Good morning. Thank you for joining us. I'm Bruce German, Director of Investor Relations for 3M. We really appreciate everyone joining us here in the room this morning, and also to those that are joining us via the webcast. One thing I just want to make sure you're aware of, we are currently having some technical challenges in this room with accessing the internet. The instructions to access the internet are on the backside of your badge, and we'll let you know as soon as we get it fixed. For those that were with us last night, hopefully you found that very engaging, having the opportunity to engage with many of our business leaders in sciences across many of our growth platforms. Also, hopefully you had the opportunity to engage with many of the leaders that you'll see today presenting.
Before we begin, I just wanted to highlight the dates for our earnings conference calls next year so you can get those on your calendar. January 29th, April 25th, July 25th, and October 24th. Here's a lineup of today's presenters. We'll start with Mike Roman, our Chief Executive Officer, and wrap up the day with Nick Gangestad, our Chief Financial Officer. In between, you'll have the opportunity to hear from Mojdeh Poul, Mike Vale, Joaquin Delgado, Jim Bauman, and Ashish Khandpur. Here's a formal agenda, just so you know from a planning perspective. We will take a break about halfway through, about 20 minutes. We'll leave time, obviously, at the end for Q&A. Wrap up no later than noon. If we are running ahead of time, we will stay on track and finish early.
For those of you that are able to stay with us, there is lunch, that our leadership team will be joining you. If you do need to get off to the airport, we'll have buses running as soon as we wrap up. The last bus will depart at 2:00 P.M. Finally, before I turn it over to Mike, just draw your attention to slide four, our forward-looking statement. During today's meeting, we'll make certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions. Also, please note that throughout today's presentations, we'll be making references to certain non-GAAP financial measures.
Reconciliations of the non-GAAP measures can be found in our press release and in the events and presentation section of our investor relations website for today's event. Now I'd like to turn it over to Mike Roman, 3M's Chief Executive Officer. Mike, thank you for your time.
Thank you, Bruce, and good morning. Welcome, and thank you all for being here. I also want to thank everyone who was able to join us last night. I hope you enjoyed the reception. I hope you had a chance to get a deeper understanding of 3M through our Priority Growth Platforms, and I hope you had a chance to get to know our team better. It's important for us that both of those deepen your understanding and hopefully help your confidence in where we're headed as an enterprise. It's my pleasure to kick things off this morning, and I'm going to start with the meeting highlights. I'm going to spend some time talking about our 3M Value Model, what it is that we do that makes us unique among companies and differentiates us in our marketplace.
I'm going to spend the majority of my time talking about the four strategic priorities that will deliver value for our customers, returns for our shareholders, set us up for success over our Five-Year Plan, and position us well as we go into 2019. Portfolio and Portfolio Management. We've made a lot of progress and accomplished a lot, there's more to do, and we'll talk about the actions that we'll drive. Transformation, how we are taking advantage of the deployment of our Business Transformation, the success we've had to date, and how we can utilize that to enhance our customer experience and create greater value for 3M. Innovation, you saw examples of that last night, how we're accelerating Priority Growth Platforms. I'll talk about how they fit in our Innovation Strategy. What are they as part of 3M Innovation? What else are we doing?
People and Culture. People are behind everything we do. Everything that differentiates us starts with people. I'll talk about the priority we have for focusing on developing our people and continuing to advance our culture, make 3M the place that people want to be. We'll introduce a balanced and disciplined approach to capital allocation. I'll give a brief overview of it. Nick's going to go into it in quite a bit more detail. We'll come back and announce our financial objectives as well as our outlook for 2019. I was asked, what are my goals for this morning? What am I looking for? I would say, I certainly want you to have a deeper understanding of 3M. Again, what it is that we do that's unique among companies and differentiates us.
I'd like you to gain some confidence that we're focused on the right things, the priorities we're driving, that you have confidence that they are creating that value, and that they are the focus for the future. I also like to have confidence in this team. You got to know them last night. You'll hear more today. I would like to come away with more confidence in our leadership as we move ahead. I thought I'd just say it right up front. We are going to be talking a lot about our Five-Year Plans and objectives, but we understand being successful in the future over that Five-Year Plan means we have to be successful in year one. I want you to know we're focused on 2019, and actually, that starts right now. It starts in Q4 2018. We are committed.
This leadership team, we're committed to delivering on what we laid out for you in our Q3 earnings call. We're on it, as we talk about the future, we're on it, and we're setting ourselves up for success as we move ahead. These are the three things I'm going to spend time on. I'll go into that value model, help you understand that uniqueness of 3M, dig into each of the priorities, I'll come back with the financial objectives at the end of my part of the presentations. This is our value model. This links our vision, our fundamental strengths, our priorities that we're driving, and our values as a company. It incorporates our playbook. It is what's behind that unique and differentiated value that we create.
I want to walk through each part of this value model to help you see how it fits together. It starts with our vision. You saw it in the video. This vision resonates deeply with 3Mers. It's about what we get up every day looking to do, advance and enhance and improve. It's about how we do it, with our technology, our products, and our innovation. It's about where we do it, for our customers, and aspirationally, every company, every home, every life. It is what drives us as we look to the future. Looking at our strengths, this is a view that I introduced last year at the Investor Outlook meeting in December. I talked about the power of 3M, trying to talk about how we connect our fundamental strengths to customers. Our fundamental strengths are at the heart of this.
It's our technology, manufacturing, global capabilities, and brand. There's depth and substance to each of those. They are what defines us as an enterprise to be greater than our sum of our parts. It came out of our deep understanding of what it is that differentiates us in our performance across every business in our enterprise. It really reflects how we're linked together in our portfolio, even though we might be in multiple markets. It's about our technology, not just technology that's innovative, but has deep intellectual property supporting it, and technology that is combined, multiple technologies that enable us to do unique things in our customers. It's about manufacturing. Manufacturing that's differentiated, manufacturing that's in-house in 3M, that leverages intellectual property.
A third of our intellectual property sits in manufacturing, much of it in trade secrets, enabling us to deliver higher quality, better performing, more competitive products in the marketplace. Global capabilities is more than just presence in international, long presence in international. It's the ability in our international organization to execute successfully those business models that enable us to go to all those markets, to take those fundamental strengths and applications into many markets. It's our brand, 3M, science applied to life, and how that adds value in every one of our businesses across all of our markets. This power of 3M is about how we've really leveraged those fundamental strengths. It starts at the customer. We engage our customers. We understand their processes, their problems, their promises to their customers. We bring our technology to them. We bring combination of technology to solve their problems.
We bring a deep domain expertise. We deepen it when we work with them. We often identify unarticulated needs. They don't even know the solution that they're looking for. We can help them with that. We can apply our technology, create new innovative platforms for growth for 3M and solutions for our customers. Our priority growth platforms are an example of what comes out of that. We leverage those fundamental strengths so that it's differentiated, sustainable. We can leverage that over long cycles. I'll talk about how that occurs in our innovation model. We keep a focus on our end users. We talk about how a majority of our products, our revenue, are specified or regulated. Specified, designed in at the customer, or regulated in demanding specific performance and requirements.
That focus carries us through multiple commerce channels, distribution models, direct models, retail models, and increasingly, e-commerce. We keep that focus on the end user, making sure we're in a position to deliver that value where they want it, when they want it, how they want it. That end user focus, that customer first mindset, enables us to create those competitive advantages in how we serve and work with our customers through all those different channels. Here are four priorities I'm going to talk about. I'm going to go into these in quite a bit of detail. The first three, portfolio, transformation, and innovation. A number of questions last night of what are we going to see that's different? These are right out of our playbook, coming from our levers.
The foundation we built in the playbook enables us to see where we can go, accelerate into the opportunities in each of these. I'm going to talk about how we are driving actions to do just that. We have a fourth priority which touches everything we do, people and culture. How do we develop our people and advance our culture? Putting a focus there is going to be critical. In fact, we think of it as what drives the other priorities. It's really foundational to everything that we do. Our values. They're at the foundation of this value model. What we expect of our leaders, the behaviors we expect them to exhibit.
We have world-class leadership development efforts that are reaching many more and more of our leaders across the world, really building this into our leadership and our leadership expectations across the company. Our code of conduct is really what it means to be a 3M-er. Last month, I joined our global compliance day. I talked about the importance of trust. Trust from our shareholders. How great companies are built on trust. Trust from our customers, trust from our shareholders, trust from our business partners, trust from our employees, trust from the communities that we're part of. This code of conduct is about trust, building trust with those stakeholders. That no 3M-er should be taking any opportunity to compromise that trust. It's about being 3M across every 3M-er.
On the right-hand side of our values, you see the priorities that we're focused on continuing to take forward into the future. Inclusion, how do we become the most inclusive enterprise that we can be? It's about attracting talent around the world, top talent around the world. We've made great progress in inclusion. We've been recognized with awards for what we've accomplished in becoming a more inclusive enterprise. There's more to do. We've got much more to do as we move ahead. That leads to a much more diverse 3M, a stronger 3M, a more creative 3M, a higher performing 3M. In our values, we have a special focus on sustainability. I'm going to talk about this in more depth later in my presentation, but it is at the heart of our innovation.
What we do in sustainability is what we do in our operations, it's what we do across our enterprise. I'll talk more about that. We have a value of putting a focus on the individual, respecting, encouraging, and challenging everybody in the company to be the best that they can be. Building a culture that enables that, being the best that they can be in their individual careers as part of a team, and really as part of the entire enterprise. These values are really what enables us to drive that value model sustainably into the future. I'm going to turn over and talk about our priorities. I'm going to start with two of them. These two are our portfolio and transformation, are going to be critical for increasing customer value and shareholder returns.
I want to focus on these right up front and talk about what we're doing to action them. Let's start with portfolio. Back in 2012, we introduced a new framework for thinking about portfolio management, looking across the whole portfolio. Thinking about strategic attractiveness, relative strategic attractiveness in our businesses, relative financial attractiveness in our businesses. Before this, we had acted on portfolio. We had spun off a division in the '90s. We had divested our pharma business in the aughts. We had turned around businesses. We had our abrasive business. A decade ago, our abrasives systems business would've been in the lower left-hand corner of this relative attractiveness. We reinvented it. We invented precision engineered abrasives, game-changing technology for abrasives. It's leading us forward in the market. Now this business is a heartland business with accretive growth and value for 3M.
We've acted in our portfolio, we didn't have a way to act comprehensively across the portfolio, not to think about it with the rigor and discipline around how to maximize value in the enterprise. When we brought this frame forward, it gave us a much clearer focus of how to think about that across all of our businesses. We identified heartland businesses, our core, those darker blue bubbles up in the center, strategically connected to 3M and important to leading our financial performance as we moved ahead. We identified push-forward businesses, those opportunities for prioritizing investments as we moved ahead. We actually called out three global push-forward businesses to really prioritize everywhere around the world. We put a circle, I guess it's kind of an ellipse today, it was a circle around strategic review.
$2.5 billion of businesses, good businesses, but dilutive to 3M, being deprioritized kind of methodically around the world. We said we've got to think about creating a process for how we're going to act on those businesses. I was part of the leadership team that built that process to think about how to be an active portfolio manager. We developed some rigor. We developed some evaluation steps. We really looked at different options, and we acted. Are we doing the right thing? We keep the business the way it is. Should we invest in it? Maybe we're just under-investing in these businesses. Should we fix them? Is there something we should do differently? Combine them? You saw the outcome of some of that, combining it into businesses where we could create greater value and relevance.
Maybe we should harvest it or even shut them down. Maybe we should divest or spin. We had a number of options to evaluate, and we acted on that. We went from 40 to 23 divisions, combinations to create value and relevance at the customer. We completed more than 10 divestitures, representing $1.1 billion in revenue and $2.1 billion in proceeds. We also fixed and exited, or exited a number of businesses, some product categories globally, some on a regional basis. I'll talk about examples in our West Europe business a little later on. We leverage this approach for some of our business groups, starting with Electronics and Energy, and really reshape that portfolio. Ashish is going to talk about that journey that we've been on in Electronics and Energy, and how it has reshaped that portfolio and repositioned it in such a strong way.
Safety and Graphics, you heard over the last couple of years, the outcome of the work in portfolio there, how that positioned that business to be the next breakout business for 3M in terms of growth and performance, in terms of value and cash flow and margin. We are leveraging this discipline and taking action. That's the foundation we start from, but there's more to do. We're building a sharper focus. We've developed a deep understanding of how to leverage these fundamental strengths. We start there. We think of strategic attractiveness and how we do take advantage of those fundamental strengths, the greater than the sum of the parts foundation that we have. On financial attractiveness, a sharper focus, it's about markets, attractive markets, higher growth, higher value markets for our innovation.
Of course, it's about financial returns, growth, profitability, Return on Invested Capital. Where can we maximize those kinds of value creators? We have, I think, a clear view as we move ahead too. Our portfolio framework for 2018, as we think is the foundation of our plan. If you look at this, we still have a very clear view of our heartland businesses. This portfolio that you see today, it's moved up into the right based on the work that we have done in that previous portfolio. It's not the same scale as the previous version I just showed you. We're up and to the right. These are all very good businesses. It's important to understand relative strategic attractiveness and relative financial attractiveness and make sure we're prioritizing the right ways and acting in the right ways.
I'm going to talk about the actions. We've identified additional opportunities in push forward. We are thinking about review much broader. It's not about strategic review anymore. It's about reviewing our entire portfolio on an ongoing basis, looking at how we can maximize value across our enterprise in that value model. What are we doing? In order to fully leverage that 3M value model, there's several actions that we're driving. First of all, it's about organic growth. How can we, in our portfolio strategies, drive greater and more valuable organic growth? Clearly, it's about prioritizing areas like our heartland and push forward businesses, where we get accretive returns. We continue to shift and prioritize resources, people and capital to drive those higher value parts of our business.
We expect to grow our heartland businesses faster than their markets in accretive performance to the enterprise. We want to increase scale and push forward businesses. They're kind of the business version of priority growth platforms. They're ready to scale. We want to increase investments, make sure that we're driving that. That really is an enterprise focus kind of strategy. On M&A, we've learned that we can create differentiated value leveraging those fundamental strengths. Our most recent acquisitions have performed very well because we've been able to leverage those fundamental strengths so well. There's other reasons as well that I'll get into, but that's critical. We continue to look at our portfolio as the guide to where we go with acquisitions in the future.
We want to add businesses where we leverage fundamental strengths, where we can leverage that market attractiveness, where we can build a leadership position through acquisitions. We also see opportunities in our pipeline to enable those priority growth platforms, enable the organic growth with acquisitions. It's not just about acquiring growth and bolting on a business. It's about bringing in and integrating a business into 3M that creates differentiated value, leveraging that same value model. That's the strategic approach. That's the discipline that we take into our acquisition. As I said, we're thinking about review more broadly, thinking about how do we maximize value across all of our portfolio. It's everything from redesigning and optimizing our business models to thinking about strategic options.
Whether it's a divestiture or other strategic options, what can we do to maximize value in our portfolio and look across broadly in our portfolio? I want to talk about that first priority. I'm going to talk about it in the context of our capital allocation plan. Nick's going to come back and talk about this in more detail. We have a balanced capital allocation plan that starts with the first priority of investing in innovation and organic growth. You see 30% of our capital allocation is targeted towards R&D and CapEx. That 3M model of 6% to sales in R&D and 5%-5.5% in CapEx, that 11% that is behind building those fundamental strengths, it's the golden nugget at the center of the power of 3M. It's what enables us to continue to remain differentiated and unique in our marketplace.
It is our first commitment in our capital allocation. Nick will talk about our view on where we allocate the dividends and more flexible deployment when he comes up later in the morning. Thinking about M&A, maybe going a little deeper into this. We've built some success since 2012 in M&A. We've acquired 12 companies, $7.7 billion in value. We came up with a strategy of fewer, larger as we went through that period of time. What does fewer or larger mean? We were coming off a period of time where we made more than 60 acquisitions, typically much smaller. Bolt on to our businesses or to our regional country businesses around the world. That created value but didn't leverage our fundamental strengths.
We recognized we also didn't have the capability we needed to integrate businesses successfully into 3M, often leaving them as standalone small businesses across our portfolio. Fewer and larger was this idea of acquisitions like we've been doing. We've made a number of acquisitions in that $1 billion-$3 billion range that leverage our fundamental strengths that can really take advantage of the uniqueness of 3M. We also, in the process, have built an integration management capability that is an incredible strength for us as a company as well. It's enabled us to perform better and better with these acquisitions. Our most recent acquisitions are outperforming our expectations, the fundamental strengths alignment is part of it, but it's also about our ability to integrate and optimize, and leverage all our capabilities on productivity and efficiency improvements.
We've acted as a result of that, now we point at the future and we say, "Where do we go next?" We've identified priorities in our portfolio. When you look at that relative attractiveness portfolio, we're prioritizing in Health care, Industrial, continue to prioritize in Safety and Graphics. We're active across all five businesses. We expect opportunities along these strengths to be across all five of our business groups. We also continue to pursue and build opportunities around acquisitions for those priority growth platforms to enable greater and greater opportunities there. We will leverage our fundamental strengths as we move ahead. We will remain disciplined in driving that strategy and that thinking as we move ahead. That integration management office is a strength that we can count on to deliver on our models and our value as we go forward.
At the heart of it is Lean Six Sigma and our ability when we integrate to leverage not only the value model, but the Lean Six Sigma capabilities to maximize performance of businesses as part of 3M. Some examples of thinking about a broader approach to portfolio and maximizing value, thinking about reviewing our businesses more broadly. The first one is an example, now almost two years ago, we went out quite publicly and looked at exploring a range of strategic options for our Health Information Systems Business. This is a business that performs very high in relative financial attractiveness, not as connected to our fundamental strengths. We looked at it and said, "Are we maximizing value with that business in 3M?" We evaluated strategic options.
Out of that, we decided to keep the business, that we were the ones that will maximize value. In fact, we didn't decide just to keep it, we decided to invest in it. You saw last night, those of you that had a chance to see the health information priority growth platform, some of the now outcomes that are coming from that decision to increase and invest. We're building out on our leadership position in that business and moving into new spaces, and we're excited about the growth we're seeing and the growth to come. We have divested businesses, including most recently our Communication Markets division. This was our largest divestiture to date out of this kind of rigor. We explored how to maximize value in that business. It was a good business.
It was in that lower left-hand relative attractiveness quadrant, a good business, but dilutive to 3M, and it was being deprioritized. We were not serving it well. While we looked at ways to manage it better inside of 3M, we realized we could maximize value by divesting it to an owner where. Where they're going is they're actually in the heartland core. They're going to be part of the priority investments in the company that they're being integrated into. That decision to divest maximized value for that business and for 3M as an enterprise. Something maybe less visible to you, we've recently announced a new business model for one of our core businesses that we've had in our portfolio for a long time. What we call our closure and masking systems.
It's really our industrial masking tape, our industrial box sealing tape, and our closure solutions for the personal care applications, typically diapers. It's solutions for closing diapers. These have been core businesses for 3M. They've been part of our Industrial Adhesives and Tapes Division. We looked at how do we maximize value. They're dilutive in margin. They have strengths behind them. They leverage fundamental strengths in global reach and in our brand. They certainly leverage some technology, and I'll talk about masking tape in particular, how we continue to develop line extensions off of that. We realized that we weren't maximizing value for the enterprise.
By putting it into a separate global business model, pulling it out of that division, pulling it out of a country-based kind of management, and managing it on a global basis with the go-to-market model and the customers on a global basis, we could grow with the markets and maximize our cash flow out of that business. That we were the best owner, that we were going to create more value doing that inside of 3M than divesting it outside of 3M. We're excited about where we can take this, and it's a good example of how we can be active portfolio manager inside of 3M. Kind of summarizing portfolio management, great progress with what we established in 2012 have been executing against, realigning and consolidating businesses. It's really the way we reshape the company.
How we're prioritizing businesses to the greatest value creators in our portfolio, what we're doing to acquire businesses and build that portfolio in the right places, and how we are thinking about a disciplined approach to review businesses in our portfolio. As we go forward, this is a place where it's not just about more to do, it's about much more to do and about accelerating into the future and really driving greater and greater prioritizations. Prioritization's really difficult work in a company. Shifting resources, reallocating, managing that effectively, managing the changes around it. Realigning resources to our highest priority is. We're accelerating into that. Increasing our investment in M&A. Nick's going to talk about the flexibility in our capital allocation plan.
We can step into acquisitions, and we'd like to prioritize this as a way to create additional value in our portfolio, augment that organic growth that's at the heart of 3M. We will execute portfolio actions to maximize value for our enterprise and our shareholders. That's our commitment. We are going to be stepping in and continuing to be an active manager of maximizing value across our portfolio. More to do, much more to do in portfolio. Let me turn to transformation. We have made great progress in our business transformation journey, and now we're looking at how not only do we continue to take that forward, but how do we activate our transformation advantages. We talked about our commitment to deliver value in terms of incremental income and more efficient working capital as part of our journey, but where can we go next?
We're very proud about what we've accomplished, and we now successfully deployed our ERP across 70% of our global revenue through Europe and in the U.S. We've, in the process, simplified, standardized, and redesigned our processes. We've taken a lot of the complexity out of our front end of our business in particular. We streamlined our end-to-end engagement with customers, making it easier for them to engage with 3M. We've created value through new service models. That value creation, those targets that I talked about, much of that comes from these service models. Our global service centers managing our back office transactions, our marketing and sales organization that supports the front-facing parts of our businesses and manages efficiently all of the operations as part of that, and our centers of expertise across the world for our supply chain, centralizing and managing efficiently and effectively our supply chain.
We've got that foundation. We've accomplished a lot. We've got more to do on the transformation, but we also can see much more that we can do. What's next? We see an opportunity to really take advantage of our transformation and drive even greater service for our customers. It's a focus for us. They have to see this. They're going through the transformation with us. They're working through the changes with us. There's got to be a big opportunity on the other side of it, and service is a big part of it. Many of our customers, as we increasingly have more lights out order processing with our customers, they're seeing that. They're seeing our business communication improve. We've got to make sure we take that across all of our customers and really take advantage of the capabilities we now have.
We think we can increase value creation. It doesn't end in 2020. I'm going to talk about how we think that builds into what we can do as we go through the five-year plan. We're deploying and we're learning at the same time how to leverage our ERP capabilities. Greater leverage of that, really getting in and optimizing that for each of our business models, an important part of that. We are, as I said, still have deployments left in our journey, and we are taking stock of what we've learned. We've gotten better each step of the way. We recover quicker, we deploy more successfully, we can do more to streamline those deployments, enable greater flexibility in making changes and enhancements as we go. It gets into project management, it's an important part of driving success for us as we go forward.
The visibility we get on data is really raising our expectations and opportunity around data science and analytics and applying that in supply chain, in our businesses, in our go-to-market models. Really driving into those. These can create value. They'll create much more value for our customers as well. An example of where we are taking advantage of that and targeting specifically to really leverage that, it's improving our operating income and margins in Europe is where it shows up. We made a commitment to you that we would take our West European businesses to 20% operating income by 2020. They're dilutive today. They're our lowest margin region of the world, business transformation is foundational to doing that.
We, leveraging those service models that I talked about, leveraging those to create greater efficiency in West Europe, reshaping West Europe around those capabilities, not just moving to more efficient service models, but automating and really driving automation into those. We also are taking advantage of our capabilities through business transformation to think about relevance to the customer and efficiencies. We've been regionalizing our European operations. We've reduced the number of operating units by half, taking advantage of where we've come in business transformations. It's similar to what we were doing in portfolio with divisions going from 40 to 23, creating value and efficiencies, relevance to our customers, really putting our efforts into what's most important to our customers. It's better leverage and scale of our operations.
All with this focus on the customer, streamlining our engagement with the customers and creating that value as we do. Our goal to get to 20% operating income is not just built on business transformation. We're acting on portfolio. This is one of those examples where we're taking a regional view of portfolio. Looking at how do we maximize value for West Europe. We've worked on, through this year, and we talked a little bit about it, as we look at where our West Europe growth in particular is in the range that we guided for. It's at the lower end of the range. Part of it is because we've been exiting some of the businesses in West Europe, some of the product categories. 2%-3% of our West Europe revenues are being exited as part of this portfolio action.
It's giving us opportunity to redeploy, along with those service models, redeploy to higher value, higher growth opportunities within our West Europe portfolio. We're also, as you know, driving a strategy around footprint optimization. Nick will talk a little bit about this, where we are in that overall strategy. We talked upfront about investing $500 million-$600 million to really optimize our footprint, consolidate sites across our footprint. Look, focus on about 10% of the sites in our footprint and delivering $125 million-$175 million of incremental income and working capital improvements as well. Where are we on that, the journey? Nick will talk about how far we are overall, but the impact on West Europe has been significant. We've reduced the number of manufacturing locations in Europe by a third through this strategy, and that's going to enable greater and greater performance in our portfolio and our profitability.
They're benefiting also in that process from what I'll talk about later, the investments we're making in disruptive technology and how those help us drive productivity, efficiency, and performance for our customers. Together, we are on track and really clearly focused on taking West Europe performance to that next level through 2020. This transformation journey now puts us in a position that we can see over the five years that we can create even more value. You'll see it from Nick in detail, we're laying out 200-300 basis points of margin expansion over the five-year plan. Business transformation is a critical driver of this, what we're able to do to take advantage of business transformation. It starts with new product innovation, still critical to continue to drive margin improvements.
We talked last night about, how do we see your success with innovation, your return on investment in R&D, that it's working? That's really driving growth. Where do we see it in growth? Where do we see it in your results? It starts with margin. If you're an innovative company, the first place you see it is in margin. You get differentiated value in your markets, you get rewarded with that in your price value. You see it in margin. It's part of this margin expansion as we move ahead. It's not just leverage of greater growth, it's really that innovation being differentiated. Our footprint optimization is part of it, our disruptive technology is enabling part of it, and at the foundation is Lean Six Sigma. We've got more to do in Lean Six Sigma.
We've been at this for almost two decades, we keep building more and more capabilities focused on really driving Lean, focused on cycle times, focused on creating efficiency, leveraging business transformation. A big part of our Lean Six Sigma focused on that as well. Together, these give us confidence that we can continue to expand our margins as we grow and outgrow our markets moving forward. Let me turn to innovation. You saw a lot of this last night with our Priority Growth Platform. I want to talk about our proven ability to extend our innovation value over the long run. I want to talk about really three ways that we do that and how they fit together. It starts and it's often very visible when we bring disruptive technology solutions to our customers and create new disruptive businesses.
They can create large businesses for 3M. This is very visible when you see this in our history. As you move forward, you see us creating these businesses. It doesn't stop there. We are a line extension machine. When we have a platform of products and technology, we're close to our customers, we see their needs, we continue to advance. We improve our products, improve their performance, improve their quality, shift even into new applications and markets, extend their reach, and we create line extensions over a long period of time. Then we build priority growth platforms off of those same disruptive business foundations, those technology platforms that we created. I don't show it here, but behind this is that periodic table of technology that we have often multiple technologies combining to create these disruptions.
They also enhance those platforms, deepen them, and position them to be used across many more businesses and product categories. It's that shared technology. Adhesive shows up in a majority of our products across the company. Big ways, small ways, but always innovative ways. Nonwoven in a big portion of our portfolio. Films, big portion of our portfolio. It's that expansion and sharing of technology that really drives innovation. It keeps us interconnected, and it builds that set of fundamental strengths and that greater than the sum of parts portfolio of businesses. One example, top row, adhesives and tapes. We invented masking tape a long time ago. That masking tape portfolio got us into tapes and pressure-sensitive adhesives, and we've been extending masking tapes ever since. Now, we have a new model for managing industrial masking tapes, but we continue to extend our capabilities into many markets.
We have new high-temperature masking tapes for applications where masking tape never went before. We have ScotchBlue innovations every year improving our portfolio for consumer customers. We didn't stop there. We used our knowledge in tapes and adhesives to then launch new platforms. Acrylic foam tape is a platform that, to this day, continues to grow mid to high single digits. Very valuable part of the portfolio. A new approach to pressure-sensitive adhesives, foamed adhesives, adding new capabilities, gets us into automotive. It's why automobiles started to perform better under corrosion. They were using high bond acrylic foam tapes to assemble the automobiles. It doesn't stop there. It gets extended into electronics and broad industrial, and even consumer applications.
The next platform, laminating adhesives, takes some of the capabilities we built in acrylic foam tape, builds a new platform, thin laminating adhesives, taking tape where it could never go before, into very application-specific opportunities, electronics, again, broad industrial applications. Now we're introducing tapes and building off our capabilities in silicone-friendly tapes for healthcare. You saw examples of how we're already extending that in wound care last night. You see the silicone-based dressings, taking that into broader and broader applications. Line extensions, new platforms of capabilities. Most recently, optically clear adhesives, leveraging what we've learned along the way. Those priority growth platforms are really the way we take advantage of that foundation that we started with.
Those priority growth platforms, to help you get a frame for that, the ones you saw last night are the priority growth platforms that we see coming along and at the point of scaling or ready to scale or even in the process of accelerating their growth. We make many bets in these new platform areas. Lots of small bets. We can manage lots of small bets. The key with priority growth platforms is then identifying them at the point that we need to scale them and making the right investments. Disruptive innovation at the core, line extensions everywhere, and priority growth platforms to launch into new businesses and new markets and new areas. Nonwoven started with respiratory protection. It continues to extend lines. We're a leader in the industry and continue to innovate and create better and better performance off it.
It led to Thinsulate thermal insulation, Thinsulate acoustic insulation. Now our category-leading Filtrete brand filters. Joaquin's going to talk about some really great innovation in that space. It's part of what you saw with our pharmaceutical filtration. We incorporate that in, leverage our own technology along with Membrana technology and build new solutions that nobody else can bring to pharmaceutical filtration. You know the story about multi-layer optical films and how that's been a foundation for us in electronics and energy. Ashish is going to talk about that journey. It's not stopping with displays, it's moving into solar films for windows and then taking window films to the next level of performance, and it's part of our automotive electrification and where we go with our glass films. We have high-performance fluids. You saw some examples last night.
Started with fire suppression, cleaning, coatings, now into immersion cooling, again, part of our automotive electrification platform and building for the future. Disruptive business innovation, we focus a portion of our 6% to sales and R&D and that capital investment on disruptive business development. We focus part of it on the line extensions that come off of it, and we focus part of it on that priority growth platforms to make sure that we're scaling those next big opportunities that we have. At the heart of it is technology shared across the enterprise. You can start to see how this is part of the enterprise being much greater than the sum of our parts. We leverage this shared across the enterprise. You saw the 12 priority growth platforms, the folks that were with us last night, anyway.
You'll hear more about these today. Each of our businesses are going to spend some time on it, talk about it, I hope you get a very good understanding of how this fits into that overall innovation model. I said I wanted to come back and talk about sustainability, advancing sustainability for 3M is a priority for us. It's not just for 3M, it's for all of our stakeholders. For our customers, they're demanding it. For our shareholders, they're demanding it. For our partner companies, they're demanding it. For our communities, they're demanding it. It's at the heart of who we are. We have a long history of being a leader in sustainability. We've been a leader in Pollution Prevention Pays program for many decades, we've always been a leader in our markets and our industries and our businesses.
We have goals for 2025, what we're going to do to reduce the impact on energy and climate, not just what we do in our operations, but how we help our customers. We have goals around waste and raw materials and reducing the waste, and landfill waste in particular. We're reducing our use of water and helping our customers do the same. We're improving health and safety and helping our customers do the same. We're focused on education and development. It's broader than just environmental and health. It's really about people, a focus on people. In our value model, these are the things that we do. They're part of our value model. Operational environmental health and safety, EHS. Its first priority in our supply chain leadership is around EHS. With that, we have a leadership focused on environmental stewardship.
How do we make sure, as a broad enterprise, that we are being a great environmental steward? We have sustainability inspired in our innovation at the grassroots. I think those that talked to some of our technical people last night, you heard it. It comes through. You're not innovative if you're not doing it in sustainable fashion, really making a difference in multiple ways. You'll hear from our businesses, there's a strong business case for doing this, and you'll see great examples of just that. With that comes product stewardship, thinking about not only product and responsible development of products, but life cycles of products. And to be a leader in sustainability, there's a challenge that you have to be thinking forward. You have to be looking years ahead to understand what the expectations are going to be in the future.
Not just the regulations of the day, but what the expectations are going to be in the future, and what you need to do to lead into that. You've got to be aspirational around it. Diversity and inclusion is an important part of this. Thinking about sustainability as an enterprise in our business models and our partnerships, we have to be thinking about how do we lead in inclusion, not just for keeping 3M as a place to be to attract talent, but in partnership with our customers and our business partners as well, and that diversity that comes from it. You see our reputation is strong. Our Pollution Prevention Pays is often imitated and held in high regard. We're now, I think, 19th year in a row, Dow Jones Sustainability Index, a member of that. Again, voted one of the world's most ethical companies.
That makes us proud, but it's what we expect to do. As we think forward and move forward, we have to continue to lead so that we continue to be in that position. Aspirationally, we want to apply science to improve every life. There's a business case behind all of this, and you'll see it in our businesses. We also want to be visibly leading and innovating to a more sustainable future. We have focus areas. Science for circular, Science for Climate, Science for Community. What do those mean? Science for circular is about designing solutions that do more with less material, advancing the global circular economy, where you take out waste in the system. You set a circular capability. An example of how we're doing that is taking things out at the source. We're eliminating solvents in many of our solutions.
We continue to march through our portfolio with solvent-free solutions. You can solve a lot of assembly problems with tapes and adhesives if you go to solvents, and that's been the platform for a long time across many companies and many customers. We are the leader in innovation around solvent-free, and not only solvent-free, but better performing, lower cost solutions. That's the innovation challenge, and we're doing a great job leading forward with that. This is actually a picture from one of our plants where we've just invested in a new line to take their film application solvent-free and improve the performance for their customers. Science for Climate is about decarbonizing industry, helping to accelerate solutions globally, being part of the solutions there. Also, broader-based, our environmental footprint, and what we're doing to enable solar energy.
We continue to drive solutions that enable better, more efficient, greater adoption of solar energy. We can make a big difference there. Science for Community is a great foundational focus for us. We've always been a big supporter of STEM education, creating a more positive world through science and inspiring people to be part of it. We've done science surveys. We now have a science ambassador. We're kind of facing into the reality that a lot of people don't think science is that important in their lives. How can we help that? Continuing to sponsor STEM education, being a partner with Nobel Media to take it broader. These are ways that we can lead, and they build our reputation, and they create new opportunities for us as a company. Important to have aspirations as we think about leading into that future.
Wrapping up the innovation piece, these are the five areas that we are focused on driving our approach to innovation. Organic growth and innovation, using that 3M value model to build those new growth platforms. Inorganic, making acquisitions, even partnerships that can help add to our growth platforms and more broadly. Bringing in technologies that we can add together and create another example of greater than the sum of the parts. We do have a new ventures group, and we're focused on looking outside in, avoid that insularity around our innovation future, adding to it, looking at new early technology opportunities, maybe accelerating time to market in some of the innovations we can drive. That focus on disruptive is at the heart of our long-term value creation with innovation. We continue to put resources into a market-centric view.
3M has a long story of going to where the biggest smokestacks were back in the day, because that's where the opportunity was. That's where the production was. It's thinking about high-growth markets. It's an example of thinking about high-growth markets. There's better ways to do it today. It's starting there for our disruptive opportunities. Sustainability, visibly leading, and the advantages and the business case that comes along with it. I want to talk a little more about people and culture. As I said, it's foundational to all our other priorities. If we don't attract top talent, if we don't differentiate ourselves in people, if we don't differentiate ourselves in the way we work, none of the rest of it will go forward. A focus on people and culture becomes critical.
I was asked last night a few times, "What keeps you up at night?" You get that question. First of all, nothing keeps me up at night. It might wake me up in the morning early and get me thinking really fast. There are a couple things that I think about often. One is the digitalization of business, the broad impact of digitalization of business. It's much more than e-commerce. It's data science and analytics and how you can create a competitive advantage or have somebody else create a competitive advantage over you. It's how it changes every job in our company. What do we have to do to think about that? How do we help our people through it? People and culture helps us with thinking about that.
The other thing that I think a lot about is how do we compete for that top talent in the world? How do we win? We're in a great position today, we were voted Top company for millennials a couple of years ago to come to. Science is cool. People want to come work for science applied to life, we've got to work to continue to advance that. We got to advance our culture so people see a place for them, and that they want to come to 3M moving forward as well. We've got to focus on strengthening our competitive advantage in attracting talent, developing our people, advancing our culture, as I've said. This is how we think about it. What do we need to do to continue to advance 3M as a more inclusive workplace, the most inclusive enterprise?
How do we think about creating a strong, diverse talent pipeline? How do we engage our people around purpose and performance-driven focus in their careers? Thinking proactively about how we continue to advance that and where we go next, and that there's much more to do. A big focus for us is on development that is focused on continuous learning. A great example is data and analytics, business analytics. It's going to touch everybody in their jobs. Helping our people get comfortable with that, focusing development on that, not expecting them to go off to some university on their own and gain that experience. Helping them in their jobs, focusing on that. It's a way that we can help develop our people in a way that helps them manage change and prepare for the future. We continue to advance leading-edge leadership development.
You see and have met leaders that have benefited from that in 3M. That's critical to carving out our success in the future. We have a focus on managing change, which is part of our development focus as well. We have another example that I like to highlight. We have something called our 3M Impact Program. We started it last year. It's a volunteer program. You self-nominate. We take 50 people, we put them into a community project somewhere in the world. It gives them much broader horizons. We had 800 people sign up for the 50 spots last year, we're expanding the program this year. Last year, those 50 people went to Vietnam, and they worked for a couple of weeks on a community project, supporting a community in Vietnam.
They came back, and the people I talked to was that it was the most impactful development experience of their career. It broadened their horizons, made them think differently, really enhanced and encouraged how they think about their role in 3M, and where they can go and make an impact in their careers as they move ahead. A lot of dimensions to that development piece of focus for us. Finally, the future of work. Work is changing, not just data and analytics, but a lot of things. How you work together. What people are looking for. Our demographics are changing significantly in our company. As we think about where do we go in the future of work, at the heart of our value model is collaboration. We work collaboratively across our businesses and our company.
Thinking about how do we collaborate in the future, what are the changes we need to make? How do we continue to move that forward? We've always been a company that's led in advancing culture and how we work. Our 15% time is a way we think about encouraging people to work in our company differently, give them permission to do things on their own, create their own opportunities and opportunities for 3M as well. How do we do that? Greater flexibility in career. The career paths are not going to be the same as we move ahead. We've got to think about experience and development. A big part of our development for people is experiential learning, so how do we help them in their career? More flexibility in the workplace. Then just advancing our global talent. We've got a global organization to think about.
A lot of work going into challenging ourselves and thinking differently and really, again, another one of those areas you have to look forward five years and say, "What do we have to be doing five years from now?" Then how do we manage our way to it? A lot of energy, a lot of passion, a lot of focus from our leadership around our people and culture priority. Let me wrap up with long-term financial objectives. Nick will go into these a little more. Here's our 2019-2023 plan. It really is a continuation of setting realistic but aggressive targets based on our value model and what we can deliver.
In the world of where we see IPI and GDP going in the future, 3%-5% organic currency growth, leveraging to 8%-11% EPS growth, continuing to drive strong 20% return on invested capital, and 100% free cash flow conversion. That's our focus, that's our commitment. Those are our targets and objectives as we move ahead. We'll do that through the five business groups that you'll hear from today. You see the ranges for each of those businesses. They'll talk more about that, how that fits with their opportunities, how that fits with their view of their markets, and their overview of each of their businesses. I'll come back and I'll end where I started, with the 3M value model.
Again, I hope that we are, through my talk, through last night, through the rest of the day, we hope to deepen your understanding of what it is that we do that makes us unique among companies. What differentiates us in our markets, what takes us to all those markets and makes us not a conglomerate, but a clearly focused enterprise around a unique value differentiator that is really leveraged broadly in the company. We commit to those priorities to continue to manage this, maximize the value, optimize this value model as we move ahead. With that, I want to thank you for your attention, and I'm going to turn it over and introduce Mojdeh Poul. Mojdeh.
Just want to let everybody know that the network inside the room is up now. If you need to log in, excuse me, the instructions are on the back of the badge. Thank you for your patience, again, apologize that it wasn't available at the start of the meeting. Thanks.
Thank you. Good morning, everyone.
Good morning.
Good morning. It's a pleasure to be here to be sharing an overview of 3M Safety and Graphics Business with all of you. I'm going to start by giving you a business overview, I'm going to share a little bit about our strategy and business focus and platforms for growth, I will close with the summary. I think it's most appropriate to start by sharing with you our strategic intent. We're about advancing safety, enhancing environments, and improving lives. Safety, whether it's about keeping the workers safe around the globe or it's about bringing families home safely, is very much at the heart of our purpose-driven organization. We also leverage many of 3M's differentiated and unique technologies as well as high-performing materials to enhance the environment as well as our customers' brands in many ways.
Our business consists of four different businesses with $6.8 billion in sales and approximately 26% operating income margin. Our largest business is our Heartland Personal Safety Business at $3.7 billion, here we're about advancing worker safety and productivity. The key market segments that we serve with this business are defense and public safety, transportation, and manufacturing. Our second-largest business is Commercial Solutions Business at $1.8 billion, here we're about improving our customers' brands and their commercial productivity. The key segments in this business are retail, accommodations, and food service. Our third business, Transportation Safety, is at $1 billion, here we're about infrastructure safety, obviously, and also reducing road-related deaths and injuries. The key market segments here are transportation and construction.
Finally, our smallest business, our Roofing Granules Business, is at about $300 million, here we're about bringing differentiated granules to the market that offer superior performance in terms of protection as well as energy savings. Before I leave this page, I think it's important that I share that the three largest businesses that we have collectively have a total addressable market size of $65 billion, growing at single- to mid-digits. Very strong, attractive opportunities for us. We operate mainly in a regulated environment, this map shows our view of the regulation standards and enforcement landscape across the globe. As you can see, Canada, U.S., and Australia, as well as a few handful countries in Western Europe, are in a very strong position.
This leaves the rest of the globe with much more opportunity to expand and advance safety through establishing standards, which many of the government and regulatory agencies are doing so increasingly as we move forward. Global organizations such as United Nations and World Health Organization also are very much aligned with this safety advancement mentality. I want to share at this point some sobering facts with you that further demonstrate the need for continued increased penetration of our safety solutions in the world. Falls account for 39% of deaths in the U.S. construction. 250 million workers are exposed to dangerous noise levels every day on their jobs. Almost 0.5 billion deaths occur globally due to work-related respiratory diseases. Over 1 million people die in traffic-related crashes with over 20 million additional injuries. Finally, crashes cost most countries 3% of their GDP.
In our business, we work with regulatory agencies as well as industry associations to advance the culture of safety around the globe. We do this by providing deep industry and technical expertise that are required to advance science-based standards. It's the vehicle through which we deliver this expertise to our customers. In our regulated businesses like personal safety or transportation safety, our application engineers really help our customers be kept up to speed on the regulations as well as compliance requirements. They also help our customers put in place compliant processes. To help advance the science-based standards, we have local professionals that are skilled in standards development in more than 70 countries.
They work. They are very actively engaged with both local and global standard-setting organizations. They are very closely working also with the safety opinion leaders around the globe. Also, I should mention that we provide industry-leading education and training to our customers. We do this through more than 700 professionals that we have around the globe, who deliver this training through many different means, whether it's training centers, mobile training units, or it's virtual training experiences that customers can benefit from our expertise. We have executed disciplined portfolio management in our business over the last three years, consistent with our business strategy to gain relevance and strengthen our relevance with key priority markets within the globe. During this period, we have had two key acquisitions, Capital Safety in 2015 and Scott Safety in 2017. We have also exited seven businesses.
These transactions have not only helped us become a more integrated and focused organization, they have also helped, as you can see, increase and accelerate our growth by about 100 basis points and our operating income margin by more than 300 basis points over the course of last five years. The Capital Safety and Scott Safety acquisitions have helped elevate even further the leadership position that we already had in personal safety space around the globe. Both of these acquisitions, they have helped us obviously with expanding our product portfolio. They have also helped us expand our market coverage as well as the relevance to the key market segments that are our priorities.
Our Capital Safety fall protection systems have augmented the position that we already had in construction, utility, as well as mining, oil and gas, while our Scott Safety fire and rescue products have allowed us better access to defense and public safety and chemical and pharma segments. I want to share with you right now an example that brings to life this expanded relevance and the benefits that we are seeing as a result of these two acquisitions. A confined space is a space where there is limited means for entry and exit. As you can imagine, they exist in many industries, in industrial sites and manufacturing sites. Some of the examples of confined spaces are underground vaults, tanks, pipes, vessels. The entry into and also operating within these spaces is highly regulated.
Before our two acquisitions, we were a minor player in this application, in this space, with just the basic eye protection, ear protection, head protection coveralls. With the two acquisitions that we've had, now with the fall protection systems as well as the self-contained breathing apparatus and escape respirator, we have a full solution set that addresses most rescue plans for confined spaces. The other thing that we have been able to leverage very much and boost even further is our innovation capabilities as a result of these acquisitions, because now we can apply our innovation capabilities across the entire product portfolio that we have in personal safety. Now let's talk about fun stuff, our growth platforms. We continue to use 3M's core technologies to innovate in our core. That's a given.
We're also very excited about advancing into connected platform technologies that some of you got to have a view of last night, of Connected Safety and Connected Roads. I'm going to jump in and talk first about the connected platforms. As you saw last night and you heard this morning, this is one of our two priority growth platforms. We find the Connected Safety platform to be about a $6 billion opportunity for us growing in double digits. Today, we have half a billion workers around the globe that are on our personal protective equipment. They're using ours, but for short, we call it PPE. As you can imagine, it's only been natural for us to have an active progression into connected PPE and worker solutions that could get integrated with the manufacturing and control environments.
With connected PPE, customers can validate that the right PPE is being used in the right work environment, that the equipment is functioning properly, and that the employee or the worker that's using that PPE is trained and certified to be in the work environment that they're operating at the moment. In our connected platforms, we use advanced technologies and data science to bring solutions to the customers that helps increase worker safety in hazardous environments, helps the employees to have an elevated sense of situational awareness, and it also helps our customers strengthen the compliance and productivity that they have in their organizations. These cloud-based solutions are using the digital twin capability to automate and optimize the workflow for compliance in our customers' organizations.
They are also very much aligned with Industry 4.0, where we use predictive data and safety analytics to be able to establish solid, robust safety programs and also be able to manage compliance to those programs. The next program I'd like to highlight, again, the second one of our priority growth platforms is Connected Roads. Connected Roads opportunity, we estimate to be at about $2 billion, also growing at double digits. Through our many interactions with key stakeholders within the industry, be it in government or regulatory agencies or automotive OEMs, what we're finding out is that the existing infrastructure will have to go through significant improvement in order to be able to increase the safety, reliability, and efficiency of the automated vehicles.
Regardless of what the sensors are that are going to be on board of the future autonomous vehicles, 3M is in a very strong position, as you saw last night, because we're already bringing in solutions like the high-contrast tape-based pavement marking or ceramic roadway optics that actually have higher level of reflectivity that works both in wet and dry conditions, as some of you saw in the demo last night. These solutions are also very much suitable for the partially automated vehicles or Level 2, or also in the future, fully autonomous Level 5 vehicles. A digitally based infrastructure is being built today that is going to overlay the physical roadway infrastructure that we are operating within. According to National Highway Traffic Safety Administration, by 2021, over 50% of the light vehicles in the U.S. are going to have dedicated short-range communication.
That allows the vehicles to communicate with the infrastructure to obtain critical safety or roadway information. We, in 3M, are uniquely positioned to be able to provide those linking touchpoints between the digital and the physical roadway infrastructure. If some of you saw the demos yesterday, one of the solutions that we're bringing into the market, it actually combines a digital and material solution to allow for the high-density information to be uploaded onto street signs without compromising the appearance of the street sign for the human drivers. Through some of the early interactions that we've had with some of the Department of Transportation on this particular innovation, they're quite excited about the opportunity that it provides, especially in the high-risk environments, such as work zones or emergency situations.
I hope you can see why we so strongly believe in the importance of an investment in our connected solutions, as I shared with you. Now let's talk about some innovations in our core, and for that, I would like to focus on our commercial solutions business. I'm going to start with architectural markets. The first example that I'm using is our DI-NOC architectural finishes. In this product, we leverage our film and micro-replication technology to marry high performance and design to provide a solution to our customer that helps reduce the remodel time as well as reduce their material cost of up to about 80%. The second example is in our floor care system, and it's actually a product that we launched earlier this year. We call it the Scotch-Brite Clean & Shine Pad.
This product uses our nonwoven and abrasive technologies to create high shine with a reduction in the chemicals that are used to clean the floor. Because of the fact that this product performs two functions and it eliminates one maintenance step, it lends itself really well to the autonomous cleaning equipment that are being adopted as we speak today. Finally, the last example I'd like to share with you is our digital print films. These products use many of our innovations and technologies, film, adhesives, micro-replication, weathering, to create superior graphic application, image warranty, as well as removability. One of the most recent innovations that we've had in this area is our groundbreaking air release technology, which allows our customers to save a lot of time and hence improve their productivity in large install projects of graphics. Many of our core innovations also are inspired by sustainability.
Like the rest of 3M, we are committed to advancing sustainability through our innovations. The innovations that you see here are just a few examples of our sustainable solutions. Whether it's our energy-saving window films or landfill-diverting architectural finishes or waste and chemical-reducing cleaning solutions or environmentally friendly granules, they all help the environment in one way or another. They help the environment by reducing waste and reducing chemicals, by reducing water consumption as well as energy consumption. To close, we have a strong business aligned with key macro trends, with industry-leading solutions in attractive markets that are growing at attractive rates. We are continuing to differentiate ourselves through expertise delivery, innovating at our core, and advancing into our new and connected platforms. We are well-positioned to continue over-delivering accretive growth for 3M, both in terms of growth and profitability.
I always say that 3M Safety and Graphics Business Group brings all three elements of 3M's vision to life, 3M technology advancing every company, 3M products enhancing every home, and 3M innovation improving every life. Thank you for your time and attention. Now I would like to invite Mike Vale to the stage.
Thank you, Mojdeh. It's a pleasure to be here with you this morning and to talk about the outlook that we have for our healthcare business and the confidence we have going forward. My presentation this morning is going to be in three parts, an overview of our businesses and the markets that we are in, how we continue to leverage the broader 3M technology platforms to continue to build our innovative platforms for growth, and how we are continuing to evolve our commercial playbook to build more relevance and intimacy with our customers globally. At $6 billion today, 3M Healthcare is organized across five market-facing businesses, ranging from medical solutions to oral care to food safety.
The diversity and depth of our leadership positions in each one of these segments is a reflection of our capability to effectively extend and adapt 3M's technology, and to develop clinically differentiated solutions for our customers globally. We drive performance by delivering attractive growth at industry-leading margins while executing our strategic intent of care pathway innovation for improved health outcomes at lower overall cost. While we drive performance, we don't lose sight of what our purpose is. In 3M Healthcare, our purpose is what you see represented on this slide. We bring innovation to reduce, improve, or prevent some of the largest and most costly challenges that confront healthcare providers and practitioners every day around the world. Costly, not just in financial terms, costly in terms of human pain and suffering.
3M innovation improves every life by providing products and platforms that reduce preventable complications inside hospitals, such as acquired infections, which impact 1 in 10 patients that enter a hospital a day around the globe, and cost billions of dollars of additional costs into healthcare systems. 3M innovation improves every life by deploying comprehensive solutions that prevent the formation of a chronic wound or lower the overall cost of its treatment, in a landscape where the treatment of chronic wounds also costs billions of dollars a year into healthcare systems. 3M innovation improves every life by giving platforms and portfolios to oral care professionals that span both disease prevention and tooth restoration, bringing not only great smiles to our customers globally, but helping continue to improve overall health. These problems and challenges are large, they're global, and they're not easily solved.
Every day, 3M healthcare employees come to work focused not only on driving the performance of the business, but finding new and better ways to improve the health of our customers globally. This is really not a new approach. As we drive performance and we drive it with purpose, we continue to actively manage our portfolio. We are continuing to invest to grow our leadership positions in areas such as surgical safety and sterilization, where we have long-term established positions in markets that are large, that are global, and have stable and attractive growth outlooks. Simultaneously, we continue to invest in acceleration areas where we see ability to develop and scale positions in fast-growing market segments, such as advanced wound care, where we see a clear path to extend and leverage 3M's fundamental strengths to build the franchises of the future.
This approach, though, is not new for healthcare. This approach of focused and disciplined investment over the long term is what has helped us effectively scale this business over many, many decades. You can see this effectiveness of this approach as you look at two of what I would call our heritage businesses. When you look at our medical solutions business, it fundamentally began with the formation of a medical case portfolio that adapted and extended our industrial adhesives technology into this segment. Today, we are the market leaders in vascular access, specified solutions, biomedical electrodes, and critical tube securement. Our future is built on an outlook that combines both material technology and digital technology that will take us into segments such as advanced wound care, patient monitoring, and medical wearables.
We see the same level of evolution and trend when you look at our market-leading oral care business. Decades ago, we launched the first tooth-colored composite into the oral care space, and we did it by using reflective fillers that came from our traffic safety business. Today, we are the market leaders and innovation leaders in both the indirect and direct restorative procedures, using nanocomposites and nanoclusters that now give better optical properties, better strength, and better wear for the patient and for the user. We're going to continue to broaden and develop our technologies into new segments, such as specialty materials for additive and subtractive manufacturing, the use of bioactive materials for prevention and healing, and encompassing digital workflows. We have a very broad portfolio and pipeline within our oral care business, and we look forward to the future.
I'm going to go through some of these priority growth programs, some of which you saw last night if you were at the session. Starting with wound care. The reality that we face today is the impact of an aging population and the continuing growth of chronic illness, such as diabetes.
These factors combined will generate the outlook for continued growth for the need to effectively deal with complex, complicated, and persistent wounds. Today, we believe the advanced wound care market is about $8 billion in size, growing in the mid-single digits, and we have developed and are deploying a comprehensive set of products that spans all 5 elements of the care pathway for treating wound care, from materials that prevent the formation of a wound in the first place, to products that prepare the wound for the beginning of the healing process, to systems that passively protect the wound while it heals, to specialty additives that activate the body's own healing process, to materials that will catalyze the final wound closure step. We leverage multiple 3M technologies, adhesives, nonwovens, micro-replication, specialty additives to create unique and clinically differentiated products for each step of this care pathway.
Products like the five-layer Tegaderm foam dressing that you saw last night that brings ease of product use, better drainage, better breathability, and longer wear time for the end user. We continue to develop new areas of innovative possibility in technology such as biofilm additives. Early customer feedback on these products has been extremely positive, and we continue to see double-digit growth in this segment that we expect to continue as we scale and develop this business globally over the next few years. Let's move from material science to now digital or data science, and I'll give you an update on where we are with our health information business.
Today, our core business, which you see on the right side of this slide, is focused on coding and clinical documentation improvement in systems predominantly within U.S. healthcare providers, and we continue to deliver solid growth as we expand the functionality and reach of our 360 Encompass platform. 3M's core coding and grouping methodologies are the industry standard today, and we have significant scale across 2,500 hospitals, touching 60 million health records a month. At the same time that we build and extend our core capabilities in the coding and grouping area, we continue to develop and expand our next platform, the Performance Matrix, which will establish 3M as an industry leader in the rapidly growing segment of population health.
The Performance Matrix is a data analytics and performance management platform that combines 3M's decades of coding and grouping methodology experience with the analytical power of Verily, formerly Google Life Sciences. The platform has been built to access and analyze performance across populations that span healthcare networks, looking at all visits, all care states, all points of care. In doing so, we are able to bring real-time analysis to care providers, as well as performance management options and analysis to administrators. In one recent example at a midsize hospital that had deployed this platform, the Performance Matrix identified within the cardiac surgery wing that the hospital was operating with a 45%-60% higher rate of complications post-surgery in post-respiratory failure and the onset of post-op pneumonia. This would not have been seen without months and months and months of deep analysis.
The Performance Matrix was able to identify this down to the care setting and even the surgeon setting within the hospital and has led this hospital to identify and execute a series of actions that will save them millions of dollars in potential costs going forward. As we've expanded the speed and capability of the system, we continue to see growing customer acceptance and adoption. We currently have over a dozen major contracts signed both with payers and providers. We continue to see great interest in the pipeline of growth is growing. Ultimately, we believe that our scale and experience in healthcare data, combined with the capability of the system, will enable customers to identify root cause and effectively manage cost out of the system in a landscape that is more and more moving towards value-based care.
Finally, I wanted to highlight how we continue to evolve our oral care business, where we are market leaders in the protection, restoration and movement of teeth, delivering better and healthier smiles across the globe. We continue to see great growth opportunities in the areas of aesthetic treatment, driven by the rising middle-class incomes globally, as well as greater access to more flexible options. When we look at the orthodontic segment specifically, 3M has the most comprehensive end-to-end solution for orthodontists, utilizing world-class material technology and manufacturing capability to deliver differentiated performance with reliable quality, customized to individual case requirements. From the Victory Series metal brackets to our ceramic aesthetic Clarity Advanced and Ultra, to our lingual platform, Incognito, and our latest new product launch, the clear tray aligners, Clarity Aligners.
We are delivering capability that provides maximum choice and flexibility as a trusted partner for orthodontic professionals for over 40 years. We're doing it in a landscape where orthodontic cases continue to grow. Where we see the large majority of cases continue to be at the entry level. We are the best positioned in the marketplace to manage the evolution of orthodontic care up the portfolio. Since the announcement of our Clarity Aligner launch, we have seen case starts grow. We see increasing doctor adoption as they become more comfortable with the overall system and solution that we offer, from the digital treatment platform to the service we provide to the aligner performance itself. We continue to receive positive feedback. The frequency and number of case starts is growing for us. Additionally, we are now seeing more and more orthodontists moving rapidly to combination therapy.
The reality is that every clinical case is different, you have to provide maximum flexibility to the orthodontist on how they want to adapt each case to the patient's need. A single appliance will not fit every clinical situation, we believe combination therapy offers improved treatment and versatility that will ultimately increase patient satisfaction and reduce overall wait time. We feel very confident about the outlook of this platform and our overall oral care business. When you look at the market landscape and you look at the depth, breadth, and strength of our innovation portfolio, it's really quite strong. In addition to that, though, we continue to evolve our commercial model in a landscape that is changing and that is dynamic while we continue to drive our overall goals of double-digit growth in key developing markets and mid to single-digit growth in large developed markets.
The commercial framework, while it's applied differently to different situations locally, still has the four fundamental elements: optimization and localization of a globalized portfolio, acceleration of market access and focus on market development, evolution and expansion of coverage models to touch customers wherever they are, and the continuing development of our local team capabilities. When you look at how we deploy this in China, you see every element of this coming to bear. We continue to leverage 3M's long-term presence in China, expanding our presence, localizing our operations, including manufacturing. We've been extending our field and professional service teams to encompass more and more of the country, touching customers now in tier 2 and tier 3 cities. We are increasing our investment in highly impactful clinical educations that showcase 3M's technical differentiation and guide the standards of care within the country.
We are increasing our investments to localized product lines supported by ongoing manufacturing efforts that help us meet the needs of the local market at speed. We continue to be very confident in the combination of our innovation pipeline and commercial model in driving double-digit growth in our business in China well into the future. That same outlook holds true for developed economies like the U.S. and the European Union. We feel that 3M is not only going to compete effectively, but we will win in a landscape that continues to move towards outcome-based care because our products are designed to improve clinical outcomes at lower overall cost. We are shifting our commercial model to move from more of a product-based approach to a platform care solutions team approach at the care settings.
We're going into specific care settings, working hand-in-hand with practitioners to clearly show them the clinical differentiation that our products bring to market. At the same time, we're deploying clinical selling teams that will operate in either a group purchase organization model such as you see in the U.S. market or a bid and tender type market such as you see in the European Union. Either way, our goal is the same, to take the clinical differentiation that our products bring, shown to the practitioners, but show the economic value of the total overall reduction of cost. These models are going to help us continue to not only compete but win as systems move to a more outcome-based approach.
We do that while we continue to advance in healthcare capabilities or capabilities that are unique to healthcare within 3M, capabilities that will amplify the impact of our core strengths, from centralization, globalization of regulatory and quality affairs to ensure that we are delivering to our customers products every day in only one way, the right way, to the expansion in global and standardization of our clinical and medical affairs team that are going into markets to improve access and shift customer adoption within those markets to 3M products, to the ongoing investments in healthcare dedicated, globally compliant manufacturing sites, bringing in core 3M manufacturing technology as well as disruptive technology platforms to improve the speed and flexibility with which we serve our customers. We are becoming a more comprehensive healthcare business and a stronger 3M business.
Finally, I want to comment on sustainability and the impact of sustainability within healthcare markets and why I see sustainability as another competitive differentiator for 3M. The reality is sustainability is a very large topic within the healthcare industry today, and one of the biggest topics from our customers globally. They know that 3M is a global leader for many decades in sustainability. Healthcare systems today continue to incorporate parameters on sustainable and environmentally safe products and services into their purchasing model, giving preference to suppliers who come with sustainable products that help them reach their goals. Wherever you look across 3M and 3M Healthcare, you see the sustainable features that we have incorporated into our products, either directly in them or through their use.
You see how we manage operations to lower our overall carbon footprint and our environmental impact, whether it's lower landfill, more energy efficiency, lower greenhouse gases, lower water usage. You see how we engage with our communities locally to partner with organizations that share our same mission and ideals to impact the broader wellbeing. 3M is recognized as a sustainability leader, and 3M Healthcare is being recognized by our customers as thought and operational leaders in this space, and it will continue to differentiate us. In conclusion, I am very confident in our growth outlook for healthcare in the coming years. We will deliver clinically differentiated platforms that improve overall care. We will evolve our commercial playbook to compete and win in an outcome-based model. We will drive sustainable, accelerated growth at industry-leading margins.
We will do this for our customers and our end users globally, leveraging and extending 3M's fundamental strengths. Thank you very much. Now I will introduce Dr. Joaquin Delgado, who will come and tell you all the great stuff that's going on in Consumer.
Thank you, Mike. Good morning. It is really an exciting time in the retail markets, it's a rich opportunity, and it's primarily driven by the extent and how rapid digitalization is taking place. Today, I will be discussing how we're going to market in the Consumer Business Group and highlight a few of the key growth drivers that support our continued and profitable growth expansion. I will be talking about how we create and execute against our objectives, working on our imagination and creativity, how we're accelerating e-commerce, and how we have a business that is highly data-driven with direct consumer demand generation. Starting with our strategic intent. Our strategic intent is to bring 3M to the hearts and minds of consumers. It is not just the consumer brands that you are used to knowing and that we will talk about them, but it is what Mike was talking about.
It is about our values, it is about our vision, it is about our intent and bringing that to each one of the consumers around the world. We do this via a commercialization process driven by the imagination and creativity of our employees, operating a direct consumer demand generation model that is driven by the growth of point-of-sale, not just the selling that we do, but how consumers are buying those items at either the digital shelf or the physical shelf, and delivering cost-competitive, best-in-class customer service. We go to market with a broad portfolio of category-defining brands. All the brands that you see there, we defined more and created all those categories in the market. In 2018, we expect to deliver $4.8 billion in sales by generating consumer demand both in the physical and in the digital channels. Within the consumer, we operate four different divisions.
The Construction and Home Improvement Division provides innovative solutions for consumers and professionals under the Command, Scotch-Brite brands, as well as indoor air quality solutions driven by our industry-leading Filtrete brand. The Stationery and Office Supplies Division is home to two of our more iconic and well-known brands, Post-it and Scotch. These two brands deliver communication and creativity solutions for the home, work, and educational settings. Our Home Care Division includes innovative cleaning solutions under the Scotch-Brite brand that enhances the feeling of being home. The Consumer Healthcare Division is home to 3M branded outdoor and air quality solutions, as well as first aid, muscle, and joint products from our Nexcare, ACE, and FUTURO brands.
Within the Consumer Business Group, we commercialize a broad range of innovative products and solutions that provide differentiation and value to our customers by leveraging 3M science and technologies and the global strength of our brands. With this broad portfolio, we compete in many large global market segments with favorable growth potential. As you can see here, the global home improvement segments had shown very attractive growth with an expanding middle class and increase of popularity of do-it-yourself behaviors. Consumer air quality is a growing segment as more and more people around the world are impacted by poor air quality. We will talk more in a few minutes about how we're doing and winning in that space today. The consumer health segment is seeing nice global growth as consumers are becoming increasingly more active and taking more control over personal health and wellness.
The global cleaning segment is growing at lower single-digit, but with opportunities when we're looking at automation on how to make the task of cleaning the home much easier for the homeowner. Traditional stationery products are experiencing contraction within the office environment, but along with the arts and crafts, see low single-digit growth in home and educational settings. We execute a consumer demand generation model through our various channels, and this is supported by strong relationships with retail partners around the world. Over the last couple of years, we have been shifting our mix to higher growth channels. We have moved more and more from channels that are contracting and have lower growth, like office and retail and pharmacy, to higher growth channels like e-commerce, home improvement, club, and mass and hypermarket. As my previous coworkers have shown before, sustainability is also a key advantage for us.
We are a sustainability leader in the eyes of our consumer and customers. As a company, 3M has a rich history of environmental stewardship, the Consumer Business Group continues to strengthen our market-leading position through sustainable innovation. We are developing more reusable and recyclable products, drastically reducing the amount of waste, water, and energy that we use in our manufacturing processes, and creating solutions that remove harmful materials from the air we breathe. At the same time, we are providing solutions, as you saw yesterday and you will see later on, that help our consumers take care and manage the quality of the air, whether when they are indoors and outdoors. By using 3M innovation, we have a more positive impact on the environment, and more important, we enable our customers to achieve their sustainability goals that they have set for themselves and the consumers that they serve.
Our commercialization process is fueled by the imagination and creativity of our employees, I have mentioned before, and it's based on the integration of four key elements that you see here. Science and technology, consumer and shopper insights, design, and data science and analytics. It is the early convergence of these four key elements that give us a process that not only is more agile, but also results in smarter solutions for our customer and consumers and allow us to get to market much sooner than we were doing before. An example of how we're using this process is in addressing one of our key global growth platforms that look at poor air quality around the world. This is a segment opportunity of $17 billion that is growing at double-digits. You can see there the statistics that you can read.
93% of the world's children under the age of 15 breathe air that is so polluted, it puts their health and development at serious risk. 72 of the top 100 most polluted cities are in India and China that provide us great opportunity to manage the quality of air for the consumers and the population there. You can see there that the U.S. Environmental Protection Agency lists indoor air quality as one of the top 5 environments. The fact is that indoor air quality, including your homes, is worse than the outdoor air quality in your communities. We provide an extensive solution of outdoor air quality solutions as well as indoor air quality solutions. We are deploying our commercialization model against this very serious global issue to create innovative solutions to address this air quality, both indoors and outdoors.
First, we're leveraging our 3M material science and technology in nonwovens, filtration, and separations and sensors. We're using consumer and shopper insights to develop solutions that make air quality visible. People want to know the quality of air, and in providing that data, we make what we say, make the invisible visible. We're designing intuitive devices that integrate our world-class filtration technologies. Lastly, we're incorporating data science as analytics to educate, inform, and more important, empower the consumer to control the quality of the air they breathe.
As a result, you can see there that we have a portfolio of outdoor air quality solutions, both for adults and for children, as well as indoor solutions, whether you have HVAC systems in your homes or in many areas of the world where they don't exist, using room air purifiers or filters that go for air comp solutions that are towers or are located in windows. Using this framework of development and commercialization, we have generated some very exciting and innovative new products for the consumer business. We're extending existing platforms to new consumer with Post-it Extreme Notes, solution that has been engineered to perform in the harshest environments. If you look at the end user, the consumer, Post-it was the brand that was used by office worker, white-collar workers, as well as assistants. Now we're moving that brand to new consumers.
With Extreme Notes, we go to the blue-collar worker that is working outdoors and has a need to mark and identify areas under very harsh environments. Also, we are moving into the education by looking at the new generation of children that are using for education that can use Post-it Notes to memorize much better what they need to do as they are growing, and they are attending school, as well the home users. We have extended the Command brand into new designer Command hanging solutions that add not only functionality, but also style in the trend of more home decorations. We have moved and extended our Scotch-Brite from the traditional sponge and nonwoven to scrub sponges that address issues of trapped food in traditional scouring devices, and the creation of unpleasant odors.
We have, as I have mentioned before, designed respirator that is specifically designed to fit children. We have also developed new platforms. Yesterday you saw we have taken the Filtrete platform, and now we are making into a connected solution, Internet of Things, with our room air purifiers and also our connected filters. In early 2019, we will be launching an entire new category of products geared towards adaptive shipping solutions that align well with growth trends on e-commerce and package systems. I will tell you, it will not look like anything that you have seen of boxes or rolls of tapes or anything like that. Wait till first quarter, and you will see what we are talking about. Talking about e-commerce, which is a faster-growing segment.
We see that the brick-and-mortar and digital environments have very different characteristics but aren't converging. This is providing additional growth opportunities for us. What you can see is that there are similarities and great dissimilarities between brick-and-mortar and e-commerce. While brick-and-mortar has a limited product assortment because they are limited by the shelf space that they have, they have very structured planograms, resets, and they have a very uniform model of fulfillment. The e-commerce has an endless digital shelf. They have real-time assortment updates that can be done by the second, by the minute, and a very flexible fulfillment. As these ecosystems converge, retailers are relying on product manufacturers to help deliver three very important propositions to the consumer, newness, value, and convenience. For newness, we are leveraging insights to bring consumer-inspired innovation more rapidly via online platforms.
For value, as you will see shortly, we're increasingly using data science to optimize product assortment, placement, and presentation. In terms of convenience, by establishing both a presence in the physical and digital channels, we enable consumers to shop our products whenever and wherever they want to do it. E-commerce is not only the fastest-growing channel for the Consumer Business Group, it is on par in terms of profitability as other traditional established channels for us. As more of our business moves online, we are finding ways to enhance the value of our products, specifically within these channels, with new forms of innovation with our category-defining brands. We are using shopper insights and advanced analytics to optimize our online product assortment to drive value for our customers, retail partners, as well as 3M.
We're effectively and efficiently driving direct-to-consumer digital demand generation through search optimization and messaging that is targeted and relevant upon specific attributes. By creating online-specific configurations, we minimize the amount of packaging materials for the consumer and increase overall profitability for retailers and 3M by reducing overall costs. Machine learning and artificial intelligence fuels much of the innovation and value that we create online through increased efficiency and acceleration of our point of sales growth. This is a good segue to talk about the investments that we have made and we continue to make in data science and analytics. The use of data science and analytics drives our business in both the digital and physical channels by greatly increasing our speed and efficiency and unleashing human-inspired creativity.
We have developed proprietary machine learning and artificial intelligence algorithms that we use to optimize the way in which we present products to our retailers and deliver them to our customers. In e-commerce channels, using artificial intelligence and machine learning, we identify optimal combinations of rich product content to display in our product listings to maximize point of sale. All is done by machine and artificial intelligence. Across digital and physical channels, we apply artificial intelligence to optimize our media mix for local conditions and measure the effectiveness of demand generation investments using machine learning. Lastly, we optimize our assortment with our physical and digital retailers by using proprietary algorithms to tailor our offerings based on consumer preference patterns that are geographically specific.
Using data science to automate these various elements of demand generation enables our employees to spend more time and energy unleashing their imagination and creativity for our business. Our marketers spend more time developing marketing campaigns and thinking and creating unique merchandising vehicles. We have more time and energy to dedicate to portfolio innovation and the development of new growth platforms. Finally, it gives us also more time to collaborate with our retail partners to identify innovative ways to drive point of sales growth for both of us and improve and synchronize our respective supply chains, which is becoming more and more important to service the consumers. The combinations of these activities result in a more data-driven business that operates at a much faster pace and generates a much bigger impact on point of sales growth.
In summary, my team and I are very confident that we can deliver a 2%-4% organic local currency growth in the period of 2019 to 2023. We are very confident that we can do that because we are using the key elements to generate global consumer demand, both in the physical and the digital channels. We do that via the imagination and creativity that fuels commercialization of innovative new products that further strengthen our categories and our brands, capitalizing on the omnichannels convergence to create sustained, profitable growth opportunities, and because we can increase the speed of our business and our impact on point of sales by using data science, including proprietary machine learning and artificial intelligence, to unleash more and more of the human-inspired creativity. Thank you.
I think that now, Bruce, we have 20 minutes, so I think that we'll be back at 10 to 10 Central Standard Time. Thank you.
I'm looking forward to yours.
Okay, very good. I hope I deliver to your expectations. Good morning.
Good morning.
Good morning to the investor team. Welcome back from break. I'm Jim Bauman. I'm the Executive Vice President of the Industrial Business Group. Today, I'm going to cover this agenda. I'm going to start out with a business overview. I'm going to talk about how we're accelerating our platforms to growth. Then I'm going to give you a view towards how we're creating additional value in factory automation. The Industrial Business Group, a $12.4 billion business, consisting of those six divisions on the right-hand side of this slide. Our strategic intent is advancing industry performance. The way we do that is by serving broad and diversified industrial markets. Our business model drives improved performance and productivity for end users in faster-growing markets. The way we're going to accelerate growth in these faster-growing market segments is with three priorities. The first is accelerating end user demand.
We have opportunity in our core businesses to gain share and deliver more growth. We do that through our innovative business models and our end user demand creation, both in digital and market specialization. I'm very excited to talk about our platforms for growth. We have four of them in the Industrial Business Group: structural bonding, biopharmaceutical filtration, surface finishing, and automotive electrification. I'm going to talk about advancing factory automation. This is leveraging our application expertise and expanding into automation-enabled solutions. I'll talk about that in more detail. I think it's worthwhile just taking a step back and talking about how industrial drives value with our customers. By the way, this is extremely well-aligned and utilizes the business model that Mike described earlier today. It starts with our material performance.
We work with our customers to solve their design challenges. We innovate their production process. Where it becomes really exciting for us is we can scale, we can automate. It's a virtuous cycle for us as we apply our application development support to them. That's the business model of how we continue to create and recreate the businesses within our business. Why is that important? It's important because the way we differentiate value in our industrial business model is two-thirds of our business is designed in or regulated. I got some examples. When the aerospace industry comes to us around bonding, they're looking for solutions around being able to bond aluminum or titanium to composites. You do that through our solutions.
In automotive, the application of securing a headliner in the interior of a vehicle using our Dual Lock solutions, also combining dampening solutions to drive out noise. In filtration, if you had the opportunity to see the biopharmaceutical filtration example last night, you can see how we're improving our customers' yields through the application of our technologies. In fluoropolymers. Metal oxides have been used in many sealed devices in order to create the kind of performance required. They create a problem. They look to us for a solution that doesn't include metal oxides to be able to provide seals. Customers are coming to us now speccing in those solutions in our fluoropolymer business. The other one-third of our business is brand-driven consumables. These are categories 3M invented. They're in masking tape, they're in box sealing tapes.
Those businesses Mike described, where we're reinventing the business model of how we're taking this regionally to drive growth. Of course, we've got businesses that carry over in both. Abrasives. Oftentimes, abrasives can be specced in or designed in because of performance requirements. Of course, it's a well-known brand that is sold into so many different markets. We're accelerating our end user demand through those innovative business models. Our specialized segment marketing is going deep into faster-growing market segments. We leverage our go-to-market models. We're creating access to a broader 3M portfolio for our customers. This increases relevance with this access to products. Perhaps a customer was a strong abrasives customer for us. We are now bringing to them the broader portfolio. It could be in personal safety, as Mojdeh described. It may be in industrial adhesives and tape.
All of that allows us to enhance our end user coverage, driving share gain in our core business. Our access is through multiple channels. We're strengthening and building in each and every one of these. We're growing with our global national distribution partners at mid to upper single-digit growth rates. We're strengthening our direct-to-OEM business models. We're expanding our value-added reseller model. Historically, we've been strong in the industrial and adhesive tape area of the converter markets, where customers were looking for specialization in terms of the solutions they use. We're expanding that now into abrasives and some of our other businesses. All of that sits on the foundational pieces of our digital commerce platforms.
The global distribution partners, the big nationals, we're creating content for them to use on their websites to be able to enable digital content and drive faster growth, double digit, in most of their digital platforms. Let me talk about our portfolio, it starts with our core, we continue to invest in our core. Many of those core products that you see are foundational and cornerstones of our company. As I indicated, great share gain opportunities for us to continue to grow and build out that portfolio. We're accelerating in platforms of growth. I'll talk about each one of those in a minute. The opportunity to expand our great application development expertise, our domain expertise in many of the core businesses into automation. This is leveraging the reliability and predictability of our consumable products into automated solutions.
It's being able to take to our customers the ability to provide productivity. That's obvious. Productivity and automation is quite obvious. What we're doing is we're looking to extend that into error-proofing and creating waste-free processes through automation. Our belief is we can do that organically, we can do that inorganically, that's our view towards the way we're going to leverage automation into the future. Let me just talk about a core example, 3M's assembly solution enabling design flexibility. The market trend, pretty clear, replacing mechanical fasteners. Customers are looking for light weighting, combining dissimilar materials, of course, driving productivity. The way we win is the most comprehensive and unparalleled tape and adhesive technology continuum available to any customer in the marketplace.
It goes all the way from recloseables, as Mike described earlier, up to strong structural adhesive applications, as the example I used in the aerospace business. We are growing assembly solutions at two times market rates. An example, you have heard, I'm sure, historically, we panel bond glass in architectural structures on high-rise buildings. We brought the very high bond tape application where panels get bonded in trailers and commercial vehicles. We're expanding this now into e-vehicles, where they're looking for solutions where we bond batteries into trays to ensure that they remain reliable and safe in those applications. We remain very excited about assembly solutions. Let me shift into our priority growth platforms, the first is structural bonding. This is a $12 billion segment opportunity for us. It's growing 6%-8%. The market segment's broad across our industrial landscape.
The trends, very similar to what I described in assembly solutions, automation, light weighting, this bonding of dissimilar materials, all replacing mechanical fasteners. How do we win? We have unique chemistries and technologies that really create process speed and design flexibility for our customers. When customers come to us, they're looking for that confidence in bonding their solutions, their dissimilar materials. Let me give you an example. We just recently introduced a one-part epoxy. Okay, there's a lot of one-part epoxies out in the marketplace in structural adhesives. How do we differentiate? It's low-temperature curing one-part epoxy, a demand that our customers have had, we've been able to enable it. Low temperature, most epoxies cure at 365 degrees Celsius. Ours cures at 65 degrees Celsius. Think about the design flexibility that that allows our customers to utilize in their manufacturing.
All of a sudden, structural bonding of plastics to other dissimilar materials becomes very real with that kind of temperature curve. We have a large consumer electronics customer who is developing a wearable with this product specced in most recently. We are very excited about that example. Biopharmaceutical filtration. This is a $5 billion segment opportunity growing 10%-12%. We too are growing double digits in this particular market segment, and it is recombinant proteins and vaccines in the drug development business. Increasing biopharma drug pipelines, the need for speed to clinical trial, and the increase in biosimilars are all driving this market trend. The way we win is enhanced performance through our materials to improve our customer yields and productivity.
Again, if you had an opportunity last night to review our position in this market, what we do is through our core filtration work. Combined with our recent application in Membrana and our science around surface modification, we create a solution for purification, separation, and filtration that is unique to this business. We can take what is typically a 15-step process for drug manufacturers down to 10. When you do that, you improve their yields, you improve their productivity, and it is a win for both them and for us as we build out this business. Surface finishing, a $5 billion segment opportunity for us, growing 8%-10%. We are reinventing and taking abrasives to the next level in this market. Of course, the market segment served, again, broad across the industrial landscape.
Fine finishing and enhanced productivity and automation all around new emerging substrates is a critical need in the marketplace as we serve. We win by brand, but what we are doing is taking a step change performance in fine finishing. The way we are doing that is through our shape grain technologies positioned in unique ways that allow this fine finishing to take place. An example in the medical market. Medical market, it has moved from high-strength steels for body part replacements to, of course, alloys, to titanium, and now composites and ceramics, all requiring a different type of fine finishing requirement. We have been able to take our technologies and deliver on the promise of being able to fine finish for them in those applications. Automotive electrification. This is a platform for growth that we share with the electronics and energy team. Our contribution is lightweighting and assembly solutions.
The trend, improved battery range for e-vehicles, lowering CO2 emissions. The way you do that is through lightweighting and novel bonding solutions, whether it is in an internal combustion, a hybrid, or ultimately in an e-vehicle. The industrial business continues to drive applications into those markets. An $8 billion segment opportunity growing 8%-10%. We win through these bonding solutions. Glass Bubbles, when products are molded with Glass Bubbles, we drive out 50% of the weight of that particular product. Thinsulate, 40%, where that is specced in versus the prior acoustic solutions. That all provides better cabin experiences. I would like to talk about advancing factory automation. We see this as a $50 billion opportunity growing 8%-10%. We can increase relevance with our customers through our industrial automation. As I mentioned earlier, we have automation-ready products today.
Our customers come to us because we have high-quality, reliable, and predictable products. When the robot decides that it's going to grind a material, it has pressure and time, but it has to have a very reliable product that's predictive so that it does it in the right cycle time with the right performance. We enable that because of our technologies. This expands more broadly to all of our solutions across our industrial area. We are looking to expand that through hardware and software applications in this market. Maybe as an aside, the robots sold today into the market, 60% go into two markets, automotive and electronics, both of which we're very strong in, highly engaged in, 40% of those robots go into markets of welding, grinding, and assembly.
What I would say is both grinding and assembly are markets that we participate in quite broadly. We've earned the right to participate in this market space in a much bigger way, and that's exactly what we're going to do. Let me give you a couple of examples. Wheel weight applications. The automotive industry came to us looking for a solution. Wheel weight application, historically very manual. A person would go in and balance a wheel, go to a near infinite number of bins with different weights, and then they would pound this lead wheel weight on the rim of your vehicle and then supply it to the OEM. We developed a replacement product for lead, a very sustainable replacement product for lead, tungsten, with an applied tape, ours, very high bond tape.
The wheel gets balanced, the tape gets cut to the proper weight and applied to the wheel rim. We improved the cycle time by well over 50% and drove the defect rate down nearly 100%, creating great productivity advantage and quality for our customers. Another example is in the automotive OEM paint finishing. This is leveraging our fine finishing. Today, there's a very manual operation. As cars come out of the paint booths, there's small defects that have to be identified and removed, an area we actually have participated in for many, many years. They're looking for an automated way to solve that because of the labor intensity of that process. We're working with people today to identify the defect and then eliminate it. Those customers that have applied this process have shown paybacks in under two years for an automated solution to their process.
I'd like to talk about sustainability. This has inspired innovations for our customers. Of course, our lightweighting applications for vehicles driving fuel efficiency, we're also reducing and creating solvent-free adhesives in our product lines. We're creating products that cut faster, offering significant ergonomic and productivity gains for our customers. Lastly, we've got a very clever product that was developed along with the acquisition of Membrana, where we can enhance the performance of water treatment systems. Today, there's a product called Liqui-Cel that takes dissolved gases out of water. That's our product. To get dissolved gases out of water is a very complex process. We've simplified that and created a very productive solution for that. We're very excited about that technology. In summary, we'll deliver 3%-5% growth in the industrial business.
The way we're going to do that is by driving share gain with expanded end-user reach, by accelerating growth through the expanded growth platforms that I just described, and we're going to advance our industry performance through automation-ready to automation-enabled solutions. I thank you for your attention. I'm going to turn it over to Ashish Khandpur, who's going to talk about Electronics and Energy. I just got one public announcement. Somebody left a phone out in the lobby, and so I'll just set it over here on the end, and they can retrieve that. Okay? Ashish.
Morning.
Morning.
On behalf of the Electronics and Energy team, it is my pleasure to give you an update on our business. The agenda of my presentation is as follows. I will give an overview of our business. This will be followed by sharing the journey we have traversed over the last few years and our path going forward. I will then briefly touch upon our platforms for growth, both in the core and in new high-growth segments before finally summarizing. Advancing a connected world is a strategic intent of our $5.5 billion Electronics and Energy business. The Electronics part of the business is focused on enhancing visual experiences by enabling superior displays for various applications and in various form factors. Some of these applications include displays for cell phones and monitors, TVs, and automobiles.
The Electronics part of the business is also focused on developing and providing unique and differentiated materials that enable the performance, assembly, and finishing of electronic component and devices. Our electronic materials and solutions are used in a broad range of applications, from cell phones to mobile devices to semiconductor processing to cooling servers in data centers. The Energy part of the business helps our customers deliver safe, reliable, and efficient power by providing innovative products used in the generation, transmission, and distribution of electricity. We have been on a journey to reinvent the Electronics and Energy business. Over the last 5 years, we have done extensive portfolio management and prioritization in this business. With the recent divestiture of Communication Markets division, we have gone from 9 divisions to 3 in the Electronics and Energy Business Group.
These portfolio and footprint actions, creation of scale to drive efficiencies, and our strategic cost actions have helped us improve our margins by 900 basis points over the same time period. The result is that we have a very healthy and growing business with an agile team in place with a relentless focus on the customer. We believe we are well-positioned for sustainable and profitable growth for the future. To drive this growth, we are focused on a 2-prong approach, growing the core, which addresses a market size of $50 billion, growing at 1%-5% CAGR, and accelerating our expansion in fast-growing segment, which address a smaller market size of $18 billion, but growing at a much faster 7%-10% CAGR.
In the core, not only are we broadening our applications and customer base for increased penetration, we are reinventing our product platforms to create competitive advantage and to increase our relevance to the customers in the markets that we serve. Apart from strengthening the core, we are accelerating our expansion in segments like auto electrification, semiconductor, data centers, and renewable energy. Faster penetration in these segments will not only accelerate business growth for us, but will also improve our sales mix towards longer product lifecycle businesses. Our approach to evolving our portfolio in new and fast-growing market is nothing new to us. It is what we do. Displays are one such examples. We invented brightness enhancement solutions for LCD displays in the 1990s.
Since then, working closely with our customers, we have evolved our light management technology beyond monitors to serve the growing needs of televisions, phones, and wearables market segments. As we look at our current portfolio and roadmap. We are well positioned to capitalize on growth in the evolving display segments like OLED, flexible and foldable displays, automotive displays, and displays for augmented and virtual reality. We are able to do this because of our deep engagement at all levels, but especially bench-to-bench collaboration with our key customers to ensure that our product and technology roadmaps are well aligned with theirs to help them solve their challenges. Let me now discuss how we are innovating in our core for both electronic and energy areas. Electronic and display materials are a significant part of our core. Continued demand for enhanced display performance and functionalities are expected by our customers.
3M is creating differentiated solutions for elevating the performance of LCD displays while also bringing game-changing innovation to address some of the hardest challenges associated with the newer OLED display technology. In addition to displays, we continue to win share and penetration in our core electronic markets by expanding in new applications like optically clear adhesives, electronic component assembly, electronic component finishing, wireless power charging, electromagnetic shielding, and new enclosure materials for enabling 5G technology adoption in mobile devices. On the energy side, we are reinventing the core by developing new-to-the-world solutions that enable delivery of safe and reliable power for our customers. In America alone, power outages cause $150 billion of cost each year. The need for grid reliability and renewable energy adoption are driving modernization of power infrastructure.
As the grid increasingly moves underground, the need for robust and durable solutions that can withstand harsh environmental conditions while still providing real-time grid monitoring and fault location data becomes paramount. 3M is innovating to address this market need by providing easy-to-install cable connectors and by putting sensors in cable accessories for real-time asset monitoring and fault detection. In short, along with providing easy-to-use and install solutions, we are putting more electronics in the energy grid. Apart from sharing our efforts on reinventing the core, I would also like to provide you better understanding of what we are doing in our high-growth segments that we are accelerating our efforts in. One such segment is auto electrification. The convergence of automotive, electronics, and electrical are driving robust growth of this segment, and this is an area where we see significant opportunity for 3M.
As you know, 3M has been serving automotive customers since the industry first started sanding and painting the cars. This in-depth knowledge of the industry, our close connection to the automotive customers, and our depth of relevant technologies and materials, in the automotive, electronics, and transportation safety space, make us uniquely qualified to capitalize on opportunities in auto electrification. Our efforts in this space are focused in three areas: auto displays or human machine interface, battery solutions, and lightweight and assembly solutions. Several of you had the chance to see multiple applications around these three areas last evening. Jim Bauman already talked about lightweighting and assembly solutions in his presentation before. I would like to talk about the other two in the following slides. The auto displays or human machine interface is a growing opportunity as drivers demand more information, connectivity, and experiences similar to consumer electronics.
The analog parts of the cabin is being replaced by displays. This also provides an opportunity to enhance visibility and safety in the automotive space. 3M's light management expertise is enabling multiple applications in this area, which include glare-free, evenly lit center stack displays, camera displays for rear and side view mirrors, and head-up displays that can span entire windshields. 3M is also leading the way in 3M Connected Roads and intelligent road furniture that will interface with the vehicles in the future. You heard more about that in the presentation from safety and graphics earlier. Electrification of cars has put significant demands on battery safety, efficiency, and assembly in order to maximize range. Thermal management of battery packs is critical, not only for safety, but also to improve battery life and performance.
3M has several cutting-edge innovations to solve this thermal management challenge, which include thermally conductive pads and materials, Novec fluorochemical fluids for direct cooling of batteries, insulation tapes, and cushioning materials. In addition, our specialized bonding and assembly solutions help put together battery packs in a safe, reliable, and efficient manner. Semiconductors are pervasive. They enable most of the things we use today. Artificial intelligence, automation, cloud, and 5G are driving semiconductor growth and wafer starts. Our position in the semiconductor market provides us broad exposure to several favorable trends, including auto electrification, data center, IT infrastructure growth, and the expansive consumer market. Our chemical mechanical planarization solutions, which include Trizact pads and pad conditioners, improve wafer polishing and yield in semiconductor fabs.
Our high-performance fluids are used in semiconductor in-process cleaning and preparation steps. They also enable efficient heat transfer in chiller applications as part of semiconductor manufacturing equipment. Growth in data centers, and especially hyperscale data centers, has been explosive. Increased data loads and server speeds create unique challenges for our data center customers. Efficient cooling of servers, low latency, especially as edge computing becomes more prevalent, and reliable supply of powers are some of the key challenges that 3M is aggressively addressing, working closely with the key players in the hyperscale data center space. Our high-performance fluids help with server immersion cooling in the data centers, improving their operating efficiency and dramatically reducing the energy consumption in the data center. Our 3M Twin Axial Cable and optical interconnects help reduce latency by providing fast data transfer with high signal integrity and in a compact form factor.
Our power cable accessories ensure reliable supply of power to data centers with real-time asset health monitoring capabilities. Renewable energy continues to become a greater portion of the overall global energy mix. This growth creates opportunities for both new installations and maintenance of installed base of solar and wind. In solar, our light-redirecting films enable high-efficiency panels, helping generate more electricity from them. As flexible solar gains traction, our ultra-barrier films provide an unmatched level of performance in the marketplace. In wind, our wind protection tapes help improve turbine uptime and efficiency by protecting the windmill blades against abrasion and erosion, while our cable accessories enable reliable generation of power. To summarize, the Electronics & Energy Business continues to expand and extend the transformation journey we have been on over the last few years.
Our approach is simple: Work closely with our customers as we strengthen the core and expand in fast-growing segments. Doing this will help us create profitable and consistent growth while improving our sales mix towards longer product lifecycle businesses. Thank you very much. Now it's my pleasure to introduce our CFO, Nick Gangestad, to come and talk to you.
Thanks, Ashish, and good morning, everyone. I'd like to start by thanking all of you for participating in our Investor Day meeting today and for those of you that could be part of our event last night. It's very exciting for us, so we hope you're catching some of that enthusiasm. During the presentation today, my presentation, I'm going to review the financial components of our five-year plan, as well as providing a preview on our 2019 outlook. For the plan that you've heard laid out today, we expect to continue to deliver strong, consistent, profitable growth and a strong return on invested capital over the course of this five-year plan.
As Mike said earlier, that means organic growth in the 3%-5% range, which we feel we can translate to earnings per share growth of 8%-11%, delivering a return on invested capital of 20% or better, and generating 100% free cash flow conversion. I'd like to now walk through how we can turn 3%-5% organic growth into 8%-11% earnings per share growth. That this projected 8%-11% earnings per share growth comes from four contributing areas. First of all, our priority investment area is investing in the organic business and the resulting 3%-5% organic growth. That's the first component, where organic growth generates 3%-5% earnings per share growth.
Supplementing that organic growth, the investments we anticipate making in acquisitions, we estimate to add, over the course of this five years, 1%-3% of earnings per share growth. Third, margin expansion. We're estimating 200-300 basis points of margin expansion over the course of this five-year plan, and that margin expansion contributes 2-3 percentage points to our earnings per share growth. Finally, we expect tax and other financial components to be adding between 0% and 2% to our earnings per share growth. I'll walk through each of these components, starting with organic growth. First of all, our growth plan is built on our expectation that we will continue to outpace economic growth. We are building this plan on the assumption that economic growth over the next five years will be somewhere between 2% and 3%.
That's whether you look at it from a GDP perspective or a more traditional metric we use in 3M of looking at industrial production growth. Our 3%-5% organic growth expectation aligns with our historical track record of our ability to outpace economic growth. If I break it down between growth in developed markets in the world and developing markets, we expect our growth in developed markets to be between 2% and 4%, and our growth in developing markets to be between 4% and 7%. Our team continues to focus on driving efficient growth to achieve our financial objectives. Next, we'll look at our organic growth expectation by business. Mike showed this slide earlier, and our expectation to grow 3%-5% organically across the portfolio is driven by our portfolio of strong market-leading global businesses.
The Health Care business is projected to lead growth for the company with 4%-6% organic growth over the next five years, closely followed by Safety and Graphics growing 3%-6%. Industrial, we expect to grow between 3% and 5%. Electronics and Energy, we expect our growth to be between 2% and 6%. Lastly, we expect our growth in our Consumer business to be between 2% and 4%. That's our growth by business. Now let me cover what we're expecting by geography. We do see ourselves growing across the globe over the next five years. From a geographic perspective, we expect our growth in the United States to be between 3% and 4%. Our EMEIA growth, partly driven by some of the portfolio adjustments that Mike talked about earlier, we expect that growth to be in the range of 2%-4%. Asia-Pacific growth, 4%-7%.
Organic growth in Latin America, Canada, of 2%-6%. As many of you saw last night that were here, and in the presentations throughout the morning, innovation is the heartbeat of the company, and technology is one of our four fundamental strengths. We connect our technology platforms to solve customers' real-world problems. R&D enhances our ability to grow organically, but it also enhances our ability to deliver premium margins and premium return on invested capital. We expect that our R&D investment over the next five years will continue to be approximately 6% to revenue during this five-year plan. We are increasing our investments as part of this in our priority growth platforms that you saw highlighted last night and throughout the morning. I'll discuss that on the next slide. You've seen our 12 priority growth platforms.
As Mike and as the business leaders talked about throughout the morning, we are increasing our investment there. In fact, over the course of this 5 years, we are expecting a four-fold increase in the amount of investment we are making in these 12 priority growth platforms. Also, over this 5-year plan, we are expecting sales growth to be between 10% and 15% in businesses related to these 12 platforms. As you can see, this is an important part of our growth strategy in the next 5 years. Moving from organic growth now to the second component of EPS growth of M&A. We project acquisitions to add between 1% and 3% to our GAAP earnings per share growth over this 5-year plan. Our portfolio prioritization, as you heard Mike talk about earlier, we're focused on building scale, building relevancy, and facilitating market penetration with our acquisitions.
We are also looking to add technologies that complement what we are doing organically from a technology development standpoint. Lastly, we have an ongoing rigorous review process to ensure that we are creating value in these acquisitions and in our businesses, both for our customers and for our shareholders. As we look at our portfolio and the actions we contemplate, whether they be acquisitions, divestitures, consolidations, we look at them through the lens of our four fundamental strengths. We look at those pieces of our portfolio that fit well and others that may fit better in someone else's portfolio. In addition, we are focusing our activity and acquisitions by focusing on end markets that we see sustainable and create accretive growth potential for the company, as well as leveraging our own fundamental strengths and our own integration capabilities.
Let me now share some details on our three most recent deals. Over the last three or four years, acquisitions that we have done have benefited from investments and strategies we have made to be improving our portfolio management and our integration process. The last three acquisitions that we have done in combination have added $1.2 billion of revenue to our company. They are delivering accretive growth to their businesses and to the total company. In 2015, we acquired the Membrana business, adding new technologies and new products, which Jim talked about earlier this morning, that combined with our capabilities to create solutions that could not have been done before. In 2018, our Membrana business is delivering EBITDA margins in excess of 30%.
As Mojdeh talked about earlier, we enhanced our relevance and breadth in the personal safety business with two acquisitions, the Capital Safety business, which we acquired in 2015, and the Scott Safety business, which we acquired in 2018 or late 2017. Our Capital Safety business, growing and accretive to total company growth, is also delivering EBITDA margins in excess of 30%, and Scott Safety, only a year in, is delivering already EBITDA margins in excess of 20%. Looking ahead, over the course of the 5-year plan we're laying out here, these businesses will be delivering a cash return on invested capital return of 9% by the end of this plan. Let's now take a closer look at divestitures. In the last three or four years, we have also strengthened our portfolio through divestitures.
We have sold businesses in the last four years, which you see listed on the right here, totaling $1.1 billion in revenue. We received a total of $2.1 billion in proceeds from these transactions. These businesses were not growing. They consumed resources and had margins well below the overall company. We did not see a path in these businesses to leverage our four fundamental strengths. Thus, divesting of them allowed us to further focus our resources, coupled with acquisitions, has strengthened our portfolio. Let me now talk about how we expect to improve our company's operating income margins. As Mike noted earlier this morning, building on our strong foundation, we are going to continue to enhance operational efficiency. We are targeting to expand our operating income margin by 200-300 basis points.
We forecast that 100-200 basis points of this margin expansion will come from gross margin improvements and an additional 100 basis points from SG&A efficiencies. Let's take a closer look at each of these. Gross margin improvement is going to come through the areas that you see listed on the right. Mike talked about this earlier. I'll reiterate this. New product introduction and the investments we're making in innovation not only enhance our ability to grow, they also help 3M to maintain and improve our operating and gross margin, improve our gross margins, and deliver premium return on invested capital. Business transformation, which we've been progressing on, will continue to be a contributor to our gross margin improvement in these next five years.
For a long time, Lean Six Sigma has been part of our culture and part of how we deliver operational efficiency and take out waste in our company. That will continue. Lastly, investments in disruptive technology and our ongoing footprint supply chain manufacturing optimization are areas where we will continue to see benefits, which I'll discuss on the next two slides. First, on disruptive technology. Over the five-year plan, we are stepping up our investments and implementation of disruptive 3M proprietary technologies. It's central to how we build our future supply chain. Using our proprietary technologies, we are doing that to build solutions that deliver Six Sigma quality at efficient cycle times. We are setting up automated processes that are consistent and no touch.
We are setting up connected processes that are data-driven and real time with efficient, lean, continuous process flow, all while being safe and sustainable, which has a lasting positive impact on our communities, on our customers, and on our employees. Overall, to support this, we plan to invest between 5% and 5.5% of revenue in CapEx over this five-year plan. Let me now discuss footprint optimization. We launched our supply chain footprint optimization efforts in early 2016 with the objective to improve customer service, operational efficiency, and increase cash flow. To date, we have invested approximately 75% of our planned investments. We have closed or are in the process of closing more than 30 manufacturing sites around the world. We are on track to delivering the $125 million-$175 million of COGS improvement by 2020. We anticipate further savings beyond 2020 as part of this five-year plan.
Let's now cover SG&A. As I mentioned, we are targeting 100 basis points of ongoing operating margin improvement through greater SG&A efficiencies. This is expected to come from a few different areas. First of all, you heard Mike talk about business transformation, that we continue to use this effort to deliver added value to our customers, better efficiency, and also the fact that we have set up new service models in our company. New service models such as our global service centers, which are handling transactional activities for us, as well as marketing sales operations that are enhancing the interfaces for our customers. In addition, we are going, over the course of this five-year, to work to streamline our organization. One example of that is what you heard Mike talk about earlier, as we have moved to regionalize our approach to doing business in West Europe.
We remain confident in delivering the $500 million-$700 million of operating income benefit that we have projected for business transformation by 2020. This plan includes us completing that, going further and getting more benefits beyond 2020, and this 200 to 300 basis points of margin expansion is partially being driven by ongoing savings from business transformation. Let me now share how tax and other financial components support our earnings per share growth. As I said earlier, we expect tax and other financial components to contribute up to 2% to earnings per share growth over the plan. First of all, we forecast that we will have a reduction in our pension and OPEB expense over the next five years of nearly $300 million.
Our global pension plans are well-funded. We project that we will need to add cash of up to $1 billion over the course of this five-year plan. That's versus $3 billion, which we have added in the last five years. In relation to our tax rate, we estimate that our tax rate over the course of these five years will decline between 100 and 200 basis points through continued optimization of our supply chain and through effective cash management. We also anticipate that we will add between $5 billion and $15 billion of net debt to our balance sheet, which will result in increased interest expense over this five-year plan. Lastly, we will deploy some of our capital to share repurchases. Our philosophy in share repurchases remain unchanged.
It's dependent upon the relative intrinsic value of our company versus where the stock is trading and other competing capital needs, in particular, M&A. We do plan to maintain at least a minimum repurchase threshold, enough to offset employee equity compensation. Let's now move to how we plan to deploy capital to maximize value. Our strong operating cash flow fuels our capital allocation plan. We anticipate generating between $55 billion and $65 billion in capital prior to investments in R&D. As mentioned earlier, we expect to add between $5 billion and $15 billion of incremental leverage in this plan. All in, our five-year plan calls for $60 billion-$80 billion of deployable capital. Let me now break down how we plan to deploy that capital. This is a slide you saw Mike show earlier, from an allocation standpoint, we plan to maintain a disciplined and balanced approach.
As I've mentioned, our first priority is to reinvest in the business to fund long-term organic growth and consistently strong return on invested capital. We will continue to drive productivity in our R&D investments and invest approximately 6% to revenue, while investing 5%-5.5% into capital equipment and assets. Combined, that will account for approximately 30% of our deployable capital over the next five years. Second, we plan to continue our long-term track record of returning cash to shareholders via dividends. We've paid dividends without interruption for over 100 years, with consecutive increases over the last 60 years. We assume dividends to grow in line with earnings over time. We expect this to account for approximately 30% of our deployable capital.
Lastly, after funding the business for organic growth and providing a dividend, paying an attractive dividend, the remaining 40% of that $60 billion-$80 billion of capital is for flexible deployment. Our highest priority for flexible opportunistic deployment is to allocate capital to strategic acquisitions to augment organic growth. As mentioned earlier, we will continue to follow our philosophy and approach to share repurchases. Let me now discuss our five-year plan and the two other financial metrics. Our highly integrated business model drives strong and consistent cash flow through the economic cycles that we encounter, and it provides capital flexibility for reinvestment to grow the business. Part of this plan calls for us to continue to leverage our improved asset efficiency and to improve working capital turns over the next five years. Thus, we target strong free cash flow conversion in the plan, averaging 100% over the five years.
Next, I'll move on to return on invested capital. We continue to generate industry-leading margins and return on invested capital. Factors that enable us to generate premium return on invested capital include efficient capital utilization, our vertically integrated supply chain, since we manufacture many of the raw materials that we consume, optimizing our global cash balance, and our disciplined capital allocation. Our strong operating margins and capital deployment is supported by our four fundamental strengths. We are projecting 20% or better return on invested capital during this plan. To summarize, we plan to deliver organic growth of 3%-5%, which will in turn drive earnings per share growth of 8%-11%, delivering a return on invested capital of 20% or better, and delivering 100% free cash flow conversion over the course of this plan.
Let me now turn to talk about the first year of this five-year plan, giving you a preview of 2019 with continued growth, continued productivity, and operational excellence. For next year, we expect economic growth to be in the range of 2%-3% for both global industrial production growth and global GDP. For 3M, we continue to project that we will grow, be productive, and operationally efficient. We will generate consistent, healthy cash flow due to the strength and diversity of our business model. In 2019, we anticipate another year of effective capital deployment. As always, we will be investing in our business as that is the top priority to fund organic growth and support our premium margins and premium return on invested capital.
While we invest in the business, we also plan to maintain our long track record of returning cash to shareholders via dividends and share repurchases. Planning for 2019, we forecast our organic growth to be 2%-4%, with positive growth across all geographic areas and business groups. Earnings per share is projected to be between $10.60 and $11.05, off of our 2018 guidance of $9.90-$10, which equates to earnings per share growth of 7%-11%. Contributors to next year's earnings per share growth include organic volume growth, increases in selling prices, productivity, reduced pension OPEB expenses, and share repurchases. Partially offsetting those tailwinds include higher raw material expenses, which is inclusive of tariffs, and increased interest expense.
From a capital allocation standpoint, we forecast investments in CapEx between $1.7 billion and $2 billion, and we expect our share repurchases to be in the range of $2 billion-$4 billion. We estimate our return on invested capital will be between 22% and 25%, and we anticipate a year of strong free cash flow conversion with a conversion rate of 95%-105%. I'll wrap up where Mike started the morning. Our 3M value model positions us to win. We're focused on our four strategic priorities: portfolio management, transformation, innovation, and people and culture. Our plan includes disciplined and balanced capital allocation, and we are well positioned to deliver on our financial objectives both for 2019 and for the full five-year plan. With that, we'll take a moment to get our presenters in front of you on stage, and then we'll open it up for Q&A.
Thanks for your attention throughout the morning.
2019 outlook meeting. Nick just obviously covered 2019. We will not be having another meeting in three weeks. If you have specific questions about 2019, now's the time to ask him. We have people on the side here that will be bringing a microphone down to you. Please wait until the microphone's been delivered to you, so that people on the webcast can hear your question. Andy Kaplowitz.
on? It's not on. Is it on?
It's on.
Hello. Can anybody hear me?
Yes.
Okay. Sorry. Nick, this one's probably for you. You talked a lot about business transformation, but I think you've told us before that by the end of this year, you'll do about $250 million in business transformation, and you said you reiterated the guide of $500 million-$700 million. If you do the math, to get to the high end of the range, it would actually be more than 50 basis points over the next couple of years in terms of margin expansion. That's sort of excluding factory optimization and operating leverage. Maybe talk about any of the offsets. I know you don't want to say margins are conservative because you're already very high. I think we all get that. Just maybe an update, and then just sort of dovetailing with that, Europe, where are the margins now versus that 20%?
I think they were at 16 the last time you updated us. How much more do you have to go there?
Andy, that's several questions, but I'll try to wrap that
Sorry
get that all covered. Yep, through the end of this year, we estimate that our savings from business transformation that's been benefiting our operating income will be approximately $250 million. By 2020, we continue to see ourselves in that range of $500 million-$700 million. In addition to that, we think business transformation beyond 2020 is going to continue to generate benefits for us, both in COGS or our gross margin, as well as SG&A efficiencies. As we talk about 200 to 300 basis points of margin expansion, there's probably 30%-40% of that savings that is coming from things we've already put in place around business transformation.
Then on other things coming from trajectory beyond 2020 of what more we can do with business transformation, as well as some of the other things that we've talked about, that footprint will continue to generate benefits for us. As business transformation becomes a bigger and bigger part of how we operate, what we could foresee, Andy, it was going to become more and more difficult to come up with a precise measurement of that savings. That's why we're starting to sunset that over the next couple of years, because it's becoming an overall measurement of our overall productivity and our overall margin enhancement. That's one of the reasons you're seeing a shift change there. As far as headwinds that we're facing, it's a little hard to go out beyond 2019 thinking about pricing and raw materials.
In 2019, as an example, we do expect that we will continue to see raw material inflation, and on top of that, tariff impacts. Our view right now is that our selling prices will more than offset what we see of raw material and tariff impacts. Those very things that we listed, transformation, what we're doing there, our supply chain footprint optimization, investments in disruptive technology, they're all contributors to that 200 to 300 basis points of margin expansion. In terms of West Europe, a year ago when we talked about the margins, they were about at 16%. They have not budged a lot in 2018, as we have been doing very specific actions that cost money. While they've been seeing improvement, they've been offset by some of the investments we're making there. We think 2019 will be a pretty significant move on the path.
2019 will be a pretty significant move on that path to 2020. Then 2020, where we ultimately get to 20%. By the way, we don't see 20% for West Europe as the ending point, but we see it as the first step we're moving to, and potentially beyond 2020 as part of this plan as well.
I'll just try and make this question more simple. Mike, this is your first sort of guide as a CEO, right? What's noticeable is the organic growth going from 2%-5% to 3%-5%. A big part of that is Ashish's business, but it's also Health Care sort of being still 4%-6%. As you were sort of rolling this all up, given Health Care's been a little bit lower than the target-
Electronics and Energy's actually been better than a lot of us would've thought. Maybe talk about sort of your conviction level in those two particular segments and sort of what is different now that's going to lead you to have Health Care be 4%-6%.
Yeah, 3%-5%, I would start there.
It's based on what we know we can deliver under kind of our view of the markets, our view of the macro, down to the individual markets and our portfolio. The 3%-5%, it looks in line with what we've talked about in the past. A multiple of the macro and thinking about that. I would say this, I think the 3%-5% is on a stronger foundation. Just like I talked about the portfolio moving up and to the right, the way we are managing our businesses, the way we are prioritizing investments, how we're shifting into those markets, into the opportunities that you heard from our businesses today, it's true for each of the businesses. You kind of focused on Electronics and Energy and healthcare, but it broadly based, I feel more confident about the ranges.
In Electronics, you think the last five-year plan, we were coming out of some pretty big swings that were hitting us, and we were doing a lot of heavy lifting on the portfolio at that time. We had kind of a range that we had a little bit of uncertainty in that. I think we feel much more confident. What Ashish laid out, the core growth and the high growth segments, that gives us confidence to have a more positive look on that range. Healthcare, we have a portfolio that faces end markets that have been steady growers. We've had some challenges recently in our portfolio, but we don't stand pat. We've been managing through that. I think we have a good look-through some of those into the future.
It's another example, different market, different dynamics, where we have a pretty good look-through and confidence around that. We're not extrapolating off of a single one or two data points in 2018. We're looking at what we've been doing to move the portfolio forward, what we've been doing to align to the market growth. Those two businesses, actually all five businesses, I would say we have more confidence in those ranges. The 3%-5%, while it looks like a similar multiple to the macro, it's, I think, got a stronger foundation across those five businesses.
I'm going to jump across to Andrew Obin.
Sorry. Just a question about footprint optimization, that 2015 slide. You said you're down 30 facilities. If you were to recreate 3M from scratch, what would be the optimal number of facilities that you think 3M needs? Given that you cannot do that, what's the realistic path for facility reduction over the next five years?
Yeah. It's a great question, and I think the way we think about that, Andrew, the way we look at it is we look at our global supply chain, and we recognize where we are most efficient, most productive, most effective, where we are able to leverage the fundamental strengths the best. We have a pretty clear view of not only those facilities and those value streams in our supply chain, but what we do there that makes us different. That certainly is right at the front end of how we think about footprint optimization. We look at the smaller, less efficient, maybe not fully leveraging those strengths kind of assets, and we think, boy, if we could have those as part of larger, more efficient 3M operations, we'd do that. Now, if we started from scratch, would we build all of those kinds of facilities?
We would still end up with very portfolio specific, geographic specific kinds of models. We call them more medium-sized kind of operations because they serve customers in very vertical ways, and they target that, but we would certainly not end up with a lot of small, inefficient kinds of operations. It's a frame. Maybe we recognize we're never going to start from scratch, but we want to move towards a better balanced kind of portfolio. We started with those pieces of footprint that were clearly sub-optimized. We had very strong returns on the investments to optimize those, to recombine those into larger facilities. Is there more to do? Yes, there's more to do as we move ahead.
A lot of the sites that we've already acted upon came through acquisition, it's not unusual for us now, I would say, in our plans when we make an acquisition that we are consolidating as part of that integration into 3M. We're doing more of it upfront. In the past, we've integrated a number of acquisitions, not taking those actions. You can think of this as going through that learning process and taking it on in a bigger strategy. There's more to do, though. We still have more sites that we can drive greater efficiency with some different configurations, and we won't ever get to where we would be if we started from scratch. If you started from scratch, you'd be probably optimizing over time because you would continue to make acquisitions anyway.
I don't have a specific target for you as we go beyond what we've laid out, there's more to do in that footprint.
Just a follow-up question. What effects on oil prices all over the place over the past week, what's baked into your 2019 forecast for effects on oil price?
As far as oil price, Andrew, I'm not going to say that there's a lot of sophistication. We are planning on raw material inflation greater than what we saw in 2018. How what we're seeing with oil impacts that, I'm glad I have until January to give a lot more specifics on that. In regards to FX, if I were to snap the chalk line right now, it would have a negative impact on revenue next year, and it would have a virtually neutral impact on earnings per share, primarily due to where we stand with our hedging.
Deane Dray.
Yes. Thank you for Mike. I'd like some more color on the slide about moving five businesses potentially into the Push Forward category. Just take us through the implications on growth, the implications on investment there, and the implications on the five-year plan, and hopefully some insight on which of those businesses fit into those Push Forward category. Then for Nick, just so Mike, you can think about that answer. For Nick, it was interesting that the free cash flow target for the five-year is a specific % conversion, whereas you give ranges for the 2019, you give ranges on CapEx. Just in the build-up for the five-year plan, what might that range on free cash flow conversion be and some insight into what additional CapEx spending, where that's going? Two questions.
I-
Michael's first, though.
Nick could go first. I'm fine either way. I still remember your question. Push Forward. I talked about additional opportunities and colored in more than the three global Push Forward that we had in the past. When we identified those global Push Forward businesses, we could scale them globally, take them forward. Examples were oral care. We thought we could take them into developing markets more successfully, and that's been playing out. We're double-digit growth in developing markets. While I said a lot of the portfolio management actions we took encourage us to do more, and maybe much more as we move ahead, the prioritization of investments in our portfolio, while that's hard to do and you build up momentum there, you want to do more. Those additional opportunities, they aren't maybe all the same.
We're not, in every case, looking to try to create scale in international. Some of them are leaders in their markets exactly where they need to be, but we can invest in them and drive greater growth, and accretive growth and returns. Some of those are really, it's about moving resources, taking, like we did with the closure and masking solutions division, and changing the business model, in an essence, freeing up kind of as an enterprise, SG&A, R&D resources, and all things being equal, putting them into the higher priority areas. A couple of those Push Forward businesses are examples where we are a leader, we're scaled, but we can do more. We've got opportunities to drive greater growth, either in adjacent and high-growth segments or in deeper penetration.
There's a little bit of a, I would say, broadening of what we're going to do in those Push Forward businesses, but we're building off that momentum where we are not just doing more to shift resources. We're gaining confidence it works and that it drives value. That's part of it. You got to get the entire organization confident that you're not going to lose the value in the lower left before you create the value in the upper right. We are building that confidence. We're stepping into it. A lot of that takes place at the business level as we think about our plans for the year. We also take opportunity in our planning process at the enterprise level to move that and try to drive that shift. That's another one that's going to build momentum over time.
Broadening it out, maybe adding some new dimensions to that investment in those priority growths.
Deane, in regards to the free cash flow conversion, if you look over the last five, six years, I would say a variability of ±5% is pretty encompassing, that the vast majority of the years would be falling in that range. Philosophically, we wanted to target 100 because that's what we think of as success. There's always been this volatility. Some years, two or three or four percentage points higher than that or lower than that, but it's been in that range. In regards to the investing 5%-5.5% of our revenue in CapEx and up roughly 50 basis points from our prior guidance, I think your question was what's changed there. There's a few things changing. First of all, we do see less capital in that capital allocation going into business transformation.
Over the last five years, part of our CapEx budget has been around business transformation. That is going down. Offsetting that is, if I look at the last five years versus the next five years, the percentage of that going to capacity expansion is going up slightly. The biggest change has been the amount that we're allocating towards disruptive manufacturing technology. Robotics, other advancements in technology that we think can be making an even more efficient manufacturing supply chain process for us. That's the primary driver of what's happening with CapEx.
Steve Tusa.
Start with a strategic question first. How's the fourth quarter going so far in the last few weeks? Strategic for some of us, I guess. Last year you had eight different kind of targeted markets, I think, with $30 billion that are addressable. When I kind of count up to 12, roughly just using the different presentations, you're kind of up to like somewhere around $70 billion-$80 billion. How is this different than kind of the famous pyramid discussion that we had 10 years ago with the former CEO? Basically, his struggle was that you guys were making great returns and great margins, in these markets that were kind of too small, if you will, to continue to grow at a fast rate.
How can we be so sure that just these $40 billion of markets that have kind of shown up on our doorstep this year are not a little bit more dilutive and take a little bit more resources? The flip side of that question is how big in revenue, roughly, are these kind of 12 targeted priorities? What is the, if you will, if they're growing double-digit, what's the decay
in the rest of the business, which if you take investment from those, probably is at risk of accelerating, if you will. How do you balance that dynamic?
Yep. Maybe I'll try to unwrap the strategy around all that. I would say, what's changed, maybe to start with—and that was my slide last year, was what's changed since we talked about the priority growth platforms last year and the addressable market size. I think these are emerging opportunities, and we're getting a clearer view of what we can do in those spaces. An addressable market is kind of a tricky thing to measure, right? You're always kind of applying what you see from your vantage point, your opportunities in those markets. We're refining that. We also, I would say a couple of them were earlier in their S-curve development on their development, and where they're further along, and we see a bigger market opportunity, and we start to put that out, and how we think about it.
We also have a couple more years kind of at the back end of this plan that we're thinking about that growth compounding. Think about it as a learning process, and we're getting, hopefully, a sharper, clearer focus. I think it's a better view of the opportunity space that we're going to be operating in. The $40 billion is more of getting a better view of where we can go with these businesses. The accretive growth rates of that, the way we are funding that is really in portfolio management. We're acting in our portfolio to create the space to make these investments. Again, it's back to, I've talked about maximizing value across the portfolio. It's about optimizing that strategy.
CMSD, that closure and masking business is an example where you can free up some space to invest in these higher growth areas. The theory is you don't sacrifice market rate growths. We weren't getting the kinds of returns we wanted investing in that to try to outgrow those markets anyway. They were dilutive in margins and the growth rates themselves. You kind of face that reality, and you go, you know what? What do we do with it? In this case, it was much more valuable to keep it but manage it that way. That frees up some space, and we can create that as we move ahead. It's not a zero-sum game in that sense. We can manage the portfolio to create some space to invest in those higher growth areas.
We can access those, in theory, with moving the whole portfolio again up and to the right and being accretive to the average overall. That's the intention of those. Those priority growth platforms, this is in recognition of what we've always understood is a way to create value that we could do that. By creating the space and managing our portfolio in a way to do that more aggressively and in a little bigger scale, we can scale faster and go after them bigger. The market view will continue to sharpen as we move ahead. Part of it is some of these markets we're developing them. Now, back to the pyramid question.
The pyramid was always, in some ways, thinking about a particular market that you got a limited space at the top of the market where you can create that accretive to 3M kind of value. You can innovate. We would go in there, and we'd do that, and then we would maybe not move down pyramid as the market matured. In fact, we might even cede space in the top of the pyramid to our competitors. We are a much different place today with our fundamental strengths, I think, and how we manage our portfolio. We are expanding that attractive space adding pyramids to the side. We recognize that going down pyramid is a different business model.
That golden nugget that I talked about at the heart of what we do, that six plus five and a half, that is focused on differentiated market opportunities that leverage our fundamental strengths. If we want to move down pyramid and spend less on R&D and more on commercial activation, that's a different business model. That's not who we are. We aren't thinking that way. We're thinking about expanding the higher value spaces, priority growth platforms that put new pyramids on the page. That's the way to think about it. We have tremendous opportunities for our model in markets and innovation that's happening in markets. We don't need to go down pyramid to drive our growth. We can do it in high value spaces. It gets back to how do we do that in a virtuous way.
How do we do that and move the whole portfolio in an accretive direction, growth and returns and value. That's our model, and we're getting better at it. Five years ago, we couldn't even talk about that. That would have been like, well, we'd tell you a lot more than we know at that time. Now we're in a position, I feel like we can talk with more confidence about it. We can step into it. Other part of my answer to Andy's question is we have more confidence in our portfolio to be able to do that consistently and reach for higher growth as we move ahead.
Steve, in regards to your first strategic question that you asked. We're halfway through the fourth quarter, and everything that we have seen through the first half of the quarter is very much aligned with how we guided at the third quarter earnings call, both from an organic growth standpoint and from an earnings standpoint. Very aligned. Nothing taking us off track there yet.
Great. Thanks.
Jeff Sprague in the back.
Thank you. Good morning.
Good morning, Jeff.
Just picking up a little bit on some of these earlier topics. It does seem like to execute on your strategy, there's implicitly and perhaps explicitly with the higher CapEx and now with M&A clearly taking a higher priority than share repurchase. Kind of an acknowledgement that the business is going to be more capital intensive in the future than it was historically. Obviously, your ROIC still looks great, so that isn't necessarily a bad thing, but it does seem like you're in somehow suggesting maybe a stronger pivot away from legacy parts of the portfolio to stay ahead of the curve in terms of growth. I just wonder if you view that as an accurate observation, and if you could address on those 12 growth platforms, the size of those, what the base of that is that we're starting from.
I'll start on that one, Jeff. On the second part of the question, as far as the priority growth platforms and some of the sizes. As an example, automotive electrification, what we've said last year is our revenue, in that component was about $200 million. If I take all 12 of them, some of them are highly embryonic, like what we shared yesterday and today in the oral care Clear tray aligner space, where we're starting at virtually zero. Some are established, like air quality, where we have hundreds of millions of dollars of revenue. Some are like automotive electrification, where there's a couple hundred million dollars, and some are virtually none. All in total, the starting base of revenue is clearly north of $1 billion right now, but we haven't quantified it beyond that. Jeff, remind me of the first part of the question.
Just trying to think about you're trying to kind of up the ante on growth, right?
Yeah, the capital, the M&A.
Yeah. The kind of
Yeah, I don't want you to overread what we're saying there. Clearly, our first and most important priority is the organic. We continue to look as we shift that portfolio, where are things we can be using the capacity on our balance sheet with M&A to bring things in to complement what we're already doing. When we talk about we have that capacity and intent to do that's how you should be taking that. It's not in our character, nor do I expect deploying M&A capital to new places that we're not doing something of a more transformative. This is how do we use our capital to be adding to what we're doing organically.
Yeah.
That's the primary message I'd take on that.
I would add this. I think it reflects what we've been demonstrating. We've demonstrated strong ROIC in both our CapEx investments and some of the acquisitions that have been around the strategy that we've been driving. It encourages us, and we've been active around this, and we've been building on the capabilities that have helped us do that to say we should be willing to step into some of those as we move ahead. It certainly becomes a priority for our capital deployment to deliver that kind of return. That demonstrated building of capabilities, confidence, and when we look at the opportunities that we have, for us, it's not a macro kind of target. It's built on strategies down to very specific portfolios and growth opportunities in our capacity investments and where we can deploy disruptive technology and get returns.
We have a portfolio of investments underneath that we think about. M&A is a little less certainty, right? You've got a pipeline and we're active, but we're active around what I laid out. We're active around that strategy of leveraging the fundamental strengths and the confidence that we can integrate and create value. As we pursue and advance those, we are excited to be able to deploy some capital to pursue those. It's kind of building that momentum and that confidence, that demonstrated capability at a target by target level.
Jump to Nigel, Mark, on the end there.
Yeah, thanks. I want to start with a 2019 question, just a little bit nitpicky, but 2%-4% organic growth. Can you just give us a sense of what segments are really driving that, which are kind of at the lower end of the range, as well as the tax rate for 2019? Then, we're looking at 2%-4% organic growth this year. Based on where we are in the economic cycle, I guess, what gives you the confidence to project 3%-5%, which implies acceleration throughout the rest of your forecasting period?
For 2019, I'll first talk geography. We likely see the U.S. in low to mid-single digits, Europe and Japan probably in low single-digit. China, mid to high-single-digit growth for us. As far as business by business, that's what we actually plan to share in January when we give the full breakout. In terms of tax rate, we're projecting a 20%-22% tax rate for 2019. From a macro standpoint, in 2019, most economists are projecting something approaching 3% economic growth. As you can see in what we're guiding, we're saying that might be true, but we're also preparing for it could be a lower economic growth, a 2%-3%. I'd say that's one of the factors that's informing our 2%-4% organic growth guidance right now.
John Inch.
Exactly. Thank you. I want to just go back again to this growth and decay dynamic. I think based on your own targets, for the auto segment, the electrification or whatever to get to $1 billion in 5 years, that's about a half a point of growth. I'm sure you could add up the rest of it, and that could be at least another half a point of growth. If the starting point for what you just said, Nick, is sort of three, Mike, what is actually going on in terms of the natural attrit that decays it? Is it, for instance, exiting businesses in Europe? If you didn't have any of these initiatives, what happens? Does the corporation's core growth decline kind of half a point a year or what?
It doesn't seem to be that crazy to actually get higher, assuming the economy is stable, toward the 5%, just based on all the presentations. I'm just curious on your thoughts.
Yeah. It's a range around, I always say this, and we talked about it last night and today. We think about our outlook around the demonstrated capabilities that we've had, how have we grown through the cycle. You think about it, we've always had priority growth platforms. We are stepping into them more, trying to scale more effectively and target them, especially the bigger opportunities. We want to add additional growth from those, but we've always had those as part of that demonstrated capability to outgrow the macro through the range. For sure, our strategy is to always try to improve that capability, add priority growth platforms and do even a better job in line extensions and bring new disruptive businesses and manage our portfolio so that we're working in spaces where you have more attractive markets so that can enable your growth.
Part of the reason we outgrow the macro is we operate in attractive markets. They're faster growing than the average market, if we're doing our work the best we can in those spaces. We're always looking to step up. The range recognizes that there's a range in macro, there's a demonstrated capacity that we have. Everything we're talking about is designed to put us in that range and then drive higher. It's science in that these are the things that we know will do it. We've got to demonstrate it as we move ahead. We've got to demonstrate that we will do that in automotive electrification. We are near term seeing it contribute to us outgrowing the build rate. It is demonstrating the $200 million that Nick talked about is growing double digits. It's helping us outgrow that auto build rate in the near term.
Now, how will that play out over time? How will the shift between the builds and the build mix in the industry play out, and will it be 300-400 basis points above build rate? Can we expand that as electrification takes over? We've got to get out there and demonstrate that and prove that part of that billion-plus opportunity that we drive it there. To get to the top end of the range is a forward-looking kind of. That's our strategy is to build our capability to increase our ability to outgrow those macros.
It sounds like what you're saying is, assuming the economy's stable, you would expect an acceleration of your core growth as time goes on. I just want to ask Jim a question. We talked last night about your penetration of your end markets. Films and tapes, we both agree, are pretty widely penetrated globally, but abrasives are not. Is there any way to size? If you could just give us a little bit of a history of why are abrasives not more highly penetrated, and what kind of growth rates and assumptions, perhaps driven by the automation stuff you talked about, could actually get the core growth in abrasives higher?
I think you heard Mike describe a little bit of the abrasive journey over maybe the last few decades in terms of how that's been advancing. I think it goes right back to we reinvented a lot of what we did in abrasives in terms of bringing different science, whether it be grain structure, whether it be the composition of the grain, and being able to demonstrate that we had a higher performing product that allowed us to grow faster. Now we're growing upper single digit growth rates against the backdrop of markets that are probably, especially in the abrasives area, maybe the 3%-4%. That portfolio broadly, globally has been able to grow in that way.
Maybe just to talk about priority growth platforms, because this is a good example. You could have called our precision engineered abrasives a priority growth platform 10 years ago as we introduced it and built it out. It represents how these platforms grow. These are new solutions in the marketplace, and there's an adoption time. The classic S curve of a product growth, slow at first, eventually gets through the chasm, hits its inflection point, and grows very rapidly until eventually slows down and maybe levels out or decays, depending on the portfolio. Abrasives is a great example. When we launched Cubitron II, our first precision engineered abrasive, it was 36-plus grit on a fiber-backed disc. That's what we went to market with. We grew that $15 million at the time right away. Over time, that platform becomes many portfolios.
Jim talked about fine finishing. Going from 36 grit precision engineered abrasives to fine grit, that's application of science. It's a lot of science and how you coat those and how you get them all to work and how you get the grains to do their work the best way possible. You go into bonded and nonwoven kits. We're building out that platform. Frustratingly, there can be a fairly slow ramp as you start these even game-changing technologies until you hit that inflection point. Our priority growth platforms, we're trying to accelerate the investment in scale so that we can shorten that flatter part of the curve and get to the steeper part sooner, and ultimately take more of the opportunity ourselves before there's other solutions that enter the market. Sometimes, different indirect kinds of solutions.
It is a part of what we're trying to do with priority growth platforms, and this is a very good example. We introduced it in 2010. Here we are in 2018, game-changing technology, and it hasn't taken over the whole division. It's still smaller, it's less than half of the division. It will be eventually, virtually all of the division. Everything will switch to Precision, it just takes time. Our priority growth platform is, in addition to everything else, is trying to shorten those times to that accelerated growth.
Josh Pokrzywinski.
Thanks. I guess first question, with a lot of discussion around growth, if you guys end up at the lower end of the long-term range on growth, but track toward the higher end of the 200-300 basis points of margin, and Mike, you said that the investment shows up in margins first. Would that necessitate a change in strategy, or would that be kind of a successful journey? I guess my point is, if margins come in ahead, would you try to reinvest some of the upside to get growth off the bottom end?
What we were talking about kind of separately, what I was talking about is investment innovation. If you're successful in your innovation model, you see it in margin. You're differentiated in the marketplace. Your solutions are valuable. It's not just 3M, it's companies that invest in innovation. Getting growth is about applying your innovation, right markets, high growth spaces, places that you can really accelerate the growth. We want to do both. We expect to do both, and that's a big part of why we outgrow the macro and individually outgrow our market. Would we be satisfied at the low end of the growth range and the high end of the margin? I would say it depends a lot.
If we are sacrificing somehow the opportunity for our innovation because we are doing something to drive margins higher and we don't get that balance right, that would be something that I would think we'd have to be really thinking about in our strategy. If we're getting the margins because of business transformation and disruptive technology and what we're doing to lean out our value streams, we take those, whatever the growth is. They could be decoupled a bit. We expect innovation to drive both, but there can be reasons why those get a little decoupled. A bit of it depends, but we would expect to do things right. We're going to see the growth continue to be strong in our outlook, and we're going to deliver that margin, and innovation's going to play an important role.
Just follow up on some of the questions around selectivity or decay. You called out Western Europe and some of the selectivity there. If I had to roll that up over time, over the last few years, versus what it looks like going forward in terms of what you're willing to walk away from, is that a similar number? Is the selectivity going down in the outlook? Just help us frame that up.
The 2%-3% that I talked about in Western Europe, it's part of an effort that Julie and her team are leading. It's a regional portfolio effort. We didn't say, "Hey, we've got this much and we're going to do this much." We said, "What do we need to do? With our view of the portfolio today, what are we going to go after?" I would say, it's like portfolio in general. I say there's more to do. We did five or six years of portfolio. We've acted, we've created a lot of value in the company. We've learned a lot from it, and now there's more to do.
I think in Western Europe, taking a regional approach and how we're deploying BT and how we're lining up with our markets and how they shift, we are seeing the first big step of what we know how to do. Now we're going to learn through that process. I wouldn't be surprised to see us come out the other side and go, "That was really good, but there's more we can do.
There's no explicit gap in the guidance, is what you're saying?
No. We don't, in our guidance, have a plan for another tranche of geographic portfolio actions in West Europe. Doesn't mean we won't come out of it and go, "Yeah, we see additional opportunity." What we learned here, we can apply that more. This was really, let's go after what we know we can deliver value from. I give a lot of credit to our European team. They were the ones that laid this out. They worked with the businesses to make sure we got this right on a global basis. Then it's no fear in the execution. Let's go get it done. I think it is not meant to be a phase one of 3 phases, but we'll learn from it and we'll see where we go.
Josh, just to complete that. In the 5-year plan, exactly as Mike said, in the 2019 plan, there are some isolated pockets where we have intentionally planned for some exit of businesses, and that's part of that 2%-4% organic growth. As an example, Jim has a place in his business where he'll be seen as a part of some plans we took to exit things, some impact to growth next year, and there's some residual impact from some of the decisions we're taking in West Europe, too. From a big standpoint over the next 5 years, what Mike says is exactly right. Not any big extra things.
Julian Mitchell.
Thanks. Maybe, Mike and Nick, a question on gross margins. I remember two and a half years ago, Paul Keel's presentation where Paul had talked about 150 to 200 basis points of gross margin expansion over the current plan. I think gross margins this year, though, are maybe flat with 2015. Maybe explain what have been the unexpected headwinds in the interim, why you think you'll get back on track with gross margins going up.
A couple headwinds that probably weren't anticipated in what Paul was talking about almost three years ago. Changes in FX and where we are geographically, our manufacturing has been one thing, and we clearly have seen a different raw material world than what we've been in, than what we were in then as far as raw material expenses. Now that we've been largely offsetting with selling price increases. Those are two of the dynamics that I'd say are different from what we were talking about three years ago.
Got it. My follow-up would just be on the portfolio side. You talked about a cash ROIC on some of the recent deals of about nine.
Yeah.
When you gave a similar number on acquisitions a couple of years ago, that number was around 12. Should we assume that nine is the better ROIC run rate for acquisitions from here? Secondly, I guess on the portfolio pruning or divestment side, you've sold, I think, businesses with sales of around $1 billion. I was trying to understand if you're alluding to pruning. Are you implying we could see a similar number the next few years sold, or it's more just about focusing on other areas and just putting less R&D into some businesses rather than selling them?
I'll start with portfolio. I talked about the examples of the actions that we've taken. Those are also in line with what we expect to do. Now, will it happen in the next five years, the same way as it happened the last five years? Probably not. We are stepping in, and we have a lot of confidence about how we manage our portfolio. We demonstrate ourselves that we can create a lot greater value. If the way to do that is divestitures, we will make divestitures. If the way to do that is to change our business models and reshape how we operate as a company, we'll do that, too. At the heart is our value model, and what optimizes that value model in portfolio, in our go-to markets, in our transformed company, that's what drives us.
We're not setting out ahead of time saying that we want to have a target for divestitures, to somehow fit with the acquisition target that we have so that we can kind of get the right balance as we move ahead. We're really looking at the strategies from the other side and saying, how do we create value, leveraging our value model on acquisition side? What do we do in portfolio to do that? I'd be surprised if we didn't use all the levers that we have to create that value. We will do that.
In regards to the 12% that we shared earlier, that was a different set of deals that we were talking about. Our overall philosophy is, well, I'll say one of the litmus tests that we go through is, can a deal get to a cash ROIC by the fifth year? Can it get to our cost of capital by that fifth year? What you're seeing here is these deals are getting to that.
From anything on top of that, we see upside. That is, I'll say, a threshold that we set.
Now, Joe Ritchie.
Thanks, Bruce. A couple of data questions for Nick, then I want to turn to sort of broader question for Mike. Nick, the automation investments you're making, what does that do to headcount? Does that keep manufacturing headcount flat? Does it decline? How does that play out? What does that actually give you tangibly?
Investments that we make in automation, they do have an impact on headcount, that it makes us probably in the future of our manufacturing sites have less need for some headcount. Some of the automation improves our yields, that the capabilities there allow us to take yields and move them to higher level. The returns come both productivity and yields.
Okay. On pension OPEB, the $3 million, how much of that lands into 2019?
Right now, our estimate, of course, it all depends on what interest rates are on December 31st. Right now, our estimate is it'll be somewhere between $150 million-$200 million in 2019.
Okay. Mike, new CEOs generally like to put a signature on a change in strategy of some sort. From the presentation, it seems like it's very much steady as she goes. If you think about where maybe there's opportunity to tighten up and sharpen up strategy, be it R&D, productivity, commercialization, et cetera. Where do you see those opportunities?
Yeah. I would say probably yes, yes and yes. There's always that kind of opportunity. First of all, I like data questions, too. You can ask the team. I like data questions, too. I like to ask data questions is what I like. It's a great place to be as an incoming CEO. That we've built strong momentum. We have a strong foundation in the priority strategies that we know create value, that are true to 3M, that leverage our value model, that continue to build an enterprise greater than the sum of its parts. We need to continue to step forward in that. It's, yes, I see opportunities in every one of those areas. Portfolio management, better return on investment in innovation, greater productivity in our operations at the factory floor and across our supply chain, leveraging business transformation.
We can step forward and leverage business transformation into commercial activation, something that we're working on, and we'll talk more about as we go forward. It's an opportunity for us to leverage what we're building and activate commercially much more effective models. Not new models, but B2B through distribution and retail direct and OEM direct and healthcare models. We see ways to do that on a global scale and streamline the engagement with our customers, streamline our operations. It is along the same vectors of strategy that we have been driving, we just are in a position to take them further. That's a great place to be. Again, I keep using the word confidence. We have confidence because we've demonstrated performance, now we can step into it. It wasn't hard to get this team, the leadership team, during the transition to coalesce around that.
We know we can do that, we get confidence we can drive this forward. That is the place to start. We're not taking a right turn off of 3M and doing something in any part of our strategy. It's taking it to where we have that opportunity and we have that confidence based on performance.
Steve Winoker.
Thanks very much. Nick, Mike, I hope you guys are correct about where the economic cycle's going over the next 5 years. To the extent that we end up in a different place and we actually do enter a recession, if you think about how different the portfolio is today, if you think about the differences in the channels, where do you think is 3M's ability in a negative organic growth scenario to hold margins? Are you less vulnerable, for example, to distributor destocking because of the model changes, the businesses that you've exited? When investors sort of think about 3M through the cycle, while we're very excited about the growth, we get a better sense. You know what? The next experience, all other things being equal, 3M would behave, have a different kind of financial profile.
We talked about this a little bit. We have performed well during recessions in our history. I mean, our margin holds up. We certainly lead in typically, because of our go-to-market models, in part. You see destocking. It's not just distribution. It tends to be the entire value chain to the customer. There's inventory in every step of the way from us all the way into the end-use customer. You see that effect hit you as the slowdown hits the end of the value chain. That's not going to change. We're going to see that. How will we see that through e-commerce? It may be different because cycle times are shorter, efficiency's greater. In general, I would say e-commerce maybe is one of the catalysts, the distribution models in the world, they've gotten more efficient. They don't make the big swings.
We get a lot of questions, how's inventory in the channel? In general, it's better balanced than it was 5 years ago because they're more efficient, more effective. You see part of the reason the nationals have such a big effect in different markets is they're rolling up small ones, and they're becoming bigger and a bigger part of the overall distribution model. They're becoming more efficient, and they're managing their cash. They're also finding that they have to spend more on operations to get the same kinds of growth performance. It's a transformation in the channel. Will we see the same inventory effect? We'll see the same kind of value chain inventory effect. Will it be as sharp? Maybe not. We'll still see it. I mean, we're going to see it.
It's a matter of how is our portfolio now positioned to be able to perform in that. I would say the same kind of the other side of the answer to Andy is that we've got a portfolio that is, I would say, we're more confident that we can do what we've done in the past, which is perform pretty well on the downside, stay in position to take share, and really come out of it on the upside. I would say our expectation is we do better in terms of absolutes as we go through that. The growth, I don't know.
I would expect we're still going to see that we're going to lead in, lead out, and then we'll perform very well in terms of margin performance, and we don't walk away from those innovation opportunities when the recession hits because we know we're going to come out the other side, and we do, and that's why we end up growing coming the other side. It'll change the dynamics of the channel. E-commerce will be interesting to watch. It depends on how much cycle reduction and changes we see between now and the next recession, I suppose, to a degree.
Just a follow-up. If you think about kind of 3M's development over the last 50 years, one of the key transitions over that time has been increasing ability and ramping of commercialization of R&D efforts, and the ability to sort of see the results of that accelerate and the magnitude. How do you measure that now? What are the things that you're looking at to measure that effectiveness, the speed of commercialization, and what would you recommend we look at for that as well to anticipate is how it underlies this plan?
Yeah. I recognize that the metrics we use, internal metrics, we don't share those publicly. You have to look at our growth rates, our margins as we've talked about, our price power is a reflection on that. We certainly look at in our portfolio of innovation investments and how we perform. We look at every aspect. The three things that I talked about today. New disruptive businesses, that class of innovation investment. Priority growth platforms. How are we doing in that? We expect to deliver high probability success and performance there. Line extensions, as I said, we're very good at line extensions. We measure the return on that, and we adjust our investments according to that. We're looking at return on investment. We still look at NPVI. We've talked about that. We still look at new product vitality index. It's an important metric. It's not a primary metric.
Organic local currency growth is. Our margin performance, our portfolio performance, that's the primary metrics. Those are for us to be managing our strategy and innovation, where we apply our resources, where we do invest in the next growth opportunities. That's the way we think of it. We look in terms of how we're doing relative to the market growth business by business, market by market. It's very much a model and market and business specific kind of view of it. There's differences. There's differences in short cycle businesses, long cycle businesses, there's differences in consumables versus specified in and regulated businesses like healthcare or safety. There's a lot of dynamics that we fit into that, so we think about the ROI a little differently across those.
There's a lot of analytics that go into that, and we'll try to give you a qualitative view of that and then continue to point out how that impacts the rest of our business results.
Cliff Ransom.
Thank you. I just have 13 interrelated questions online. Thank you. I'll throw out a data question. I'm struck today, to me, there's a big difference between data and actionable information. Actionable information is the wisdom that you gain when you mine all that damn data. I'm struck today that what I haven't heard anybody say, and correct me if I'm wrong, to me, the highest value of that data is when you take it, mine it, and produce better products and services.
create even more insurmountable barriers to competition. Is there a reason why I haven't heard that, or did I just mishear?
We probably could spend some time on looking at how we're using data and analytics on the commercial side of our business. Certainly, we use it on the front end of our business with our customers. I suppose when I talk about the strengths of 3M and the power of 3M and the model engaging our customers, to a degree, it's a person-to-person, face-to-face. That's certainly part of it. We're working with our customers. There's a lot more in it. There's data and analytics that feed that as well. It's not windage, it's science. It's science in our market understanding. It's science in our research. It's science in the data and analytics. I think it's a very good observation. It is where the world's going.
There's more insights to be mined out of data than to go in and spend time with a customer day in and day out and find articulated needs that way and that way alone. There's a lot in that data. We'll talk more about that as we move ahead. It's on the innovation and commercialization side. It's certainly, and I think Joaquin showed a great example without sharing all of our secrets on how we're doing that in retail businesses and really not just mining it, but real time adjusting off of it. We can do that. One of the great strengths of having a retail business in 3M is they're at the forefront of that, and they're helping all the rest of our business models come along with it. We're learning.
They've got a clock rate in their business on point of sale that's faster than our other businesses. They're real time with their retail customers. It's part of the ante to be in the game with those retail customers. I don't know, Joaquin maybe.
Yeah, I think you're absolutely correct, Cliff. It's not only about what data and what insights do you get with the data, how do you act with them. That's what I was referring in my presentation without getting into the data science details, the two components, which is machine learning, which essentially is mining for the data, looking at correlations, looking at that, then artificial intelligence, which is when we program the engine to say, "Okay, what decisions? What I'm going to do with that data, and what value I'm going to bring?" That is what we are combining day in and day out.
As I've given some examples, without getting into details or disclosing proprietary information, how we go about that to generate demand, to generate rich content, to decide what campaigns do we do, to determine what products are we going to and assortment we are going to have on which product we're going to have.
Thank you very much.
Great.
Ken Walsh.
Hi. Thank you. I think for your automotive business relative to build rates, you've outgrown by about 300 to 400 basis points historically. I'm just wondering how you guys think about that evolving over time as Automotive Electrification continues to grow faster.
Maybe I'll get a high level to talk about it, Jim can come in on how they're thinking about it as we look at the landscape for where the growth is going to happen and the projections as we go forward. That 300-plus basis points of outgrow, it's really about us driving penetration. A number of strategies that get there, but ultimately, it's about innovating and adding solutions in our opportunities with customer. When you look at our automotive OEM business, we're in somewhere close to $20 a car if you do the high level maths. Take almost $100 million cars and light vehicles, and you divide it into the revenue, you're in that kind of space, somewhere $15 to $20. There's a lot of upside on the bill of materials of a car if you bring innovative solutions. They're always innovating.
Even before we pulled together a big view at a priority growth platform on Automotive Electrification, we were going in with electronic solutions. The electronification of cars, internal combustion cars, has been going on for some time. Part of our ability to grow was solutions that we bring to that. On a broad level, that innovation is what drives that opportunity. Electric vehicles creates even a bigger denominator of innovation for us. We see fairly clearly, and you saw them last night, examples of opportunities where we can broaden out our innovation space is creating an internal combustion engine, we have more limited powertrain kinds of opportunities than we do an electric vehicle. That, by definition, creates a bigger opportunity for us. Our growth rate's already because there's a bigger opportunity than what we've penetrated to date. That's what's outgrowing the build rate.
Now it gets to be a bigger opportunity, maybe multiplies faster because the whole powertrain becomes a bigger opportunity. I don't know, Jim, if you have anything to add.
No, I think you said it well. I think perhaps a number of sessions ago, Inge referenced a car has four, maybe five tires, so it limits the amount of penetration. For us, there's expanding needs within the industry. I would go back and reference whether it's structural bonding as maybe an example. Cars are being developed with dissimilar materials requiring different bonding techniques. They're looking for productivity. They're looking to eliminate mechanical fast. That all creates great opportunity for us. You just look at extending that, and maybe the example I'll give, and it actually is in Ashish's business, but within our electrical materials business, we do unique and exciting things within something as age-old as the windings within motors that creates unbelievable efficiencies for them. That's an area that's expanding fast within the e-vehicles. We're just leveraging that.
That would be an area that historically within the automotive space wouldn't necessarily have been natural in terms of what was being really needed or desired. What we're doing is continuing to look at the broad 3M technology base, being able to leverage that broadly across e-vehicles, doing exactly what Mike said, even creating greater lift in what we can do in terms of $ per car of penetration with e-vehicles.
Thank you.
Yeah.
All right. Well, I'm going to wrap up. We're about to noon. Before I turn it back over to Mike, I just want to remind you of lunch downstairs. Please join us downstairs for lunch, and thank you again for your time today.
Yep. Maybe don't want to interrupt applause for Bruce. He's been working hard the last couple of weeks. I just want to end where I started, too. Thank you for being here. I appreciate you spending your time with us, and I know that's a big investment from you. I hope I accomplished some of what I set out to. A deeper understanding about 3M, how we create value, how we're unique and differentiated among companies. I think a better understanding of our leadership and the broader leadership of 3M in that we are not just focused on the priorities that are going to take us to the future, but doing that in 2019. We are going to drive to that starting with a strong close to 2018. I'll leave it there. Thank you again. Enjoy the lunch.
Look forward to some conversation over lunch, and have safe travels where you head back home. Thanks. Thank you.