Hanes got out of the mask business. Connecticut is trying
Not so long ago, Connecticut couldn’t get masks at any price.
Now, it can’t get rid of 202,500 reusable cloth masks, leftovers from a gift of 2 million face coverings procured by the federal government from the maker of Hanes underwear.
Connecticut used about 1.8 million, but the rest sit in 450 cases on nine pallets in a New Britain warehouse. They contain 40,500 five-mask packs made by Hanesbrands Inc., a company briefly bullish on a PPE product line.
The boom has gone bust, Hanes no longer is in the PPE business and the administration of Gov. Ned Lamont said the Hanes masks are unneeded by the state and unwanted by anyone else.
The surplus masks recently were listed for sale by the Department of Correction on publicsurplus.com, an auction site used by state and municipal governments. The listing generated no serious offers from potential buyers, just questions and criticism from a Republican state senator.
The administration sees the lack of interest as proving its essential point: The masks truly are surplus, the likely consequence of massive federal spending that helped turn last year’s shortage into this year’s glut.
Sen. Heather Somers, R-Groton, said she cannot believe the masks are unwanted.
“Really?” she said. “I make five phone calls in less than 20 minutes, and I have towns and schools and Planned Parenthood and anyone else that would be willing to take them.”
Max Reiss, the governor’s communications director, said Somers is welcome to direct takers to the administration. It already has tried a more standard route, publicizing their availability through its emergency communication channels. (The masks are not currently listed on the auction site.)
“Using our unified command structure, we reached out to everybody — we asked municipalities, fire departments, police departments,” Reiss said. “And the consensus was everybody had masks, and they didn’t want them.”
The masks came to Connecticut via FEMA, the Federal Emergency Management Agency, at no cost to the state, Reiss said.
Connecticut offered to return the surplus to FEMA.
“FEMA said, ‘No, we don’t want the masks back,’ ” Reiss said.
FEMA provided them, but they had been procured in April 2020 by the U.S. Department of Health and Human Services. It committed $645 million to a crash program to secure and distribute personal protective equipment, or PPE.
Hanesbrands Inc. scored the biggest contract, a $321.5 million order completed in October 2020. In a second quarter earnings call in July 2020, the company’s longtime chief executive, Gerald W. Evans, told stock analysts the new line already was a money maker.
“Our newly created PPE business generated over $750 million of revenue,” said Evans, making his last earnings call before retirement. “This was well ahead of our initial expectation as we benefited from additional government contracts for both mask and reusable gowns, and we were able to fulfill demand for a number of businesses.”
Evans told analysts the company also had a launched a retail “PPE face mask” line.
“We expect to generate more than $150 million of additional PPE revenue in the second half of the year,” he said. “Looking forward, we continue to believe this consumer product line represents a meaningful ongoing business opportunity.”
Sales stalled, then fell. Supply increased and demand dropped off as vaccinations became widely available and many states dropped mask mandates. Connecticut still requires masks in schools, while leaving to local officials whether to require them in indoor settings, as recommended by the Centers for Disease Control and Prevention for unvaccinated persons and, in certain circumstances, the vaccinated.
When Evans’s successor, Steve Bratspies, killed the Hanes mask line in February 2021, Wall Street applauded with a nearly 25% jump in its stock price.
“It’s encouraging to see that COVID vaccines are rolling out around the world. As a result, this rollout, along with slowing retail orders and a flood of competitive offerings, have dramatically reduced our future sales opportunities,” Bratpies said in an earnings call. “Therefore, we do not view PPE as a future growth opportunity for the company.”
The commercial market might have tanked, but Somers said her calls have found willing takers for the surplus masks.
“The town of Griswold senior center said they can always use masks. The Griswold school system said they can always use masks. I talked to the town of Groton, they’re giving away masks,” Somers said.
Somers acknowledged that none of her potential recipients were looking to take enough masks to make a dent in the surplus. Connecticut was intent of ridding its warehouse of the surplus, an attitude that the people at Hanes might understand.
In June, Hanesbrand did its own housecleaning. The Winston Salem, N.C., company donated 2.6 million leftover masks to a charity in Canada, Brands for Canada. The gift arrived on 400 pallets, packed in eight tractor trailers.