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)

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