Spring is normally a slow season for Coleman Knitting Mills, which makes cheerleader uniforms, letter jackets and letter sweaters for school markets. So it had idle capacity, idle hands and a stockpile of raw material when Abe Dalebout took a call in early March from his sister-in-law, a nursing home director in Washington state.
“It got really hot in Washington with Covid cases,” said Dalebout, the owner of the Ogden, Utah-based company.. “So she called up, saying, ‘Hey, we don’t have anything. There’s nothing. There’s no masks and our supply is going to run out very quickly.’”
Over the next day, Coleman employees came up with a pattern for a reusable mask that could fit over an N95 mask and that complied with guidelines from the Centers for Disease Control and Prevention. The business has grown from there, Dalebout said.
Coleman now has 44 full-time employees and 60 contract sewers making about 4,000 masks a day for hospitals, nursing homes, food distributors, grocery stores and others. It also is making about 300 gowns a day. It is also working with other small manufacturers — including a maker of bowling supplies in Santa Ana, Calif. — and sourcing fabric from a Philadelphia-area company, Yarrington Mills, which was temporarily locked down by the state of Pennsylvania as a non-life-sustaining business.
Small U.S. manufacturers have been racing to retool and overcome government obstacles to produce equipment for the fight against Covid-19. That includes masks, gowns and plastic face shields, but also the finely machined components that keep ventilators pumping and IV lines flowing.
In the absence of a coordinated national effort and after decades of decline in the U.S. supply chain and manufacturing infrastructure, the ability of small factories to step up has become crucial, though slow and insufficient, to supply the medical system. Some companies have been dipping into cash reserves to retool in hopes that federal aid will come through or anticipating demand will continue.
For now the bottom line is taking a back seat to the pressing need to contribute to the greater good, said Aneesa Muthana, CEO of Pioneer Service Inc., a contract machine shop in the Chicago area. “It’s either we’re in it or we’re not. There’s no halfway.”
It’s not clear the demand for supplies is being met even now, or how companies should plan for the future.
“It reminds me a lot of that movie ‘Dunkirk,’” said Dalebout. He was referring to the citizen flotilla, organized by the British government, that left England to rescue Allied soldiers stranded on the coast of northern France in the early days of World War Two.
Dalebout said a nearby Air Force Base wanted masks in three days. He told them it would take two weeks. “One of the biggest challenges is that we don’t have enough time and resources to supply everyone, and that’s been frustrating,” he said.
Donations To Local Hospitals
Raw materials also can be scarce. Waterloo, Neb.-based Fanbox Subscription Services Inc. makes items that go into themed subscription boxes. But it recently purchased plastic sheets to make face shields, which it has been donating to local hospitals and university research centers.
It is nearly through its first batch but was told it would have to wait eight weeks for more, said Jeff Smith, the company’s CEO.
“We want to make as many as humanly possible,” Smith said, but he acknowledged that the need might be greater elsewhere. “Should I not be asking? It’s hard to know.”
Much of the public attention has focused on political failures: Governors and President Trump have been sniping over who is responsible for ensuring adequate supplies of ventilators and personal protective equipment. There’s also a rising concern about price gouging, especially from third-party distributors, and low standards for crucial equipment.
Manufacturers said government direction can help, by ensuring goods arrive where they’re most needed, for example. But the U.S. is also experiencing the result of the long decline in the manufacturing base of skilled workers, factories and capital infrastructure. Just as epidemiologists have tried to plan for a pandemic, economic experts have been warning about the decline in the manufacturing base for years.
The pandemic is a wake-up call for companies that had moved production offshore, said Miles Free, director of industry affairs for the Precision Machined Products Association, a trade group based in Brecksville, Ohio. “They can’t make the parts that they need to keep their mother or their grandmother alive because they thought the race to the bottom for the lowest cost in China was smart business. But there’s more to smart business than lowest cost from China.”
“The risk of a weak manufacturing capability is clear. Overreliance on imports and substantial manufacturing trade defificits increase Americans’ vulnerability to everything from exchange rate flfluctuations to trade embargoes to supply disruptions from natural disasters,” wrote two Brookings scholars, Martin Neil Baily and Barry P. Bosworth, in a 2014 paper published in Journal of Economic Perspectives.
If the Paycheck Protection Program is any guide, manufacturers need help, said Chris Netram, vice president of tax and domestic policy at the National Association of Manufacturers in Washington, D.C. Manufacturers account for 12.25% of total loan volume approved as of April 13 in the $350 billion program, which is run by the U.S. Small Business Administration.
“I think that’s an indicator that there is a shortfall there,” Netram said. NAM has been seeking $1.4 trillion for manufacturers alone.
Meanwhile, the entrepreneurs at small manufacturers are figuring out on their own how to navigate the obstacles, which include raw-material shortages and the complex regulations governing medical equipment. The rules have been loosened but they haven’t gone away.
Fronting Costs To Retool
Manufacturers also are cautiously spending their own reserves to retool equipment and keep people working. While demand for medical supplies is up, it has not completely replaced revenue lost to other products.
Pioneer, the contract machine shop near Chicago, makes parts for a variety of end users, including automaker Tesla, said Muthana. Its 35 employees also make parts for ventilators, stretchers and hospital beds, as well as tables used in biomedical research.
Since the pandemic began, its share of medical-related work has jumped from 20% to 50%, but overall volume is down. “There’s definitely going to be an impact.”
Muthana is seeking a Paycheck Protection loan but declined to specify the dollar amount. It would equal two and a half months of payroll and help avert layoffs and cuts in hours. The money had not been deposited as of the morning of April 15, Muthana said
Demand has exploded for ventilators. Among the highest-profile projects is the partnership between automaker General Motors and medical-device maker Ventec Life Systems, which are collaborating to make ventilators at a GM plant in Kokomo, Indiana. When they began looking for parts in mid-March, they turned to groups like the Precision Machined Products Association. The association quickly distributed prints of nearly 40 parts to its roughly 450 members. Seventy-one companies submitted quotes, said Free.
Contract manufacturer Smith and Richardson Inc. was among those that took a look but it has been busy fulfilling a flood of orders from existing customers, said Rich Hoster, president and co-owner of the company, which is based in the Chicago suburb of Geneva, Illinois. Its parts generally fit inside valves.
New Workers Would Need To Be Trained
In a normal year, the company might churn out 10,000 ventilator parts. In March, the contract manufacturer shipped about 56,000, Hoster said. Those parts flow into the supply chain feeding ventilator manufacturers Vyaire and Nihon Kohden OrangeMed Inc.
To accommodate the spike, Smith and Richardson first had to clear its production schedule, a process that was easier since demand for other parts had fallen off, Hoster said. Turnaround time, however, has accelerated. Orders that might have taken four or five days now take one.
One supplier tried to hit him with a fee for expediting an order, Hoster said. He replied by raising the reputational risk of appearing to take advantage of the situation. “They had a change of heart,” he said.
The company’s 70,000-square-foot plant is highly automated and its 35 workers can spread out safely, Hoster said. The company has not had to hire anyone and would probably not be able to, since training would require working shoulder to shoulder.
While demand is high, the orders are not exactly steady. The pace reflects caution about being stuck with inventory. “Nobody wants to be out in front of this too far,” Hoster said. Still, he added. “My guess is we’re going to build a lot of ventilators and put them in storage after all this is over. That won’t necessarily be a bad thing, as long as they’re properly maintained.”
Some of the demand is being met by ad-hoc alliances and information sharing among small companies — like the interaction between Coleman Knitting and Master Industries Worldwide LLC.
Getting Over The Government Hurdles
Master Industries is one of the last U.S.-based producers of gloves, ball buffers and other bowling accessories. When the Covid-19 pandemic dried up demand for the company’s goods, general manager Donna McDermott figured the 13 workers at her plant in Santa Ana could start making face masks.
So she fired off email after email to get her company classified as an essential business. McDermott didn’t get any answers until she reached out to Coleman Knitting. It had posted a video showing how it went from stitching together cheerleading uniforms to making masks and gowns.
Dalebout quickly returned her call, McDermott said. “He had so many orders that he said, ‘We would love to have you on board.’”
McDermott expects the bowling industry to rebound. But she’s not sure when that will happen. In the meantime, she said, she was assured by a trade group that contracts to make masks should allow Master Industries — a subsidiary of Storm Products Inc. — to stay open.
“I have a feeling this might last for awhile,” she said.
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