A global trade dispute over raw materials could affect the cost of producing surgical instruments, hospital beds, operating room tables and other healthcare equipment and supplies.
Supply chain could be affected by raw materials dispute
In a move that if successful could broaden medical product companies global options for cost-competitive manufacturing, U.S. Trade Representative Ron Kirk last week asked the World Trade Organization to help settle a dispute that accuses China of limiting the export of raw materials used in the production of steel and other manufacturing compounds.
The nine raw materials cited in the dispute include coke, magnesium, silicon metal and several other agents used by manufacturers to produce a variety of products, according to U.S. trade representative officials.
The formal dispute stems from long-running complaints by U.S. trade officials and manufacturers that Chinas restriction on exporting certain raw materials plentiful to the region is reducing available global supplies and driving up the cost of those materials on the worldwide market. At the same time, those raw materials are readily available to Chinas manufacturers, Kirk said during a news briefing. We are deeply troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries by making raw materials cheaper for Chinas companies to get and goods more economical for them to produce, Kirk said. If the U.S. dispute is successful, China would be forced to lift the export restrictions, and that move could help level the playing field for manufacturers.
Mike Alkire, president of group purchasing organization Premier Purchasing Partners, said that such restrictions have over the years prompted medical products companies to concentrate manufacturing in China in order to access cheaper prices. Because we are so dependent on China, we have huge risks, Alkire said. One of the concepts Ive been pushing is spreading out the manufacturing of goods to near shore areas like Central America and South America, Alkire said. The U.S. trade representatives dispute resolution efforts could help facilitate such activity, he said.
But other supply chain experts dont see Chinas export restriction as having an effect. Most companies will have multiple sources for materials to address geopolitical moves just like this, said Terry Hisey, vice chairman of the U.S. Life Sciences division for consultancy Deloitte. My expectation is not only wouldnt pricing be affected, but also quality wouldnt suffer.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.