The chief executive of 3M Co. said Friday that he thinks the U.S. economy will begin to improve in the third quarter of 2009, but he doubts that a huge federal stimulus bill will do much this year to cure the economy's ills.
"It's not quite Armageddon yet," George Buckley told business leaders at a University of St. Thomas event in Minneapolis. Buckley, who analyzed recessions over the past 100 years for his presentation, forecast that the U.S. economy will continue to deteriorate and contract for the first half of this year.
3M management, which saw fourth-quarter sales fall by 11.2 percent to $5.5 billion, has been cutting jobs and costs, but Buckley warned business executives to guard against overreacting to the harsh economic news.
"You want to be in business next year, so don't slash and burn more resources than you need to, especially the human ones," said the head of the state's largest manufacturing company.
On Friday, politicians were debating the contents of a stimulus package and a national jobs report showed 207,000 manufacturing jobs were lost in January -- a 1.6 percent drop.
"There are only three ways in the world in which to create new wealth -- manufacturing, agriculture and minerals extraction," said Buckley, an engineer who became 3M's top executive at the end of 2005.
He emphasized that elected officials need to cut corporate taxes, and he added that the combined federal and state corporate taxes in Minnesota -- totaling 41.4 percent -- are among the highest in the world.
"If I have a chance to invest in a factory in Ireland at zero [corporate taxes], or a factory in [South] Korea at 15 percent, or a factory in Singapore at zero, or a factory in Germany at 25, why would I want to invest in Minnesota or the United States?" Buckley said in an interview after his business speech.
In the "short-term, yes I'm OK with stimulus packages," Buckley said. But he views a federal-government stimulus as a one-time deal, and he's more interested in smaller government and lower taxes that he argues would enable U.S. businesses to grow. The stimulus package is "the economic parallel to giving a man a fish instead of teaching him how to fish."
He also said that it was "scandalous" and a "waste of public funds" that some members of Congress have pushed to include pork-barrel projects in the stimulus bill.
As he leads 3M through the recession, Buckley said that he's focused on controlling costs and preserving cash.
But, he added, now is a critical time to invest in research and development for new products.
"That's what's going to not only differentiate you during the downturn, but it's going to be the accelerant in the upturn," said Buckley.
"We haven't pulled back and gone into our foxhole," he said, pointing to a new water quality initiative and efforts to build a solar business.
3M is a diversified business that sells products internationally. But Buckley said that 3M is struggling along with most other companies because the credit crisis created "synchronicity" of economies around the globe falling at the same time.
"People get so fixated over what's gone" as they react to declining sales, Buckley said. "You need to focus on what's left. So it's about gaining market share."
Liz Fedor • 612-673-7709