By Austen Hufford and Joe Palazzolo
3M Co. pushed back against criticism of its work to get N95
masks to health-care workers in the U.S., intensifying conflict
between the Trump administration and U.S. manufacturers racing to
meet urgent demand for medical equipment.
Chief Executive Mike Roman said 3M is raising domestic
production, importing masks from its plant in China and taking
action against price gouging on masks that medical workers need to
treat patients infected with the new coronavirus.
"We in our company are doing everything we can," Mr. Roman said
in an interview.
President Trump on Thursday invoked the Defense Production Act,
which could force 3M to manufacture as many N95 masks as the
Federal Emergency Management Agency determines are needed. He said
in a tweet that his administration "hit 3M hard today after seeing
what they were doing with their Masks."
Mr. Roman defended his company's efforts. "We are not fighting
price gouging? That's absurd," he said. "We are not doing
everything we can to maximize respirators in our home country?
Nothing is further from the truth."
3M is the latest company to draw criticism from Mr. Trump over
its efforts to fight the coronavirus pandemic. Health workers
across the country are running short on N95 masks -- so-called
because they block 95% of very small particles -- as well as the
gowns, ventilators and face shields used to treat the sickest
patients with Covid-19, the disease caused by the virus.
The president criticized General Motors Co. last month for not
working fast enough to make ventilators. GM executives were
surprised by the criticism and felt the company was being unfairly
targeted, people familiar with their thinking told The Wall Street
Journal. The company emphasized the extent of it efforts to
administration officials, a person familiar with the matter said,
and the president changed his tone a couple of days later, saying
the auto maker is doing a "fantastic job." Mr. Trump invoked the
DPA against GM last week.
Mr. Roman said the act could compel 3M to bring masks produced
internationally to the U.S. Such action could face legal challenges
in those countries because they have export bans.
Robert Zafft, a St. Louis-based attorney who advises companies
on commercial matters, said invocation of the DPA could protect 3M
from legal exposure for failing to honor mask commitments to
distributors. Typical commercial-contract provisions excuse
companies from fulfilling their agreements because of circumstances
beyond their control, such as government action.
3M is the primary U.S. producer of N95 masks, and health workers
consider its products the best on the market. Since cases of the
coronavirus began to proliferate in China in January, 3M has
doubled mask production to some 100 million masks a month globally.
Mr. Roman said 3M would be making masks in the U.S. at a rate of 40
million a month within weeks, up from 35 million a month
currently.
That is the bulk of the U.S. capacity to make about 50 million
N95 masks each month, according to industry executives. Other
companies including Honeywell International Inc. are also working
to raise output. The Department of Health and Human Services
estimated in March that the U.S. would need about 300 million N95
masks a month to confront a pandemic.
3M said it was importing 10 million masks from its factory in
China to the U.S. at the administration's request. But the company
said it would continue to send less than 10% of the masks it makes
in the U.S. to Canada and Latin America on humanitarian grounds,
unless compelled to stop by government action.
Prime Minister Justin Trudeau said Canadian officials spoke to
the Trump administration on Friday about maintaining trade in
health-care products and services between the two countries.
"It would be a mistake to create blockages or reduce the amount
of back-and-forth trade of essential goods and services," he said.
"It could end up hurting Americans as much as it hurts anybody
else."
While 3M has maintained substantial mask production in the U.S.,
other companies moved output abroad years ago. U.S. hospitals and
suppliers said importing during the pandemic has been slow and
expensive. Airports are short-staffed, and some countries have
restricted exports of medical supplies and raw materials to fight
the virus locally.
Governors, city officials, health-care executives and
distributors said the market hasn't triaged effectively without
federal intervention. In interviews, they described cities bidding
against cities and states bidding against states, and masks flowing
to those who can pay fastest rather than those most in need, such
as New York City, which accounts for 22% of the country's confirmed
coronavirus cases and 24% of coronavirus-related deaths, according
to the Johns Hopkins Coronavirus Resource Center. New York state on
Friday reported its largest single-day tally of deaths related to
the virus.
City officials said regular suppliers, including W.W. Grainger
Inc. and Fastenal Co., don't have enough masks to meet the massive
need for workers in hospitals, emergency services and other city
jobs. City officials estimate they will need 30 million masks every
four weeks. They have pleaded with 3M to sell directly to the city,
offering to send tractor-trailers to 3M plants to pick up pallets
of masks, said a senior city official. 3M declined, the official
said.
3M said it is working with six large health-care distributors
and FEMA to send products where the need is highest. "Those are the
most efficient, effective ways to get products to the health-care
workers," Mr. Roman said.
In desperation, procurers for the city and its public hospitals
are striking deals with unfamiliar suppliers. Procurers have been
inundated by calls and emails from brokers and companies promising
masks, some marked up as much as 1,000%, the senior city official
said.
Prices that U.S. government agencies and public hospitals are
paying for masks have spiked in recent weeks, according to
contracting-data provider GovSpend. N95s are selling for $3.59 to
$6.89 each, compared with between 86 cents and $1.20 before the
crisis.
Mr. Roman said 3M's authorized distributors weren't price
gouging. He said resellers were raising prices on masks they found
sitting on store shelves or in warehouses.
"That inventory has moved and found its way into resellers." Mr.
Roman said. "They are doing unethical things, criminal things."
Officials in New York are telling some frontline workers to
ration diminishing mask stocks. Some hospital workers are wearing a
single mask for entire shifts. The city health department sent an
alert Wednesday urging conservation measures, such as storing masks
in paper bags between uses and decontaminating them using
ultraviolet light.
"The global shortage of personal protective equipment and other
supplies has definitely tested our resourcefulness," said
Christopher Miller, a spokesman for the public hospitals.
--Paul Vieira and Allison Prang contributed to this article.
Write to Austen Hufford at austen.hufford@wsj.com and Joe
Palazzolo at joe.palazzolo@wsj.com
(END) Dow Jones Newswires
April 03, 2020 17:23 ET (21:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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