3M CEO Sees Possibility Of A Double-Dip US Recession

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

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