BUILDING SELF-RELIANCE THROUGH DOMESTIC PPE PRODUCTION
The COVID-19 Pandemic exposed the USA’s reliance on foreign manufacturing of essential PPE.
Before the pandemic, 90%+ PPE supplies were manufactured in Southeast Asia, primarily in China, and access to surge volumes was limited. China’s market dominance has only increased as the pandemic has waned.
American manufacturing responded to the call during the pandemic. Multiple organizations initiated plans to produce high-usage PPE items such as masks, gloves, gowns, and testing supplies domestically. Through the HHS Industrial Base Expansion, the US Government helped further accelerate these efforts by providing seed funding to many of these organizations to build or expand production capabilities.
REALITY: AN EMERGING MANUFACTURING BASE WITH NO MARKET
Most of these new manufacturers have shifted from expansion to survival mode now that supplies have normalized. We’re facing a dim outlook for several interrelated factors:
- No Preference: The market has not shown a preference for domestically manufactured options – especially if those options are at a slight price premium.
- Fewer Federal Funds: HHS support and funding programs have diminished, and the initial funding efforts did not consider construction inflation costs. Many projects reached only partial completion.
- Race to the Bottom on Price: The major buyers of these goods are medical and industrial distributors – and low-cost, sourced goods fuel their business models. They benefit from increasing their imports of Asian PPE products instead of shifting certain purchases to domestic providers.
CHINA INVESTS TO GAIN GROUND
As global demand for PPE skyrocketed, China took notice and invested heavily to expand its existing production capacities. Now, as demand has normalized, China is implementing aggressive pricing tactics to consolidate its market share further. Case in point, based on US International Trade Commission numbers, the import share of Nitrile Gloves from China has increased from ~10% in Q1 2020 to over 40% in Q2 of 2023 – a 300%+ increase.
THE RISK FOR AMERICA
As geopolitical tensions rise and global trading markets become more volatile, the likelihood of a supply chain disruption seems less like an “if” and more like a “when”.
Continuing to rely entirely on Asia, and so heavily on China, presents a significant risk for PPE and other critical products. If the next disruption becomes a reality, the US will only have a PPE production base that is 70% – 80% in place and has yet to become operational.
WHITE HOUSE LEADERSHIP OPPORTUNITIES
We can advance national self-reliance for PPE products. We need to complete the work to build the infrastructure. The White House, the Made in America Office and the “Make PPE in America Act” are all already in place and can lead and strengthen the PPE domestic production base to prepare for future world events and crises and build resilience by: