Minnesota Mining and Manufacturing, or 3M (MMM – $78.50), is a Minnesota institution on the order of Milwaukee and beer. Founded in 1902 by a lawyer, a butcher and a locomotive engineer, the company set out to make sandpaper and, 23 years later, came up with a packaging revolution known as masking tape. Along the way, it also spawned an indigenous economy that employed thousands and represented a cultural paradigm of corporate-sponsored creativity which produced such nonpareils as Scotch tape and Post-it® Notes.
Diversification, acquisitions and investment in emerging markets signaled a healthy if sometimes overextended fiscal policy and continued inspiration. Under CEO James McNerney and his Six Sigma platform (2001-2005), 3M suffered a creative setback and incurred a class-action discrimination suit, but recovery seemed assured once he left. Minnesotans continued to work for – and buy stock in – the company, believing they were investing in Minnesota’s economic future. Trouble came out of nowhere, and was initially dismissed as disgruntlement.
In 1985, word started to leak out that the PFCs the company had been dumping into local landfills were leaching into water supplies. PFCs are associated with cancer, low birth weight and birth defects, including developmental disabilities. The first one-mile square well-water advisory was issued in 1982, and the boundaries revised upward in subsequent years until, in 1993, the alert became a storm water contamination advisory (SWCA). It remains in effect to this day, and the MPCA admits likely extension beyond Washington and Dakota counties.
In 2005, the Minnesota Pollution Control Agency (MPCA) further scrutinized local water supplies. One investigator, Fardin Oliaei, discovered – in addition to high levels of PFCs – a disconcerting amount of perfluorobutanoic acid (PFBA), which 3M used until 1998. PFBA wasn’t an MPCA target at the time, but Oliaei’s readings – 1,200 parts per billion – prompted her to inform her superiors and insist that the Minnesota Department of Health be brought into the loop. Her superiors later rewarded her by firing her.
The Health Department sat on the findings until January 2007, then admitted that drinking water supplies in at least six local communities had been contaminated, affecting upwards of 150,000 residents. Additional testing in early 2007 indicated that PFBA contamination exists throughout much of southwest Washington County and part of northern Dakota County. In February 2007, 3M declined to participate in any of the six public Health Department meetings to inform the public. Instead, it released findings from its own study on rats which indicated the water was safe to drink.
The estimated cost to clean up the Woodbury site alone is $23 million; no provision has been made for ongoing health problems. Four metropolitan lakes – Calhoun, Phalen, Como and Gervais – are currently under a consumption advisory, upgraded in mid-2007 from one meal of fish per week to one meal per month. The company has supposedly stopped making PFCs, but the Cottage Grove plant is still releasing those contaminants into the Mississippi River. The company recently gave a $48,000 grant to Gratiot County in Michigan to monitor the Pine River watershed, and gave $37 million in the U.S. overall, yet it continues to struggle with – and shrink from – admitting its guilt and adequately funding the Minnesota cleanup.
In the last six months, 3M has announced increased manufacturing expansion in China, to the tune of several hundred million dollars, and layoffs in its 380,000-square-foot Columbia, Missouri, facility. In 2006, it announced the sale of all but 6 acres of its St. Paul campus; more recently it said the entire parcel was on the block. This will effectively end a century-old relationship between the company and Minnesotans. The 1,000 remaining employees will reportedly be relocated. The sale is advertised as making the property more attractive to investors, but it looks like a bailout to Minnesotans, who are increasingly unhappy – not only with the end of the affair, but also by the way they have been left holding the bag.
CEO George Buckley’s 2007 letter (available on 3M’s website) reads:
Long before the concept of sustainability came to the forefront of corporate consciousness, 3M served as a leader for reducing its impact on the environment …Sustainability is integral to 3M’s values.
In 2007, in an effort to improve its environmental image, 3M joined the Clinton Climate Initiative’s (CCI) landmark global procurement agreement. Its corporate environmental policy is dedicated to "solving its own environmental pollution and conservation problems". Its 2010 target is a 25 per cent reduction in volatile organic compounds. Its European record is better, if only because Europe operates under stricter standards, like REACH (Registration, Evaluation, Authorization and Restriction of Chemical substances), which went into effect in June 2007. The company is also a member of Advanced Environmental Recycling Technologies, Inc. (AERT) and the EPA’s National Environmental Performance Track. Unfortunately, none of this makes it "green" again, at least in the eyes of many Minnesotans.
The stock, which traded at $97 in October 2007, is currently priced at $79.63. The annual growth rate of 12% has a 2008 target of $1.53 billion in sales, with 65% of that overseas. In 2007-2008 alone, 3M acquired Standard Abrasives, Aearo Technologies, Acolyte Biomedica Ltd, Aerion Technologies, InfoX, Inc., and Diamond Productions, and entered into cooperative ventures with Checkpoint Systems (CKP – $23.19) and Philips (SpeechMagic) (PHG – $41.53). In 2005, it introduced a highly conductive transmission line, ACCR, which is being used locally and overseas in China. More recently, it developed a mini-projector for wireless devices, and introduced DI-NOC, a flexible vinyl film used in architectural finishes. In 2007, it settled all of its lithium ion battery cathode patent infringement cases.
Inventive? Yes. Environmentally responsible? A resounding NO.
Disclosure: I don’t own 3M stock.