U.S. PPE production ramps up, but can it be reshored?

It was a common refrain early in the coronavirus pandemic: Widespread shortages of protective equipment would help push manufacturing of those critical goods back to the U.S.

Those discussion are happening, but as the experience of one Ohio auto parts supplier that jumped into making plastic medical gowns shows, the reality of reshoring can be more complicated.

Sensical Inc., which cuts automotive fabrics and compression molds vehicle parts, changed direction in the pandemic when its traditional business softened: It added 190 temporary employees and equipment to make gowns.

By June, the Solon, Ohio-based company was making 80,000 polyethylene medical gowns a day.

The company said it wanted to help and felt its experience with fabrics gave it a leg up on plastic gown making.

Vice President Trip Roney said the company saw images of health care workers reusing gowns—or in worst-case situations posting social media pictures of themselves wearing garbage bags as makeshift gowns—and hoped that filling that need would also turn its U.S.-made PPE into a permanent new business.

Roney said hospitals do say they want more U.S.-made protective gear, but so far, the shift toward more domestic sourcing doesn't seem to be happening in a big way.

"I spoke with the chief procurement officer of a major hospital here and he says, 'I will never allow my organization or my people to be in that situation again, and we will allocate 15-20 percent of our annual spend towards domestically made product,'" Roney said. "The challenge is, that's not actually happening right now."

Roney said he's sympathetic to the situation hospitals face. They've run through their budgets for the year and now that the global supply chains they're usually tapped into are coming back, they're trying to catch a breath.

But he and others who are pushing for more U.S. sourcing of PPE say there's a risk that without stronger commitments to purchase domestically, an opportunity could be missed.

"What I see is not many states putting their money where their mouth is at this point, probably because they just spent a ton of money trying to make sure that everybody was safe through COVID," said Ethan Karp, CEO of the Cleveland-based Manufacturing Advocacy and Growth Network, who echoed Roney's call for more focus from health care groups and governments in the future.

Karp's group has worked with Sensical and dozens of other companies during the pandemic to try to build up domestic manufacturing of gowns as well as plastic face shields, cotton masks and other PPE,

The reshoring aspect seems to be working for face masks. Karp said two companies, with financial help from the state, acquired equipment from Germany to automate, and they are competitive against overseas mask makers. He believes the same potential is there with gowns.

"Gowns to me are a huge opportunity," Karp said, if companies can get enough long-term orders to justify the costs of automation.

Domestic solutions

Roney said Sensical was happy to contribute in the early parts of the pandemic, setting up new sealing stations for the PE film gowns. It started off making 3,000 gowns a day, but it grew to 80,000 a day at its peak, he said.

It was a natural transition to switch from cutting automotive fabric to cutting gowns. The company wanted to help with COVID, plus its automotive business was impacted "quite a bit" as car factories temporarily shuttered, Roney said.

"We want to be part of the solution, not only for the COVID pandemic but other health concerns that might come at us," he said. "We want to be part of the reshoring effort to get these products manufactured back here in the States. And from a selfish perspective, we need ways to diversify our business."

Sensical is looking at automation to better compete with the gowns made in low-wage countries, Roney said, but it's also looking for a clearer sense of demand for domestically made PPE.

"Obviously, automation isn't free," Roney said. "We want ingenuity to stay here, and we want businesses and manufacturers in the United States to be willing to take risks, but there has to be some sense that that risk is going to be rewarded."

The company has been able to win some longer-term business in the pandemic, he said, for making cotton masks. It's also made hair and shoe covers from spun-bound fabric, as well as plastic face shields.

"We are fully committed to being part of the solution to reshoring these specific PPE products," he said. "We've allocated capital, manpower and resources to onboard and scale production of these products."

Roney said the company does not want to benefit from a pandemic; it wants the virus to be controlled. But it's also hopeful that next year hospital supply chains will start to buy more gowns domestically.

"My hope is that when we get into 2021, some of the budgets might be altered a bit to allocate some level of funds to domestically built and produced PPE," he said. "That would be my hope."

Global market

The federal government has been taking a closer look as well, with law makers in both parties in Congress calling for more focus on building up domestic manufacturing of PPE.

The Trump administration is studying it as well. The U.S. International Trade Commission held hearings in September and plans to issue a report by December on steps that could be taken to boost domestic supply chains in the wake of coronavirus.

USITC heard some statistical evidence that U.S. supply chains were not able to keep up with demand for PPE, even with disruptions in trade flows early on.

The group Public Citizen told USITC that the trade deficit in critical medical goods like PPE from China shot up nearly five-fold in the first seven months of 2020, compared with 2019. Worldwide, the U.S. trade deficit was nearly 50 percent higher in the period, the group said.

Karp said he favors governments making purchases for stockpiles from domestic sources or providing financing for favorable terms for loans to companies that want to invest in PPE automation, to strengthen capacity in an emergency: "It's an insurance policy of sorts for the state."

An executive at one plastic molding company with a heavy focus on the medical market, GW Plastics Inc., said COVID-19 is causing companies to look to reduce risk in their supply chains, even if the global nature of manufacturing chains is not likely to change.

"Globalization is here to stay, but I think this pandemic certainly pointed out some risks to the supply chain," said President and CEO Brenan Riehl. "I think many companies, including ourselves, have put in risk mitigation."

For medical manufacturing, that could mean more production in Mexico, which is potentially a "prime spot" for that, he said. But he also argued that having factories around the world is another risk mitigation strategy.

GW, which is based in Bethel, Vt., was bought Aug. 6 by Swedish molder Nolato A.B., combining GW's factory base in the U.S., Mexico, China and Ireland with Nolato's larger network of facilities in Europe and Asia.

"I think some companies were just chasing price and putting their supply chain at risk by doing so … and that's not always the best decision to make," he said. "But you know, at the end of the day, we're going to continue to see a global marketplace."