Minnesota

By Hugh E. Bishop

Got a bit of paint peeling? Pull on some gloves lined with Thinsulate Insulation and run out to buy sandpaper to smooth it. Wanna let your kids know where you’re going? Stick a Post-it note on the fridge. May as well get a roll of masking tape, too, since you’ll be painting the sanded area. Oops, that $10 bill is torn. Never mind, an inch of Scotch Tape will mend it.

One, two, three, four, five … just like that you’ve contributed to the success of an international business that started 100 years ago on the shores of Lake Superior.

3M, also known as Minnesota Mining and Manufacturing Company, began its life in June 1902 in the modest Two Harbors office building that now houses, appropriately, the 3M Museum. The museum, run by the Lake County Historical Society, follows not only the dramatic success of 3M, but the nearly disastrous start of a company founded on mistaken information, sunk into heavy debt, then rebuilt by innovation and creativity into an international player that posted sales exceeding $16.07 billion in 2001 from operations in more than 60 countries and 32 states.

On the eve of 3M’s centennial, the company doesn’t shy from the rocky road of its earliest years. Although its headquarters long ago moved south to St. Paul, 3M has been generous in keeping its Lake Superior history alive through support of the Two Harbors-based museum.
“3M is proud of our past and we look forward to the future,” says Cynthia Kleven, manager of community affairs for the company. “As we mark a century of innovation in 2002, it’s important to preserve the past and to use our past success as a springboard to our future. The 3M Museum is an important part of that process.”

In the early 20th century, few economic soothsayers would have predicted a 21st century survival of 3M. Its early history – multiple stumbles corrected by its founders’ unabashed “can-do” tenacity – offers a welcome happy ending and story moral for businesses facing challenges in our current economy. Success did not come easily or quickly for 3M. The fortitude to withstand near disaster accounts in some measure for the creative drive that now has the company marketing 50,000 different products to customers in 200 countries.

Things seemed bright in June 1902, when Two Harbors attorney John Dwan drew up articles of incorporation and added his $1,000 to that of other charter board members, meat market owner Hermon Cable, Dr. J. Danley Budd, the city’s leading physician, and Duluth and Iron Range Railroad executives William McGonagle and Henry Bryan.

The new company’s goal was to mine and process a mineral called corundum at Crystal Bay near the Baptism River. (This accounts for the “mining” in the name of a company known primarily for technology.) Corundum was in demand as the premier abrasive for grinding wheels, sandpaper and other items to polish, shape, sharpen and decorate items produced by America’s increasingly industrialized economy. This new source of corundum was greeted jubilantly; the only other North American source was in Ontario.

“The material (corundum) is there and its worth has been proven. The market is adequate for all that can be produced,” a local newspaper enthused when 3M made its first one-ton shipment the winter of 1903-04. That would be its only shipment of the mineral.

The problem – one that surfaced after the company had incurred a large start-up debt – was that the corundum was not there on Lake Superior’s Minnesota north shore. What was there was anorthosite, useless as an abrasive. So within a couple of years of its founding, 3M had tons of mineral for sale, no customers and was all but bankrupt

By the end of 1904, even before the discovery that its “corundum” was not corundum, the indebted company faced a grim future. 3M’s stock – these days hovering at $111 a share on the New York Stock Exchange – back then earned a “barroom exchange” of two shares for a shot of rotgut whiskey. Early 3M investor Edgar B. Ober of St. Paul contacted Lucius P. Ordway, co-owner of a large St. Paul plumbing supply company, for financial help. Ordway agreed to obtain 60 percent of the company by advancing $14,000 for debt payment, financing a plant to make sandpaper and supplying working capital. He, like the others, believed the Crystal Bay mineral was corundum.

With Ordway’s backing, the company emerged. An expert was hired to run the sandpaper plant located in an abandoned Duluth flour mill. Imported garnet and emery were used as abrasives. One year later, orders averaged $2,500 per month. But expenses were $9,000 a month.
Once orders came in, the plant switched to the Crystal Bay “corundum” for its sandpaper. A weak abrasive wasn’t the only problem. Humidity at Duluth’s waterfront led to uneven drying of the adhesive that bonded abrasive to backing. Quality control was nearly impossible. Inferior sandpaper resulted in a marketplace disaster as customers demanded that the company make good. Finally, everyone in the company agreed that its “corundum” was worthless.