We don’t think too much about COVID now, but four years ago, it wreaked havoc on U.S. manufacturing supply chains. Every industry was affected to some degree, but none was hit harder than the healthcare industry. Remember the shortages of personal protective equipment (PPE)? You couldn’t find N95 masks anywhere. Crafters began sewing face masks for loved ones. Near me, a local distillery began making hand sanitizer from gin by-products. (It was revolting!)

Rather than grouse about government-imposed lockdowns, manufacturers stepped up to fight the disease and help healthcare workers and first responders. For example, Ford Motor Co. joined forces with 3M and GE Healthcare to expand production of urgently needed medical equipment and supplies. The automaker developed a plan to assemble more than 100,000 face shields per week and harness its additive manufacturing expertise to produce components. A Ford assembly plant in Ypsilanti, MI, was quickly converted to produce ventilators.

In the aftermath, business leaders and public officials realized that outsourcing entire industries and product groupings might not be the best way to go. The federal government took note of this vulnerability and attempted to improve future readiness. In late 2020, the Department of Health and Human Services leveraged the Administration for Strategic Preparedness & Response to establish an “Industrial Base Expansion Portfolio.” This platform provided seed investments to some 60 companies across the following categories:

• PPE and raw materials ($1.2 billion).
• Therapeutic supplies and materials ($272 million).
• Vaccine supplies and materials ($213 million).
• Testing capacity and materials ($2 billion).

These investments were intended to kick-start reshoring and expand manufacturing capacity to ensure at least a nominal amount of domestic production for critical medical supplies for future pandemic-like events or supply chain disruptions. In addition to initial government investments, a sizable amount of activity was mirrored by the private sector to establish manufacturing capabilities and reduce reliance on imports.

Early momentum was promising, and there was an increase in reshoring and near-shoring for critical medical products. The goal was to solidify a nominal domestic production base that could be relied upon in times of greater need rather than to completely replace high-volume imported goods.

Alas, according to a new, eye-opening report from the American Medical Manufacturers Association (AMMA), the early enthusiasm for reshoring and domestic supply chains has vanished. Most commercial healthcare buyers have fully reverted to the pre-pandemic model of purchasing low-cost imports that primarily originate from Southeast Asia.

Take gloves, for example. The U.S. consumes approximately 120 billion nitrile gloves annually. There is no significant domestic production of nitrile gloves currently, and approximately 98 percent are imported each year. Gloves were one of the scarcest PPE items during the height of the pandemic. Historically, the largest manufacturer of gloves was Malaysia, which controlled about 70 percent of the global market. China was a nominal player, but it invested significantly during the early stages of the pandemic to expand production and increase market share. Now, China is the dominant supplier of nitrile gloves to the U.S.

It’s the same story with N95 masks. In immediate aftermath of the pandemic, U.S. healthcare providers diversified their supply chains, purchasing larger amounts of masks from Mexico and other countries. That did not last. Today, China supplies 90 percent of N95 masks in the U.S.

For domestic manufacturing of PPE and other medical products to gain traction, additional support from the federal government is needed, according to the AMMA report. Support could come in the form of long-term purchase orders, additional support funding, tighter requirements to buy domestically made products, or increased tariffs against foreign-made goods. If support is not deployed soon, the emerging domestic supply chain for PPE will likely disappear as quickly as it formed.