Hoosier Manufacturing in the Wake of Coronavirus

Indiana needs more medical supplies now, and a more dependable supply chain, so we never face this kind of shortage ever again.

March 25, 2020

Hoosiers are getting sick and dying from the coronavirus, at rates that will only increase because our government has failed to act quickly to protect Indiana. Our health care system is stretched to its limits today, and will reach capacity in the very near future. We don’t have enough test kits, so we can’t do enough testing to target our interventions. On top of this, there’s the damage the pandemic is doing to our economy, some of which is likely permanent. Coronavirus is causing a recession. According to a Federal Reserve Bank President and others, the resulting unemployment rate could exceed 20 percent in the next six months.[1] Many of the affected jobs likely won’t return when the pandemic subsides.

Medical professionals in Indiana hospitals, and those throughout the nation, have sounded multiple alarms about impending medical supply shortages sweeping our health care system amid the coronavirus pandemic, and the impact it’s having on patient care and staff safety. There’s no coordinated effort at the top.  States are bidding against each other for critical supplies.

Governors of both parties have been asking the federal government for more tests and more protective equipment as the virus spreads. They’ve been loud, vocal, and deliberate in their demand for a coordinated, national strategy to get ahead of this crisis. By comparison, Governor Holcomb has been relatively silent. As a result, Hoosiers continue to be at risk.

Every Hoosier should be asking: Where are our test kits? Where are our medical supplies?

Deaconess Health System in Evansville, Indiana asked the public to sew face masks for staff fighting coronavirus.[2] A physician at Ascension St. Vincent Hospital in Indianapolis recently raised concern about our own hospitals’ preparedness after watching Italy’s health care system in crisis.[3] The American Hospital Association (AHA) predicted there could be 96 million cases of coronavirus in the U.S. in the next couple of months, with 1.9 million intensive care unit admissions, 4.8 million hospitalizations, and 48,000 deaths from the virus.[4] Additionally, the AHA estimated that 960,000 people would need ventilators during the pandemic in the U.S.[5] There are only about 170,000 ventilators nationwide.[6]

Indiana must demand its fair share of the federal allocations of medical supplies, but even this won’t be enough. While there are steps we must take now to increase our supply of staffed hospital beds and to ensure we’ve got trained medical staff at the ready, we also must identify innovative ways to boost  medical supply production and blunt the economic impact of this coronavirus.

The challenge before us provides Indiana with an unprecedented opportunity to revive our economic base and bring back thousands of good-paying jobs that we’ve lost. Under my leadership, the coronavirus pandemic would become the stimulus needed to revive Indiana’s manufacturing industry and create new jobs by making us a major medical supply hub. Targeting the production of all of the medical supplies in short supply will reduce our dependence on foreign companies. Offshoring has taken more than 29,000 manufacturing jobs from us between 2010-2016 alone.[7] It has also left us dependent on a global supply chain ill-equipped to meet the demands of a worldwide pandemic of this magnitude.

 As Governor, I’d ensure that a medical supply shortage like this one isn’t repeated. I’d provide the incentives and support to expand our current capabilities in life sciences and pharmaceuticals, medical device manufacturing, and health care information technology to make Indiana a medical supply anchor for the nation and the world, and thereby help reassure our medical community that we won’t be dependent on foreign suppliers ever again. As the pandemic takes hold and tests our economic endurance, I’d lead Indiana’s coronavirus comeback – taking back our control, with a plan to jumpstart our economy and create thousands of good-paying jobs for Hoosiers ready to work.

Why Indiana?

  • Timing is right. Now that President Trump has invoked the Defense Production Act providing the federal government with the ability to require U.S. manufacturers to produce medical supplies during this health crisis, Indiana should aggressively communicate to federal officials our interest in ramping up production and that Indiana’s manufacturing sector is open for business.
  • Capacity exists. We have factory capacity throughout the state sitting idle, including several current and former auto manufacturing plants. We have Hoosier companies that could potentially shift capacity to produce medical equipment for the short-term, with talks now underway for this pivot.[8] We have more than 300 industrial properties for sale statewide, with some that could be retooled and expanded for long-term medical equipment production.[9]
  • Skilled workforce. We have skilled workers – 17 percent of our workforce is employed in manufacturing industries that may not quickly return after the pandemic subsides.[10] They’ll need options.
  • Market presence. We have a large medical device industry, with a global market presence.[11] Our top two manufacturing sectors for job growth in 2018 – 1) pharmaceutical and medicine manufacturing and 2) medical equipment and supplies manufacturing.[12] Abbott Laboratories recently announced its plan to build a manufacturing facility in Westfield, adding to our already robust medical manufacturing presence with Hillenbrand Industries in Southern Indiana, Cook Medical in Bloomington, Hillrom in Batesville, Eli Lilly and Roche in Indianapolis and Zimmer Biomet, Revra Depuy, and others in Warsaw.[13] We could build on them and others to bring more production back home to Indiana.
  • Strategic location. Indiana’s premier logistical ability makes us the ideal state to distribute health care products. There’s no better location in the nation than the Crossroads of America to serve as the nation’s medical supply hub. Eighty percent of the U.S. population is within a day’s drive, and Indiana serves as one of FedEx’s main worldwide air hubs.[14] We’re also a “super-hub” for the United Parcel Service (UPS).[15] Additionally, our extensive port system provides direct access to national and international markets.

How would we do it?

From the beginning of this pandemic, I’ve advocated for creating an Indiana Coronavirus Leadership Group comprised of representatives from all sectors, including labor and business, that would continually evaluate the pandemic’s impact and find ways to propose policy changes that allow us to successfully manage this crisis and come out stronger. This group would be responsible for carrying out my vision.

As Governor, the first steps I’d take:

  • Direct members of this group to work with Indiana’s Economic Development Corporation to determine what federal and state tax incentives we could leverage and what capital is available to immediately expand our medical supply industry.
  • Identify idle plants throughout the state, with the help of Indiana’s Manufacturers Association and labor that could be retooled or expanded for basic medical supplies and equipment. I see us producing a variety of complex medical equipment, resulting in a higher-paid Hoosier workforce.
  • Conduct a thorough review of our economic policies to determine what changes are needed to take advantage of this opportunity without delay. While there’s no patent protection hurdle to overcome for many medical products, we need to ensure there aren’t other hurdles that could slow our growth.

Conclusion

We have immediate short-term needs and extraordinary opportunities that we should embark on now for the future. The coronavirus wreaking havoc today likely won’t be the last health issue we’ll face in our lifetimes. As Governor, I’d be the champion for Indiana’s health and economic needs to revive Hoosier manufacturing in the wake of coronavirus. The time is now to put Hoosiers first.

 

 

[1] U.S. Jobless Rate May Soar to 30%, Fed’s Bullard Says, Bloomberg, 3/22/20, https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q

[2] Coronavirus: Deaconess asks public to sew CDC-compliant face masks for staff,” Courier & Press, 3/18/20, https://www.courierpress.com/story/news/2020/03/18/coronavirus-deaconess-ask-public-provide-medical-face-masks/2865273001/

[3] “As U.S. Braces for Coronavirus to Spread, Hospitals Worry About Shortages,” Time, 3/16/20, https://time.com/5804335/coronavirus-hospitals-shortages/

[4] Ibid.

[5] Ibid.

[6]Why lifesaving ventilators will be in short supply for the foreseeable future,” Vox, 3/20/20, https://www.vox.com/recode/2020/3/20/21186749/ventilators-coronavirus-covid-19-elon-musk

[7] “Automation and offshoring in durable goods manufacturing: An Indiana case study,”IBR, 2008, http://www.ibrc.indiana.edu/ibr/2018/fall/article2.html

[8] “US automakers study medical manufacturing as coronavirus squeezes capacity,” Supply Chain Dive, 3/19/20, https://www.supplychaindive.com/news/us-auto-manufacturers-studying-production-medical-equipment-coronavirus/574464/

[9] https://www.loopnet.com/search/industrial-properties/in/for-sale/?sk=7d8baa9ddddd9e3c802d152128955fad&bb=9m5grmmtmLuh5g0gm3K

[10] 2019 Manufacturing Facts, NAM, https://www.nam.org/state-manufacturing-data/2019-indiana-manufacturing-facts/

[11] Indiana’s Medical Device Industry Is Fifth Largest in the U.S. Generating $10 Billion Annually, BioCrossroads, 1/18/12, https://www.biocrossroads.com/indianas-medical-device-industry-fifth-largest-u-s-generating-10-billion-annually/

[12] 2019 Manufacturing Facts, NAM, https://www.nam.org/state-manufacturing-data/2019-indiana-manufacturing-facts/

[13] Abbott to build medical device manufacturing facility in Indiana,” Verdict Medical Devices, 10/29/19, https://www.medicaldevice-network.com/news/abbott-to-build-medical-device-manufacturing-facility-in-indiana/

[14] Shipping: Why Indiana Needs To Be Your Logistics Hub, Langham Logistics, 7/15/19, https://www.elangham.com/2019/07/why-indiana-needs-to-be-your-logistics-hub/

[15] UPS Opens New Indianapolis Regional Super Hub, Post & Parcel, 6/27/19, https://postandparcel.info/107539/news/ups-opens-new-indianapolis-regional-super-hub/

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