Responding to the COVID-19 Crisis: Can Industry Help?

March 26, 2020 – Four Twenty Seven Analysis. We leverage our global database of manufacturing sites to identify industrial plants that may be able to contribute to the production of personal protective equipment and medical equipment to address the global public health crisis. The data is available free of charge to state and national governments seeking to engage with manufacturers in their jurisdictions.

Introduction

As COVID-19 continues to spread, states and countries experience shortages of essential first response equipment such as masks, hand sanitizer, ventilators and hospital beds. A few manufacturers in the perfume, automobiles and electronics sectors have responded by repurposing their facilities to produce equipment that will help deal with the public health crisis.

These companies demonstrate the potential for more widespread public-private partnerships during this global crisis. To support these efforts and encourage public-private partnerships, we leveraged our global database of corporate facilities to identify the companies that have facilities that may be repurposed to contribute to this effort.

Methodology

Based on news coverage of companies that have announced efforts to repurpose their manufacturing facilities to support COVID-19 response efforts, we identified facilities within SIC industries that may be able to contribute. The table below provides the list of sectors included in our analysis. Note that many factors influence whether or not a specific facility can be repurposed, so this data is intended as an entry point for a dialogue and engagement with industry.

Findings

Starting with a database of about a million corporate facilities owned by large, publicly-traded companies, we identified 11,322 facilities globally in sectors of interest.  2,755 of these are in the United States. Below we provide examples of industries in the four states with the largest number of facilities based on this analysis, which are also among the states with the most diagnosed COVID-19 cases to date.

New York

As of March 26, New York has the most diagnosed cases of COVID-19 in the United States. We found 149 manufacturing facilities in the state with the potential to be repurposed to support response efforts. Household and personal products make up 48 of these facilities and include 20 manufacturing facilities owned by Estée Lauder and 10 owned by L’Oréal. On Monday Estée Lauder announced that it would reopen one if its facilities in New York to produce hand sanitizer. Meanwhile, cosmetic company LVMH transformed three of its French perfume factories into hand sanitizer producers, supplying health authorities and hospitals in France. L’Oréal Group has also joined other cosmetics companies in Europe to use its manufacturing facilities to produce hydroalcoholic gel and hand sanitizer. This suggests that cosmetic companies in the United States may also be able to repurpose their facilities.

There are 57 manufacturing facilities owned by pharmaceuticals, biotechnology & life sciences companies in New York State, including 16 owned by Pfizer. In addition to having the necessary machinery and supplies, companies also need to address regulatory constraints around manufacturing different types of medical equipment. However, there are opportunities for businesses and governments to work together to identify appropriate exceptions to allow companies to support the urgent public health demands. For example, pharmaceutical company Roche recently got emergency approval to distribute high-speed coronavirus tests.

New Jersey

New Jersey and California have the second and third largest number of residents diagnosed with the virus and they each have 228 manufacturing facilities with the potential to be repurposed for COVID-19 response efforts based on their industries.  Similar to New York, there are 160 facilities owned by pharmaceuticals, biotechnology & life sciences companies in New Jersey, with Pfizer, Merck and Johnson and Johnson representing the largest number. Likewise, there are 27 facilities owned by household and personal products companies, 10 of which belong to L’Oréal. New Jersey also has 21 chemical manufacturing facilities, which could potentially use their equipment to produce hand sanitizer or test kits depending on their equipment and resources.

California

California facilities that may be able to contribute include 29 owned by automobile and component companies. Those with more than one applicable facility include Autoliv Inc, Aptiv PLC, Ford, Tesla, Toyota and Honda. General Motors and Tesla have already begun producing ventilators, while Ford has said that it’s considering the possibility. The FDA has waived some approval regulations typically required of new ventilator manufacturers, which helps open the door for companies to step up. We also identified 18 facilities owned by textile and apparel manufacturers in California, such Adidas, Nike and VF Corporation that could potentially use their equipment to produce masks.

While medical-grade masks are made from specialized fabric that many fabric companies don’t usually have access to, there is already a collaborative effort between yarn spinner Parkdale Mills, Inc and textile companies such as Fruit of the Loom and Hanes brand to create a manufacturing supply chain for masks. This indicates the potential for other clothing companies to contribute to the efforts by producing masks or hospital gowns. There are also 137 manufacturing facilities owned by healthcare companies in California, which can potentially transition their production to materials directly relevant to the COVID-19 crisis. For example, Allergan and Pfizer both have 13 facilities across the state. Roche, discussed above, also has nine facilities in the state.

Michigan

Michigan, the state with the fourth most COVID-19 cases as of March 26, has the largest number of manufacturing facilities owned by companies that may be able to produce response equipment. Out of 262 applicable facilities, the state has 181 owned by automobile and component companies, with 27 owned by Aptiv PLC, 26 owned by General Motors, and 24 owned by Magna International Equipment. The transformation of several other car manufacturing facilities into ventilator production centers shows the potential for these facilities to be repurposed.

Conclusion

As states and countries strive to identify the most efficient responses to an unprecedented global public health crisis, there is an opportunity to leverage existing capabilities. Understanding which companies may have tools that can help support response efforts can help inform conversations around addressing this crisis.

Four Twenty Seven is making the underlying data available free of charge to state governments, please send requests to Natalie Ambrosio, Director of Communications (nambrosio@427mt.com) if of interest.

This analysis was written with support from Lindsay Ross.