Near sourcing is a trend that will change the supply chains for medical masks, critical personal protective equipment (PPE), and the materials needed to make them.
Governments and industry are seeing the value of following the model common in hygiene nonwovens markets, producing the nonwovens close to the converters and placing converters closer to where the masks and other critical PPE will be needed. This serves as a hedge against future pandemics or similar supply chain disruptions.
As more companies adopt near sourcing tactics, they will place a certain amount of upward pressure on global average prices for these goods. More suppliers will set up production capacity in places like North America and Europe, which lack China’s cost advantages in economies of scale and low labor costs. A combination of strategies such as a push toward greater automation in production or government subsidies will be needed to support these higher-cost producers if near sourcing is to remain a priority.
Don & Low’s recent investment in meltblown production capacity in Forfars, Scotland, is one such example. The company reportedly received 80% of the cost to acquire and install the new line from the Scottish government. This capacity will make the company one of only a few companies in Europe that can make the material needed for respirator masks. The government saw value in having local capacity to produce PPE for healthcare and other frontline workers.
For more information, see The Freedonia Group’s coverage of the textile and nonwovens industries, including a new COVID-19 Impact Analysis report for Global Disposable Masks & Respirators.