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Published in Manufacturing

West Michigan food manufacturers playing outsized role in baby formula shortage

BY Friday, May 13, 2022 01:50pm

EDITOR’S NOTE: This story has been updated with comments from Gerber Products Co.

West Michigan is playing a major role in the ongoing U.S. baby formula shortage as producers fall in the center of a product recall or are ramping up production to help meet consumer needs.

Similac is one of three formula products recalled by Abbott Nutrition in February. COURTESY PHOTO

The mid-February recall of multiple formula brands produced at an Abbott Nutrition facility in Sturgis exacerbated an ongoing shortage that dates back to the early months of the COVID-19 pandemic. 

Meanwhile, West Michigan is home to multiple baby formula producers that have responded by ramping up production.

That includes Allegan-based Perrigo Co. plc, which shipped 37 percent more formula in the first quarter of 2022 compared to the same period last year. The company has increased production by 15 percent in recent months.

Perrigo produces a line of store-brand nutrition products that include toddler formulas.

“The Company is doing everything possible to provide as much infant formula to its retail partners during this challenging time,” the company said in a statement to MiBiz. “Perrigo has not had any infant formula supply chain issues. We are running all the formula we possibly can, but our facilities are at full capacity.”

Perrigo’s more than 550 infant formula employees are running facilities 24 hours a day, seven days a week. The company initially focused production on hypoallergenic formulas to produce a roughly one-year’s supply of its pre-recall demand before prioritizing production of formulas and sizes that are in high demand. Perrigo CEO Murray Kessler told Reuters today that he expects shortages to last for the “balance of the year.”

“By optimizing our portfolio, we have increased production output by 15 percent above full capacity and expect to be able to continue to do so until this crisis is resolved so parents and caregivers can help babies thrive,” according to the company’s statement.

The ongoing shortage that started more than a year ago was exacerbated by a major product recall on Feb. 17 at an Abbott Nutrition facility in Sturgis. The company, which is headquartered in Chicago, voluntarily recalled three popular brands of powdered formula following consumer reports of bacteria found in infants who used formula produced at the facility about 45 miles south of Kalamazoo. The Sturgis plant is one of Abbott’s primary production facilities.

Since the recall, the U.S. out-of-stock rate for infant formula has grown to 43 percent and is more than 50 percent in five states. The out-of-stock rate stayed below 10 percent in the first half of 2021.

In addition to Abbott’s recall, supply chain challenges, limits on imported formula from Europe, and initial stockpiling that shifted supply and demand during the early months of the COVID-19 pandemic have all contributed to the shortage, according to a report in The Atlantic.

Key role for West Mich.

Other West Michigan formula producers include Fremont-based Gerber Products Co. — which is owned by Nestlé S.A. — and Mead Johnson & Co. LLC, which operates a major facility in Zeeland that underwent a $67.7 million expansion less than two years ago. The expansion allowed the facility to become Mead Johnson’s global supply and technical center for hypoallergenic infant formula.

“We do have a very strong cluster in West Michigan of producing food products and a niche really in infant formula production,” said Jennifer Owens, president of Lakeshore Advantage Corp., an economic development organization for Ottawa and Allegan counties. “I do think all of the plants in West Michigan that can produce formula will likely be at or above capacity.”

A Gerber spokesperson said while the company is a “small player in the infant formula market, we are absolutely committed to doing everything we can to help get parents and caregivers the formula they need so their babies can thrive.”

“We have significantly increased the amount of our infant formula available to consumers by ramping up production and accelerating general product availability to retailers and online, as well as in hospitals for those most vulnerable,” the spokesperson said. “We are also working through our Parent Resource Center, website, social media and industry groups to help make sure essential information is available for those parents and caregivers seeking it.”

Owens added that infant formula production, in particular, is a difficult and highly regulated industry to develop.

“It’s not a space that a new company can come into in the U.S. and start producing infant formula,” she said. “The fact that we have very strong companies doing this for a long time and doing it well bodes well for growth in the area.”

Meanwhile, the four companies — Nestlé, Mead Johnson, Perrigo and Abbott, which control nearly 90 percent of U.S. formula manufacturing — are the subject of a congressional inquiry announced this week to help address the shortage.

U.S. Rep. Carolyn Maloney, chairperson of the Committee on Oversight and Reform, and U.S. Rep. Raja Krishnamoorthi, chairperson of the Subcommittee on Economic and Consumer Policy, issued letters to the four companies on Thursday seeking more information about how they’re boosting production.

“The national formula shortage poses a threat to the health and economic security of infants and families in communities throughout the country — particularly those with less income who have historically experienced health inequities, including food insecurity,” the two members of Congress said in a statement. “It is critical that your company take all possible steps to increase the supply of formula and prevent price gouging.”

Top state officials on Friday afternoon also announced that they were in talks with company executives and are coordinating resources to help parents.

“Today I spoke with Abbott leadership and offered support to help get production back on track,” Gov. Gretchen Whitmer said in a statement Friday. “I will do everything I can as governor to boost baby formula production, getting it from factories to store shelves and into people’s homes. I know how anxious parents must feel right now, and it’s crucial that they have confidence that a product is safe for their babies. I urge federal leaders to use every tool at their disposal to boost formula production. We're tackling the shortage head-on in Michigan and working with our federal and private sector partners to fix supply logistics and ensure every baby has what they need.” 

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Read 1400 times Last modified on Thursday, 19 May 2022 15:51
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