3M CEO Sees Possibility Of A Double-Dip US Recession
By Bob Tita, Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- There is a "good chance" the U.S. economy will slip into
a so-called double-dip recession next year, unless consumer spending improves
and unemployment begins falling, 3M Co. (MMM) Chairman and Chief Executive
George Buckley said Thursday.
During remarks to the Executives' Club of Chicago, Buckley said the economy is
reaching a plateau where excess inventories have been wrung out and industrial
production is aligning with wholesale and retail market demand. But if retail
demand doesn't turn higher and instead falls back early next year, U.S. GDP
growth will lose momentum as well, effectively creating conditions for another
recession.
"I actually think there's a good chance of it," he said, noting that consumer
spending remains under pressure because the U.S. unemployment rate remains high
at more than 10%.
"Unemployment is the lynch pin to the recovery," said Buckley, who was hired
by 3M in late 2005 after leading recreational boat builder Brunswick Corp. (BC).
Buckley said high levels of idle production capacity make it difficult to
predict when companies will start hiring workers again and spending more money
on equipment and buildings. Buckley, who sprinkled quotes from famous figures
throughout his address, summed up his inability to provide more definite
forecasts with a remark from British economist John Maynard Keynes who once
said: "I'd rather be vaguely right, than precisely wrong."
3M, whose products include Scotch tape, Post-It notes, furnace filters,
industrial adhesives and disposable medical supplies, raised its 2009 profit
forecast in October. The company expects to earn $4.50 a share to $4.55 a share,
well above its July guidance for $4.10 to $4.30. 3M also pared its anticipated
sales decline for 2009, predicting that sales will fall by 9.5% to 10.5% from
2008, compared with a drop of 10% to 13% forecast earlier.
Buckley said severe recession forced 3M to overhaul inefficient operations,
trim its supply costs and strengthen its management team.
"Anybody who goes through these things you'll never, ever be scared of
anything in business again," he said.
3M's stock closed the regular session down 0.71%, or 55 cents, at $77.25 a
share.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com
(END) Dow Jones Newswires
11-19-091706ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|