Layoffs pummel Waterloo firm hailed for making PPE gear

WATERLOO — A Waterloo firm that retooled to make face shields when they were desperately needed is now shedding employees while millions of masks and shields sit unsold on shelves.

Inksmith, an education technology company, earned shout-outs from governments when it pivoted early in the COVID-19 pandemic into making personal protective gear in a new venture named Canadian Shield.

The firm took on 10 times more manufacturing space, upscaling from 10 employees to more than 300 by July. It says it invested more than $10 million to automate the production of medical masks for health-care industries and for governments.

But on Friday the firm laid off 47 people. It has five million masks and two million face shields it has not sold.

“We can’t sell to hospitals,” chief executive Jeremy Hedges said. Hospitals are locked into group purchasing contracts to buy from Chinese or other suppliers for up to seven years, he said.

“We’re priced competitive. I can sell a mask for the same price you can buy it from overseas. But I’m just not allowed to,” he said. “The supply chain has normalized. The importers are able to fill their contracts.”

Other domestic suppliers of protective gear face the same challenge, Hedges said. Shut out of long-term hospital contracts, a homegrown industry that poured millions into protecting Canadians will quickly wither, he warns.

“If we could make these products here in Canada, we’re keeping dollars in the country, rather than exporting those dollars and jobs,” he said. “It’s an urgent problem. The industry is at stake.”

Canadian Shield has about 100 employees now. Hedges figures the firm can sustain them until the pandemic ends. Beyond that, the future is unclear.

The firm has been downsizing staff since September, partly to automate production and partly because sales have slowed. “We don’t make face shields any more because the demand for that product has completely dried up,” Hedges said.

Hedges said Canadian Shield has raised its concerns with governments. The Record reached out to ministers in federal and provincial governments for comment Sunday.

In an emailed statement, a provincial government representative said Ontario has launched a business portal and a centralized supply agency to encourage provincial manufacturers to make protective gear and to stabilize access to a supply of products.

“These are Ontario-made solutions to an ever-growing global concern that will support our effort to reopen the economy and relieve the province of depending on unreliable global supply chains,” wrote a spokesperson for the Ministry of Government and Consumer Services.

The government noted it is up to hospital boards to determine their equipment needs.

Domestic suppliers of protective gear intend to advocate collectively for their threatened industry, Hedges said

The solution he sees is to open up hospital contracts in some way. “I’m cautiously optimistic that we’ll be able to get this change effected soon,” he said.

He argues that domestic suppliers of protective gear could become exporters. “We’re not asking for a handout. We just want to be able to compete,” he said.