Since the early days of Covid-19, we’ve heard lots of inspiring stories about businesses, especially manufacturers, stepping up to provide critical supplies. What we’ve heard less about is how (or if) those manufacturers will hold their own now that overseas factories have largely come back to life – you know, the part of the story where you’d expect the imported products to reestablish their dominance with cheap labor and low prices.
This is the story of two Ohio manufacturers who are giving that tired plot a twist. Buckeye MaskCompany and Stitches USA are ramping up to produce up to 100,000 cotton face masks per day and holding their own against overseas competition, so far, using technology that enables them to produce high-quality products and competitive prices.
How they’ve done it is not only another inspirational Covid story, but also a parable of reshoring, illustrating how a coalition of entrepreneurs, government officials and industry experts can quickly come together to establish state-of-the-art factories capable of competing – and winning – in markets long dominated by low-cost foreign factories.
A Reshoring Roadmap
Shortly after the initial Covid outbreak in the US, more than 2,000 manufacturers in Ohio alone began producing masks to curb severe shortages among frontline health care providers and other essential workers. We were working with dozens of sewing companies hand sewing masks, and had cobbled together a capacity of about 200,000 mask production per week across the entire state at prices under $3/mask. But none had the capacity to meet the market’s voracious need without cutting corners on quality, or to match the volume Asian factories were producing before Covid halted their production.
The only way to achieve that scale was with technology. So a group of Ohio manufacturing leaders and organizations, including MAGNET, the nonprofit consultancy that I lead, and the Ohio Manufacturers’ Association went looking for automated sewing equipment that could be customized to make masks. We found it in Germany, made by a company called Durkopp-Adler.
Durkopp-Adler’s sewing technology uses a system of conveyors to move materials down the production line, ensuring the mask components are moved into precisely the right position and geometry, at exactly the right time. In the past, only well-trained humans could do what the machines do. But there aren’t enough well-trained humans to meet the Covid -fueled demand for masks, and even if there were, the equipment can produce masks at a rate exponentially faster than manual production.
The Germans agreed to design and produce the machines we needed. Next we needed someone to buy them. Even with soaring demand, it was a tall order: the price for fifteen machines, capable of producing 100,000 masks per day, would run to about $3.5 million. That’s the kind of number that scares off a lot of risk-averse manufacturing owners and leaders – which is exactly why they’ve been unable to compete with factories overseas.
To help risk-averse manufacturers see the light, our group built out financial models showing how a factory that installed 15 of Durkopp-Adler’s automated sewing machines could profitably make 100,000 masks per day.
Yet we couldn’t remove all the risk; the manufacturer who bought the mask-making equipment would have to shoulder the cost of the facility, the materials and the staff to run the equipment. We needed manufacturers with the entrepreneurial vision and will to take on that risk.
Enter Stitches and Buckeye. Stitches USA is an Ohio-based flag-maker; its high-end products are mostly made manually – but, crucially, Stitches’ parent company is a highly automated maker of automotive components. “Beating China at its game has been my mission for over twenty years – and we have done it by investing in automation technology,” says John Miller, Stitches’ CEO. “PPE is no different. With the right technology, we can compete with offshore and produce the product we need right here in Ohio.”
Buckeye Mask is a startup formed by three experienced manufacturing entrepreneurs in Cleveland. Carla Macklin had launched her own sewing factories; Chuck Grossman owned a protective clothing and gear maker called National Safety Apparel, where the third partner, Sal Geraci, was chief operating officer. Grossman and Geraci had experience with automation on their shop floors, and Macklin had spent a lot of time reading up on the technology. Still, for her, as for so many veteran manufacturers, automation remained “an abstract concept in my mind,” she says.
Taking A Risk on Technology – With A Little Help
But Macklin is an entrepreneur – she didn’t let inexperience stop her. And, anyway, German technology that had been conceived of (and never before built) for mask-making was unlike anything either any of the manufacturers at Stitches or Buckeye had worked with before. The need for masks would stretch into the millions every week, and they saw that for what it was: an opportunity.
To seize it, they got critical help from the state of Ohio. First, the state’s Development Services Agency offered grants aimed at helping ramp up domestic PPE production. Stitches got a $500,000 grant; Buckeye got $30,000. Those funds went to purchase the equipment from Durkopp-Adler, which then sent its technicians to Ohio to train the 15 workers hired to run the machines.
Second, JobsOhio, the state’s private nonprofit economic development organization, stepped up with an innovative approach to financing the equipment. It provided JobsOhio with an upside: if the mask-making ventures succeeded, the money would be recouped. And it protected the manufacturers’ downside: no repayment of the funding if the market for masks collapses.
By August 10, less than three months from when the idea was hatched, both facilities were producing masks. They will soon be capable of making more than a million per month, selling them at prices comparable to the masks produced overseas and considerably lower than the handmade masks produced in the early days of the pandemic. In a statement, Ohio Governor Mike DeWine calls it “a great win for Ohio,” demonstrating “how manufacturers are stepping up to meet the challenges presented by Covid -19.”
It certainly is – but I also believe it’s more than that. The mask-making venture shows how US manufacturers can compete on price and quality with their foreign counterparts. There’s no reason this story can’t be replicated anywhere in the country, for anything that can be made and sold here.
Replicating it won’t require a pandemic. It will require embracing automation technology that can make American factories cost competitive. It will likely require industry advocates to identify market opportunities and build coalitions across business, nonprofit and government sectors. It will require government leaders to smooth the path by removing risk – with grants, loans or other financial incentives. And most of all, it will require entrepreneurial manufacturers willing to take risks on new technology and new markets.
Bringing all of those actors together, with the right technology and the right incentives, is really all it takes.