◼ BUSINESS Bloomberg Businessweek March 23, 202015CLASSROOM:
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BY
ELIZABETH
HIBBARD
FOR
BLOOMBERG
BUSINESSWEEK.
FACTORY:
PAUL
YEUNG/BLOOMBERG
(2)
THEBOTTOMLINE Theglobalsupplychainformasksis
dependentonChina,wherehalfaremade.Thecoronavirus
pandemichassparkedcallstolocatemorefactorieselsewhere.is pushingtheU.S.toenactanexportbanonmedi-
calsuppliessuchasfacemasksandtocompeldrug
companiestomanufacturedomestically.
TheU.S.onlyhasabout1%ofthe3.5billionmasks
it needstocombata seriousoutbreak,Healthand
HumanServicesSecretaryAlexAzarhassaid.HHS
planstobuy 500 millionN95respirators—which
blockout95%ofairborneparticulates—overthenext
18 monthsforthenationalstockpile.
“Thispurchasewillencouragemanufacturers
torampupproductionofthepersonalprotective
equipmentnowwiththeguaranteethattheywillnot
beleftwithexcesssuppliesif privatesectororders
arecanceledoncetheCovid-19responsesubsides,”
saysStephanieBialek,anofficialatthegovernment’s
StrategicNationalStockpile.
Manufacturersneedtoboostproductionofmasks
byanadditional40%tomeetdemand,accordingto
TedrosAdhanomGhebreyesus,theWorldHealth
Organization’sdirector-general.WhileWHOhas
shippedsuppliesto 47 countriesincludingIran,
Cambodia,andUganda,shortageswillhitsoon,
especiallyoftheN95masks.“Industryandgovern-
mentsmustactquicklytoboostsupply,easeexport
restrictions,andputmeasuresinplacetostopspec-
ulationandhoarding,”Tedrossaidina statementon
March3. “Wecan’tstopCovid-19withoutprotecting
healthworkersfirst.”
DespiteTedros’sappeal,SouthKorea,Germany,
andRussiahaverestrictedexportsofmasksand
otherprotectivegear,whileFrancesaidit would
requisitionallfacemasksproducedinthecountry.
SwitzerlandsummonedtheGermanambassador
tocomplainaboutthedecisiontoblocka ship-
mentof240,000facemasks,whileAustriacalledon
Germanytoreleasesupplies.Othernationsinclud-
ingIndia,Kenya,Thailand,andKazakhstanhad
alreadyinstitutedrestrictionsonmasksales.“The
accumulatedimpactofthesemeasuresis tocreate
paralysis—one big logjam,” says Morrison of CSIS.
China has pushed other mainland businesses—
from carmakers to energy providers—to begin
churning out masks at their factories. BYD Co.,
the electric carmaker backed by Warren Buffett’s
Berkshire Hathaway Inc., on March 13 billed itself as
the world’s biggest face-mask manufacturer and said
it can make 5 million masks daily. Founder Wang
Chuanfu in late January led a team of 3,000 engi-
neers to build production lines from scratch using
90% in-house components. Guangzhou Automobile
Group Co., which makes cars with Toyota Motor
Corp. and Honda Motor Co., is also cranking
out masks. And iPhone assembler Foxconn
Technology Group is making masks for 1 million of
its workers. That’s helped to boost production morethan fivefold, from 20 million units daily before the
epidemic, according to Chinese state media
service Xinhua.
DuPont De Nemours Inc., which makes masks
and protective gear worn by first responders, says
it’s increased production to more than three times
its usual global capacity. Meanwhile, 3M Co. says it’s
increased production of N95 respirators at its facto-
ries since the outbreak and makes millions monthly.
“We immediately ramped up production in this
facility,” Andy Rehder, plant manager at 3M’s factory
in Aberdeen, S.D., said in a post on the company’sblog.Theplanthasgone“frommoreofa standard
five-dayweektomoreofa seven-day week, with
additional equipment as well that we’ve been able
to bring in and turn on,” he said. Still, 3M spokes-
woman Jennifer Ehrlich says the company expects
“demand for respirators and other supplies to con-
tinue to outpace supply for the foreseeable future.”
The dependence on China and a few other coun-
tries for masks has some calling for a rethink of sup-
ply chains. The World Medical Association, which
represents physicians, wants governments to estab-
lish factories in major markets such as the EU and
the U.S. to ensure adequate supply of critical drugs,
vaccines, and other medical necessities.
Back in Brooklyn, Dealmed’s Einhorn thinks the
shortage isn’t likely to let up until the summer. The
crisis may finally persuade Americans to pay more
for masks made in the U.S., rather than cheaper
imports, he says. “The world shouldn’t be relying
on one country for health-care products,” Einhorn
says. “We absolutely need to look at the supply
chain.” �K. Oanh Ha, with Jenny Leonard and
Richard Clough◀ Masks being made at
a plant in Hong Kong● Number of N
respirators the U.S.
government plans to buy500m