In scramble for PPE, county turns to off beat vendors
Demand has officials finding other channels — including glow stick firm
By late March, Harris County Purchasing Agent DeWight Dopslauf was desperate.
The novel coronavirus pandemic had reached the Houston area weeks earlier, and the county already had exhausted 75 percent of its supply of personal protective equipment needed for law enforcement officers, health workers and other front-line employees. The health department faced the prospect of closing desperately needed testing centers, which at times had only several hours’ worth of PPE on hand.
Dopslauf could not find new face masks. Some of the country’s largest suppliers, such as 3M and Honeywell, were backordered for months. A shipment of 125,000 low-quality masks from the state health department, which resembled paper napkins bound with string, were of little use.
“The first week and a half I panicked. I was calling everybody and their dog trying to find some,” Dopslauf said. “We placed a whole lot of orders, but nothing was coming in.”
Some third-party brokers offered to supply PPE but demanded payment upfront; Dopslauf thought this would put the county at risk of getting scammed. Many of the unsolicited offers in his inbox daily seemed too good to be true.
He would have to get creative. How he ultimately succeeded — through a sheriff’s deputy who knew a lapel pin maker who went to first grade with a millionaire Louisiana
baby product manufacturer who purchased 250,000 masks from associates in China — illustrates the extraordinary lengths local governments have gone to secure PPE amid the pandemic.
Unable to source from domestic suppliers, Houston and Harris County have turned to a hodgepodge of new vendors, including a health care consultant, glow stick maker, party goods company and other firms with contacts in China. The local governments estimate they source 90 percent of their PPE from there.
In some cases, companies become impromptu PPE brokers to stay afloat, as the pandemic has devastated the Texas economy. Others have no experience procuring medical supplies and simply see PPE — including masks, gloves, surgical gowns and face shields — as a suddenly lucrative commodity.
They describe a daily chaos of fluctuating prices and an unprecedented logistics nightmare as the world descends on China to purchase all the PPE it can supply. Sometimes deals fall through or shipments are delayed at customs checkpoints here and abroad, leading purchasing agents to place many smaller orders with dozens of vendors.
“We’re all hedging our purchases and splitting orders,” said Jerry Adams, chief procurement officer for the city of Houston. “What I have committed to the mayor is, I will not get caught flatfooted again.”
Help from childhood friend
Harris County’s break came through David Cuevas, president of the Harris County Deputies Association. Cuevas worried the sheriff’s office soon would run out of PPE. In mid-March, the Harris County Jail had 2,400 masks, a sheriff ’s spokesman said — enough for less than half of the facility’s total population. An outbreak there eventually would infect 1,000 inmates and staff.
Cuevas asked Tom Guyton, whose Spring company makes lapel pins and challenge coins for police officers, if he had any contacts who could supply some. Guyton did — Eddie Hakim, a childhood friend from Monroe, La., and the CEO of Nuby, a baby product manufacturer with 5,500 employees in China.
“I thought, ‘I hope they don’t get ripped off like other people are,’ and I knew that my friend of 65 years was honest and above board,” Guyton said. “I called and said, ‘Hey Eddie, can you help us with this?’ ”
Hakim, who perhaps is best known outside Louisiana for lending his mansion for exterior shots on the television show “Duck Dynasty,” already was importing PPE for American retailers such as Amazon. He agreed to help, and Guyton put him in touch with Harris County. Even with decades of business experience in China, Hakim faced challenges, including volatile product and shipping costs.
“We placed orders, and then the next day the goods went up,” Hakim said. “We approved the goods, and the next day they went up by sometimes 30 percent. It was everybody jumping in and trying to buy everything they could buy.”
Harris County ordered 2 million KN95 masks, though he was able to deliver only 250,000 because space on cargo flights is so limited. In some cases, Chinese airports are so crowded with flights that authorities sent planes back to North America empty. The shipments Hakim arranged arrived in the fourth week of April, Dopslauf said.
American buyers often are at the mercy of capricious Chinese customs agents, who since the pandemic began often have prevented PPE from leaving the country, said Steve Dickinson, a Seattle-based expert in U.S.-China trade. He said the high foreign demand for PPE early in the pandemic allowed Chinese suppliers to require 100 percent upfront payment without committing to a specific delivery date.
“The Chinese manufacturers had hundreds of buyers, so they were able to say, ‘Look, if you are able to buy from us, we’re going to impose on you completely unique business conditions,’ ” Dickinson said. “If you don’t want to take those terms, then you go to the back of the line.”
The governments of Houston and Harris County have shifted the risks to the local vendors they use to secure masks, face shields and surgical gowns.
Businesses shift
Some of these companies have become makeshift PPE suppliers as a way to replace lost business elsewhere. A historic oil bust and coronavirus restrictions on commerce and travel have plunged the Texas economy into a deep recession.
Cole & Ashcroft, a Houstonbased party supplies manufacturer, saw its business nosedive when people stopped holding gatherings to isolate in their homes. The firm did have contacts in China and offered to import PPE for Harris County. Crucially, the company had expertise on how to navigate China’s byzantine customs regulations.
“A lot of the packaging had to be tailored to what the Chinese government would allow to be released,” said Paul Wagner, the company’s president. “If you had mismarkings on anything, they would hold it up or deny it to leave the country.”
Cole & Ashcroft secured 15,000 face shields and 250,000 N95 masks for Harris County. Seeing an opportunity, Wagner said his company plans to import machinery from China to manufacture PPE in Houston. He hopes to roll the first products off the line within six months.
Ionized LLC in Sugar Land saw an 80 percent drop in sales because of the pandemic, manager Sharez Prasla said. The glow stick maker effectively has become a temporary medical supplier, securing PPE from Chinese contacts for local governments, as well as those in Louisiana, South Carolina, California, Pennsylvania, Massachusetts and Florida.
The transition has allowed the company to avoid laying off employees.
“It’s a big shift, obviously,” Prasla said. “But we have to adapt and just learn about the whole PPE industry and see how we can help.”
Dana Herrera saw her work dry up as a business consultant for doctors, as Harris County’s stay-at-home order barred elective procedures. She made up the lost income by becoming a PPE broker. She charges about a 25 percent premium on medical masks imported from China, in line with the profit margin other suppliers disclosed.
Houston and Harris County pay only on delivery to protect against fraud, meaning Herrera sometimes has to put up close to $100,000 on goods that may be delayed or never arrive. Once a vendor proves they are reliable, however, she said purchasing agents are likely to place more orders. Private companies also are hunting for supplies.
“Once you’re able to source something, like masks, you get calls for gloves, hand sanitizer,” Herrera said. “Every industry needs PPE.”
In another instance, county records show purchase orders for 560,000 masks from Egreenfees, Inc., a Houston firm originally formed to help golfers book tee times.
Spiking prices
While local governments have secured the supplies they need, the demand for the goods, use of third-party brokers and strain on supply chains has caused prices to surge.
Before the pandemic, Dopslauf said, Harris County paid around 5 cents each for three-ply medical masks. In March and April, the county shelled out as much as $1.75 per unit. The cost of N95 masks increased as much as ninefold, to $7 each.
Harris County expects the Federal Emergency Management Agency to reimburse up to 75 percent of those costs.
The outbreak in the Houston area has been far milder than in other major cities, such as New York and Los Angeles. A $17 million field hospital commissioned by Harris County was never needed, though the county is prepared to set up another.
Supply chains have improved significantly improved since March, said Lori Upton, vice president of the Southeast Texas Regional Advisory Council. The nonprofit coordinates shipments of supplies, including PPE, from the state health department to medical facilities in 25 counties surrounding Houston.
Hospitals and local governments are preparing, however, for a possible surge in cases as Texas reopens businesses and public spaces, as well as a potentially more severe wave of the virus in the fall. Health experts believe the coronavirus could pose a significant global threat for several years, until a vaccine can be developed and distributed.
Mac McClendon, deputy incident commander for Harris County Public Health, said department employees are burning through more protective gear as they ramp up testing and conduct on-site investigations at nursing homes, where the virus has been particularly deadly. A spike in cases could again place the county in a precarious situation.
“If there’s a surge where patients start showing up at hospitals and doctors’ offices, more PPE is going to start being consumed,” McClendon said. “Am I comfortable now? A little. But I’m also cautious.”