Just a few short months ago, face masks were so hard to come by that companies were sending employees to safeguard shipments from government seizure or mysterious bandits. Now, the world is so awash in face coverings and shields that some of distributors are having a hard time getting full price.

Fastenal Co., a supplier of industrial odds and ends for the factory floor, on Tuesday cited an improved supply of certain Covid-19 specific safety products — including masks and face shields — as the biggest reason its gross-profit margins were slimmer than expected in the third quarter. Average daily sales of safety products increased 34.4% in the period relative to a year earlier. While that was a sharp deceleration from the triple-digit increase in the prior quarter when the coronavirus was just taking hold and disruptions were at a peak, it’s strong enough to serve as a reminder that the pandemic hasn’t gone away and neither has the need for personal protective equipment. But many companies are stepping in to fill that void. 

Not wanting to put their employees at risk of going mask-less or resorting to the guerrilla-style approach to PPE that New York’s doctors had to take in the early months of the pandemic, many companies turned inward to crank out supplies. Ken Engel, Schneider Electric SE’s senior vice president of global supply chain in North America, told me the company purchased mask machines for its factories across the globe. Others, including Boeing Co., Ford Motor Co. and a collection of 3D printing companies, saw an opportunity to ease the public health crisis and started using spare factory space and machines to crank out face shields. The manufacturing and medical worlds require a higher degree of filtration, but most of us are satisfied with regular cloth masks, and the struggling retail industry has been only too happy to provide them. The net result is that it’s just not as hard or as pricey as it once was to buy face coverings.

This has ramifications not just for distributors like Fastenal but also for manufacturers like 3M Co. The latter company has aggressively ramped up production to meet the spike in demand and is on track to manufacture some 2 billion masks globally by the end of the year. 3M has repeatedly sought to assure the public that it’s not raising prices on its coveted N95 masks as a result of the pandemic and has filed multiple lawsuits over alleged fraud and price-gouging. Gordon Haskett analyst John Inch has warned that the company could be looking at a price and demand cliff in 2021 as aggressive production efforts from others create a glut of masks. Fastenal’s comments on Tuesday would seem to signal that concern is appropriate. 

But for both Fastenal and 3M, face masks are a relatively small part of their business. Fastenal also reported “continued softness in underlying business activity owing to a generally weak industrial marketplace” for anything that’s not explicitly tied to battling Covid-19 outbreaks. That’s pressuring purchases of fasteners and a bucket of other factory-floor products that make up about 30% and 45% of its sales, respectively. At the end of the day, having too many masks is much better than the alternative.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.

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