3M Co., confronting regulatory pressure and lawsuits that threaten billions of dollars in damages, will stop making so-called forever chemicals and discontinue their use in products by the end of 2025.
The industrial conglomerate expects to book pretax charges of $1.3 billion to $2.3 billion as it stops making per- and polyfluoroalkyl substances, or PFAS, according to a statement Tuesday. That will include an estimated charge of up to $1 billion this quarter.
The announcement marks a historic break with an entire class of chemicals — consisting of thousands of variations on the carbon-fluorine bond — that were first created in researching the atomic bomb in World War II. They helped 3M develop hundreds of different products over more than 70 years, like Scotchgard, and are now a potential liability that could reach $30 billion.
Mike Roman, 3M’s chief executive officer, said the decision was an acknowledgment of “accelerating regulatory trends” and increasing customer unease with the use of PFAS.
“When we look forward at some of those factors, we don’t see a viable business in the future,” Roman said in an interview. “This is a portfolio decision that allows us to move into other, higher growth opportunities.”
Roman said it’s too soon to provide details on whether the company will repurpose plants currently manufacturing PFAS, but he said 3M would work to find other roles for employees hurt by the decision.
PFAS is used in a wide variety of products, from raincoats and smartphones to medical devices, cars and firefighting foam.
But manufacturers are keen to find alternatives because the chemicals are almost impossible to get rid of, accumulating over time in the soil, the water and in human bodies. They are associated with a host of health problems, including cancer and liver and kidney problems.
And 3M isn’t the only company involved in litigation over the manufacture and use of PFAS. Other defendants have included Tyco Fire Products LP and Chemguard Inc. DuPont Co. and Chemours agreed to a $670 million settlement in 2017 to resolve PFAS suits filed by 3,500 people in Ohio.
3M’s exit from the category comes 20 years after management phased out an early, popular form of PFAS, known as PFOS, in 2002 under pressure from scientific studies about its potential harms. That phaseout set off a deluge of some 2,000 lawsuits that could cost ultimately as much as $30 billion or more, according to Bloomberg Intelligence.
3M’s decision to abandon PFAS manufacturing also raises questions for the companies that continue to make or use them, and for industrial applications that rely on them.
Roman said 3M was committed to working with customers to find alternative solutions.
The company currently generates about $1.3 billion in annual sales from manufacturing PFAS, according to the statement, and has a profit margin of about 16% before interest, taxes and other expenses.
3M was up less than 1% to $122.13 at the close Monday in New York, giving the company a market value of about $67.5 billion. The stock is down 31% this year, compared with the 20% loss in the S&P 500.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
