Murphy wants NJ-based manufacturers to produce PPE. Easier said than done (updated)

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Phrases like “Made in America” and “Made in New Jersey” are nothing new when it comes to the discussion on boosting the economy and making jobs. After years of moves to lower-cost locations, the old-school assembly-line factories that blanketed New Jersey and much of the United States in the mid-20th century seem like a distant memory. But manufacturing in the Garden State and its neighbors remains viable.

Gov. Phil Murphy on May 3 joined the governors of Connecticut, Delaware, New York, Pennsylvania and Rhode Island to coordinate the purchase of medical supplies and personal protective equipment – for a combined $5 billion – so the states would not have to barter and compete against each other.

That’s been an issue that has plagued New Jersey and other states during the pandemic: scrounging for personal protective equipment to keep medical workers and health care providers safe as they treat hundreds of thousands of suspected or confirmed COVID-19 patients. The equipment needed ranges from N95 face masks and simple surgical masks, to face shields, gloves and gowns.

While interstate collaboration can help alleviate the shortages, Murphy said a bigger and more important development would be to manufacture the products locally. “That’s something I think we all want to strive for,” the New Jersey governor said. “We’re doing that in New Jersey, we want to figure a way to make that stuff here.”

Indeed, Murphy on April 29 announced that the state would be forging a “partnership” with the New Jersey Manufacturing Extension Program to produce face masks and gowns in the state.

“I don’t have a lot of details on that but I’m thrilled that we are partnering and that it is official,” Murphy said.

But it is unclear just how New Jersey businesses can transition manufacturing back to the Garden State after long-established national and global supply chains were upended by one of the worst economic recessions in American history.

“We don’t generally make these things because we can get them cheaper elsewhere,” said John Kennedy, chief executive officer at the NJMEP, a not-for-profit that works to train and connect the workforce with the state’s manufacturing industry.

“This is why we’re in such a big problem,” he added. “We have tremendous manufacturing capabilities in this country. We can make all this stuff, but if I can make it for a nickel cheaper somewhere else … then I’m going to do that.”

That is not to say the task is impossible, Kennedy maintained. But the industry will have to overcome many hurdles before N95 masks, face shields, gowns and other personal protective equipment can bear the logo “Made in New Jersey.”

“If somebody is going to completely change their operations to manufacture something different, it’s going to be pretty expensive,” said Sen. Linda Greenstein, D-14th District, and the Democratic chair of the bipartisan Legislative Manufacturing Caucus.

On March 27, President Donald Trump invoked the Defense Production Act to order automaker General Motors to switch its manufacturing capability to produce the ventilators that were then in short supply.

The DPA was enacted during the Korean War as a means to quickly shift peacetime production to wartime footing.

“It was in a week from building cars to building ventilators,” New Jersey Chamber of Commerce President and Chief Executive Officer Tom Bracken told NJBIZ. “I would assume it could be done if there’s the right motivation.”

But he acknowledged the complexity of the shift. “These products have to be something that conforms to the mandates, the integrity of the product.”

The U.S. Food and Drug Administration has strict rules for how medical products, especially N95 masks, can be manufactured. And FDA approval cannot be bypassed for any N95 masks that enter the flow of commerce within the country, Kennedy said.

What’s more, Kennedy said, mid-sized manufacturers, unlike GM and Ford, might not have the financial resources to ramp up that level of production.

“They’re hoping to just make ends meet and sometimes you’ve got to remind them that they need to charge for their stuff,” he said. “You can’t keep giving it away and stay open.”

A group of the state’s 80 major business associations, trade groups and local chambers of commerce on May 2 unveiled a number of steps the Murphy administration could take to kickstart an economy now in a state of suspended animation. The recommendations include a federally funded state workforce development program to train the growing number of jobless residents in certain industries that have become relevant during the pandemic, such as manufacturing.

BioNJ, the trade group that represents the state’s biopharmaceutical industry in Trenton, proposed the introduction of “grants, tax credits and deductions” to lure that kind of manufacturing in the state, “invest in a global marketing plan” for New Jersey, and the creation of a “New Jersey Pandemic Task Force” to look at some of those long-standing issues.

“It could be incentives, it could be support along the way in terms of logistical support,” said Debbie Hart, BioNJ’s founding president and chief executive officer.

“New Jersey has such a diverse commercial landscape… I think how we can create those spaces and build and infrastructure literally and figuratively … That makes it appealing and attractive for a company to up its operations.”

Providing tax incentives to bolster a broader manufacturing presence in the state would be worth the cost, according to Senate President Stephen Sweeney, D-3rd District. “We need to set up manufacturing for the region,
and if that costs a few bucks, that is a hell of a lot cheaper than what we’re going through right now,” Sweeney said during a May 12 meeting with NJBIZ editors and writers.

Coming out of the pandemic and ensuing recession, businesses in states like New Jersey might no longer be willing to rely on existing suppliers. Factories and other production facilities would no longer be single-sourced, a longstanding practice, Kennedy suggested.

“There’s a reason why diversification has long been a successful strategy for many years … and the same thing with the supply chain, don’t put all your eggs in one basket,” Sen. Steven Oroho, R-24th District
and the Republican chair of the Legislative Manufacturing Caucus, told NJBIZ.

If a widely expected second wave of outbreaks hits the region, the public health infrastructure must be able to “flip that switch” and tap into a ready supply of medical equipment, Sweeney said.

“We just got caught flat-footed,” he added.

Editor’s note: This story was updated at 9:00 p.m. EST on May 17, 2020 to include comments from Senate President Stephen Sweeney.