Minnesota Mining and Manufacturing Company
List of Deals
- 1975 $150,000,000 8.85% sinking fund debentures due April 1, 2005; $150,000,000 8.20% notes due April 1, 1985
Minnesota Mining & Manufacturing Company (3M) was founded in 1902 by a group of industrialists led by Lucius P. Ordway and John Ober. The company was formed to exploit the mineral corundum; however, three years later the company had nothing to show but a pile of rock, as the corundum they hoped for was actually anorthosite. The company was able to use the anorthosite to make sandpaper, which had a large and expanding market. While 3M did not turn a profit for several more years, two of the employees it hired in 1907 would ensure its future. The two employees were William L. McKnight and A.G. Bush, who developed the sales system that helped to make the company a success. McKnight created the guidelines that would seem something of a company creed—diversification, avoiding price cuts, increasing sales by 10 percent a year, high employee morale, and quality control. The two men designed an aggressive, customer-oriented brand of salesmanship. Instead of dealing with a company's purchasing agent, sales representatives were sent past the agent and into the shop where they could talk to the people who used the products. Going into the shop enabled the salesmen to find out both how products could be improved and what products were needed. For example, such forays into shops led to the company's development of tougher sandpaper and, later, waterproof sandpaper. 3M hired the inventor of waterproof sandpaper as its first full-time researcher. This marked the creation of one of the nation's first corporate research and development divisions.
Significantly, the sales strategy paid off even more in 1923, when a salesman in an auto body painting shop noticed that the process used to paint cars in two tones worked poorly. Needing to find a way to prevent the paints from running together, 3M invented masking tape. The invention of Scotch tape also established 3M as a force for innovation in American industry. Transparent Scotch tape provided a major windfall during the Depression, helping 3M to grow at a time when most businesses struggled to break even. Another salesman invented a portable tape dispenser, and 3M had its first large-scale consumer product.
During the 1930s 3M funneled 45 percent of its profits into new product research; consequently, 3M tripled in size during the Depression. The company continued to grow during World War II. It did not shift to making military goods, as many U.S. corporations did, but continued to concentrate on understanding its markets and finding a "niche" to fill. The war did leave 3M with a need to do some rebuilding and not enough cash on hand to do so. To meet its building needs, in 1947 the company issued its first bond offerings to help fund the program. In 1947 3M introduced the first commercially viable magnetic recording tape.
The company continued to prosper, and in 1959 it experienced its twentieth consecutive year of increased sales. During the 1950s 3M introduced the first dry-printing photocopy process, ThermoFax. In the 1960s the company went on another growth binge, doubling in size between 1963 and 1967 and becoming a billion-dollar company in the process. During that decade, 3M's products included dry-silver microfilm, photographic products, carbonless papers, overhead projection systems, and medical and dental products. It even produced the backdrops used for some of the spectacular scenes in the 1968 movie 2001: A Space Odyssey.
The 1970s brought obstacles to 3M's period of growth. A financial scandal rocked some 3M executives in this decade. Sales growth also slowed, ending the company's string of averaging a 15 percent growth rate every five years. The company also had difficulties with competition, as it lost the cassette tape market to TDK and Maxell—3M stuck to its tradition of abandoning markets where it could not set its own prices and backed off. Eventually, 3M stopped making much of its magnetic media, instead buying it from an overseas supplier and putting the 3M label on it.