As Anheuser-Busch, Hanes Join Others In Making Sanitizers, Masks, Coronavirus Highlights The Growing Importance Of Stakeholder Interests

As the coronavirus outbreak escalated in the U.S., Budweiser brewer Anheuser-Busch and Champion parent HanesBrands recently joined a growing list of companies in promising to make hand sanitizers, masks or other critical medical supplies in severe shortage.  

Anheuser-Busch said on Saturday that it’s using its supply and logistics network to begin producing and distributing bottles of hand sanitizer to accommodate the growing needs across the U.S. Hanes, meanwhile, also said Saturday it’s working to retrofit some of its plants to produce medical masks “urgently needed in the U.S. to fight the spread of the virus.” 

The two companies join a growing list of others switching gears to help relieve demand for critical medical and other supplies. In the U.S., designer Christian Siriano and Dov Charney, now head of Los Angeles Apparel after being ousted from American Apparel that he had founded,  have both announced they are making masks. In Europe, luxury companies including LVMH are making hand sanitizers while Zara parent Inditex has said it’s also helping to make masks and some gowns. 

While the stock markets have crashed as many non-essential stores and restaurants shut doors amid the looming threat of global recession, the outbreak also calls attention to global companies’ promise to honor “Stakeholders for a Cohesive and Sustainable World,” the theme of this year’s World Economic Forum in Davos in January.

In August, U.S. Business Routable, made up of chiefs of major U.S. companies, redefined the purpose of a corporation to promote “an economy that serves all Americans” and serve “all stakeholders,” including employees, supplies, communities as well as shareholders. Traditionally, it had endorsed “principles of shareholder primacy – that corporations exist principally to serve shareholders.” 

Just as the issue of sustainability, for example, is no longer an afterthought in the fashion industry that is struggling to wrestle with how to be environmentally responsible and not just plant factories wherever it’s the lowest cost, the coronavirus outbreak, and the empty U.S. shelves of masks, hand sanitizers and many other supplies, is another wakeup call. 

With U.S.-China trade wars already prompting many companies to diversify to other countries and even consider bringing manufacturing back to the U.S., the outbreak also shows the vulnerabilities facing a global supply chain driven often only by lowest costs and over-dependence on China, known as the world’s factory.

As many reports have found, the severe shortage of masks and other medical supplies gripping the U.S. hospitals is because of the fact there aren’t enough made in the U.S. and majority of those imports have come from China, where the coronavirus outbreak originated.

“Coronavirus has made the theoretical risks seem far more real, I think, to most of us,” Steven Adams, the acting director of Strategic National Stockpile, told NPR recently, adding the U.S. government now realizes it needs more mask factories in the U.S. 

A study by AP has found that the critical medical supplies, including testing swabs, hand sanitizers and protective masks, can be tied to the sudden drop in imports from China. 

U.S. also depends on Chinese pharmaceutical companies for more than 90% of U.S. antibiotics, vitamin C, ibuprofen and hydrocortisone, and 70% of acetaminophen, the New York Times reported, citing a report from Council on Foreign Relations. China’s state news agency also recently threatened in an editorial to ban the export of critical drugs and other medical supplies to the U.S., adding, in that scenario, “the United States would sink into the hell of a novel coronavirus epidemic,” the Times reported.

Some consumers are already concerned about their drug supplies being disrupted by any derailed global supply chain. In a telling sign, Costco’s finance chief Richard Galanti said recently on a conference call that the retailer has observed some pharmacy customers opting recently to pay out of pocket to fill a year worth of the prescription drugs.

“They’ll want all 4 (90-day supplies) of them filled now,” he said. “In some cases, even when their particular insurance plan doesn’t cover it, they’re paying cash. They’re just hoarding — they’re hoarding up on their prescription to make sure we’re not running out.”

Every crisis is an opportunity. Many companies can do well to take to heart what they promised when it comes to serving stakeholder interests, instead of reverting back to the old ways of chasing after the fastest sales growth and lowest costs often only for short-term shareholder gains.   

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