Almost $1 Billion Later, the US Still Can’t Make a Medical Glove (archive link)
A bit of low effort commentary but seeing the US fail at making an industry that my country specialises in despite being hegemon is quite funny and I will make fun of it.
A dark gray building full of steel tanks and giant reactors sits at the foot of the Blue Ridge Mountains in Southern Virginia, a hulking symbol of an abandoned effort to make more medical gloves in the US.
With $123 million in financing from the federal government, the factory was to have been the first in the nation in more than 30 years to produce a key ingredient in the gloves used in exam rooms and hospitals across the country. Now, four-and-a-half years after breaking ground, the Blue Star NBR factory may be a month away from being sold for parts.
“I’m out of money,” said Scott Maier, Blue Star’s chief executive officer. “I’ve got nothing left to mortgage.”
The plan to kickstart production began in 2020. As the Covid pandemic exposed the lack of American manufacturing mettle in personal protective gear, the first Trump administration decided to bolster domestic glove-making capacity. The government under President Joe Biden kept the effort going, financing six companies with $850 million.
Instead of seeding an industry that could reduce dependence on imports, the money doled out left a trail of empty factories. None of the companies is making medical gloves. Almost all still come from abroad, most from Malaysia, with the critical raw material supplied mainly by China.
Okay that’s a lie. Malaysia imports 64% of the raw materials for NBL. The imports mainly comes from South Korea according to this commodity business analysis:
Malaysia depends on imports for 64% of its NBL requirement, mostly from South Korea, ICIS analyst Lina Xu said. South Korea’s NBL production, in turn, is dependent primarily on the Middle East for supply of key raw materials BD and ACN.
…Malaysia, which supplies about 45% of global demand for rubber gloves, is a major supplier of essential personal protective equipment (PPE) to global healthcare systems, according to the Malaysian Rubber Glove Manufacturers Association (MARGMA).
Even now the cope is that China deindustrialises the US when it’s just blowback.
Sorry folks the free market says that Malaysia and China has a comparative advantage in gloves.
read more
In the end, the glove endeavor showed how difficult it can be to revive US manufacturing, said Prashant Yadav, a senior fellow for global health at the Council on Foreign Relations.
“It is frustrating to watch because value chains for any medical product take a while to establish and take root,” Yadav said. “Any back and forth on an earnest attempt to relocate some portion, or a significant portion, of the value chain — it just erodes credibility in future initiatives.”
Reduce government and corporate bureaucracy. The US has too many rent-seekers. I think more austerity against the ruling classes are needed.
Nitrile gloves, as they’re called, are vital in healthcare, protecting patients and practitioners from infection and contamination. Only about 1% of those used in the US are made domestically, in part because medical-grade nitrile butadiene rubber isn’t produced anywhere in the country. The deficiency was highlighted when the Iran war sent petrochemical costs soaring, threatening the foreign medical glove industry and creating shortage risks.
Blue Star received the $123 million under a contract awarded in 2021. Maier said that just wasn’t enough to finish the project after construction costs soared during the pandemic. Other glove-contract recipients either never got going or ceased operations and laid off workers when they couldn’t find buyers. One roadblock: a pair of domestic gloves can cost twice as much as an import from a country with far lower labor and other costs. The difference is pennies, but for a hospital system that purchases millions, it adds up fast.
Americans need to accept the managed decline of high(er) costs and low(er) standard of living. That’s what the Global South has suffered for centuries.
While the glove plan was initiated during Trump’s first presidency, the contracts were awarded after Biden took office in 2021. The current administration’s view is that the program failed because of investments during Biden’s term that didn’t meet expectations, according to a person familiar with the thinking who wasn’t authorized to speak publicly and asked not to be identified.
Tim Manning, the White House Covid-19 supply coordinator under Biden, has a different take. “The truth is, the Trump administration did begin a number of these projects. Those contractors, those manufacturers were identified in the waning days of the Trump administration and we took them over.”
The companies’ appeals for more money after the initial contracts went out gained little traction. The current administration has decided not to put any more money into those businesses, according to the person familiar with policymakers’ thinking.
Instead, it’s rolling out another plan to benefit the few US companies that make nitrile gloves with imported NBR, and didn’t participate in the program. New procurement rules will ensure that federal agencies buy the gloves domestically, a spokesperson for the White House Office of Management and Budget said. “All nitrile gloves purchased by the US government will soon be made in America.”
Wtf - public procurement? Can we get WTO on this unfair non-tariff barrier to free trade?
That would be a welcome development at US Paper Mill Co., a paper mill-turned glove factory in Chillicothe, Ohio. It employs about 150 people and sells under a licensing agreement with US Medical Glove Co.
“If the federal government were to make continuous orders of gloves from this plant instead of China and Malaysia, US Paper Mill could hire more workers,” said Dan Williamson, a spokesperson for the plant, which uses NBR from South Korea and India.
The US goes through some 120 billion nitrile gloves each year. About 30% are used in the medical field and the rest by such industries as food service, auto repair and pharmaceutical production. The government buys around 2 billion annually for federal healthcare professionals, food-service workers in jails and security personnel in airports, among others
While the Malaysian manufacturers get most of their NBR from China, the world’s leading maker of the material, the few US nitrile glove makers must source it elsewhere if they want to do business with federal agencies.
American Armor Gloves in West Columbia, South Carolina, acquires NBR from Italy and South Korea. Dan Adams, the owner, said in May that his factory churns out about 100 million a month and recently struggled to keep up with orders. That's because the shortage threat linked to the Iran war spurred buyers to scour for new suppliers to bolster stock they had on hand.
“We’re getting calls from all over the country,” Adams said then, saying American Armor heard from hospitals, the military and more. “They’re asking if we have supply.”
According to the OMB spokesperson, the Trump administration believes the new government purchasing plan may lead to a domestic NBR industry down the road.
It’s unlikely to be soon enough for the Blue Star factory, a few miles off Interstate 81 near Wytheville, Virginia, next to railroad tracks in a sparsely populated industrial center. Nothing in the building is operational. The 2,500 jobs Blue Star was to have created in the town of just over 8,000 people never materialized.
Maier said he pulled $10 million from two other small businesses he owns to try to get the plant going. He said he was dedicated to the effort. “This is a critical piece of infrastructure that the country needs,” he said. “You can’t just buy equipment from China and plug it in.”
It’s no easy task to make NBR, a blend of the colorless, petroleum-based butadiene and the chemical acrylonitrile. The plan was for the two to be brought in by rail, mixed and transferred to reactors where the combo would be blasted with heat for 11 hours. After that, the mixture would make its way to a blowdown vessel to be cooled and stripped of unwanted materials. From there, the finished NBR would head to five six-story-tall silos outside, to await transport by truck to manufacturers.
Each of the reactors at Blue Star cost more than $500,000 and getting them up and running would take another $70 million, Maier said. He persuaded the Department of Heath and Human Services last August to provide an additional $10 million, but said that didn’t come close to filling the gap.
Standing outside the factory, he said he may need to sell the reactors and other equipment, likely to an NBR maker in China. “I don’t want to sell,” he said, “Seeing taxpayer dollars get sold off for bits and pieces, every bone in my body does not want to do that.”
You can print more tax dollars buddy. But you can’t print out an industrial ecosystem. Sad.
