The Supply Chain Matters blog highlights another example of joint business collaboration, and how a commercial real estate development firm and a legacy local manufacturer are addressing the need for domestic U.S. based production of N95 surgical respirator masks. This collaboration further has a unique process innovation supply network strategy.
Since the global outbreak of the COVID-19 coronavirus became initially visible in February of this year, Supply Chain Matters has placed a special emphasis on healthcare delivery, medicine, medical device product demand and supply networks. We did so because in pandemics, virus spread and safety of human life is predicated on the ability of governments and healthcare agencies to be able to respond with required medical supplies, protective equipment, testing and availability of proper medicines.
We observed that in the analogy of Triage, supply networks directly supporting healthcare delivery are the product demand and supply chain networks that govern the subsequent indirect or direct impacts to all other industry supply networks. At the same time, a global pandemic is an extreme event, one that requires a lot of contingency and scenario-based planning as opposed to the feasibility for stockpiling of physical inventory.
At the height of the initial spread of the COVID-19 coronavirus among global populations, The World Health Organization (WHO) had estimated that healthcare workers would require upwards of 89 million medical masks a month in order to respond to medical care needs. This obviously equates to over one trillion masks on an annual basis. Indeed in those early days, national governments, individual states and local healthcare delivery facilities were collectively competing with one another for any available supply, regardless of cost. It was a lucrative constrained supply environment.
In the United States, the situation is compounded by an uncoordinated federal government response. A woeful supply of N95 surgical grade face masks in the Strategic Stockpile forced individual U.S. states to fend for themselves in the default open market to obtain needed supplies. Amazon had to police opportunistic online sellers and allocate limited inventory only to healthcare providers. Making matters more challenging were certain directives among individual nations to limit exports to protect domestic healthcare needs. When the needs were critical, and the supply was indeed very limited, various local manufacturers successfully pivoted to address local needs to protect healthcare providers.
In Massachusetts, where Supply Chain Matters resides, the Governor of our state in April, after losing rights to a needed large shipment of masks to another government willing to pay more, marshalled state resources, private industry and a local professional football team, the New England Patriots, to both secure a 1.3 million mask shipment, and at the same time, dispatch the team’s own Boeing 757 aircraft to fly to China to pick-up the needed masks and fly them direct to Boston.
While this was an example of supply chain management ingenuity, collaboration and logistics response, the effort required over three days of negotiations, the leveraging of a network of known influencers with contacts, expedited customs clearances and required aircraft certification.
Now, with the Northern Hemisphere countries entering into the fall and winter period where people congregate more indoors, coronavirus infection rates are once again exploding, invoking new emergency measures.
The United States continues to outpace the world in both coronavirus infection rates and deaths due to this disease. While supplies of PPE including surgical grade face masks, have been augmented, a new, perhaps growing infection outbreak is underway and continues to alarm healthcare agencies.
Major U.S. hospitals have been able to build up some supplies of N95 grade masks, while some individual U.S. states have passed legislation calling for hospitals to secure specific stockpile quantities. As an example, the State of California passed legislation last month requiring hospitals to store three months of PPE inventory. Other states may follow, especially given dire forecasts of even more record-breaking infection rates across the U.S..
Kaiser Health News recently reported that nursing homes, small physician offices and rural clinics are being left behind in the rush for needed surgical masks, exposing some of the most vulnerable populations and their caregivers to COVID-19. Once again, a coordinated national strategy appears lacking and while PPE supply is better, it is not optimal.
Thus is the backdrop of a local development that provides a different supply network twist in supply network horizontal integration, as well as another example of corporate ingenuity in addressing local health and safety needs brought by this pandemic.
The Collaboration of Fallon Company and Shawmut Corporation
In mid- October, two Massachusetts based companies, The Fallon Company and Shawmut Corporation, announced the creation of a new domestic manufacturing operation to produce N95 respirators to provide for local healthcare provider needs.
The announcement provides unique but familiar themes in the COVID world.
It brings together two well-established successful businesses. Both have demonstrated social and corporate responsibility to areas of civic need.
One is a noted commercial real estate firm founded by its innovative founder and philanthropist, Joe Fallon. The Fallon Company is today noted as a developer of the most vibrant new urban neighborhoods across the U.S. East Coast.
The other has a 104-year-old history as both a traditional manufacturer of textiles and as an advanced materials producer in composite materials and fabric design. Shawmut markets itself as one of the most trusted suppliers if innovative textiles and engineered materials globally, including a presence of 8 global based manufacturing sites.
This new effort will be supported with a $2.7 million grant from the Commonwealth of Massachusetts Manufacturing Emergency Response Team that has already reportedly funded more than 11 million pieces of medical PPE and other deemed critical items related to the pandemic. In all, grants of $6.5 million are being distributed to multiple organizations.
Joe Fallon, CEO of the Fallon Company, has added an additional financial investment to fund infrastructure upgrades, utility improvements and some capital improvements to the Shawmut Corporation manufacturing facility located in West Bridgewater, Massachusetts. The plan includes supporting end-to-end production of up to 180 million masks annually primarily for Massachusetts front-line responders and business owners including nursing homes. Initial production is being planned fat the rate of 5 million masks per month.
Supply Network Aspects
Supply Chain Matters has previously profiled the new establishment of U.S. based producers of surgical face masks, including that of contract manufacturing services provider Jabil. The challenge for the presence of U.S. based domestic producers of surgical masks has been the dependence for having to import raw material. In mid-April, we saluted the employees of U.S. based polypropylene producer Baskem America, when 43 workers each volunteered to work rotating 12 hour continuous work shifts for 28 consecutive days, and who literally lived within the factory in what was described as a makeshift college dormitory, in order to insure that tens of millions of pounds of the needed material would be available to various mask and gown manufacturers.
What makes this joint collaboration different is the supply network integration aspect. The added infrastructure includes the addition of polypropylene melt blown extrusion and mask conversion production capabilities including the acquisition of 60 tons of specialized equipment fast-tracked from Reifenhauser REICOFIL GmbH of Germany, well recognized in global production circles as the premier source of such equipment.
In conjunction with this announcement, this Editor had the opportunity to speak directly with James Wyner, the CEO of Shawmut. Wyner credited Joe Fallon in taking the visionary lead in securing the Reifenhauser equipment when said equipment was in very high demand globally. Both CEO’s had the vision to view a domestic production presence to include an integrated melt blown capability as well as full control of the production process that could ensure both the high-quality needs of masks as well as the security of supply. Shawmut’s engineered materials legacy in existing product areas of surgical gowns and other specialty textiles product areas added to the collaboration.
I asked Wyner whether some of this critical melt blown capability would be made available to other U.S. based surgical mask producers. His response indicated that the initial priority was the need to support the local Massachusetts healthcare delivery provider supply needs. That includes establishing a trusted reliable partnership to local healthcare service providers both in short and longer-term supply agreements, as well as being a backstop for critical surge period needs. However, he did not rule out assisting other U.S. based respirator mask providers with raw material if a critical U.S. wide shortage need were to exist.
Wyner stressed that process innovation has always been the core of Shawmut’s product strategies, and this venture includes helping to address over time, parity supply price needs for domestic production of critically needed PPE. He noted that ten years ago, Shawmut’s production facility was a premiere provider of surgical gowns, drapes, and packs to U.S. based healthcare providers, but the trend changed when countries like China leveraged their lower labor costs and access to strategic supply to become the lowest-cost provider. Lately, near shoring in areas such as Mexico have occurred.
That stated, Wyner remains optimistic that with added engineering and process innovation, PPE needs that feature either disposable or re-use approaches can be produced in the U.S., especially when strategic supply risk is a consideration.
Supply Chain Matters extends our Tip of the Hat recognition to both The Fallon Company and Shawmut Corporation for this innovative approach to domestic PPE production.
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