Advisory Committee on Supply Chain Competitiveness: January 2022 Meeting Transcript
Transcript from the Advisory Committee on Supply Chain Competitiveness (ACSCC) meeting on January 20, 2022, in Washington, DC, via Zoom.
Advisory Committee on Supply Chain Competitiveness (ACSCC)
Thursday, January 20, 2022
12:30 pm EST
Moderator: Richard Boll
Richard Boll: Hello everyone. This is Rich Boll. We’re just going to wait and make sure we got some other people coming in. And then we’ll be getting started, thank you for your patience.
Can we just wait one or two more minutes and then we’ll get started.
Okay, I think we’ll start. I appreciate everyone’s patience hope everyone’s been able to get in relatively easily. Good afternoon, everyone. My name is Richard Boll. I am the Designated Federal Officer for the Advisory Committee on Supply Chain Competitiveness (ACSCC). I want to welcome everyone to the first meeting, and it’s an open meeting of this Advisory Committee. The first one for 2022. Welcome everybody.
And I just want to get a way a few little quick little things when it comes to the, the video and stuff like that because we have a lot of people on here there are members of the committee as long, also with the public so there’s probably close to probably 100 people on the call. So for that, for those you know they’re not committee members. Please refrain from using the video so we can have the members be able to use their video and be able to, to ask questions with, with a short meeting that we do have. Let me see what else. And I think those are the, the only main things also to be aware that it is being recorded. And as I mentioned before, it is an open meeting with public attendance. And with that, I think we’ll start off the meeting. I guess I’ve been told Ronnie might be able to start it off. Ronnie. There you go.
Ronnie Chatterji: Thank you, yeah I just need the host needs to unmute. Welcome everyone. I’m Ronnie Chatterjee the Chief Economist at the Department of Commerce. It is great to see all of your faces here we spend a lot of time trying to put this community together and it’s amazing to have you involved. We want to proceed quickly for the agenda, we’re going to have remarks from the Secretary, from NEC Director Brian Deese, as well as John Porcari are Port Envoy and Charlie Anderson from our COVID response team. Then I’ll moderate a short discussion between the members to lay the foundation for our next meetings and subcommittee meetings.
I think the Secretary and Brian Deese are on their way from the West Wing to a room that they’re gonna be able to record this, I want to just give a chance if they’re in the room now we can kick it to them, if we’re still waiting on Brian and the Secretary, I’d like to turn it over and let me just see if we have the secretary. All right. It looks like we do not have them yet so I’m going to kick it over, just, oh yeah they are perfect timing. So with that, let me turn over to Heather. Heather you want to introduce the Secretary of Commerce and she’ll be followed by Brian. Thanks.
Heather Sykes: Thank you, Ronnie I appreciate that. Good afternoon, I am pleased to welcome all of you to today’s meeting of the Advisory Committee on Supply Chain Competitiveness. My name is Heather Sykes and I’m the Director of the Department of Commerce’s Office of Supply Chain, Professional, and Business Services in the International Trade Administration.
The ACSCC was rechartered in November, and member selections for the reconstituted committee were just made last week. We are excited to welcome our new members as well as our returning members, and we thank you all for being here.
The committee is extremely important to Secretary Raimondo’s leadership on supply chains. As the only major Advisory Committee, dedicated to providing the U.S. government with advice on such issues, the ACSCC’s work is instrumental to our efforts to implement short-term and long-term solutions to address supply chain congestion and related economic challenges. To address those issues, we’ve put together a comprehensive agenda for the meeting, starting with some excellent speakers and then moving to a moderated discussion with our committee members. Now, I’m privileged to introduce to you the Secretary of Commerce, the Honorable Gina Raimondo.
Secretary Raimondo: Good afternoon, everybody. It’s wonderful to see you. As I look around the screen, I see a lot of old and dear friends and I want to thank you for stepping up to serve. To those of you who I haven’t yet had the opportunity to meet in-person, I’d like to thank you also.
This is an incredibly important committee, and as I told each of you when I called you and asked you to serve, this isn’t for show. This is the real deal. We’re going to be asking a lot of you. We know you’re busy, but we need your help. And in case you haven’t noticed, supply chains are a challenge. They continue to be challenged. It is incredibly complex it is global, and Brian and I and the rest of the cabinet, the President have been working on this since the day we got here. But the reality is we need your engagement.
There are some, you know, really complex issues here, related to data, tracking, labor force, infrastructure. We need the private sectors’ ideas, engagement and partnership. And so that’s what this is all about and I want you to know from the get-go. We are totally serious about listening to you and making sure that the work of this committee is, you know, paramount as we develop our clients. President Biden, from the minute he got here has been laser focused on supply chains. I am one of the co-chairs of the Supply Chain Disruptions Task Force, which the President created. He did an executive order on supply chains, and I must say, by the way, we are making some progress and a number of you on this call frankly have helped us; with the ports, with, you know, streamlining the way we track and train truck drivers.
Having said that, we’re not there yet. And, you know, this relates to inflation, very clearly. This relates to the modernization of our infrastructure, it’s not just fixing the emergency now it’s about planning for the future. And fundamentally it relates to a global competitiveness, like fundamentally, it’s about investing in America, making more in America, and America’s ability to compete and lead.
So, I’m really looking forward to hearing your voices and to having your voices be heard here. And also, you know, out as validators and I just want to express my gratitude and my enthusiasm. And with that, I’ll turn it over to Brian.
Brian Deese: Great. Thank you, Secretary Raimondo and I want to add my thanks to all of you.
We deeply understand how valuable your time is, and that you are giving and committing your time to this effort is an extraordinary thing for you to do, and our commitment is that we will use it well in the service of these broad national goals.
In service of that and in this being about really doing the work, and not about the show I’m going to be very brief, and I just want to underscore a couple of points that the Secretary made. One, on behalf of the President, there is no issue that is more urgent or more important for the American economy right now then figuring out how to build resilience and efficiency in our supply chains as we come out of this crisis.
Secretary Raimondo and I just walked across the complex and left the President in a meeting where we spent almost two hours going through elements of the infrastructure law and the ways in which we can use those resources to support supply chains. He is very focused on this set of issues, and is very eager for any good idea, no matter where it comes from, or what the consequences are. If it’s going to help, we want to hear it and we want to figure out if we could utilize it.
The second is, this is an extraordinarily unique moment, obviously, the challenges in our supply chain, in our global economy, the larger structural changes that the pandemic will then the pandemics aftermath will effectuate. But also, so many of these issues that so many of you have been working on a meeting on for years and decades, are connected to serial under investment in our physical and transportation infrastructure and our information and technology infrastructure. And we now have a moment and an extraordinary responsibility to deploy capital, public capital, at historic scales in everything from ports to rail to transport to aviation to broadband to water systems across the board. So, the scope for ideas, putting into action at this moment is much broader than an environment where we were operating without that historic infrastructure investment research. So, I raised that only to say both the stakes of the work that we can do together are high, but also the scope of the ideas that we would ask you to think about, we can think big, we can think bold. And then, you know, think about how we can execute on that.
And the last point I want to explore is we desperately need it on your partnership in your ideas, I know John Porcari is going to talk about the ports. We have made real progress in the last couple of months, almost every idea has come from a number of people on the screen, and others who are steeped in how logistics infrastructure work. Our objective is to find the smartest and right people, listen, learn and implement. So you know, we have proven this out in more narrow models, and I’m just really excited that now we’re going to try to use this group and the structure to take it to a broader scale. So with that, and on behalf of the President, I just want to say thank you, and we’re looking forward to getting to work.
Secretary Raimondo: Over to you, Ronnie.
Ronnie Chatterji: Thank you, Secretary Raimondo, and Director Deese, and were pleased to also hear from Deputy Secretary Graves and our general counsel Leslie Kiernan in the administrative session. There are two more folks I want you to hear from before we start a moderated discussion. The first I’d like to introduce next is Charlie Anderson, in addition to being my fellow North Carolinian he is representing the COVID Task Force. We have a lot of important updates as it relates to Omicron and its effect on supply chains and then we’ll pivot to John Porcari. So, Charlie, if you’re out there, you can jump on camera and get in. Thanks so much.
Charlie Anderson: Yeah, hello, thanks. Can you hear me? Good.
Hi everyone, thanks for having me, I’ll try to be quick. Obviously, a lot to cover on Omicron. I know you all are tracking it very closely as are we all, but obviously everything with how we tackle the virus is intertwined with all the things you’ll be talking about today and so the domestic response as always, we know, you know, addressing the pandemic domestically is vital to strengthen the economy, and supporting strong and resilient supply chain so with, with respect to Omicron.
You know when Omicron first became apparent around Thanksgiving, we sort of looked at three different things. Three benchmarks that we were covering. And we looked at how it was emerging in South Africa and then the UK and Europe, and we tried to learn about one transmissibility, you know contagiousness breakthrough. Two, severity. Three, vaccine effectiveness. And so, what we know, over many weeks of diligent work with our international partners and seeing what’s happening domestically as, you all are seeing there’s no question it’s highly contagious. Also, it’s high breakthrough potential at least for infection.
Second, it appears to have lower severity than previous variants, a lower share of hospitalizations per case, and shorter duration of stay in the hospital. But that said, you know, these high case burdens he’s extraordinarily high case burdens is you’re seeing every day more than counteract the lower severity and so that drives you know hospitalizations to levels we haven’t seen and that’s. It has just been a really difficult period and that remains true and while we’re seeing some cresting in some of the places that dealt with Omicron earlier as far as cases go and there’s a little bit of a lag in hospitalizations in those too. It’s, you know, we’re not out of the woods yet and we’re going to have to keep fighting it in the coming weeks. The good news is, you know, our existing vaccines remain highly effective against severe illness and that’s especially true with a booster and I really want to emphasize that and I’ll be emphasizing that throughout my remarks. You know, less so against preventing infection, but really highly effective against preventing severe outcomes. The unvaccinated, though, are still vastly a disproportionate share of hospitalizations in debt so the unvaccinated are 17 times more likely to be hospitalized than those who are vaccinated and 20 times more likely to die. And as I said, you know, we’ve looked at countries that experienced the wave a little bit earlier than us for some of the clues and, you know, in the UK, they have not seen much of an uptick in ICU admissions and death. They noted that 90% of their hospitalizations are un-boosted.
And that’s in a population where basically nine out of 10 of their vulnerable seniors are boosted, so vastly disproportionate when you’re talking about un-boosted. 60% of the folks hospitalized in the UK are unvaccinated, and that’s in a country with, you know, vaccination rates among adults well into the 90s and amongst older adults, close to 100%. So that’s remarkable and just really points to the effect of boosting, and vaccination. So, this you know we’ve got sort of short term. I would say a little bit more, more than short term and longer-term issues that affect you know supply chain. So in the short term, obviously reducing absenteeism, you know, we’ve seen some of the acute absenteeism affecting workforces across the board, whether it’s airlines, childcare, education, healthcare, etc. And that’s really tough and so that just sort of says we have to double down in the near term on some of the layered approach we have obviously get vaccinated, get boosted but then on top of that wear a mask, high quality mask indoors.
Second, you know, childcare and education are obviously critical for making sure people can stay at work and have reliable schooling and childcare options. And so, one of the things, one piece of good news today, I just had report at a morning meeting is that 97% of schools are open for in person learning right now which is up from, you know, less than half about a year ago. Obviously, it took a little bit of a dip a few weeks ago, it’s now coming back up and so we’ve really emphasized doing whatever we can to keep school safe and childcare safe and open so that folks can continue to live their lives.
And the last piece of this is sort of the longer term which I know you all are watching which is, you know, how can we make sure that we’ve done enough that both workers and consumers feel safer returning to as much of their normal lives as possible and supporting that rebound. Yes, getting people back into the labor force who feel worried about going in, but also a rebalance towards normal patterns of living which can help unwind some of the things we’ve dealt with throughout the pandemic.
So, you know, the good news is that a lot of the same strategies we’ve been investing in for a year now, remain really critical. So first, get the unvaccinated vaccinated. We’ve gone from less than 1% of the population vaccinated to 210 million people vaccinated, three quarters of the adult population. Boosting is absolutely essential, it’s not just about restoring the protection people had at the beginning, it actually gives you a stronger protection. And thirdly, wearing a high-quality mask when around other people indoors. And you’ve seen this, you know, in the last few weeks the President really emphasizing these things and you know we just had the announcement of, you know, sending out 400 million high quality masks across the country – some of those are shipping today. It will be these three elements that are really critical.
So, that’s what we’ve been focused on. Businesses can play a major role here and now we’ve seen across the board, businesses across the economy, across industries put in place vaccination requirements. And over and over, the same thing happens, vaccination rates rise by 20 percentage points well into the 90s, and the federal government, same thing, largest employer in the country, vaccination rates rose dramatically after requirements were put in place. Compliance is in the high 90s. So, it’s really critical that we get as many of the unvaccinated vaccinated Possible, the vaccinated boosted. encourage strong workplace protections including high quality masking indoors. That obviously has the direct benefit of saving lives, limiting hospitalizations, reducing absenteeism and illness but it also can create some more resilient society. You know unwind from the locations we’ve all the dislocations We’ve been living with, you know, and get people back in the labor force who have been concerned about their safety or don’t have reliable childcare.
Last thing I’ll note, obviously critical to supply chains is the international response and we’ve been really focused on this. And we have a whole dedicated team that has been working to deliver doses around the world. I can report that as of today, we’re at nearly 400 million vaccine doses delivered around the world 393 million donated, and delivered donated free of charge delivered with no strings attached to 112 countries that’s more than double any other country in the world. We’ve committed to triple that to deliver 1.2 billion doses total. So, they’re 800 million more on their way to low-income countries and, you know, obviously we just, we can’t get out of this until the entire world is protected and so we’re going to keep doing what we can and look forward to working with you as well.
Turning back over to you, Ronnie.
Ronnie Chatterji: Charlie, thank you so much for the update and also thank you for all the work you’re doing. For the folks on the committee, we’re going to do our best to keep you linked in with Charlie’s team to make sure we have the information we need to do our work . this is clearly an important issue we’re going to be tracking as it relates to supply chains and I know Charlie will use his bandwidth available to us in the future as well as members of his team so thank you so much, Charlie.
I want to kick it over next to the President’s Port Envoy John Porcari. John is so effective in the administration we use him as a noun and an active verb, you know, we often try to put up a Porcari or Porcari something. John has been just fantastic on our Supply Chain Disruptions Task Force and he’ll be a close partner with this committee so with that I want to turn it over to the President’s Port Envoy John Porcari.
John D. Porcari: Thanks Ronnie and thanks for being here everybody. As Secretary Raimondo and Brian both said, this is a real action committee, not just a fronts piece. I think it’s worth remembering the baseline where we started here in the beginning of the pandemic and what is meant on the goods movement side.
Since the outset of the pandemic consumer spending shifted dramatically, as you know, less on restaurants and theaters, more on goods, especially online, and that built in dislocations in the goods movement chain and stressed it in a way it’s never been stressed before. Import good volumes are at a record high so for the ports of Los Angeles and Long Beach, they’ve seen a 17% increase over the previous high, which was pre pandemic.
And the early response by the President and his team and setting up a cabinet-level Supply Chain Disruption Task Force, which includes Commerce, Transportation, USDA. It’s really served an honest broker role, getting parties to talk to each other throughout the good supply chain that don’t have that kind of communication every day. It’s everything from the marine terminal operators, and rail and trucking firms, warehouses, labor, local and state transportation officials. So, it’s been work both vertically and horizontally across the goods movement chain.
And as part of that we continue to work toward 24/7 operations in particular with the ports of Los Angeles and Long Beach. And we do that because that’s where the capacity is. My friend and colleague Gene Seroka is on this committee who’s done a lot of the daily blocking and tackling to actually deliver those goods. Those two ports together are 40% of the U.S. container imports. So, if part of this we’ve also gotten commitments from major cargo owners including some of them in this virtual room to work toward a 24/7 system, where the capacity actually is. And we’ve also tried to make sure that U.S. exporters, in particular agricultural exporters, are not disadvantaged by the supply chain dislocation. So we’re actively engaged with the ports for example, in Oakland, Savannah, Los Angeles, Long Beach, among others to make sure that agricultural exports are, in fact a priority and remain that. So, it takes every part of the supply chain to really address, not only the current issues that we’re having but importantly to lay that foundation and build a stronger foundation for the future so that’s really where this group comes in.
This is largely a private sector, supply chain. and our ports our state Departments of Transportation and federal agencies to provide a lot of the physical infrastructure in the past, but a lot of it is private sector as well. And we need to work together, public and private in a comprehensive way, and a much more vigorous way than we’ve done in the past. And this collaboration will really help identify the physical improvements. Throughout the goods movement chain, but also some of the data improvements that will make the whole system operate better as well. And this committee really is that unique public-private forum that can help drive the short term and long-term changes in the supply chain.
The timing is perfect for this discussion in the sense that the bipartisan infrastructure law is signed underway. And it’s very much a step change in terms of federal public investment in the goods movement infrastructure. Just on the port side, it’s $17 billion, which is an order of magnitude more investment than has been made at the federal level in our ports in the past. There’s 120 billion dollars for other goods movement related improvements including roads, bridges, rail, air, and we’re further multiplying that impact by partnerships with the states, so I wanted to flag one as an example that can apply to other states as well. With the state of California we signed an emerging projects agreement, which is basically a $5 billion letter of credit for access to the federal loan programs, which lets the state of California finance the local share of these long-term improvements. And as a result of that for the first time, the state of California is building a program of projects inland, basically from the ports. Air, rail, highway. Distribution Center in land acquisition improvements that helped the entire goods movement chain and that kind of partnership with the states are involved as well, is an important precedent going forward. And I flagged the specific mechanism for all of you to, to participate in that, in that every state prepares a state freight plan. In the past, some were better than others. Some were more comprehensive and multimodal than others. Most of them have a freight advisory committee composed of private sector participants. Those freight advisory committees and the freight plans that they generate are the blueprint for public investment in the future. You need to make sure that your piece of the goods movement chain is written into that future. On the data infrastructure side, in contrast to other parts of transportation. For example, the airline industry. We really don’t have a lot of data sharing throughout the goods movement chain, it’s very siloed and has really not benefited the, the entire good movement industry, the way it could with better data sharing. So one of the primary goals, from my perspective for this group is on the, on the data collection and data sharing side to have a real step change into kind of the information provided, its use, and its utility throughout the system. So, these kind of changes in supply chain will be transformative for the US economy.
Let’s take advantage of the spotlight, that is on this issue now, and make these kind of generational changes and investments, not just the short-term operational changes that we’ve done to date. But we need to take the goods movement system, which is actually a system of systems, and take that systems approach to it, to comprehensively work with all of it. It means moving towards 24/7 operations to the entire goods movement chain. It means that we identify and standardized data sets, as I mentioned, and we need to have complementary public and private co investments, that together transform this goods movement and change for the future. So, that’s our mission statement and mission set. As we move from the short-term response to the longer term, building that stronger foundation is something that we need to do together. So thank you in advance for all your help on that, and Ronnie back to you.
Ronnie Chatterji: John, thank you so much for your fantastic work and your comments here. I’d like to quickly move into the moderated discussion piece. Our session here, the point of the moderated discussion is to raise issues for the committee to like to work on. I’m not going to probably get to everybody but please you can raise your hand I have a few people I’ll call on to start, and we’ll do our best, but I do promise that we will follow up with every single person whether you’ve been able to comment or not in the coming days to figure out the issues that we’re going to work on and also set up a structure to actually get things done. I did hear a lot about data, and the ports in the comments that John made so I’d like to start with Gene Seroka.
Gene if you wouldn’t mind, you’ve been at the center of a lot of these challenges, you’re a data driven decision maker and have had to implement the issues around 24/7 that John mentioned, can you talk a little bit about where you see the challenges today and the progress we’ve made.
Gene Seroka: Thanks Ronnie and good morning good afternoon everyone. Couple pieces here, start with data. In LA we took the step about six years ago to create one of the nation’s first and still only port community information sharing systems through a partnership with U.S. Customs and Border Protection. We are decades behind other trading nations in the way they share information, whether it Dakosy in Germany, Calista in Singapore, the work that’s being done in Jebel Ali in the United Arab Emirates, among others, Nxtport in Belgium. The idea of sharing information is on a generic basis not proprietary until but to give you a line of sight upstream to see what’s coming at you, so you can plan the workforce and the equipment that’s needed to move the goods, whether it be on sea, air, or land.
The difficulty, Ronnie, has been that some folks think their data is really important to them, the fear that someone else will monetize and sell it or distribute proprietary information. For six years now we haven’t sold a character of data and proven that, but again it’s a wider national conversation that needs to take place, we’ve stumbled and fallen a couple times we’ve done some things pretty well but I think comparing notes and replicating best practices may lead us to some area of progress, and in this particular part of what we want to do.
On the 24/7 notion, we’ve had the direction of the President, to the world, back on October 13, stating that the ports of LA and Long Beach would be open around the clock. Traditionally we work about 19 hours a day but it’s that extra shift, as Envoy Porcari said to really open up the capacity. Part of the problem today is that we have latent capacity, both on the trucking side as well as rail, trying to utilize all that we can to encourage folks and those two important modes of transportation is important, but it’s also important for the importers. Many through this pandemic have had very choppy procurement systems, it’s been difficult getting purchase orders in at the factory level when you’re competing with just about everybody else. And it has gotten us into a situation where we see ordering taking place just in case, no longer just in time.
So being able to segment that cargo and drive the ability to enhance capacity also has that data element to it as well as evidenced by what we did in the fourth quarter of last year trying to push cargo directly out to the marketplace. We had the opportunity through our datamining to segment that cargo that was not needed, right away. There was no shame involved in it, just identify it, move it to the side and get those factory parts and components out to the manufacturing community, get the medical products, where they needed to be as well as the goods that were for the all-important retail holiday season. As we know now, retail sales were up eight and a half percent during that holiday season.
So the work on 24/7 again, from the administration’s top levels all the way down to the ground here has been getting other folks on the same calendar as us. The truck community, warehouse, importers, and exporters. And as we can open up that capacity here in LA as an example, we traditionally work nine shifts a week out of a potential 21. So we’ve got an opportunity with more cargo growth, more consumer demand, more export opportunity to really open up that aperture and make sure that we can handle cargo knowing where it’s at, how it’s coming in preparing our workforce today and for the future, allows us to do just that. And for a longshore dockworkers one of our committee members Mike Podue is with us today. We have had this language in our collective bargaining agreement between the employers association and the International Longshore and Warehouse Union for decades. The men and women who work on those docks everyday are absolutely raring to go. More hours of work means more cargo throughput and more job opportunities. Ronnie, over to you.
Ronnie Chatterji: Gene, Thank you so much. We’re going to turn to some of those issues in the context of the port of LA. I did want to go next to Raj, the President of FedEx and then to Kate Gutman from UPS as well because in our conversations we have a lot of interesting discussions around data. Raj, I mean this committee is going to be challenged in terms of getting your head around lots of different kinds of data, understanding what matters and what doesn’t. How do you advise we go about that work and what have you seen from your perspective at FedEx and in terms of what we should prioritize?
Rajesh Subramaniam: Thank you, Ronnie and first of all I appreciate Madam Secretary and the team here to convening or reconvening ACSCC and I’m looking forward to working with each of you, as we continue to build the momentum of the White House Supply Chain Disruptions Task Force.
And I, you know, the point that was made earlier about some of the recommendations actually made it into actions, and I’m thankful that that happened, and that, you know, in fact, you know we’ve had a very successful big season. So, as you all know, you know the global economy is rebounding from the pandemic. And, you know, we’re seeing significant changes in buying behaviors. The demand remains strong. Of course, we know we have Omicron. The situation is little uncertain, literally short term, but overall we think the demand for goods continues to remain quite strong. And of course that drives even more imports into the system.
We are actually recovering from the aftermath, that’s not we, as a system, the supply chain whiplash you know when the demand side started to fall, the supply went away, then the demand came back much stronger and suppliers never really caught up so that’s one set of things on the supply chain. The other bottleneck is what we talked about several times here, you know, in the first 20 miles of the port, there are several links and that supply chain, and we have, you know, as we’ve said multiple times, there’s opportunity to get more collaboration on the data. I say, you know, as you said catch up, with perhaps an opportunity to leapfrog with modern multiple, you know, data platforms that can actually, you know, we can build and set the standard perhaps even. You know we have, you know, provide a lot of input on this regard and some of them have been turned into action but there’s a long way to go in building that infrastructure. But you know what we are hearing from our customers, is that, that the demand remains strong, and, you know, we expect that these issues, we have to solve for long-term streamlining of our supply chains. So thank you for the opportunity to serve here and again, appreciate the collaboration.
Ronnie Chatterji: Great. And I want to ask the same question to Kate Gutmann the Chief Sales and Solutions Officer at UPS, Kate welcome.
Kate Gutmann: Thank you and good afternoon to all. I think I’d start with something that certainly isn’t new to us but it’s worth reinforcing and that is supply chain challenges aren’t made overnight and they’re also not resolved overnight. So it was very refreshing though to hear Secretary Raimondo actually say, looking for advice and insights to then action.
So if I were to say the three knowing that some of them are exacerbated by the pandemic. I of course would start with people and talent, as all of us know and experience day to day we had a talent gap, we knew it was coming. It then came and then a pandemic came on top of it driving up demand and increasing that talent gap, just in the U.S. alone 80,000 truck drivers shortage, and in a market that has growing demand.
Secondly, I get very close to what Gene pointed out, certainly the criticality of transparency and visibility end to end requires collaboration on a new level, not just within us companies but end to end all lanes and putting aside the reservations and the, the risk aversion of the past to really try to drive this forward so increased transparency for sure.
And then thirdly, infrastructure modernization which we’ve hit upon but it’s a challenge but it’s very exciting I’m especially excited after Director Deese said ask big, so we heard you I wrote it down we’re excited about that, because it takes a timeline and people determined to make difference and I’m hearing that throughout all the commentary that’s been made today so thanks so much and Ronnie I turn it to you. Those are the three challenges I would point out.
Ronnie Chatterji: Thanks so much Kate and just, you know, moving off of that I think you mention of the pandemic and its impact on supply chains I know Tom Polen at Becton Dickinson has a real perspective on this. Tom, I mean your firm has played, I guess, a pivotal role in the global supply chain for medical supplies for a long time but especially during the pandemic. Are there some lessons learned from that that you would want this committee to incorporate? We’d love to hear your view on that.
Tom Polen: Sure. First off, just want to thank Secretary Raimondo for convening this forum and for all the support and help that you’ve provided, helping make sure that we get critical medical devices to the health care systems around the country. So I’d say there’s probably three major areas that we’ve been focused on in the healthcare industry overall throughout this pandemic and as we think about more long term, supply chain competitiveness topics.
One is that transportation congestion that we talked about, which includes just getting raw material. We as an example are very large U.S. exporter, net exporter of medical devices. Think about, for example, we’ve made 1.2 billion syringes to deliver 1.2 billion COVID vaccines. we normally make 7 billion in a year, we made an extra billion just for COVID vaccines, those are all made here in the U.S. as an example. Getting raw materials in to make that happen, is critical and that’s part of getting that supply chain transportation issues addressed.
I’d say the just availability of raw materials, is an important issue that we see, everyone knows about semiconductors. And the really important work on expanding the U.S. availability of production of semiconductors and is certainly on the radar of the medical device industry. Given regulatory pathways that happen when you start developing regulated medical device, it can be six, seven years, until that gets to market. That’s old-time chips in the cycle time of the chip industry and so having a stable supply chain there. I think the domestic one is important. And, but there’s other areas as well. Silicone is a big shortage right now that’s affecting the healthcare industry, interesting in a certain part of China, that is undergoing some restrictions is actually one of the biggest sources of silicon in the world, and so you’re seeing implications on that for things like medical tubing for catheters etc.
And then the last one just like affects all industry certainly labor shortages, not only in manufacturing plants, but also over our customers, and of course that’s the very, very end of the supply chain of getting it into hospitals and into patients, the labor shortages that affect all of the companies that we all represent, certainly, apply to the folks that are serving all of our associates and our employees when they need health care. And so that labor shortage is a broader issue as well that we see as critical dressing as part of supply chain competitiveness.
Ronnie Chatterji: Thanks, Tom. Yeah, and getting us to the impacts one of the issues we are dealing with a lot is the impact of supply chain resilience on the prospects for smaller businesses and I want to turn it to David Ball in a moment here, who runs a third-generation business, Balls Food. Balls Food has been really active in the food supply chain piece and David I’d like to know how you are seeing the impact of some of the supply chain challenges on small and medium sized businesses, particularly in your industry, and thanks for joining us, David.
David Ball: Yes, thank you very much. I am also honored to serve on this committee and very thrilled to actually learn more from you all probably than I can probably provide but I’m going to start at 40,000 feet. Excuse me, our supply chain issue started with the probably back in the 80s, when in the food industry when it was just in time inventory. And so, as, as Walmart came into our industry. They drove down to a net cost of goods. And so what that caused our industry to do was to be more efficient and really analyze our supply chain, as a whole. And so we did not, we, we did not stockpile stuff we did not have a whole lot of extra supplies, so that as a related to getting hit with this pandemic. You probably all recall the toilet paper shortage, that we all had in a country that’s where it all started. And we have not recovered since that point that was two years ago. We are still seeing massive out of stocks, from our manufacturers, and our wholesalers
Another, another issue that we see is that, for example we have quite a few pharmacies, 80% of our pharmaceuticals come from China, and whether that’s right or wrong or indifferent. I kind of see this kind of running parallel with the power grid challenges that this country is going to be having and the infrastructure, so I think really looking at the big picture and then drilling down a little bit more detail how we all can make an impact on the supply chain and what that that affects we don’t we don’t see a recovering anytime soon. Probably be, you know, nine months to 18 months before we can get our supplies built back up, because of the backlog that we’re seeing in our reliability that we have on other countries that produce particular items and I have I would see that probably very similar to many of the industries in the in the United States.
So yeah, so we have we have a big issue to address here and, and I’m, I’m grateful that we’re looking at it and we’re using. I know some of the folks on the call here that are in the food business and industry. And I’m very encouraged to be a part of this and share what I can to really try to get some of these issues solved. But we’re, but it’s not gonna, it’s not going to happen overnight. So we’ve got it I think we’ve got to have some short term strategies to deal with the issues. Now, and 2022, but then we really need to lay out a really nice roadmap that we can measure ourselves against to make sure we’re doing the proper things so that this does not happen again.
Ronnie Chatterji: Thank you David ,and that roadmap is going to be a high priority for this group. I did want to highlight one of those critical industries that comes up by going to Bob Costello, from ATA. Bob, you know the trucking industry obviously is a critical piece of our good movement supply chain. There’s been a significant issue around getting the right amount of drivers both pre pandemic and during the pandemic. What are some of the strategies that you’re working on to address these issues and how the supply chain challenges affecting the industry.
Robert (Bob) Costello: Well thank you, Ronnie and hello everyone and I’ve been one of those that have been on this committee for a while and so I look forward to this new group, we can do some exciting work and in this area. Ronnie you’re right we, you know, we we’ve had a driver and labor issue for a while in the trucking industry but it just got exacerbated as a household started spending more and more on goods, and you know that the drivers really were the heroes on the highway.
Early in the pandemic going out making deliveries and then delivering vaccines and PPE and so forth and that’s exciting but the reality is we’re short about 80,000 drivers today. I want to thank the administration for the work that you have done in helping us attract more talent into this industry. We have a job that’s not an easy job, right, a lot of times you’re on the road for a while, but it is a job. You don’t need a college education and it is a pathway to the middle class. And I think that’s very exciting with very good benefits and so I think we’re starting to move down that path, we’ve got a new pilot program with FMCSA getting 18 to 20-year-olds and for 3000 drivers that’s rolling out. And so I think we’re moving in the right direction and highlighting how important this job is and I know the administration’s helping with that I also think though, you know, as this group and we all been talking about chips. We have a driver shortage, but we also have a truck shortage now, and OEMs are able, you know, only able to deliver upwards of, you know, 50 - 60% of the trucks that they normally do and what’s happening is more and more trucking fleets are having to take their existing fleet sort of cannibalize it for parts, and that reduces capacity as well.
So, you know, that is something and then the last thing I would mention Ronnie and short term and, and we’re all very much pro vaccine and getting as many people vaccinated as possible. Unfortunately that’s been a real challenge with drivers and truck drivers in that group in particular and now we have these coming. Canadians have put in a mandate for drivers going into Canada, and I just want everybody to know that hopefully that won’t be a huge issue but I can tell you I have members that say, you know what, 60% of my drivers are vaccinated so I there’s 40% of my drivers that normally go into Canada that I cannot and they bring stuff back, as well as take our exports that is our largest export market. So, there are some challenges on the driver end that we can use some help within the trucking industry and we look I look forward to working with all of you.
Ronnie Chatterji: Thank you so much and before I go to President Schuler who I want to call on next, I did want to say on semiconductors, you we have a lot of expertise in the Commerce Department and between the White House and the Commerce Department underneath Secretary Raimondo and Director Deese direction, we’ve done a lot of work and we’ll make sure this committee is fully briefed on those efforts so you can incorporate it into what you’re doing. For President Schuler, we’re hearing a lot about the role that workers are playing at every point in the supply chain you think about the conversation so far in docks, trucks, rail, warehousing, our food workers. Can you talk a little bit about how the key issues are developing for workers in these supply chain discussions and also you’d recommend this committee take those into account during all of our deliberations.
Elizabeth Shuler: Absolutely. Thank you so much, it’s been fascinating to hear what has the conversation that’s gone on so far because in almost each intervention. I’ve heard the word “workers,” “labor.” So of course we are so thrilled to be at this table and I was glad to hear Secretary Raimondo’s vision, and that she and Brian laid out that this is a bigger focus then just logistics and just transportation, right.
There’s so much more it’s bigger than that and we see it as you know manufacturing and trade policy labor policy. But job quality, and we haven’t really touched on that quite yet and all of those elements and how they work together to build, build this vision for what the post pandemic economy really should look like and we have an opportunity to do that together. I think it was mentioned earlier, I’d heard you know the context of this, and the shift from the, you know, consumer spending driven economy to the more emphasis on goods I think that’s an important context that we should continue to think about and evaluate a lot of the challenges that were laid out in the context of you know just this notion of a higher goods demand. And the strain that that has put on, you know, all of these systems including our workforces.
And I think about our members in the UAW, the auto workers, and you know how they have suffered layoffs, because of the chip shortage, people don’t think of that first they think of it as an after effect so really looking through the committee’s work through the lens of working people is what we hope to bring to this table and we think that this will be, you know, something we’ll have to look at in every phase of this work. You know how are we addressing the needs of workers. The quality of the jobs that are in the supply chain. And, and also I’ll put a pin in the focus on transforming our economy and decarbonizing are freight systems, and so we think that everyone in this meeting should be bringing a decarbonization perspective to this work as well and we’re excited about the job creation potential in that realm that we’ve been talking about, as we build this, you know, new clean energy economy and the domestic production of those goods that can go into decarbonizing it.
Ronnie Chatterji: Fantastic, thank you President Shuler. On job quality and decarbonization, I can pledge to you that these will be things we’re gonna be talking about in this committee. I do want to get on one more topic that I think will be central to our work and I know we have some good perspectives on and then I’ll kick it back to Secretary Raimondo and Director Deese, and that is around manufacturing and the supply chain which President Schuler really previewed there. I’ll go first Jeff Wilke, Jeff for you, now, devoted your career to try to rebuild manufacturing capacity in the United States. They are a huge part of what it means to have a resilience supply chain here, how should we think about these issues in the context of our work.
Jeff Wilke: For sure. Thanks Ronnie, and thank you Secretary Raimondo for reconvening this group. After the conversation that’s occurred so far I, I really look forward to all of the different perspectives that the experts assembled here will bring over the course of the next couple of years. There’s so much that I know all of us will learn from each other and, and I’m sure that we’ll be able to help.
With respect to that and manufacturing. You know, I think, and we, the company that I’m a part of now, called Re:Build Manufacturing, we think the strength of our country depends critically on our economy, of course, that includes our supply chain and the manufacturing plants they feed. The earlier conversation led by Becton Dickinson is a really good example of reminding us that the supply chain includes manufacturing plants that are inside the U.S. that depend on raw materials that come from outside which depend on the transport of materials and finished product inside of our country. Good paying jobs matter, industries that create value robustly matter. And in my opinion manufacturing contributes one of the highest combinations of both of those effects.
Without it, we’re beholden to any nation state who’s focused on these priorities. We have to rebuild and re-shore this capability. And there are a bunch of benefits we get if we do it. We ensure good middle-class jobs, that’s been brought up multiple times, we support national security and protect intellectual property and doing so, we improve the tax base, and we support pride in our country. They are visible examples of the strength of our country when you drive by a large manufacturing plant that employs thousands of people. Potential areas for further exploration by our committee in this area I think include the infrastructure investment that’s been brought up so far, including power, transportation, broadband access, worker training, immigration policy play some role, incentive alignment and a tax code and foreign trade, and full use of the federal government’s domestic procurement rules which can really help ensure that incentives are aligned to Buy American first by the largest procurer of goods in the United States.
Ronnie again, thanks to all of the committee members for their participation in time, and I really look forward to working with you.
Ronnie Chatterji : Great, I do want to get an opinion on this issue from Revathi from Flex and then I want to close with Ursula, and then turn it back over to the Secretary and Director Deese. And for those who didn’t get to speak in this session I will follow up and I’m glad to talk more about these issues as well. Revathi, how are you thinking about the relation between manufacturing supply chains and American competitiveness in this context building off of Jeff’s work here.
Revathi Advaithi: Ronnie, thanks for including me, and Secretary Raimondo thanks for having me on the committee. I’m really looking forward to the work this committee can do it here and all the conversations, it was interesting, Jeff and I were just talking about this, I think, a month or so before Christmas about you know what work really has to happen to build back manufacturing in the United States, and I would say, first and foremost, there’s a lot to be optimistic about right. Right now, there is so many things that have come together in the last couple of years, whether it’s related to kind of pandemic, which is difficult but it has brought into question the issue of supply chain resiliency and was really brought into this conversation about it is best to build things closer to where the end consumption is as much as you can. So I’d say timing is perfect for this conversation because if we can use this moment to really focus on, realistically, what are the places that we can build manufacturing jobs back in the United States. I think we can make real momentum.
And the reason I say realistically is because there are many things right like little capacitors and resistors, things like that, that will always be hard because efficiency and cost will be driven by many other places in the world, but things that require a higher skilled workforce right that requires more automation larger products like communication or energy infrastructure that require last mile customization, or things like electric vehicles right, there’s so many things that we can really focus on creating hubs of excellence across the country, that will really drive not only a very efficient, but a highly productive I would say workforce across the country. So while I think labor and skills we’ve talked a lot about this, I think a good plan and strategy to develop these hubs and these areas for growth. I think will be very productive and I’m looking forward to doing work with this, this committee and really moving that forward in the right direction.
Ronnie Chatterji: Thank you so much Revathi and let me close here with Ursula Burns to give us some final thoughts on what stood out to you about the issues and how we might proceed.
Ursula Burns: First let me start with a thank you to all in the phone and thank you, Secretary Raimondo for including me. And this is an area that I’m passionate about because it brings together a lot of different areas that I’m passionate about, immigration, development of talent, the development of infrastructure, the strengthening of manufacturing in this nation, the inclusion of significantly more people into the value chain, all these areas are under this umbrella of the supply chain improving the supply chain.
I will say that I agree with our theme so much in that this is a good time to be engaged here. It’s a time of massive disruption, and that always gives rise to bold action and moving forward and so I think that the group on this phone, on this video call. And with this renewed focus on the supply chain I think will make a significant amount of progress on. I’m just looking forward to being engaged.
Ronnie Chatterji: Thank you so much and I will turn it over to Secretary Raimondo and Director Deese to close this out, really appreciate everyone’s contributions, Secretary.
Secretary Raimondo: Yeah, thank you. Ronnie great job as always. So, I will say, you have made me optimistic. Having listened to you here, I feel really energized and I love you’re ready to go, let’s tackle this attitude, especially because I know you’re living with the disruptions every day so the fact that you’re bringing your energy to this is excellent.
So I have a couple of takeaways. One is, I’m sure Brian agrees with this - he and I are partnering on this, it’s even more clear to me now why we need to have this committee, and why we need you guys engaged, because some of the detail ideas that you have, which comes from your learned experience of having lived through this and living through, it is just it’s what we need. And so I just I feel, I guess validated that we’re doing this in this form.
Second thing, it just it’s driving home to me again how complicated this is. There’s no one lever, right, it’s investments in manufacturing, investments in raw materials, people, labor, freight, transportation, data, transparency, infrastructure, job quality, decarbonization it’s this is and by the way we do it all. So this is complicated. And I think that button therein lies the opportunity, I mean I think Jeff, all of you have said, like in the process of tackling this challenge will come out the other end, you know, stronger, more resilient, more jobs in America. I love what Raj said, bad news is that we’re behind, you know Gene says we’re decades behind this is the bad news. Good news is we can leap frog. And so that’s what we have to do you know we can we can leap frog, with more modern data platforms, more, more modern technology.
Final thing I heard is transparency, Ryan and I’ve been working supply chain, the past year aggressively. It’s amazing to me how simple, but how lacking like transparency is simple, but it is lacking, and a brief distrust mistrust and so we have to really work on that throughout the supply chain.
So, we are aiming to create some subcommittees of the overall committee, so we can tackle these particular areas that we’ve just discussed, manufacturing, labor, etc. And it will be in the subcommittee’s that the real work happens, and then the subcommittee’s, you know will report to the whole group. From what I heard today, and from where we are now. I think probably the two most immediate needs and the two subcommittees we gotta get going on, straight away. The first would be around freight movement and the transition to 24/7 freight movement Gene and John talked about a little bit. I think it’d be great if we could have a subcommittee to engage stakeholders across ports, rail, truck, trucking, air, and warehousing really have a broad view of what that looks like to get to 24/7 and come back to the group. And so I think we ought to set up that subcommittee straightaway.
And then second priority which almost all of you touched on, is data, which relates to this transparency and is one of the areas where we are so behind. So we have to develop data infrastructure for the, for the needs of today and tomorrow and data infrastructure, and data tech platforms that allow goods to move. Several of you mentioned having standards and common metrics and data sharing practices. We got to get to that. And now’s a good time, and Ursula says it’s disruption it’s massively disrupted. So, if not now, when? So I think we ought to have a data and tech subcommittee. Over time we can create other subcommittees but I suggest we start there.
In terms of timeline. We’re going to aim for another meeting in June. And so, between now and June we’ll assemble these initial subcommittees, help work with you, and then in June, we’ll reconvene again and we’ll hear some of the outputs and action steps of those two subcommittees, so no time to spare. My mother always told me, Gina if you want something done ask a busy woman. So I guess we’ll broaden that will say if you want something done, ask busy people which is all of you running big companies. And I just want to say, (unintelligible)…
Brian Deese: I just close out with one and go to one impression, our, our public opinion data expert or biggest expert inside of the White House on public opinion said something yesterday and it struck with me is when you look at in the political realm, you look at seems that when you ask, typical American people, open ended one of the issues that you that are on your mind or you care about or otherwise the single largest increase in 2021 was awareness and interest in the supply chain, which has never been sort of typical American public polling even registered on the list. And I think it underscores the point that and many of you may which is we have a very unique moment right now, unique as john said in terms of spotlight on this but also unique in terms of turning back, public awareness into prioritization solving problems that have, if you’re too far and there just hasn’t been enough effort to solve them. So I think we have a really unique opportunity.
The impression just from all of the richness of the feedback that you’ve already provided is. I really think as we want to go into the weeds, we want to find very specific things that we can ladder up into larger change, but I think as many of you said, want to keep our eye on the both the objective of outputs and ultimate outcomes, and I will really is aligned with a number of you said, which is, we want to more resilient economy. When economy that creates more opportunities for good jobs and middle class life for more Americans. And to do that in a way that actually expands the productive capacity of our economy. That makes it comfortable for people for us to make more things us to move more things us to produce more things. And if we do that, we are really going to change the game for our economic strength or national security interests, and ultimately benefit the American people. So, we will keep our eye on both of the very practical. You know, practical, pragmatic and technical but also think about how we make sure that that connects to those ultimate outcomes and just listening to the feedback you’re I mean, I can wait wait energized that we’ve got an extraordinary opportunity here with this group to, to make that happen.
Secretary Raimondo: Great, thank you and I’m just say finally hear us talking about supply chains, you know publicly privately. If you think we’re getting something very right, or you think we’re getting something very wrong. Let us know. And we’re going to do the work of this committee we really are going to reconvene in June, at that time, you’re going to give us a lot of great ideas. But in the meantime, if you see us making a mistake, please call, and if you see us doing something terrific that we should be doing Laura will let us know that too, like Brian said practical concrete.
Brian Deese: Right. Thank you very much.
Secretary Raimondo: Thank you very much.