George W. Buckley, Chairman, President and CEO

© 3M 2007. All Rights Reserved. 2007 3M Investor Conference

George BuckleyChairman of the Board, President, and CEO3M Company

October 9, 2007

ContinuingOn the Path to

Higher Growth

© 3M 2007. All Rights Reserved.

2

2007 3M Investor Conference

Higher Growth Is Fundamental To Our Long Term Success

1. Rebuilding R&D to improve new product flow and impact

2. Complement the core through acquisitions

3. Financing the growth through supply chain re-engineering

4. Developing a more entrepreneurial and responsive culture


3


What Has Changed Since 18 Months Ago?Early analysis quickly identified:-

The causes of slow growthThe way to accelerate it

Eighteen months ago, we told you what we were planning to do and, since then, we’ve been simply executing

We’re building the plants, doing the acquisitions, investing in R&D and fixing the things which were broken and selling those we don’t need or want

What is clearer to us now?The vital importance of the supply chain initiativeThe vital importance of 3M’s traditional coreThe power of 3M’s enduring franchises .. And how to secure themThe fact we cannot rely only on big bets (e.g., Aldara) for growthThe fact we can finely balance growth, ROIC and margin


4


Operational ExcellenceGrowthProtect and

Grow the CoreAdjacencyBuild Out

1. New Technology 2. New Products

4. Breakthrough Opportunities

(BTO’s)6. Go to Market

3. Solve Low Turns Inventory

4. Service & Quality Revolution 5. Sourcing5. Localized, Simplified

Supply Chains

1. Factory Cost Reduction

2. Control Price Leakage

6. Lean Six Sigma

3. M&A

Organizational excellence within a growth culture essential

Growth Inspired by Our Customers, Balanced with Operational Excellence


5


The Dynamics of GrowthMany companies covet growth and believe it to be the best value creatorCompanies that participate in broad markets will always, in the absence of something special, tend to the mean growth rate. Growth above market is not a rightA company cannot sustain higher growth rates than the market unless it does at least one of three things:

Creates new markets at growth rates consistent with their long term growth expectations. Saturation always happensPenetrates new segments, e.g. international or the pyramid’s lower levelsMoves to markets where the average growth rate is higher

Sustained growth above the average is therefore a very challenging goal for corporations to achieve


6


Why Growth Naturally Runs Out; Market Saturation

9%

91%

3M ShareBalance

17%

83%

3M ShareBalance

13%

87%

3M ShareBalance

24%

76%

3M ShareBalance

34%

66%

3M ShareBalance

Assume we grow at ≈ three times (10%) the market rate; here’s what happens

Year 0 Year 5 Year 10

Year 15 Year 20

Market Grows @ 3%

Market Grows @ 3%

Market Grows @ 3%

Market Grows @ 3%

Market Grows @ 3%

Market twice the size

growing @ 10%


7


Essentials of 3M’s Growth PlanRebuilding & extending the core; lowest risk and fastest results

Protect and defend the core; inventing a new futureFixing chronic capacity issuesBroaden the product portfolio to become more important to customers

Invest in the futureR&D spending increases, protecting our flanks and reengaging the labs Acquisitions, Break Through Opportunities (BTOs) and “feet on the street”

Improving supply chain speed and efficiencyShortening most of our supply chainsDriving growth by going “local” with regional brands and manufacturingReleasing working capital and lowering entropy costs and effective tax rate

Experiment with new marketsEmerging Business Opportunities (EBOs) and other adjacencies

Greater emphasis on International markets growth


8


• Seeded by small M&A• Mega Trends • Track and Trace• Minerals extraction• Oil & Gas• Food safety

Grow the Current Core Business

Build New Businesses

StrategicThrust

Complementary Acquisitions

International Growth

• Defend and extend the core• Build scale• Build relative share• Localization• Disruptive technologies• Build long term competency

• Follows core strategy• Supports adjacencies• Mostly tuck-ins• Occasional transformation

• BRICP• No country left behind

A Visual Of Our Basic Strategy


9


Core Growth Remains The First Mission

• Imagine, dream and invent• Beat competitors to the future• Plan for cannibalization• Licensing • Avoid NIH syndrome

Invent a New Future

Build Broad LongTerm Competencies

• Develop broad based long-term capabilities• Acquire supporting technology with quality brands• Build volume and scale

• Constant reinvention• Localization• Differentiation• Build key partnerships

Grow the Current Core

Extend The Core

• Build first where we’re strong• Build scale & relative share• Fill product “white spaces”• Be important to customers• Use dual branding• International localization• Local acquisitions• Private labeling


10


We Made Solid Progress in 2007Reinvigorating R&D

11% increase over 2006*Building on EBOsNew product vitality index up from 20% to 24%

Accelerated International GrowthBuilding local/regional brandsPursued profitable adjacencies

Invest in a better Supply Chain28% increase in Capex over 2006Improving local source of supply

• Korea – New respiratory facility • Poland – New optical facility • Canada – New CHIM tape facility • China – New Industrial tapes facility

Seed Further Growth in the Core via acquisitions15 acquisitions YTD

*ex-pharma, Brontes in 2006


11


Capital Spending 2001-2007

Building the capital assets to drive growth

2001 2002 2003

Supply Chain

Growth/Strategic

+25% CAGR

2005 2006

Optical and Film

Sustain

2007E

-20%CAGR

2004


Elements of Growth


13


Voice of The Market

Technology-enabled solutions

3M Technology Capability

3M’s Core Strength: Connecting Technology to Markets

NPI

Ab

Bi

Ac

Ce

Ad

Dd

Am

Di

An

Do

As

Ec

Em

Fc

Fe

Fs

Fi

Im

Fl

In

Is

Lm

Md

Me

Mf

Mi

Mo

Mr

Pe

Nt

Nw

Rp

Se

Po

Pm

Wo

Vp

Su

Sm

Op

Pd

Pr

Pp

Tt

We


14


3M’s Multiple Technology Platforms

AbAbrasives

BiBiotech

AcAcoustics

CeCeramics

AdAdhesives

DdDrug

Delivery

AmAdvancedMaterials

DiDisplay

AnAnalytical

DoDental &

Orthodontic Materials

AsApplicationSoftware

EcEnergy

Components

EmElectronicMaterials

FcFlexible

Converting & Packaging

FeFlexible

Electronics

FsFiltration,

Separation, Purification

FiFilms

ImImaging

FlFluoro-

materials

InInspection &

Measure-ment

IsIntegrated Systems Design

LmLight Mgmt

MdMedical

Data Mgmt

MeMetal Matrix Composites

MfMechanical Fasteners

MiMicrobial

Detection & Control

MoMolding

MrMicro-

replication

PePredictive

Engineering & Modeling

NtNano-

technology

NwNonwoven Materials

RpRadiation Processing

SeSensors

PoPorous

Materials & Membranes

PmPolymer

Melt Processing

WoWound Mgmt

VpVapor

Processing

SuSurface

Modification

SmSpecialty Materials

OpOpto-

electronics

PdParticle & Dispersion Processing

PrProcess

Design & Control

PpPrecision

Processing

TtTrack and

Trace

WeAccelerated Weathering

Investmentpriority

Successful new product growth builds on uncommon connections


15


FROM

Traditional mineral materials and market focus; metal finishing and wood-working

2003 OI Margin = 12%2003 ROIC = 16%2003 Growth Rate ≈ 1%

The Oldest Can Be Forever New - Abrasive Reinvention

Cubitron™

Trizact™ Super Abrasives Hook-it™

Synthetic materials and specialized applications; aerospace, healthcare, composites2012 OI Margin = 25%2012 ROIC = 45%2007 Growth Rate = 7.8%

Movement to higher growth, higher profit market zones

TO

Sandblaster™


16


3M’s Platforms Broadly Supported by Nanotechnology

Reinventing material science through nanotechnology

CeCeramics

AdAdhesives

AmAdvancedMaterials

FiFilms

NwNonwoven Materials

MrMicro-

replication

Nanotechnology

NanofabricationNanocatalysisNanocompositesNanoprocessing

Nanomaterialhardcoats

Drug DeliveryFiltrationDental restorativesWindow Film

Zirconia cubes10nm

Silica spheres75 nm


17


Rekindling the Spirit of InnovationBroad patent portfolio140 Technology Platform Experts identified and recognizedSubject Matter Expert roster published and available across 3M

Technology leadership

“Tech Time” with GeorgeMonthly meetings with CTOR&D executive leadership within every Big BTop scientist (T6/T7) advisory board

Executive support

Strengthening the innovation culture2003 R&D opinion survey highlighted job fears, time pressures, and emphasis on formal processes (e.g., Six Sigma)2007 survey shows a committed technical community, encouraged tocollaborate, freedom to focus on new ideas

Continued recognition for innovationInnovation Funding grants (e.g., Genesis, Alpha)Circle of Technical Excellence and Carlton Society recognition

3M Culture

Technical Community is getting re-engaged


18


Stepping Up The Pace In New Products – Our Vitality Index

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2005 2006 2007Estimate

2008Forecast

2009Forecast

2009 Launches2008 Launches2007 Launches2006 Launches2005 Launches2004 Launches2003 Launches2002 Launches2001 Launches

2005 Launches

($MM)


19



$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2005 2006 2007Estimate

2008Forecast

2009Forecast


2006 Launches

($MM)


20



$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2005 2006 2007Estimate

2008Forecast

2009Forecast


2007 Launches

($MM)

2007 new products expected to deliver ~33% more than historical average


21


2008 Launches


$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2005 2006 2007Estimate

2008Forecast

2009Forecast


2008 Launches

($MM)



22



$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2005 2006 2007Estimate

2008Forecast

2009Forecast



75% of new product 2009 sales expected

from products already launched 2009 Launches

($MM)


23


Towards More Impactful New Product LaunchesTools & training developed for successful launch execution; ~90%adoption rateTrained 8,000 people globally on commercialization; established Marketing UniversityEstablished a commercialization community for best practices with 15,000 membersIntense focus on top 2006 and 2007 new product introductions (NPI)

Becoming more effective in new product introductions1H2006 1H2007

~45%

Top Product Launches


24


The 3M Growth Strategy Is Taking Hold3M

LC

Rev

enue

Gro

wth

2%

5% 6%

1%

6%

03-05

8%

06-07 YTD

Acquisition

OrganicOil and Housing

Headwinds Plus a Slowing GDP in US and Asia

Increasing growth, without favorable economic conditions


New Product Success Ensures Long-Term Market Sustainability

Just Some of 3M’s NewPlatforms


26


Light Extraction PSA for OLED

OLED Glass(n=1.51)

Visible Light PhotonsITOAnode

Organic Layer

Injected Hole

Injected Electron

OLED Glass(n=1.51)

Visible Light PhotonsOLED Glass(n=1.51)

Visible Light PhotonsITOAnode

Organic LayerAl/Cathode

Injected Hole

Injected Electron

FunctionalPSA

Protective film

A Great New Emerging Platform: Optically Clear Adhesives (OCA)


27


High Performance Window Film

• Film offers IR reflectivity and the nanomaterial hardcoat absorbs IR resulting in rejection of up to 97% of the sun’s IR energy

• Tiered global launch with a new businessmodel to meet service expectations – met 100% of sales forecast in 1st year

• Established a technology platform to launch subsequent products (Prestige Safety – 2007).

Prestige and Crystalline Window Films Film + Nanomaterials

LinerPSAHPWF 875

Nanomaterialhardcoat

Superior heat rejection with low reflectivity and high visible light transmission


28


New Consumer Products Inspired by Non-Woven Technology

• New performance attributes• Natural materials• Sustainable and renewable

• New performance attributes• Natural materials• Sustainable and renewable

Non-woven


29


Benefits- Increases throughput- Reduces down-time- Improves quality- Long lasting - Lower overall cost

3M™ Trizact™ Cloth Belts

Microreplication Drives Abrasives - 3M™ Trizact™ Belts

3M™ Trizact™ Diamond Cloth Belts


30


Low thermal expansionHighly conductive

Light weight like aluminum

Strong like steel

Aluminum-oxide fibersAluminum-oxide fibers

Metal matrix(inorganic)

Metal matrix(inorganic)

Key Features:Capable of carrying 2-3x the current of conventional, steel core conductors

Compatible with existing structures

Less sag

Almost no corrosion due to:Chemically compatible materials Environmental stability

Key Features:Capable of carrying 2-3x the current of conventional, steel core conductors

Compatible with existing structures

Less sag

Almost no corrosion due to:Chemically compatible materials Environmental stability

Advanced Materials Provides Basis for 3M Aluminum Composite Conductor Composite (ACCR)


31


• Stronger, Lighter, More Versatile

• Processing Advances and Capacity

• Building Blocks for Composites, Cements, Insulation, Oil and Gas Fluids

EnhancedOil & Gas

Production

Advances in Ceramics Produce High Strength Glass Bubbles


So What Makes 3M So Resilient?

3M’s Enduring Franchises


33


First, What Not To Do…Growth First Requires Plugging The Leaky Bucket

The objective is to bulwark and defend the markets that we created, not just to grow

Push into upper middle level market

Competitors push into the lower market … we refuse to defend


34


Then What To Do…The Enduring Franchises of 3M

What similarities do Scotch tape, Post it Notes, Scotch-Brite, Trizact and many other 3M “franchise” products have?

3M usually invented the basic technologyThey serve all market segments from the bottom to the topCustomers make more money on them than we doAs the market commoditized, 3M served all segments as and when they gradually emerged, steadily building market competence and influenceThey were built up over many yearsIn developed markets they almost always began at the top and spread to the bottom of the market tier


35


A Good Example — The “Scotch Tape” Market Pyramid

Several critical elements sustain enduring market success

Scotch Tape Success:Services all market segmentsGreat aesthetic designSuperb management of price and value laddering World class service delivery Outstanding account managementWorld’s leading brandConsumer friendly technologiesCustomers make higher profits than 3M


36


Traffic Safety – Sustaining the Enduring Film Franchise

Traffic Safety Division remains globally pre-eminent in traffic signage

Engineering Grade ™

Diamond Grade ™

High Intensity Grade ™

Traffic Safety sustained the film franchise:

Moved the Engineering

Grade™ film down the

pyramid

Launched new,

innovative products for

the top of the pyramid


37


Different Strategies for Different Situations

One size does not fit all

Type

of m

arke

t Dev

elop

edD

evel

opin

g

Franchise strength

Emerging Developed

Extend the coreExpand the base

Build a presenceCreate a presence

Paint Application Solutions

Scotch-Brite™Natural Fiber

Wipes Medical Tian Tu (Second

Way) China Brand

Post-it® Notes


38


How We Think About Successful FranchisesWhere 3M typically wins: Business Success Factors

Market size Margin

Use of multiple technologies

Market structure Growth

Our best businesses fit with the majority of these factors

Small<$1B

Moderate$1-10B

Large>$10B

<10%

10-15%

>15%

<5%

5-10%

>10%

Discrete

Well-defined overlaps

Highlyinterrelated

Low

Medium

High High

Notregulated

Low

Level of regulation

Global adaptability

Single country

Trans-national

Global

Moderate$1-10B

Discrete

>15% High High

Trans-national

5-10%


39


Adhesives Films CeramicsMicro-replicationNonwovensAdvanced

materials

Tapes Automotive aftermarket Office Display Safety Dental

3M franchises

3M Technologies

Enduring franchisesEnduring franchisesare the majority of salesare the majority of sales

Technologies provide the foundation

3M’s Enduring Franchises Span the Company


40


But Franchises Must Be Constantly Refreshed

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

λ = 0.2

λ = 1

λ = 5

Time

Rela

tive

mar

ket p

ower

N(t) = Noe-λt

λ = decay constantNo = starting point

Moving down the pyramid enables enduring franchises

Industrial

Consumer

Electronics


41


Extending Our Optical Franchise

Four market elements; hand helds, monitors, laptops and LCD TVBattery powered devices favor high performance films; high performance films in plug-in devices produce better energy efficiencyUsage changes…. More movie watching on monitors drives recontentingWe anticipate the LCD TV market will follow similar dynamics we’ve seen and experienced in other markets, but played at faster speed than mostThe LCD TV market will exist for many years …. substitution not likely in high volume for many yearsAnd yes, it will see pricing pressure over time, but afterwards, stability and recontenting opportunities emergeTurbulence at the bottom of the market as new players enter and succeed or fail


42


DBEF + BEF

DBEF

BEF

Comp BEF

Microreplicated Gain Diffuser

Bead Coated Gain Diffuser

Brightness Gain

Extending Our Optical Franchise

Current 3M product focus

Looking to use film technology leadership and scale to enter all segments

Participation in all segments is essential to maintain leadership

1.6

1.8

1.5

1.2

1.4 -

1.5


43


Acquisitions

Higher organic growth results from more frequent acquisitions

Base

Growth

Acquisitions

Acquisitions are not only about bulk, but are helpful in:

1. Strengthening the base by filling in white spaces

2. May facilitate growth through entry into a new market

3. May provide a key new technology or brand

4. Fast capacity acquisition


44


The Expanding Impact of M&A

10% Increase in acquisitions in 2007 following 350% increase in 2006

18

4

2005 2006

~20

2007 estimate


45


Thoughtful Acquisitions Accelerate Core Growth

Acquisitions Enable Growth Beyond Market Averages

20%

15%

Int’l

US

14%

2006 Acquisitions*

Int’l

US7%

2004-2007 3M Sales CAGR

19%

2007 Acquisitions*

*Note: 1st year projected sales growth

Growth rate


46


M&A to Bolster Technology Portfolio: Brontes Technologies


47


Building New Businesses Emerging Business Opportunities (EBOs)

~$1B

2007

~$3B

2012

~20%

Sales (MM)

Market Center in SS&PS

Mining & Mineral Extraction

Division in SS&PS

Track & Trace

BU in I&TB

Renewable Energy

BU in I&TBBU in HCBDivision in I&TB

Oil & GasFood SafetyFiltration

• Emphasis on high growth opportunities where technical capability exists

• Consolidate related activities into a single entity to gain economies of scale and focus

• Acquisitions and additional resources provide momentum

Great start: >20% growth in 2007


48


- Films capable of concentrating sunlight 500x

- Coatings to reduce dirt build-up- Encapsulation used to limit

moisture and film degradation

Solar

- Ethanol extraction membrane- 50% less energy in distillation

- 2X throughput- Potential for cellulosic and butanol

BioFuels

- Existing coating products to improve hardness and reduce fractures in composite blades

- Protective films for turbine blades

Wind

Renewable Energy EBO

Leveraging 3M capabilities to build businesses

Ab Bi

Ac Ce

Ad Dd

Am Di

An Do

As Ec

Em

Fc

Fe Fs

Fi Im

Fl In

Is

Lm

Md

Me

Mf

Mi

Mo

Mr

Pe

Nt

Nw

Rp

Se

Po

Pm

Wo

Vp

Su

Sm

Op

Pd

Pr

Pp Tt

We


49


Solar: Distinct Segments But Common Needs

Environmental Durability: UV Stability, Scratch Resistance, Self Clean, Moisture, Sealing, Cracking, YellowingIncreased Efficiency: Improved materials, capturing more sunlight, heat management, Lower Cost: Improved cost per watt, fabrication/mfg processes, reduced weight

Flat Panel Photovoltaic

(<25 kW)

Concentrating Photovoltaic

(CPV)(25 kW – 30MW)

Solar Thermal(CSP)

(> 50MW)

Thin Film and Next Generation

(various kW)


50


IR Reflective FilmsBarrier Films

Structural Tapes, Sealants & Adhesives

Optically Clear UV Stable Fluoropolymer Films

Anti-soil &Hard Coatings

Metallized Mirror Films

Micro-replicatedLens Film

Electrical Foil &Connectors

Wavelength Selective Mirror Films

60 Years of Experience(Weathering Resource Center)

Solar: Strong Capabilities & Technology Base


International OperationsOur Largest Growth Platform

Inge ThulinExecutive Vice President, International Operations

52


International Operations

$13.6B 2006 Sales*$3.7B 2006 OI*62% of 2006 3M Total

65% by 2012

65 Subsidiaries34 Laboratories85 Manufacturing Sites

40,000 Employees99% Local Nationals

Our Largest Growth Platform

$5.4 $6.2$2.0

Latin America/Canada

Europe, MiddleEast & Africa Asia Pacific

*Excludes Pharma and special items.

53


$10.2

$11.7$12.2

$13.6

'03 '04 '05 '06

$2.4

$3.2$3.5 $3.7

'03 '04 '05 '06

International Recent Performance

PrioritiesGain share in West Europe and JapanExpand BRICPBig 3M/portfolio managementGrow at more than 2.5X IPILocalization

Revenue*

PrioritiesDecentralized organizationProductivityPrice/margin managementOperational exellence/Lean Six SigmaResource reallocation

Operating Income*

’03-06 CAGR 10% ’03-06 CAGR 15%

*Excludes Pharma and special items.

54


3M’s Subsidiary Network

KeySales & MarketingManufacturing/ConvertingTechnical Capabilities

Venezuela

Panama

El Salvador

Puerto Rico

Trinidad& Tobago

Brazil

UruguayArgentina

Chile

Peru

Colombia

Ecuador

Jamaica

Costa Rica

Guatemala

Dominican Republic

Mexico

Canada

China

Korea

Japan

Taiwan

Hong Kong

Vietnam

Philippines

Thailand

India

Malaysia

Indonesia

New ZealandAustralia

Singapore

Sri Lanka

UAE

Switzerland

Austria

Greece

Italy

Pakistan

Egypt

Kenya

South Africa

Morocco

France

Germany

United Kingdom

Belgium

Netherlands

Denmark

Norway

Sweden Finland

Spain

Portugal

Poland

CzechRepublic

Hungary

Russia

Turkey

RomaniaUkraine

East

Israel

Kazakhstan

55


CanadaCanada

Latin AmericaLatin AmericaMiddle East/Middle East/

AfricaAfrica

West EuropeWest Europe Developed Developed APACAPAC

Developing Developing APACAPAC

Central/EastCentral/EastEuropeEurope

International Growth Dynamics

ForecastedSales

CAGR

Current Sales

56


Cornerstones of International Growth Strategy









Outpace Local Economy by at Least 2.5X

Portfolio Management and Geographic

ExpansionBrand and Reputation

BuildingR&D & Supply

Chain LocalizationHuman Capital

Planning

Four Cornerstones of the International Growth Plan

57


• Customer focused Supply Chain• Capital Center-of-Gravity Shift• Financial Optimization through Strategic Investments• Improve Productivity Levels

• Recruit, Retain, Enable the Best• All Employees Aligned Around Corporate Objectives• Compensation for Performance• Leadership For Growth

• Play the Big 3M• Increase Levels of Customer Intimacy – Key Accounts• Develop and Launch Products to Meet Local Needs• Borderless Customer Success

Managing International Growth

Portfolio ManagementPortfolio Management& Geographic Expansion& Geographic Expansion

Brand and Brand and Reputation BuildingReputation Building

R&D and Supply R&D and Supply Chain LocalizationChain Localization

Human Capital Human Capital PlanningPlanning

• Margin Management• Building strategic and local brands• Government relations• Manage the brand pyramid

Cornerstones

58


& Geographic Expansion

Brand & Reputation Building

R&D & Supply Chain Localization

Human Capital Planning

Portfolio Management& Geographic


BuildingR&D & Supply Chain

Localization


Human CapitalPlanning

59


Developed Countries Most Important Today Developing Countries Accelerating

74%

26%

72%

28%

69%

31%

59%

41%

2004 2005 2007 2012

Developed Developing

60


Opportunities in Developing MarketsGrowth in Infrastructure SpendingPopulation growth and desire for basic services will fuel investment in roads, power generation and distribution and other infrastructure.

Migration of Industrial BusinessWith infrastructure in place and political stability, manufacturing migrates to developing countries in search of lower costs.

Emerging Middle ClassGrowing employment base provides increased income and standard of living.

Increased Health Care SpendingGrowing middle class increases expectations and expenditures on health care services.

3M Portfolio Meets Needs of Developing Markets at Every Step of Their Evolution

61


Geographic Expansion: PLUS

The Future Is Here And Now!!!

Vietnam

Indonesia

KazakhstanUkraine

Turkey

UAE (Dubai)

62


1960 1970 1980 20101990 2000

Brazil

India

China Poland

Russia

1950

Indonesia Turkey

UAE

Vietnam

Kazakhstan

Ukraine

Investing in our future

Deep Roots in BRIC(P)

Long-Term Focus on Developing Countries Drives Growth

63









Localization



64


Strong Brands and Market Positions

Brand Equity and Investment Shared Among BusinessesBrand Equity and Investment Shared Among Businesses

65


Strong Brands and Market Positions

Building a Regional Presence Through Acquisitions

NeoplastAbzil Industria

e Comercio

DMS ChileNylonge

Mahindra

66









Localization



67


Germany, France, UKCenters of Excellence (CoE): Automotive, Dental, Telecom, Specialty Materials, Polymers, Consumer, Oil & Gas, Drug Delivery

RussiaNew Customer Technical Center – May 2006Focus: Abrasives, AutomotiveConsumer & Office Center of Excellence

LocalizationR&D

PolandOptical Manufacture & TestMedical & Consumer Healthcare Center of Excellence

BrazilNew Customer Technical Center in 2005 Technologies: Bio, NanoSpecialty Mater ials: Hook/Loop, Molding, Non-PVC Films, Acrylic Foam Tape

Europe and Latin America

IndiaCustomer Technical Centers (New Delhi, AOEM Design Studios)Engineering Centers: Automotive, Corrosion Protection, TextilesWater filtration, fire protectionAnalytical development

KoreaAsia Display Tech Center Asia Tape & AdhesivesLabs: Nonwovens, RFID, Electronics, Energy, Nano

JapanSEMS (software)Electronics, AutomotiveTechnologies: Track & Trace, Microreplication, Liquid Filtration

SingaporeSoutheast Asia region: product localization, corporate research lab, medical productdevelopment & regulatoryElectronics, Fine Pitch Flex Circuitry, RFID, Cuno

China New R&D Center – June 2006Global Labs: HV Electrical, SMSAsia Lab: TelecomTechnologies/products: Nonwoven, Reactors, Medical, Corrosion ProtectionDisplay backlight center

Asia

68


UKUK

SpainSpainItalyItaly

Poland Poland GermanyGermany

FranceFrance

IndiaIndia

SingaporeSingapore

ChinaChina

KoreaKoreaJapanJapan

MexicoMexico

Brazil Brazil

CanadaCanada

International Supply Chain Footprint - Current

69


West EuropeWest Europe

IndiaIndia

SingaporeSingapore

ChinaChina

KoreaKoreaJapanJapan

MexicoMexico

Brazil Brazil

CanadaCanada

Central AmericaCentral America

TurkeyTurkey

RussiaRussiaEstoniaEstonia

Middle EastMiddle East

Poland Poland

VietnamVietnam

IndonesiaIndonesia

Russian Russian FarFar--EastEast

Current Supply Chain

Expanded Supply Chain Footprint

International Supply Chain Footprint - Potential

70









Localization



71



Recruit, retain and enable the best employeesSignificantly accelerate knowledge transfer to developing and emerging countriesMove resources from back-office to customer-facing and from foundational businesses to growth opportunities.

5% front-line, 8%+ back-office productivity improvement

72


3M International Summary

International growth continues to expand Developed countries will grow through penetration and market share gain Developing countries accelerating

BRICP and PLUS strategySupply chain, brand and product localization

Strategic acquisitions provide locally-relevant brands and product portfolioAll about execution starting with the customer!!!

Growth Possible in All “Corners” of the WorldGrowth Possible in All “Corners” of the World


Operational Excellence


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Financing Growth Through Supply Chain ImprovementsThe opportunity

3M’s history led to very complex supply chainsAverage time to traverse global supply chain is ~100 daysMultiple plant hops, often backward and forward across continents, is the norm at 3M→ Structure drives up inventory and working capital usage and lowers fill rates → Led to expensive, if flexible, machine tools→ Frequent machine set ups and high excess and obsolete inventory

Air freight, manual intervention and expediting are normalLarge numbers of SKUs complicate the picture, compounded by chronic capacity shortages

Goal: Make it close to where we sell it


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We Are Already Making Strong Progress

China KoreaJapan

India

Italy

PolandRussia

China Suzhou LCD II

UK

Russia Mfg

Taiwan

China Medical Mfg

China CHJ III Mfg

China GuangZhou

Korea OH&ES

Poland Optical

Poland Tapes

India Industrial Tapes

2007

2007

2007

2007

2007

2007

2007

2008

2008


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Average Distance to Customer ~3,000 MilesAverage distance to customer ~30% (or ~1,000 miles)

Capacity Adds are Reducing Distance to CustomerExample: Maintenance Free Respirators and Laminating Adhesives

From US Supplying the World

To Korea for APAC


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Our Emerging Manufacturing Footprint“Super Hub” concept

Large factories ($400Million to >$1B SVOP) and distribution centersAligned to regional and area projected sales growthShared resources and infrastructure among businesses/divisionsLocated in countries with maximum corporate and regional benefits

BenefitsShared infrastructure and resources produces:-

• Lower risk to individual businesses; economies of scale • Faster capital equipment installation and better resource utilization• Regional centers supply chain expertise

Regional ‘ownership’ with increased customer responsivenessPrincipal locations = China, South East Asia and the Middle East


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Globalizing the “Super Hub” concept

Super Hubs would produce at levels similar to Hutchinson facility


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Accelerated GrowthService, higher fill rates

A Huge Prize Remains for Supply Chain Improvements

Accelerate Growth … Drive Productivity … Reinvest

Cost reductionLabor, logistics, shrinkage

Lower InventoryWIP, FG, local sourcing

+1 point minimum,adds ~$100M OI

Minimum +1 turn,adds ~$700M to FCF

+80 to 100 bps gross margin,adds ~$300M to $400M OI/year

2012 Opportunity

$1 Billion-PlusOpportunity

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+

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Summary


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Understanding The State Of Our Portfolio

83%82%Growing > 5%Medical Supplies, Commercial Graphics, Automotive Aftermarket and Abrasives, et. al

On course

16%15%Need modificationIndustrial Minerals, Electronic Interconnect, Filtration, Optical Films

Workable solutions

1%3%Challenged Business or TechnologyPersonal Care, Touch Systems

Reposition

OI%Sales WeightCharacteristicsBusiness Type


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14.4%8.0%8%+Safety, Security and Protection Services

3.1%1.6%4-6%Electro and Communications7.9%5.6%5-8%3M (ex. Pharma)

7.4%6.6%5-8%Consumer and Office5.4%5.2%5-8%Display and Graphics12.3%9.9%8%+Health Care (ex. Pharma)

7.6%4.3%5-8%Industrial and Transportation

Incl. AcquisitionsOrganic LC* Target

Growth Targets

*Local Currency Sales Growth = Volume + Price

Organic LC 6 Qtr. Avg.


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What Have We Left Out?

For every supply chain need there is a corresponding systems need that will be gradually addressed after leaning out the supply chainSelective plant closures and mothballing in high-cost, high-tax areas with no foreseeable fill plan

No big bangs are expected

There will be a few small divestitures where we think we are below critical mass


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3M’s Long Term Business Summary

1. Growth plans in place to deliver >2x IPI

2. Commitment to double-digit earnings growth

3. Maintain >20% ROIC and premium margins

4. Moving into faster-growing market spaces

5. EBOs making good progress

6. Supply chain improvements in place to finance growth

7. Tax opportunities abound

Great opportunities remain for 3M


Our Principal Mission

Driving Growth

Economy & Finance

George W. Buckley, Chairman, President and CEO