U.S. Companies Shifted To Make N95 Respirators During COVID. Now, They're Struggling
When an N95 respirator shortage left hospitals scrambling in 2020, U.S. manufacturers stepped in. Now, those companies are facing bankruptcies and layoffs as Chinese-made masks flood the market again.
RACHEL MARTIN, HOST:
Chronic shortages of personal protective equipment such as N95 respirator masks left hospitals scrambling last year. The problem dominated the headlines.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON #1: Health care workers across the globe are pleading for personal protective equipment.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON #2: Front-line health care workers are still experiencing shortages of safety gear known as PPE about...
MARTIN: Domestic manufacturers then stepped in to fill the gap. Now those companies are facing financial troubles, possible bankruptcies and layoffs as cheap, Chinese-made masks flood the U.S. market yet again. NPR's Monika Evstatieva reports.
MONIKA EVSTATIEVA, BYLINE: When essential workers found their supply of N95 respirators shrinking, Armbrust America (ph) was one of the companies that answered the call.
LLOYD ARMBRUST: So we started at the height of the pandemic, really, in April. And very, very quickly in about six months, we were able to scale up to producing about a million masks per day.
EVSTATIEVA: That's Lloyd Armbrust, the founder and CEO of the company. Using his own resources, he purchased the facility, bought machinery hired over a hundred workers applied for a complicated and lengthy certification and started manufacturing.
ARMBRUST: We did, I think, over a million dollars in sales in the first 10 days.
EVSTATIEVA: Business was doing well until a mass vaccination effort dramatically reduced demand for masks.
ARMBRUST: We're down to a skeleton crew on the alternate shifts and just barely a full crew on the main shift.
EVSTATIEVA: And he's not alone. Armbrust and 27 other small businesses that had started up during the pandemic joined forces and formed the American Mask Manufacturer's Association. Now they're all struggling.
ARMBRUST: We have 28 members who are going to go out of business in the next 60 to 90 days. And when they go out of business, it's not like we turn off the lights and mothball these machines. We send them to the dump.
EVSTATIEVA: One of the main reasons for the slump in business - global competition. Before the pandemic, less than 10% N95 respirators were made here in the U.S.
ROBERT HANDFIELD: The N95 market prior to COVID - there were just a few domestic manufacturers, very small ones for the most part.
EVSTATIEVA: Robert Handfield, a professor of supply chain management at North Carolina State University, says even the biggest U.S. mask companies were making most of their products abroad.
HANDFIELD: So they had outsourced it to lower-cost manufacturers in China that were producing the masks and then putting the 3M or Honeywell label on it.
EVSTATIEVA: The biggest buyers of masks in the U.S. before COVID-19 were THE distribution companies that supply hospitals. When the pandemic hit, China, overwhelmed with its own response, shut down exports entirely, leaving American companies in the lurch.
HANDFIELD: 3M is unable to get shipments from its own factories in China back to the United States because the exports are being prevented by the Chinese government from leaving the country.
EVSTATIEVA: Fast forward to today. Chinese masks are back on the market, and they're much cheaper to make. Producing the same products here in the U.S. costs more than double. So there is little motivation for hospitals to purchase more expensive U.S. masks.
MIKE BOWEN: It's like a crack cocaine addiction. They are addicted to foreign prices, even when they're not real.
EVSTATIEVA: Mike Bowen of Prestige Ameritech has been through this before. He's one of the oldest domestic mass manufacturers in the U.S. In 2009, during the H1N1 pandemic, he stepped up production to meet the growing domestic needs. But the aftermath was harsh - laid-off workers, financial losses. This time around, not much has changed. Bowen has six idle machines in his factory.
BOWEN: It's like people want to have their cake and eat it, too. They want China prices. But then they want American manufacturers to bail them out when they can't get their Chinese products. That doesn't work.
EVSTATIEVA: Bowen and the small manufacturers are asking the White House to ban foreign imports of masks and keep competition to U.S. companies. California Congresswoman Anna Eshoo agrees. For years, she has warned against foreign dependence on commodities such as PPE and pharmaceuticals.
ANNA ESHOO: If the market is eaten away at by dumping of a foreign country - in this case, China - they don't stand any chance. And so it's lopsided.
EVSTATIEVA: Plus, many of the cheap masks are counterfeit, she says. And Chinese companies don't have to abide by much stricter U.S. quality controls.
ESHOO: It's not just that they're pennies on a dollar. It's an inferior product.
EVSTATIEVA: The White House says they're working on a strategy for a more resilient pandemic supply chain. Ten billion dollars were allocated for the Defense Production Act for PPE and other medical gear earlier this year. And a White House official says they're working to provide access to grants and funding for the newly formed small businesses struggling to survive. It is unclear if manufacturers like Lloyd Armbrust will get any funding in time. But he knows he took a risk when he started his business.
ARMBRUST: There are 27 other member companies that did the same thing. A bunch of people made bad decisions personally to do something that was right at the time.
EVSTATIEVA: And that, Armbrust says, is the American spirit. Monika Evstatieva, NPR News. Transcript provided by NPR, Copyright NPR.