By Tomi Kilgore, MarketWatch
3M Co. responded Friday to criticism from President Donald Trump, saying the request to cease exports of much-needed N95 masks to fight the COVID-19 pandemic will not only have the “opposite” effect of what is needed, but also significant “humanitarian” consequences.
The company, which makes safety, industrial and consumer products, including Post-it Notes and Scotch tape, as well as face masks, said that it has been working closely with the Trump administration to supply N95 respirators to fight the spread of the novel coronavirus, and appreciates the authorities in the Defense Production Act that were invoked on Thursday, but indicated that some of the administration’s requests could be counterproductive.
For example, under the DPA, the administration requested 3M to cease exports of respirators made in the U.S. to Canada and Latin America.
The company (NYS:MMM) said that would have “significant humanitarian implications” as 3M is a critical supplier to those countries. It would also likely provoke other countries to do the same, as some have already done.
“If that were to occur, the net number of respirators being made available to the United States would actually decrease,” 3M said in a statement . “That is the opposite of what we and the Administration, on behalf of the American people, both seek.”
The company pointed out that after a request from the administration to increase respirators imported from its overseas operations, it was able to secure approval from the Chinese government, with help from the administration, to export 10 million N95 respirators that it made in China to the U.S.
The company’s response comes after Trump tweeted late Thursday that he “hit 3M hard,” and that the company will have a “big price to pay,” as many in his administration were surprised with what 3M was doing with their masks.
The administration formally invoked the DPA to require 3M to prioritize orders from the Federal Emergency Management Agency (FEMA) for N95 masks.
Earlier this week, 3M said it has boosted production of N95 masks to 100 million per month , including 35 million masks per month in the U.S. By June, the company said it expected to make 50 million masks in the U.S.
In an interview on CNBC on Friday, Chief Executive Mike Roman said it was “absurd” for President Trump to suggest 3M wasn’t doing everything it could to supply face masks to U.S. health-care workers. “Nothing could be further from the truth,” Roman said on CNBC’s “ Squawk on the Street ” program.
Using the DPA to ask 3M to make more masks “may not be as effective as we wish,” as the shortage of masks is more a result of a lack of raw materials than of production capacity, according to Howard Yu, Lego professor of management and innovation at the Institute for Management Development in Switzerland. The raw material to make the N95 masks isn’t usually in high demand during peacetime, Yu said.
“It requires once-obscure melt-blown fabric, an extremely fine mesh of synthetic polymer fibers,” Yu said.
Yu said the administration also has to be careful in it’s attempt to fight the pandemic in isolation by calling for a cease in exports of personal protective equipment (PPE).
“No country can be completely self-sufficient,” Yu said. “The virus knows no border.”
Canada’s Prime Minister Justin Trudeau reinforced that point in an interview on CTV News . He said 3M has indicated that it understands how important it is to continue with delivering on orders to places like Canada, “because there is much trade that goes back and forth in essential services and it can end up hurting Americans as much as it hurts anybody else.”
3M’s stock (NYS:MMM) fell 3.0% to close at $133.79, while the Dow Jones Industrial Average (DOW:DJIA) fell 361 points, or 1.7%. Year to date, 3M shares have shed 24.2% while the Dow has dropped 26.2%.
Despite the boost in production in masks, from 3M and others, there is still expected to be an alarming shortfall. As reported in The Wall Street Journal , 3M and a half-dozen smaller competitors were producing about 50 million N95 masks in the U.S. each month, compared with the Department of Health and Human Services’ estimate in March that U.S. health-care workers would need 300 million masks.
New England Patriots' Plane Flies 1.2 Million Masks from China to U.S.
The Massachusetts governor struck a deal for N95 masks from China, but he needed a way to transport them. The New England Patriots plane ended up making the delivery. Photo: New England Patriots
And demand for face masks are likely to increase substantially after Trump and Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, appear to be close to recommending the general public wear face masks.
Mayor Bill de Blasio advised New York City residents to cover their faces before leaving their homes, and New York Gov. Andrew Cuomo said it “couldn’t hurt” to wear homemade face masks to stop the spread of coronavirus.
Earlier this week, Massachusetts Gov. Charlie Baker worked out a deal with New England Patriots owner Robert Kraft to fly 1.2 million N95 masks from China to the U.S., with 300,000 of that supply going to New York. Read the WSJ story of the details of the flight on the Patriots’ team plane .
Last month, Cuomo had called on local fashion designers to help produce PPE, including face masks and hospital gowns, and they listened, with many designers, including New York’s Christian Siriano, Prabal Gurung and Rachel Comey, among others, announcing plans to join the fight of the COVID-19 pandemic. Read more in Barron’s.
The supply of masks isn’t the only issue.
On Friday, 3M said it will continue to fight against price gouging and the unauthorized reselling of its masks. “This activity is unethical and illegal,” 3M said. “We are working with the U.S. Attorney General and attorneys general of every state, making it clear that 3M has not and will not raise prices for respirators and offering our assistance in the fight.”