Coronavirus: US relies on ‘pure capitalism’ to plug gaps

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In a normal year Michael Rubin’s athletic apparel factory in Pennsylvania would be ramping up for the beginning of season , churning out team uniforms and clothing to sell to fans. Instead his company, Fanatics, has remade itself into a gown and mask manufacturer for hospitals facing shortages of protective gear as they fight the coronavirus.

Fanatics isn’t alone. Thousands of companies across the US have skilled pleas for help from hospitals facing shortages of critical health supplies.

Clothing companies like Gap and Hanes are making gowns and scrubs. Ford and General Motors are repurposing fans and batteries, typically utilized in cars, to form ventilators. Boeing and Apple are making face shields. Luxury brands, distilleries – even state prisoners – are producing hand sanitiser.

“We felt it had been our responsibility to assist dig in ,” says Mr Rubin. Firms responding in what he calls this “dire time of need” aren’t necessarily getting to take advantage of the enterprise but they’re proving a point: The private sector is famously good at responding nimbly and quickly to changing demands.

‘Supply chain 101’
The shortages within the US are aren’t unique, neither is the response from the private sector.

In the UK, engineering firm Dyson has designed a replacement ventilator; in France, Chanel is contributing masks; in Germany, Volkswagen and other firms are manufacturing protective equipment.

But the White House has been notably hands-off when it involves establishing any co-ordinated, centralised response, says Nada Sanders, professor of supply chain management at Northeastern University. This has led to a free-for-all, as local governments and hospitals competed to shop for products or find donations, scam artists emerged, and costs skyrocketed.

The US has allowed “pure capitalism to function an incentive” says Dr Sanders.

“Companies want to intensify to the plate then many are. i actually applaud them, but I also find it even more frustrating because I see the chaos.”

In the European Union , the shortages were caused by inadequate reserves of kit , as coronavirus cases surged and shipments from overseas were delayed. But within the US, which features a national stockpile of supplies, including badly-needed ventilators, a slow federal response has added to the matter , says Prashant Yadav, a senior fellow at the middle for Global Development and a professor at INSEAD.

“Outcomes are pretty bad in both [Europe and America], but in one place they do not have large resources during a stockpile. They did not have an outsized manufacturing base,” he says. “Our decision-making wasn’t working right or our coordinating mechanisms weren’t working right.”

Converting factories to form basic products like sanitiser or masks isn’t necessarily that difficult or expensive. Mr Rubin’s factory shipped its first masks within three days and now produces about 10,000 daily.

But getting companies to start out making machines like ventilators – which have dozens of parts sourced globally – is way more complex and requires government intervention, says Dr Sanders.

While some states, including California, have voluntarily sent existing ventilators to virus hotspots like ny , Dr Sanders says a national response is required , to make sure there’s a transparent inventory of what is available and therefore the ability to shift resources to the places that require it most.

“This is supply chain 101 … it isn’t like it’s really that tough ,” she says. “The lack of coordinated national response is basically infuriating.”

‘A national system’
Under pressure to act, President Donald Trump has targeted some companies with orders to supply items in high demand and banned exports of medical supplies. Federal health officials also announced a $50m affect General Motors to supply 30,000 ventilators.

But for weeks Mr Trump resisted using the complete extent of his authority to compel firms to supply equipment and prioritise deliveries.

“We’re a rustic not supported nationalising our business,” he said last month. “Call an individual over in Venezuela. Ask them, how did nationalisation of their businesses work out? Not too well. The concept of nationalising our business isn’t an honest concept.”

New York Senator Chuck Schumer, a number one Democrat, last week called on the president to appoint a national ‘czar’ to oversee distribution and production. “The hunting and pecking isn’t working,” he told reporters.

It is not clear that the president will change tack.

Luckily in some places the private sector efforts are coming through. St Luke’s University Health Network, which worked with Fanatics to style its masks, now has about 30 days worth of protective gear available , says vice chairman Chad Brisendine. Contributions from non-traditional suppliers account for “a quarter or more” of that.

“Between the external, local, non-traditional suppliers, plus the donations, that really helped us,” Mr Brisendine says.But the Pennsylvania hospital system has still been forced to introduce new cleaning procedures so it can reuse masks and other equipment more intensively, he adds.

Mr Brisendine says he’s worried the wider needs are so great, even a stronger federal response wouldn’t resolve the problems his health network now faces.

“I just wonder how fast they can move,” he says. “When you need it, you needed it yesterday.”

Source: BBC News

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