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Comment by gruez | Hacker News Reader

I took a quick skim of the article and it looks like all it would take to solve this problem is for him to raise prices (clearly the current prices are below the market clearing rate) and forcing customers to pay upfront (or at least put the money in a trust or something).

>“Last time he geared up and went three shifts a day working his tail off,” the mayor recalled. “As soon as the issue died, he didn’t have any sales. He had to pay unemployment for all these people, and he had to gear down.”

Doesn't seem to be a real issue if those extra costs are factored in

>Hospitals promised to stick with him afterward, but they broke their promise. The allure of cheaper Chinese masks was too great for hospital purchasing groups to ignore.

Ask for money upfront, or get it in writing and sue later.

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The machinery require maintenance and software contracts from the suppliers.

The raw inputs require delivery contracts from the suppliers and is currently also in short supply. He can’t get his same preferential pricing outside of his supply contracts, or his suppliers may not even be able to deliver it, or they’d require he increase his contract buy.

He may not believe in hiring hourly manufacturing employees on contract without benefits. The amount of time he spends training them and watching them cycle in and out has a cost.

Sure, it could be done. Is it worth it? Obviously not, or he’d be doing it.

>Sure, it could be done. Is it worth it? Obviously not, or he’d be doing it.

All of the factors you listed can be conceivably factored into the price and/or be part of a purchase commitment. The fact it hasn't either means:

a) the increased price isn't something the market is willing to bear. I'm skeptical about this because the presence of scalpers on the market makes me think that there are at least some consumers willing to pay insanely high costs for masks. I will also go on a limb and say most people would probably be willing to pay 2-3x "normal" price for N95 masks (a quick search on archive.org says they normally retail for $1/ea when purchased in modest quantities).

b) the owner is behaving irrationally from a profit maximizing perspective, perhaps because he got burned last time or thinks any profit isn't worth the hassle.

It's too easy as a catch-all to say "everything can always be priced in". Right now 48 states (I can't find anything saying all 50) are in a state of emergency, which prohibit raising prices more than around 10% or 20%.

I'm bringing up these points because over the last month I have come to also think either state or federal government needs to take responsibility and buy these makes from a local producer - even when there is no pandemic.

I don't think our connected web of hospitals, suppliers, and insurance companies have the right incentives to use local, "expensive" suppliers when there are lower cost non-local suppliers and these non-local suppliers have stocks.

[1] Price gouging percentages - https://www.natlawreview.com/article/coronavirus-emergency-d...

[2] State of emergency - https://www.businessinsider.com/california-washington-state-...

Raising prices in a crisis is probably criminal under price gouging laws.

Addressed here: https://news.ycombinator.com/item?id=22789745

Also, if the situation is really dire, I'm sure the government can grant him a waiver

“Probably” not illegal is a hell of a risk to take. All it takes is one prosecutor who thinks he can make his career over crushing pandemic profiteering and you’re screwed. It doesn’t even matter if you somehow win in the end.

The government can also place a long term order but they haven't done that either.

And there was no room to raise them in quiet times either because they were already more expensive than imports.

> He had to pay unemployment for all these people, and he had to gear down

Whining about a non-issue. Of course market conditions will change when the time-sensitive crisis is over. Unemployment is "paid" for the period of employment, not when they are laid off. If you don't like laying people off then contract them month-by-month.

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