China’s Supply Chain Virus

3 Important Lessons from the CCP Virus

Exclusive: Curtis Ellis looks to reverse the offshoring of manufacturing supply chains

By Curtis Ellis Published March 27, 2020 at 7:30pm

The CCP virus, commonly referred to as the novel coronavirus or Wuhan virus, has taught us many valuable lessons.

For one, it has laid bare our dangerous dependency on China for the essentials of life. By now, most of us are familiar with the shocking statistics: 90+% of antibiotics and commonly used lifesaving medicines are made in China. We’ve seen how the bulk of protective medical gear is now made in China – and they won’t export it. You’ll find the same dangerous dependence in industry after industry, from automobiles to electronics.

President Trump sounded the alarm about our reliance on China long ago. His tariffs should have spurred companies to move back to America as he advised. Instead, too many executives chose profit and business-as-usual. Sadly, we are all now paying the price for their greed and shortsightedness.

Second, we have seen the bureaucratic sclerosis afflicting our government.

President Trump warned against the debilitating overregulation by a federal bureaucracy on autopilot. That, along with an antiquated tax code and deeply flawed trade deals, was choking the economy and pushing American industries overseas.

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Anyone watching would notice that before we could attack the CCP virus we had to attack a thicket of regulations that hamstrung rapid response.

When Seattle doctors reported the first U.S. cases of the CCP virus to the CDC, career bureaucrats ordered them to stop testing until they recertified their lab according to the regulations – a process that would take months. Admittedly, this is better than arresting the doctors, which is what happened in Red China, but it shows the same CYA reflex endemic to the bureaucratic mind.

It took the FDA two months into the pandemic before it suspended (not ended) regulations requiring a manufacturer wishing to make surgical masks to: 1) do a compositional side-by-side analysis of the mask versus all other masks currently sold, 2) measure “tensile strength” and “impact resistance,” 3) perform detailed “risk analysis,” for fluid/bacteria resistance and “flammability,” 4) fill out and return the “standard ISO-10993” form for “Biological Evaluation of Medical Devices Part 1: Evaluation and Testing” and so on. Talk about barriers to entry.

Before this emergency, anyone who criticized the regulatory state was considered a crank and accused of hating babies. Now we know better.

Or at least some of us do.

Nearly half of all medical devices in the U.S., including the face masks and surgical gowns known as personal protective equipment, PPE, is sterilized using ethylene oxide, and there is no viable substitute available now to replace the chemical sterilizer.

Last year, environmental activists forced state and local officials in Illinois and Georgia to close sterilization facilities operated by Sterigenics.

Sterigenics has at least 1 million items of personal protective equipment awaiting sterilization.

Hospitals are desperate for this equipment, and FDA Commissioner Stephen Hahn asked the governor of Georgia for help:

“Due to the recent challenges with the closure of some commercial sterilizers, such as the Sterigenics facility located in Cobb County, the supply of critical PPE during the COVID-19 outbreak has been further limited. FDA is asking for your assistance in helping to increase the supply of PPE to help protect against COVID-19 by working with Sterigenics to allow for the appropriate sterilization of PPE,” Hahn wrote.

In response, the environmentalists are accusing Sterigenics, and apparently the FDA, of trying to “take advantage” of the health crisis.

Environmental leftists are not the only ones putting their own interests before the national interest.

The administration warned that anyone hoarding critical supplies would be dealt with harshly.

We typically picture the perp as a sweaty conniver with a garage full of Purell he sells for $150 a bottle on Amazon.

But hoarding takes other forms.

Any manufacturer that claims “existing supply chains” should be protected above all else is also a hoarding profiteer. They are hoarding their know-how and their productive capacity to protect their own future profits at the expense of the nation’s health.

Ventilators provide a useful example. The existing supply chain to make ventilator parts is inadequate to meet the increased demand in this emergency. And many of the companies in that existing supply chain are located in Europe and Asia.

The ventilator manufacturers never had a contingency plan for a global pandemic. That is understandable. But as result, there is no stockpile of components. That in itself will backlog orders by weeks if manufacturers rely on their current suppliers. Remember that when you hear “We can only produce 7,500 ventilators a week.”

However, there are hundreds of other small and medium sized companies right here in the United States with the know-how and capacity eager to step up and fill the gap. Many of these companies are completely shut down, some by orders of governors, and they could be making the plastic molded parts, tooling, die casting, precision machined parts now.

The disruption due to the pandemic threatens to permanently shutter more of these companies – our domestic productive capacity. If that happens, even more manufacturing work will be transferred abroad in the future.

The big ventilator manufacturers are already sharing their blueprints with their parts suppliers in China. They need to share their blueprints with the American companies who are ready willing and able to make parts for the machines the nation needs now. Then the federal government could provide these companies with financing needed to surge production and start work immediately.

This approach would address a number of problems the CCP virus has exposed.

It would resolve immediate shortages of medical equipment.

It would put Americans back to work.

And it would help reverse the offshoring of our manufacturing supply chains, the long-term problem that got us into the current mess and will be with us after the virus passes.