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The Sunshine Economy

How did a Miami Lakes mask-maker go from millions unsold to expecting a shortage?

Demetech N95 masks 09132021.jpeg
Tom Hudson
Demetech invested $15 million to make N95 masks. Last fall, it had 20 million unsold masks in its Miami Lakes warehouse and few buyers. Now President Luis Arguello worries about a shortage as demand has skyrocketed.

A South Florida mask maker gears up – again – to make millions of masks.

In October, Karla Arguello stood on a balcony overlooking her family company's mask manufacturing and warehouse. A handful of workers were at a few of the machines that took material, stamped out N95 face masks, and attached head loops. Most of the machines sat idle.

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Just beyond were row upon row upon row of boxes on pallets, stacked 10 feet high. Inside those boxes were 200 million surgical masks and about 20 million of the more highly protective N95 masks.

Demetech had invested millions to make masks that were gathering dust in its warehouse.

No longer.

"We're almost out of stock of N95s," Demetech President Luis Arguello said. "We are in process of ramping back up to our peak. Hiring as fast as we can. A lot of our clients are going on backorder on N95s."

What happened? How did Demetech’s mask-making business turn around in just a few months — from millions stacked row after row,10 feet high, to reducing that stockpile to almost zero?

The big catalyst was the Centers for Disease Control and Prevention.

The highly contagious omicron COVID-19 variant spread fast, and in mid-January, the Centers for Disease Control issued an update on its masking recommendations. The agency emphasized wearing the most protective, best fitting mask – such as N95 and KN-95 masks. KN-95 masks have ear loops and are made in China. N95 masks are American-made and must meet U.S. regulatory standards.

Tom Hudson
Millions of surgical masks await buyers on Sept. 13, 2021 inside Demetech's Miami Lakes warehouse.

Adding to the buying interest — the announcement by the Biden administration that it would distribute 400 million N95 masks to Americans beginning this week. Each person will be able to get three masks for no charge at health centers and pharmacies. But they won't be Demetech masks.

"So it's not going to be coming from us," Arguello said.

Still, the distribution brought public attention to N95 masks, and provides an opportunity for Demetech to compete to resupply the National Strategic Stockpile.

In 2020, Demetech spent about $15 million to expand from its traditional medical suture business into face masks. It rented a building in Doral, bought equipment to make PPE — personal protection equipment such as masks — and hired about 1,500 people.

"We put it all into PPE, all of it. We bet the house, as you say," Arguello told WLRN in December 2020.

It was a bet that soured last year when there were no big buyers for its Miami-made masks despite federal requirements to buy American-made masks. By October 2021, the tens of millions of unsold masks were piling up and Arguello was filled with uncertainty.

"Do we continue to produce do we continue with this capacity? We know our country is going to need more masks. But how long can we continue to hold out?" Arguello told WLRN in October.

Mask-making at Demetech, Oct. 2021.mp4

It couldn’t hold out. It closed its Doral plant and let go of the mask-makers — almost 1,500 workers. The company went from making upwards of several millions of masks a day to a few thousand.

Now he said they are frantically hiring again — 50-60 new workers a day — as it ramps its mask making back up. Arguello is hopeful, stressed, and frustrated.

"There are significant shortages of N95. It's just starting. In the next couple of months, you're going to see prices spiking, people freaking out, trying to find out where to buy it because there's not enough inventory in our country. The capacity was there, but is not there today," he said.

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In a journalism career covering news from high global finance to neighborhood infrastructure, Tom Hudson is the Vice President of News and Special Correspondent for WLRN. He hosts and produces the Sunshine Economy and anchors the Florida Roundup in addition to leading the organization's news engagement strategy.