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3M Seeking Better Tax Rates By Moving Overseas

Company hopes to save $1 billion over the next six years by building plants closer to customers and moving some operations to lower-tax locations.

ST. PAUL (AP) â€” 3M Co. may move some of its factories, distribution centers and potentially entire business units to countries that promise higher growth and lower tax rates, company officials said.
The company hopes to save $1 billion during the next six years by building plants closer to customers and moving some operations to lower-tax locations, chief financial officer Pat Campbell said at an investors convention Tuesday.
''We think there is about a $1 billion cash opportunity for us as we get some of our supply chains cleaned up,'' Campbell said. If 3M could ''untangle the very complex supply chain in many of our U.S. operations'' and locate operations closer to its mostly international growth markets by 2012, the company could speed up its growth rate by 1 percent, he said.
Currently, about 61 percent of 3M's $24 billion in annual sales are made overseas. By 2012, 3M expects the percentage to grow to about 65.
George Buckley, chief executive of the Maplewood-based manufacturer, noted that 3M is opening five factories this year in Korea, Poland, Canada, Mexico and China.
By shifting manufacturing or distribution, 3M could slash its overall tax rate from 33 percent to 30.5 percent and shorten distribution routes between manufacturing plants and customers.
Officials said no overall revamping was planned and that any moves would be carefully considered. However, they noted that 3M's manufacturing is ''heavily weighted'' in the United States, Japan, Western Europe and other ''high-tax'' markets.
''As for (our) business unit operations (of which there are six), all are in the U.S. today. Yet half have over 60 percent of their sales from outside the U.S. So one of the things we have to look at is, should some of our business units actually be located outside the U.S?''' Campbell said.
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