TRANSCRIPT 🔗
00:00:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Nitral medical gloves are supposed to be abundant and identical. They're all made out of the same material and engineered the same way so that medical professionals can use and remove them over and over throughout the day without skipping a beat.
00:00:24
Speaker 2: These gloves are the ones you see in every exam room when you go to the doctor or the hospital.
00:00:31
Speaker 1: That's Anna Edney, she reports on the healthcare industry.
00:00:35
Speaker 2: They're disposable. There are billions of these. There's about one hundred and twenty billion that are used in the US annually.
00:00:43
Speaker 1: One hundred and twenty billion used every year in the US, not only in the medical field, but in industries like food service, auto repair, and pharmaceutical production. The US government alone buys around two billion of these gloves annually for federal workers like healthcare professionals and airport security. But only about one percent of these nitral gloves are actually made in the US.
00:01:08
Speaker 2: They are made in Malaysia, and the companies in Malaysia get the main ingredient for those gloves from China. That's where they get the petroleum product nitral buddadyne rubber so Essentially, we are relying on China for the medical gloves, and in addition to kind of the tensions with China, there's also the war they're on.
00:01:31
Speaker 1: The war has disrupted ship traffic through the Strait of Hormuz, which has made it harder and more expensive to transport petroleum products.
00:01:45
Speaker 2: Essentially, we're in this spot which we sort of were in running COVID for different reasons, where the glove supply is kind of on thin ice and the hospitals are trying to make sure that they can get enough.
00:02:00
Speaker 1: When nitral gloves were in short supply during the twenty twenty COVID nineteen pandemic, the federal government came up with a plan to wean the US off of imported medical gloves and make more of them domestically. Since then, six American companies have been granted almost a billion dollars in government contracts to bolster the US's manufacturing capacity and build more factories to produce NBR. Now, the US is staring down the possibility of another medical glove shortage, but Anna says the country still isn't prepared.
00:02:36
Speaker 2: The companies are not making gloves in they're not making the rubber.
00:02:47
Speaker 1: I'm Sarah Holder, and this is the big take from Bloomberg News today on the show, why the US couldn't stand up its own nitral medical gloves industry in the years since COVID and what the failed push to make medical gloves says about efforts to reshore American manufacturing. So Anna, you've been looking into the US's effort to ramp up domestic manufacturing of an extremely important product that often gets taken for granted, nitral gloves. Why are they so challenging to make in the US.
00:03:23
Speaker 2: There's a really important key ingredient that's needed to make these. It's nitral buddhadyne rubber NBR that mostly is coming from China. We do not make any of that NBR here. We used to make it here decades ago. It's just cheaper and easier with environmental regulations and things to do this in other countries.
00:03:49
Speaker 1: So that was the status quo for a long time, right. The US would buy billions of these nitral gloves a year, largely from other countries. But during the pandemic, the supply of medical gloves emerged as a real issue in the US. The US government had a plan for ramping up domestic supply. What was that plan.
00:04:07
Speaker 2: Yeah, so we all learned, you know, that COVID was airborne. We wanted to protect ourselves, certainly, you know, the medical professionals wanted to protect themselves. So the demand for medical gloves just skyrocketed, and you know, hospitals weren't able to get them. What happened was the Trump administration, during the first Trump administration during COVID, was going to give out contracts to companies that were willing to set up glove factories or factories that could make the main ingredient in these gloves nitrol, boodadine, rubber. And then it was the Biden administration that actually gave out the contracts. So they gave out about eight hundred and fifty million dollars to six companies to get that started.
00:04:58
Speaker 1: And how did that plan work out?
00:05:00
Speaker 2: You know, some of them got started, they quickly folded. They shut down their glove operations. They weren't able to sell those essentially because they cost a lot more than the gloves made in Malaysia, where we get most of our gloves from. You sort of need more infrastructure than just the buildings and just the manufacturing. And during this time. You know, when the companies were trying to get up and running, they quickly found out that already our attention span had kind of switched in the US, as it does, especially with pandemics and kind of public health emergencies, and you know, the hospitals, even the federal government were not buying what they were trying to make. The hard part about bringing an entire industry back to the United States or boosting it here is just that it costs more. And that's why manufacturing in a lot of instances has moved offshore. And to bring it back, you know, you sort of need more infrastructure than just the buildings and just the manufacturing. You almost need government subsidies to make it worth anyone's while to buy the products to make sure they're there when the emergency happens.
00:06:18
Speaker 1: After the break. What reshoring more nitral glove manufacturing would really take. Since the start of the US effort to kickstart nitral glove manufacturing domestically, the federal government has financed six companies with eight hundred and fifty million dollars to build factories that make medical gloves or NBR. One of the contracts went to a company called blue Star NBR, which got one
Load full transcript
hundred and twenty three million dollars in financing to help it build a huge NBR factory in southern Virginia. The company's CEO, Scott Meyer, told Bloomberg's healthcare reporter Anna Edney that by now he's running out of money and the business still hasn't gotten off the ground.
00:07:14
Speaker 2: The challenge that happened specifically for them in this case during COVID was that the price of construction went up, and I think we all were sort of familiar with that and people trying to do projects at their houses or anything. The same applied to this factory, and so when they were in the middle of it, they had said to the federal government, we you know, we're not going to have enough money to basically plug it in and get it going. And it kind of sat in this limbo for a long time, and the government has not, you know, wanted to fund it anymore to help them reach the endpoint. The other issue is just if there weren't really companies making gloves in the country, then there's no one who's going to buy their NBR. They sort of didn't have that ability to have a revenue or anything to try to get going.
00:08:09
Speaker 1: I'm wondering what does the Trump administration say about why the program didn't pan out.
00:08:14
Speaker 2: Well, I was able, you know, to talk to a source who was familiar with the governments thinking, with this Trump administration's thinking, and essentially they said that the administration felt that the Biden administration had made these bets on companies that didn't fulfill the promises of these contracts, and they didn't want to keep putting money into that, which is why they told me they were, you know, stopping funding this. They weren't going to give any more money to try to get these companies up and running. And I did speak to Timothy Manning, who was with the Biden administration during this time, and and he said, actually, contrary to what that person had said, was that those companies that they did fund, those six that they gave about eight hundred and fifty million, were sort of already picked out during the Trump administration, and the Biden administration was just you know, continuing that program.
00:09:13
Speaker 1: Based on your reporting, what is your understanding of the biggest things that went wrong, the biggest failures in this program.
00:09:19
Speaker 2: The biggest failures for the program were that there wasn't anything set up to make sure that these companies would be supported beyond just building the infrastructure to make loves or to make NBR. What can happen too, is they weren't all saying we definitely need more government money. They were saying, we could get private capital, but no one wants to fund us because even the government won't buy our product. And so the biggest issue is sort of that a lot of industries in this way are heavily subsidized so to get off the ground so that it makes it worthwhile for the American hospital system, the medical system to purchase these gloves.
00:10:04
Speaker 1: Right, and the eight hundred and fifty million dollars in contracts were meant to kick start manufacturing, not actually purchase any of those gloves for government agencies. You also wrote about some of the US based companies that make these gloves using imported materials. How are those faring?
00:10:24
Speaker 2: American companies that are making gloves with imported ingredients, with imported NBR, they usually cost about double, sometimes even more than the gloves coming from Malaysia. These are these are interesting companies. They also got started around COVID. There's about two or three It depends on how you look at it. So they are starting to make headway and telling the government over and over, you know. Some of them told me, we are in DC several times a month. People I talked to in the government said, we are surprised how often we are talking about gloves at this level, because they're there constantly telling them, please buy our gloves, so that if you want this industry to be built up, like this is what you have to do. And the government does seem to be recognizing that. The Office of Management and Budget told me that they were now going to start requiring that federal agencies purchase gloves from these companies that operate on US soil.
00:11:33
Speaker 1: The OMB spokesperson also told Anna that the Department of Homeland Security has started coordinating purchasing instead of having individual agencies each make their own orders.
00:11:43
Speaker 2: Another thing they are doing is there it's a proposal, it's not yet finalized, but they are looking into medicare giving higher reimbursements to private hospitals, other hospitals that aren't obviously government agency, but that buy a certain percentage of gloves from these American companies.
00:12:04
Speaker 1: And the reason for that is because these gloves are more expensive to buy. And so if the government gets in this market supports these domestic manufacturers, that will make it easier for them to break even.
00:12:17
Speaker 2: It will make it easier for them, and it will be assigned to the market to those private investors that they might need still for certain things that there will be support there for them. The government's supposed to do this anyway. They're supposed to be prioritizing buying things made in the United States, to be perfectly honest, and.
00:12:41
Speaker 1: There's new reason for urgency around this issue right now, right yeah.
00:12:46
Speaker 2: I think the interesting question on this for me, and one of the reasons I wanted to write it now because the war is making it difficult for anything that's a petroleum based product, and as we talked about, the NBA is petroleum based. So the price of the Buddha dine rose substantially throughout the war. A lot of the glove makers have fixed contracts with hospitals, so the hospitals aren't necessarily paying more right off the bat for these gloves when the ingredients cost more. The companies, the glove makers are the ones who get hit really hard. And there was a threat that they could close down that even led to a lot of the hospitals being on what's called allocation. They were limited by how many gloves they could buy because they didn't want people panic buying. So you know, the idea was if we had just gone ahead and done a better job and successfully been able to boost the glove industry and finished this NBR plant in Virginia, we might have been in a very different position.
00:13:51
Speaker 1: And in the end, none of the companies the government financed ended up being successful. You wrote that they quote either never got going or ceased operations and laid off workers when they couldn't find buyers. As for Scott Meyer in Virginia, does he see any hope or relief coming down the line.
00:14:11
Speaker 2: I think he is. He's pretty dejected at this point in the sense that the government has said we will purchase from companies that are operating on American soil, but they did not say they would get these companies that weren't able to make it over the finish line. So Scott told me that he is contemplating selling the factory essentially for parts. It will likely go somewhere in China, because that's who's making NBR. The building itself, the land where it's at. It was actually given to them, granted by the county government because it was supposed to bring a lot of jobs. And I think, you know, he's he feels terrible that the jobs aren't there, that this didn't bring the infrastructure that he had hoped And you know, I think he's he's his kind tract that he did have is up at the end of July, so he doesn't really have that long in the government has said, you know, this is it like, we aren't giving you more money? You know, this was a great example of how difficult it can be to reshure manufacturing. There are a lot of things to contemplate when we're trying to do that. And it's not just that we threw up a factory and we're able to start making it. How can we actually support this industry down the road. How can you know, we make sure that there's a way for it to be affordable, which can be very difficult and is one of the reasons that the offshoring happened in the first place.
00:15:50
Speaker 1: This is the Big Take from Bloomberg News. I'm Sarah Holder. To get more from the Big Take and unlimited access to all of Bloomberg dot com. Subscribe today at Bloomberg dot com Slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow