As the novel coronavirus spread throughout China, it became clear that a key piece of protective equipment for health care workers was the N95 respirator mask.
Maplewood-based 3M, as the largest maker of N95s, kicked into high gear to make as many as possible at its Shanghai plant, nine hours east of Wuhan — the epicenter of the disease in China.
As the coronavirus mushroomed across the rest of the world, a global shortage of N95s would develop and test 3M like nothing else in its 118-year history.
Entering the year, only 15% of 3M’s N95s were made for health care customers. Not even four months later, it’s now 90%. That “flip” was done at the same time 3M raced to quadruple production rates, said Denise Rutherford, 3M’s senior vice president for corporate affairs.
The dash to ramp up production involved opening idled production lines and finding factory workers to get them going. It meant overcoming regulatory and trade barriers, changing supply chains on the fly and reconfiguring its distribution.
It wasn’t all smooth — from the operational or public relations standpoints. 3M had to navigate a political firestorm when President Donald Trump decided it was not working fast enough to achieve U.S. needs.
Yet industry watchers are lauding 3M as handling it particularly well, even as it was dealing with cratering demand for other stalwart lines such as automotive and industrial products as the economy slowed to unprecedented levels amid the fight to stop COVID-19’s spread.
Coming off a tough year, 3M’s financials are expected to show the same effects seen by other big global companies when 3M reports first-quarter results Tuesday.
“3M is definitely not immune from what is transpiring in the economy, but there are pieces of the economy that are obviously going to see somewhat of a windfall,” Edward Jones analyst Matt Arnold said.
Springing to action
When 3M saw the severity of the coronavirus spread in China in January, the company accelerated its production. It had been down this road before with smaller outbreaks of SARS and H1N1. At that time, 3M bought extra manufacturing equipment for each of its factories around the world that made personal protective equipment (PPE).
For 3M “to have that surge capacity available is not typical in modern lean supply chains. And it’s incredibly expensive,” said Kyle Goldschmidt, assistant professor of operations and supply chain management at the University of St. Thomas.
N95 masks are considered the gold standard because they block 95% of airborne particulates. As coronavirus spread across Asia, Europe and the U.S., N95 demand far exceeded past pandemics and forced 3M to increase its “surge capacity” efforts.
That wouldn’t have worked, Goldschmidt said, if the company did not already have a framework in place.
“My guess is that academics will be writing case studies about 3M’s efforts and how well prepared they were in the wake of this virus,” he said.
By the time the U.S. had put together a coronavirus task force led by Vice President Mike Pence, 3M had identified some obstacles where the government could help.
When Pence visited the Maplewood campus March 5, one of the asks was for a quick change in regulation that would allow the N95s made for U.S. industrial use to be sold to U.S. health care entities. Once that was done, CEO Mike Roman said earlier this month, 3M redirected its main distributors to sell to where the need was.
3M turbocharged its relationships with six medical distribution giants and started airlifting masks to COVID-19 hot spots in New York and Seattle. In other cases, 3M employees delivered the respirators themselves, for example, moving 500,000 masks from its South Dakota plant to New York City and Seattle in a single day, a 3M spokesman said.
As one team worked on distribution, another increased manufacturing. The company has pledged to double its worldwide N95 manufacturing twice since January for a total of 2 billion masks a year.
Yet by January, 3M had maxed out its N95 manufacturing in Shanghai. Weeks later, its mask factories in South Dakota and Nebraska were also running 24/7. The company added equipment in Aberdeen, S.D., to increase capacity.
By March 30, the Valley, Neb., plant was hitting a wall, said Wade Kretman, technical director for the 3M Auto Aftermarket Division, who received a call asking him to help with the situation. Kretman’s mission was to find 50 3Mers with factory experience from Minnesota and Iowa to work in the factory for several weeks.
Kretman said he had 200 volunteers “in the snap of a finger” and a team was traveling in 24 hours time.
Other workers came out of retirement to help with other needs, including Don Garvey and Bruce Penning. The two now field customer calls from their homes to help overwhelmed colleagues who run the Personal Safety Division (PSD) Helpline.
Helpline calls tripled to 1,000 a day in four weeks as anxious customers inquired about the virus, mask fittings, expiration dates and how to use two-filter industrial paint respirators some had found in dusty basements.
Garvey, a retired 3M construction health and safety manager, said he now spends nine hours a day talking to people from factory workers to government officials, with queries from how to use them to more operational questions.
The relationships, he said, have become personal in minutes and he admits while he likes to think of himself as a tough guy, he has found himself in tears.
Since January, 3M also reached out to find partners: “Anywhere that 3M can find someone to help us, we are not too proud,” said Rodney Hehenberger, leader of 3M Respiratory Global R&D.
That included creating relationships in weeks that can in normal circumstances take years. After idling several of its auto plants, Ford started reaching out to see how it could use its manufacturing capacity to make health care components.
The automaker sent engineers and representatives to 3M’s Nebraska plant, Ford figured out it could make its own version of battery-powered “PAPR” respirator to help shore up PPE capacities. Auto supplier Cummins is making filters for PAPR respirators.
By the end of June, 3M’s two U.S. plants should be making 50 million N95s a month. Until then, 3M arranged for its factory in China to export more here.
As 3M was working with trade groups, governments and supply-chain experts to figure out how to increase the imports, Trump inserted himself strongly into the situation at the beginning of the month. Trump invoked the Defense Production Act on April 2, ordering 3M to send as many respirator masks as needed to the Federal Emergency Management Agency.
As Roman pushed back, calling “absurd” claims that the company wasn’t doing as much as it could to help U.S. customers, 3M also was negotiating with the Trump administration. Within a week, Trump publicly said he now liked working with 3M and announced a $76 million federal contract with the company.
3M agreed to import 166.5 million masks from China by July. That would help infuse the U.S. with extra supplies until 3M’s South Dakota and Nebraska production rates were high enough.
After 3M and other companies increased production capacity many times over in China, by March when that country was recovering, there was supply available, said Serguei Netessine, vice dean of the Wharton School of Business.It still took some time, he noted, for the governments to negotiate trade allowances.
Even with agreements in place, the path to importing PPE remains turbulent.
Ben Bidwell, director of U.S. Customs for Eden Prairie-based logistics company C.H. Robinson, said the company is fielding hundreds of PPE equipment requests. Demand, he said, exceeds available airfreight capacity from Asia.
And because of quality concerns and a recent swell in counterfeit products and marketing, China implemented new safeguards that require more time. 3M also has increased efforts to find and investigate fraud in relation to N95 masks.
One more challenge
The pandemic added a crisis on top of a year spent dealing with global economic problems and in the U.S. with lawsuits over claims of PFAS chemical pollution and military earplugs malfunctions. Its stock had plummeted 30% last year, while peer companies saw a drop of 10%.
“The last 12 months have been filled with issues and challenges, there is no question,” said Edward Jones’ Arnold. “3M has underperformed its peers.”
Still, the “ramp-up in the production of masks is a win,” Arnold said. “3M will obviously benefit from demand and they can play a really critical role in combating the outbreak in the process.”