Many Companies Have Stepped Up To Help: Imagine If There'd Been A Plan In Place

In the largest industrial mobilization since WWII, many companies have voluntarily converted factories to produce urgently needed supplies, and a number are donating their products and services.

But the problem is that a global supply chain drive by efficiency and profit is ill-equipped to address threats that require some redundancy - with more organized planning and coordination. JL

Robert Klara reports in Ad Week:

Many producers have stepped into the breach, including immense manufacturers like Hanes and Fruit of the Loom, which formed an alliance of 11 clothing brands producing 1 million masks. ExxonMobil retooled one of its plants to produce 160,000 gallons of hand sanitizer, all to be donated. Most companies willingly lined up to help,(but) is the private sector doing the job that the federal government should be doing? “What Covid-19 has brought into focus is when  a large, complicated economy like the U.S., is built on this complicated international globalized supply chain, it’s really fragile.”
Bayard Winthrop remembers the phone call he got around the end of March that would change the direction of his company and, to a small degree, the nation itself. Winthrop is the founder of American Giant, maker of a thick-woven, domestically produced, $108 sweatshirt that’s colloquially known as “the greatest hoodie ever made.” But as Covid-19 rampaged across the country, Winthrop knew that what Americans really needed wasn’t hoodies, but medical supplies.

Which is why the ringing phone was just the call he’d hoped to get. On the line was Anderson Warlick, CEO of Parkdale Mills, a North Carolina-based manufacturer of spun yarns. Warlick had himself been contacted by Peter Navarro, the White House’s director of trade and manufacturing policy, who was working to mobilize domestic manufacturers to meet the chasmal need for personal protective equipment, or PPE.

“Anderson called me and said, ‘Here’s the thing. We have a bunch of projects out of HHS [the Department of Health and Human Services] and the White House—can you join?’” Winthrop said. “When you get a call like that, you drop everything and you do it.”

Winthrop did drop everything. And within a few days, he’d reworked American Giant’s lines to produce medical-grade masks. Winthrop is proud to be doing his part, but American Giant is not a huge brand and can only contribute so much to meet the endless list of requirements for supplies. “We’re only doing masks,” he said, adding that of the 30 million masks the government needs weekly, “our take of that is about 600,000—we’re a relatively small producer.”

Fortunately for the country, many other producers have stepped into the breach, including immense manufacturers like Hanes and Fruit of the Loom, which formed an alliance of 11 clothing brands that are producing 1 million masks weekly in addition to other forms of PPE.

Winthrop’s story is an encouraging one, but his experience also illustrates a larger dynamic that’s become increasingly clear as Covid-19 drags on: American brands, often acting on their own initiative, are coming to the aid of the country more than at any time since World War II.

There are literally hundreds of examples of how the private sector has risen to the occasion in recent weeks. The hand-sanitizer shortage first prompted boutique distilleries to begin making the stuff, followed by larger companies including Anheuser-Busch and Bacardi. Several days ago, even ExxonMobil got into the act, retooling one of its Louisiana plants and pledging to produce 160,000 gallons of hand sanitizer, all of it to be donated to healthcare workers and other first responders. The efforts of business-to-business brands have received less media attention but have been no less significant. In Baltimore, for example, wire fabricator Marlin Steel has been turning out test-tube racks for Covid-19 screenings.

The tech sector, too, has volunteered its talents and money. Boston Dynamics has developed a four-legged, canine-type robot to help doctors treat Covid-19 patients remotely. Apple and Google have partnered on Project Bubble, a contact-tracing app that was expected to be ready by May 1. And then there was the much-publicized announcement by Twitter founder Jack Dorsey that he’d pledged $1 billion—nearly a third of his personal fortune—to coronavirus relief programs.

These efforts are critical and, at times, even heroic, not least because the brands involved are often taking a hit to their own bottom lines to do the right thing, even if they do get a degree of complimentary advertising out of their largesse. But looming behind these efforts are large and elemental arguments about the role of government during a national crisis and who should be taking the lead in helping a country driven to its knees by a virus. While few Americans would fail to appreciate the measures brands are taking to help out, the question remains: Is the private sector doing the job that the federal government should be doing? And if so, how did it reach this point?

Whose job was it to help?

The degree to which it is the federal government’s job to swoop in and save the nation during a health crisis is, of course, a highly political debate. In an interview on NPR earlier this month, Microsoft founder and billionaire philanthropist Bill Gates insisted that “the responsibility to protect the public and have been prepared for disasters like this—that’s totally a governmental responsibility.” But author and conservative political commentator Kathy Barnette, in an op-ed for the Washington Times on April 22, was equally adamant when she said, “It’s not the federal government’s job to purchase, ship and manage the movement of necessary PPEs in every single hospital in every single state. Even during a devastating crisis such as the one we’re contending with, it’s not the federal government’s job to make sure every request for a ventilator is fulfilled.”

Irrespective of where one stands on the political spectrum, however, events of the past month suggest that private-sector brands weren’t just rallying a response to Covid-19 because they recognized both a humanitarian and market-based need to do so: They did it because a period characterized by delays, confusion and political infighting made it clear that someone had to.

Though President Trump created the White House’s coronavirus task force relatively early in the pandemic (Jan. 29), its efforts struck some as out of proportion with the size of the need. For example, as a Pro Publica investigation revealed, an early White House overture to manufacturers to produce needed medical supplies came via a SurveyMonkey form, which Johns Hopkins Bloomberg School of Public Health director Tom Inglesby called “the wrong scale of effort by orders of magnitude.”

Federal agencies did not begin earnest efforts to source critically needed medical supplies until the middle of March, but by that point, the official count of coronavirus infections had reached 3,000 and the wolf was already at the door. Kathleen Sebelius, who ran the Department of Health and Human Services during the Obama years, told the Associated Press that, when it came to the federal government’s response to Covid-19, “we basically wasted two months.” (Sebelius, who now runs health consultancy Sebelius Resources, declined to comment for this story.)

In responding to the virus, the federal government has also taken something of an ad-hoc approach that blends elements of centralized planning (via bureaus including Federal Emergency Management Agency and HHS) with the assumption that the states would take care of their own needs. To a great extent, the states did, but numerous governors went on the record with their belief that it was the federal government’s job to coordinate the effort in finding necessary supplies.

For its part, the White House has shrugged off criticism that a decentralized approach left states in a bidding war against one another (and sometimes against foreign governments) for desperately needed supplies. Asked during an April 3 press conference about what might be done to help the states, Trump said, “They have to work that out.” He elaborated that “long before this pandemic arrived, they should have been on the open market just buying.”

The president doubled down on that position on March 19 when he told reporters that, when it comes to sourcing and distributing life-saving medical supplies, the federal government is “not a shipping clerk.”

Andrew Lakoff, a sociology professor at the University of Southern California’s Dornsife College of Letters, Arts and Sciences, told Adweek that while it’s clear the federal government was caught flat-footed in coordinating the purchase and distribution of supplies, it’s also true that the country hasn’t faced a crisis quite like this before.

“The process of how you distribute [is] where you need an adaptive and thoughtful response with the government and, as you’ve seen it’s a mess,” he said. “At the federal level you need a system for how to allocate scarce resources. FEMA is presumably used to doing that with emergencies. But at a national level, we haven’t really had a national-scale emergency.”

Bill Oldham, founder and chair of the Thought Leadership and Innovation Foundation, a nonprofit foundation focused on global-health issues, added that the decentralized nature of America’s political economy requires better coordination and cooperation among all the entities, public and private, that are trying to do their part during this crisis. “We are in this together,” he said, “but often we’re not working together effectively.”

The role of public-health infrastructure

Another reason the country has been so reliant on private-sector brands to save the day stems from the defunding and/or inadvertent neglect of the country’s public health apparatus that, ideally, was supposed to swing into action in a crisis like this.

Take the much-talked-about Strategic National Stockpile, for example. Created in 1999, first deployed after the Sept. 11 terrorist attacks and administered jointly by the Department of Homeland Security and HHS, the stockpile was to have a ready supply of urgently needed medical supplies to cope with a large-scale emergency. But as of early March, to cite one example, it had only 1% of the masks needed for a major epidemic, and some of the masks shipped out were rotted and unusable. Greg Burel, the recently retired head of the stockpile program, recently told NBC News that the supply had been left at reduced capacity ever since 2009’s H1N1 outbreak and couldn’t be replenished because “we never received additional appropriations.”

Six years ago, fears that Ebola could spread to the United States led the White House to create the National Security Council Directorate for Global Health Security and Biodefense—or, as most call it, the Pandemic Office. But that office was eliminated in 2018 and, with it, much of the federal-level apparatus for managing a nationwide outbreak of a serious viral illness. In an editorial published in The Washington Post on March 13, Beth Cameron, who led the office, lamented the decision in the wake of Covid-19. “In a health security crisis, speed is essential,” she wrote. “When this new coronavirus emerged, there was no clear White House-led structure to oversee our response, and we lost valuable time.”

And while federal bureaus like the Federal Emergency Management Agency are very much involved in procuring supplies and equipment needed by healthcare workers (its Supply Chain Stabilization Task Force is one of eight new offices created just to deal with the coronavirus), it’s worth pointing out that FEMA’s experience has historically been centered on local or regional disaster relief—Hurricane Katrina’s rampage through New Orleans, for example, or the California wildfires of 2018. Covid-19, by contrast, is a nationwide disaster that affects every city and town in America.

Last year, a Government Accounting Office report found that the natural disasters of 2017 alone (notably Hurricane Maria) “overwhelmed FEMA’s workforce” and that the agency “hasn’t fully assessed national gaps in emergency preparedness.” But in its own report released just a month later, FEMA itself found that a serious pandemic would quickly overwhelm the country’s infrastructure and noted that “emergency management is a shared responsibility of the whole community.”

What’s wrong with relying on the private sector, anyway?

Just because it fell to corporate America to rally to the aid of the nation does not, of course, lessen the fact that those efforts were courageous and comprehensive. Though the White House did have to deploy the Defense Production Act to compel GM to make ventilators and 3M to produce N95 masks, most companies willingly lined up to help, and the help came in most every category. A long list of brands including Eddie Bauer, Brooks Brothers, Nike and Under Armour converted their manufacturing lines to produce PPE. Crocs gave shoes to healthcare workers. Marriott provided room keys to first responders.

“This the largest mobilization of creators—of manufacturers in the United States—since World War II,” said Erin Streeter, svp of communications and brand strategy for the National Association of Manufacturers. “Companies large and small are stepping up to supply desperately needed healthcare equipment, invent new solutions, retool their facilities, supply the essentials for daily life and keep their employees and communities safe.”

Free marketeers point to the fact that the United States does not have a command economy and that allowing brands to fill the needs of production—in regular or crisis times alike—is simply how laissez-faire capitalism is supposed to function. What’s more, said Veronique de Rugy, a senior research fellow at George Mason University’s Mercatus Center, a market-oriented think tank, it’s not the federal government’s job to do everything for everyone, even in a time of crisis.

“There’s no doubt in my mind there is some role—a significant role—for the government to play in terms of emergency coordination,” she said. For example, “Quarantine is needed. It’s unrealistic to count on the private sector to say, we’ll quarantine ourselves. Some people will and others won’t. Here is a role for the government—there’s a role in information.”

But in terms of organization and mobilization, de Rugy said, it’s a mistake to expect the federal government to save the day.

“Why would we believe that somehow this government that is less than efficient in normal times and have fumbled the response to this pandemic, who’ve left us completely unprepared, would suddenly have the incentive to be better?” she said. “We’ve always been better served by the creativity and investment being unleashed by the private sector, thinking in a decentralized way.”

It follows that, if a brand suspends its normal operations to manufacture needed materials, it’s earned the right to get some marketing mileage from the effort. Sometimes, she said, such brands “are just following their own profit. But even in that pursuit, they’re serving the customer.” In other words, a little publicity is a small and allowable price for the public to pay for getting the goods it needs.

America simply doesn’t make what it needs

At the same time, the shortage of supplies and the nauseating prices they sometimes command on the open market does point to a complication with depending on American manufacturers to help when a plethora of supplies and equipment are needed in a hurry. It’s a condition that existed prior to the Covid-19 crisis and is likely to outlast it. The fact that while hundreds of brands might want to help by making the goods the country needs, the country itself does not make many of its own goods anymore.

When America entered World War II in December 1941, its manufacturing base was so big that industrial corporations cranked out two-thirds of all of the equipment that the Allies used during the fighting. The industrial base of the U.S. was already the biggest in the world; by war’s end, it had doubled. But if Covid-19 made one fact painfully clear, it was that most of the supplies that the country desperately needed were harder to get because factories had been “offshored” years ago.

Navarro pointed to this fact (and turned it into something of a Trump reelection cry) when he said, “If there’s any vindication of the president’s ‘buy American, secure borders and a strong manufacturing base’ philosophy, strategy and belief, it is this crisis.”

Politics aside, the degree to which an eroded American manufacturing base cost America precious time—and perhaps even lives—underscored an argument that Winthrop has been making since he founded American Giant—which contracts with American mills to make its clothing—in 2012. During his formative days as a Wall Street financier, he joined the religion of free trade, believing that open borders and a global economy were good for everyone because it made consumer goods cheap and plentiful, even if it had to ship many of them across the border.

But “over the last 10 years,” Winthrop said, “it became clear to me that that’s just a crock of shit.”

Filling Target and Walmart with cheap goods might look like a good thing, he explained, but it’s come at the expense of working-class jobs and a domestic manufacturing base that would have made a big difference in the past few weeks. The country has learned a difficult lesson about supply chain while it waited for China to make those supplies.

“What this Covid-19 thing has brought into sharper focus is when you build a large, complicated economy like the U.S., built on this highly complicated international globalized supply chain, it’s really fragile,” Winthrop said. “It breaks really quickly.”