Tight supply for virus gear costs US states in billions


Ray Bellia had good business before the coronovirus epidemic. He topped $ 4 million in annual sales from his New Hampshire store that specialized in protective gear for police.

They then ask a buyer from the state of Massachusetts if they have anything that can protect people from COVID-19. He did as it happened. He went on to sell the state’s 300,000 disposable masks for 97 cents.

“Since that time, it’s just insanity,” said Belia.

Mask. Gown. Gloves. Glasses. Sanitizer Coveralls. Thermometer. Belia has sold it all, and not just to Massachusetts. From Maine to Hawaii, many other states, counties, cities, colleges and schools have lined up to shop from it.

However, after the coronovirus shutdown, countless other businesses developed Belia’s stores – Body Armor Outlets – into one of the nation’s 20 largest suppliers of personal protective equipment, according to a nationwide analysis of state procurement data by the Associated Press.

The AP exceeded $ 7 billion in purchases this spring for high-demand medical devices such as personal protective equipment, or PPE, and ventilators and infrared thermometers.

The data, obtained through open-record requests, is the most comprehensive accounting of how many states were buying, what they were spending, and what they were paying during a chaotic spring when inadequate nationals The store Left state governments are scrambling to get supplies. Most purchases occurred outside of normal competitive bidding processes, and many states lack transparency The administration of governors made it difficult for the public – and even for MPs – to see how taxpayers’ money is being spent.

Spending data cover the period from the emergence of COVID-19 in the US to the beginning of summer in early 2020. Some governors The early personal protective equipment market was described as the Wild West, where supplies often went to the highest bidder, even if they had already been promised to someone else. States instituted their own fraud tests, rejecting masks that failed to meet safety specifications or lacked medical labeling.

In some states, general recordkeeping went its way. Idaho did not initially state how much was paid for each mask and gloves for each supplier. Senior buyer JP Brady of Idaho’s Department of Health and Welfare said this is because state buyers were trying to buy larger quantities than hundreds of competitors.

“It was chaos, epidemic,” Brady said. “Neither of us knew what we were doing.”

Although states have spent millions more this fall, as COVID-19 cases have increased again, the initial protective equipment of the jitter has been reduced as production increases and supply chains improve.

California spent the most during the initial months of the epidemic – at least $ 1.5 billion in AP figures – followed by Texas, Maryland, Massachusetts and Washington. New York spent several hundred million dollars on protective equipment and ventilators through November, although it is unclear how much happened in the spring.

New Jersey and New York provided total figures but not specific details About their purchase. New Jersey’s Department of Health said it would be too “disruptive” for agency operations to do so, and New York repeatedly postponed a response.

AP data shows that millions of dollars came into business from states that had never sold personal protective equipment before, including a Chinese electric vehicle manufacturer, an American tribal organization and consultants with international connections. Idaho officials bought 50,000 N95 masks from women’s clothing store In Los Angeles, and Ohio bought 3 million gowns From an in-state marketing and printing company. In both cases, businesses used their connections with Chinese manufacturers.

Traditional safety equipment suppliers also saw PPE sales increase, offsetting their losses from other products amid a sudden slowdown.

But the bursting of states was not a boon for everyone. When states rescinded the order, some businesses tried to supply protective equipment, causing millions of dollars in damage. Which failed to meet aggressive delivery deadlines or strict product specifications. Businesses selling PPE faced a treacherous market, including a backlog of foreign manufacturers, shipping delays and numerous intermediaries.

All of them increased the prices paid by the states, costing taxpayers millions of dollars.

States paid an average cost during the spring of about 14 cents per glove, a four-fold increase in pre-epidemic prices. But AP’s analysis found that more than half the states at times paid some sellers more than this: up to 50 cents per glove.

Before the epidemic, an N95 mask that filters small particles can cost around 50 cents. According to AP’s analysis, this spring, states paid an average of $ 3. Some states paid more than $ 10 a mask to get them quickly.

In mid-March, Louisiana paid from the Gray Wolf Safety Group in Broussard for 5,000 N95 masks at $ 57,450 – $ 11.49 each. Gray Wolf owner Sean McClain said that to fulfill the state order, he would have to buy whatever his rivals had in stock. Some of the masks he found were made for painting, others for welding. Some came with special breathing valves, while others did not.

“All the cheap masks that were N95 were already gone,” McClellan said. “So I basically buy expensive ones that were left over.”

Then he marked the price a bit more and reintroduced them to the state, making a couple of dollars per mask.

“I’m not price-gazing,” McClellan said. “I have to make something, and I have to pay my seller something.”

Other businesses charged states higher prices that offered similar explanations. Go Green Solutions Inc. in South Grafton, Massachusetts sold several thousand N95 masks to its home state in early April for $ 11.25 to $ 11.50. The price was a product of limited supply and high demand, resulting in only modest profit margins, manager Jim Fisher said.

“Usually, if you got inventory with some of your suppliers, then you had to shop right. You can’t wait, “he said,” because within an hour, it will be gone. “

States competed with each other, with the hospital system, the federal government, and even other countries searching for and purchasing medical gear as the virus began to spread.

Pressure to obtain protective supplies Some led states to unusual sources. Minnesota purchased 2,300 waterproof gowns from Uder Tech Inc. to feed the cows. The price for the special gown was about $ 46 when the goods were included – the average price that states were paying for medical gowns this spring. Before the epidemic, some health care systems were able to purchase disposable gowns for about 40 cents.

“They wanted to achieve anything at that point to help protect health care workers,” said Dana Casto, business manager at Rosemount, a Minnesota-based dairy supply company.

While some states paid a premium for small orders from local suppliers, their purchasing agents scrambled to secure large amounts of protective equipment, most of it manufactured in Asia. This provided an opportunity for companies to enter the protective equipment sector.

This spring, the largest supplier of personal protective equipment to tell it had not sold a single mask before the epidemic. But from mid-March to early June, Chinese electric vehicle manufacturer BYD sold $ 930 million worth of masks and sanitizers to the states. Two-thirds of it went to California, where Democratic Gov. Gavin Newsom was initially criticized for keeping the details of his “bold and big” deal secret, which paid BYD $ 3.30 for every N95.

Like the leaders of some other states, Newsom bypassed the traditional procurement process of publicly urging vendors to bid competitively, which could take weeks or even months. Some state lawmakers responsible for the budget complained that Newsome pushed him out of the loop.

Washington, which was one of the first states to file coronovirus cases, purchased millions of N95 masks from BYD and tens of similar KN95 masks at prices ranging from $ 2.58 to $ 4.02. According to AP’s analysis, the rate of purchasing masks per COVID-19 among its residents helped Washington rank among the top states.

BYD also sold to Connecticut, Massachusetts, North Carolina and Texas after a period covered by APD’s data and signed an additional $ 316 million contract with California in July. By then, the company’s price charged to California had fallen to $ 2.13 per N95 mask and 20 cents per surgical mask, barely a third of the spring rate.

During the first quarter of 2020, when China was in lockdown, BYD reported a 35% drop in operating income. That’s when the company’s chairman Wang Chuanfu started making masks and sanitizers. BYD was reborn to achieve 12% profit through the first three-quarters of the year. Its stock price fell from $ 5 to $ 20 in January, although it is unclear how much it owes to new protective equipment production vs. sales of electric vehicles and other products.

BYD North America senior communications director Frank Girardot compared Chuanfu to an inventor “on the lines of Thomas Edison” who joined the personal protective equipment business for philanthropic reasons.

“They decided in January that this was something the company had to do to serve the world,” Girardot said.

BYD’s largest US investor is Berkshire Hathaway led by Warren Buffett.

Fastenal Company and WW Gringer, two industrial suppliers, also saw increased PPE sales. AP’s data include $ 99 million in personal protective equipment sales in 32 states by Fastlane, and $ 50 million in protective equipment sales to 40 states by Gringer, which said its profit on those sales was increased freight. Was squeezed by previous contracts with costs and low prices.

Many companies in AP’s data set are not publicly traded and thus can keep their financial data private. For example, one of the biggest deals is a $ 179 million order of 20 million gowns from Bucho LLC of California. The New York-based company has a bare-bones website that describes it as “a brand and product development think tank”. Some other details about the company are available.

When reached by telephone, Buko owner Rashmi Budhram refused to comment.

However, others were willing to explain how personal protective equipment sales provided a lifeline at the onset of the epidemic.

The leaders of Grand Traverse Economic Development, a commercial investment unit for the Ottawa and Chippewa Native American tribes in Michigan, decided to venture into the protective gear business after a shutdown affected the tribe’s other business ventures. The organization quickly became New Hampshire’s top PPE supplier, selling the state nearly $ 28 million worth of masks, gowns, coveralls, face shields and wipes this spring. Business Development Director Lauren Tucker said it made profits of around 10% to 15%.

“It helped us keep our doors open, hired and engaged our employees fully, and we thrived during the epidemic,” she said.

Bellia, president of Body Armor Outlets, also expanded. AP’s data for the spring include more than $ 50 million in sales of personal protective equipment by Salem, New Hampshire, states to the company. But Belia said that his total PPE sales this year are $ 120 million – a nearly thirty-fold increase from his company’s total sales for 2019.

Due to the success, Bellia increased her salary from eight to 12 employees. And as he continued to sell body armor, he cleaned almost all of them from his warehouse to make room for coronovirus protective equipment.

“While living in a heartbeat, I would trade it to go back the way I think it is a very good thing for us.”

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Lasett reported from Jefferson City, Missouri, and Santa Cruz, California. Associated Press data editor Meghan Hoyer contributed to this report.

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Fassett is a core member of the Associated Press / Report for America Statehouse News Initiative. Report for America is a non-profit national service program that puts journalists in local newspapers to report on undercover issues.

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