“As I laid out sort of the math there and earlier in this conversation, $13 billion worth of cost of goods, if we do 2% net productivity, it’s more or less $260 million. If we did it every year, it’s sort of a point a year of gross margin.”

In context

“getting gross margins for 3M into the high-40s. Right now, you are sort of 42-ish or so rate, including some charges. So is the right way to think about the medium term, maybe sort of 400 or 500 points of gross margin uplift on the sort of total enterprise level? And then operating expense inclusive of SG&A and R&D, that’s sort of staying relatively stable in the low-20s as a share of sales as you sort of squeeze out more efficiency and returns from the R&D? Bill Brown: Yes. So Julian, it’s a good question. We are running kind of in the low to mid-40s right now and gross margin in the 43%, 44% range, plus or minus. There are points in time in the past where we were high-40s. That’s excluding healthcare. So in our – the way we have our business structured today, it’s certainly achievable. As I laid out sort of the math there and earlier in this conversation, $13 billion worth of cost of goods, if we do 2% net productivity, it’s more or less $260 million. If we did it every year, it’s sort of a point a year of gross margin. Of course, there is lots of dynamics here. You’ve got mix happening in the business. You have new products coming in. We have got kind of, as next year, middle of next year as we exit PFAS manufacturing. You have some under-absorbed costs within those factories we’ve got to take care of. Eventually, Solventum is going to move some of their production away or in the TSAs will wind down. We’ve got to absorb that. So there is going to be lots of puts and takes. So it won’t be a linear journey over the next number of years, a growing gross margin. But I do see that that’s a big focus of ours. We have got to be really pushing that hard to drive gross margin improvement over time. Our R&D level is about 4.3%, 4.4%. I mean it could drift up, it could drift down a little bit in the tens of basis”