Detroit steps in again to offer manufacturing might in coronavirus fight
RCO is one of 600 Michigan companies heeding the call to assist in the battle against the deadly COVID-19. The pivot to medical devices fills a desperate need for gear as nurses and doctors continue to perform their duties in deteriorating conditions — and for some companies is a way to keep themselves essential and keep operating.
Last week, the state received a delivery of equipment from the national emergency stockpile, including 43,000 face shields and 95,000 N95 respirators, but it’s nowhere near enough, Gov. Gretchen Whitmer said in a press briefing on March 23.
The medical manufacturing also provides a stopgap for at least some of the auto industry’s labor force from being laid off. And, if and when the virus releases its death grip on Michigan, its citizens and economy, many of these companies could continue to thrive in the manufacturing of medical gear, according to experts and executives.
Mobilizing the ‘Arsenal of Health’
Ford picked up an open source face shield design posted online last week by Lennon Rodgers, director of the Engineering Design Innovation Lab at University of Wisconsin-Madison and sent it around to suppliers.
Ford’s wholly owned subsidiary Troy Design and Manufacturing in Plymouth intended to produce 75,000 masks last week for local hospitals.
RCO is directly contracting with McLaren Macomb Hospital.
“We’ve been collaborating with McLaren up front,” Simek said. “We believe we have a solid product for the market. The demand is so high right now.”
The state of Michigan’s Emergency Operations Center is helping connect Michigan’s manufacturing companies with the state’s hospitals and community health departments to manage the need. The Michigan Economic Development Corp.’s Pure Michigan Business Connect platform has been used for years to connect Michigan companies to contracts at major companies like Boeing, GE and even Ford and General Motors. It’s now being used to help connect potential medical device parts manufacturers.
“We’re still early in the process, but what we’ve seen is a testament to the resiliency and tireless work ethic of Michiganders,” said Josh Hundt, executive vice president and chief business development officer for the MEDC. “From Petoskey Plastics manufacturing 10,000 isolation gowns for McLaren to the work Ford, GM and FCA are doing. This is really happening in companies of all sizes and all corners of the state.”
FCA said a plant in Asia would be converted to produce face masks for health care workers and quickly reach a target of 1 million masks per month.
GM is coordinating with ventilator manufacturer Ventec Life Systems to aid in the production of upwards of 200,000 ventilators. GM supplier Plymouth-based Meridian Lightweight Technologies Inc. secured the production of six ventilator compressor parts made of magnesium, first reported by Crain’s on March 22. Minneapolis-based Twin City Die Casting and Spartan Light Metal Products near St. Louis were tapped to produce those parts.
GM is also considering its 2.6 million-square-foot Kokomo, Ind., factory to manufacture at least a portion of those ventilators, though debate about how many it can produce and who will pay for them is leading to delays, The New York Times reported.
President Donald Trump tweeted Friday that GM wanted “top dollar” for ventilators and could only deliver 6,000 by late April. Later Friday, Trump signed an order requiring GM to produce ventilators under the Defense Production Act.
GM responded to the tweet, saying 1,000 workers would follow through with making ventilators at its Kokomo and Marion, Ohio, plants as an overall goal of making the 200,000 ventilators and will begin deliveries next month.
“GM is in the position to help build more ventilators because of the remarkable performance of GM and Ventec’s global supply base,” CEO Mary Barra said in a statement. “Our joint teams have moved mountains to find real solutions to save lives and fight the pandemic.”
The automaker will also produce 50,000 surgical masks per day from its Warren plant in the next two weeks with plans to potentially increase to 100,000 per day, GM said in a statement.
Payment, however, is a critical component as auto sales dry up and balance sheets start constraining operations. Global auto sales are forecast to plummet 14 million units, or 15 percent, in 2020 due to the outbreak, according to LMC Automotive. For context, global sales only fell 6 million units during the entire Great Recession between 2007-2009.
Most suppliers stepping up to produce medical suppliers don’t know who is going to pay them, but most don’t care.
Macomb Township-based PTI Engineered Plastics’ business is already 65 percent medical, with over 280 customers. But it’s also exploring manufacturing airflow assemblies for GM’s ventilator program, at the invite of the automaker.
“We just started making the tools (needed to make the parts), said Mark Rathbone, CEO of PTI. “Tools are scattered all over the world, mostly in China, so we’re all trying to go from nothing. Deadlines are measured in days, not weeks anymore.”
Rathbone said he doesn’t know where payment will come from if it starts producing the ventilator parts.
“We don’t know yet who is going to pay what,” he said. “We don’t know if GM is going to get paid by the government or not. We’re doing things like we used to — a handshake and let’s go. Or an elbow bump and let’s go in this case.”
Oakland County dedicated $700,000 of its $3 million stabilization fund to encourage companies to shift manufacturing capabilities to PPE.
The entire auto supply sector globally is coordinating to get existing PPE to U.S. hospitals as quickly as possible.
Canada’s Magna International Inc., which operates a technical center in Troy, is transitioning its three automotive seat sewing plants in Mexico to produce cotton masks that can extend the life of critical N95 masks. The supplier is also producing 51,000 per day of these masks for Europe at five plants there and plans to reach 51,000 per day for the North American market out of its Mexico plants in the few weeks, said Jim Tobin, executive vice president of marketing and president of Magna Asia.
“Every day we’re comparing notes with the car companies and are on the phone with Business Leaders for Michigan, Congresswoman (Elissa) Slotkin and Gov. Whitmer’s office,” Tobin said. “All we’re thinking about is how we can increase the supply to the medical community.”
Magna is delivering 510,000 K95 masks, a similar respirator mask than the N95, from its Asia operations this week. Whitmer’s office said the state needs 400,000 daily for the next several weeks.
“It’s not that different from what we do at Magna every day,” Harris said. “We figure out the shape and fit the foam the seat. Here we’re figuring out how to fix the N95 masks. It’s just creating a pattern and figuring out a sewing sequence.”
Magna sent Harris’ design and video tutorial to employees with a call to action. Harris alone is sewing 40 mask covers a day, Tobin said.
Medical device diversification?
The transition to medical devices has been a salve to the ongoing employment bloodletting. Between March 15-21, nearly 3.3 million Americans filed for unemployment, quadruple the previous record. More than 128,000 Michiganders filed unemployment during that week with filings expected to have climbed far further last week.
Whitmer’s three-week stay-at-home period for nonessential businesses to mitigate spread of the coronavirus prompted some Michigan businesses to enter the medical field to become essential.
The Ironwood cut-and-sew manufacturer Ironwood-based Jacquart Fabric Products pivoted from sewing its iconic Stormy Kromer wool caps to face masks and hospital gowns.
That put one-third of Jacquart Fabric Products’ 100-employee workforce back to work mid-week after the governor’s shutdown order, which labeled clothing manufacturers non-essential during the pandemic.
“Unfortunately, Stormy Kromer hats would be considered nonessential,” said Gina Thorsen, president of the Stormy Kromer division of her family’s business.
PTI laid off 52 employees, or 22 percent of its workforce, last week, primarily those in its automotive and consumer electronics division, but would have laid off more without the medical device work, Rathbone said.
“We are, as we speak, bringing some of them back,” Rathbone said.
PTI is also working with a customer that is fast-tracked by the FDA to produce COVID-19 test kits that produce results in minutes.
RCO also laid off workers.
“We are an essential services provider in aerospace, defense and energy,” Simek said. “But the business was going down, absolutely. But we came up with a plan B. Employing folks is critical for us.”
Plan B may become part of the region’s diversification efforts if and when the ramifications from the deadly virus subside, said Hundt.
“At the MEDC and across state government, we’re looking down the line at what we need to help Michigan come back stronger from this and to lead the nation out of this unprecedented crisis,” Hundt said. “We are enabling more medical devices through our engineering, and more specifically, our manufacturing prowess. This unprecedented situation can absolutely help lead our companies to future opportunities.”
Simek said RCO plans to stay in the sector and that he expects many other automotive companies to join him as the industry faces continued disruption from autonomous vehicle and electrification progress.
“The electric vehicle requires at lot fewer parts than a combustion-engine vehicle,” Simek said. “Any making castings, forgings or exhaust systems is ultimately going to need something else to do in the next 10 years. They need to diversity and I suspect many will pick up on medical.”
Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, predicts governments will offer domestic incentives to build up medical supply stockpiles when the nation recovers from the outbreak.
“I think it’s only a short-term surge that’ll maybe last a few years,” Dziczek said. “The policy levers will turn to incentivize this sort of production, but I don’t think it’ll be around 10 years from now. So there’s an opportunity to stay in, but it’s probably limited.”
Simek isn’t so sure it’ll be short term as the auto industry may have the ability to outcompete the traditional medical supply sector.
“Nowhere else does this type of horsepower exist than in Michigan and Detroit,” he said. “Right now, we have all these engineers navigating the path through FDA regulations and commercialization. They are quickly learning what it takes to get these devices to market. I don’t see them stopping. The war on COVID-19 may boost Southeast Michigan’s medical cluster just like World War II did for manufacturing back then.”
Posted By: Crain’s Detroit Business on March 29, 2020. For more information, please click here to read the source article.
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