If you imagine a business making surgical facemasks is working 24/7, guess again
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I've contacted over 100 hospitals. They don't want to help themselves. It's all about pushing people into a web form that fronts a bureaucratic system that supposedly allocates resources efficiently through a central clearing authority (never heard back from any of them), covering their ass in regards to regulatory requirements, and not allowing anyone to take advantage of them by charging money.
Individuals aren't much better. They've had so much conflicting information drilled into them that of the few who still think masks are needed by regular people, many feel so guilty about getting them that they can't bring themselves to do it. Or can't wear them in public because people will judge them for taking away from nurses even though the same hospitals the nurses work at have made it clear they would rather have their employees work unprotected than buy something not approved by the FDA or stoop so low as to work with someone who can't donate everything for free.
Have had way better success working with retired civic-minded business guys who can buy stuff through their local civic group and just get it done. It takes a surprising amount of almost outright harassment from these dudes to get the hospitals to either accept a donation or come up with a list of what they need and arrange funding, but so far getting hooked up with this type of person has been the only way I've found to get PPE (at least the kind that's still available) into a hospital.
We just drove up to the UCSF hospital and dropped off a couple hundred pounds of supplies. No fuss:
https://www.rinse.com/blog/rinse/covid-19-medical-supply-dri...
Here's an example organization with a long list of facilities accepting donated supplies:
I'm sure it's harder to convince the terribly inefficient US health care bureaucracy to pay for this. I noticed our local Chinese American community, combating a worrisome rise in racism, has been active in the philanthropic distribution of masks. You might try raising funding that way, instead of through the bureaucracy.
I've also noticed a reluctance to accept the Chinese KN95 standard. People don't trust it, for better or worse. I think they would rather have homemade cloth masks, to be honest. Not sure how you can change that perception.
Best of luck in your efforts!
We've spent the last 30yr using civil case law to heavily incentivize organizations to build process and follow that process even when it's stupid, push decision making higher up and remove the capacity for decisions making down low (like middle manager level) where they can happen fast.
It's not that the people want to protect the business at the expense of patients but that the business itself is structured in a way that it's impossible for the people who make it up to do break protocol that says they have to meet X Y and Z criteria when sourcing supplies without it being a fire-able offense.
There's a significant difference between donating to or working with hospitals and doing the same with medical professionals working in hospitals.
Particularly for small donations like a partial box those are probably being allocated out directly by and to clinical staff in need.
https://www.buzzfeednews.com/article/kenbensinger/the-fda-no...
https://www.fda.gov/medical-devices/personal-protective-equi...
- banned sale of FFP3 class respirators to anyone else than healthcare providers and the state
- required everyone to wear masks in public of any type (this is rather important as it both prevents asymptomatic carriers from spreading the infection & remove the mask stigma by everyone having one)
- this triggered a huge wave of basically everyone with a sewing machine & some fabric making masks, by now (~third week of masks) basically everyone is stocked and is quite easy to buy a had made mask online or get it from your local administration (there are now even some mask vending machines)
- started an air bridge from China (various aircraft - from the government, chartered & NATO leased An-124s, planes appropriated from various airlines), so far 500+ tons of PPE and medical supplies have been acquired
- material distribution is handled by the state (army, firefighters & sometimes even the police) to all the hospitals, care homes, for police, social workers, etc.
Have any studies been done on this? It seems pretty tenuous to me and lots of assertions about mitigations (from drugs to masks) are being made just now without evidence.
Turns out stopping droplets helps slow the spread of a virus that spreads via droplets. Shocker, I know.
Here's one on homemade masks; they work better than nothing, not as well as surgical/N95: https://www.ncbi.nlm.nih.gov/pubmed/24229526
Just today a went for a walk through the second largest Czech city. The weather was nice and there were people in the streets, though a lot less than normally, with the usually crowded spots totally empty due to all the restaurants still being closed.
To cut things short, the number of people without mask I saw during this hour and a half walk that were not wearing a mask ?
1
I have a friend in a mid-size midwestern town in the U.S. whose mayor just put out a bulletin advising that everyone wear masks.
I know we want to study and confirm everything, but it seems like a real no-brainer that wearing a mask that filters droplets would reduce your disk of infection from an airborne virus generally spread via droplets.
And we're not talking about this in a hospital context, simply as harm reduction. As long as respirators are not an option for most of the general public due to supply issues, etc, then anything which reduces the infection rate is /better than nothing/, even if it isn't perfect.
There are reasons health experts around the world have not bothered to recommend general wearing of masks before other measures. Most people don't have the discipline to wear masks properly, not touch them, sterilise them, clean masks and all their clothes when they get in etc.
It’s one of several things one should be doing.
> Both masks significantly reduced the number of microorganisms expelled by volunteers, although the surgical mask was 3 times more effective in blocking transmission than the homemade mask.
Stopping droplets entirely isn't as critical as slowing them down. That's why the homemade masks still require the six foot social distancing.
There's a delusional belief on HN that the only way people are infected is by breathing in droplets, and all the other routes (fecal-oral, ocular, hand to mouth nose or eyes) are ignored, even those these are probably the main route of infection.
We run into fraud and scammers trying to take advantage of our desperation on a daily basis. Probably about 20% of our supply leads. So, yeah, there’s a definite element of wariness - we don’t just take anything from anyone at random. Lives depend on us sourcing actual equipment, rather than squandering limited resources on falling for a scam. And, you know, not being the FBI, for many of us this falls to a lone harried admin plus-or-minus their boss talking it over and making a gut call before moving on to put out the next fire.
Also hearing “Shiny Happy People” while everyone is literally up to their eyeballs in PPE afraid to be near each other is a weird experience.
I hope that starts to become more socially accepted now. The thing that's always stopped me from wearing my mask as early as February was all the news reports of people being assaulted for wearing a mask on a subway. Like no good deed goes unpunished.
>“It’s a fruity pop song written for children. It just is what it is”, Michael Stipe told the BBC’s Andrew Marr in 2016.
And it's now rare to see people not wearing masks in LA.
People keep talking about donations, but the reality is that this is a crisis of supplies, not a crisis of money. My experience matches the parent comment here.
I've been knee deep in this stuff for the last two weeks or so, the article in this post is accurate from what I've seen on the supply side. This is also another accurate article - https://www.forbes.com/sites/daviddisalvo/2020/03/30/i-spent... One thing worth pointing out is the article points to the sheer number of supplies leaving the country due to hospitals being unable to pay quickly enough. All I can say is, the demand is real, the supply is constrained, and not all the 'random internet people' are scammers - a lot of them are people with very deep resources and relationships in China actually trying to do their part to bring PPE.
In the end, donations aren't going to solve this problem. Reliable supply chains are, and reliable supply chains require that some small profit be made to cover material costs, cost of risk, cost of storage, etc.
If the OP actually has those masks, and can prove he owns the inventory and that they are what he claims they are, he wouldn't be having any issues selling them right now.
https://utrf.tennessee.edu/information-faqs-performance-prot...
The CDC recommends not reusing masks, but sometimes it may be necessary.
Another option is to have 5 masks in a paper bag and rotate them every day. The virus should be dead after 5 days.
Another option I read is to steam a mask in the microwave using a plastic bag with 60ml (6 tbsp) of water for 3-10 minutes once steam is generated.
https://www.cdc.gov/coronavirus/2019-ncov/hcp/ppe-strategy/d...
I am only passing on information I read and am not qualified to judge its accuracy.
HN is really becoming an echo chamber where there is only one leading trend, downvoting to hell the various opinions, and it is really bad for HN’s ability to help entrepreneurs anticipate on trends.
Govt stepped in quickly on the brink of this outbreak though. Govt called 34 companies together each responsible for different parts of mask manufacturing from material, machine parts, installation, assembly, etc and govt up front paid 6 million USD for 62 production lines to be installed and assigned military personnel to help man the lines 24/7.
Daily mask production ramped up from 3 million to 10 million in 3 weeks. This is only barely covering Taiwan's domestic needs. Taiwan is now aiming for daily production of 20 million.
For distribution, govt rations out all manufactured masks. Currently each citizen gets 9-10 masks every 2 week and I believe each doctor receives 40 per week. The price of the masks for regular folks is fixed at around 1 USD for 6 masks. It is free for med staff.
As for the installed production line, once the mask maker reached the production quota of 5 million masks for a particular production line, the mask maker gets to keep that production line for free. Note that the mask makers, once involved in this project, pretty much gave their business as usual.
I would think it is tax dollar well spent.
EDIT: Try and include some English references: - [https://focustaiwan.tw/business/202003090013] - [https://www.taipeitimes.com/News/taiwan/archives/2020/03/10/...] - [https://www.taipeitimes.com/News/editorials/archives/2020/03...] - [https://www.straitstimes.com/asia/east-asia/coronavirus-how-...] - [http://www.taipeitimes.com/News/front/archives/2020/02/15/20...]
https://jamanetwork.com/journals/jama/fullarticle/2762689
and a timeline:
https://cdn.jamanetwork.com/ama/content_public/journal/jama/...
From another perspective, he's having trouble getting long time contracts. Hospitals could give him that extra 90c per mask (10c per mask per the article, 1$ suggested price in your comment) by signing a contract to buy x masks every year for 10 years instead of just signing a contract to buy x masks.
It seems that the actual problem might just be hospitals being stingy.
Hospitals have to stay afloat just like everyone else. If they go bankrupt, they close, just like everyone else.
If the government agrees it's a national security matter for us to have our own PPE production pipeline, then it needs to stop in. It can't expect private facilities, that have to make their own budget targets, to take on the cost of keeping up national priorities. That's literally what the government is for.
But that’s beside the point. Almost all disposable medical supplies are cheap in isolation. They build contracts for a whole bunch of supplies, in massive quantities, over time.
Those pennies add up.
Again, operating margins <2%.
Until you’ve internalized what that means, I don’t see a high value in going back and forth.
Yes, there is: the cash flow for the two cases is very, very different. Case b) is doable for a reasonable cash flow. Case a) is impossible unless someone else besides the hospital provides the huge up front amount of cash required to pay $0.80/mask for the first year.
Maybe not under normal circumstances, but these are not normal circumstances. Also, we're talking N95 masks, not ordinary surgical masks.
Nothing in the article says these are N95 masks, I don't believe you are correct. But also, what does that have to do with my comment?
Also, I highly doubt this guy is using 10 year contracts.
If I was him I would only be selling to those hospitals that sign 100 year contracts with strict non compete clauses and defined rules around sourcing / pricing and failures to comply.
Exactly. IIRC Sysco negotiates 50-99 year contracts with e.g. universities to supply on campus dining. It seems that firms in the healthcare supply chain would do the same.
As for long term contract, the argument is ok up to certain extend. The cost of machine is quite high, several $m, it is a fixed cost, but negligible with high production volume - not that high to justify 10y contract.
https://www.npr.org/sections/goatsandsoda/2020/03/16/8149292...
“His masks may cost a dime each, but a made-in-China mask might go for two cents.”
A hospital charged my friend $5k for three stitches. They could pay 8 cents more per mask. But they care more about $$$ than the long term health of the country.
And I’m not even making a moral statement with that. It’s the natural consequence of making health care a capitalist endeavor. There are other approaches.
Most hospitals run at profit margins well below 10%. Median operating margins are in the vicinity of 2% (https://www.modernhealthcare.com/providers/operating-margins...) And for the last few years, expenses have been growing faster than revenues (though the rate of growth of expenses has slowed.)
Whatever you imagine they're bringing in, they're not.
Nor is their job to maintain the long-term health of the country. That's literally the government's job.
[1] Those numbers have a historical reason behind them, which people are either ignorant of or choose to ignore. The short version is: hospital prices are set as a part of the negotiations with insurers. Insurers account for the vast, vast majority of dollars going into hospitals, so their business operations are built completely and entirely around insurance dollars. Uninsured patients register as barely more than a rounding error. So while, yes, being uninsured in this context sucks, hospitals aren't gleefully rubbing their hands and going "muahaha, $5K for stitches!" They don't expect to see that 5K, they don't rely on that 5K, and they're not trying to gouge that uninsured person who's almost certainly not good for that 5K. That person has just fallen into the crack(s) in our healthcare system, which are more complicated than "evil greedy hospital", or "evil greedy insurer."
No, it isn't. It's everybody's job. The government is a tool we use to delegate certain aspects of that job--and often it's a very bad tool to use and we should be relying on it less, not more. The idea that "it's the government's job" to do things causes all kinds of problems, because people think they can just let the government take care of it and not have to worry about it any more. You can't do that. Ultimately it is we, the people, who are responsible.
What a bizarre position. This distributed approach to the emergency health of nations hasn't worked out well in the current situation.
I can't see how it would suddenly start working better in the future under our current economic system either. Everything is set up under economic pressures such that inefficiencies are ruthlessly exposed and eliminated.
This maybe works out OK for creating new generations of electronic gizmos but it is catastrophically fragile for things like PPE as described in the article.
To avoid something like this in the future, the only options I can see are more government control or rethink how economic systems work.
I don't see how it's bizarre to recognize what the US Constitution says.
> This distributed approach to the emergency health of nations hasn't worked out well in the current situation.
In the US at least, what hasn't worked is waiting for centralized authorities to tell people what to do, instead of just doing obvious common sense things like social distancing and wearing masks. Not to mention allowing the FDA to prevent state and local health authorities from taking obvious common sense measures to develop tests, either on their own or in cooperation with private labs, when it was clear that the FDA and CDC didn't have tests ready.
> more government control
Would be a bad idea, since the more centralized authority controls things, the worse the consequences are when the centralized authority makes a mistake.
> rethink how economic systems work
What you call the "catastrophically fragile" economic system is a product of government control. So again more government control seems like a bad idea.
E.g., I had my vocal cords looked at; took only ~1/2 hour of an ENTs time, and is a (somewhat) common and non-risky procedure. $4,000. I have no way to justify that price — I highly doubt the ENT is making $8k/hr! It was one of the big reasons that drove me away from PPOs in general: completely opaque, expensive, retroactive billing. Going to the doctors puts you on the hook for near unlimited liability.
Now, Kaiser was a nice contrast; I had the opportunity to get my wrist operated on for RSI. Somewhat invasive, would require weeks of healing, not guaranteed to be successful (it had a ~50% success rate!): $300, priced out before the operation.
(Sadly, I'm no longer with Kaiser, as they were west-coast and the rent was too high.)
> As the drug industry has come back down to earth, the returns of the 46 middlemen on the list have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%.
An example of a middleman firm is Express Scripts (a prescription management / negotiation firm) which had an operating income of $5B in 2017 on revenues of $100B. The parent company Cigna (NYSE:CI) handles a broader array of insurance things and had an operating income of almost $10B in the last twelve months but on revenue of $160B.
Medical billing in this country is insane and full of inefficiency. A little bit of each part gets collected along the way, and it adds up. I don’t even think ExpressScripts would have been counted in the methodology that The Economist was using (excess profits are considered a >10% return on capital) as part of Cigna.
[1] https://www.google.com/amp/s/amp.economist.com/business/2018...
https://www.kff.org/other/state-indicator/hospitals-by-owner...
If you have the procedure codes that were billed you can likely look up the Medicare reimbursement rates for them. Private insurance would pay more than that, but not orders of magnitude more.
He billed 4K. The contracted rate he got from an insurer is significantly below that. A huge chunk of that disappeared to malpractice insurance before he got to paying the rest of his overhead.
He saw, as another poster said, maybe 15% of that.
Have you seen the lavishness of the modern US hospital? The art pieces, high vaulted ceilings on every floor, solariums, gardens, decorative architecture... These things are not free. They are very, very expensive! And at the same time, they are fucking worthless in regards to making people healthy. I pay my insurance because I want to be healthy, not so the hospital I go to looks pretty. They are marketing machines that live outside their means, and I should not owe them $5k for stitches. It's fucking insane, and it's greed to use those massive markups on people who are in life or death situations. It's equivalent to wartime profiteering.
Check-in with security: Yes, because this is 'Merica and it has actually become necessary to do a preliminary screen to make sure you are not a raving nutjob.
Check-in with receptionist: Enter you into the system, until this point is hit you are not even at the hospital as far as the system is concerned.
Talk to nurse assistant: No, this is not just an assistant for a nurse, but rather a term used to describe someone who has a particular level of training and commensurate duties. A CNA can take vitals, ensure that they have the proper records for you (e.g. records say vi is a 45 year-old white male and we have a 60 year-old Latina, maybe we need to double-check things.) This is also the first real step in the triage process where someone with medical background can make a quick decision as to whether or not you need to be seen quickly or can wait.
Talk to nurse: Ok, now we actually start doing more fine-grained examination and diagnosis. Chances are this is where the real diagnosis and treatment was decided, but you don't need to know this.
Talk to doctor: Now someone who is very busy will take a few moments to examine you and make a decision. The nurse you talked to earlier put markup on your chart indicating what she noticed and found as well as possible standard treatments for same so the doctor was able to confirm that it was horses and not zebras and then sign off on the treatment.
In a hospital all of that process you think of as inefficient does not give a shit about you or your time, it is trying to maximize the value and impact of the time that really matters in a hospital: the attention of doctors and RNs. The process may have been inconvenient for you, but it means that the people who matter at that hospital only spend their time where it is needed and trivial tasks or downtime are handled elsewhere in the process.
Evil greedy medical industrial complex?
I think most of the issues in the US medical situation come from everyone trying to profit as much as possible.
We're suggesting the hospital giving him 1 dollar per mask instead of 10 cents during the crisis, that's an extra 90. 98 cents compared to the Chinese prices.
I guess my proposal makes it a bit less. With the 10 year contract, assuming that the demand spike only exists in the first year, it would be an extra 90 cents - savings of (9 years * 2 cents / year) = 72 cents per mask. This could be "fixed" by extending that contract for a few more years.
$1 is an absolute bargain.
$0.10 is vastly below the cost of manufacture and only being promoted by people who mean harm.
https://www.youtube.com/watch?v=VGDUqBLtyNM
DIY can save money. I've used superglue for this in the past.
Search for “tissue adhesive” or “liquid bandage”.
The difference between you and a doctor for little things like stitches that causes the $5k price tag is a couple of hours of study, credentialism, beurocracy and malpractice insurance. Only the couple of hours study is actually needed and you can do that yourself pretty easily with the internet.
I seriously can't believe I have to say this.
And it’s somewhat how it’s still is in some fields of it primarily cosmetic, elective surgery (including LASIC and the likes) and dentistry.
There are plenty of countries where the majority of the health care is provided by private firms even if the state picks up the bill or part of it including almost all countries with universal healthcare.
The US is pretty much unique in costs and distribution of burden and it’s not because of the free market approach to healthcare.
When 9 out of the 10 most profitable hospitals in US aren’t even private/for profit you can’t simply claim that the investment firm or HMO that owns the hospital tries to suck out as much profit as possible for their shareholders.
P.S. I don’t agree that regulations are the problem anyone who thinks that you somehow would get better results with deregulating healthcare is likely very wrong, the entire system in the US is however broken and not because of simply campitalism.
Stitches are very easy to administer. Nobody needs a uni degree to stitch up a wound. They need lots of practice.
It is impossible for a reasonably free market to charge $5,000 for 3 stitches; because an independent doctor would set up next door with a sign saying "Stitches; $4,500!" and drive home in his Lamborghini every day. The hospital and the independent doctor would then start undercutting each other until the margins were no longer outrageous and they have to think a bit before dropping their prices any further.
If a hospital can get away with charging $5k for 3 stitches, any market freedom has long ago been exorcised.
How exactly do you measure the profit of a non-profit?
Also that kind of emergency care is quite rare. It's a very small part of the healthcare system and mostly confuses the discussion.
> Because that would be the worst imaginable PR.
You're wrong. "Bad PR" has not worked at all to encourage the healthcare industry to fix medical billing on its own. See this article for an example:
https://www.nytimes.com/2017/03/29/magazine/those-indecipher...
It's literally impossible to comparison shop healthcare, and I've tried. You can't properly diagnose yourself, for the same reason a doctor can't properly debug your code. You have no idea how treatment is going to be coded (and you'd have to be an expert to understand the codes and their implications, anyway). Hospitals will only tell you their inflated "list prices." Your insurance won't tell you anything about what they've negotiated with the hospitals in your area until you've been billed, since they consider that information proprietary.
Most healthcare is to solve real health problems (from mild to extremely serious). People won't decide to live with those problems unless they're forced to, so they can't opt out of the system until it's fixed.
Also, I would like to point out that the vast majority of medical issues are not emergencies.
Maybe there is a reasonable argument that ambulances, and emergency rooms should be highly regulated. But, fortunately, the vast majority of medical issues do not involve going to an emergency room.
Before the government got heavily involved in healthcare in the 1960s, healthcare was cheap.
Edit: requested cite: https://www.thebalance.com/causes-of-rising-healthcare-costs...
Feel free to make a moral case against Reagan's decision if you feel like it.
I bought a 383 big block engine for my dodge, and a friend of mine was helping me move it into the garage. I tripped and fell on top of the block, making quite a gash in my eye socket. Lucky I missed my eye. Still have a scar! Sadly, the block turned out to have a crack in it and was not salvageable.
That's just one.
(I'm pretty sure that's not what the person you were replying to is going for - but it is a very problematic piece of the regulatory environment which is unique to hospitals)
The attachment of medical insurance to employment is another.
If you don't already know at least a few of these, you're probably a student or not interested.
Nobody knows all the regulations, and asking for a list seems a bit clueless.
Couldn't we say the same thing about the owner of this factory? He could gear up and then pay unemployment for laid-off workers after the crisis ends; he did it once.
I am also not a fan of our health-care system, but...it's complicated.
Governments preventing price increases just means that supply doesn't increase nearly as quickly as it would otherwise.
The company in the article is closed on nights and weekends. Don't you think there's a price at which they'd stay open, thus increasing supply?
There is no price at which these masks can be sold which will meaningfully impact supply before Covid 19 burns itself out.
Such price increases are honestly more likely to incentivize people digging their P100 masks out of their garages and workshops and donating those.
But with it illegal, you'd be relying on self-sacrifice and altruism, which isn't very reliable. Greed is a much more effective motivator.
I read his article: he claims can't get the volume to justify adding more shifts. Well, right now he could, even though the additional shifts would presumably cost more (more expensive labor costs, more inputs (e.g. energy), and likely a higher cost for the new raw materials wheich he'd have to get on the spot market as opposed to the long term agreements he already has.
There's really nothing stopping him from doing this, except he's busy appearing on Bannon's podcast. And he says "well it would just be a drop in the bucket" -- likely it would be meaningful for Texas though, and then Texas's external demand would drop a little, allowing someone else to get access. This is how the economy is supposed to work.
But instead he says the government should give him a long term contract. Well boo hoo. He describes the capabilities he has but complains instead of taking advantage of them. And the newspaper doesn't call him on it.
>Laws often include exceptions for price increases that can be justified in terms of increased cost of supply, transportation, demand or storage
[1] https://en.wikipedia.org/wiki/Price_gouging#What_the_law_pro...
First, he may be in the clear legally, but that doesn't mean he has no legal risk. Some enterprising DA could try to dispute that that his price increases could be justified.
Second, I tried to be precise when I said "anti-price gouging sentiment." Even if it's legal to raise prices, the risk of a public backlash makes it safer to just keep the factory working normal hours. That's a harder problem to fix than bad laws, though.
Is it supposed to be a good thing that people would work 100hr weeks during a pandemic and compromise their immune systems? Why not just hire more staff and have them work healthy 40 hour weeks? It's not as if unemployment is low right now.
Let me reframe is this way: There is some emergency wage where his employees would enthusiastically work substantially more than they are right now. There's some price-per-mask where the owner would enthusiastically pay them that wage to get extra masks out of the factory. That price-per-mask would still count as a steal compared to the cost of a healthcare worker developing COVID-19. Everyone would be better off if hospitals were paying that price. So why aren't they?
Because your analysis is wrong? You seem be assuming workers are some kind of machine that turns wages into output, and the more wages you put in, the more output you get, and you can freely adjust output by adjusting wages. You also seem to thing he has a lot of pricing flexibility due to the demand. I think those ideas have several problems:
1. There's an obvious limit to individual output, and his existing employees are probably operating close to that, especially since his business was already under stress.
2. Human psychology is complicated, and you're ignoring morale. A logical robot might have the same satisfaction with a certain wage before and after he's made much more than that, but a human probably won't (and that's even an oversimplification).
3. His customers are probably going be unhappy with him for raising prices in a crisis, regardless if he had good reasons for it or not. He's already dealing with the problem of customers leaving after a crisis for cheaper competitors, and a price increase now would probably make that problem even worse.
I'm as big an advocate as anyone for sustainable work practices, and I absolutely agree that most of the time working longer hours is counterproductive over the long term. But isn't working on an assembly line during a crisis pretty much the canonical counterexample? Output scales linearly with time even if you aren't feeling creative/fresh/energetic, and there's an urgent need for more masks now.
Like the current Uber driver case.
There are laws about what constitutes contractors vs employees - both federal and state. If you satisfy N out of M items in a checklist, you are an employee, regardless of whether both parties want you to be.
Controlling how you do your job is one of them. If the employer directs how you can do the job and doesn't give you freedom to do it your own way, that's a major item.
If your employer doesn't let you bring your own equipment, that's another one.
If you do not have a chance of losing money on the contract, that's another one. Say you hire a contractor to repair your roof, and he screws it up. Typically he is expected to fix it even if he ends up with a net loss (or he can refuse and not get paid at all). When an employee screws up, the worst that will happen is he'll get fired.
And so on.
It's very unlikely these people can be contractors unless he's hiring experienced folks who know the equipment.
I think you have misunderstood the suggestion; it's not about contractors vs. employees, it's about fixed-term versus not.
Fixed-term employees are not classed as contractors. They are regular employees with all the usual benefits and rights of employement - except that it comes to an end at a pre-determined date, unless extended.
Regulations have many unseen side effects that end up causing damage, people should think harder about them and they would realize that in many cases (most in my opinion) they do more harm than good.
Everyone's already charging more for masks, he should be able to manage a decent market rate. To begin with, unemployed people in a pinch are probably willing to accept slightly lower pay.
Why do you want the business owner to arbitrage his business when the people who do arbitrage for a living won't do it for him? If the experts at arbitrage declare it a bad idea, then he probably shouldn't do it either.
And he's not. That's sensible.
https://en.wikipedia.org/wiki/Arbitrage
There's no arbitrage for the factory taking a loan, it is just a business risk.
NOT A SINGLE WEALTHY PERSON has done this. None. Zero. Nada.
There's your answer as to the priorities of capitalism.
Granted, companies work hard to be devious. But when we allow them to spend their profits on a whole slew of stuff that reduces their tax rates to zero percent, it seems churlish to blame the companies. Government specifically waived taxes in order to encourage e.g. R&D and now we, the people, are paying the price of the details of a large raft of this sort of law making.
Governments also use tax law to reward specific groups of people, for reasons both honorable and nefarious.
Identifying the motives for a given tax law is often quite difficult. Companies currently get to avoid most taxes on profits that are reinvested in activities that they certify as "research and developement". Is this possible because the government wants to encourage R&D or as a payoff to their political sponsors, or both?
It's non-trivial to answer, but what's easy to say with certainty is that is an example of _how_ companies avoid paying taxes, and if you want to stop it, you need new tax laws which don't permit/encourage this.
The hospitals not signing contracts with him is bad. But probably the more surprising to me is that the government isn’t calling him up to say “hey we will pay you $BIG to start producing masks for us 24/7 that we will distribute”. Where $BIG is enough for him to offset his concerns. After this pandemic slows down the government can continue buying from him to restock (and constantly refresh) the stockpile.
How has the government not by now started to track all the items we need, all the items we have, and called every damn company that can possibly produce those items or know who can to tell them to start cranking? Why do we continue to hear about discoveries of masks in warehouses and the like? The logistical failures here seem to be extreme.
The materials you are talking about aren’t usually found on a warehouse shelf because they deteriorate over time. You wouldn’t want to put expired material through a machine because it becomes brittle and breaks.
And as for why we haven’t started tracking materials more closely? Kushner’s running this show. The word you’re looking for is incompetence.
The equipment is perishable (on the range of years) and should be rotated. Most things probably are.
Any such stockpile should have a half-life rotation period, where items at the half life are sold in to the market at a slight discount and the stockpile continually refreshed. Ideally the government should also be buying or making in bulk and thus their discounted price might actually be competitive.
It's not like manufacturing is some moral goodness that we've lost, or a defect in the nation's character. Manufacturing isn't "better" than services. It's not more honest or anything.
Free trade raises everyone's living standards. It's economically incredibly wasteful to manufacture everything locally.
Countries absolutely have to make decisions about retaining certain capacity for essential items in case of war or emergency... but everything has tradeoffs. There's nothing "shameful" here, it's just cost-benefit.
On the other hand, if you don't have the manufacturing capacity and you don't stockpile? Yeah, that's shameful. The fact the US didn't have a national stockpile of emergency masks for both civilians and doctors is shameful.
If our supply of cosmetics or children’s toys works this way, fine. But our food, medical, and military supplies most certainly should not, and there’s a decent gray area up for debate between those extremes.
What’s tragic is the way this thing has just caught America napping and how ineffective our response has been.
It can reflect underlying advantages in other respects, such as location of source materials, and availability of energy for production in relevant quantities.
Below some threshold of energy use to transport, it will use less energy overall to produce some goods far away and transport them, than to produce them locally.
I'm not sure if shipping on the oceans is below that threshold, but I wouldn't be surprised because it's pretty energy efficient for the amount transported.
This is 100% about the cost of labor, and the fact that China is moving poor rice farmers out of the country and into these jobs and giving them exactly zero labor benefits or protections
And the bigger your facility is, the more efficiently you can transport things in and out. Very local production means work trucks running around wasting fuel all over.
During the Second World War the US not only managed economic autarky, but we had enough agricultural and industrial capacity left over to feed, arm, and equip much of the free world. We lost that through complacency and the past 40-50 years have been a series of escalating kicks in the teeth. Maybe this will be enough for things to change.
How would this work? Who is going to buy all those expensive (by asian standards) american-made goods?
>We lost that through complacency
AFAIK we lost it because of globalization, which caused the labor market to be flooded cheap labor from developing countries.
Japan, South Korea, Taiwan, are all examples of wealthy and industrialized nations.
Think of it this way: if you rely upon robots too much, you're making a huge bet that you can design the manufacturing process from scratch and basically get it right the first time. If you get something wrong, it's going to be expensive to go back and improve it because you need to rework all of the automation. Conversely, if you design a less automated manufacturing process, more of the work is done by human beings, who are typically smarter and more adaptable than robots. That way, if you come up with process improvements later on, you can just teach it to the humans. Better yet, the humans themselves can think of their own process improvements.
At any rate, Toyota produces millions of cars in the United States on an annual basis; clearly the cost of American labor isn't a problem for them.
Suppose someone said that's completely untrue, could you back your assertion up?
Like, when was the last time a pandemic ever happened? Pshh.. not my problem.
I'll echo what most have said here already: the moment this crisis is over, we'll be overseas trying to find the cheapest possible price. We don't care about keeping the local guy in business. We care about our margins.
I'd hate to say it but what made us great, could very well be our downfall...
-Jeff Bezos
American protectionism is actually part of what created this problem: it was only this week that the Chinese KN95 standard was approved for use by the FDA.
[1] https://www.propublica.org/article/us-emergency-medical-stoc...
>“Last time he geared up and went three shifts a day working his tail off,” the mayor recalled. “As soon as the issue died, he didn’t have any sales. He had to pay unemployment for all these people, and he had to gear down.”
Doesn't seem to be a real issue if those extra costs are factored in
>Hospitals promised to stick with him afterward, but they broke their promise. The allure of cheaper Chinese masks was too great for hospital purchasing groups to ignore.
Ask for money upfront, or get it in writing and sue later.
The raw inputs require delivery contracts from the suppliers and is currently also in short supply. He can’t get his same preferential pricing outside of his supply contracts, or his suppliers may not even be able to deliver it, or they’d require he increase his contract buy.
He may not believe in hiring hourly manufacturing employees on contract without benefits. The amount of time he spends training them and watching them cycle in and out has a cost.
Sure, it could be done. Is it worth it? Obviously not, or he’d be doing it.
All of the factors you listed can be conceivably factored into the price and/or be part of a purchase commitment. The fact it hasn't either means:
a) the increased price isn't something the market is willing to bear. I'm skeptical about this because the presence of scalpers on the market makes me think that there are at least some consumers willing to pay insanely high costs for masks. I will also go on a limb and say most people would probably be willing to pay 2-3x "normal" price for N95 masks (a quick search on archive.org says they normally retail for $1/ea when purchased in modest quantities).
b) the owner is behaving irrationally from a profit maximizing perspective, perhaps because he got burned last time or thinks any profit isn't worth the hassle.
I'm bringing up these points because over the last month I have come to also think either state or federal government needs to take responsibility and buy these makes from a local producer - even when there is no pandemic.
I don't think our connected web of hospitals, suppliers, and insurance companies have the right incentives to use local, "expensive" suppliers when there are lower cost non-local suppliers and these non-local suppliers have stocks.
[1] Price gouging percentages - https://www.natlawreview.com/article/coronavirus-emergency-d...
[2] State of emergency - https://www.businessinsider.com/california-washington-state-...
Also, if the situation is really dire, I'm sure the government can grant him a waiver
Whining about a non-issue. Of course market conditions will change when the time-sensitive crisis is over. Unemployment is "paid" for the period of employment, not when they are laid off. If you don't like laying people off then contract them month-by-month.
I sincerely hope the lasting change from this crisis is a changing attitude towards where we build things.
Walmart became the giant it is because while people agree that supporting local businesses is important (especially when they and their neighbors own those businesses), they still could not help themselves and chose to do their shopping at Walmart because it was cheaper. Then many of the small local businesses died.
Modern (American/western/and-possibly-everywhere-else) people are really terrible at balancing short vs long term priorities.
The problem is things are cheaper from china, because China as a nation invested in their ecosystem of manufacturing. Ports, roads, tax incentives, loans e.t.c
US on the other hand did not invest in themselves as heavily. It's like a rich son having someone else do his assignments and when the end of year exam comes, he's fucked because he didn't put the effort in learning himself.
The more we take China take the lead and we rely on them, the more we lag behind.
Honestly, US government policy should be to buy everything that could be remotely considered strategic or useful in an emergency from US suppliers that use US labor and materials. Small exceptions could be made for proprietary things made by NATO allies, but even that stuff should really have a second source supplier located in the US.
This quote really got me. Being in Texas you would think people value American made.
The machines in that article appear rather different.
But it's not just hospitals, all of US is built on "just in time" fulfillment for decades now. That's why a government stockpile was important for emergencies, it's not unrealistic to expect government to have that role. You just can't have people in charge of government that spend all their time dismantling it and expect it not to fail.
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So his solution is contracts. The fact that people aren't signing them shows their true intentions.
What I can't quite figure out is why, during the good times, a $0.10 consumable for a $4000 operation needs to be made more efficient so badly that the only way to produce the thing is in a communist country with no environmental controls.
That's simple to figure out, and it is not specific to hospitals. Some purchasing manager says "hmmm ... I'm paying $100,000 per year for this product. But I can buy it overseas for only $20,000". Score!
At the end of the year, that purchasing manager writes a report to his manager saying something like "saved the hospital $10,000,000 by optimizing our supply chain". Or some such.
How much some random operation costs doesn't factor into his decisions at all. That's not what he's being compensated for.
The only way this mindset changes is if top management insists on it. But usually top management is constantly pushing to cut costs. Their bonuses depend on it.
There's just a minimum volume cost to most finished goods below which it just costs money to do the work at all. Sure if the volumes go way up there's economy of scale at work and the fixed costs of scaling up go down so prices can be reduced in a way that doesn't affect the manufacturing business to be more competitive but there's a bottom in the other direction.
You can insulate that with long term contracts from the buyers so that you can get favorable contracts with the suppliers, but when you have purchasers going quarter to quarter and saying lowest price = best value you just are playing a totally different game for a smaller manufacturer. The current model of a small American manufacturing business seems to currently reward doing the same boring product at the same boring volume so that the company will exist in 20 or 30 years by investing in specialist equipment that does one or more steps of manufacturing better than generalist equipment and creating a niche stable market for yourself as the depreciation/fixed cost of that specialist equipment per total units made approaches next to nothing.
This would be a good time to hire temp labor through a staffing agency; you pay a bit of a premium for that, but you also don't put the employees directly on your payroll that way (they're employees of the staffing agency instead, so said agency is then responsible for finding new work). People need the jobs, America needs masks, this guy wants to make and sell masks, win-win-win.
Like, I didn't really see a compelling reason in the article why that factory isn't working 24/7. I know of plenty of companies that deal in similarly-high-demand-in-pandemics products (my employer included) that are ramping up and running 24/7 and doing everything they can to get those products to people who need them. Most of them are doing that by hiring temps.
Perhaps a measure allowing emergency part-time workers? Why does he have to be 'fooled again', why not just increase production temporarily?
It sounds to me, this guy is being spiteful. Wants to make a point. Maybe not the right climate to make his point in.
The bottom line would appear to be that capitalism is, by far, the best system we have, but only when it operates inside a walled garden.
We should impose tariffs on essential items so as to allow local employees to be paid a fair and living wage, put restrictions on the multiple between the lowest wage in a company and the highest, limit growth to preserve the competitiveness of markets, and ensure that the true cost of production, including the environmental damage associated with production, distribution, and disposal is accounted for locally.
Imagine if this small business was allowed to charge a fair price for their product without competition from a totalitarian state that has bred 1.6 billion slave workers to exploit the planet and conduct a covert economic war to undermine democratic free-market countries.
Imagine if the earnings of every CEO were capped at 3x the lowest wage on the factory floor. Imagine people having stable jobs that fulfill a genuine need while producing something in a sustainable and environmentally-responsible fashion. Imagine that those hard workers get health care and generous vacations and a living wage.
Is it so ridiculous to dream of limited capitalism? Sane capitalism?
Also this guy sounds kind of butt hurt about buy American rheteroic. I agree but if you are charging 5x on a commodity vs china, I mean rah rah America only goes so far.
Hospitals promised to stick with him afterward, but they broke their promise.
And later
Now, it’s only selling to U.S. hospitals. But Bowen asks hospitals to sign contracts. Who can blame him?
Or as the mayor puts it, “He’ll gear back up, and he’ll produce, and they’ll probably do it to him again.”
I imagine as a small business he may not have pockets deep enough to pursue legal action against hospitals that are breaking contacts.
Unfortunately that is not how machinery works, you would need personnel to maintain them, and also switch them on periodically, and repair them otherwise your stockpile of machines won't work anymore in - say - three to five years of stockage.
And BTW you would also need to have a huge stockage of spare parts, as in the same three to five years the current model (the machines that actually running in production) will be release/model Mark V, and they have different parts from the Mark I you have stocked ...
The govt has been harshly criticized by the recent, new libertarians, for the import taxes increased prices to the end consumer and scared away foreign investors. Turns out that we had national mask makers ready to step up. Plus, textile and other industries decided to also jump in to help. I bought three masks before taking a flight recently, I didn't have any trouble finding them, paid less than a dollar for a locally made N95 equivalent; it seems that many of my flight mates had the same idea. I guess our old politicians nailed it, at least this time.
You get to choose 2 of the 3. This guy wants protectionist policies to help him stay in a more sustainable business. You can't fault him for wanting to serve his own interests. But we could've prepared for this by having the proper stockpile in anticipation of an emergency.
China said no to Google and Facebook, they let Baidu and Tencent build the technological prowess. China manufactures most of the worlds electronics, they help their cities foster ecologies. e.g Shenzen, Guangzhou, Tianjin e.t.c
Meanwhile US has been losing its manufacturing edge over time. We can't be price competitive to China because we haven't invested in the ecosystem necessary for mass scale production. Our governmental leaders have frequent conflict of interests because they've worked at previous mega corps.
US can no longer think and take actions for the interest for the whole nation. Corporate interests are winning out. Seeing how the $2 trillion stimulus was a giant coop, to Jared Kushner (neopotism) saying "National Stockpile is for us, and not for the states." COVID-19 is exposing how incapable we are as a nation to be self sufficient.
Is US a democracy? I am not so sure. Without fair competition, we aren't a capitalist society either.
Do you really care if your monthly water bill is $1 or $5?
Think - if you're at $5 a month, I mean you could save 500% (!!) by going to another provider at $1!
No - you don't care at all. At such a low price and vast surplus (the difference between what you pay, and what it's worth to you) - other considerations are paramount.
The difference between 10 cents and 2 cents is stupid. They could be 50 cents and it would not be 'price gouging' because there's tons of surplus to go around.
If we're going to talk about 'gouging' we need to talk about the entire medical system - it's just one big massive gouge.
There basically needs to be a strategy of price regulation and sourcing, as simple as that.
A simple rule like 'must be bought and fully sourced in the US' is easy, because it still implies a lot of competition.
For some products there could be a strategic reserve, and also a strategic production capacity.
Same for the entire military supply chain.
It's time to re-think globalism.
That's because people don't hate businesses and businesspeople, and are thankful for their effort.
Low-quality surgical masks here retail for 40-50 USD per box (50pcs), and there are no plans to introduce any price controls. That means that resourceful people are stimulated to abandon their family and regular jobs, and work round the clock to set up production lines, because they want to earn money.
I assume in America the sentiment towards businesspeople and pricing is somewhat different.
That seems weird. They're half that on AliExpress, including shipping to NZ.
Of course keeping a few machines in the wings is probably cheaper than overtime and unemployment.
[edit] I'd also like to know how difficult it would be to just switch the machine over to making cheaper, non-medical grade masks as demand changes?
I suppose it's more realistic with cnc or 3d printing but even then it's not that simple mission, this small company wouldn't most likely try or want to be "aws but for x robots" : )
I suppose if you think about 3d printers, plastic molding, cnc, then we are slowly going to this direction.
I'd be willing to bet that you are right though and that the machines currently being used wouldn't be capable of producing much besides masks.
Although they don't provide links this article from McKinsey suggests some vehicle manufactures do in fact utilize robotics to ease scaling.
https://www.mckinsey.com/business-functions/operations/our-i...
While the following articles suggest this very question is an important aspect of robotics that manufactures can take advantage of to mitigate costs and make modernizing less painful
https://www.mckinsey.com/business-functions/operations/our-i...
With the following article making a strong case for the re-shoring of jobs that advanced manufacturing options have historically resulted in as well as laying out the benefits these technologies can provide which allow small scale production of niche products.
https://itif.org/publications/2019/10/15/robotics-and-future...
I'm sure it's more complicated than three articles can outline. I would like to really know why this can't happen though.
If you have the foresight, and money, to pay to transplant an entire industry from a place which manufacture masks for 2 cents as opposed to one that does it for 10 cents, wouldn’t it be a lot easier, cost efficient, and sensible, to simply by 2 masks whenever you need one for a total of 4 cents for the 2 masks, and keep 1 of those 2 masks in your stockpile?
You end up spending about 4cents per mask, and you’ve built up a massive stockpile in addition to that for emergency situations. And you’ve only paid 20% of the money you would have for the masks the article is advocating.
Frankly, this was a disaster in federal planning. Trying to twist this into some sort of issue with the supply chain system is kind of ridiculous.
Also, if you actually look at the US right now, the idea that American companies would be manufacturing anything full throttle is beyond ridiculous. China in fact manaaged to completely lockdown Hubei province in a way the US can never dream of, which allowed them to continue their industrial manufacturing, and actually be able to supply masks to states and hospitals around the country (of course, life would be a lot easier if the federal government coordinated the procurement so states weren’t outbidding each other only to have the Federal government pirate their supplies to ha d off to private entities that then resell it to the same states for even more...).
It seems like this is what the Defense Production Act is for? It's not like GM, where invoking the act doesn't seem to speed anything along because they don't make ventilators normally, and have to spend several days retooling their factories. In this case, you have a manufacturer that has excess capacity and is simply refusing to use it.
Also, how is this supposed to make people trust American manufacturers any more than the Chinese? The Chinese are actually _making_ masks at full capacity and exporting them... meanwhile, our own homegrown industries are busy navel-gazing and feeling bitter about some past slights.
A solution for the future would be be high import taxes for products of "national interest".
If Goldman-Sachs wanted to stockpile masks made at 10 cents each and take on the risk of never being able to sell them, great. I cannot fathom how someone running a non-diversified business could possibly make such a choice.
They own their plant, as 30 seconds of research show. https://www.prestigeameritech.com/press-releases
They've been in the business long enough and through at least one pandemic before (see below) to make this something other than a "belief" issue. Even small companies can build reserves if their business model works.
Prestige Ameritech's sales have doubled in recent weeks,
forcing the company to maintain a seven-days-a-week
production schedule to keep up with demand.
Even if he could predicted have it, he still couldn't sell them for more than $.10ea due to price gouging, so your whole point is moot. There's no insentive for him to take the risks you're suggesting.