Since January, the coronavirus has gone from a mysterious infection located in Wuhan, to the global threat spreading like wildfire. While it is primarily a public health matter, with the number of cases nearing 8 million and no vaccine in sight, the pandemic has also wreaked havoc on the global economy.

One of the primary economic concerns that have been established since the outbreak is the vulnerabilities of the global supply chain which is driven by lowest costs and over-dependence on China.

Though factories in China are slowly re-opening, they are still operating far below capacity, if at all. An article in the New York Times titled ‘Halting China’s Economy Was Hard. Restarting It Is Harder’ describes the immense difficulties for Chinese factories to regain productivity between a lack of demand, distribution, and tens of millions of laborers still unable to get to work.

Even as these factories start up production, US consumers have turned “hostile” to products from China, according to a study titled ‘Consumers turn against Made in China.’ The study highlighted that nearly half of consumers from the US strongly agree that local retails should halt sourcing from China. As a mistrust of China builds, the demand for products made in the U.S. soars.

In all economic shake-ups there is a handful of industries that flourish, and this period is no different. Very specific industries have benefitted due to the new reality brought on by the coronavirus pandemic, a new reality which includes a distrust of Chinese products as well as a lifestyle of isolation and social distancing.

The companies seeing profits in COVID-19 times

The obvious ‘winners’ of the coronavirus epidemic include glove and mask manufacturers, Ecommerce marketplaces, video conferencing apps, and of course, entertainment and streaming services.

But another, less obvious industry who has turned out a profit since the epidemic began is USA-based packaging manufacturers.

All products, whether manufactured in China or not, require high-quality packaging for their distribution. From the food and beverage industry, to chemicals used in labs and hospitals, each object requires specific packaging that enables safe containment and delivery. In times of COVID-19, with social distancing measures keeping many at home, the demand for delivery has soared, and with that so has the demand for packaging.

Yet, with the packaging factories in China working far below capacity, and the distrust of Chinese products growing dramatically, US companies are forced to bring their packaging sourcing back home. This has given the handful of local packaging manufacturers in the United States a time to shine.

Jack Grover who owns a flexible packaging company Grove Bags opened up about the positive growth his business has seen over the last few months stating, “Our organization has been fortunate in the way that all our packaging is produced in the United States, so we have actually seen an influx in our flexible packaging business from companies that were previously outsourcing their bags.”

In fact, business is so good for domestic packaging companies in the United States, that many of these businesses are struggling to keep up with the surging demands in their industry.

Grover continued to explain his current situation claiming, “our operation is up to running 3 shifts a day, 7 days a week and we are still, unfortunately, having to turn work away because we are over capacity on our packaging side of the business, which is certainly due to the coronavirus.”

Another company who has upped their game to satisfy ever-increasing demands is FlexAttack. A business owned by family-man Ty Bonnar. This International and domestic bulk liquid transport and storage company has always been proud about their U.S. made products.

FlexAttack has maintained a stable customer base thanks to their high-quality products and are one of the few companies that do not import any part of their merchandise from China. Ty Bonner expressed the importance his company places on US production, claiming “All products are 100% fabricated in the USA …we are prepared along with vendors to support customers in times of crises.” Indeed, they have stepped up in this crises time with Bonner relating that the company has seen an increase of proposals and phone calls over these months.

WoodMac, a consultancy group who are known for their comprehensive data and analysis, studied how the COVID-19 pandemic affected flexible packaging. They too concluded that US and European packaging has profited and emphasized that “demand for flexible packaging in medical supplies, such as gowns and swabs, has seen double-digit growth over the outbreak period.”

Considering the sudden overwhelming demand, every U.S. based packaging manufacturer should be greatly profiting. It is a golden parachute for these businesses, and the kind of opportunity that is unlikely to come again.

A missed opportunity for this US pioneer

The pioneer of the movement to bring packaging production back to the United States is Environmental Packaging Technologies (EPT), a flexible packaging company that decided to keep all stages of product-development in the U.S. when they were established.

Founded in Texas in 2007 by Tatiana Golovina, a Russian-born entrepreneur, EPT was one of the first companies to stay committed to in-house production and had years of great success.

But where is EPT now and why aren’t they the biggest winners of the packaging boom?

Although they were the forerunners of the US based industry, EPT missed out on their chance to shine due to years of mismanagement and lost legal battles of their founder and president, Tatiana Golovina.

Golovina has been faced with multiple lawsuits over time. Investors, collaborators, and patent experts have been in court with her for years over breach of patent rights, breach of contract, patent infringement and fraud. Golovina was eventually found guilty of fraud and fiduciary duties [1] after spending more time in the courtroom than closing business deals .

EPT then found itself de-listed from the Securities & Exchange Commission (SEC) list, a result of concerns over manipulative trading activities and a lack of transparency. Throughout these turbulent years, Golovina’s focus and energy shifted from moving her company forward, to winning her legal battles, a move that greatly weakened the company over time.

After attempting to contact EPT regarding their status and profitability during this boom, we found their website removed and no contact information available. It seems the company is barely operating during what could be their most profitable time, an unfortunate consequence of Golovina’s constant run-ins with the law and lack of foresight.

A shift to local manufacturing on its way

The overall success of local bulk manufacturers, spurred by growing distrust of China and a vulnerable global supply chain, might be a sign of restored focus on national manufacturing. While many industries are struggling to survive through the coronavirus pandemic, US packaging companies like Flexattack and Grove Bags have more business than they know how to handle.

Considering China’s extraordinary economic surge over the past 40 years, its race to becoming the world’s second biggest economy, and its annualized growth of 7%, it would be premature to assume this shift away from China will be long term. The coronavirus may end up being but a hiccup in China’s rise.

Yet it is undeniable that, at this moment, those packaging companies that have shifted their manufacturing out of China and into the U.S. have felt the least strain during these challenging times. U.S. packaging companies who have maintained their reputations and kept production close to home are now benefitting from the kind of growth that will carry them through this economic crisis, and potentially for years to come.

[1] Cause No. 2014-18161. Harris County, Trevor Griffiths V. David Michael Sims, Tatiana Golovina, Environmental Packing Technologies, Inc., and Environmental Packaging Technologies Limited

Coronavirus