The PPE Crisis: Is Reshoring the Answer?

The PPE shortage during the COVID-19 pandemic highlighted the importance of building a stronger supply chain. But the question arises: How can this be done?

Many believe that the only way to fix the supply chain is by reshoring, or bringing manufacturing back to American shores. Soon after the pandemic began, the number of North American manufacturers who planned to reshore jumped from an already-high 54% to 69%, and a year later the number stood steady at 83%. So what exactly is reshoring, and why do some believe that it’s the key to repairing the supply chain?

The Benefits

A large percentage of American PPE is produced by other countries. The United States is by far the largest importer of PPE across the globe, but they are not the largest exporter. China is the world leader in exports of medical-grade face masks and eye protection, and several countries in Asia (in which rubber is a natural resource) carry the title of the largest exporters of medical gloves. Even before COVID, reliance on other countries for PPE adversely affected our ability to deal with other public health crises, such as the H1N1 influenza pandemic in 2009 and the Ebola Virus epidemic in 2014.

If companies would reshore PPE manufacturing, it would mean rebuilding American factories to produce PPE, rather than exporting the PPE from other countries. This would shorten the PPE chain, increasing its resilience in the case of a shortage or other crisis. Not only that, it would increase employment and economic development in areas that traditionally excelled in manufacturing. In fact, due to backward linkages between industries, each job created producing PPE or other nondurable goods would support more than five additional jobs indirectly.

These benefits are even more likely since the current wave of reshoring also emphasizes the importance of sourcing materials near manufacturing facilities, which limits risk. This trend of supply localization, which supplants the sourcing of materials purely based on price, would prevent some of the major issues encountered during the pandemic, primarily that of supply chains that circle the globe and rely on dozens of countries in order to operate.

The benefits go still further. American reliance on other countries, most notably China, poses national security concerns. For example, in 2019 an influential Chinese economist recommended that Beijing decrease its exports of the raw materials to manufacture vitamins and antibiotics, in an effort to assert its dominance over the US. In addition, allowing American products to be manufactured overseas can put American companies at risk of intellectual property theft and substandard production. For example, in 2018 a leading Chinese vaccine manufacturer produced at least 250,000 “substandard” doses of diphtheria, tetanus, and whooping cough vaccines. And just last year, the FDA issued a warning letter detailing issues with a biomedical patch that were discovered during an inspection of a Chinese manufacturing facility.

Reshoring: Present and Future

Many companies have already started the reshoring process, often with great success. Shawmut, for example, was once a flourishing corporation based in Massachusetts that produced medical equipment for Johnson & Johnson. In the late 1990s and early 2000s, when about 90% of American PPE manufacturing moved overseas, Shawmut followed suit. Today, Shawmut has begun the process of reshoring, opening a new facility in West Bridgewater, Massachusetts that will employ around 300 workers and shorten the supply chain for medical equipment in the area significantly.

Similarly, the US Department of Defense awarded a grant to Continuus Pharmaceuticals in 2021, funding the construction of a manufacturing plant in Massachusetts. Civica Rx also received federal funding to build a Virginia-based plant, which will manufacture drugs that would otherwise be imported.

The future of American manufacturing definitely seems to revolve around reshoring, for almost all sectors of PPE. (Gloves are the outlier, since they are more difficult to manufacture—they are part art, part science—and they also are more logical to manufacture in areas that can easily access natural rubber.) As more and more manufacturers successfully reshore their factories, America will find itself in a stronger place, in terms of both national security and the strength of its supply chain

This is the second in a series of three posts about the PPE crisis of 2020. The first post explained the history behind the PPE crisis, and how it developed over the past few decades. The third will discuss other strategies that would be necessary in conjunction with reshoring.

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The answer goes back several decades, and uncovers a fascinating and disturbing aspect of American policy.

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