Factory Workers Know How to Speed Up Covid Shots
(Bloomberg Opinion) --
The pandemic has called attention to several underappreciated corners of the industrial world, most notably the importance of a good ventilation system and the value of super-cold freezers capable of storing and transporting Covid-19 vaccines. The next manufacturing process to have a pandemic moment? The assembly line.
At the core, that’s what a mass vaccination campaign is: an assembly-line-like process of moving thousands of people through specific, repetitive steps — check-in, jab and observation period — as quickly and efficiently as possible. As the country races to accelerate its coronavirus vaccination rollout, some U.S. manufacturers are seeing the parallels to their own specific skillsets and stepping up to help out.
In the most high-profile example, Honeywell International Inc. has teamed up with health-care system operator Atrium Health and Tepper Sports & Entertainment in its home state of North Carolina to bolster the vaccine campaign there. The results have been impressive so far: 35,000 people were vaccinated at two events held at the Charlotte Motor Speedway and the Bank of America football stadium, where the Tepper-owned Carolina Panthers play. A follow-up event for second doses of the coronavirus vaccines is currently underway at the Speedway, with another planned at the BofA stadium in two weeks.
Honeywell brings particularly useful expertise to the fore: it sells handheld barcode scanners normally used to register the price of cereal boxes at grocery-store checkout lanes or read hospital bracelets that can be adapted to check in vaccine patients more efficiently. Honeywell is also building an industrial software business and drew on that know-how to automate patient data entry and shorten wait times. It used a camera-based artificial intelligence system developed by its building-technologies arm to monitor the flow of cars in vaccine drive-thru lanes to prevent logjams. And as a provider of warehouse-automation equipment for e-commerce giants, it has expertise in logistics management.
But much of the process is just basic industrial engineering and the application of well-known manufacturing operating principles. The average trip to the hospital or doctor’s office involves a high degree of variables — are you going for a routine procedure or an emergency surgery? A flu shot or a mysterious ailment? By contrast, there’s just one goal with these vaccine events. That makes it easier to apply operating philosophies such as lean manufacturing, a strategy cultivated by Toyota Motor Corp. that focuses on boosting productivity by minimizing wasted materials, idle time and unnecessary work and by continuously improving and refining processes.
“I feel like we’ve trained for a lifetime for something like this,” Torsten Pilz, Honeywell’s chief supply chain officer, said in an interview. Pilz is overseeing the company’s involvement in the vaccine distribution programs. Asked about lessons learned so far, Pilz said the group had initially allowed for 10 to 15 minutes of overlap before a shift change at midday, but decided to extend that to 30 minutes, so that there was no disruption. “If you stop the flow at some point, it backs up — just like an assembly line,” Pilz said. “You have to make sure the steps are so synchronized.”
Industrial companies think in seconds when perfecting systems for churning out everything from cars to air conditioners. A few seconds saved here and there on vaccine distribution may not feel all that meaningful, but those seconds add up to extra minutes per visit and the minutes add up to hours when spread out over thousands of people. That makes a material difference in the number of vaccines that can be distributed on a given day, but it also affects the overall patient experience. With some experts including former Food and Drug Administration commissioner Dr. Scott Gottlieb warning the vaccine rollout may soon be slowed down by a reluctance among some Americans to want to get the shots — rather than the supply shortages that have bedeviled the process so far — convenience is paramount.
At the BofA stadium event, health-care workers were putting a shot in an arm every 4.5 seconds, according to Honeywell. The average processing time was 25 minutes per patient, but that includes the U.S. Centers for Disease Control and Prevention’s recommended 15-to-30 minute observation period to monitor for potential side effects. Pilz said they had set up crowd-control ropes — like at Disney World or the security checkpoints at Yankee Stadium— for the BofA event, but they ended up not needing them. The whole apparatus moved so efficiently, people showed up at their designated appointment times and just walked right through. One person joked that the only thing that could have made the experience better is if Honeywell’s volunteer staff also rotated his car tires and changed the oil while he was getting vaccinated.
Trane Technologies Plc, which makes air conditioners as well as super-cold freezers, is collaborating with another health-care system, Novant Health, on a separate mass vaccination program in North Carolina that aims to inoculate as many as 20,000 people a day. Trane — whose North American headquarters are in Davidson, North Carolina — is supplying freezers to help store the vaccines and also lending its logistics expertise. CEO Mike Lamach said his mother’s experience with getting the coronavirus vaccine was eye-opening for him as a manufacturing executive. The system in her home state booked people for appointments in 10-minute increments; that’s fine for a flu shot, but such a short window doesn’t factor in the observation period recommended for the coronavirus vaccines nor does it account for the need to avoid lines where people might not be able to keep socially distanced. It’s a recipe for pileups. “You have to think about it like a manufacturing organization,” Lamach said in an interview. “How long does the process take? Can you do a shot in 4 seconds? 17 seconds? How do you set up a straight line? Then you can inoculate at that speed and pace” and set up appointments accordingly.
Trane and Honeywell’s strong ties to North Carolina make this state the obvious place for their efforts to start and they should be commended for their initiative. But there’s no reason this model couldn’t be replicated elsewhere. Carrier Global Corp., another provider of air conditioners and refrigerated trailers, has reached out to the governor in its home state of Florida and held talks with an area hospital chain and a major trucking company about building its own vaccine ecosystem, CEO Dave Gitlin said in an interview. Honeywell has held talks with the owners of the Kansas City Chiefs, San Francisco 49ers and Houston Texans football teams about replicating its distribution program in their stadiums, all of which are located in states where Honeywell has a large manufacturing presence, Pilz said. The company is working on compiling useful tips, a list of necessary equipment and even flow diagrams into a handy playbook.
None of these companies have a lock on lean manufacturing principles. Far from it: Companies from Massachusetts-based General Electric Co. and Illinois-based Boeing Co. to Ohio-based Parker-Hannifin Corp. and Missouri-based Emerson Electric Co. have incorporated the operating philosophy into their business models. It’s a missed opportunity if the governors of those respective states don’t get in touch and ask these companies to volunteer their expertise.
Deals, Activists and Corporate Governance
Boeing is facing a shareholder lawsuit alleging, among other things, that the board failed to appreciate safety red flags after the 737 Max’s first fatal crash in 2018 and enabled then-CEO Dennis Muilenburg to pursue a public relations and lobbying blitz meant to push back on questions about potential engineering problems. The Max crashed again in March 2019 and was grounded by the FAA for 20 months. Boeing is seeking to have the suit dismissed and has said the picture painted by the lawsuit is “misleading and incomplete.”
On a related note, Europe’s chief aviation regulator Patrick Ky said the bloc would carefully scrutinize future U.S. jet designs in the wake of the Max fiasco. Two Republican representatives took issue with this, saying in a letter to Transportation Secretary Pete Buttigieg that the comments “could be taken as a groundless attack” and an attempt to undermine the bilateral agreement that ensures aircraft built in the U.S. and Europe are approved by both sides. Given the U.S. government’s own efforts to tighten the guardrails on the FAA’s jet-approval process amid criticism of the Max’s initial certification, “groundless” feels like an odd word choice. In brighter news for Boeing, Singapore Airlines Ltd. is swapping some of its wide-body jet orders for the much-delayed 777X. This is the first fresh 777X order since well before the pandemic, according to Bloomberg News.
United Airlines Holdings Inc. is joining with investment banker Ken Moelis to take a battery-powered flying-taxi company public this year. Could you imagine reading that sentence in 2019? But sure, why not. It feels like every electric-vehicle company under the sun has merged with a special purpose acquisition company in recent months or is weighing some other debut on the public market. Rivian Automotive Inc. is reportedly eyeing a valuation of $50 billion — $50 billion! The Moelis-backed SPAC Atlas Crest Investment Corp. is merging with electric air-taxi developer Archer in a more modestly valued $3.8 billion transaction. United will invest $20 million in Archer. Together with its regional partner Mesa Airlines, the company may eventually buy as many as 200 of Archer's small flying taxis (worth about $1 billion) and use them as a lower-hassle, more environmentally friendly way to ferry customers to airports in congested cities. United has an option for $500 million of additional aircraft. As Vertical Research Partners analyst Rob Stallard points out, Archer’s “very slick" investor presentation conveniently skips over the 2021-2023 period in the financial modeling section and jumps straight to 2024, when it expects to generate a whopping $42 million of revenue. The company is targeting $12.3 billion in revenue at a 37% Ebitda margin by 2030 — “and I just saw a flying pig,” Stallard wrote.
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Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.
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