A global shortage of semiconductors amid the pandemic has led numerous auto plant shutdowns.
On February 24th, President Joe Biden signed an executive order on strengthening domestic supply chains, with a view towards examining vulnerabilities and securing U.S. access to supplies in industries especially hard hit by the pandemic.
This follows Biden’s Buy America executive order signed in January, that seeks to boost federal purchases of American-made goods, promote accountability in the federal purchasing process, and crack down on irrelevant waivers to the law.
Meanwhile, citing national security risks, the Biden Administration reinstated tariffs on aluminum from the United Arab Emirates earlier this month, which had expired when Donald Trump left office. It is still unclear if the new administration will ultimately keep or remove Trump-era tariffs.
Today, we’re going to take a closer look at latest executive order on supply chain resiliency and how U.S. manufacturers are reacting.
Titled Executive Order on America’s Supply Chains, the new directive focuses on key industries that have seen the most supply chain disruption and others.
As COVID-related supply shortages persist, a number of industries have felt the pain.
Said Alliance for American Manufacturing President Scott Paul, “The offshoring of America’s critical supply chains has made the United States more vulnerable and less equipped to respond to a crisis. We learned this lesson the hard way, unfortunately. There are still reports of workers on the frontlines of the coronavirus pandemic facing PPE shortages. Now there’s a semiconductor shortage that has led to factory shutdowns.”
Some automakers, for instance, have needed to shut down production due to global semiconductor shortage spurred by heightened demand for home electronics amid the pandemic. Market data company IHS Market recently that production of nearly one million vehicles have been delayed due to the shortage. Industrial companies are also facing steel shortages, with steel inventories at their lowest level since 2004. The pandemic exposed vulnerabilities in medical supply chains, impacting everything from pharmaceuticals to PPE. So how does this new executive order address these concerns?
What’s in the Order
100-Day Supply Chain Review The executive order directs a 100-day review of potential supply chain risks in four specific industries that are seeing acute shortages at the moment: semiconductors and advanced packaging, large capacity batteries, pharmaceuticals and key minerals. The time frame allows for addressing supply chain vulnerabilities in these key industries for the near term.
Comprehensive One-Year Review of Broader Set of Industries This directive involves a more in-depth examination of potential vulnerabilities across a broader spectrum of industries, many of which are in the “critical infrastructure supply chain", such as information and communications, food production, transportation and the like (click here for a rundown of the industries that are part of the critical infrastructure supply chain).
This broader review will direct agencies to assess risk and provide recommendations to improve supply chain resiliency in these critical industries and will seek to consult and partner with external stakeholders such as NGOs, state and local governments and academic institutions. Agencies and participants in the review are tasked with:
• Identifying critical goods and materials
• Identifying capabilities needed to produce those materials
• Identifying locations of manufacturing and production assets
• Assessing workforce skills and transportation systems.
• Work with global partners and allies to ensure ensure that they too have strong and resilient supply chains.
Said Biden in a statement, “Remember that old proverb: “For want of a nail, the shoe was lost. For want of a shoe, the horse was lost.” And it goes on and on until the kingdom was lost, all for the want of a horseshoe nail. Even small failures at one point in the supply chain can cause outside impacts further up the chain.”
Although the executive order isn’t expected to directly alleviate shortages in the short term, a wide range of industry groups have voiced support for the executive order, including the National Association of Manufacturers, the Telecommunications Industry Association and the U.S. Chamber of Commerce, while major automakers have also expressed support.
Finding Domestic Suppliers
At MNI, our mission is to help U.S. businesses thrive, providing tried-and-true prospecting and procurement solutions since 1912. Powered by trusted MNI data, IndustryNet is an industrial marketplace that connects industrial buyers with 400,000 U.S. manufacturers and suppliers of more than 10,000 types of products and services. Set up a free account, search for suppliers, send quote requests and more with this free industrial marketplace.
