by Tk Matsabu, IEDC Fellow
As the United States experiences a critical shortage of Personal Protective Equipment (PPE) including respirators, and other medical supplies used to combat COVID-19, China is cornering the global medical supply market accounting for half of the world’s exports of PPE. While U.S. companies ramped up production from mid-March, concerns are being raised about U.S. self-sufficiency in producing pandemic related medical supplies.
Countries around the world including the U.S. are trying to repurpose their own factories to produce critical medical supplies. However, as China provides subsidized loans and inexpensive factory land to businessmen looking to set up medical factories, it has positioned itself to become the dominant supplier of PPE for the current and future pandemic due to substantially low cost production.
U.S. reluctance to invest in PPE production facilities stems from a sense that the pandemic will be temporary. But as the country reaches new daily case highs and the spread of coronavirus becomes uncontainable, EDOs, the business community, government, and community anchor institutions can collaborate to meet the medical supply needs of their local medical communities.
What can local EDOs do?
A fundamental part of China’s strategy is compelling its local medical community to only source medical equipment and PPE from Chinese suppliers, ensuring access to a massive market. Incentivizing the retooling of U.S. factories through guaranteed purchases of PPE through federal and local strategies could offer security to current manufacturing facilities striving to meet existing and future demand.
In the meantime, the manufacturing sector and EDOs are stepping in to create new supply chains of medical equipment for their local medical communities. In response to the COVID-19 pandemic, EDOs are guiding local manufacturers and small businesses in the retooling process to provide in-demand products such as masks, face shields, respirators, and ventilators.
EDOs play an important role by facilitating partnerships between multiple stakeholders (e.g. higher education) and businesses within a community in order to provide PPE. For example in Alabama, Governor Kay Ivey set up the Business and Manufacturing Alliance (BAMA) task force to locate and assist potential PPE producers in the state, and help them funnel equipment to areas in dire shortages.
This initiative is evolving into a larger retooling initiative where the governor is talking to companies from the textile sector to car manufacturers in a bid to retool local businesses to produce PPE on a long-term basis. Supported by the Alabama Department of Commerce and local economic development officials, a major bed linen company (HomTex) is investing $5 million to procure equipment that can produce medical grade surgical masks on a permanent basis.
Major manufacturers like GM, Boeing, Mercedes Benz are reconfiguring their massive manufacturing plants to produce medical equipment such as ventilators. In consultation with their local medical community, and universities to ensure design and manufacturing processes are properly adhered to, major corporations in the private sector are also trying to address the U.S. medical supplies shortages.
Increasing PPE manufacturing should become a priority for the government and the economic development community as supply struggles to keep up with demand. PPE manufacturing is also providing a way for the manufacturing sector to offset the economic impacts of COVID-19. As consumer consumption reduces drastically from economic shutdowns and unemployment, retooling of local businesses for PPE manufacturing can become critical for community economic recovery.
To that end, the National Association of Manufacturers launched the American Renewal Action Plan to respond to the manufacturing community’s increasing importance in fighting and recovering from COVID-19. The plan makes recommendations to the government on how it can assist in scaling up PPE manufacturing and distribution channels. The association is calling on Congress to offer direct financial incentives and support to local businesses that successfully retool their operations.
Additionally, FEMA has set up a Supply Chain Task Force where it is collaborating with U.S manufacturers to expand the PPE supply chain. EDOs can take FEMA’s cross-sector and multiple stakeholder approach to fortifying medical equipment supply chains in their communities. The task force is liaising with officials from the FDA to ease regulation so that more companies can retool to make PPE, while lending support to trade associations and the private sector to assist manufacturing expansion.