Global supply chains are a lot like the plumbing or HVAC systems in our homes. We normally ignore them—until they clog or break. Then we have an urgent problem on our hands.
We just experienced a gasoline supply crisis due to a cyberattack on a pipeline. We’re still dealing with a global shortage of computer chips that has forced the nation’s biggest auto manufacturers to shut down production lines despite soaring demand. And we’re facing an inadequate global supply of Covid-19 vaccines, even as thousands of patients die every day in developing countries.
Each of these crises requires a different—but equally deft—government response. We need to establish deterrents to stop cybercriminals from causing widespread damage. We need an industrial policy that creates a domestic reserve capacity for semiconductor manufacturing. And we need to boost vaccine production and deliveries to developing countries.
We are off to a decent start. Cybersecurity is now a top priority for much of the U.S. government and for private industry. On chips, the infrastructure legislation lawmakers are currently considering includes a proposal for $50 billion to boost production—a down payment on the $1.4 trillion in investments and incentives the Semiconductor Industry Association says we need over the next decade to make the U.S. self-sufficient.
When it comes to vaccine production, the problem is lack of production lines, raw materials, and trained manufacturing workers. Pfizer initially hoped to produce 100 million doses of its vaccine by the end of 2020. It had to cut that target by half because scaling up the supply chain for raw materials took longer than anticipated.
Although we will never eliminate all possible sources of disruption, we can take action to make supply chains as robust as possible.
The first step is to shorten them. We can’t continue to be wholly reliant on remote sources for vital goods and services when domestic alternatives are—or could be—available.
The exact solutions will differ, depending on the product in question. For commodities and durable goods like N95 masks and other personal protective equipment, simply creating—and maintaining—domestic stockpiles is a wise move. The most famous example is the Strategic Petroleum Reserve, which the government established after the 1973-74 oil shock to mitigate future supply disruptions.
We can’t store vaccines or semiconductors in underground salt caverns for years on end. But we can bolster domestic production of essential raw materials and equipment through tax credits, loan programs, and smarter regulation, so that we have the capacity to quickly mass-manufacture the goods we need to survive and thrive.
We also need to make sure we have a workforce up to the task. The United States currently produces only about 10% of the world’s undergraduate degrees in science and engineering. A study from Deloitte and The Manufacturing Institute estimates that American manufacturers will face a staffing shortfall of 2.4 million workers by 2028 due to insufficient STEM training and retirements. A great deal of our tech/engineering depends on smarter immigration policies, although every scientist we take in from another country disadvantages a less well off economy, and this also eventually comes back to bite us.
Finally, we ought to incentivize companies—whether they make pharmaceutical ingredients or silicon chips—to open manufacturing facilities here in the United States. Relocating a single drug-manufacturing or chip plant stateside can cost a manufacturer upward of $2 billion and take 10 years. So we had better act soon.
Modernizing our supply chains will not be quick or easy, and there’s no telling how much time we have before the next crisis hits.
Howard Dean is the former chair of the Democratic National Committee and former governor of Vermont. He is a senior advisor with the public policy and regulations practice at Dentons.