The shock to the economy caused by Covid-19 resulted in many small businesses pivoting into new markets in March and April, including the personal protective equipment (PPE) industry.
However, Paul Fitzgerald, Executive Director, Sales and Marketing and co-founder of SBAA member Bluemountain Healthcare, said many of the new entrants were unfamiliar with the PPE industry, which covers commodities such as protective gloves, masks, thermometers, hospital gowns and masks.
“There have been individuals from the engine manufacturing sector and even toolmakers pivoting to PPE since COVID-19 struck.”
Bluemountain which Paul launched with another experienced business partner is essentially a PPE matchmaker or broker. “We put international buyers and sellers of protective equipment together and add extra value along the way.”
Paul continued, “We work with factories in Malaysia who make the gloves, Korean distributors who make the masks and some distributors in China that we’re delighted with. We also buy and sell ourselves.”
Early warning signs
A media report in April[i] advised that Australian Border Force (ABF) officers intercepted several deliveries of PPE that were counterfeit or otherwise faulty. One law enforcement official, who spoke to the ABC on the condition of anonymity, estimated the ABF had already seized 800,000 masks with a combined value of more than $1.2 million on the Australian market.
Despite the reports of contrary conduct and price gouging, Paul believes that the experience of the new entrants is a more significant issue for PPE customers. “There have been reports of some faulty imported equipment entering Australia and cases of the recycling of examination gloves, although this is mostly overseas,” he said. “Prices have gone up because the demand for gloves and masks have escalated, and the supply of the raw materials is limited.” For example, a box of medical gloves that was $10 at the start of the year is now worth $20.
That said, there have also been some excellent initiatives that have supported appropriate new market entrants. A Federal Government announcement in June delivered significant funding for several firms from the textiles, clothing and footwear (TCF) industries to help them pivot into PPE[ii]. At the time, Kestrel Manufacturing received $495,000 to assist in its production of filter materials used in both surgical and P2 masks, while there was a pledge of $213,000 for Clets Linen to increase its capacity to fulfil ongoing orders for disposable isolation gowns for both Australia and abroad. Also, Nobody Denim received $400,000 to instal up to 20 new sewing machines to produce isolation gowns, while RRJ Engineering will manufacture more plastic PPE components, including hand sanitiser bottles, closures and pumps, with $392,000 in assistance. “Overall, this was a good move that aimed at ensuring the survival of several major Australian manufacturers,” Paul noted.
Beware the cowboys
The more significant issue causing problems for customers is the proliferation of new suppliers who don’t appreciate the nuances of the PPE industry. “When the pandemic started, we saw people pivoting to PPE from some weird and wonderful walks of life, and suddenly they were experts,” Paul, who previously worked for pharmaceutical giants 3M and Bayer, explained. “In contrast, the leadership team at Bluemountain Healthcare have 200 years of experience between us in the healthcare sector.
“We have sourced products of the highest quality registered with the TGA and CE, and have supply lines set up to ensure regular deliveries of the product allowing us to provide rapid, door to door service for our clients.”
Paul is adamant that not everyone new to PPE is dodgy. Instead, many new entrants simply just don’t have the supply lines to fulfil their orders. “We’ve heard instances where letters of intent from customers taken by brokers are then sent onto up to 10 other brokers to help fill the order.
“Sometimes the order is never filled because the broker doesn’t have the contacts or then customers find themselves dealing with brokers they’ve never met before.”
How to identify the less experienced
A Hotmail or Gmail account is a tell-tale sign for a customer they are dealing with a new entrant, advises Paul. “If they don’t have a corporate email address, I wouldn’t deal with them.
“Having said that, the cowboy phenomenon is ameliorating as many new entrants are starting to work out that they can’t make a quid and are dropping out. So, the industry is gradually starting to stabilise, but the cowboys are still out there.”
In addition to personal emails, if the PPE business doesn’t have a website or has a website developed since April 2020, this is another ‘buyer beware’ warning sign, according to Paul. “Or if they have a website, it might be pretty crappy.”
If your small business requires masks, hand sanitisers or digital thermometers, as a member of SBAA, you will be eligible for a discount from BlueMountain Healthcare. Just email your order to firstname.lastname@example.org and mention the SBAA.