3M is bringing back the 'magic'

At 3M these days, an increasing share of the industrial giant's sales are coming from new, innovative products. It's a payoff from the company's steady investment of more than $1 billion annually in research and development.

3M makes more than 50,000 products -- everything from protective coatings for cars to cell phone parts to dental crowns -- and even those roadside signs that clock how fast your car is going.

3M got its start making sandpaper more than a century ago. And the company continues to build on the primitive idea of gluing grit to paper to make a tool. But now it's shaping the individual grains of mineral that do the work.

Conventional abrasives are made up of irregularly shaped, randomly placed minerals. But 3M's Cubitron II abrasives are composed of triangular bits of ceramic aluminum oxide. 3M has figured out a way to produce grains that are virtually identical, and they sharpen themselves as they slice away steel or other metal.

In a lab at a 3M facility in Maplewood, 3M technologist Jim Olson demonstrates the power of the Cubitron II abrasive by removing a half-inch thick steel weld, about six inches long, in 27 seconds. The disk doesn't even look like it's been used. But the steel is smooth and shiny.

"This product is much more efficient in cutting the metal, a lot smoother, a lot easier on the operator," said Olson.

Just about every manufacturer uses abrasives to produce finished products, whether they're cars, refrigerators or golf clubs.

"Everything you touch, see and everything else, just think, how did it get that smooth? How did it get to look that way? How did that corner get that sharp or that rounded?" said Chris Holmes, vice president of 3M's Abrasive Systems Division.

"The market is really huge, to tell the truth. So, it's a game-changing product that we have here," he said.

The worldwide market for abrasives is worth roughly $14.5 billion. 3M has a good piece of that business, though it won't say how much.

The Cubitron II abrasives are part of a rebound in innovation at 3M. Under its previous CEO Jim McNerney, 3M's reputation as an idea factory suffered as McNerney put a priority on financial discipline.

3M tracks innovation with something called the vitality index, the portion of company sales produced by products introduced within the past five years. Morningstar analyst Adam Fleck says the vitality index has been growing robustly since George Buckley took over as 3M's CEO.

"They see what the customer needs before the customer understands his own need. And then they develop the product."

"Before Buckley came to the company back in '05, it was kind running in the low 20 percent range. And he's already got that up to the high 20 percent range," said Fleck. "The company is expecting to get that all the way to 40 percent."

Buckley is credited with rekindling enthusiasm for research and innovation at 3M. He often boasts that the "magic" is back at 3M. And the company is moving quickly to turn the magic into higher sales.

Buckley's spending on R&D has helped turn around 3M's brightness-enhancing film -- a one-time star business that was stalling and threatened by increasing competition.

About five years ago, optical film sales were in decline. Manufacturers didn't see much difference in the films made by 3M and its rivals. And prices were falling.

But Edward Jones analyst Daniel Ortwerth says 3M has given itself a big edge over competitors by developing films that provide big energy savings and brighter displays. Ortwerth says it was a matter of anticipating the evolution of the industry.

"They see what the customer needs before the customer understands his own need. And then they develop the product," said Ortwerth.

Dave Lamb is an advanced physics research specialist for 3M's Optical Systems Division. At a 3M lab, Lamb and co-workers tear apart big-screen TVs. They install 3M light-enhancing films in the TVs to show manufacturers how the sets can be improved.

"This is kind of our side-by-side comparison of two identical models. One we modified to have 12 of these bulbs. This one has 20 bulbs," said Lamb.

Side by side, the two pictures look equally bright. But the one with 12 bulbs and 3M film consumes around one-third less energy.

"Fortunately, more and more people are caring about how much power these things are consuming, and it's becoming interesting to the brands," said Lamb.

TVs using 3M films can reduce their energy consumption by up to nearly 40 percent. That's increasingly important because governments around the world are mandating greater energy efficiency for TVs.

By 2013, 3M expects 80 percent of TVs sold will be eco-friendly sets. And 3M boasts rival manufacturers can't match the light-enhancing and energy-saving features of its newest optical films.

In its most recently completed quarter, 3M's optical film sales were up over 50 percent year-over-year.

Gallery

Fullscreen SlideshowPrevious Slide

1 of 1

Next Slide