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A business built a new supply chain due to the pandemic. It's now having doubts

JUANA SUMMERS, HOST:

The pandemic exposed the weaknesses of the global supply chain, especially early on when there was a critical shortage of medical supplies. One manufacturer in Massachusetts stepped in to help meet demand. But as Paddy Hirsch and Adrian Ma from NPR's daily economics podcast The Indicator explain, the head of that company is now having some second thoughts.

PADDY HIRSCH, BYLINE: So, Adrian, you remember when the pandemic hit two years ago, everyone was running around trying to get PPE, you know, personal protection equipment, masks, gloves, all that stuff.

ADRIAN MA, BYLINE: Yeah. I mean, like, there was a huge shortage of PPE. Hospitals couldn't get what they needed. And it turned out pretty much all that stuff was made outside the U.S., a lot of it in China.

HIRSCH: Yeah. One thing that was in particularly high demand - gowns. But there was one company here in the U.S. that used to make gowns back before all that capacity was outsourced to China in the '90s. Today, Shawmut Corporation makes materials for the military and for the auto industry. And the CEO, James Wyner, thought, well, if we used to make gown fabric, then maybe we can retool and make it again.

JAMES WYNER: We had equipment, but we were using it for different purposes. Some of it was more directly applicable. Some of it had - you know, we really had to be creative.

MA: And then he thought, well, if we can make the fabric for the gown, maybe we can make the whole thing. Except he could not make the whole thing.

WYNER: To make a finished surgical or isolation gown, you need binding materials, belt materials, cuff materials. So it's made up of several different raw materials.

HIRSCH: Supply chain. So there aren't that many textile manufacturers left in the U.S. to make all of this stuff. But Wyner started calling around.

WYNER: We're aware of people who would be potential manufacturers for different components. And then we reached out to them and evaluated their materials and ultimately put that together.

HIRSCH: And he went all over. A climbing company in Oregon helped with design, a mattress company in Connecticut did some of the sewing. He even reached out to the fashion business.

WYNER: We partnered up with a very nice company in New York who was working out of the garment district, and they did some finishing work on the gowns as well.

MA: So Shawmut essentially reconfigured the supply chain for several kinds of medical gowns from scratch. And they did it pretty fast because of the pandemic. They were up and running in just over 90 days. And normally, this kind of supply chain reconfiguration takes a lot longer.

HIRSCH: But James says that now the pandemic rush is over, China is once again exporting gowns, and their marginally cheaper products have once again cornered the market. He's proud of what he and his people achieved during the pandemic. But that gown business, which costs Shawmut $2 million, by the way, and thousands of hours of sweat equity to bring online, is now effectively history. And it never made a dime.

From a purely financial and economic point of view, was it worth it?

WYNER: (Laughter) No.

MA: James says it was heartbreaking to see this happen, and a lot of that is because Shawmut's ability to produce PPE did not have to die. The government could have stepped in and kept it ticking over and just ready to ramp up when it's needed through subsidies or given the company a government contract.

HIRSCH: And, sure, supporting supply chains in this way makes no short-term financial sense and, yes, it's a sure way to drain the public purse. Long term, however, creating and maintaining robust independent supply chains is a smart, strategic call, especially in an increasingly uncertain world.

MA: Adrian Ma.

HIRSCH: Paddy Hirsch, NPR News. Transcript provided by NPR, Copyright NPR.

Adrian Ma
Adrian Ma covers work, money and other "business-ish" for NPR's daily economics podcast The Indicator from Planet Money.
Paddy Hirsch