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Innovating Toward Faster Growth 1
That said, we remain realistic about the near-term future. Let’s
not be fooled by the arithmetic magic of easy year-over-year
comparisons. Most companies, if their results were indexed to
2007, would still have a lot of climbing out to do. We are one
of them.
The challenge of accurately forecasting 2010 outcomes is
especially hard today because the growth vectors in some of the
world’s economies are in the process of turning from negative
to positive. Growth trends are always the hardest to forecast
around these turning points. While on the face of it, the gradient
turns are good news, we must remember the words of John
Maynard Keynes who said that “there can be no lasting
recovery in an economy without sustainable improvements
in end-market demand.”
So we must look to the state of the end markets rather than rely
on numerical extrapolation to tell us where the future for 2010
most likely lies. Economic conditions vary markedly from country
to country and market to market, but we observe that there are
few real signs of demand increases in most countries in the key
segments of automotive, residential housing and commercial
construction. In our view, the key to economic growth and
recovery is the creation of new value-adding jobs, and the
ultimate measure of that is the real unemployment level.
Value is not created by adding more government jobs: they
are value destroying.
There are five things which affect 3M’s sales in any given year:
1) performance of end markets, 2) creation of new markets via
new product releases, 3) transient effects in supply chain filling
and emptying, 4) market share gains and 5) X factors. Some
of these elements should be positive in 2010 and some either
a little negative or uncertain. Share gains and new product
growth should be positive in 2010; and supply chain transient
effects should be neutral or positive: and that being the case, the
blended net performance of our end markets will be neutral or