Electro & Communications Business

                                “Maintaining
                                 the Growt...
ECB Key Financial Data
                              Sales                                     Operating Income
          ...
ECB Has Had A Wild Ride…
                                                       ECB Revenues
                             ...
ECB Portfolio Footprint
Balanced Platform Portfolio…
                                                   Characteristics
 2...
Electrical Markets
                                         Applications
           Power Generation                 Trans...
Communications Markets
                                                Applications
                      C e n tr a l    ...
Electronics Solutions
                                             Applications




                                      ...
Electronics Materials
                                         Applications




                                          ...
Platform Capabilities
                         Electrical                                                                 ...
ECB Market Dynamics
      Characteristics                                      3M Response
 Customers Move Fast           ...
ECB Positioned For Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
ECB Market-Focused / Customer Centric
3M Electronics Go-to-Market Structure…
                                  Customer


...
ECB Market-Focused / Customer Centric
                            3M Electronics Example…
                 Semi-
Market   ...
ECB – Covering The Transnationals
                               Mobile Phone OEM
      Design                   ODMs /   ...
Coordination Driven By Subsidiary Reach
                                                                                  ...
Consistent Process for “Go-to-Market”
                                  Prospects Forwarded to                         New...
Mobile Handheld
Mobile Hand-held Served by Multiple Divisions/Geographies…
                   Custom Bumpons              ...
3M Hard Disk Drive Applications
              Noise and Vibration Damping Solutions
         1

              Contaminatio...
ECB Positioned for Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
ECB Key Technologies
ESD                        EMMD
 Flex Circuits              FC Fluids
 Component                  Int...
3M Technology Platforms
  Ad                                                                                              ...
ECB New Product Sales
                                     1-Year New Products         4-Year New Products

              ...
New Products Driving Growth
  Electrical Markets Example
                                         New Product Sales      R...
ECB Positioned for Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
ECB OUS Growth
  ECB’s Largest Platform for Growth…
             %
                                                       ...
Assets Close To The Customer
                                                                              Human Capital
 ...
ECB Global Technology Centers
                                                   Electronics            Electronics
    EC...
Protecting Our Investment
  Lab Investments are Paying Off…
                                                              ...
ECB Centers of Excellence
                                                     EMI/EMC             Battery Anode
         ...
ECB Positioned for Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
Communications Network Security System
         Network Application                                           Product
    ...
Electrical High-Voltage Cable Accessories
        69/72 kV Termination

                           3M Proposed
Existing So...
Medical Flex Application
           Flexible Circuits




 Medical Devices are Moving Towards Microelectronics
 Interconne...
Lithium Ion Battery
                           Separators
Aluminum
  Case




                                 Negative
  ...
Selective M&A
    Moving Towards Complementary Acquisitions…
                                               Electronics Ma...
ECB Positioned for Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
ECB Service & Sales
                               98%                                                            25%
    ...
ECB Positioned for Continued Growth…

  Go-to-Market Structure
    – Market-Focused / Customer-Centric

  Differentiated T...
Competitiveness
             Continued Focus on Productivity…
                   6-Sigma Margin Impact                    ...
Incentivizing Growth
   Compensation Changes to
                                           …And Recognizing the Winners
  ...
Summary
ECB Portfolio Stronger than Ever…Now Positioned for Offense
   Maintained Brand/Reputation, Channel Relationships ...
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oe E. Harlan Executive Vice President, Electro and Communications Business

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oe E. Harlan Executive Vice President, Electro and Communications Business

  1. 1. Electro & Communications Business “Maintaining the Growth Momentum” Joe Harlan, Executive Vice President 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  2. 2. ECB Key Financial Data Sales Operating Income $500 $3.0 $Billions & YOY % Chg $Millions & YOY % Chg $447 $2.3 +42% $2.2 $400 $2.1 +5% $316 +6% $2.0 +3% $266 $300 +19% +12%* $200 $1.0 $127 $0.6 $100 +33% +8% $0 $0.0 2003 2004 2005 Q1 2006 2003 2004 2005 Q1 2006 LC Growth -.7% 2.7% 4.2% 10.6% OI Margin 12.7% 14.2% 19.2% 21.0% 2005 Sales By Geographic Area U.S. 27% Europe 22% LAC 10% *2002 estimated stock options, not restated. APAC 41% 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  3. 3. ECB Has Had A Wild Ride… ECB Revenues $2,700 Projecting (1 Sustainable $2,536 0% )C Growth of 5-8% AG R AG $2,400 $2,333 %C R 5 $US in Millions $2,223 $2,224 $2,101 $2,100 $2,034 $1,800 $1,500 2000 2001 2002 2003 2004 2005 OI% 16% 9% 13 % 13 % 14 % 19 % …And Future Growth is Sustainable Solid core portfolio…margins sustainable International opportunities abound Customer intimacy stronger than ever Expanding footprint in adjacent markets Effective “Go-to-Market” structure Service as a differentiator ECB Positioned For Continued Growth 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  4. 4. ECB Portfolio Footprint Balanced Platform Portfolio… Characteristics 23% Integrated materials science & processing 28% technologies Participating in “hot” markets – Infrastructure build / upgrades – Electronics boom Electronics Go-to-Market via OEM, channel pull / push & 19% 30% “Bench-to-Bench” selling (ODM, CM’s) …And Balanced Proportionately to Global Opportunities US Strong positions in expanding / upgrading 27% APAC infrastructure (Europe, LAC, APAC) 41% Asia driven by Electronics…EE Emerging Servicing transnational customers globally LAC 10% Growth Across Multiple Platforms & Geographies EUR 22% 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  5. 5. Electrical Markets Applications Power Generation Transmission Distribution Solutions Terminals Electrical Tapes Terminating & Splicing Cold Shrink Key Capabilities Med- / High-Voltage splices & terminations EMI / RFI shielding & insulating material Vinyl electrical tapes Strong brand & reputation in electrical utility industry Electrical connectors 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  6. 6. Communications Markets Applications C e n tr a l C e n tra l C am pus O ffic e O ffic e C u s to m e r P r e m is e s Solutions Central Office Connectivity Copper Aerial Closure Copper Splicing Modules & Connectors Copper Fiber Optic Structured DSL Test Structured Cabling Equipment Cabling Fiber Optic Closures Fiber Optic Splices Key Capabilities Electrical interconnect Specialty optical fibers – GGP Fiber optics cabling & connector expertise – Environmentally stable cabinets Fiber management Strong brand & reputation in telecom industry 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  7. 7. Electronics Solutions Applications Solutions High Speed Carrier & Cover Backplane Fiber Optic Flex Circuits Backplane Tape Inkjet Cartridge Solutions Solutions Assemblies Key Capabilities Flexible fine-pitch interconnect Embedded capacitance High-performance electronic substrate Component transport & testing materials Static control & protection 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  8. 8. Electronics Materials Applications Solutions Tapes & Bonding Thermally Gaskets & Films Chemicals & Conductive Adhesives Semiconductor Materials Gasses Materials Key Capabilities Specialty fluids & gases Plastic bonding & hot melt solutions Sintered & fixed abrasives Form-in-Place gaskets Battery materials Thermal management 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  9. 9. Platform Capabilities Electrical Electronics Communications Powe r G eneration Transmission Distribution Cen tral Cen tral Cam p us Transformers Transformers O ffi ce Offi ce C usto m er P rem is es Med- / High-Voltage splices World-class telecom test Flexible fine-pitch & terminations equipment interconnect Vinyl electrical tapes Electrical interconnect Embedded capacitance Electrical connectors Fiber optics cabling & High-performance electronic connector expertise – substrate materials EMI / RFI shielding & fiber management insulating material Component transport / testing Specialty optical fibers – GGP Strong brand and reputation Specialty fluids / gases in electrical utility industry Environmentally stable Sintered & fixed abrasives cabinets Strong channel presence Battery materials Strong brand & reputation in Plastic bonding and hot melt telecom industry solutions Strong channel presence Form-in-Place gaskets Thermal mgmt An Integrated Platform With Differentiated Materials & Solutions 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  10. 10. ECB Market Dynamics Characteristics 3M Response Customers Move Fast Clear “Line of Sight” From Customer – Intimate Dedicated Technology Interface New Technology Drives the Market “Bench-to-Bench” Relationships Enable Leading Edge Position on Multi- – Business is Bi-Modal Generational Applications and Process – Short Life Cycle Technologies – Fast Commoditization Customers are Geographically Indifferent Leverage 3M Global Subsidiaries and Networks…Invest Where Customers Reside – Spec – Design – Source – Mfg – End-User Can be Different Geographies Major Growth Areas Shift Rapidly Ability to React Fast Globally, Without Barriers – Between and w/in in Geographies Continuous Cost-Down Mindset Intense Productivity Without Service Compromise Positioned to Serve What, When & Where the Customer Wants 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  11. 11. ECB Positioned For Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  12. 12. ECB Market-Focused / Customer Centric 3M Electronics Go-to-Market Structure… Customer Key Accounts Marketing Sales Segment Markets Semi-Conductor / Regional Components Operations Transnational Assembly Tech Applications Global Distribution / e-Productivity Channel Platform Technologies CMD EMMD ESD EMD D&G IB SS&PS One Face to the Customer…Supported by Multiple Technology Platforms 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  13. 13. ECB Market-Focused / Customer Centric 3M Electronics Example… Semi- Market Hard Disc Mobile Display Printers conductor Drive Handheld Segments Customers Samsung Seagate Motorola Philips HP NEC Maxtor Nokia LG Lexmark Toshiba W. Digital Samsung Samsung Samsung Hitachi Hitachi NEC Sharp Canon Intel Fujitsu Panasonic Toshiba Brother Philips Toshiba Sharp Matsushita Epson Freescale HGST Sony / Ericsson Sanyo Olivetti IBM Siemens Epson Kodak Philips Hitachi Dell Running with the Winners Many Are Transnational Replicating Success Globally 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  14. 14. ECB – Covering The Transnationals Mobile Phone OEM Design ODMs / Manufacturing Customers Design Centers Converters Centers Chicago Flextronics Brazil Everywhere! Foxconn India Helsinki Brady Hungary Copenhagen Stokvis China Seoul M&C Korea Beijing Tokyo 3M Subsidiary Network Exemplary Project Design Contract Tier 1 Converter Center Mfg. Supplier 3M Product Sales 1183 Copper U.S China / Korea China Foil Tape Brazil Application LCD Shielding Each Specification Requires Global Coordination 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  15. 15. Coordination Driven By Subsidiary Reach Norway l Swedenl Finlandl Polandl Denmark s l Czech Republic l Germany l sn Switzerland s l Netherlands Puerto Rico l Canada l s n Austria s l lsn T rinidad & T obago Belgium Hungary l ls United States l sn l sn Russial United Kingdom lsn Greecel s Ireland l T urkeyl France l sn Chinal s Koreal s n Japan s n l Mexico Pakistan l lsn Jamaica T aiwan s n l ls Hong Kong s n l Guatemala ls Vietnaml El Salvador Saudi Arabia Philippines s n l l l United Arab Costa Rica T hailand s n l Emiratesl ls Israeli Portugal Indial s ls l Dominican Republic Morocco Egypt Malaysia sl ls l l Sri Lankal Indonesia s l Italy Panama lsn l Spain Brazil New Zealand s n l Singapore Ecuador lsn ls Kenya lsn ls l Colombia Australia s n l Zimbabwe Uruguay ls Peru ls l Chile ls South Africa ls Argentina lsn Key Venezuela l s n l sn l Sales and Mar keting s Manufacturing/Converting (42 R egions) n Research and D evelopment 3M Subsidiary Network Effective Globally & at Home 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  16. 16. Consistent Process for “Go-to-Market” Prospects Forwarded to New Products Flow Served Markets Cross-Functional Teams Through NPI System Ideas Communications Sales Market Concept Electrical Mfg. Tech. Feasibility + + Development Electronics Materials Scale-up CTC Electronics Solutions Launch + Laboratory VOC dictates NPI • Key account focus Apply Intellectual • Replicate to key accounts • Find the “pain points” Capital to • Multi-Generational Presence Opportunities • Develop prospects Just Do It! Success Depends Upon Global Boundaryless Teamwork 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  17. 17. Mobile Handheld Mobile Hand-held Served by Multiple Divisions/Geographies… Custom Bumpons Double-Coated Tapes …With Huge EMI/RFI Shielding Double-Coated Tapes Opportunities! EMI/RFI Absorbing G-Sheet Bonding 800MM cell phones Films Protective Tape produced each year Optically Clear Plastic Adhesive Bonding Adhesive 3M sales for these Display Enhancement Materials applications currently Electronic Micro Coaxial Interconnect ~ $400MM Switch Adhesives Flexible Circuits Novec Fluids Anisotropic Conductive Films Entitlement is Memory Card Thermal Interface Materials Connector >$7 / Unit Labels Bonding Films Water Contact Indicator Tape Earning Content & Avoiding Commoditization with Value-Add, Customized, Differentiated Technology Solutions 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  18. 18. 3M Hard Disk Drive Applications Noise and Vibration Damping Solutions 1 Contamination Removal Products 2 Abrasives 3 Interconnects (Flex & Fixed) 4 Tapes and Seals 5 Labels 6 4 Adhesives 7 > $100MM 3 Business in 2006 Customer Intimacy at “Bench-to-Bench” Keeps us in the Game… Substantial Content in HDDs Across the World 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  19. 19. ECB Positioned for Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  20. 20. ECB Key Technologies ESD EMMD Flex Circuits FC Fluids Component Interconnect Transport IDCs Interconnect Microabrasives IDCs Anisotropic Conductive Adhesives CMD EMD Fiber Optics Coldshrink Connectors Adhesives and High Density PVC tapes IDCs Liquid Resins Test & Msmt Diagnostics --- 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  21. 21. 3M Technology Platforms Ad Rf New Technology Am Bi for New Products Reclosable Advanced Biotech Adhesives Fasteners Materials Existing Pe Ab Dd Mr Rp Technology Base Predictive Drug Micro- Radiation Abrasives Engineering Delivery replication Processing & Modeling Ac Dm Nt Nm Pm Sm Acoustics Display Nano Nonwoven Polymer Melt Specialty Processing Materials Technology Materials Materials Po As Do Fi Fs Is Md Mi Pc Su Porous Application Dental & Films Filtration, Microbial Precision Surface Integrated Medical Materials & Software Orthodontic Separation, Systems Detection Coating Modification Data Mgmt Membranes Materials Purification Design & Control Ce Ep Fl Im Me Mo Pd Pr Wo Lm Ceramics Electronic Fluoro- Imaging Metal Molding Particle & Process Wound Light Packaging materials Matrix Dispersion Design & Mgmt Mgmt Composites Processing Control Vp Cp Fc Fo Ip Pp Vacuum Chemical Flexible Fiber Inks & Precision Processing Power Converting/P Optics Pigments Processing Sources ackaging More than 20 of 3M’s Key TechnologiesAll Rights Reserved in ECB © 3M 2006 Leveraged 3M Investor Meeting 2006
  22. 22. ECB New Product Sales 1-Year New Products 4-Year New Products 500 $468 $125 400 % $344 6 +3 ($ Millions) $303 300 +14 % $91 $76 200 100 0 2004 2005 2006 4-Yr NPI % to Sales 14% 15% 19% New Product Momentum Increasing… Customer Intimacy Stronger than Ever “Go-to-Market” Structure Lab Capabilities Drive Unique Solutions Differentiated Products Drive Growth 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  23. 23. New Products Driving Growth Electrical Markets Example New Product Sales Revenue Growth 120 14% $109 12% 12% 100 10% Revenue Growth 10% NPI Sales ($MM) 10% 80 $78 8% $67 60 6% 6% 40 4% 2% $27 20 2% $4 0 0% 2002 2003 2004 2005 2006 # of New Product Families 2 6 15 25 37 New Products a Key Component of Electrical Platform Rebirth 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  24. 24. ECB Positioned for Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  25. 25. ECB OUS Growth ECB’s Largest Platform for Growth… % 7% 14 R= 5% = AG = C R GR AG CA C 1% =1 GR % CA 9 =3 % R=7 GR CAG CA Jap an C hina Ko re a SEA EE LAC 20 01 200 2 2 003 20 04 20 05 …And Momentum is Building Moving Assets Closer to the Customer Accelerating Lab Presence & Scale…Yielding IP Foothold Establishing “Centers of Excellence” Close to Customers ECB Revenue is 74% OUS…and Growing 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  26. 26. Assets Close To The Customer Human Capital International CapEx 760 800 $73 80 +33% 165 570 70 600 105 $50 60 190 $46 400 $ Millions 143 50 40 405 $28 200 322 $22 30 20 0 10 2005 2006 0 Lab Mktg Mfg 2002 2003 2004 2005 2006 Electrical: Vinyl Coaters in Taiwan & China, Bolstering lab resources / expertise in APAC, Lab capabilities in APAC / Europe Europe & LAC Communication: NPI capabilities in APAC, Transferred 2 Electronics units to Asia Europe & Latin America Aligning 3M Electronics “Go-to-Market” across Electronics: Expanding capacity & the world (U.S. sales force 7 1) capability in Japan, Singapore, China, Geographical adds to support transnationals Taiwan, Hong Kong Driving Asset Shift…CapEx & People 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  27. 27. ECB Global Technology Centers Electronics Electronics ECB Communications Electrical Materials Solutions Neuss, Germany Antwerp, St. Paul, Belgium MN Pontchateau, France Austin, Sagamihara, TX Cluses, Japan France Italy Seoul, South Korea Shanghai, Columbia, China MO Eau Claire, China WI Singapore Brazil Brazil Achieving Global Technical Presence 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  28. 28. Protecting Our Investment Lab Investments are Paying Off… Patent Filings Records of Invention 184 278 2 3% 8% 257 149 7% 240 80 2 2% 122 2 1% 156 66 17% 133 OUS 19% 2 7% 112 52 US 2004 2005 2006 2004 2005 2006 ROI Yield 51% 68% 66% …In Quantity AND Quality Patent & ROI Activity Gaining Traction OUS Quality of ROIs Increasing…51% 66% Patents People Adds Building Capabilities for Growth in ’06 and Beyond Locally Developing & Securing Unique Technologies 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  29. 29. ECB Centers of Excellence EMI/EMC Battery Anode Transmission Cable Acc. Transport PSA Cleaning CMD-OSP Chemicals Interconnect PSA FTTx Abrasives OEM Tape Battery Matls Static Semicon eCabinet Semicon & Packaging Global Regional Flex FIPG Enables Sustained Growth…Close to the Customer 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  30. 30. ECB Positioned for Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  31. 31. Communications Network Security System Network Application Product Signaling & Comm. Module Manhole Sensor Control Management Unit System Software Cabinets RFID Transponder Manholes Technology Provides Unique Capability to Remotely Supervise Access Monitoring of Cabinets, Manholes & Remote Stations Critical for Telco Infrastructure Security Driven by Strong Intimacy at Deutsche Telekom Replicable to Other Regions…$15MM at Deutsche Telekom Alone 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  32. 32. Electrical High-Voltage Cable Accessories 69/72 kV Termination 3M Proposed Existing Solution • Three Parts • 72 Parts • Minimal Labor • High labor Market segment is cable accessory products for 69+kV and 110+kV Opportunity to expand upon existing position in medium-voltage accessories Six Sigma identified customer pain points and new application for cold-shrink technology Voice of Customer Dictates New Product Offerings 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  33. 33. Medical Flex Application Flexible Circuits Medical Devices are Moving Towards Microelectronics Interconnects for Cardiac Implants, Glucose Sensors, Ultrasound, X-ray, etc. Leveraging Acquisition of Siemens Flex to Accelerate Penetration of Medical Imaging Market Flex Technology Know-How, Combined with Strategic Acquisition 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  34. 34. Lithium Ion Battery Separators Aluminum Case Negative Positive Electrode Electrode Market for Lithium Ion Batteries is Moving to higher voltage…Need Safer, High-Performance Batteries Lithium Ion Materials is a $1.2 Billion Market 3M Has Materials for Advanced Cathodes & Anodes, as well as Electrolyte Salts & Solutions Strong Technology & IP…Potential to be a Big Player 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  35. 35. Selective M&A Moving Towards Complementary Acquisitions… Electronics Material Electrical Electronics Solutions Low-Voltage Battery Materials Printer / Display Flex Accessories & Tapes “Strong IP” “Strong IP” “Strong Brand / Core Channel” Adj. Battery Transmission Cable Medical Flex Components Accessories Markets Applications Siemens Flex Jese Chem High-Voltage (“Specialized (“Specialized (“Specialized M&A Technology”) Technology”) Technology”) End Game Battery Production Full Line Transmission Full Line Medical (Lithium Ion) Cable Accessories Penetration Migrating to Markets Where We Add Value 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  36. 36. ECB Positioned for Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  37. 37. ECB Service & Sales 98% 25% % On-Time & In-Full 20% Step-Change YOY Sales Growth 93% 15% Improvement in Service and 10% 88% Sales 5% 83% 0% (5%) 78% (10%) 73% (15%) Dec Dec ’03 ’05 ECB Service ECB Sales Growth 1/3 of 2005 Growth due to Improved Service 20-Point Improvement (75% in Dec ’03 95% in Aug ’05) Consistently Topping 90%...More to do Customer Testimonials Validate Favorable Impact Service Now a Positive Differentiator 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  38. 38. ECB Positioned for Continued Growth… Go-to-Market Structure – Market-Focused / Customer-Centric Differentiated Technologies Yield Differentiated New Products Aggressive International Expansion Adjacent Markets & Complementary Acquisitions Service as a Differentiator Competitiveness / Culture 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  39. 39. Competitiveness Continued Focus on Productivity… 6-Sigma Margin Impact Sourcing Savings 200 50 $41 $38 $177 40 $34 180 $173 $ Millions $ Millions 30 160 $150 20 140 10 120 0 2004 2005 2006 2004 2005 2006 % of Sales 6.7% 7.4% 7.2% % of Buy 8% 8% 6% Six Sigma Continues to Drive Both Savings and Growth Productivity Ingrained in ECB Culture Sourcing Benefits Continue Despite Headwinds Partnering with Vendors to Respond to Continuous Cost-Down Market Dynamics 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  40. 40. Incentivizing Growth Compensation Changes to …And Recognizing the Winners Drive Borderless Growth… Electronics Example: ICP ICP Revenue Design 2006 Revenue IATD US 25% 10% Other US ECB 50% 50% 75% Other 90% Reps Paid on ECB Sales Only, BEFORE: 10% Variable, Capped Revenue Geography ≠ Spec Geography Reps Paid on Total Electronics NOW: Dynamics Require “Feet on the Street” 25% Variable – Spec in U.S., Japan & Europe 2X Kicker @ 101% of Plan 3X Kicker @ 120% of Plan – Value capture in Asia NO CAP! Implication: Pay Sales Reps for Not Perfect…but Positive Trend Global Revenue Generation Changing Cultural Paradigms… Pay for Global Impacts with Differentiated Contributions 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  41. 41. Summary ECB Portfolio Stronger than Ever…Now Positioned for Offense Maintained Brand/Reputation, Channel Relationships & Customer Intimacy All Businesses Contributing…Strong Core Portfolio Effective “Go-to-Market” Structure Differentiated Technologies / Solutions Accelerating International Presence…Opportunities Abound Productivity Expertise without Service Compromise A Culture Devoted to the “Growth Mission” ECB Well Positioned for Sustainable Growth 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
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