On Thursday April 2, the Trump administration invoked the Defense Production Act requiring 3M to prioritize sales of its face masks to the US Federal Emergency Management Agency over other customers.
Before the COVID-19 crisis, 90% of 3M’s N95 mask capacity had been going to industrial customers. However, the CEO of 3M has already noted that the company has shifted sales so that 80% of its US sales now go to healthcare facilities in the hardest-hit areas, while the other 20% go to federal agencies such as FEMA. The concerns were that 3M – which sells US-made masks to Canada, Mexico, and Latin America (including countries where it is the sole supplier of N95 masks) – would not be able to fulfill the needs of domestic and global customers. However, restricting supply to other countries may lead to retaliation and shortages in these or other areas.
The US is only responsible for about 30% of the global production of medical disposable equipment in value terms. While the US is, overall, a net exporter of these products, that status does not hold across all individual product categories. Particularly in a time of crisis, the US must cooperate with all markets within global industries, which is part of what could make the demand that 3M reappropriate its existing and expanding capacity deeply problematic. Canada, which buys US-made face masks from 3M, is a key supplier of wood pulp, a primary material used to make N95 face masks as well as test kits and gloves. Global supply chains demand cooperation to function smoothly.
As of Sunday April 5, Canada’s Prime Minister Justin Trudeau did not yet have plans to retaliate and expressed hope that the supply situation could be addressed through diplomatic channels instead.
For more information, see The Freedonia Group’s US Disposable Medical Supplies, Global Disposable Medical Supplies, Global Nonwovens reports. Freedonia Custom Research is also available for questions requiring tailored market intelligence.