3M Shares Slide After Trump Warns of 'Big Price to Pay', Invokes Defense Production Act For N95 Masks

3M has said it will be making 200 million masks per month by June, but President Donald Trump wants more of those available for use in the United States.
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3M Co.  (MMM) - Get Report shares slipped lower Friday after President Donald Trump ordered the industrial group to produce N95 face masks under the Defense Production Act.

Trump told reporters in Washington Thursday that he was invoking the 1950 Act, which compels American companies to perform essential tasks for the government during times of national crisis, in order to "be able to do what they are supposed to do". 

The Administration had raised earlier concerns that 3M-produced masks were being shipped overseas amid a national shortage for healthcare workers dealing with the accelerating coronavirus pandemic.

"We have been working closely with the Administration to do exactly that, and we appreciate the authorities in the DPA (Defense Protection Act) that provide a framework for us to expand even further the work we are doing in response to the global pandemic crisis," 3M said in a statement Friday. 

"We look forward to working closely with the Administration to implement yesterday’s DPA order," 3M added. "We will continue to maximize the amount of respirators we can produce on behalf of U.S. healthcare workers, as we have every single day since this crisis began." 

The White House also issued Defense Production Act orders to assist six other companies -- including General Electric  (GE) - Get Report and Medtronic  (MDT) - Get Report -- that are making much-needed ventilators for the U.S. healthcare system. The order did not, however, name the companies that will be compelled to provide materials to the six companies named.

"I am grateful to these and other domestic manufacturers for ramping up their production of ventilators during this difficult time," Trump said. "Today’s order will save lives by removing obstacles in the supply chain that threaten the rapid production of ventilators."  

3M shares were marked 1.6% lower in early trading Friday to change hands $135.25 each.

Earlier this week, 3M CEO Mike Roman said the company had been ramping up production in N-95 respirators since January of this year, with the aim of producing around 100 million per month, 35 million of which would be used in the United States.

"We’ve already put into motion additional investments and actions that will enable us to double our capacity once again, to 2 billion globally within the next 12 months – and some of that additional capacity will begin to come online in the next 60-90 days," he said. "In the United States, we expect to be producing N95 respirators at a rate of 50 million per month in June, a 40% increase from current levels."