Wisconsin manufacturers ready to ramp up PPE production
President-elect Joe Biden has promised to use the Defense Production Act to spur manufacturing of PPE, and Wisconsin manufacturers could be primed to lend a hand.
While President-elect Joe Biden has yet to have his victory over President Donald Trump certified, planning for the early days of his administration is already well underway. One promise Biden made on the campaign trail regarding the fight against COVID-19 — to use his powers as president to invoke the Defense Production Act (DPA), a Korean War-era law that allows the president to order businesses to manufacture products necessary for national defense — could have a big impact on Wisconsin manufacturers.
While President Trump has already used the DPA to boost manufacturing of ventilators and N95 respirator masks — ordering General Motors to accept and prioritize ventilator contracts from the Department of Health and Human Services (HHS) for one, and also directing HHS to help companies like General Electric that are producing respirators to more readily access raw materials — critics such as Biden have noted the president could have done more but demurred.
Notably, while a handful of large U.S. manufacturers have ramped up production of personal protective equipment (PPE) during the COVID-19 pandemic, many smaller manufacturers are sitting on the sidelines, willing to get involved but wary of not having support for a venture that could put them out of business if it fails.
According to a National Public Radio report, one Michigan manufacturer, Adaptive Energy, retooled early in the pandemic to produce hand sanitizer and face shields. But so did many other manufacturers, and with the market for face shields flooded, Adaptive Energy now sits on 100,000 unsold shields. Adaptive Energy’s owner Ranvir Gujral wants to manufacture N95 masks which are still underproduced and in high demand, but he’s understandably cautious about another major commitment on his part without some reassurance that it will pay off.
As that same NPR report notes, the U.S. currently has a shortage of N95 masks that numbers in the hundreds of millions and growing, but President Trump has yet to push for greater domestic production of PPE and has increasingly relied on PPE imports from abroad. Says Scott Paul, president of the Alliance for American Manufacturing, it’s true that the White House worked with some big companies, including 3M and Honeywell, to ramp up domestic production of respirator masks, but they haven’t been able to make enough masks as the pandemic wore on and demand only increased.
That’s somewhat contrary to what Kurt Bauer, president and CEO of Wisconsin Manufacturers and Commerce (WMC), has heard.
“My understanding is that the U.S. now has more than enough respirators — a surplus, in fact — but there is an ongoing need for various forms of PPE, and that demand will continue as long as the pandemic persists,” remarks Bauer.
So, what could a more robust invocation of the DPA by the Biden administration mean for Badger State manufacturers?
Buckley Brinkman, executive director and CEO of the Wisconsin Center for Manufacturing & Productivity (WICMP), notes that the manufacturing capabilities at GE Medical and the assembly operations at the Foxconn facilities already made the most of President Trump’s implementation of the DPA. Beyond ventilator production, however, not many manufacturers were affected by the president’s implementation of the DPA, so there’s room for growth.
The most responsive reaction to the requirement for PPE was a combination of the design efforts at UW–Madison and the production capabilities at Midwest Prototyping, explains Brinkman. “Like many parts of the country, Midwest Prototyping used its 3D printing capabilities to produce face shields for Wisconsin’s front-line employees. Then, they went beyond the norm and engaged traditional plastic manufacturers to scale up to produce thousands of face shields every day.”
Bauer agrees, noting multiple Wisconsin manufacturers have already shifted production to PPE, though he says this has been in response to the market, rather than a DPA mandate.
“We also have Wisconsin manufacturers producing supplies for COVID-19 test kits,” says Bauer. “Again, those manufacturers have responded to the market demand, not a government edict.”
According to Brinkman, effective implementation of the DPA can transform U.S. manufacturing on critical needs. The dilemma comes in setting a strategy for which particular manufacturing capabilities are critical for the country.
“These decisions change our usual stance from the market-based focus to a more nuanced approach to securing the manufacturing capabilities that we determine are critical to our economic future,” says Brinkman. “The question remains who makes these decisions and how they can be focused to position the country for the future. Manufacturing is critical for our future economic security. We need to decide what manufacturing is the most valuable to long-term economic vitality.”
It’s a debate that may have been preventable, Brinkman notes, if the manufacturing systems in place hadn’t become so profit-driven.
“We love to address short-term issues and ignore the long-term consequences,” states Brinkman. “We were caught short in our PPE capabilities because we eliminated all the slack in our systems and drove efficiency and cost-reduction to the point we destroyed any capability in our systems to react to surging requirements. Our resilience was curtailed in order to drive prices to the lowest possible level.”
Bauer says one major vulnerability in the U.S. medical supply chain revealed during the pandemic has been the manufacturer of various pharmaceuticals. “While the research and development are largely done in the U.S., the actual manufacturing is done overseas,” Bauer notes. “Unrelated to DPA, a Biden administration could propose policy initiatives to incentivize reshoring production of those critical drugs and other therapeutics to the U.S. One suggestion would be to create a federal manufacturers production tax credit, similar to what we have here in Wisconsin.”
Brinkman cautions against the allure of a government contract that could result for manufacturers out of the DPA. “Government contracts to support manufacturing can provide false comfort to our manufacturing efforts. Done wisely, they can help manufacturers adjust and pivot to long-term opportunities and become competitive in world markets. Done poorly, they prop up unprofitable operations in a way that causes deterioration of the American manufacturing base. New government contracts should reward companies that shift to long-term pivots that create world-competitive operations in critical fields.”
Still, Wisconsin manufacturers are more than capable of taking on increased demand for their services, whether it comes via the DPA or not, says Brinkman.
“The best manufacturers made the commitment early in the pandemic to take care of their employees and keep them safe from the coronavirus. They know their employees safety and confidence is critical to thriving in the post-pandemic economy. These same companies have shown their ability to respond to changing requirements in this environment. Wisconsin manufacturers can — and will — respond to any requests made by the new administration.”
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