How 3M Uses Surge Capacity to Double Production of N95 Masks

(Bloomberg Businessweek) -- Andrew Rehder, manager of 3M Co.’s respirator mask factory in Aberdeen, S.D., got the call from headquarters on Tuesday, Jan. 21. He gathered about 20 managers and supervisors into a conference room, where they sat, unworried, less than 6 feet apart. Rehder told them that a new virus was spreading rapidly in China and that 3M was expecting demand for protective gear to jump..The Aberdeen plant had already ramped up production of respirator masks in response to demand from first responders battling wildfires in Australia and contending with a volcano in the Philippines. Now, Rehder told his charges, Aberdeen would shift to “surge capacity.” Idle machinery installed for precisely this purpose would be activated, and many of the plant’s 650 employees would immediately start working overtime. “We knew it wouldn’t be a two-week blip, it would be longer,” Rehder says. “But I had no idea.”.This is 3M’s moment, one for which the staid, 118-year-old Minnesota manufacturing giant—the maker of Post-its, Scotch tape, touchscreen displays, and scores of other products—has been preparing for almost two decades. Coming out of the SARS epidemic of 2002-03, the company realized it wasn’t fully equipped to handle unexpected explosions of demand in the event of a crisis, or what it calls an “X factor.” It decided to build surge capacity into its respirator factories around the world..Over the years, with X factors such as the Ebola panic and the H1N1 flu virus generating flash floods of demand, the company kept refining its emergency response. When the world started clamoring for respirator masks to help confront coronavirus, 3M was ready..People everywhere are scrambling for ventilators, Covid-19 test kits, bleach, and toilet paper. But almost no item is as scarce—and as vital to addressing this medical emergency—as the N95 respirator masks made by 3M, Honeywell, Medicom, and a smattering of other companies. Without respirators, doctors, nurses, and other medical personnel are at increased risk of contracting the affliction they’re treating..China, where this coronavirus originated, also happens to produce half the world’s respirators. As the outbreak spread, the Chinese government halted mask exports and demanded that all in-country manufacturers, including 3M, crank up production. Shortages swiftly developed as Covid-19 cases appeared in Asia, Europe, and the U.S., forcing health-care workers to reuse old respirators and cobble together ersatz masks from materials bought at craft stores. In America, states are bidding against one another for masks priced as much as 10 times the usual cost of 60¢ to 80¢ apiece..3M can’t save the day on its own, but it’s promising a remarkably large contribution. The company has in two months doubled global production of N95 masks to about 100 million a month, and it’s planning to invest in new equipment to push annual mask production to 2 billion within 12 months. On March 22, Chief Executive Officer Mike Roman said in a news release that 3M had sent 500,000 respirators to hard-hit Seattle and New York City, and that it was ramping up production of hand sanitizers and disinfectants as well. Two days later, Roman said 3M would work with Ford Motor Co. to produce powered air purifying respirators, waist-mounted devices that blow air into helmets that shield wearers. Honeywell is also increasing N95 production, saying it will hire at least 500 people to expand capacity at a facility in Rhode Island..Although businesses globally have emptied out, more than half of 3M’s 96,000 employees are still showing up for work in its factories and warehouses. “It’s been amazing,” says Rehder, who’s in the Aberdeen plant seven days a week, usually walking the floor, which is now marked with yellow tape to keep workers from violating the imaginary 6-foot infection barrier. “People are very proud to work in a place that’s making respirators, especially with the need that’s out there now.”.Pliny the Elder wrote of sulfur miners in ancient Rome using animal bladders to fashion the earliest face masks. Leonardo da Vinci imagined a mask soldiers could wear as they flung poisoned powder at enemies. Over the centuries masks evolved to counter smoke, smog, coal dust, and asbestos fibers. During the 1918 flu pandemic, San Francisco health regulators recommended that people wear masks in public places..The N95 respirator is so named because, worn properly, it blocks at least 95% of airborne particles from entering a wearer’s mouth and nose, while still allowing respiration through the microscopically porous shell. This design protects a person from medical and other hazards; flimsier, looser-fitting surgical masks are intended to prevent the wearer from infecting others with expelled mucus, blood, or spit..3M makes about two dozen versions of the N95, for different industrial and medical purposes. Generally they’re constructed from nonwoven materials—infinitesimal plastic strands blown together to form a random thicket that, under a microscope, “is going to look like pickup sticks,” says Nikki McCullough, 3M’s global leader for occupational health and safety. “If you’re a submicron particle, it’s quite the journey through there.” The filters can block invaders as small as 0.3 microns, or about 1/100th the thickness of a human hair. The virus is smaller than that, at about 0.125 microns, but it often travels within larger particles when an infected person coughs or sneezes..3M started making dust respirators in 1972. Later versions became staples at construction sites, oil fields, coal mines, and factories, as well as at hospitals and disaster scenes. After the SARS outbreak sent demand soaring, Roman says, “We realized we didn’t have the ability to flex” production to adapt to the unexpected. “We had H1N1 after that, we’ve had forest fires and hurricanes, and all of those create a surge in demand.” So 3M set about rethinking the manufacturing process from one end of the supply chain to the other. Factories added assembly lines that would stand dormant until needed. Suppliers were put on alert. The company assembled emergency response teams that would leap into action whenever catastrophe beckoned: Harvey, Maria, the California wildfires..Then came Covid-19. China’s respirator makers had largely shut down for Chinese New Year when the coronavirus started making headlines, leaving mask supply shrinking just as the need was poised to skyrocket..The supply chain team at 3M noticed early. “We monitor our demand constantly,” says Charles Avery, global value stream director for 3M’s personal safety division. “We knew we could be in for an X factor.” McCullough, who has worked on respiratory protection for much of her 23 years at 3M, began to worry when she saw Singapore and other countries taking precautionary steps even before they had many cases. “We started realizing how quickly this was spreading,” she says..3M had another built-in advantage: Unlike many companies that have moved production to low-cost countries, it sources the materials for its respirators near its assembly plants and serves customers reasonably close by. “We make respirators in China for the China market, we make respirators in Korea for a little more than the Korea market,” Roman says. Each plant can ship respirators anywhere—pretty important in a pandemic—but day to day, a plant doesn’t rely on distant vendors subject to tariffs or export bans..In the U.S., the facility at Aberdeen, a city of 28,000, was built in 1974. The 450,000-square-foot factory and a sister plant in Omaha together produce 400 million respirators of myriad types annually. Within the next year, they will be producing many more..When Rehder got that call from his bosses in January, he says, “basically, we were at that point where we needed to start every machine up. It happened pretty much instantaneously. That’s what this plant does.” The facility quickly organized offsite and online job fairs. Hires had to undergo training and pass a medical exam before starting work. The payroll now counts more than 700..Rehder has also been bringing in new equipment to build additional assembly lines. The mask components are readily available because most of them, including the filters, are made in-house. The lines that assemble respirator cups, filters, nose clips, and nose foam are loaded with robots and other automation, while humans tend to packaging and other tasks that allow more easily for social distancing. No workers have yet gotten sick, Rehder says. At home, his wife has been patient—though, he jokes, “when we try to sit down and watch a movie and I get six calls in between, I get a couple of looks.”.Tamer Abdouni is a Beirut-based consultant who facilitates the trade of, among other things, 3M respirators. Usually he can buy them for $1.25 apiece and resell them for a dime more. Lately the best purchase price he can get is $7.25. Even if he were willing to buy at that price, he says, selling respirators at multiples of his usual price during a pandemic would tarnish his reputation..“3M makes the Rolls-Royce of masks,” Abdouni says. “People are holding stocks of masks and waiting for them to increase in value before selling them off. This is becoming very unethical. This is a war on coronavirus, and I don’t want to be a warlord.”.In the U.S., too, prices for personal protective equipment are being driven up in what has become a grim marketplace. It’s unclear whether some distributors are withholding masks as demand rises, but states are clamoring for every mask they can scrounge and must compete against one another to secure them. New York Governor Andrew Cuomo said on March 23 that masks the state usually buys for 85¢ now cost $7..3M says it hasn’t raised respirator prices and can’t control what happens after it sells its products to distributors. Roman wrote to U.S. Attorney General William Barr on March 24 to offer 3M’s help in rooting out medical device counterfeiting and price gouging..With demand soaring, 3M’s respirator sales could nearly double this year, to $600 million, according to William Blair & Co. analyst Nicholas Heymann. The company, despite its $32 billion in annual revenue, could use the boost. 3M has frustrated Wall Street in the past year with reduced earnings forecasts, sharp downturns in key markets, and thousands of layoffs. The coronavirus outbreak remains a threat to the broader supply chain and economy, and it could ultimately “make it more difficult for 3M to serve customers,” the company acknowledged in a regulatory filing this week. It also faces potential liabilities of as much as $10 billion, some analysts estimate, over its past use of PFAS, a group of chemicals that shows some associations with cancer. 3M’s shares fell last year even as the broader markets were advancing..In Aberdeen, Rehder has more pressing things to worry about. “I just think,” he says, “as we’ve continued to see things spread across the world, it’s put more responsibility on us to make sure that every day and every minute we’re making every mask we can.” —With Riley Griffin Read more: Companies Revamp to Make Hand Sanitizer and Coronavirus Products.©2020 Bloomberg L.P..More Than 750,000 Masks Auctioned for Huge Markup While Hospitals Run Out

How 3M Uses Surge Capacity to Double Production of N95 Masks

Unlike many companies that have moved production to low-cost countries, it sources the materials near its assembly plants.

Choose a plan