WYTHE COUNTY, Va. — The federal government spent $123 million during the coronavirus pandemic to build a massive chemical plant here in the foothills of the Blue Ridge Mountains, a project meant to help ensure that supply-chain disruptions would never again leave the nation short of medical gloves.
In late spring, construction wrapped up on the plant, the only one in the country capable of producing the synthetic rubber needed to make disposable nitrile gloves.
By fall, the factory was mothballed.
“Just wasted money,” Blue Star NBR chief executive Scott Maier said this month, surveying hundreds of motors removed from the plant’s reactors in November and stashed in a humidity-controlled storage shed, where they will stay unless and until production gets underway. “This was all built, ready to go. And because we didn’t start, now we have to take it all apart. … We just want to finish what we started.”
Washington initially planned to build two factories with Blue Star, one to make the rubber and another to turn the material into medical gloves, which were in dangerously short supply in the early days of the pandemic. But by the time the rubber plant was erected, the worst of the pandemic and glove shortages had passed. Now, federal officials say, Blue Star’s contract is complete even though it still needs $60 million to hook up the rubber factory to utilities and $170 million to build an adjacent glove factory. The company will have to win a new contract or find private funding to move forward.
State and local officials have urged Washington to complete a project that promised to bolster the nation’s glove supply and deliver more than 2,400 sorely needed jobs to Virginia’s rural Southwest. So far the project has managed only to plunk a seeming white elephant on the region’s premier industrial plot.
“How a company could act in good faith and build this plant and not have follow-through from those that initiated it, it truly makes my brain hurt,” said David Manley, executive director of the Joint Industrial Development Authority of Wythe County.
Launched in late 2020 when Donald Trump was in the White House and the coronavirus was raging, the Blue Star plant and a glove factory planned for next door seemed to get lost in the change of administrations and the nation’s shifting priorities. Lots of cooks from an alphabet soup of federal entities — DOD, HHS, ASPR, IBMSC and DFC — had a hand in the project, some of them moving on after making what Blue Star says were verbal guarantees to cover cost overruns on the nitrile butadiene rubber (NBR) plant and to build the glove factory.
The United States makes very little of the personal protective equipment (PPE) that the health industry uses in abundance, including gloves. As demand for PPE soared in the early days of the pandemic, trade disruptions meant health-care providers often had to work without protection. That prompted federal officials to try to stimulate domestic production.
In late 2020, federal officials encouraged Blue Star to add an NBR plant to the stand-alone glove factory it initially proposed.
At the time, other companies had sought contracts to produce gloves, but none pitched making the rubber. Without a domestic source for that material, any new glove makers couldn’t operate if supplies weren’t flowing from overseas. Blue Star agreed to build both, anticipating efficiencies from a vertically integrated operation that would start with raw materials and churn out finished gloves.
Blue Star said all of those funding issues left the company without money for utility hookups after the Defense Department, which handled contracting for the Department of Health and Human Services during the emergency, declared in May that Blue Star had successfully completed its contract.
Even if the plant got connected to utilities, Blue Star said, it would have no market for the rubber without its own glove factory because few, if any, of the glove factories that Washington paid to set up during the pandemic are up and running. Despite substantial pandemic-era investments in glove plants around the country, only about 2 percent of the 120 billion to 150 billion medical gloves used in the United States every year are made domestically. Almost all of the imports come from Asia.
Asked this month about Blue Star’s situation, the Defense Department did not respond to a request for comment. HHS, which says work continues on several glove factories, released a written statement saying that its investments have “significantly expanded” the country’s ability to produce PPE — including the “capacity” to produce more than 1.6 billion gloves. But by “capacity,” HHS means the “domestic manufacturing infrastructure” to produce the items, not production itself, which is overseen by the private companies that built the PPE factories, not HHS.
“The Biden-Harris Administration is committed to preparing for future public health threats by continuing to invest in domestic manufacturing and the Strategic National Stockpile,” the HHS statement said. “Per the terms of the contract awarded, Blue Star has fulfilled all contractually obligated deliverables. HHS continues to work closely with Blue Star and other companies interested in domestic manufacturing to ensure a more resilient public health supply chain.”
Dawn O’Connell, assistant secretary of the Administration for Strategic Preparedness and Response (ASPR), an agency within HHS, addressed gear production more expansively in November while writing on an official HHS blog.
“It took over 50 years for these industries to leave our shores and it will take robust investments and time to bring these manufacturing capabilities back,” she wrote. “However, the office is currently only funded with limited supplemental appropriations. We are pleased there are funds included in the Senate draft Fiscal Year 2024 budget and hope to see Congress invest in this work.”
Blue Star sits inside Progress Park, a 1,200-acre industrial site that local leaders carved out of rolling farmland in 1999. It occupies Lot 24, 233 acres with prime access to major gas, electric and water lines. Rail runs right up to the property line, not far from two major interstates. The county’s industrial development authority granted the parcel, worth about $17.5 million, to Blue Star.
“Definitely one of the best sites in the western half of the state,” is how Manley described the lot. “It was begging for a major project.”
The Blue Star plant stands out from the beige, flat-topped structures that otherwise occupy the park. Soaring 85 feet tall, with a dark, corrugated exterior and peaked rooflines, it gives off a modern-farmhouse vibe, with a cluster of water tanks standing in for grain silos. With the Blue Ridge as its backdrop and round hay bales all around, the place could pass for a wedding venue.
Inside stands a succession of giant steel vats, ready to turn more than a dozen petroleum-based chemicals into the main ingredient for the throwaway gloves that keep American health-care workers safe.
The chemicals, including butadiene and acrylonitrile, would be combined, slowly churned, cooled and finally stripped of elements unneeded in the finished NBR. Along the way, the rubber would get pumped to the ceiling — six stories high — then flow back down via an innovative gravity-fed system meant to save energy and reduce bubbles that could cause flaws in gloves. From there, the finished NBR would be piped to an adjacent glove factory or shipped somewhere else.
It took three years to assemble the NBR factory, with the Defense Department declaring the contract completed in May, despite the lack of utility hookups. Six months later, with winter weather approaching but no production on the horizon, Blue Star brought in a team of mechanical and electrical contractors to remove scores of motors. Leaving the motors in place but idle — subjected to cold, moisture and a residual electrical charge — could have caused damage, explained Maier, the Blue Star CEO, who has a background in private equity and manufacturing and does not have other NBR or glove operations.
“You can’t leave a car unattended in a garage for a couple years and then expect it to start up right away,” Maier said, standing inside a climate-controlled storage building next door to the plant, where the blue, orange and green motors sat on wooden pallets spread across the floor. “There’s kind of preventative maintenance you need to do if you want it to run.”
And Blue Star most certainly wants it to run.
“It would be a shame not to finish,” Victor Galati, Blue Star’s chief financial officer, said outside the building, where he showed off a vial of NBR produced in a lab set up in a construction trailer on the site to prove to the government that their concept works. “It’s a vital product that we need, and we’re putting our country at risk, not having something so important.”
The project’s importance to the region was significant, too, though Wythe County is better off than other parts of Southwest Virginia that are heavily dependent on coal. Progress Park hums with advanced manufacturing for major automotive brands and enough Gatorade production to quench thirsts across the East Coast. But the park has plenty of undeveloped lots that for now serve only as pasture for Black Angus cattle.
In the nearby town of Wytheville, the historic downtown has experienced a renaissance in recent years, with handsome brick storefronts boasting two brewpubs, a wine bar and the town’s first Vietnamese bakery.
Tending the counter at P.R. Sturgill Fine Jewelry on Wytheville’s Main Street, Mary Wright said hopes have faded that the factory would jump-start housing development and benefit local retailers.
“I had a friend that was doing grading work [for Blue Star],” she said. “… And all of a sudden they said, you know, ‘Shut down, because we’re out of money. And the government, they’ll be sending us some money. As soon as [we] get it, you’ll come back to work.’ He don’t have a job now.”
Beth Lowder, 65, while shopping for a Christmas present for her grandson, said the plant “would be a gift to the area.” But she had lost hope, too.
“We’ve had promises of [other] things coming about, and then for whatever reason, it got shut down,” she said.
Having lunch nearby at Petals Wine Bar was Angeline Lloyd, a 47-year-old local artist who’d always had mixed feelings about the project because it cost her family 20 acres of farmland; the state Department of Transportation seized it by eminent domain to build a spur from the plant nearby Interstate 77.
“I want the area to prosper. I want people to have good jobs,” she said. “But it tugs at me a little, too, because our family’s been out there since the 1930s.”
At Chau’s Corner Bakery, owner Hoa Chau hoped Blue Star would create jobs and housing for the next generation, including her 9-year-old son.
“I love this place,” said Chau, who came to Wytheville nearly 10 years ago from Houston, following her husband, an engineer who had a job at Hitachi Energy, which makes power transformers in nearby Bland. Five years ago, she opened the bakery just off Wytheville’s Main Street, serving pho and spring rolls as well as freshly baked desserts.
The bakery has gained a loyal following, but Chau worries that the area’s population will continue “bleeding” unless new industries spring up for the next generation.
“They grow up, they go away, they study, but they cannot come back because there’s no job for them,” she said. “If we had that, we’d have something, at least some way, to come back and stay and help this community prosper.”
Despite pleas from the state’s congressional delegation to senior Biden administration officials, no solution is in sight. Indeed, HHS made clear last month that it’s not counting on a single drop of milky-white NBR coming out of Blue Star. Production projections that O’Connell made on the HHS blog in November referenced only the NBR expected to flow in two years from a yet-to-be-built plant in Louisiana, which won funding in September.
Virginia Sens. Mark R. Warner and Tim Kaine, both Democrats, and Rep. H. Morgan Griffith (R) have tried to help Blue Star by going straight to the top of the two departments chiefly involved, writing to Defense Secretary Lloyd Austin and Health and Human Services Secretary Xavier Becerra.
“Blue Star believes it has done everything asked of it — raised their hand to help during the COVID-19 pandemic, submitted proposals as directed by federal government officials, sought and received state and local support, and continues to talk to all agencies involved in this important work of expanding the industrial base for public health and national security,” they wrote early this year.
The lawmakers called the situation “urgent” and asked HHS and the Pentagon to work “expeditiously” with Blue Star to “ensure this critical project that will help secure the domestic PPE supply chain is finalized.”
But there is no indication that funding is heading Blue Star’s way, even as HHS bankrolls the entirely new NBR plant in Louisiana with another company, SafeSource.
An HHS spokesperson said the $144 million SafeSource contract had been in the pipeline for some time and originally was intended to compliment Blue Star’s operation, not replace it. But when outlining the future of domestic PPE production in her HHS blog post in November, O’Connell referenced only the NBR production expected from SafeSource — two years down the road.
“With our investments, the U.S. will have the capacity to produce … 90,000 metric tons of nitrile butadiene rubber (NBR), enough raw material to produce an additional 840 million nitrile gloves per year by September 2025,” she wrote, using the anticipated output and start date for SafeSource.
O’Connell wrote back to the lawmakers on behalf of HHS on May 23, saying that the department remained “grateful that companies like Blue Star were willing to take on new projects during COVID-19” but that Blue Star’s contract was days away from ending — meaning no new money for utilities or the glove factory would be on the way, at least under that agreement.
“This is devastating news for both Blue Star and the surrounding communities of Wythe County and the greater Southwest Virginia region,” Jason El Koubi, president of the Virginia Economic Development Partnership, wrote to Warner, Kaine and Griffith in August. “Without the federal funding, Blue Star does not have a path forward.”
The company sought separate contracts for the NBR plant and glove factory, acting at the direction of federal officials hurriedly cobbling together emergency funding and contracting across multiple arms of the bureaucracy. At the government’s urging, Blue Star later tripled the size of the NBR plant so it could supply other glove factories as well as its own.
That much is not in dispute. What went wrong after that is not entirely clear, but funding came through only for the NBR plant. That meant certain costs the twin operations were supposed to share, including site development and systems to treat and recycle water, fell entirely on the rubber plant. It didn’t help that Blue Star built during a period of steep inflation, with soaring costs of steel and construction supplies pushing the project over budget.