Can 3M & Other Large Caps Fulfill Medical Gear Shortage?

Ritujay Ghosh

3M Company MMM will be importing more than 55 million masks into the United States each month, following a public showdown between President Donald Trump and the company last week. Trump on Monday said that the U.S. government has reached a deal with 3M to manufacture and bring in millions of respirator masks into the country over the next few months to make up for the shortage of protective gear amid the coronavirus pandemic.

The United States, which has become the new epicenter of COVID-19, has been facing acute scarcity of medical equipment like masks and ventilators as it struggles to contain the spread of the deadly disease. The U.S. government has been urging a number of companies to come forward and join the fight against the pandemic by producing masks, ventilators and other medical equipment.

3M Strikes Deal With U.S. Government

On Apr 6, Trump said that the White House and 3M Company have reached a deal that will bring more than 55 million masks every month into the United States. Per the new deal, 3M will import 166.5 million respirator masks to the United States over a period of three months. This will add to the 35 million masks that 3M manufactures domestically every month, said the company.

“So the 3M saga ends very happily,” Trump said at a White House press briefing on Monday. The remarks come after Trump and other critics accused 3M of unpatriotic behavior as it continued to sell N-95 masks to other countries despite a shortage in the United States. Trump last week had said that if 3M fails to follow his orders and ramp up production of ventilators and face masks, it “will have a big price to pay.”

3M has operations in China where a bulk of its production for respirator masks take place. Trump even invoked the Defense Production Act so that he could get more N-95 respirators from 3M.

Other Companies Join the Coronavirus Fight

There has been a shortage of surgical masks since the outbreak of the virus. This has seen governments urging companies to ramp up production of respirator masks and other medical equipment. Automakers have been playing a key role in this respect, with General Motors Company GM and Ford Motor Company F encouraging their suppliers to assist in the production of face masks and ventilators. General Motors and Ford each carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last month, Fiat Chrysler Automobiles N.V. FCAU said that it plans to make a million face masks a month and distribute it in North America in an attempt to fight the deadly coronavirus. Also, Volkswagen AG VWAGY said that it is trying out using 3D printing to produce hospital ventilators. Fashion brands The Gap, Inc. GPS and Moet Hennessy Louis Vuitton SA LVMUY have also been working aggressively toward ramping up production of surgical masks.

Hospitals across the United States are struggling to purchase surgical masks and other medical equipment as suppliers are reportedly not being able to meet the demand. Moreover, prices of these products too have skyrocketed. Given this situation, large-cap players need to come forward and ramp up production of these protective gears to help the government in its attempt to fight the pandemic.

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