How New Hampshire built a mammoth PPE supply chain from China
State governments are scrambling to track down and acquire personal protective equipment (PPE) and essential medical gear to fight the coronavirus pandemic, as President Trump encourages governors to hit the open market to procure supplies.
But while larger states like New York and California can compete with ever-rising prices and a limited global supply chain, smaller states have faced major complications, even losing orders to federal agencies that outbid them at the last minute. In many cases, governors in those smaller states find themselves at the end of a very long line outside a national strategic stockpile that is rapidly running dry.
Some of those state leaders are turning to wealthy businessmen, philanthropists and sometimes their own family members to help secure the equipment they need to fully stock their hospitals and medical facilities.
For New Hampshire, that philanthropist was Dean Kamen, an entrepreneur who invented the Segway and who runs a global robotics competition. Kamen, whose businesses have extensive ties to Chinese manufacturers, had helped one hospital in Bedford secure protective masks. Within days, every hospital in the state was calling him.
But Kamen encountered a problem early on, prompting him to turn to Gov. Chris Sununu (R): He had sourced millions of surgical and KN95 protective masks for New Hampshire’s hospitals at 38 cents apiece, a fraction of what those hospitals were paying on the open market. Kamen just needed the state to guarantee the hospitals would be able to cover those costs.
“He was able to facilitate a lot of the deals for us using the relationships that he had,” Sununu said in an interview with The Hill. “The best facilitators of this have really been us, being the government, creating relationships with the private sector who had relationships overseas.”
Sununu had watched with growing unease as the coronavirus landed in neighboring Massachusetts, an early hotspot of the American outbreak. More than 100,000 commuters cross the Massachusetts-New Hampshire border every day, making the potential for a big influx of COVID-19 cases substantial.
“Prior to the first case, we knew there was risk. When the first case hit, we knew it was reality,” Sununu said.
“We had already started hearing that the commercial market was going to get really tight really fast,” he said. “We were already understanding that as this escalated, picking and choosing, we didn’t want to leave any stone unturned and we didn’t want to be in a position to say, ‘Gee, I wish I ordered more.'”
Sununu told Kamen he could count on the state to cover the costs of the N95 masks. Kamen called his friend Fred Smith, CEO of FedEx, to arrange transportation. Smith pointed Kamen to a program within the federal Department of Health and Human Services (HHS) that would pay for the flight.
“Good news, governor,” Kamen said he told Sununu. “FedEx has a relationship with the folks at HHS and they’re going to cover the cost of shipping.”
A few days later, Sununu and Kamen watched as a chartered FedEx MD-11 touched down at Manchester’s airport, crammed with masks and other protective gear.
“A plane that size, an MD-11 taxiing into a ramp in little Manchester is sort of like watching Gulliver pulling in to Lilliput,” Kamen said in an interview Monday.
Now, a little over two months since the first New Hampshire resident tested positive for the coronavirus, the state has built a massive strategic stockpile of its own. They had so much on hand that the state last week sold 4.5 million masks to the federal Department of Veterans Affairs.
New Hampshire is not the only state to scramble outside normal procurement procedures to find what it needs.
Maryland Gov. Larry Hogan (R) turned to his wife, Yumi Hogan, to negotiate a deal with her native South Korea to secure half a million coronavirus test kits. In Massachusetts, New England Patriots owner Bob Kraft dispatched the team’s 767 to pick up PPE in China.
Wyoming used its ties with Taiwan to secure supplies. Washington Gov. Jay Inslee (D) introduced state emergency officials to his cousin, an import consultant, and a neighbor whose company sources medical supplies from China and who offered to broker sales without taking a commission.
Several governors have complained that finding PPE and other medical supplies has been made more difficult, and more expensive, by the federal government. The Federal Emergency Management Agency (FEMA) has come between states and suppliers, even after deals have already been signed, or outbid states searching for their own PPE.
In late March, Massachusetts Gov. Charlie Baker (R) said federal authorities had seized 3 million protective masks. In April, federal agents in New Jersey confiscated 35,000 masks. In Maryland, Hogan ordered the National Guard to take the South Korean test kits to an undisclosed location.
Sununu said he had his own doubts about his ability to secure PPE from China. New Hampshire started small, with a few early shipments to ensure the process went smoothly, before lodging bigger and bigger orders.
“I had concerns all the way through the process, we all did,” Sununu said. “We had real concerns about our shipment being stopped here in the U.S., of FEMA taking possession of the shipments. We’d heard stories about that as well.”
The shipments are now a regular occurrence. Kamen’s China-based supply line managers have cornered a market with the same manufacturing companies with which his other businesses work. FedEx employees in China speed the supplies through customs. Boeing CEO Dave Calhoun, who has a house in New Hampshire, loaned a corporate 737 to bring in one shipment that hadn’t completely fit onto a FedEx planes.
“You hear these horror stories: the money went away; there’s counterfeit stuff; they’re sending junk; it never arrives,” Kamen said. “All I know is, we’re dealing with good companies.”
After the supplies are offloaded in New Hampshire, they are taken by the National Guard to a secure location, where they are kept under guard until they reach end users at hospitals, nursing homes and medical facilities.
Sununu said making deals early had solidified New Hampshire as a credit-worthy buyer in the eyes of Chinese manufacturers, which could help the state stock up if the coronavirus hits harder.
“By doing these deals, the really big ones, early on, it has put us in a preeminent position with manufacturers overseas,” Sununu said. “Everybody knows we’re going to pay.”
Two months after its first confirmed case on March 2, New Hampshire has conducted almost 34,000 tests; of those, 3,011 have come back positive. More than 130 people have died, and 313 have been hospitalized, according to the state’s most recent data.
In something of a reversal of fortune, the federal government has now come to Sununu for help. Veterans Affairs Secretary Robert Wilkie called Sununu to ask for his help in securing more masks for the department’s mammoth health care system, which uses about 200,000 a day. Wilkie dispatched Pamela Powers, his acting deputy, to Manchester to pick up 4.5 million masks last week.
“On the federal side, they just have a lot of bureaucracy and barriers to do deals like we can do at the state level,” Sununu said. “They have a huge need, and we said, ‘What do you need?'”
Kamen’s supply line through New Hampshire has helped nearby states as well. Connecticut, Vermont, Maine and Massachusetts are all struggling to contain the spread of the virus, and the new PPE pipeline is helping.
At a time when so many people are suffering from the virus, and so many more have lost jobs or livelihoods, Kamen said: “People need something to be a little optimistic about.”
Updated at 6 p.m.
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