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When Mike Roman took over 3M's CEO reins 14 months ago, the world economy was growing, China trade was robust and 3M's stock was near record highs.

Now, shares are down to 2014 levels amid the Trump administration's trade war with China, slowing economies around the world, weak auto and electrical markets — and a growing swirl of lawsuits around 3M nonstick chemicals, facemasks used in mining and military ear plugs.

While profits improved in the second quarter after cost-cutting measures, the company was still stinging over a painful 39% drop in the second quarter.

In the middle of this turbulent terrain is Roman, a 3M lifer who assumed the CEO role a year ago and became the company's chairman in June. He acknowledged the company must again build credibility.

"We have to continue to be focused with a great deal of urgency to execute against whatever we see coming," Roman said in an interview in his office at the company's Maplewood headquarters.

Building investor confidence will be key to the strategy, he said. With a slowdown recognized, 3M announced along with its first quarter financials a restructuring that has resulted in halting some factory production, cutting nearly 2,000 employees and lowering inventory.

"We made some pretty aggressive changes," Roman said.

Only time will tell if they are enough, said RBC Capital Markets equity analyst Deane Dray, who added Roman is getting a "baptism by fire."

"This is not a fix," he said. "This is a short-term tactical correction to the slowing economy. And it's going to require further adjustments as the market zigs and zags."

A company veteran

Roman, the oldest of five siblings and the son of an insurance salesman and hospice worker raised in Stevens Point, Wis., said he is confident 3M is well poised to withstand an economic downturn and to grow long term.

A 31-year veteran, Roman's fingerprints are scattered across the $33 billion industrial giant that boasts 93,000 workers in 70 countries. About 16,000 of those workers are in Minnesota.

Roman, now 59, joined 3M as a senior design engineer in 1988 just a few years after earning his master's degree in electrical engineering. He went on to run 3M's safety and optical films businesses in Europe; all of 3M Korea; and 3M's iconic industrial adhesives and tapes unit.

During the last 10 years, he served as 3M's chief strategist. He led 3M's largest business, the $10 billion Industrial Business Group. He then became chief operating officer, working closely with Inge Thulin, whom he succeeded as CEO last year.

Wall Street historically thinks of 3M as a well-run machine, but it penalized 3M harshly in April after missing first-quarter profit forecasts and being too slow to gut costs after auto, electronics and consumer sales plummeted, particularly in Asia and Europe.

Lately, 3M's shares have sunk to the $150s and $160s, far from the $250 the shares reached last year.

"Investor confidence in general has eroded based on the [profit] outlook reductions that they've had. They want confidence in the fundamentals to be restored," said Edward Jones equity-research analyst Matt Arnold. "Investors are going to require a few quarters where things play out as expected."

RBC Capital's Dray said 3M faces several "hot buttons" — including the slowdowns, in China, consumer electronics and the automotive industry.

"To start [as CEO] with a withering short-cycle, industrial economy along with all the trade tensions? That puts 3M right in the bull's-eye of all of that," Dray said. Roman "could be the most masterful CEO, but if those end markets and China are all going against him? It's going to impact 3M's earnings and the stock."

3M typically sees the slowdowns before other companies because its products tend to have a short turnaround to get to market.

"But their reaction to the slower conditions was slower than it probably should have been," said Kevin Earley, lead manager of the St. Paul-based investment management firm Mairs and Power.

Art Fry, the 3M retiree, stock holder and founder of Post-it notes, worries 3M's cuts may affect the company's prized reputation for innovation.

"The problem with buyouts is often the wrong people take them," he said.

At the same time, he sympathizes with Roman. "My heart goes out to him because there are so many fires to put out. It's a big job for anyone."

3M commitment to R&D

Roman said 3M's commitment to research and developing new products holds firm. About 6% of revenue will be used for R&D, typical for 3M. About 30% of all company sales come from products introduced in the past five years, Roman said.

And while the scientific breakthroughs are important, Earley said, "the market isn't focused on innovation, but on the issue of the day" and navigating the turbulent economy. So the reaction to market forces needs to be strong, he said.

3M's aggressive cost cuts were "a necessity, just to defend the profitability of the business and align the cost structure and cost footprint with the current demand realities," said Arnold of Edward Jones. "Everyone wants to see them get back on track. But the reality is that the economic backdrop in parts of the world is not strong."

Long term, 3M is counting on both acquisitions and organic growth, Roman said.

In January, 3M paid $1 billion for health care information giant M*Modal. In May, the company announced its biggest deal ever, $6.7 billion for wound-care behemoth Acelity. The high-priced but highly anticipated deal is expected to close late this year and should aid 3M's growth in digital and health care businesses.

Acquisitions aside, Roman said the five-year growth plan he introduced in November remains on track. Organic sales will still grow 3% to 5% a year by 2023 and earnings per share an average 8% to 11%, he said. The health care, safety and auto products will lead the way.

3M's fledgling electric automotive business will certainly grow, Roman said. It delivered $250 million in sales last year and is expected to soon grow to $350 million annually as automakers just designed a host of new car models that include more of 3M's new electrification products.

Roman said the new niche "did well" for 3M with automakers, even as other auto-product sales have been affected by the global economic downturn.

Like the auto sector, 3M is closely watching China's economy. Business in China generates about $3 billion of 3M's annual revenue of about $30 billion, Roman said.

In January, 3M said 2019 China sales would rise 3%. Now, it expects sales to dip, but only by low single digits.

That's because "Even in this challenging environment, we had bright spots," Roman said. "Our health care and safety [businesses] are doing well there."

One thing 3M has going for it in regard to China is that it does not export from the country, he said. Most of the company's factories in China make products for Chinese customers.

Roman said he believes that if those customers ever did shift business out of China because of the trade war, they would simply relocate manufacturing to other countries where 3M also has operations. Therefore, he thinks 3M will keep the business.

Even so, new U.S. trade tariffs will cost 3M $90 million this year, Roman said. To offset costs, 3M raised its prices.

PFAS lawsuits an 'unknown'

On a different front, Wall Street is concerned about the product-liability lawsuits, especially those involving a class of chemicals known as PFAS.

Cities across the nation are suing 3M and other PFAS makers for allegedly contaminating ground and other drinking-water sources with PFAS chemicals.

Dray from RBC Capital Markets, said the lawsuits and looming product-liability question has caused 3M investors to pause. Some Wall Street analysts worry the lawsuits and proposed regulatory changes could ultimately cost 3M billions, particularly as some in Congress and some environmental groups fight to reclassify PFAS chemicals as hazardous to humans, a point 3M strongly denies.

So, 3M's product liability question "is the big unknown," Dray said.

Last year, 3M agreed to pay the state of Minnesota $830 million over time to clean up contaminated water. Other cases are pending, and the government is changing regulations surrounding PFAS that could add costs as well.

Roman said some of the issues surrounding the PFAS lawsuits are misunderstood and that the company already has reserves for some of the cases. He acknowledged, though, that it is too early to know 3M's true liability.

Despite unknowns, Roman said he remains bullish on long-term growth, especially if 3M continues to evaluate its core businesses and strengthen them.

"We tend to be engaged for the long run," he said.