Implementing Supply Chain Resiliency
- Dr. Gary Gereffi, Founding Director of the Duke Global Value Chains Center
- Dr. James Lewis, Senior Vice President and Director, Strategic Technologies Program, Center for Strategic and International Studies
- Dr. Dario Gil, Senior Vice President and Director, IBM Research
- Mr. William “Lex” Taylor III, Chairman of the Board and Chief Executive Officer, Taylor Group
- Mr. Richard Aboulafia, Vice President of Analysis, Teal Group
- Mr. John Miller, Senior Vice President of Policy and General Counsel, Information Technology Industry Council
Thursday, July 15, 2021
10:30 a.m. EDT
Full Committee (Hybrid)
This hearing will take place in the Russell Senate Office Building 253. Opening statements and a live video of the hearing will be available on www.commerce.senate.gov.
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Chair Maria Cantwell
Chair Maria Cantwell
U.S. Senator Maria Cantwell
Opening Statement at U.S. Senate Committee on Commerce, Science, and Transportation Hearing on Supply Chain Resiliency
Witnesses: Dr. Gary Gereffi, Founding Director of the Duke Global Value Chains Center; Dr. James Lewis, Senior Vice President and Director, Strategic Technologies Program, Center for Strategic and International Studies; Dr. Dario Gil, Senior Vice President and Director, IBM Research; Mr. William “Lex” Taylor III, Chairman of the Board and Chief Executive Officer, Taylor Group; Mr. Richard Aboulafia, Vice President of Analysis, Teal Group; Mr. John Miller, Senior Vice President of Policy and General Counsel, Information Technology Industry Council
July 15, 2021
Cantwell: Commerce, Science, and Transportation will come to order. Thank you all for being here. We have a distinguished group of witnesses today to talk about a very important issue to us in the United States of America; that is the state and competitiveness of our supply chain, and its resiliency for the future. Each one of our witnesses, the distinguished Dr. Gary Gereffi, Dr. James Lewis, Mr. Richard Aboulafia, Dr. Dario Gil, Mr. William Taylor, and Mr. John Miller, all offer a variety of perspectives on the importance of this issue. I can say for me in the state of Washington, aviation supply chain is something we're very proud of. More than 150,000 people work in that supply chain that continue to innovate and create new products that, as Mr. Aboulafia says in his testimony, that's where the innovation is happening in the supply chain.
That is why we just recently passed the now called U.S. Innovation and Competitiveness Act, USICA, that we are trying to negotiate with our House colleagues, because we believe in making an increased investment in the supply chain. So I'm sure we're going to hear today about the challenges we face in the semiconductor sector, an aspect of our supply chain, which we saw great shifts over the last several decades, and the consequence is obviously less jobs in the United States of America. So needless to say, I think Congress has caught on that the supply chain is key to our economic strategy, and that a robust supply chain in the United States of America means we're going to continue to have robust employment in the United States of America. Without the resiliency of the supply chain, it could be complicated, given the experience of COVID, as to whether products can be delivered in a timely fashion, whether our services and security could be impacted, and just how important it is that we have a strategy for a global economy in which a variety of products and services can be delivered in a much more competitive fashion than in the past. That means the investments that the Department of Commerce should make are important.
USICA took several steps to contribute to the resiliency of the supply chain, incentivize domestic semiconductor manufacturing, and establish a Supply Chain Resiliency and Response Office within the Department of Commerce. It makes tremendous investment in the Department of Commerce, National Science Foundation, Department of Energy to support R&D and translating inventions into products creating regional technology hubs and expanding the workforce and our innovation economy. And these important facilities, like our Pacific Northwest National Laboratory, can help with spin-offs of new technology that become critical parts of our R&D and domestic supply chain. Also, our NIST funded manufacturing extension programs can help in working with developing resiliency and supply chain strategies so that we continue to have not just potential customers, and supply chain connectors, but understanding, again, how we can best innovate and stay competitive.
I look forward to hearing the testimony from our witnesses today. I feel very excited to have this distinguished group in front of us and I hope our colleagues will all learn from the information here. And what I would say, Senator Wicker, I'm not sure 20 years ago, if we would've had the same hearing. I see our colleague Senator Young here, the key sponsor behind what was then the Endless Frontiers Act. I'm not sure we would have been having this same conversation but the world has changed, supply chains have changed and are changing, and I look forward to how the United States stays very competitive here. Thank you.
Ranking Member Roger Wicker
Ranking Member Roger Wicker
Thank you Madam Chair, and good to be here with you today and to be with this distinguished panel. What do we mean when we say “supply chain?” It’s the process that starts with raw materials and ends with sale or consumption. Along the way there are various steps: materials refinement, manufacturing, and distribution. Resilient supply chains can withstand and quickly recover from disruptions – and we’ve had disruptions – but they also include, in addition to infectious disease outbreaks, severe weather, international conflict, things like that.
In recent decades, our manufacturing capacity has declined significantly. Between 2000 and 2010, manufacturing jobs were cut by one-third, with small businesses heavily impacted. And, as we all know, that’s where we create the jobs in the United States of America – small business. As global competition has increased, control over our supply chains has fallen into the hands of fewer and fewer countries, most notably China. Such geographic concentration of supply chains has left many U.S. companies vulnerable to disruption – something we are now acutely experiencing.
Helping U.S. companies identify and address areas of vulnerability will require strong partnerships and international partners. The federal government can also help by investing in R&D and workforce development to make sure new innovations are conceived and developed here in the United States. Taylor Machine Works in Mississippi is one great example of a U.S. company conducting R&D in the materials handling industry, and whose innovations are today being replicated around the world.
This committee took important steps – as the distinguished Chair mentioned – in passing the Endless Frontier Act, now known as the United States Innovation and Competition Act, or U.S.I.C.A. – I don’t like that as well. This bill, authored by Senator Young, passed the Senate by a vote of 68-32.
This legislation would create a new Supply Chain Resiliency Program within the Department of Commerce to monitor key industry supply chains and develop ways to address vulnerabilities.
The bill also includes emergency appropriations to support semiconductor manufacturing and R&D. This is a much-needed response to the semiconductor shortages that have disrupted manufacturing across the nation, including in my home state of Mississippi – and undoubtedly we will hear about that from our distinguished panel.
The legislation also includes an important contribution from the Finance Committee to combat China’s manufacturing imbalances and threats to free and fair trade.
Today’s hearing is an opportunity for witnesses to discuss how the United States Innovation and Competition Act can make our supply chains more resilient. Witnesses may want to share their thoughts on how the Department of Commerce might implement the various provisions of this bill.
The House passed its reauthorization of the National Science Foundation, but it still needs to take action on the broad range of topics covered by our legislation.
The President recently issued a 100-day supply chain review that identifies some important supply chain vulnerabilities – we perhaps will hear about that today.
I am honored that among our panel is my good friend and fellow Mississippian Lex Taylor, the Chairman and CEO of the Taylor Group. It is a leading manufacturer in Mississippi. Taylor builds forklifts and a wide variety of material handling machines for both industry and defense purposes. Mr. Taylor has first-hand experience with the topics we will cover, and I know he and other members of the panel will make a valuable contribution to this discussion.
Thank you, ma’am.
Dr. Gary GereffiFounding DirectorDuke Global Value Chains Center
Dr. James LewisSenior Vice President and DirectorStrategic Technologies Program, Center for Strategic and International Studies
Dr. Dario GilSenior Vice President and DirectorIBM Research
Mr. William “Lex” Taylor IIIChairman of the Board and Chief Executive OfficerTaylor Group
Mr. Richard AboulafiaVice President of AnalysisTeal Group
Mr. John MillerSenior Vice President of Policy and General CounselInformation Technology Industry Council