Grainger Things

As “silent partner” in five-way deal, industrial supply giant doubled mark-up

W.W. Grainger is just one example of a company profiting off the coronavirus pandemic. At least the equipment in question in its current situation is for a useful purpose.

It pays to distribute, sometimes, as Grainger was needed to facilitate an important deal recently. Word is out that the heralded industrial supply company was part of a major contract for protective coveralls with the U.S. Department of Health and Human Services worth up to $35.8 million, NBC News and other outlets reported April 18. No eyebrows were raised initially at the highly-publicized deal, considering the product is useful as protective wear for workers aiming to stem the spread of coronavirus. However, heads turned once it became known that Grainger—who wasn’t mentioned by President Trump, the HHS, or the other two companies during a lauded press conference last week—was not only part of the deal, but bought the coveralls at $4 apiece from DuPont and resold them to the government for $7.96 apiece.

In detail, Grainger was the “silent partner” in what was initially presented as a four way deal between the federal government, HHS, DuPont, and FedEx. Grainger remained in its “silent”—colloquially, middleman—role, up until about last week.

To be clear, nothing illegal was being done here; Grainger just stands to profit significantly off the suits after doubling its mark-up. Federal documents show that the Lake Forest, Ill., company, which is often DuPont’s main distributor, served as such in the deal.

The standard work coveralls approved and distributed by Grainger are worn over clothing to keep it clean and reduce wear. Quilted coveralls add a layer of warmth for use in cold weather. These suits, which cover the chest, arms, and legs, while bib overalls cover the legs and part of the chest and back, include varieties from DuPont, 3M, and others. This iteration had an added element: the synthetic Tyvek material manufactured by DuPont from its Richmond, Va., facility.

NBC News reported that DuPont does not have direct contract fluidity with the federal government, hence the inclusion of Grainger in the deal:

“DuPont typically doesn’t sell directly to the federal government and it may have needed a partner for immediate entree into the contracting system. A person familiar with the arrangement said the federal government was specifically interested in purchasing DuPont’s Tyvek-based coveralls.”

Tyvek is a huge brand used for everything from building envelopes, to PPE and sterile packaging. There’s no doubt it will, at least, be a useful material in the fight against COVID-19. It is marketed as “a material without limits”, and DuPont specifically has a campaign going (“Tyvek Together”) designed to combat the pandemic. Grainger simply made its suits, added the material, and doubled its mark-up, which as our friendly readers reminded us, is a big difference from doubling its profit…the company’s true profits remain to be seen.

No harm, no foul? You make the call.

2 Responses to “Grainger Things”

  1. GERALD A STHILAIRE Reply April 25, 2020 at 1:13 pm

    Grainger did NOT double it’s profit, it doubled it’s mark up, BIG difference

  2. Thank you for leaving this comment. NBC News has additionally reported a statement from a Grainger spokesperson, quoted below. The full NBC article is online at https://www.nbcnews.com/politics/politics-news/little-work-grainger-sold-suits-u-s-double-cost-n1187061

    “It’s important to note that the sale price was nearly 10 percent lower than the standard listed price for this off-schedule transaction,” Joseph Micucci, a spokesman for the company, said in an email response to questions from NBC News about what is by far the largest federal contract Grainger has ever won for apparel. “[W]e carefully review all pricing to ensure that any price increases are only the result of our increased costs.”
    Grainger lists several styles and sizes of Tyvek coveralls at $221 for packages of 25, a 10 percent cut from which is $7.96 per suit — the amount charged to the HHS Department for the stock DuPont says it sold to Grainger for $4 per unit.

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