Embedded Files
By Patricia E. Moody, The Mill Girl at Blue Heron Journal
Copyright 2021, all rights reserved, excerpted from the book American Reboot!(tm)
10/28/2021 UPDATE:
New lines installed in new production area - in record time - doubles glove output.
7/24/20 UPDATE:
Gloves re-shored!
One of two remaining US glove manufacturers has great news! Just awarded an 8-figure contract by the USAir Force for US Health and Human Services for 500M - up from 25M - gloves per year, Renco's Colebrook, New Hampshire facility, American Performance Polymers, is exploding, booting up to meet demand. Currently at two shifts, six days per week, 85 employees - up from 12 - are working 12 hours per day. CEO Rich Renehan and CTO Rick Tillotson are adding 70,000 square feet of temperature-controlled manufacturing space with ten new lines to meet demand, with contractors on site preparing the space for the expansion.
Renehan and Tillotson have assembled a team that includes Couture, a Berlin, New Hampshire firm to fast track the building design, while Nordic Construction Services LLC, also out of Berlin, will help with the build-out of capacity. All the while, APP’s main facility continues mid-pandemic to crank up glove production.
According to Renehan, who founded APP in 2017 after his father Bill Renehan created Renco, the Reboot! (sm) came just in time - "The US is facing unprecedented demand for medical exam
gloves with prices 5 times their 2019 levels. This added capacity will help re-shore an American industry in the region where the "Pilgrim, " the original, patented nitrile exam glove was created by Neil Tillotson in 1991."
Renco’s growth strategy is to re-shore. “We are executing further expansion across the United States,” he says, “to help ensure the US is sufficiently stocked for pandemic responses and to meet increasing market demand both domestic and abroad. And we are not stopping there - we have been asked to do more and I think we should. The strategy will continue to unfold over the next month. We accomplished what we intended to do. We grew from under 20 employees – we’ll soon be up to 200. And we’ve brought in some great additional resources to help us move faster, including high speed dip line experts. “
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THE GLOVE STORY
When fifteen year old Neil Tillotson left his Beecher Falls, Canaan, Vermont home in 1913, he carried with him a tough, inventive spirit that took him to the top of US
ingenuity and manufacturing brilliance. But now, stricken with hundreds of corona virus deaths nightly in big city hot spots accompanied by growing rural pockets of the disease, one of Tillotson’s biggest and simplest designs has become critical to this nation’s survival, nitrile gloves.
Tillotson’s personal success story unfortunately highlights the sad off-shoring obsession that drove US manufacturing into decline as once booming electronics, plastics, medical supplies and automotive manufacturers’ hollowed out supply bases struggled to maintain a tenuous foothold in domestic markets. The transfer of manufacturing’s wealth – not just profits, but infrastructure, the systems and equipment and layout and trained labor force - seemed unstoppable. Unstoppable that is, until an unknown virus landed, grabbed a quick foothold and quietly took over.
Renco and American Performance Polymers (APP)
When the 2019 corona virus pandemic began, there were only two remaining nitrile (not natural rubber or latex) exam glove factories in the United States - the Colebrook, New Hampshire APP plant, and Showa Best Gloves in Fayette, Alabama, both facing continued loss of domestic demand and pressures to meet China and Malaysia’s prices. Now, the United States’ growing shortage of gloves and other essential containment and contamination equipment far exceeds US manufacturing’s production capabilities. In fact, the US continues to import these products at inflated prices while it looks at how to meet domestic demand - witness the embarrassing import “gift” of one million K95 uncertified masks from China.
Plan B, Reboot! (tm)
The US’s preferred Plan B - in-stock and immediately available emergency medical equipment and supplies – not imports - demands that the US ramp up very quickly to meet increased demand by growing domestic manufacturing with new production lines, workers, raw materials, and even factories. Although many manufacturers have signaled strong intent, not all big producers are light and flexible – or desperate enough – to re-design their systems. Sure, anyone with a sewing machine can start mask manufacturing, but more complicated solutions for ventilators and detection devices are slow in coming. So while new solutions are appearing weekly and new products – super gloves for instance – have become real possibilities, US customers, including federal and state governments, continue to import critical products at double or triple the price offered in pre-pandemic.
Not surprisingly, pre-corona virus, HIV, Ebola and other crises forced the US to consume most of the world’s exam glove production capacity! According to APP’s CTO Rick
Tillotson, “Our own medical institutions enabled the growth of exam glove factories in Malaysia, Thailand, Indonesia and China, usually with the direct support of our own government, so that offshore costs and prices went well below those of domestic producers.” Like so many other off shored US industries, glove-making had gone global. “There are now 250 glove-dipping lines in the Asia Pacific for every 1 glove-dipping line remaining in the US. Eventually,” says Tillotson, ”the three nitrile synthetic latex producers located in the US that met US nitrile glove demand all shuttered their plants or moved them to Malaysia or China!”
It didn’t happen overnight
Like the virus’ spread, our manufacturing dilemma was a long-time coming - not an overnight shock to the system - whose roots extend all the way back to pre-WWII. By 1942 the US was cut off from 90% of its supply of natural rubber used to make tires and other products. CTO Tillotson recalls that the US challenge reached the White House, but this time we had a two-fold strategy, and that meeting launched a new, synthetic rubber industry:
1. President Roosevelt called together tire and rubber goods manufacturers, the major oil producers and refiners, and representatives of US regions that produced oil, wheat and corn, along with scientists and researchers that had been studying the creation of synthetic polymers based on oil or alcohol feed stocks. What came out of this collaboration was the Defense Plant Corporation that eventually built, financed, and sold fifty-one strategic facilities for the production of synthetic rubber and the necessary chemical feed stocks. The new product generated by this government/private collaboration, GR-5 (Government Rubber), is still used to produce tires, although not so much in the US! “Even though the original raw materials - oil, corn, wheat - are plentiful in the US, the manufacturing derived from these commodities has been “globalized,” and our production infrastructure abandoned or demolished - not even mothballed for future use!” says Tillotson.
2. Roosevelt deployed rubber expert Neil Tillotson to look for other sources of natural rubber in Central and South America. Tillotson already had a long history of manufacturing rubber products, including his invention of the latex balloon in 1931; later, the rubber coated work glove in 1946, the latex exam glove in 1964, and – at the age of 92! – the disposable nitrile glove in 1990.
The Tillotson family business
Tillotson learned that any terrain suitable for growing coffee would also grow rubber. Firestone and other manufacturers built plantations in Central America to deliver natural
rubber to the US by truck or rail, thereby avoiding ocean shipments vulnerable to enemy subs. His factory in Massachusetts made weather balloons for the army and ink sacks for Parker pens. After the war ended Tillotson continued his work with natural rubber, making natural latex toy balloons, play balls, swim caps and rubber girdles. The Vermont native built new factories including a factory in Georgia to produce his rubber-coated Best Glove ™ work glove, and hired and trained thousands of skilled workers, The business continued to grow in size and variety as daughter Janet developed the coating and backing for broadloom carpet at a latex facility in Dalton, Georgia. Later, son John developed viewing hoods for Raytheon’s radar terminals, and a rubber cover for windshield wipers, and then moved to Dalton to build a carpet dyeing business where he also developed synthetic rubber foam and its application system.The material technologies transferred into medical applications as Neil, having developed a PVC vinyl play ball for Woolworth, morphed the material into clinical uses. His other inventions pioneered medical and manufacturing breakthroughs – the exam glove in the early sixties led to a new machine to produce the first latex exam glove from a dip manufacturing line.
The Wizard of Dixville Notch
Post-WWII expansion continued as Tillotson grew the US presence in what he knew had become a critical industry. In 1954 Tillotson, nicknamed The Wizard of Dixville Notch for his rescue of the bankrupt Balsams Hotel, installed a second balloon factory there. The Balsams provided the space he needed in a large underground garage along with a largely farming and logging workforce. Son Rick Tillotson recalls, “The secret to this plant’s economic success was the combination of a seasonal and weather dependent hospitality business, with a 24/7 rubber factory run by his sons, hidden beneath buildings in back of the resort.”
Soon, the Balsams’ factory was producing 75% of the latex exam gloves used in the U.S, until 1989, when large AIDS-driven demand for exam gloves prompted the building of over 200 new factories around the world. At that time employment had grown to include approximately one thousand North Country residents at the hotel and the factory. Even then no one could anticipate the sad and frightening result of the US’ rising off-shoring obsession.
Tillotson worked almost until his death at age 102 in 2001, but ten years later the Trustees of his estate closed and sold the Dixville enterprises. It seemed like the end of an era…
But three hard years later, son Rick, the current CTO who had operated the Dixville factory with his brother Tom since 2004, bought a neighboring 100,000 square foot building, enabling him to relocate production and continue manufacture of gloves, balloons and medical droppers in Colebrook with his Canadian partner, Alain Boisvert.
The real and terrible impact of outsourcing
With the completion of upgrades and validation of its process, the reborn company, American Performance Polymers, began full 24 hour per day glove production in the spring of 2016 with 17 workers. But by the end of June, their distributor was unable to sell the gloves. Colebrook was forced to stop production. Although management tried to find new buyers, it was over… or so it seemed.
Tillotson summarizes the US’ position on this critical and essential medical product:
The US is solely is reliant on China, Malaysia, Indonesia, and Thailand to be the industrial base for nitrile gloves…
The federal government purchases all their nitrile gloves from China, Malaysia, Indonesia, and Thailand, with no reciprocal trade agreement with the United States.
Although the $6.5B annual sales of disposable nitrile glove market was invented and launched by American entrepreneur Neil Tillotson, twenty years later the market was entirely controlled by China, Malaysia, Indonesia, and Thailand.
The US needs to increase domestic glove manufacturing because China, Malaysia, Indonesia, and Thailand will not support the warfighter or a U.S. national emergency, should Asia encounter a devastating virus pandemic
Gloves entirely manufactured in China, Malaysia, Indonesia, and Thailand are not Berry Amendment or Buy American Act compliant. The Berry Amendment mandates that the US Department of Defense purchase items manufactured in the U.S. from domestic raw materials in order to secure the industrial base that can support our warfighters in time of conflict.
By 2017, despite orders for a new glove product line added to American Performance Polymer’s continued strong sales of medical droppers and a high margin new product - nitrile and neoprene sleeves for glove isolation boxes used by labs in the US and around the world - the note was called.
The company teetered in insolvency, losing customers and unable to invest in new projects or workers. And in 2018 Renco, a long-time friend of the Tillotson family, purchased the operations.
The New Generation
The Colebrook team led by CTO Rick Tillotson, began, post Renco acquisition, the reboot. Tillotson brought in new products to be developed and manufactured in Colebrook and, most importantly, expanded throughput as well as the workforce. “Our production will be 500,000 gloves per week with our existing glove machine, which we expect to double in September when we start the second of nine additional glove machines that we are building ourselves.
As the corona pandemic arrived, causing a horrifying shortage of gloves and other PPE (personal protective equipment), Renco CEO Richard Renehan took his message to
government and non-government buyers: the Colebrook factory could keep US front-line medical personnel and care givers safe with its existing glove inventory and new glove production capacity.
Renehan, who described the glove frenzy as “the Wild West,” became increasingly frustrated, however, by the old school purchasing cycle of sample submissions followed by weeks of negotiations and POs, time better spent on factory production. But when an order for nitrile exam gloves from a large laboratory supply firm arrived at the Colebrook factory, it was time to flip the switch. Colebrook was committed to triple production from 40 to 144 hours per week.
Reboot!
The Colebrook factory had to immediately go to a 24 hour per day continuous, six days per week production schedule with twenty workers. Although packaging and production support would continue at five days per week, the six day machine production would be divided into four shifts. The first shift was scheduled to run from 6:00 a.m. to 6:00 p.m. on Monday, Tuesday and Wednesday and the second shift would continue production between 6:00 p.m. and 6:00 a.m. on those same days. The third and fourth shifts would similarly divide the 24 hours of Thursday, Friday and Saturday. Each of these shifts would work a total of 36 hours per week, allowing the other four days of the week for off time. This was how the Dixville factory had divided its 24 hour glove manufacturing, but demand also required shifts to work every other Sunday.
Renco CEO Renehan looks at the Colebrook site as a model for the US' Reboot. “By January we will have five lines bumped up to 40 workers, with more coming along with our new products.”
The Renco Reboot!
1. New lines
2. More workers and training
3. Raw materials in stock
4. Safety equipment for workers
5. Distancing on line
6. More shifts
7. New Products
Production increases
Rick Tillotson sees these changes as necessary and welcome.
“We are ready to once again make protective barrier gloves. We have a core of workers who worked for many years in the Dixville factory, and they know the process. Plus we have added a new Human Resources team member to bring in and train our new workers.”
Pandemic hiring “curbside”
But hiring and training new workers during a pandemic, like so much of “ordinary practice” that industry used to do, has changed. The new HR manager posted employment applications in folders in a black mailbox out front which applicants can pick up, take home, complete and return in a sealed envelope to the same mailbox. HR then calls to acknowledge receipt and answer any questions. She will also inquire about any recent travel and risks of infection. When the hiring decision is made, the next phone call requests information for W-4 and I-9 forms and schedules the training start date. Training lasts one week.
All employees are properly gloved and masked and line layout has been redrawn to accommodate correct distancing “We want to help our fellow Americans, but to do this, our workers need to stay safe,” said Tillotson. “We have been lucky in our communities so far, but we must all act as if our community was Wuhan, if we are to continue being safe. Wash your hands, wear gloves and wash your Gloves.”
Although CEO Renehan has found few moments for reflection among the massive changes and opportunities, he does recognize that the US contamination and containment industry cannot return to its pre-pandemic roots. There are too many uncertainties and too many global moves to permit that.
We asked Renehan and Tillotson the three questions about their pandemic opportunities and challenges.
1. Has the mission itself has changed because of the pandemic?.
We asked about supply chain issues. “ We are not that worried, “ Renehan replied, “although we could see a spike in raw material cost. And because of the massive increase in usage, many competitive Asian factories are already putting in hundreds of new dipping lines, so we project at some point that there will be a glut again.”
How long does it take to start a new line? “Normally, eight to twelve months, but our Colebrook factory can do it in four months – they are flex lines, so we can make a variety of products on the line. That means it’s easy to change color, sizes, shapes, thickness, on the same line. The Colebook lines are more adaptable in dipping. Not to say that we won’t be adding high capacity lines, but Colebrook is number one in this type of flexible production. “
What will it take to put 10 factories across America? “It’s going to be a contract from the government. American Performance Polymers is looking to boost the industrial base by adding five to ten factories across America. “We envision big high capacity dipping lines with masks nearby, along with sterilization of gloves and medical devices. Even before Covid 19 one of our goals was to expand. But the main push has been medical exam gloves and we also make various polymers.
Boots on the ground
Renehan sees the long view, a reconfiguration of an US essential industry. “Eighteen months ago we purchased the factory from the founders. In fact because one of the founder’s sons, Rick Tillotson, works with us as the factory manager, we are still very connected to the principles. This week we also signed a deal with Thermal Fisher Scientific to help us meet the demand spike. It’s out of control.”
On May 19, 2020, when northeast overnight death rates still totaled hundreds, Renco inked a multi-million dollar deal with Partners Health Care, the group that includes Massachusetts General Hospital and Brigham and Women’s, to provide 10M/exam gloves per month for six months. “We’re seeing,” says Renehan, “with Fisher Scientific, McMaster Carr of Chicago, and MSC the beginnings of the movement to domestic sourcing. We’re looking at solid distribution arms that will warehouse and rep product – boots on the ground to serve thousands of customers. It’s what we need to see.”
Skyrocketing costs and crazy demand
But the medical equipment market has taken a new unsettling direction. Renehan reports, “Costs are 25% – 40% higher. We do four billion gloves a year in the US for medical and industrial uses, but now demand is going crazy and there is just not enough capacity. The Colebrook plant was doing two shifts, but now we’re seeing panic buying. Panic buying means that buyers are not only attempting to seal up all available product, but they are also attempting to import even more stock for US customers.”
The results of all this frantic buying activity are alarming, says Renehan. “Buyers are flying in $70 – 80 per case shipments from offshore. Compare that to a clean room customer accustomed to paying $100 per 1000 pairs of industrial gloves. The healthcare industry, which was pre-pandemic overcapacity in the Fast East, where prices dropped to $40, $50 or $60 per thousand gloves, is now looking at $200 per thousand units. Makes us wonder where the demand is coming from!”
Government response to the capacity challenge
Nevertheless, the company has been careful. “Even with the Fisher deal in the works, it became obvious that Colebrook needed additional capacity. We even proposed a deal to the Commonwealth of Massachusetts, but it’s been slow. What we need is a team that will expand capacity five or ten times in the next six months.” Although Renco will add lines for exam gloves, still, Renehan wants the US to move faster. “I have to say I am frustrated. It feels like the government commitment to manufacturing is lip service.”
Even with Renco in the expansion mode, it is a steep hill to climb. “We are frustrated by the government’s slow response.” Although Renehan’s team talked with FEMA (Federal Emergency Management Agency) three or four weeks ago, and FEMA recently came back with an order, costs are now lower than China’s. “I believe government funding should give glove supplies a priority. We get the feeling that buyers are still buying only on price, and not availability or transport times. If you buy based solely on book price, where’s the commitment to US or New England manufacturing and the US pandemic victims?” For example, although the Renco proposal according to Renehan cut prices by 15% for an estimated eighteen thousand gloves in nine forty-foot containers, with prices that undercut China’s, the government buyer failed to respond, and missed the opportunity.
On the upside, management is now continuously working at the Colebrook factory to improve health and safety conditions with masks, signage reminders, even with lines broken up and rearranged. “The pace has been extremely pressured as management is bringing in and training new people to increase from one to two shifts in less than 4 weeks, with some shifts doing 12 hour stints. Our people, many of whom drive from over an hour away, are dedicated. They understand the crisis and they want to help.”
Gloves, masks and test kitsDuring this crisis the US still has a couple more solid options for healthcare equipment, and one, says Renehan, is refurbishment vs. disposal. “Gloves can be refurbished and rendered sterile and completely reusable, and this is a recommendation we have made to government healthcare officials.”
The test kits shortage
The company has also been looking at rapid testing because Renehan believes the number of false negatives (estimates range from one quarter to one third of all tests) needs to be fixed. “We know we can get test kits from China for less than $10, but unfortunately we got a tepid response when we laid twenty units in front of government buyers. These kits should be tested and copied, just like the Chinese do to us, because we need to go to blood test kits, not swabs.” Renehan sees the need, and the team is moving ahead on evaluation of about sixty test kits for which they are hoping to see “a pretty high, 95% accuracy rate. The need is huge and I don’t think we have moved fast enough” he says, “to address the critical testing problem.”
Refurbished masks
In the area of masks, Renehan boasts “a great network of smaller manufacturers that can together produce 500,000 refurbished masks per day.” Developing the refurbishment concept, however takes money, either from the government looking to support both small businesses and public health, or private equity. “We will need more funding to proceed. We are not talking millions here, more like a few hundred thousand with a projected return on investment of 10 - 20% We have, unfortunately been frustrated so far by lack of government interest.”
Out-maneuvered by government bureaucracy
It has become clear to Renehan and others that the government bureaucracy hasn’t moved fast enough to keep up with the pandemic. Despite that burden, the CEO still believes in their mission. “Glove manufacturing is an honor, an operation that requires dedicated workers. There are no minimum wage pay scales in our factory. Our benefits are top notch and we do regular training. We are ready for this challenge, but the government needs to move faster. The idea that it takes buyers four weeks to process a purchase order for a factory that is only five hours away producing at lower cost than the Far East makes no sense….. “
Question 2: What should US companies work on now? R & D, lean manufacturing methods, labor, robotics, IT, supply chain, or something else?
Renehan: I would say at this point the need pretty much dictates our response. For us, we knew we had to work on adding shifts to raise capacity. And we will be adding more products to fight the pandemic. That means we will be working on ramping up the factory to meet capacity needs for regular and new products.
Tillotson: Speaking to the supply chain question, The only supply chain issue of concern is that there are no longer any facilities left in this country that can make the polymer used to produce nitrile gloves. To make our gloves we must bring in raw material from Italy or Brazil. So we are dependent on ocean shipping times. As the polymer can be damaged by freezing, we also have transportation issues during winter, adding risk proportional to the length of the supply line.
And we are building additional dipping machines ourselves to increase capacity. For the new machine we are now building, one of nine, with the availability of parts and the current crew size, we expect it will take four months, but we are working to cut that time. Basically, the build time is dependent on availability of some parts, like the conveyer chain. What it comes down to is the number of workers available to cut and weld steel, run wire and plumbing and complete the assembly of a very large machine - 80 feet long by 13 feet wide and 15 feet high.
Question 3: What do you think will happen next?
Renehan: I hope what happens next is that US plants meet the capacity challenge and even bring plants back to the US. We have a plan in front of government decision makers that will work, a proposal not led by big distributors like Cardinal but by small and medium-sized producers. The plan is to collaborate and eliminate backroom deals and inflated prices. Right now I would be happy to launch up to ten factories across America - local production to meet local needs.
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Patricia E. Moody
FORTUNE magazine "Pioneering Woman in Mfg"
Industry Week IdeaXchange Xpert
A Mill Girl at Blue Heron Journal, on-line resource for business thought-leaders and decision-makers, https://sites.google.com/site/blueheronjournal/,%25C2%25A0%25C2%25A0tricia@patriciaemoody.com, patriciaemoody@gmail.com, pemoody@aol.com
COPYRIGHT 2021 ALL RIGHTS RESERVED
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