efforts to manufacture protective medical equipment in the United States fail | Missouri News
By DAVID A. LIEB, Associated Press
UNIVERSITY CITY, Mo. (AP) — When the coronavirus pandemic first hit the United States, sales of window coverings at Halcyon Shades quickly plummeted. So the suburban St. Louis company did what hundreds of other small manufacturers did: it pivoted to make protective supplies, with the help of an $870,000 government grant.
But things didn’t go as planned. The company stopped making face shields because it wasn’t profitable. It still hasn’t sold a single N95 mask due to difficulties obtaining equipment, materials and regulatory approval.
“So far it has been a net waste of funds, resources and energy,” said Halcyon Shades owner Jim Schmersahl.
Many companies that began producing personal protective equipment with patriotic optimism have scaled back, closed or abandoned, according to an Associated Press analysis based on numerous interviews with manufacturers. Some have already sold equipment they purchased with state government subsidies.
As COVID-19 stressed hospitals and shuttered businesses in 2020, elected officials touted the need to boost U.S. production of protective gear: “This should all be made in the United States, not China,” said Florida Governor Ron DeSantis in remarks echoed by others.
Yet many manufacturers who answered the call faced logistical hurdles, regulatory denials, declining demand and fierce competition from overseas suppliers. On April 1, Florida-based American Surgical Mask Co. became one of the latest to close.
“I just finished the fight,” CEO Matt Brandman told the AP.
After the PPE rush ended, many industry newcomers struggled to sell products. Government agencies sometimes wanted huge quantities under difficult deadlines. Hospital systems tended to contract with established vendors. Retail sales have declined after each virus surge.
“At the end of the day, when everyone said they wanted made in the USA, nobody bought it, not even the state,” said Tony Blogumas, vice president of Green Resources Consulting, a company rural Missouri that received an $800,000 state grant but sold only a few thousand masks. “We’re a bit upset with the whole situation.”
Missouri Governor Mike Parson is also disappointed. His administration split $20 million in federal COVID-19 relief funds among 48 companies for the production of masks, gowns, sanitizers and other supplies. Parson hoped to sow a permanent field of manufacturers.
“I still feel strongly that we need to make PPE here in this state,” Parson said. “Unfortunately, many entities have gone back to where they got it before.”
The onset of the pandemic revealed that the United States relied heavily on foreign countries for protective gear. When China curtailed exports due to its own battle with COVID-19, U.S. inventories plummeted. Prices soared as federal officials, governors and health systems competed for supplies.
Although federal stockpiles have been replenished, dwindling domestic production has raised concerns that state governments, medical facilities and others could again find themselves stuck scavenging for materials during a future pandemic.
The AP has identified more than $125 million in grants to boost production of pandemic supplies for more than 300 businesses in 10 states – Alabama, Hawaii, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Missouri, New York and Ohio . Grants may have been awarded in other states, but there is no central clearinghouse to track them.
In November 2020, Alabama awarded one of the largest grants — nearly $10.6 million from federal pandemic relief funds — to HomTex Inc. The company was to equip a new facility in Selma to manufacture 250 million surgical masks and 45 million N95 masks per year. The factory has repaid $1.8 million of the state grant and has yet to earn anything due to a lack of customers.
“I can’t produce a product that I can’t sell,” said HomTex president Jeremy Wootten.
Other companies have also struggled to live up to the hype.
In October 2020, New York announced eight grants that the then Lt. Governor Kathy Hochul, now governor, said it was “a blueprint for how we build back better for the post-pandemic future.” These included $800,000 for new company Altor Safety and $1 million for start-up NYPPE.
But NYPPE’s equipment wasn’t ready until February 2021, by which time the market had changed, chairman Connor Knapp said.
So Knapp put the brakes on his plans. NYPPE still hasn’t sold N95 masks because it doesn’t have regulatory approval. It has just ramped up production of surgical masks, having obtained certification from the US Food and Drug Administration that accompanied its purchase of Altor Safety.
Some PPE manufacturers cite federal regulations as part of the reason for their difficulties. Three-ply masks must be FDA-cleared to be marketed for medical use — an important designation for building up a long-term customer base.
This process can take time. Facing delays, Angstrom Manufacturing in Missouri ended up buying another company that already had FDA approval, President Chris Carron said. At that time, it was fall 2021 – a year after receiving a state grant.
Companies need approval from the National Institute for Occupational Safety and Health to market products as N95 respirators, which filter out at least 95% of airborne particles.
In the first two years of the pandemic, NIOSH approved 30 new manufacturers — more than seven times the number typical during a similar pre-pandemic period, according to agency data. Some requests remain pending, while many others have been denied.
Halcyon Shades’ N95 certification was rejected in October because its samples did not have headbands attached. While the company works on another application, its equipment sits idle inside the clear plastic walls of a specially constructed “clean room” to protect the materials from airborne contaminants. Partially finished masks sit paused on a conveyor belt, waiting to be dropped into a cardboard box.
Without federal approval, “we’re just dead in the water,” said Schmersahl, the company’s owner.
Progress reports filed with the Missouri Department of Economic Development show nearly all of its PPE grant recipients faced challenges by July 2021, particularly with sales.
Patriot Medical Devices, which received $750,000 from Missouri, hired nearly 100 people as it produced millions of masks during a COVID-19 surge in late 2020 and early 2021, CEO Rick Needham said. There are less than 10 employees left.
“We felt it was our patriotic duty to do something to help solve the problem,” Needham said. But, he added, “it’s frankly a bit of a dysfunctional business model at this point.”
Ohio awarded $20.8 million to 73 companies to manufacture pandemic-related supplies, state data shows. Of 60 companies that complied with a recent reporting deadline, more than a third were no longer producing PPE by the end of 2021.
Cleveland Veteran Business Solutions, which received a $500,000 grant to get into the PPE business, made around 5 million surgical masks as of August 2020. It eventually halted production in the face of cheaper imports and sold its machines this year, co-founder Taner Eren mentioned.
“It was strategically surprising and disappointing that there was no support for a local PPE manufacturing industry,” Eren said.
The company was one of several dozen that banded together to form the American Mask Manufacturer’s Association in a bid to support the industry. The number of group members has dwindled as more and more people go bankrupt.
Association organizers say the industry has reached a tipping point. They want the federal government to treat PPE makers like the nation’s defense industry — entering into long-term contracts to perpetually replenish stock for future pandemics or emergencies.
“If the federal government doesn’t step in and help support the US manufacturing base, it’s almost certainly going to go back to China, and we’ll be just as vulnerable as we were at the start of 2020 and 2019,” said Brent Dillie, the association president and co-founder of Premium-PPE, a Virginia manufacturer launched during the pandemic that has lost about two-thirds of its roughly 300 employees.
Infrastructure legislation signed by President Joe Biden has taken a step toward strengthening domestic providers. Beginning in February, it required new contracts for PPE purchased by the Departments of Health and Human Services, Homeland Security and Veterans Affairs to last at least two years and be awarded to US producers – unless there is not enough quantity and quality at market prices.
The health and veterans departments said they hadn’t purchased anything yet. Homeland Security did not respond to questions from the AP. Documents show the government has solicited bids due Dec. 6 for up to 381 million US-made surgical masks over three years for its stockpile. No deal has been announced.
Other documents show the government is seeking contracts with three major suppliers – 3M, Moldex and Owens & Minor – for a total of $115 million worth of US-made N95 masks over three years. A rationale document indicates that non-competitive contracts are necessary to preserve capacity for future coronavirus surges or emergencies.
The Biden administration has also formed a task force of experts from federal agencies, healthcare providers, PPE manufacturers and distributors to develop a national strategy to ensure a “health supply chain resilient public. His work is expected to span years.
Some manufacturers said they couldn’t wait long for a federal life jacket.
Dentec Safety Specialists is entering into a contract to supply 125,000 rubber reusable respirators and 500,000 filter cartridges from its Kansas plant for national stock, President Claudio Dente said. He needs more orders soon to avoid layoffs, he said.
“I thought COVID would really change the mindset of people, governments and manufacturing,” Dente said. But he added: “The general market is going back to its old ways, which means looking to buy products from China.”
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