As protective gear becomes a new normal, some call for Michigan health systems to buy domestic
COVID-19 cases are dwindling in Michigan, but the demand for personal protective equipment — the face masks, shields and gowns that help keep medical professionals and the public safe from the virus — remains steady as large segments of the state's economy reopen.
Sourcing and producing such critical items may change dramatically following the scramble earlier this year to procure PPE from mostly overseas manufacturers amid supply-chain disruptions and shortages. The experience has some calling for Michigan's health systems to source at least some of their PPE domestically.
"There's a big opportunity for purchasing agents in this country to really understand the total cost of doing business," said Jason Keiswetter, president of Petoskey Plastics Inc., a northwest lower Michigan-based manufacturer of plastic automotive, construction and medical coverings that jumped into the PPE fray to produce hospital gowns. "It's opened the eyes that you need to have a domestic source no matter what."
Detroit-based nonprofit Industrial Sewing and Innovation Center corralled companies it works with to lead a gown-sewing initiative that to date has produced 130,000 gowns and kept more than 100 people working during the shutdown. Now it is pushing for Michigan's health systems to commit to sourcing 10% to 20% of their PPE from U.S. producers such as them.
The rationale: buyers would spend just a small amount more in exchange for the security of having a domestic supplier and for the satisfaction of creating American jobs, particularly amid high unemployment caused by COVID-19 shutdowns.
"It's dangerous to give your whole supply chain to imports," said CEO Jen Guarino. By committing to source some PPE locally, "it gives you more control. It mitigates risk. And it creates real jobs."
Michigan's health care systems had a short time to prepare for the onslaught of COVID-19 cases first reported in March, just a few months after the first cases were reported in China in December. The cases quickly multiplied here, and as of Wednesday the state had 65,182 confirmed or probable cases and 5,955 confirmed or probable deaths.
"It's been an unprecedented time here in the business of health care," said Melanie Fisher, senior vice president of supply chain for Beaumont Health, the state's largest health care system. "Supply chains are not built to handle this type of influx in demand."
Much like the auto industry, she explained, hospital systems' supply chains are global and typically operate with "just-in-time" inventory. Supply-chain disruptions are not uncommon, but "never to this degree." When COVID-19 cases hit the health system, "we saw ... just unprecedented demand for PPE."
For example: in all of 2019, Beaumont used 50,000 N95 masks. During the peak of the coronavirus, the health system was burning through that amount within 10 days.
The hospital system quickly worked to establish relationships with 200 new manufacturers — many of them non-traditional, such as automakers and roofing companies — to produce much-needed gowns and masks.
Quickly, an informal patchwork of connections led to a network of new suppliers. Detroit automakers General Motors Co. and Ford Motor Co. were among the manufacturing companies that jumped in to help, retooling several plants in southeast Michigan to produce PPE.
To date, GM has donated more than 3.1 million face masks and more than 167,000 face shields. The automaker now has a large group of entities it supplies, and has committed to continuing production for as long as needed.
"As the need moved from emergency containment to prevention we have expanded our delivery to include other organizations like the state's Healthcare Coalitions, municipalities, long-term care facilities, Michigan Association of Dentists, Michigan Association of Day Care facilities and the state's homeless shelter support system," said GM spokesman Dan Flores.
Ford has produced more than 20 million face shields for hospitals, health clinics, first responders, long-term care facilities and PPE donation centers. The Dearborn automaker now has established a waiting list for frontline health care organizations in need of face shields.
Ford has slowed its production of face shields due to a slowdown in demand, but it plans to continue making PPE as long as needed.
Rifino Valentine, president and founder of Ferndale-based craft distillery Valentine Distilling Co., also has noted a slowdown in demand recently for the hand sanitizer the vodka, gin and whiskey maker has been producing since mid-March.
Amid a huge drop in business due to stay-at-home orders, Valentine rapidly retooled to help fill shortages of hand sanitizer: "As soon as we announced we were making hand sanitizer, we could not keep it in stock. ... The amounts we were trying to make just dwarfed anything that we had made in our 13-year history," Rifino said.
Between sales, donations and ethanol Valentine supplied to a brewery, the distillery has gone through some 20,000 gallons of ethanol. Typically, the distillery processes about 6 1/2 tons of grain a week. During peak sanitizer production, that increased to 10 tons.
Valentine made the ethanol, but ran into shortages of materials such as plastic bottles — so, the distillery began bottling sanitizer in five-gallon pails, and in its own liquor bottles: "We went through almost a year's supply of our gin and whiskey bottles in the first three weeks," said Rifino.
For a time, the Valentine-made sanitizer was flying off shelves, but more recently demand has slowed. There have been requests from companies stocking up as they reopen, and Valentine is prepared to continue making sanitizer for the time being. But Rifino doesn't see it as a long-term venture for the distillery.
"If a second wave comes and all of a sudden people need it again, we'll make it," he said. "But I am not planning this as a long-term product line extension. At some point, Purell is going to catch up and there's not going to be a real need for it."
Petoskey Plastics, by contrast, has decided to permanently add disposable gowns to its product line. After helping supply Beaumont with gowns, the manufacturing company expanded to supply other major hospitals in the state. To date, the company has produced 3 million gowns.
At a time when auto plants were shut down for eight weeks, the foray into gown-making provided a much-needed boost to a company heavily focused on the automotive sector, Keiswetter said.
"We went from a very dire position to oversold. We are re-shoring something that has been been outsourced, and it's really driving the competitive juices internally."
The venture went so well that the president saw an opportunity for Petoskey to expand its portfolio and make in the United States a product that typically is imported from overseas. He estimates the gowns could end up generating between 7% to 12% of Petoskey's revenue.
Although demand for gowns may be trending downward from its peak, Keiswetter expects another uptick as manufacturers work to fill distribution channels and as broader segments of the workforce start wearing them.
And he believes hospitals may be more interested in sourcing PPE domestically, given the rude awakening they experienced a few months ago. To be safe, some may decide to dual-source PPE: "You can see what happens we take our eye off the ball. We find ourselves in a difficult position, and the recovery time is much longer than if those gowns had been made domestically."
And demand for PPE may surge as such large institutions as Michigan's public universities prepare to resume on-campus, in-person classes in the fall. Wayne State University, for example, has ordered 62,000 reusable face masks from Office Depot in preparation for the fall semester.
The university aims to provide students, staff and faculty with a small supply of PPE, and also is considering installing PPE vending machines on campus, said Ken Doherty, associate vice president for procurement and business services.
For now, the university is stocked up on hand sanitizer and dispensers. Doherty and other stakeholders have daily conversations about PPE to work through new issues raised as they contemplate a return to school. One example: how to ensure that hearing-impaired students who rely on lip-reading are not at a disadvantage.
"Beyond that, we're pretty darn comfortable with where we're at," he said.
Beaumont's Fisher agrees that lessons learned from the pandemic likely will result in more domestic production of PPE and changes in health systems' supply chains. It's a recurring conversation in the state's health care industry right now: "We've got a unique view of, how can we impact change here? No one has seen anything like this."