Corporate Globalization Coming Home to Roost

Eight months into the pandemic, frontline workers are still not getting the protective equipment they need. According to a report by National Nurses United, 87 percent of nurses have had to reuse PPE at some point, and 27 percent reported that staffing at their hospital declined in recent months.

One nurse wrote to Salon: “I’m so disappointed in our lack of preparation as a country for a pandemic . . . N95s [masks] quickly became sparse and we were forced to reuse them for days, basically until [they] broke, when they are intended per the manufacturer to be single/ one time use. We had to put them in a brown paper bag in between uses.”

Many commentators have chalked this up to a regrettable failure in global supply chains in amassing PPE and ventilators. In fact, we are seeing decades of corporate globalization coming home to roost. As corporations offshored manufacturing — chasing cheap labor across the globe — downsizing, lean inventories, and just-in-time production arrived at home.

In an article titled, “Why Are There Still Not Enough Paper Towels?” the Wall Street Journal answered its own question:

The scarcity is rooted in a decades-long quest by businesses at all levels, handling many different products, to eke out more profit by operating with almost no slack. Make only what you can sell quickly. Order only enough materials to keep production lines going. Have only enough railcars for a day’s worth of output. Stock only enough items on a shelf to last till the next batch arrives. The concept, known as lean manufacturing or just-in-time inventory, was born in the hyperefficient Japanese automotive industry in the 1970s and became a religion for many American CEOs. It spread first to Detroit, then to other U.S. manufacturers and finally to other industries, from distribution to retailing.

While US manufacturing represented 28 percent of domestic output of GDP at the end of the 1950s, that figure is just 11 percent today. A full 85 percent of mask production capacity is in China, and ventilators are produced from parts sourced from across the globe.

Experts in the field have long warned that investor rewards for lean production are inimical to public health needs. A paper published in Health Security raised the alarm in 2017:

Like most goods in the United States, the PPE market supply is based on demand. The US PPE supply chain has minimal ability to rapidly surge production, resulting in challenges to meeting large unexpected increases in demand that might occur during a public health emergency. Additionally, a significant proportion of the supply chain is produced offshore and might not be available to the US market during an emergency because of export restrictions or nationalization of manufacturing facilities.

During previous crises, such as the 2009 H1N1 influenza pandemic, supply chains buckled under far lesser pressure than what we face now.