Date: October 21, 2020
RONCO PPE Update and General News
Dear RONCO Customer,
Trust you, your families and friends are safe and Covid-19 Free.
On behalf of Ronco I would like to thank you for your continued business and understanding during these past 8 months of the year of the pandemic. There is a general fatigue in our country and citizens just want this to be over with; though it seems our struggle will continue for some months yet.
Below is our latest update to share with you.
The Wild West of PPE in Q4 2020
Disposable gloves: In October we experienced our 4th general price increase on disposable gloves. The supply shortages and price escalation continues and factories are now wanting to extend high prices for as long as possible. The factories are still seeing demand exceeding capacity to keep up with supply needed to support with the second wave case explosions in North America (especially the escalated growth rates in USA), Europe and India. CBC recently reported research from the academic journal “Environmental Science & Technology”, estimating that the world is using 129 billion disposable masks and 65 billion disposable gloves each month! Advance payments are continuing to be a requirement prior to shipping. In general, the supply situation is still extremely fluid, and factories are dictating terms. For example, limited sizes are being produced at some mills (X- Small, Small and XX-Large gloves are not being produced). Allocation cuts are still applying to our standing purchase orders, causing us to continue with tough allocations with customers.
Nitrile supply is still an ongoing struggle, although some good news is on the horizon with a few dark clouds. The Chinese Govt has compelled the largest producers to either expand production in regional development zones or face high taxation on the additional profits made in 2020. Estimates of expansion vary but could be up to 300 lines or 15%, some of which are starting by year end. The downside is that the raw material producers have not expanded their capacity to supply. So, there is a concern that this will contribute to shortages in the short run. Nitrile raw material shortages will also affect the dipped and reusable glove lines.
Vinyl factories in China have seen some environmental shutdowns by the Government. If we remember, back in 2018 there were rotating shutdowns in regional production zones due to air pollution / air quality. The difference this year so far is that the plants will not be able to start up until they have installed air pollution and water effluent measures to reduce emissions and improve water quality. Total impact is unknown at this time.
RONCO will continue to allocate monthly sales to our customers based on pre-pandemic sales of 2019. Customers that do not have a purchase history of disposable gloves will unfortunately be restricted to our other products e.g. Industrial gloves, Head & Body protection.
The disposable glove outlook over the first half of 2021 is for continued supply and allocation along with high prices. Wherever possible RONCO will substitute alternative products up to our customers’ monthly allocation, when out of stock situations occur.
Regarding pricing my opinion is that disposable glove prices are at or very near the peak of the market. The price difference between regular Supply Chain orders, the Government Intervention market, and Social or (Bid) Market, has blurred and is quite narrow. At time of writing this, Ontario has announced reversion back to a modified stage two of pandemic shutdowns in Toronto, Peel & York regions and Ottawa. Quebec is also taking action with similar restrictions to in-house dining, closed bars & movie theatres, and limitations to gatherings. Once news of a vaccine is available sometime in the first half of 2021, this will ease demand and pricing as a result.
RONCO is committed to fair market price and we will adjust our prices as soon as possible once price reductions take place. We envision a staged approach on the way down as with the escalation on the way up in 2020.
Non-woven PPE (Body Protection, Bouffant Caps)
RONCO has been receiving limited amounts of non-woven products particularly bouffant caps, hair nets and poly-propylene gowns since the early shutdowns began in March. Fortunately we were able to manage our supply to our customers but we hit a wall at the end of September. We are backordered on bouffant and hairnets until the end of October, after which time we will have good inventory levels. Microporous Coveralls (XP1000, 1800 & 2000) please note we will be in short supply until Q1. We have some new partnerships in place and the outlook for 2021 is positive in general on this category.
Industrial Gloves and Products
Industrial gloves are in good supply and our sales team is actively promoting our additions to Prima-Cut (cut-resistant gloves) (we added five new products in 2020). Other industrial product lines including gloves (Sol-fit, Light-fit, and Flexsor), Hush Hearing Protection and Nova Eye Protection are readily available. A reminder that we are no longer allocating these products and are able to on-board new business with you. Our TM’s will be working with you to provide industrial product solutions and in some cases may be able to recommend substitutions for disposable gloves. We continue to look for alternate product solutions amid continuing price inflation and shortages.
RONCO Protec Masks: RONCO is pleased to announce that our first mask machine has arrived and is being installed at our Concord Facility. If ever there was a case for Canadian made products, manufactured by Canadians, for our domestic consumption, the time is now. The Covid-19 PPE shortages and price inflation is forever cemented in the psyche of Governments and all Canadians. There is a case for self-sufficiency of PPE. There will be another pandemic… SARS, H1N1, and current Covid-19 are examples of pandemics in the last 20 years. Unless we learn from 2020, our past experience is bound to be repeated.
Mask inventory is expected to be available by December if not sooner. We are also planning to expand our production to other PPE products in 2021.
RONCO Face Shields: Ronco Launched Nova Face shields in June, this is a quality reusable product featuring scratch resistant and anti-fog plastic. The shield lens is 25mm thick which is much more durable than many of the disposable alternatives that are available. This quality equipment can be cleaned and maintained and is designed to last. We reduced prices during the summer and our product presents an excellent value. Please contact your RONCO Territory Manager for a free sample.
To Make Matters Worse…
The pandemic shutdowns in the spring and summer caused general market supply issues on a variety of goods not just PPE. Furniture and appliances for example face long lead times to retailers. Many partially filled retail shelves are apparent. This supply back-log has caused a budge moving though the supply chain resulting in shipping container shortages. The result being arrival delays into ports. PPE is also being affected. A further complication is that the ports are congested, causing shipping delays for trucking and intermodal services which we rely on for timely delivery. These delays constitute 1 – 2 weeks currently, this is all ahead of the usual ramp up prior to Chinese New Year in February. Typically, we expect that fewer orders will leave China during February, and we therefore bring in additional product to compensate.
To summarize, supply issues of disposable gloves, high pricing and allocation process will continue for the first half of 2021. Bouffant Caps will be available with good supply in November moving forward. Industrial Gloves, Head and Body protection are readily available and are not subject to allocation.
RONCO has been working hard on your behalf to secure product and repair the supply chain. Our commitment to you is to be market relevant and we will adjust prices accordingly.
Thank-you for your business and support.