This Month’s Issue
Trending: Mexico takes lead as top US trading partner
Domestic Activity: Interest in US manufacturing remains high as projects still struggle
International Front: Glove manufacturers see recovery signs in later 2024
Legislation: US CEO’s sound alarm on China concerns – free COVID test program resumes
Market Dynamics and Trends
Mexico Officially Overtakes China as Top U.S Trading Partner (Full Article)
In the first six months of the year, about $397 billion worth of goods moved between the US and Mexico — this is 44% higher than the $276 billion worth of goods that passed through the US and China, according to the latest data from the US Census Bureau.
Now, Mexico’s in the top position thanks to its manufacturing sector, Luis Torres, a senior business economist at the Federal Reserve Bank of Dallas, wrote in a July 11 post. “Mexico’s gains mirror its rise in manufacturing, a key component of goods moving between it and the US,” Torres added.
Mexico’s rise as a factory hub is apparent as it became the US’ leading manufacturing trading partner in 2022 after knocking China off its perch.
Domestic Manufacturing and Supply Chain Resiliency
Manufacturing Pivots to the US as Imports from China Plummet (Full Article)
- US imports from China have been on a steady decline since late 2022.
- In the first five months of 2023, the U.S. went from China’s largest export destination, to its third largest.
- Data from the U.S. International Trade Commission (USITC) indicates the decline of imports from China to the U.S. has been considerable when compared to rising imports from other countries like Mexico.
Increasing American Manufacturing in the Wake of COVID-19 (Full Article)
- The Journal of Healthcare Contracting assembled a panel of supply chain leaders to discuss the merits of domestic manufacturing (for medical products).
- The panel included organizations such as Ochsner Health, Baptist Health and Encompass.
- Participants agreed that if American manufacturing is going to be a viable option for providers going forward, there are things that need to change to make it more available for providers.
Glove Factory Set to Bring 2,500 Jobs to Wythe County on Hold (Full Article)
- Nearly two years after then-Gov. Ralph Northam announced in October 2021 that a manufacturer of rubber gloves would bring 2,500 jobs to Wythe County, the project has stalled.
- It remains unclear how Blue Star NBR will get the money it needs to finish building its facilities and begin operations.
- Once the operation is running, Blue Star plans to expand over five years to the point where it has about 150 employees at the NBR plant and about 400 at each of six glove-making plants producing billions of gloves annually, reaching the figure of 2,500 jobs.
HIDA, ASPR to Monitor Strength of Medical Supply Chain (Full Article)
- HIDA has announced the release of a Preparedness Playbook developed in collaboration with the Administration for Strategic Preparedness and Response (ASPR).
- The Playbook provides insight and guidance for public and private supply chain partners on planning strategies and supports the national preparedness response framework.
Trans-Atlantic Shipping Suffers “Meltdown” (Full Article)
- The shipping boom in the trans-Atlantic market was one of the world’s biggest, and spot rates in this trade have not only plummeted from COVID-era highs, they’ve sunk below pre-pandemic levels.
- According to Peter Sand, chief analyst at freight-rate data provider Xeneta, “This is a major meltdown for a trade that was steady and ‘dull’ for decades before suddenly becoming the poster boy of the container freight market in 2022, defying gravity with elevated rates for a long time after the rest of the market had crumbled.”
International Updates
Hartalega Registers 1Q Net Loss of RM52.47mil (Full Article)
- Hartalega Holdings Bhd posted a net loss of RM52.47 million in its first quarter (1Q) ended June 30, 2023, versus a net profit of RM88.28 million a year earlier as revenue for the period halved to RM440.04 million from RM845.67 million.
- Mainly due to lower average selling prices and reduced sales volume compared with the previous financial year, against the backdrop of the continued oversupply situation in the glove sector and supply chain inventory adjustment, as well as higher operating cost
- The 5-Year Strategic Plan includes the decommissioning of our Bestari Jaya facility which is currently underway, to consolidate our operations at Hartalega’s Next Generation Integrated Manufacturing Complex (NGC) in Sepang.
Supermax says Meaningful Glove Market Recovery Likely in Late 2024 (Full Article)
- Supermax Corp Bhd posted an annual net loss of RM149.45 million for its financial year ended June 30, 2023 (FY2023), against an annual net profit of RM718.91 million in FY2022, as earnings were weighed by lower sales and average selling price (ASP) for gloves, amid persistent oversupply in the market.
- The group’s earnings were also hit by the loss of sales due to the Withhold Release Order (WRO) imposed by the US Customs and Borders Protection in October 2021, which remains in place, as well as increased operating costs amid higher utility costs.
- Moving forward, Supermax said the over-supply situation is expected to moderate gradually as more of the smaller players exit the market, while some of the big players scale back their expansion and retire older factories and production lines.
Hartalega Expects Business Recovery in 2H 2024 and 2025 (Full Article)
- Hartalega expects to see business recovery from the second half of 2024 (2H 2024) towards 2025 and does not foresee uptake this year as the global importation of gloves remains low.
- Global demand for gloves remains soft, with the monthly global import of gloves now at around 15 billion gloves per month in the first four months of calendar year 2023, as compared to the pre-pandemic level of 20-25 billion pieces of gloves per month.
- Expect lower average selling price for gloves to continue for the next quarters against the backdrop of an oversupply situation.
Hong Seng Suspends Glove Venture (Full Article)
- Hong Seng terminated its plan to sub-lease land in Penang, signaling the end of its venture in the glove-making industry due to the “weak market sentiment”.
- The decision was a result of the prior choice to halt the progress of a nitrile butadiene latex (NBL) manufacturing plant in Kedah Rubber City (KRC), by Hong Seng’s wholly owned subsidiary Hong Seng Industries Sdn Bhd (HS Industries).
Legislation
China a Serious Risk to US Manufacturers, CEO’s Tell House Committee (Full Article)
- Despite years of tariffs, anti-dumping measures and export restrictions, China remains the biggest risk to the future of U.S. manufacturing, seven senior executives told a makeshift House Select Committee on the Chinese Communist Party.
- Subsidies, free land, below-market-rate loans, transshipment schemes and intellectual property theft were all named as what businesses meant by “unfair.”
- There is constant talk in Washington about restricting China’s investment in the U.S., and U.S. investment in China. The House Committee on the CCP has taken the lead on this endeavor.
Administration Awards $600M to for US Manufacturing of COVID-19 Tests (Full Article)
- HHS through the Administration for Strategic Preparedness and Response (ASPR), is announcing an investment of $600 million across 12 domestic COVID-19 test manufacturers and the reopening of COVIDTests.gov to deliver tests for free to households across the country.
- “Manufacturing COVID-19 tests in the United States strengthens our preparedness for the upcoming fall and winter seasons, reduces our reliance on other countries, and provides good jobs to hardworking Americans,” said Assistant Secretary for Preparedness and Response Dawn O’Connell. “ASPR’s investments in these domestic manufacturers will increase availability of tests in the future.”