When the coronavirus pandemic first hit the U.S., Halcyon Shades’ curtain sales quickly dimmed. So the suburban St. Louis business did what hundreds of other small manufacturers did: With the help of an $870,000 government grant, it turned to producing protective gear.

But things didn’t go according to plan. The company stopped making face shields because it wasn’t profitable. It still hasn’t sold a single N95 mask due to difficulties getting equipment, materials and regulatory approvals.

“So far, it’s been a net drain on money, resources and energy,” said Halcyon Shades boss Jim Schmersahl.

Many companies that began producing personal protective equipment with patriotic optimism have scaled back, closed or abandoned, according to an Associated Press analysis based on numerous interviews with manufacturers. Some have sold equipment they bought with state grants.

As COVID-19 weighs hospitals and shuts businesses in 2020, elected officials Touted the need to boost U.S. production protective equipment. However, many manufacturers answering the phone face logistical hurdles, regulatory rejections, slumping demand and stiff competition from foreign suppliers. After the initial PPE scramble subsided, many newcomers to the industry struggled to sell.

“Ultimately, when everyone says they want made in the U.S., no one buys, not even the state,” said Tony Blugumas, vice president of Missouri rural firm Green Resources Consulting. There are only a few thousand masks. . “We are disturbed by the whole situation.”

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Missouri Governor Mike Parson was also disappointed. His administration allocated $20 million in federal COVID-19 relief funds to 48 businesses to make masks, gowns, disinfectants and other supplies. Parson hopes to seed a permanent field of manufacturers.

“I’m still a firm believer in this — we need to make personal protective equipment in this state,” Parson said. “Unfortunately, a lot of entities are going back to where they got it before.”

The outbreak of the pandemic has shown that the United States is highly dependent on foreign countries for protective gear.when China restricts exports Because of its own battle against COVID-19, U.S. inventories plummet. Prices soar as federal officials, governors and the health care system scramble for supplies.

While the Federal Reserve has been replenished, shrinking domestic production has fueled fears that state governments, medical facilities and other agencies could once again be caught in a rush to buy gear in a future pandemic.

The Associated Press identified more than $125 million in grants to stimulate funding for 10 states (Alabama, Hawaii, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Missouri, New York and Ohio), more than 300 businesses manufacture epidemic supplies. Grants may be obtained in other states, but there is no central clearinghouse to track them.

In November 2020, the state of Alabama awarded HomTex Inc. its largest single grant — nearly $10.6 million from the federal pandemic relief fund. The company will equip a new Selma factory to produce 250 million surgical masks and 45 million N95 masks annually. Due to a lack of customers, the factory has yet to produce anything.

“I can’t make a product that I can’t sell,” said HomTex president Jeremy Wootten.

Some PPE makers point to federal regulations as part of their struggles. Three-ply masks require FDA approval for medical use—an important sign of building a long-term customer base. Companies need approval from the National Institute for Occupational Safety and Health to market the product as an N95 respirator, which filters at least 95% of airborne particles.

In the first two years of the pandemic, NIOSH approved 30 new manufacturers — more than seven times the typical number in a similar pre-pandemic period, according to agency data. Some applications are still pending, while many others are rejected.

Halcyon Shades’ N95 certification was rejected in October because its samples did not have a headband attached. While the company was working on another app, its equipment was idle, with partially completed masks parked on a conveyor belt.

Without federal approval, “we’re just dead in the water,” says company owner Schmersal.

A progress report submitted to the Missouri Department of Economic Development shows that nearly all PPE grant recipients face challenges through July 2021, especially with regard to sales.

Ohio awarded $20.8 million to 73 businesses to make pandemic-related supplies, according to state data. Of the 60 companies that complied with the most recent reporting deadline, more than a third were no longer producing PPE by the end of 2021.

Dozens of businesses have banded together to form the American Mask Manufacturers Association to keep the industry going. But as more and more businesses fail, the group’s membership has dwindled.

Association organizers say the industry has reached a tipping point. They want the federal government to treat PPE makers like the defense industry — with long-term contracts to permanently replenish inventories in case of future pandemics or emergencies.

“If the federal government doesn’t step in and help support America’s manufacturing base, it will almost certainly come back to China, and we’ll be as vulnerable as we were in early 2020 and early 2019,” said Brent Deeley, association president and co-founder of Premium-PPE. The founders, a Virginia-based manufacturer that launched during the pandemic, laid off about two-thirds of the company’s roughly 300 employees.