“What’s new?”
The most common question I get asked. We all have the same answer since there is not much to do except work and then binge watch TV with whomever we are locked in our homes with at night!
The series Yellowstone seems to be on fire lately, and thus the inspired picture up top on this blog! Some of us have never been in better shape, finding ways to Peloton at home (I am LOVING the new Apple Watch working out apps! Helps motivate me!). My fingers are tough as nails and my already hoarse throat doesn’t stand a chance when Karen heads off to work and I fire up the “LIVE STREAM” with my guitar at night!
Plus, ya, Yellowstone.
“How are other offices doing?” is another question. It was popular before Covid and will forever be popular. I doubt anyone really gets a straight answer. We all want other people to think we are rockin’ it. The best clinic in the world, and if this business was only about being a superstar dentist – everyone would be winning! Yet, the business is so much more than that. It happens to involve management of people, and it was already a tough job for any boss before Covid. In these times, it seems like the shortage of “qualified” people has shrunk to below zero – it’s definitely making business ownership less desirable.
Yet, we need to remember to count our blessings! This is an amazing business, that is staying open (#dentistswillnevershutagain!) and is necessary for the good of all the public.
Then there is the question of overhead. Who can manage to stay at 6% Supply costs when gloves ALONE have QUADRUPLED in price. The most basic commodity in a dental office, it was already one of the largest components of your overhead as a consumable. A year ago, I was selling high quality house brand gloves for as little as $6 per 100. That would be $18 a box or $180 a case. These same gloves are now HARD TO GET and are $999.90 per box. Every week changes too!
The mask situation has “stabilized” and KN95 are relatively inexpensive at $1.50 compared to $8 a mask a few months ago. These will continue to drop. Face Shields, Gowns, disinfectant (www.egretlab.ca) all items we can get made locally for the most part – not surprised, they have DROPPED SIGNIFICANTLY and will continue to drop….but gloves. It’s a story in and of itself.
Could we make them here?
“He blames the delays on China where many factories that could, switched overnight to making PPE. He says it was a wild, wild west gray market where buyers showed up with cash in suitcases. Thomas claims goods he ordered just kept disappearing.
John Thomas: One of our delays was when China literally stole our inventory off the line for one of our state customers. What China was doing, instead of issuing an order saying, "We're not gonna allow America to have medical supplies," they would arbitrarily change the rules almost on a daily basis.”
Good old Charles from “Best Glove” company used to come calling on the buyers at Medical and Dental distributors. Begging them to pick up his new line of gloves. Promising they would be cheaper and better quality and have more features than any of the 200 brands they were already carrying. The buyers would negotiate a price and delivery and then publish a price. This was a VERY competitive market, with so many manufacturers and so many vendors! Keeping the pencil sharp was very important.
Then Covid happened.
These same shipments that were already negotiated at agreed upon quality, prices and delivery time simply disappeared. Sorry Mega-important health care sector buyers a guy with a suitcase full of cash showed up and took the entire shipment for twice the price. This same guy told us they are willing to buy as much as we can make at that price next time too. If you want to match the price, you are a good customer and we might be able to fulfil the next order.
Of course the reputable companies say no way at first. They are used to keeping a fair price in the health care market for highly competitive consumable items.
Yet these new “entrepreneur” “grey market” buyers, who were NEVER in this business continued to hedge their bets that these commodities were going to be in short supply. And many more people jumped into the game. Supply and Demand.
Prices skyrocketed.
“Rubber prices have rocketed to their highest in over three years as protective glove demand surges due to the COVID-19 crisis and industrial use rebounds in China, while supplies remain tight with producers struggling to replenish stocks”
Gloves don’t make it to our market overnight. They are made with relatively inexpensive labour in a country far away. When these businesses quote prices on gloves to buyers – it’s based on current commodity prices and they secure a certain amount of inventory. When the suppliers of gloves were getting quotes in late October that are 40% higher than they used to be – it takes several months to work it’s way down the chain. So the shipments arriving in January might have been booked in November with the new prices.
There was already a bidding war with people that never used to exist in this business, doubled down with with a surge in raw materials prices…..supply and demand.
That’s not the end of the story…
Then this happened.
Good old Sam the Best Glove salesman. His phone is ringing off the hook. NOBODY wants to run out of gloves at any price. The gray market entrepreneurs are trying to outbid each other, fueled with profit they have already garnered from the first round or two of shipments they basically stole from the legitimate and well developed glove market. Then the raw materials spike due to demand for the raw material and the pandemic. Then the largest manufacturer has to shut down for weeks to deal with a Covid outbreak……
That was LATE NOVEMBER…
And glove prices reach $1000 a case.
It hurts. This needs to be accounted for in the fees that are charged in health care eventually. It doesn’t seem to be. It’s hurting small business that is already down. Yet a free market has very little it can do to control this.
Can we plan better? Opening a mask factory made sense in Canada. It’s about raw materials and labour. Masks are mostly made by relatively inexpensive machines. Medicom stepped up, and several other companies are now manufacturing here. Prices are stable and I expect these will drop like a rock when we aren’t all wearing masks in the near future. Masks were down to $5 per 50 and I expect this will come back soon.
Gloves will be no different, it’s just a series of events that take months to reach the supply chain. When they start to go down, it will be no different than it was in the 80’s when I started. They will drop fast and hard. Some of these people who came into our business will want to dump the millions of dollars of gloves they so greedily snapped up and dump them. The manufacturers will need to fight to survive and they will have access to lots of raw materials sitting at the port to make the Trillions of gloves that are no longer in such great demand….
How long? I can’t predict the end of a pandemic. Nobody can. My experience just tells me that logically this is not sustainable. If for some strange reason it stays this way, at the end, the consumer will pay for this in their health care, dental care. Prices are never absorbed in the long run they are always reflected in retail eventually.
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