I don’t know whether you will find this encouraging or discouraging but according to this press release 3M has been ramping up production of its N95 respirators for some time:
3M’s manufacturing model emphasizes local for local, which means the majority of our products made in China are sold in China, for example. We continue to manufacture personal protective equipment in multiple areas around the world, including in the United States.
While 3M manufactures millions of respirators per month at production facilities in the United States and China, as well as in Latin America, Europe and Asia, we expect demand for respirators and other supplies to outpace supply for the foreseeable future.
“We immediately ramped up production in this facility,†said Andy Rehder, plant manager, 3M Aberdeen. The plant has gone “from more of a standard five-day week to more of a seven-day week, with additional equipment as well that we’ve been able to bring in and turn on.â€
3M has notified our authorized distributors that we are prioritizing orders to help serve our base business — including hospitals — due to high global demand.
While we have not changed the prices we charge for 3M respirators as a result of the coronavirus outbreak, we cannot control the prices other dealers or retailers charge.
As this situation continues, we are closely monitoring and responding to any potential impact to our broader supply chain. Serving our customers is a top priority and our business teams will work diligently to communicate with individual customers about any potential disruptions.
I actually find that pretty encouraging. That suggests that 3M has been able to increase its domestic production of the N95 respirators, intended for use in hospital settings, by about 30% nearly overnight. It is likely to be able to do more over time.
re: “we expect demand for respirators and other supplies to outpace supply for the foreseeable future.”
If we had anything resembling a free market in medical care in the USSA, Econ 101 says demand wouldn’t outpace supply and there’d be no such thing as “price-gouging.”
“Econ 101 says demand wouldn’t outpace supply ”
Then it is a good thing they have Econ 102 where they cover the areas where Econ 101 falls short. There was no way hospitals were going to carry an extra 20 million masks on the books at $5 each for 50 years (the go bad BTW) for that once in 50 year event. Demand went for almost zero to billions overnight. Markets don’t fix that quickly.
Steve
That comment would have a bit more force if hospitals had started ordering many, many more supplies in January.
What I suspect actually happened is that hospitals, as you suggest, did not want to assume any risk, preferring to assume that they’d be backstopped by the federal government.
One more interesting factoid about supply chains is that grocery stores are claiming that the reason for empty shelves isn’t lack of ordering or available supplies but the relative inelasticity of the supply chain itself (my terminology). It’s taking too long for the materiel once ordered to get from the supplier to the outlet. That will either be transient or it will result in some major changes to processes. I don’t know how much inventory at any given time is actually in trucks but I suspect it’s a lot.
I think steve is correct. It’s not just masks, it’s breathing equipment, ICU units and the very medical personnel needed. He probably could tick off a half dozen other items. You just can’t design for every extreme event possible. If you believe you should, get into the roofing business and start selling roofs that can survive an asteroid hit. I know some bankruptcy attorneys when you fail. If you want to make systems more robust we have some serious cost benefit debates to have.
I think Dave’s point on supply chains will get a tremendous amount of attention in the future. As I noted in a previous comment, Walmart and Costco’s supply chains don’t look like Whole Foods or Stu Leonard’s. And as I’ve quipped before, some people think we can ship our icky businesses overseas because of, oh, the snail darter or something. Well, imagine we get held hostage due to chasing rare earth production off to China. We just aren’t good at doing cost benefit analysis in the political realm.
“That comment would have a bit more force if hospitals had started ordering many, many more supplies in January.”
Some of us did. Were told stuff was not available. Remember that masks being made around the world were being sent to China in January. I believe 3M sent at least a million.
HHS says we have 42 million total masks. (This is actually the highest number i have seen anywhere I am a bit dubious.) They predict that we will need 3.5 billion. Azar said we would need 300 million. (Lowest estimate I have seen.) Pence claims 3M just agreed to produce 35 million a month. (Not confirmed by 3M so we have no idea if they can make that many.) Do the math. Unless we really, really flatten the curve we run out. China and Europe are holding on to their masks. Realistically our only chance is that China has cases drop off drastically and they agree to ship to us instead of Europe. Since they are our best buddies I am sure they will help us out. Maybe we finally get all those tests and we can track local outbreaks better and clamp down sooner.
https://globalbiodefense.com/headlines/u-s-to-ramp-up-mask-production-but-china-is-bottleneck-for-raw-materials/
Steve