Coronavirus Report: The Hill’s Steve Clemons interviews 3M’s Mike Roman
Steve Clemons: We’re pleased to have with us today 3M’s chairman and CEO, Michael Roman, to discuss the state of play on respirators today and what we need tomorrow, on what is good and what not good about global supply chains, and about the nature of leadership in these stressed out times. Mike, thanks so much for joining us. As I was sharing the picture — in part because I know that 3M is the muscle in the world on this — can you share with our viewers what the state of respirators at this moment is and where you and where the nation is going?
Michael Roman: Yeah, Steve, and thank you for having me with you today. It’s a pleasure to be with you. So, maybe I’ll start here, and it’s really want to say how proud I am of 3Mers around the world for the way they’ve responded and stepped up to help fight this pandemic. And that is, of course, right at the center of the PPE and our leadership there. But it’s broader than that. We’re fighting the pandemic from every angle. And I would say our position and our strategy in helping to fight this pandemic goes back to the SARS pandemic. We took the lessons there and invested in additional capacity to be ready for the next pandemic. We knew we would be called upon to deliver in those times at increased capacity. And so when the pandemic started to have the outbreak at the beginning of the year, we ramped up that largely idle capacity that we had invested in. We were able to increase our output and deliver now, from January through June, we’ve delivered over 800 million respirators around the world, with over 400 million here in the U.S. So it’s been a strategy that we had to employ, and now we’re adding to that, increasing our capacity. As you said, we will deliver by year end over two billion respirators worldwide and over a billion in the United States. And with that said, the demand in the marketplace is greater than our output and really the output of the entire industry, so important strategy and a great response from 3Mers around the world. But more to do.
Clemons: Many people, when there was a demand for PPE and respirators going through the roof, we saw as I just mentioned on eBay or Amazon or other suppliers coming in and providing products, and they would say, “Wow, you know, this is 3M.” It clearly wasn’t. But how much of a problem have the middle sellers in this been for you?
Roman: Well, our delivery of respirators is primarily to health care and first responders in the middle of this pandemic, and we work with large, reputable distributors in that space, and we also work in close partnership with FEMA as part of our partnership under the Defense Production Act. So, we’re delivering through reputable health-care distributors. We are seeing a responsibility for us. It’s one of those areas, when you talk about changes in leadership, in the middle of this pandemic, we’ve seen a need for us to step up in new ways, and one of those is to help fight fraud in the middle of this pandemic. And it really comes through in price gouging, it comes through in fraudulent offers of counterfeit product. We announced recently that we’ve taken down more than 7,000 — helped to take down more than 7,000 counterfeit websites offering fraudulent offers of 3M product. And so it’s a leadership role, we had to step up. We’re not just manufacturing and delivering respirators through those partners. We also have to fight the issues of fraud that we face in the middle of this as well.
Clemons: Look, one of the things I report on a lot is how the international system works and holds together or is coming apart. And so Americans have also become more aware than ever of supply chains, you know, supply chains used to be something people used to go to sleep when they were talking about, but now it’s become a big deal. And … you’re a major global producer, and you produce near your markets all over the world. But there’s been some tension out there in the way supply chains work and, you know, product that’s made abroad. Is it theirs or is it America’s? How do you communicate both the strengths and weaknesses, if there are any, of how the supply chain on a kind of global production network works?
Roman: Well, the strength of the 3M model has never been more clear than in the middle of this pandemic. Our model is to produce our products for customers around the world close to them. And that means in the United States, we manufacture nearly everything we sell in the U.S. in factories in 29 states in the U.S., and we take that model around the world. So we produce a majority of what we sell in China for customers in China. We don’t export around the world from factories in other parts of the world, in places like China, so it’s a model that served us well. We can respond quickly to changes in the marketplace in each of those regions of the world. And it gives us, as you said, some strengths to flex when we have needs like we do in the middle of a pandemic. So as the United States became a hot spot for the outbreak, we were able to bring additional production from our Asia factories in Singapore and Korea and China and bring that to the U.S. So it’s been an important part of our supply here. But it’s that model to invest in factories regionally to support those needs that has really served us well and served our customers well. And a couple of factories to know about: There’s a factory in Aberdeen, South Dakota, and a factory in Valley, Nebraska, that are really the places that we are producing those respirators and we’ll … have a capacity to produce over a billion respirators by the end of the year.
Clemons: A lot of people have gotten too used to forgetting that there’s manufacturing in America and that 3M is a major manufacturing — has major manufacturing muscle in the United States. I’m glad you mentioned those two plants, but you make a lot of other things beyond respirators, I want to remind folks. Sticky notes and Post-it notes and other things. But when you kind of look at the broad picture of America’s manufacturing, is it coming back now? Does it need something more to move it ahead? Has this crisis, in a way, helped more than hurt when it comes to manufacturing in the United States?
Roman: Well, as manufacturing moved around the world, as companies offshored production from the U.S., we never left. As I shared with you, we produce nearly everything we sell here, and we continue to invest in the U.S. manufacturing capacity. And that is to serve customers where their demand is. And I think what we will see as the biggest dynamic that impacts us as a company will be when other companies decide to move their production, their supply chain, customers of ours, so as they move around the world, if there is a focus on increasing domestic supply of health care or PPE products around the world, that’s where we would adjust our supply chain in order to serve those changes. But for us, that model to be regional is a great strength for us. It enables us to serve customers directly. It enables us to work on new innovations, and many of those go in to the manufacturing floor. We get to work with customers closely on that. So, our model has demonstrated its strength and we’ll continue to flex that strength as potential changes happen in the customer’s supply chain around the world.
Clemons: One of the things I really like about 3M, and I haven’t told you this, is it’s a major science company. It invests billions of dollars every year in science and basic R&D and all these kinds of new things that are coming up. And I know you have a new partnership with MIT to try to solve the riddle of how we get diagnostic tests for COVID-19 out in the marketplace so that we don’t have to wait, 8, 9 days, two weeks for results to come back, which frankly, are ridiculous, In my view; this is my editorial comment. But, I mean, tell us about the science side of the firm, but also what you’re doing with MIT.
Roman: That’s an important part of when we talk about fighting the pandemic from every angle. It’s that science that really enables us to do that, so comes through our PPE and the technology that goes into N95 respirators. It’s in our filtration solutions that go into biopharma and help with the development and production of therapeutics and vaccines. And now, as you mentioned, we have a partnership that we announced with MIT, where we can bring material science capabilities that we had for manufacturing at high volume and low cost test platforms for viral technologies ready to partner with somebody like MIT who has the chemical knowledge around how to detect the COVID virus. And so that partnership brings strength on strength; our capabilities and the ability to bring that test technology and they bring the know how to be able to make this solution in COVID. So we’re excited about working in partnership, and that is, I would say, another learning in the middle of COVID is how powerful these partnerships between companies can be and in this case, no better partner than MIT.
Clemons: Look, I know this is an unfair question, but I read the press release. It sounds very exciting. How quickly do you think science will get there and then once science gets there so you can have that test, how long will it take you to scale to get what we need? I mean, the Rockefeller Foundation just came out with a report and said we need 30 million tests a month, a million a day. We have about 4 1/5 million a month right now, so I’m just sort of interested in what you think would be possible.
Roman: Well, as you would expect, we’re doing everything we can to go as quickly as possible. And this remote partnership with MIT has been extraordinary how fast we moved to this point. But there’s much more work to do, and it’s something that we have teams on both sides working diligently to accelerate as quickly as we can, and we’ll update you as we get further along in the process. But we will do everything we can to bring those tests. And we have the ability to scale to large volumes when we have the solution ready to go.
Clemons: You know, I think one of the other questions I want to talk to you about, I’m fascinated by leadership in these times. And I’ve asked governors and mayors and other CEOs how — you know, a pandemic doesn’t come by every time. And I mean, I want to keep on our screen that 140,000-plus Americans have died from this, so many more diagnosed, many ill and suffering right now. What’s your north star in trying to get your corporate direction right, take care of your workers and contribute in a way that’s constructive for the economy? Because you’re in the whirlwinds and sometimes you know not all the news is positive and a company like yours can be attacked. So what’s your north star? How does leadership work in that moment?
Roman: Well, we formed up around three really important priorities as we came into the pandemic, and that is first and foremost, protecting our employees, employee safety is number one. We continue to operate nearly all of our factories around the world. So that was very important that we focused their first and foremost. Then, as I’ve talked about fighting the pandemic from every angle, that is a passion for 3Mers. Bring our science, our innovation ,not just in PPE but broadly as I talked about. And then the third priority is important too: we continue to deliver for our stakeholders, our customers, our shareholders. We have to deliver for them as we work through the challenges that we face in the pandemic. So that’s been our guiding principles. It’s simple, it keeps us focused on the right things and it drives that passion around fighting the pandemic. And then I would say that, you know, it’s been extraordinary to see how we can manage in a largely work-remote kind of environment, on protecting the safety of employees that are working in the factories at the same time, and the lessons that we’re gaining from that, I think, will really accelerate some of the things we’ll be able to do as we lead through and out of the pandemic.
Clemons: Let me just finally ask you, Mike and I’m in Washington, D.C. You’re in Minneapolis right now. We have a fascinating circus of players involved in coronavirus responsibility at the federal level. We also see leaders around the country. Let me just ask you, what do you most need from this town? What would help the private sector? The GMs, the GEs, the 3Ms, you know, so many of you are out there that are playing. What would be the biggest thing the federal government could do to make this process of what you’re providing an easier and a sounder one for the American people?
Roman: Well, I would say we’ve had extraordinary experience in working with government, at all levels. It’s been another example of partnerships. And in the middle of a pandemic, everybody’s learning every step of the way, so it takes time to build those partnerships, whether it’s with other companies, even at government at all levels, and I think we’ve gotten to a great place where we have a partnership with the federal government, with state level of government to help us deliver everything when we can to the marketplace. And a good example is we’re working very closely with FEMA to bring product from our overseas factories and get that to front-line health care workers and first responders. That’s been a partnership that was instrumental in delivering product to where it was needed and to help us really pave the way to be able to bring large volumes of product from overseas. So it’s a good example of what you need to be able to do. You need to be able to partner with different levels of government to deliver for those end-use customers. And that is a dynamic that when you start in the middle of a pandemic, you don’t realize what that’s gonna require, and so those government, public-private partnerships are really important. And I am really pleased with the way it’s been working as we’ve come through the challenges with COVID-19.
Clemons: And just finally one little tack-on, you know, I described in my opening a kind of law of the jungle, of states competing against states. You know Larry Hogan in Maryland having to go to South Korea. Do you think that is stabilizing? Do you think there’s a neater and better acquisition process out there that is less — the word that comes to mind is vicious. Is it a better, healthier acquisition system today for those places who need it?
Roman: Well, I think the supply chains are working better and better as we go through the fight with COVID and bringing up additional capacity, bringing additional product into the marketplace is an important part of that. Those partnerships that I talked about, FEMA is a great example. Also with our normal channel partners. As I mentioned earlier, those have all gotten better. We’re managing to, I think, do a good job now of getting product to where it’s most needed and really, really maximize the impact of the product that we’re able to produce as we ramp up that production capacity.
Clemons: Well, Michael Roman, chairman and CEO of 3M Corporation, I am grateful for the insights into what 3M has been doing in this stressed out time. I think we’re going to be at this for a while. We’ll see what happens in the fall, but you’re welcome any time to come back. Thanks so much for sharing this with us.
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