COVID-19 has been a lesson in relying too heavily on foreign production for vital medical goods.
As coronavirus cases first swelled around the globe earlier this year, around 80 countries made moves to ban exports of personal protective equipment, according to an April report from the World Trade Organization. At the same time, China issued new regulations for outbound medical equipment, tightening custom checks and certification requirements. While the measure was intended to ensure quality, it delayed shipments of critical supplies out of the country, including to the United States.
Before the pandemic, the United States imported about half of its personal protective equipment from China. But following shortages in supplies tied to supply chain disruptions, the Trump administration is making a push for domestically produced PPE.
In a memo from May 14, President Donald Trump wrote, “Since less than half of personal protective equipment (PPE) is manufactured in North America, our supply chain was extremely vulnerable to foreign production interruptions. The coronavirus pandemic exposed the need to increase domestic production and reduce foreign dependence on items critical to our nation’s health and national security.”
As part of the endeavor to expand U.S. production, an executive order from the White House gave the United States International Development Finance Corporation (DFC) the power to provide financing to strengthen the domestic supply chain.
South Korea-based apparel manufacturer Hansae is heeding the call for U.S.-made medical equipment. In the fourth quarter, the company will be opening its first factory in the U.S.
“Offering speed to market is important, and global trade restrictions led to our decision to open a PPE factory in the U.S.,” said Hermann Chiu, managing vice president for strategic sales at Hansae.
Situated in North Carolina, the factory will have automated machines producing surgical masks. The plant will operate two shifts, with the potential to scale to three shifts should the need arise.
While the company hasn’t received funding from the U.S. government, building the plant in North Carolina is helping to make Hansae’s American operating expenses more manageable due to the friendly business environment.
Entering a new market is not without its hurdles. Hansae has an office in New York, but one of the challenges of establishing a production center in the U.S. was handling the logistics of hiring and paperwork across time zones and states.
Amid the COVID-19 crisis, Hansae continues to expand its operations. The manufacturer recently kicked off construction for a new facility in Myanmar. This upcoming opening joins Hansae’s other plants in Vietnam, Guatemala, Haiti, Indonesia, Myanmar and Nicaragua.
The U.S. is a critical market for Hansae, since the manufacturer is a supplier for brands and retailers including Gap, Target, American Eagle Outfitters, Ralph Lauren and Victoria’s Secret, among others. Each year the company exports 300 million garments to the nation, sending almost one article per U.S. resident.
“As an organization, we decided this was the right opportunity for our company, customers and citizens of the United States,” said Chiu. “The U.S. operation will expand our global manufacturing footprint, and we will be able to provide Made in USA products. We have phase two and three research in progress to increase our business in the USA.”
Click here to learn more about Hansae.