3M May be the Shape of Things to Come

3M May be the Shape of Things to Come by David Haggith for The Great Recession

Shares of 3M Co. plummeted toward its biggest one-day decline in over 30 years, after the industrial, health-care and consumer products company reported missed profit and revenue expectations, slashed its full-year outlook, and said it was cutting 2,000 jobs…. The percentage decline was second only to the 26% plunge on Oct. 19, 1987. That is the day referred to as Black Monday, with the Dow registered its biggest-ever one-day crash with a 22.6% tumble.

MarketWatch

3M stock took its worst cliff-dive in thirty years today because its revenue plummeted this past quarter. Its stock had been on the rise all year as part and parcel of the recent market-wide rally, showing just how quickly things can turn bad, and how little those bidding up a stock often know about the current business of the company they are buying. It did not fall due to rising costs or bad management, but due to falling sales in almost everything.

3M’s worst declines came in its manufacturing for industry and for electronics and energy where revenue was down 6.6% and 11.9% respectively. Now, I know 3M makes a lot of tape, and the government buys a lot of red tape, but I don’t think you can blame this plunge on the government shutdown either, as has been popular in the undeserved euphoria of this earnings season. The business simply wasn’t there to be had.

When you think about what 3M makes you realize it may be a harbinger of the recession I have been predicting for this year, and its graph of what happened today may foreshadow what the stock market looks like soon, too.

What does 3M make?

It makes lots of stuff ordinary people use every day, usually embedded in the products of other companies, such as lots of stuff auto manufacturers use, and especially lots of stuff home builders use.

The company produces a variety of products, including adhesives, abrasives, laminates, passive fire protection, personal protective equipment, window films, paint protection films, dental and orthodontic products, electronic materials, medical products, car-care products,[4] electronic circuits, healthcare software and optical films.

Wikipedia

In short, if 3M sales are coming unglued that badly, it’s because industries in the areas 3M sells to are falling off badly. You can’t mask the problem by claiming Amazon is preying on its sales because 3M isn’t retail. It’s not due to its products going out of style because 3M isn’t stylish. Its products are the meat-and-potatoes ingredients that go into everything else.

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David Haggith

Knave Dave — vigilante against the false profits of The Great Recession Too many criminal CEOs still fill their porky bellies with the biggest taxpayer bailouts in the history of the world. These bailouts protect their reputations, saving them from the fall they should have taken. They continue to receive bonuses for having done an unparalleled job of destroying their companies! Many of their companies wouldn’t be making any profit at all if not for the interest they’re making off of nearly free government bailouts. Just this week Hewlett-Packard fired its CEO, but is still paying him a bonus of millions of dollars in exchange for a year of corporate wandering in the wilderness. Netflix’s CEO cost his company hundreds of thousands of subscribers and had to reverse his decision. Bank of America’s CEO launched a debit-card fee plan that was immediately stupid in the eyes of many, but greed an arrogance led him to think he could pass it by his customers, and he lost customers in droves and had to reverse his decision, as did the many major banks that followed him. Since these corporate leaders do things most of us can immediately see as being dumb, why are they rewarded with salaries a thousand times greater than many of us make?