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NCTO to Congress: PPE Production Requires Policy and Federal Support

Kim Glas, president and CEO of the National Council of Textile Organizations (NCTO), testifying at the House Ways & Means Trade Subcommittee Thursday, outlined policy recommendations and steps the government should take to address the need to fix and support domestic production of personal protective equipment (PPE) and the overall industry.

“While domestic textile manufacturers have undertaken heroic efforts to confront the ongoing crisis, the onshoring of a permanent PPE industry will only materialize if proper government policies and other actions are put in place to help domestic manufacturers survive the current economic crisis and to incentivize the long-term investment needed to fully bring PPE production back to the United States,” Glas said at a hearing on “Manufacturing and Critical Supply Chains: Lessons From COVID-19.”

“The time is ripe for a revival of American PPE textile manufacturing,” she said. “It has already begun, but we are at a pivotal point. Without the necessary policy response and support, our recent progress will be undone just as quickly, and the China stranglehold over global medical textile supply will be locked in for the foreseeable future with no reason to invest here. The U.S. textile and apparel industry is ready, willing and able to supply our country’s PPE needs now and for what lies ahead.”

Glas said as the country faced “devastating challenges” in responding to COVID-19, the U.S. textile industry has stepped forward and answered the call during this time of crisis.

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“Our industry received urgent requests from the highest levels of government to nurses and doctors on the front lines asking for immediate assistance,” she told the committee. “Our industry is honored to help during this critical time and feel it is our duty to contribute to the health and safety of our nation.”

PPE Production

Glas said NCTO members, representing the full spectrum of the U.S. textile sector, from fiber through finished sewn products, as well as suppliers of machinery and chemicals, have been at the forefront of efforts to deploy manufacturing resources to address the critical need for PPE and other medical and sanitation supplies.

“Our member companies quickly mobilized to find innovative solutions to the crisis, proactively retooling production lines and retraining workers to provide U.S.-made PPE to front-line medical workers,” she said. “These American companies often put aside competitive differences to construct multi-company PPE supply chains virtually overnight. In doing so, they were able to manufacture and supply hundreds of millions of urgently needed items including face masks, gowns, and their textile components at a time when global supply failed to meet the needs this crisis has required.”

With that said, the onshoring of a permanent PPE industry will only materialize if proper government policies and other actions are put in place to help domestic manufacturers survive the current economic crisis and to incentivize the long-term investment needed to fully bring PPE production back to the United States, Glas said.

State of the industry

She noted that the vast majority of U.S. textile companies are now confronted with idle capacity, rampant cancellation of orders, plant closures and workers being furloughed. The pandemic has created unprecedented demand destruction for apparel and textiles, she said, with billions of dollars of orders for fiber, yarn, and fabric cancelled as retail customers close or operate at reduced capacity.

“Our ability to make PPE long term in the United States depends on the health of a strong domestic textile industry, we must use all the tools necessary to ensure this manufacturing sector and other key sectors survive and thrive long after this crisis is over,” Glas said. “We need a robust manufacturing stimulus package for the industry and its workforce.”

She told the committee that if there’s something to be learned from the pandemic, “it is that onshoring PPE production is not just a health care issue, it is a national security issue.” She said the country must examine the true cost of not protecting the American people and heroic medical workers on the front lines.

“This is a cost too high for any of us to pay,” Glas said. “There is great apprehension within the textile industry that the PPE supply chains our industry created overnight will evaporate just as quickly if federal and state governments do not immediately begin to approve and implement the right policies and tools.”

The offshoring of domestic manufacturing coupled with the United States’ overreliance on global supply chains dominated by China exposed the fragility of the country’s ability to respond to an international health crisis that paralyzed the economy and put frontline workers in harm’s way, she testified.

Citing a recent World Trade Organization report, Glas said the U.S. was the top importer of PPE last year at over $19 billion, while China was the largest exporter of PPE at $25 billion.

Since February, Chinese production of these materials has increased exponentially, she said, “with all signs pointing to a hyper-charged Chinese dominance in the PPE sector for many decades to come.

“Unless policy solutions are advanced now, it is clear that China will cement and expand its global dominance in the marketplace for these products in the decades to come,” Glas said.

Recommendations and solutions

Glas offered the committee several steps to address long-term goals of building, strengthening and maintaining a U.S. PPE supply chain, and meeting the immediate PPE needs of frontline health care workers, patients and the general public. She suggested a “reassessment of aspects of our national trade policy to reverse the policy environment that over the past 40 years substantially downsized our domestic manufacturing base and created a catastrophic dependence on China and others for essential materials at the onset of COVID-19.”

The recommendations included creating strong domestic procurement rules for federal PPE purchases in line with the Berry Amendment, a domestic procurement law that ensures the country has an industry capable of servicing the military’s needs. Applying these strong procurement rules across government purchases of PPE “will unequivocally lead to investments in this sector and help onshore this industry.”

The country also needs to improve and streamline the role that the Strategic National Stockpile plays in preparing for and leading the national response to a national health crisis. This will require additional advance planning by the executive branch and proper oversight and funding by Congress, Glas said. It will also require critical domestic supply-chain mapping to identify gaps in the U.S. PPE supply chain and develop recommendations to meet existing and future supply chain needs.

The government should also incentivize private-sector purchases of U.S.-made PPE. She said expanding the domestic customer base for PPE beyond the federal government to the private sector will provide long-term stability to U.S. PPE producers and enhance national manufacturing capacity.

“Once the current pandemic subsides, our private sector has every incentive to chase the cheapest price for Chinese PPE,” Glas said. “Without federal incentives for purchasing domestic PPE, our hospitals and communities will face the same PPE shortages when the next public health emergency arrives.”

Noting that American textile companies moved swiftly to recalibrate their production to build supply chains for PPE and other vital medical supplies at their own expense and without guaranteed purchase orders when the crisis hit, she said the federal government should provide grants and tax credits to these and other U.S. companies to support future investments in domestic PPE production.

Additional solutions include supporting tariffs that she said “serve critically important roles in balancing the unfair advantages that nonmarket economies have over domestic producers. These advantages include government subsidies, state-owned enterprises, non-reciprocal trade policies, intellectual property theft, currency manipulation, and sub-standard labor and environmental policies.”

“Congress must resist pressure to waive, delay or reduce duties from massive importers like Amazon and Walmart who undermine U.S. manufacturing through an insistence on sourcing goods from countries that routinely employ these sub-standard practices,” Glas said. “Congress should also revisit significantly consequential tariff policies like the current U.S. de minimis level of $800 that hurt the manufacturing sector. Every day, the largest retail distributors in the world use Section 321 de minimis tariff waivers to import millions of individual shipments into the U.S duty free. This tariff structure loophole has allowed for counterfeit and unsafe products, including PPE, to enter the United States duty-free with minimal inspection from any country in the world.”

She also called on Congress to reject any expansion of the General System of Preferences (GSP) program for textiles and apparel because it “would severely undermine our trade agreements and, in addition, would incentivize the offshoring of PPE production to low wage countries. In fact, any expansion for this trade sensitive sector would be severely destructive to U.S. manufacturing.”