A Weak Link in America’s Supply Chain.
When the COVID-19 pandemic first hit, there was a panicked rush to buy protective equipment. The general population bought up paper towels, gloves, hand sanitizer, rubbing alcohol and even toilet paper. Suppliers were also dealing with a sudden spike in demand of critical items, especially N95 facemasks. Officials were asking people not to hoard masks so healthcare workers would have them. There were severe shortages and prices inflated. According to NPR, prices surged to more than ten times the average within days. People were scrambling for any type of face covering, whether it had an R95 NIOSH rating or not—masks were sewn out of T-shirts and 3D printed. Suddenly there were hundreds of “uncertified” versions that were pressed into use when there was no other option available.
Compare this recent scenario to the response of America’s sudden involvement in WWII. The quick pivot in domestic production to support the war effort was nothing short of amazing. The unparalleled manufacturing capability of the United States was a critical factor in the eventual Allied victory. 80 years ago we quickly produced items as complex as tanks and aircraft by the thousands in the span of a few months.
Fast forward to 2020 and we could not make a few million simple foam facemasks with two elastic straps.
The primary cause of this issue is that the United States has become incredibly successful at outsourcing the manufacturing base. Several factors are behind the issue according to recent reporting by Reuter’s:
“Manufacturers have been attracted by lower wages and weaker environmental standards in China and other countries in recent decades. This exodus has resulted in critical gaps that have been laid bare during the COVID-19 pandemic, such as the making of medical equipment.”
As a result, we now struggle to rapidly produce even the simplest of products domestically.
Interestingly, it was not just the production of the masks themselves that was a challenge—it was acquiring the raw materials needed to make them. For example, Catalyst designed, developed and produced thousands of facemasks for clients in the span of a few weeks. The plastic facepieces that we made were assembled utilizing filter media sourced domestically from one of our own clients. However, there was a bottleneck in the project due to a shortage of simple, elastic fabric straps. Most elastic fabric is produced overseas and suddenly everyone in the world was buying it up. To overcome the supply issue, Catalyst designed, built tools and molded a thermoelastic resin strap in a fraction of the time it would have taken to wait on fabric elastic straps to be imported.
Catalyst was able to overcome the strap problem, but it uncovered a glaring issue in America’s reliance on an international supply chain.
“As this pandemic has made clear, we can never again be in a position where we have to rely on a foreign country that doesn’t share our interest in order to protect our people during a national emergency. We need to make our own protective equipment, essential products and supplies.” –President Joe Biden
The issue now has the attention of the U.S. government. A recently signed executive order has attempted to address this critical issue and an extensive review is underway to reshore manufacturing processes and supply lines. Franco Ordoñez, a political reporter with NPR sums up the monumental task: “An initial 100-day review will look at four products: chips, large capacity batteries used in electric cars, pharmaceuticals, and rare earth minerals. Then, the administration will take a closer look at six sectors: defense, public health and biological preparedness, communications technology, transportation, energy, and food production.”
For domestic companies, now is also the time to review their own supply chain.
The Harvard Business Review has an interesting article that provides guidance: “The majority of companies did not heed the lessons of the natural disasters of the last decade and, as a result, suffered severe supply disruptions when the COVID-19 pandemic struck. To make sure the same thing doesn’t happen the next time around, they should map their supply chains in depth, which includes identifying alternate sources of items; changing the way they assess the performance of their procurement function to include revenue assurance and not just cost savings; and incorporate disruption-related metrics in their evaluations of suppliers.”
Undoubtedly, there will be another unpredictable crisis which will test U.S. supply chain logistics. Hopefully, American business will be better positioned because of this experience. For our part, Catalyst will continue our tradition of forward and innovative thinking to help our clients succeed.