Overabundance of Chinese masks undermines U.S. businesses

Mask mandates have eased, a welcome step in the fight against covid-19, but for the two dozen domestic companies that entered the mask-making business last year, the good news is ‘comes with a downside – a catastrophic drop in sales.

Part of the slowdown in demand is linked to the easing of masking guidelines by the Centers for Disease Control and Prevention, but industry experts say a bigger factor has been the return of cheap protective gear from from China that started flooding the US market this year.

Industry executives and some members of Congress have accused China of dumping, noting that many imports are sold at such low prices – sometimes a tenth of what US factories charge for comparable products – that domestic companies are unlikely to survive.

In recent weeks, at least three companies have stopped producing medical masks and gowns, and several others have dramatically reduced production – including Premium-PPE, a surgical mask maker in Virginia that recently laid off most of it. its 280 workers.

“Our industry is in icebreaking mode,” said Brent Dillie, co-owner of the company.

Like other startups, the company entered the mask business after China, the world’s largest producer of protective medical equipment, halted exports at the start of the pandemic.

“Six months from now, a lot of us will be gone… and it won’t be good for America the next time there is a national health emergency,” Dillie said.

The crisis facing domestic producers is an urgent test for the Biden administration and epitomizes two of its priorities: strengthening American manufacturing and ensuring that healthcare workers never scramble to find adequate protective gear again.

These shortages, according to health experts, most likely contributed to the high rates of infection among frontline workers, more than 3,600 of whom died from covid-19 in the first year of the pandemic, according to one. survey from The Guardian and Kaiser Health News.

The White House has announced some measures to support domestic producers of personal protective equipment, but industry leaders say they are still waiting for more substantial trade policies and supply chain measures that would strengthen chances of survival of their businesses.

Tim Manning, the White House covid-19 supply coordinator, said the administration has tried to address some of the industry’s challenges.

They pushed federal agencies to source nationwide supplies and they pitched startups to the retail giants who supply hospital chains across the country. The administration, he said, was also poised in the coming months to allocate billions of dollars in federal relief spending that would replenish the strategic national stockpile with medical products made in the United States.

“The scale and scope of these efforts are things we are still working on,” Manning said.

In Congress, a bill with bipartisan support would allocate $ 500 million in annual spending over the next three years to support domestic manufacturers of vital medical equipment.

IMMINENT WARNINGS

While industry executives welcome these measures, they say time is running out.

The American Mask Manufacturers Association, a newly formed trade group, said its 27 members have already laid off 50% of their workforce. Without concerted action from Washington, most of these companies will go bankrupt within two months, he says.

An immediate boost, the group says, would be to reverse CDC guidelines born during the pandemic that require health workers to repeatedly reuse N95 masks, even if they are designed to be discarded after contact with each patient. Many hospitals are still following the guidelines, despite the 260 million masks collecting dust in warehouses across the country.

“We are not looking for endless support from the government,” said Lloyd Armbrust, president and founder of the association and general manager of Armbrust American, a mask manufacturing company in Texas. “We need government support right now because unfair pressure from China is going to kill this new industry before lawmakers even have a chance to fix the problem.”

The association plans to file an unfair trade complaint with the World Trade Organization, saying much of the protective gear imported from China sells for less than the cost of production. The price of some Chinese-made surgical masks recently fell to 1 cent, compared to 10 to 15 cents for American masks that use raw materials produced in the country.

“This is an economic war in its own right,” said Luis Arguello Jr., vice president of DemeTech, a medical suturing company in Florida that this month laid off 1,500 workers who made surgical masks.

In the coming weeks, he said another 500 workers who make N95 masks would also likely be made redundant.

“China’s mission is to make sure that no one in the industry survives and so far they are winning,” Arguello said.

The Chinese Embassy in Washington did not respond to requests for comment.

The International Trade Administration, a division of the Commerce Department, declined to say whether it would support an anti-competitive complaint against China. The agency, a spokesperson said, “continues to closely monitor market trends and assess options to ensure that US manufacturers compete on a level playing field.”

The office of the U.S. Trade Representative, which makes trade policy recommendations to the president, did not respond to requests for an interview.

HANGING BY A WIRE

The flood of cheap imports is also affecting producers of other medical equipment.

Merrow Manufacturing, a 183-year-old textile company located in Fall River, Mass., Produces an unlikely line of products from lingerie to bulletproof vests to tank blankets. It entered the surgical gown business last year, in part due to the desperation of New England hospitals that suddenly couldn’t get medical supplies from China.

“Our phones were ringing all the time and people were asking if we could help,” said Charlie Merrow, who runs the business with his brother.

Hundreds of workers were quickly retrained and dozens more were hired, and after retooling that cost $ 10 million, Merrow’s sewing machines were producing 700,000 dresses a week last summer.

The governor of Massachusetts stopped by the plant to celebrate his efforts. The governor of Rhode Island described the Merrows as heroes.

Few hospitals call these days and Merrow recently shut down production after the number of unsold gowns hit 1 million. The company’s $ 18 reusable dresses, he said, don’t stand a chance against similar products from China that sell for $ 6.

“It really is a lost opportunity for the country when you consider that our national security is at stake,” he said.

The Merrows are determined to stay in the protective gear business. They are turning to making scrubs and other medical clothing from recycled materials, but other companies have decided to stop.

National Filters, a surgical mask company in Harbor Beach, Mich., Ceased production this month, and Protective Health Gear, a mask startup based in Paterson, NJ, is weeks away from laying off 40 employees. remaining.

“We’re hanging by a thread,” said general manager Brian Woli.

The industry upheaval comes as no surprise to Mike Bowen, co-owner of Prestige Ameritech, a Texas company that is one of the nation’s largest mask makers. Bowen, who has worked in the industry since 1986, has long warned political leaders in Washington about the country’s reliance on foreign suppliers.

“I have 14 years of letters to presidents, congressmen and hospital leaders telling them a whole bunch of people are going to die without serious change, and that’s exactly what happened,” he said. he declared.

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