The pandemic revealed a glaring weakness in the PPE industry, namely that almost all of the PPE in America is imported from Asia. If anything impacts the global supply chain 一 a pandemic, a geopolitical event, or any other international emergency 一 doctors and nurses nationwide may be left with an appalling lack of PPE.

As a result, the US government has invested about $290 million in public funding since the beginning of the pandemic into the creation of domestic glove-manufacturing companies. This initiative, commonly referred to as reshoring, would solve the problem by introducing on-shore production of critically important items, especially protective gloves.

The problem? Despite these government grants, domestic glove manufacturers have struggled to ramp up production. Many of the facilities built from this public funding are sitting empty. Others are under-producing. Many in the industry are concerned that we haven’t taken the necessary steps to prevent a PPE catastrophe in the case of another global crisis.

The Underlying Issues

Why is it that government grants have not been enough to galvanize the growth of the domestic nitrile glove industry? The answer has to do with the fact that the funding was enough to create the facilities, but not enough to change the reality of the industry.

There are several good reasons why gloves have been produced overseas for so many years. First of all, the raw materials for both nitrile and latex gloves are found naturally in countries like Malaysia and Thailand. Because of their easy access to these materials, companies in Asian countries are able to manufacture gloves much more easily and cheaply than their counterparts in the US.

In addition, because American workers are paid more than their counterparts overseas, domestic facilities would need to charge more than off-shore facilities. Potential glove buyers who would potentially purchase from domestic facilities are primarily large institutions, such as hospitals and healthcare distributors. Their goal is to bulk buy products that are effective and inexpensive, which means that they would likely opt for cheaper products produced overseas rather than splurging on US-made gloves. 

These issues mean that the government’s efforts to reshore the PPE glove industry need to include more than just start-up costs. To enable these new factories to succeed would require an ongoing investment. That means either subsidies or other incentives that would encourage buyers to purchase domestic PPE rather than buying cheaper products from overseas. At this point, that’s not an investment that the government seems ready to make, and it may not be one that taxpayers would be willing to support. After all, most of the time, domestic PPE is not a necessity. But by the time it is, it may be too late.

The Exceptions

That said, there are a few protective glove companies that have successfully shifted manufacturing and production from overseas to domestic factories. This is, in part, thanks to advancements in technology on the factory floor that are helping lower overhead costs, increase efficiency, and automate tasks.

US Glove Supply is a prime example. This New-York-based manufacturing facility produces about 6 billion gloves a year. How are they able to do so? “[U]sing state of the art, automated, high-speed dipping lines… [they are able to] provide a high standard of quality product to protect…frontline workers, as well as all other industry workers with premium gloves,” according to their website. The same is true of Ohio-based American Nitrile, which produces over 1.4 billion gloves per year. 

Armbrust, a Texas-based manufacturing company, specializes in medical-grade masks, but it also produces three types of nitrile disposable gloves. While these gloves are more pricey than most, this brand emphasizes that all of its products are “designed, developed, and manufactured in the USA,” which may attract some buyers that would otherwise end up purchasing gloves from overseas. Capitalizing on new technologies, these companies have managed to compete in the global PPE market.

A Proposed Solution

While a handful of companies have been successful at reshoring, they are the exceptions, not the rule. What can be done to increase the domestic production of protective gloves, given the many hurdles that other companies have encountered?

One possibility is for the government to encourage foreign corporations to open US-based facilities. Much like those in the automotive industry (among others), foreign PPE companies understand the benefits of diversifying their operational base to include a US presence.

A couple of companies have already taken this plunge. For example, Showa Group is a Netherland-based glove manufacturer, but two of their eight factories have already been reshored to the US. 

Similarly, a much larger player in the global industry has also recently started a branch in the US. Supermax is one of the world’s largest manufacturers of disposable exam gloves. They export to over 150 countries on five different continents. A subsidiary of Supermax, Maxter Healthcare, is building a $500 million facility in Brazoria County, TX.

The government may want to specifically focus on encouraging Malaysian companies to open facilities in the US. During the pandemic, the United States Customs and Border Protection (CBP) banned imports from several Malaysian glove manufacturers over suspected forced labor practices. This decrease in supply was especially painful to Malaysian glove manufacturers since it occurred at the same time that the pandemic was causing the demand for PPE to skyrocket.

With that as a backdrop, some Malaysian manufacturers would likely find it prudent to open manufacturing operations here in the United States. Not only would they curry political favor with Uncle Sam (who would like to see critical supply chains operate on US soil), but more importantly to them, they would be diversifying some of their geographical risk by not concentrating the majority of their operations in Southeast Asia.

This would be further cemented if the Malaysian companies created partnerships or joint ventures with US corporations. Joint ventures allow companies to combine their strengths, whether it's technology, capital, market knowledge, or distribution channels. When reshoring manufacturing, this can be particularly beneficial as it often requires a deep understanding of local regulations, labor markets, and supply chains, making the arrangement mutually beneficial.

The advantage of this type of joint venture for American companies would be that they could benefit from the experience of their Malaysian partners rather than building their own companies from scratch.

At the same time, it is important to note that joint ventures also come with their challenges, including differences in corporate culture, decision-making processes, and potential conflicts of interest.

In short, despite the government’s well-intentioned efforts, reshoring efforts have not been very successful. Throwing more taxpayer money at the problem seems wasteful, and it may not address the underlying issues. The logical next step would be to welcome global players to our shores, and even to partner with them. The alternative would be to risk a repeat of the catastrophic PPE shortage that occurred during the pandemic. This time, though, we would have no excuse for our failure to plan ahead.

Written by Robert Brown