President Biden Announces Plan to Secure Critical Supply Chains and Revitalize U.S. Manufacturing

On February 24, 2022, the Biden Administration announced its plan to strengthen critical supply chains and invest in U.S. manufacturing and infrastructure. Seven agencies released six reports outlining key areas of vulnerability and policy recommendations to strengthen U.S. supply chains in critical industrial sectors. Many of the supply chain vulnerabilities identified in the reports address longstanding challenges in the U.S. industrial base – such as a lack of domestic manufacturing capacity, aging infrastructure, and a skilled workforce deficit – that require long-term solutions.

The reports were in response to Executive Order (E.O.) 14017, “America’s Supply Chains,” signed last year on February 24, 2021, that launched a comprehensive interagency review to identify risks in the supply chains for products deemed critical to U.S. national and economic security, including: semiconductor manufacturing and packaging; large capacity batteries; critical and strategic minerals; and pharmaceuticals and active pharmaceutical ingredients. These reviews have been spearheaded by the Department of Commerce (DOC), the Department of Energy (DOE), the Department of Defense (DOD), and the Department of Health and Human Services (HHS).

The initial 100-day reports that were announced on June 8, 2021 examined a wide range of supply chain risks and identified five main sources of vulnerabilities:

1. insufficient U.S. manufacturing capacity;
2. misaligned incentives and “short-termism” in private markets;
3. strategic industrial policies adopted by competitor and allied nations, including China and the E.U., to advance their domestic competitiveness;
4. geographic concentration in global sourcing; and
5. limited international coordination on supply chain resilience.

The 100-day reports also made a number of recommendations and announced immediate steps the Administration would take to strengthen U.S. supply chains while continuing to analyze potential long-term solutions to these problems.

The recently issued the one-year reports detailed the interagency working group findings of year-long reviews of the following six critical industrial base sectors: defense; public health and biological preparedness; information and communication technology; energy; transportation; and supply chains for production of agricultural commodities and industrial food products.  There are several common themes and findings across the reports, including: 

1. Training – any supply chain action must include significant investment in training and education of U.S. workers in critical industrial base sectors;
2. Infrastructure and Manufacturing – need to invest in infrastructure and expand domestic manufacturing capacity;
3. Standards – the need to work with foreign partners to establish global standards to prevent supply chain vulnerabilities; and
4. Resilience – recommend that the U.S. continue to diversify supply chains to improve resilience to global crises.

The reports did not create new programs to address the supply chain vulnerabilities that they identify, but did call on Congress to provide funding for new domestic manufacturing initiatives.

Some of the key findings from the six interagency reports included the following.

Defense – The DOD analysis of the defense industrial base found vulnerabilities in large capacity batteries, specifically lithium batteries, and casting and forging of metals and microelectronics. To strengthen these areas, DOD recommended that the federal government: invest in training doctoral-level skilled labor; expand industrial security, counterintelligence, and cybersecurity; expand domestic additive manufacturing; and engage more small businesses as key members of the defense supply chain.

Information and Communication Technology -- The Department of Homeland Security (DHS) and DOC analysis of the information and communication technology industrial base found that while U.S. technology companies lead the world in innovation and development, most of these products are made in China.  The U.S. lacks the skilled work force to support re-shoring of information and communication technology supply chains, leaving them vulnerable to continued disruptions.  To alleviate these vulnerabilities, the U.S. should invest in domestic manufacturing, work to improve international standards, and increase monitoring of information and communication technology supply chains.

Energy – The DOE analysis of the energy sector found that the U.S. has an opportunity for sustainable growth of its domestic clean energy supply chains, but currently lacks an adequate manufacturing raw materials and domestic production capabilities. The report also recommended that Congress enact legislation to provide tax incentives for domestic clean energy manufacturing and funding for domestic workforce training and that the federal government leverage foreign direct investment in U.S.-based clean energy technology manufacturing.

Public Health – The HHS analysis of the public health sector found that offshore manufacturing for personal protective equipment (PPE) and other health care supplies are a critical vulnerability and that pressure to reduce prices has resulted in a highly-concentrated manufacturing base that create vulnerabilities in supply chains. The report recommended that the U.S. invest in domestic manufacturing; stockpile critical items; and improve workforce development.

Transportation -- The Department of Transportation (DOT) analysis of the freight and logistics supply chains found that U.S. ports are a key vulnerability and a bottleneck of supply chains and that domestic transportation infrastructure requires significant investment to alleviate supply chain vulnerabilities. The report recommended that the federal government invest in domestic infrastructure and building the workforce in this sector. 

Agriculture and Food Production -- The Department of Agriculture (USDA) analysis identified multiple vulnerabilities, including: concentration of industrial food production; labor shortages; climate change; disease to livestock and poultry; transportation bottlenecks; and trade disruptions. USDA recommended taking action to address these challenges through existing and additional funding

These reports take a significant step to identify numerous vulnerabilities for critical supply chains and reaffirmed the importance of U.S. manufacturing.  Although they did not provide detailed solutions to address the vulnerabilities, they did call upon Congress to provide funding to support new domestic manufacturing initiatives.  This increased focus on manufacturing is important for industries in critical supply chains, such as the surface finishing industry.  Even though it may take time to implement these manufacturing initiatives, surface finishing companies should begin to position themselves for expanded opportunities in these critical supply chains.

The NASF will continue to work closely with federal officials and industry partners and provide further updates to NASF members.   If you have any questions or would like additional information on this issue, please contact Christian Richter or Jeff Hannapel with NASF at crichter@thepolicygroup.com or jhannapel@thepolicygroup.com.

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This update is courtesy of the National Association for Surface Finishing (NASF). For more information or to become a member, visit nasf.org.