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Editorial Q&A: What It Will Take to Create a Reliable Domestic Supply Chain for PPE?

See the original editor’s Q&A by Robert Bowman at Supply Chain Brain

The coronavirus pandemic uncovered a serious shortfall in the supply of personal protective equipment (PPE) manufactured within the U.S. Now, both government and the private sector are taking steps to remedy that state of affairs. In this conversation with SupplyChainBrain Editor-in-Chief Bob Bowman, Chris Garcia, CEO of Health Supply US, details what his company and others are doing to ensure a national supply of PPE for all types of medical emergencies.

SCB: What’s the state of the PPE supply chain right now?

Garcia: To answer that, we have to frame it from the perspective of where we are in the COVID-19 pandemic. Very few saw the supply chain breaking as it did. When the peak months of March, April and May hit, it became very clear that we had an over-reliance on foreign imports. Today, we’re seeing an understanding across the nation that we need to be more self-sufficient. It cuts across industries and party lines, because everybody’s been affected. We’ve got to find a better way to ensure the availability of PPE when these international pandemics hit.

Today, I would say we’re in much better shape because of several key steps that have been taken. As a relative new entrant to the industry, our outsider perspective has allowed us to approach not just the commercial sector, but government contracting as well, using innovative ways to lower costs and build a more resilient supply chain.

SCB: Where do you manufacture?

Garcia: We have nine factories in the United States —three in California, three in Texas, one in North Carolina, one in Oregon, and one in Connecticut. We’re constantly looking to expand that footprint, to diversify the manufacturing base for products that aren’t readily available domestically. We’ve made it a policy not to source anything from China or other non-market economies.

SCB: Where do you source raw materials?

Garcia: For federal contracts that require strict compliance, we source raw materials through a variety of domestic manufacturers. We’re grateful to have robust industry partners that have helped us to identify those suppliers. But we’ve diversified geographically.

SCB: One can see the advantage of manufacturing PPE in the United States for domestic consumption. But what are the challenges involved in setting up a manufacturing capability and supply chain within the country, for this type of material and product?

Garcia: There are several constraints. As a manufacturer of PPE, the United States has fallen behind over the last couple of decades. We have to look back to the opening of normalized trade relations with China, its accession to the WTO in 2001, and our recognizing it as a developing nation. We were betting on China to become more Westernized and democratized, but the opposite has happened. It has only become more emboldened in the unfair subsidization of industries, currency manipulation, intellectual property theft, forced technology transfers, and cyber-espionage — all of the things that have put the United States at a strategic disadvantage when it comes to U.S.-China trade and our overall position in the world.

Between the years 2001 and 2017, we saw close to seven or eight million U.S. manufacturing jobs move overseas to China. Some estimates have it upwards of 65,000 to 75,000 factories that closed up shop as a result. That put us at such a strategic disadvantage that we’re playing catch-up today. To re-shore manufacturing and reorient the supply chain away from China back to North America, we’ve had to be very strategic about which products are manufactured here in the United States. We have some infrastructure we’ve been able to tap into, such as cut-and-sew apparel makers and related industries that have the equipment and trained labor force. Many of those companies have pivoted to making masks and gowns, products that were in high demand during the height of the pandemic.

But we feel that the only way there’s a sustainable pathway to re-shoring manufacturing is with federal support. We cannot compete on a free-market basis when China has unfairly dumped goods because of state subsidies over the last several decades. We have to invest as a nation in domestic manufacturing. Fortunately, we’ve seen both sides of the aisle come together and recognize this challenge, to set things in motion so there’s a sustainable, long-term investment in revitalizing domestic manufacturing.

SCB: Have you and other PPE manufacturers ramped up production to meet current demand? Or are there still shortages here and there of necessary product?

Garcia: We have ramped up, with significant investments in equipment. Making the capital expenditures that are needed to pivot to the manufacturing of PPE is something we were committed to from the very beginning. We believe there are still substantial investments that have to be made. We’re seeing shortages in gowns, N95 masks, and face shields. In addition, nitrile gloves are still very difficult to come by. There are several opportunities for companies who wish to step up to the plate to make sure the United States is self-sufficient and can fill in some of those gaps.

SCB: Didn’t you take over a former Brooks Brothers factory in Garland, North Carolina?

Garcia: That’s right. We’ve had a signed agreement with the Brooks Brothers estate since July of 2020. There are about 150 workers who have been ready to come back to work. As of now, it’s still pending bankruptcy approval. But that was the first facility that we identified as a perfect transition for us to pivot. Since then, we’ve identified a number of others, and we still believe that apparel factories are the types of facilities with which we could start to mobilize as a company. We’re on the lookout for additional factories to make a part of our portfolio.

SCB: Would you advocate the creation of a national stockpile of PPE and other critical emergency materials, much along the lines of the Strategic Oil Reserve?

Garcia: Absolutely. In fact, the Defense Logistics Agency has been engaged by the Department of Health and Human Services to create a more robust PPE supply through the Strategic National Stockpile, what they call SNS 2.0. This was something that was lacking adequate PPE, according to what the media has reported. We not only need a national stockpile filled to capacity, but also the ability to replenish it every two to three years, to make sure we have the most up-to-date equipment.

SCB: So you believe that once the pandemic has passed, a robust domestic manufacturing base of PPE is here to stay?

Garcia: With the right investment, a public-private partnership, and some strong signals from the federal government, there will be a demand. It’s a national security issue, to make sure the United States is self-sufficient, and PPE isn’t just there to protect against viral pandemics. This is a key industry, with products that are foundational to the safety of our frontline workers. So if the federal government decides to stimulate manufacturing domestically, then I think absolutely that this industry is here to stay.