How COVID-19 is Impacting Manufacturers, Part II

We work with many brands, individuals, and companies that want to make 3D textile products because they save almost all of the production waste that goes into landfills during the production process. What we’ve been seeing is a movement away from seasonal merchandise development and a flock toward seasonless products.

We’ve also experienced companies interested in on-demand manufacturing, which is making things when they’re ordered and not warehousing literally tons of perishable fabrics.

We’ve also been hearing rumblings of made-to-measure for years. The issues challenging the marketplace are that of fit, since fit is subjective and each individual is finicky. There are companies trying to make products to measure in virtual reality, but the challenges are vast in making sure that what the customer sees on the screen matches not only their virtual expectations, but their fit expectations. If returns are a problem now, they will likely increase with made-to-measure. Made on-demand is different and that seems more viable.

The entire manufacturing industry, including fashion, is indeed headed to a new world of buying, making, and selling. It’s about time; there’s so much waste in fashion and manufacturing industries, generally.

We see the continued buildup of medical device and PPE safety stocks driving production demands for a long time. A potential silver lining to the COVID crisis will be the improved speed with which medical device OEMs and tier one suppliers are working to approve and validate IQ, OQ, and PQ. Historically, this has been a slow, arduous process, but the current situation has opened people’s eyes to the inefficiencies inherent in “the way we have always done it.”

I definitely think we’re going to see increased demand for domestic manufacturing. In fact, we’re already seeing it from brands that have finally had enough of the heartache of producing overseas. It’s really been one problem after another for companies that rely on a Chinese supply chain.

The brands that we’ve seen perform the best during this time are the ones that have loyal direct-to-consumer businesses. These brands are not relying on brick-and-mortar stores. Brands like these need to be extremely responsive to their customers and they need to order in manageable quantities. Being in Los Angeles, we’re able to offer that to them.

And of course, a huge change in fashion is face masks everywhere. The innovation and creativity around face masks, which have suddenly become a necessary accessory, have really just begun.

We were able to pivot our business very quickly to medical PPE early on in this pandemic. Because we have had manufacturing here in Salt Lake for over 28 years, Masterbrands was uniquely positioned to help fill some of the shortages left by the Chinese manufacturers.

I’m a bit cynical about whether or not the medical industry will actually reshore medical PPE as I’ve been in business through several of these events and every time it’s pretty short-lived. We seem to have very short memories here in the U.S. and I expect everyone will go back to buying their PPE from China.

The hospitals turned their buying decisions over to buying groups many years ago and the buying groups have a lot at stake because buying from China allows them to mark up the goods so they can make a profit when they sell to the hospitals. Truth is that the hospitals could buy direct from U.S. manufacturers and probably pay the same without the buying groups markup.

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The pandemic has created incredible opportunities for natural and organic food brands as the demand for healthy nutritional products has skyrocketed. Most food manufacturers that sell at retail have seen demand for their products double or triple and their online sales have soared from 200 percent to 800 percent over plan.

The biggest challenge facing these brands today now seems to be in the supply chain and distribution network keeping up with demand. Any food brand that is shelf-stable and easily shipped is probably going to see continued sales growth online. Consumers seem to be exploring alternative products as well, including the plant-based meat options already available.

The biggest issue we have is that our path to market has shifted significantly. In Colorado, we’re in need of regulatory reform to enable direct-to-consumer shipping. Other states have dropped barriers to shipping direct. (Editor’s note: Five states — Arizona, Florida, Hawaii, Nebraska, and New Hampshire — currently authorize the direct shipping of spirits.)

Like craft brewers, our industry also embraced taproom strategies. As a result, with such a young industry — the majority of companies are under five years — I suspect there will be casualties. To weather weeks and weeks without that high-margin business is a challenge.

We have been able to sell bottles the whole time, much like a liquor store. Delivery and to-go cocktails are new and we are allowed to sell out of the tasting room or deliver or both as long as it is an employee of the distillery.