HBD has unique insight to the factors shaping the American manufacturing as the economy recovers from the pandemic.  We would like to share our observations and recommendations.

Over the years, various factors including exchange rates, shipping costs, oil prices, the labor market, Chinese government policy, and US-Chinese relations have affected prices to a greater or less degree. Right now, the effects are greater.

The major factors include:

                –  The value of the US dollar has dropped nearly 10% in recent months, reflecting our weak dollar policy (which helps exporters but hurts importers and consumers) and the huge amount of dollars printed to keep interest rates low. This impacts the cost of raw materials imported by American mills and manufacturers.

                – High demand and tight Chinese labor markets have driven up labor costs relentlessly, impacting prices of finished goods.

                – US-China relations remain contentious. Tariffs continue to keep costs higher on imported finished goods, and particularly on raw materials and components.

                – Oil prices have doubled since their lows, greatly affecting the price of anything made from petroleum. Materials we use such as vinyl and nylon included.

                – And of course, the corona virus has added a layer of misery to shipping. Supply chains have been disrupted, shipping prices have spiked, ports are seeing weeks long backups, and shipping service has become erratic. Price increases for freight (both overseas and domestic) seem steady and here to stay.

                So what do we look for and recommend?

In short, prices are going up. Count on it.  We do not see any of these forces subsiding in the short to medium term.

This news does have one solution: plan ahead. Planning will save you money, as waiting will only increase the risk of higher costs. Planning will also reduce the risk of supply chain disruption.

Our aim is to continue to maintain stock items and provide short lead times. But we can only do so with your help.

We ask that all our customers and partners be as forward thinking as possible when it comes to ordering and anticipating needs.

Please call us at HBD to discuss any of this, and to help reduce disruptions as much as possible.

HBD has been producing items in China for over 25 years. Combined with our US-design and manufacturing, this has given HBD enormous flexibility. 

The current environment is obviously challenging and stressful. Much is beyond our control.  However, by monitoring both Chinese and expatriate blogs and talking daily to our Chinese partners, we have worked hard to minimize the coronavirus impact.

Specifically, we have done the following:

• HBD, as always, increased its shipments before the Lunar New Year. We received four containers in February.
• HBD has moved some production to Taiwan.
• HBD has moved production of less labor-intensive items back to our US factory.
• HBD was able to ramp up production oversees quickly as our manufacturing partners were some of the first to resume production after the quarantine period. 

We have most items in stock, and we expect shipments to resume from oversees in the next week. The size of our inventory plus our US capacity enables us to minimize disruptions to our supply chain.

We have one import request of our valued customers. In order to continue as smoothly as possible, and to mitigate further disruptions from the coronavirus, we ask that you give us an idea of your needs as far in advance as you are able. The more we know and are able to plan, the greater our chance to satisfy your needs without disruption. 

What lessons have we learned? It’s still too early to tell. We’ll leave the health aspects to the experts. We suspect, though, it may be years before they really know the coronavirus’s seriousness, characteristics, and whether it is seasonal. 

One important thing we think we HAVE learned: China is not nearly a first-world country, and much of the disease’s severity stems from, not despite, China’s form of government. Corruption, secrecy, lack of basic preparedness, and buck-passing have characterized the Chinese response. Their authoritarian form of government encourages these responses. 

Democracy is often messy. In the end, though, it gets the best results. 

Thanks for your loyal support. We will keep you posted as we have more information to share. 

Hospital bags are bags with a protective flap that inhibits the spread of microbes. They were invented and patented in the 1960’s by the Hartford Self-Closing Bag Co. (HARCO). HARCO’s president, Peggy Baviar, known to everyone as “Peggy B”, was a constant fixture at shows, sticking embroidered bees on every bag she sewed.

Peggy B. sold the company in the late 1970’s, and that company sold it to HBD in 1981, which is when Beline Products started. Beline has since become the leading independent provider of hospital bags.

Hospital bags were originally made of bias cotton or poly/cotton used mainly by the tire industry for tire belting until radial tires changed tire design. Then the VA pioneered synthetics by specing heavy spun/filament. Competitors began reducing pricing by using solid poly/cotton or 200 denier bags. Then the developers of polyester barrier fabrics began using fabric that did not test high enough for garment manufacturing for bags.

Today cotton is no longer used and poly/cotton is not widely used because cotton absorbs moisture, odors and germs, and because it stains. Now, 200/210 denier fabrics are the most commonly used fabrics, though polyester is generally used for hospitals bags instead of nylon. Many hospitals use 70 denier barrier fabrics. These breathe and repel liquids.

About two- thirds of hospitals do not use re-usable bags. Instead they use poly bags. Those are much cheaper, of course, but do not inhibit germs, and they clog up landfills. One would expect these to be outlawed, which is already happening in some areas. People are realizing now that germs in hospitals present a serious and often lethal challenge. It would not be surprising to see lawsuits against hospitals that do not use bags with flaps, since these are much safer than bags with cords.

Which bag you use depends upon your control and needs. No sense to buy an expensive bag, for example, if you will lose them before they wear out. HBD’s hospital bags come in one main size, 30×40, but also several others, such as 24×36, 36×40 and 40×40. They come in white or colors, and with several options.

Our team here at Beline will ask questions to help you determine which bag is best for you. Bags are a major business for us, so we have to do it better than other companies!

The current US Presidential election looks to be the wildest in a long while.

I have no interest in giving you my preference – your opinions are as good as mine. But I do want to point out some issues that our various pundits do not seem to be addressing.

 – There is a widespread feeling that globalism is not working for everyone.

In the aggregate,  globalism is good. It creates jobs and expands opportunities for millions. But not uniformly, or for everyone. By creating more competition from lower-wage countries, for example, it hurts US manufacturing and costs manufacturing jobs.

– Government has not been honest about the uneven effects of globalization.

Neither party has told the truth: that there are winners and losers in globalization. Neither party has told US workers that increased productivity is necessary for the US to keep up, and this demands greater education and skills. Neither party has told US citizens that being better off than your parents is not a guarantee.  It demands skills and hard work.

 – Elites in Washington, New York, and California have lost touch with working class Americans.

Educated members of economic and political elites have come to assume what is good for them is good for America. While their world has expanded, they have failed to notice it has shrunk for many less-well-off American families.

 – While our urban dwellers are used to multiculturalism, our rural citizens are not.

People who live in cities see all kinds of differences around them and take those differences as an interesting part of life. To many rural folks, those differences are strange and often threatening to the comfort of their way of life. Yet many urbanites seem oblivious or even condescending to their rural brethren.

 – Globalism has important social implications that are revolutionary in nature.

Globalism implies a free, easy movement across borders that suggest people are not American, British, German, etc., but are only in a particular place because they need to be. National differences are viewed as superficial or even quaint.

But many citizens of a particular country do not see it that way. To them, immigrants and multiculturalism are seen as fundamental threats with few benefits. Great to help others but what about us?

Any move beyond the nation-state, upon which our political system has long been based, is bound to be controversial and contentious.

– These differences cannot be swept under the rug.

Hopefully, this is the one thing about Campaign 2016 that has become obvious. We cannot move forward without a lot of conversation and a real attempt to understand each other.

This country was built on the idea that we are all in it together. Everyone needs to feel that the American dream is alive and well.

Richard Levy, HBD’s President, was actively involved in politics in a past life.

“There’s an app for that,” “big data,” “predictive analytics,” and “artificial intelligence.”  These are all phrases that have us at HBD thinking hard about the future of the industries we serve, and we are always working to help our customers evolve and adapt.

In the last year, HBD has had the privilege to partner with hospitals and industrial laundries that are using RFID technology to become more efficient, data-driven businesses. In working with them to implement RFID we have learned about the benefits they see in adapting the technology.

INVENTORY MANAGEMENT

Replacing manual counting, sorting and packaging with computerized inventory management has many benefits. RFID systems will confirm the exact number of linens in a bundle/bag, tell you how many of a given item are on hand, or where they are in the operations cycle. Having this information will save time, reduce errors, and make you a better service provider.

BETTER UNDERSTAND USAGE

RFID tags will make you a data driven business.  Knowing exactly how linens or uniforms move through your system will help you hone your operations. How many washes can a specific item take? How many uses per week? Are there variations in throughput rate? How often are repairs happening and how long do they take? Digging into this data will improve purchasing decisions, allow you to better understand your customers, and identify inefficiencies in your business.

REDUCE SHRINKAGE

Want to know where and when items are going missing? RFID adds accountability and has been shown to reduce shrinkage. If an item does go missing, you should know who is responsible. In turn, you can reduce the cost of replacement by billing the appropriate party/individual.
When customers face challenges or seek new solutions, our production team likes to joke, “There’s a bag for that.” While we are not the Apple app store, we are dedicated to solving unique problems for our customers.

Brexit waters are uncharted, so the first thought is that no one can possibly know the final outcome.

Some further thoughts:

• The effects on the US should not be major or sustained.
• UK itself will probably have a short recession, but not a big long-term dip.
• Europe will have to re-think its non-economic integration.
• Russia and China, while emboldened, will likely see few gains.
• Markets, while initially down, will likely recover within six months or so.
• London, as a financial center and as a repository for foreign money, may well face the biggest upcoming tests.

This last point, while not crucially important to anyone else, may be the most significant. Not because London’s role as a center of finance or money laundering is crucial to the world economy — it is not.  Rather, because the Brexit vote reflected similar patterns elsewhere that could have a continuing major impact.

These include:

• A rural-urban divide.
• A generational divide.
• Rebellion by working-class folks who feel government, financiers and globalization have failed them.
• Anti-immigration sentiment — or at least heightened debate over who and how many immigrants to let in.
• A threat to the direction public and private elites have been headed.

These issues are major.  Centrifugal forces are pulling Western countries apart.  Things that have been taken for granted, like expansion of individual autonomy, or multiculturalism versus the traditional concept of the melting pot, and free trade, will have to be faced squarely.

Indeed, the question of “national character,” or even of whether countries like the UK, Spain, Belgium and Italy should each be split into two or even three smaller countries, will need to be dealt with.  Scotland’s pro-EU vote is a leading indicator.

These are amazing days.  Unfortunately, many of the emerging actors will be demagogues or even Fascists, whose shrillness will make rational discussion of  these vital issues very difficult.

“May you live in interesting times” goes the old Chinese proverb.  We do.  Let’s just hope the Brexit vote doesn’t herald an era of “too-interesting times.”

Richard Levy, HBD’s President, travels to the UK several times annually.

A recent nightmare experience with an airline got us thinking about our approach to customer service. It’s not just airlines; many companies come up short on something we believe is extremely important.

There is nothing more frustrating than poor customer service (trying to speak to someone at a cable company) and nothing more satisfying than having your expectations exceeded (American Express is always impressive). Whether you are a Fortune 500 company or a small business, customer service is an extension of who you are.  It is a relationship between you and your customers, and the first impression on a potential new partner.

Customers are not just purchasing products, they are purchasing every interaction with your company.  Every point of communication produces trust, loyalty and strength. Whether communication is in person, by email, or on the phone, each customer wants to know that the person on the other line genuinely cares about their issues or needs.

At HBD, we understand what it takes to provide excellent customer service:

We Respect.  We respect our customers and know that their time is valuable.  We know their businesses depend on our ability to deliver. During business hours we will always be there to answer your calls, to provide updates, and to solve your problems.

We Listen. HBD is a solutions business. With more than 40 years of industry experience, we can apply our knowledge and expertise to the challenges you face. Our team listens carefully to the needs of our customers. Our customers are why we are here. It is our pleasure to help you find what you need.

We exceed expectations.  It is our goal to go above and beyond the call of duty.  We strive to develop products that best meet your needs and to find solutions when emergencies arise.  We will always do our best to exceed your expectations.

As our daily lives and travels provide us many reminders of how not to treat           customers, we are confident you will be impressed by the way HBD attends to your business.

Michelle Hewitt, Sales Manager & Customer Relations

As an avid runner with an equal love for team sports, I frequently draw parallels between business and athletics. These comparisons are made often in business because of their validity. Very few businesses take off like a rocket. For most, the race is not a sprint but an endurance race. Setting vision, developing a plan, and having the determination to march toward that goal requires a marathon mentality. As an American textile company that has been in business for more than 40 years we know this to be true. On the trail and in the office, I have learned the following through victory and adversity.

Be Committed. Signing up for the race is the first step. It is also the action that unleashes your potential. A commitment to compete, to set a goal, to develop a new product, or to pursue a new strategy is followed by a sense of obligation and urgency. A company, like a runner, must be committed to where it is going.

It’s a Process. I have run races on a whim, and have run races with preparation that followed a training program. Can you guess which led to the best result? To be your best as an individual or as a company, you must have a plan. Getting fit doesn’t happen overnight, neither does implementing a new strategy. There will be set backs and it will take time. But having a plan will lead to positive change (some that you perhaps did not envision). Schedules will change, bad habits will be exposed and eliminated, you will improve systems, and become more efficient.

Embrace the Challenge. Most people avoid suffering. But in deciding to train for and run an endurance race you know suffering in some form will be in your future. The best teams, the best athletes, and the best employees accept suffering as a necessary ingredient in achieving their goals. Staying late to finish a project, arriving early to prepare for a meeting — at times you will be inconvenienced or spend weeks doing things you don’t enjoy. Embrace the process and compete — you and your team will benefit.

It Feels Good. Having a healthy body and clear mind feels good. Crossing the finish line and knowing you succeeded feels great. Those feelings result from commitment, planning and embracing challenge. The endurance mentality will do the same for an individual, team, or company. You will have direction, you will improve processes, and you will overcome challenges. The end result will be a healthy, fit, successful company. It will feel good. Bayard Collins, HBD’s Vice President

CHINA UPDATE- JAN 2016

What’s with China? Its exports are declining.  Its markets are in turmoil.  Its growth goals are regularly lowered.

We made a bunch of predictions in late 2014. All but one (we predicted continued
food inflation) turned out to be correct.  So we’ll make some more observations about        China’s future over the next few years.

Most observers are still optimistic – too optimistic in our view. They believe China will make the transition – albeit bumpy – from an export to a consumer economy.

China has lots of problems that make this unlikely to us:

• A huge real-estate bubble.
• Endemic corruption.
• Bad and worsening environment.
• Overcapacity and the threat of deflation.
• A weak banking system and high debt levels.
• An aging population supported by too few workers.
• Huge income inequality.
• A disastrous imbalance between males and females.
• Vested interests of the military.

These problems are daunting. But they mask two even greater and more basic problems:

• The middle-income trap.
• Hubris in the Chinese Communist Party

The Middle Income Trap

China’s rise from backwardness to the world’s second largest economy in 25 years is           incredible and unprecedented. But the process is relatively easy compared to continued      future growth.

Why? Saving any institution involves relatively few, basic decisions:  Cut costs; become the low- cost producer; reinvest in infrastructure, plant and equipment.  The Chinese took or bought land cheaply; sold it to make money to invest in infrastructure; made sure            Chinese labor remained abundant and cheap; managed the currency; limited foreign       competition; and insisted on foreign technology transfer.

The Chinese also postponed expenditures on pollution abatement and environmental renewel. They spent little on healthcare or on developing a legal system.

These actions helped create the Chinese export juggernaut and keep it going. But to        advance further, many more sophisticated allocation issues must be addressed.  No       centrally planned economy has ever successfully navigated these shoals.  The markets, messy as they are, become the only way forward.

This leads to the second basic problem:

Hubris in the Chinese Communist Party

Until 2008 the Chinese were content to be our junior partner. But the Great Recession    convinced many Chinese that their system of command economics is better.  Their track record convinced them they could continue to guide the Chinese economy forward.

The last four days show the folly of their over-confident hubris. The market turmoil, capital outflow, and showing internal and declining export growth are reflections of problems that have been growing for years.

The Chinese government reminds you of the Japanese and USSR in the 1980’s. Remember when MITI, the Japanese central planning arm, was going to rule the world?  MITI was sure it could guess the future.  Instead it led to over two decades of Japanese economic          stagnation.

Remember when Gorbachev thought he could “reform” Russian Communism by tweaking it?   He couldn’t – no one could – and the whole house of cards came tumbling down.

The Chinese can’t tweak their way to success either. Fundamental reforms are necessary if they are to avoid stagnation or worse.  Anything less could trigger huge problems, with negative implications for China, its neighbors, and the world.

Richard Levy

Richard Levy, HBD’s President, studied East Asia and economics. He has travelled to China over 40 times since 1994.  He speaks regularly to bankers, business people, China officials and China experts.

Give us your views. We would like to publish them, using your initials and where you are from.

This blog is about healthcare economics- factors that drive costs.  It is NOT about the Affordable Care Act (“Obamacare”). Your opinion, whatever it is, is at least as good as mine.

Five factors are the main drivers of healthcare pricing:
• Demand
• Supply
• How compensation is determined
• Cost shifting
• Pricing opaqueness

Let’s look at each of these a little closer.

Demand.
If you add, say, 10 million people to the health rolls, especially the less healthy, demand for services and drugs has got to increase. Unless there is slack in the system, prices would be expected to rise.
Supply.
This upward price pressure can be lessened by increasing supply through, say, increasing the number of hospital beds or practitioners (doctors or other). Supply can also be increased relatively by reducing the number of hospital days required for specific events, or by inventing drugs or less invasive methods of treatment.
How compensation is determined.
Much compensation is based on “fee-for-service”. This creates reverse incentives for providers, who are paid for procedures, not for outcomes.
Cost shifting.
Hospitals and providers do not have to charge everyone the same for the same services. This creates a system where some customers, like the Federal government or Blue Cross Blue Shield insurers, enjoy pricing that is often unprofitable, and others are charged more to make up the difference.
Pricing Opaqueness.
Most providers, especially hospitals and surgical centers, do not quote prices in advance, even for routine procedures. This makes it impossible for even the best informed consumers to make rational choices.

In addition, at least two other factors cause major inefficiencies:
• Each state regulates its own insurance. Therefore, there are not national insurance plans. Instead, there are 50 different plans for each national provider, and then many different forms.
• The government is currently prohibited from negotiating with drug companies over  pricing. Consumers are prohibited from buying their drugs by mail-order from other countries, where the same drugs often cost much less.
Whatever your views, these are the main factors affecting healthcare costs. There are  other, philosophical issues, but these are the primary economic factors.
I hope this helps clarify the issues for you as the debate continues.

Richard Levy is President of HBD, Inc. He studied economics and has been involved in the healthcare industry for over 30 years.

Give us your views. We would like to publish them, using your initials and where you are from.