U.S. Manufacturing Had an Opportunity—And We Wasted It
In the wake of COVID-related supply chain disruptions, U.S. manufacturers should rethink global supply chains.
Six months ago, I experienced an unexpected surge of optimism about the future of manufacturing in this country. When COVID-19 shut down Chinese factories, American factories were starved of everything from raw materials to complex subassemblies. At last, I thought, American companies would realize the high-risk nature of depending on suppliers not just a border away, but an ocean away.
I have written often about the risks of offshore dependency. Low cost is only relevant when suppliers can deliver, and price is irrelevant if there’s no supply. The global supply chain is entirely dependent on frictionless, low-cost transportation and the absence of supplier glitches (which can include government-induced stoppages or slowdowns). The chain works only when all the links connect and, at the start of this year, all the links broke to an unprecedented extent. China basically shut down, and borders closed to business travel. Can anyone imagine a better demonstration of the catastrophic consequences of overextended supply chains?
Then we—manufacturers, government and the public—failed dismally to capitalize on the opportunity. Yes, there are some examples of new domestic production, such as the dive by Ford and GM into ventilator manufacturing by dint of enormous effort and great cost. A few plants switched from their usual work to produce masks and gowns, while the press made a great fuss about distilleries entering the hand sanitizer business. But, Ford and GM are no more in the ventilator business now than they were in airplane production after WWII.
America spent six months feuding over whether the virus was no worse than the common cold (no, Rush Limbaugh, it’s not, just like the colloidal silver flogged by talk radio opportunists isn’t a cure). Similarly, we spent months debating if the government couldn’t or shouldn’t trample “individual freedom” by ordering people to submit to the “burden” of simply wearing a mask in public. China, on the other hand, locked down until the infection rate reached manageable levels and everyone could safely return to work. Consequently, while the virus runs out of control in much of the U.S. with no signs of better times in the near term, overseas factories have resumed operation and are once again dominating the global supply chain.
Supply chain managers have learned one lesson during this time. They realize that reliance on suppliers in a single country (China) creates high risk. Unfortunately, their solution is not to bring production back to America. Rather, they are building production capacity in other Asian countries like Viet Nam and India. The supply chain broke, but it has healed enough to make reshoring less urgent.
On the other hand, there is still time to harness the pandemic-induced anger and fear to establish a robust national industrial security program. Failure to retain important types of manufacturing continues to be a national scandal. (Tariffs do not constitute an industrial policy, but we’ll leave that for another column.)
Anyone who isn’t furious about federal mismanagement of the virus simply hasn’t been paying attention. Yes, most state governments haven’t colored themselves in glory but this is not a regional issue. Apparently, a reasonably robust pandemic response plan was developed during the 2014 Ebola outbreak but was scrapped in 2018. Maintenance of contingency stores of things like ventilators and respirators was also eliminated.
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For all the talk about America’s mighty defense capabilities, it turns out that we are utterly naked against anything that can’t be beaten by warplanes, tanks or battleships. In addition to armaments, shouldn’t our national defense strategy be self-sufficiency in the facilities, machines and materials to meet not just normal medical requirements, like personal protective equipment, but emergency needs, as well? The same goes for many other aspects of our economy that are critical to survival, such as hardening utilities infrastructure or protecting medical facilities.
We’ve missed a great opportunity to rework the global supply chain to our benefit. Let’s not waste the chance for self-sufficiency.
Editor’s note: Jim Smith began work in electronics assembly in 1965 and founded Electronics Manufacturing Sciences in 1981 to teach soldering as a unified science. Thousands of engineers, technicians and managers worldwide have attended his "Science of Soldering" classes. Jim’s articles have appeared in more than 100 publications worldwide. His "Unconventional Wisdom" column appeared monthly in ASSEMBLY Magazine for more than 10 years and he remains a regular contributor to the magazine. For more information, visit www.emsciences.com.