THE CEO’s BLOG
Gloves. Nitrile. Latex. Vinyl. How did a commodity item that were recently selling as low as $2.99 box of 100 become America’s next crisis? Why isn’t the media all over this? Because the media is all over what is going on today and not what is going to go on tomorrow when businesses reopen.
Virtually every business that reopens will need gloves. But where are they going to buy them especially if they never bought them before? Let me explain to you because I am so f—–g busy right now, writing actually helps me to relax a bit.
First and foremost, think about the crisis going on right now. First line workers: Hospitals, ER, doctors, nurses, funeral home operators, police, fire. They all wear gloves and have always worn gloves. We take it for granted. Just like they wear face masks. Gloves were always part of their uniform, their profession. We expect gloves to be worn by these professionals.
But guess where gloves are made? China and Malaysia produce more than 90% of the world’s gloves.
Now I am not into politics on my blog as you know my loyal readers, and I am not going to start now. But the crisis we are entering is a Made In America crisis. In fact, every American right now should be thanking China each and every day for making gloves (and now masks) for America. Without China, there would be no gloves.
How did this happen? A combination of many things. Politics. Big business. The Save The Planet organizations and people behind this movement. Rules and regulations by the EPA, FDA, state and local governments. 3M, Kimberly-Clark, P&G and many other companies. People behind the MADE IN USA movement. The Big 3 are part of this. Hey, we are all part of this because we took something as simple as cheap gloves for granted. Now is the time to decide what is best for America’s future.
Here is the issue. Manufacturing gloves is not only hazardous, but the chemicals used in production are carcinogenic. The stack pipes in the sky spew out toxic gases. You have heard these same stories with manufacturing coal, tires and other toxic products. But gloves are especially bad. So bad, we cannot make them in the USA. So bad, no other countries want to make them. And they are so cheap, there is money to be made!
So if they are so bad you may ask, why do China and Malaysia make them? Good question. You can Google search the answer. Just think the word “pollution.” Just think about doing business globally and being a market leader at the same time.
So now you may ask, why can’t China and Malaysia just make more gloves? Another good question. China’s President Xi decided to tackle pollution in his country, most recently as the past 2-3 years. He wants China to become a world leader and set an example. When he makes a decision, the decision is final and carried out most efficiently.
Glove factories were on his list. Each and every glove factory was shut down by the government and had to install very expensive pollution and toxic chemical equipment to remove as much of the toxins as possible before opening back up. This cost the factories millions but they did it to stay in business. Also (I cannot confirm) the decision was made to not open additional factories without permits and most likely, there have been no new factories opened in the last two years. What does this mean? Global supply is limited to current factories output but demand is likely going to be 10 to 50 times more than that. In basic economics, supply and demand laws are at work.
TNG has a dedicated factory in China to produce its gloves, one reason why I know a bit about gloves. Most recent, TNG sold nitrile gloves $6.99 to $7.99 for box 100.
Since the crisis, market prices has risen to $11.99 to $19.99 for box 100. But this is today. This is before businesses even know they need gloves to reopen. This is before the media circus has started. Once this all happens, I predict market prices will surge to $29.99 to $79.99 box of 100.
Why do I think this? We sold Surgical 3-ply masks for years. We sold them for $3.49 a box. Today we are selling for $34.99 a box and cannot keep them in stock. That is 10X previous selling prices and they will go up again. We have containers on order for air and sea shipments and our customers are desperate for them. If gloves go up 10X, that would put a box of 100 nitrile gloves at $79.99.
And unlike masks, the federal government cannot order any USA factories to convert to glove production because they are not allowed to produce them. Bottom line, America is f—-d when it comes to gloves.
Now ask yourself this question: Who is going to pay these new glove prices? Answer: You. This will be the beginning of inflation like we have never witnessed before (and please, I hope I am so wrong in all this). If a glove costs $.50 and a McDonalds worker needs two, that is a $1.00 to $5.00 added to each workers costs per day. McDonalds will have to raise its prices to pay for the gloves. Every business will have no choice. That is how inflation starts.
Try to buy gloves on Amazon. The best online company in the world. In fact, the best company in the world, thank God for them. But if they cannot supply America with gloves, what does that tell you? All gloves sold on Amazon are for first providers only.
I have to get back to work, yesterday I ordered 5 million more masks and now I just ordered 10 million more gloves because of my dedicated factory. Now I just have to figure out what we are going to do tomorrow. I have an idea.
©2019 Larry Gaynor. All rights reserved.