The search for quality and affordable Personal Protection Equipment is leading to a new revenue stream for Stewart Industries.
During the second week of March the Battle Creek-based manufacturer began fielding calls from clients who wanted to use their Foreign Trade Zone to ship PPE from other countries into the United States to support the effort to control COVID19, says Erick Stewart, President and CEO of the company that bears his name.
“The word got out that we had mechanisms to get PPE from countries like India, China, Taiwan, and Turkey,” Stewart says. “Within three weeks we had a network that spanned different countries. Early on we said we’re going to start vetting suppliers and distributors to ensure that the pricing is right, the quality is in place, and things were going to the right place.
“We’re distributing gowns, gloves, face masks, and surgical masks. We’re looking at a project that includes a whole bunch of stuff,” Stewart says. “We have people who call us with special needs. We decided we wanted to be focused on hard-to-find items, not commodity-based items.”
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Erick Stewart keeps finding innovative ways to grow his company.As an example, he says his company has sourced all levels of gowns, including Level 1 which are disposable and commonly used during elective surgeries, which many hospitals are beginning to provide again.
In addition to this type of Personal Protection Equipment, Stewart says he also has plans to manufacture support parts for anesthesia machines.
“There’s different types of support equipment for anesthesia machines. We may manufacture some of the replaceable spare parts that have to be changed every day,” Stewart says.
Thomas Hickey, a partner with
Excelerant Consulting, is working with Stewart Industries to establish the medical side of their business. Excelerant typically works with med-tech companies who need help with product positioning, navigating corporate contracting opportunities, and with sales support to accelerate sales growth.
Hickey, who makes his home in Douglas, Mich., says Stewart Industries is a multiple-certified assembly and manufacturing company that has had an ISO certification for the medical equipment production since 2017. Hickey was introduced to Stewart by the leadership of the Right Place, an economic development organization based in Grand Rapids.
“We were qualified to do this work even before this work existed,” Stewart says. “
Stewart Industries is a hybrid of qualified broker, distributor, and quality validation company. The pivot for that piece wasn’t hard. The pivot will be manufacturing products that we haven’t done before.”
“They never had much of a business in medical products and services until they started this whole initiative in the first part of March,” Hickey says.
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Thomas Hickey, a partner with Excelerant ConsultingLeading up to the new product lineup, Stewart’s days were filled with orchestrating deals with suppliers and distributors and people in need of PPE in different countries. The conversations he was having involved requests for documentation that verified the quality of the products and production data from three months ago, information that hospital officials don’t have time to gather as they focus on the care of critically ill patients.
“Imagine being a buyer for a hospital system and you’ve got an onslaught of sick people coming in and you’re down to your last couple of sizes of gloves. You want to make a decision, but you need a quality product,” Stewart says. “These are orders that are being placed in the millions of dollars.”
This role as dealmaker, quality control specialist and distributor, got Stewart thinking about what his company could do to better support the needs of those working on the frontlines. In July, his company will begin manufacturing some of the same Personal Protection Equipment products that he has been working to help clients distribute.
“We’ve been able to work on pivoting that way. I believe we’re at the first stages of this being our small company playing a small roll in medical manufacturing in the United States. We don’t want to get caught flat-footed, especially if the virus surges again.”
Hickey, in his consulting role, is introducing Stewart Industries to manufacturers who need extra capacity or who need to have the assembly process done in Battle Creek, which has advantages because of Stewart Industries FTZ status that enables them to get products in a quicker manner. This is the on-shoring of manufacturing capabilities.
For example, pre-Coronavirus, a number of small manufacturers were doing 5,000 units of products every month. Hickey says the need has grown to 20,000 units per month, which begs the question: How can this be done more quickly?
“By outsourcing some of the product assembly to an organization like Stewart, they can scale products quicker and have a couple of different sources for spikes in demand,” he says.
Frank Ripullo, co-founder and managing partner of Excelerant, says he’s dealing with both ends of the spectrum being experienced by the major hospitals he consults with. On the one end are major hospital systems like Kaiser Permanente that is now 40 months behind in elective surgeries that had been scheduled prior to the pandemic. They are wondering how they’re going to get back to their regular caseload.
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Frank Ripullo, co-founder and managing partner of Excelerant Consulting“If a particular hospital is doing 10 surgeries a day, how do you start to implement another two or five other surgeries to make up for the backlog?” Ripullo asks.
The counterpoint to this dilemma is the shortages of gloves, gowns, masks, and hand sanitizer that he has been hearing about since the pandemic hit U.S. shores.
Like Stewart, Ripullo spends a lot of his time these days carefully vetting suppliers who want to work with his company. He says he asks for certification and documentation on the products being offered up because they have to meet strict standards established by the U.S. medical industry.
Stewart says he’s been “catching fraud left and right. I had a $2 million PPE order and it didn’t feel right to me. After two hours of vetting, I realized it was fraudulent.”
“There’s this scramble and mad rush when you can’t get what you want,” Ripullo says. “These are industry leaders running these hospitals and they’re saying, ‘We’re depressed and burned out. We weren’t prepared.’ There’s uncertainty. This is a whole psychology that nobody talks about it.”
But, it’s not just larger hospital systems seeking additional supplies of PPE. Hickey says physicians’ offices and clinics and organizations bringing people back to work, also need PPE to keep everyone safe.
The pandemic has created a shift, he says, and larger companies like General Motors and Ford have stepped in to manufacture much-needed equipment such as ventilators.
“It does create a spark of innovation and new opportunities,” Hickey says. “Perhaps, we might have seen people lose their jobs in retail or manufacturing, but they could easily be re-trained where they could go into something like this.”
At its core, Stewart Industries is a service-based company that does assembling manufacturing which essentially involves taking Product A and Product B and putting them together to create a product that meets customer specifications.
The majority of these products are smaller parts that eventually make their way into larger components for the automobile industry. Denso, a Japanese-owned company in Fort Custer Industrial Park which supplies parts to the auto industry, accounts for a large portion of Stewart Industries' total business.
But, the state-mandated closures that impacted just about every business sector, brought the automotive manufacturing side of Stewart’s business to a “screeching halt,” Stewart says.
About 43 of the company’s 60 employees went on unemployment, the remainder, who were deemed essential, were working from their homes and product continued to be shipped.
With the automotive industry beginning to scale up again, Stewart says he is bringing employees back to fill orders that have started to trickle in. He says he hopes to be able to bring back 50 to 60 percent of his workforce by the end of summer.
The new product lineup has the potential to create additional jobs, but Stewart says he doesn’t expect this to happen right away.
“It depends on how the pandemic behaves and how people behave,” Stewart says. “We’re looking at manufacturing a variety of things and setting up distribution channels for others. With any new product, it takes evaluating the customer base, the Return on Investment, and identifying sources of capital.”
Hickey says Stewart Industries is a “little bit unique” for Excelerant because of what they do.
“Typically, we work with companies that already have established product. We help them come along, but they’ve got established products. Stewart is more on the assembly end and we are connecting them with some of our clients who are already bringing raw materials in from other countries, land them in the U.S., and help them through the FTZ and assembly,” Hickey says. “They’ve got some fantastic opportunities in front of them.”
Stewart says new initiatives such as those his company is embarking upon are creating a new ecosystem for the medical supply industry “that before was reliant on foreign intervention with hospitals and public entities that were accustomed to the folks up the street making masks for us versus mask-making in foreign countries. I had a buyer at one facility tell me they would purchase from us for a little bit more because they knew they could trust us.”
Read more about Steward Industries here: