COVID-19 reveals the value of domestic manufacturing
Wednesday, April 29, 2020
The COVID-19 pandemic has brought attention to the value of domestic manufacturing. One recurring piece of news that we see everywhere, from cable channels to social media, is the urgent need for more PPE and how Americans are stepping in to make these products for our front liners.
From individual contributors to major industry leaders, millions are invested in helping to make supplies for the medical community. But many leaders and businesses are looking at other U.S. manufacturing possibilities going forward.
The wake-up call
The healthcare crisis and the need to produce medical supplies fast has acted as a wake-up call. It has shown us the importance of having a local manufacturing base and the issues that arise when goods can’t be made for the domestic economy.
A notable effort is being made by the Manufacturing Coalition, a group created by a group of American business leaders and manufacturing entrepreneurs. Together they are focused on creating a domestic supply chain to secure products to combat COVID-19 and that are essential for U.S. security. The coalition is made of 200 leaders across the country who have tapped into the manufacturing circuit and distributed the necessary medical supplies.
They are working with American manufacturers to pivot production lines and create essential products like COVID-19 testing kits; N95 masks; sanitizing gels and liquids; disposable gloves; ventilators and ventilator housings; and aluminum components for blood analysis tools, among others. Though only 30% of the coalition companies are a part of the medical supply chain, they quickly worked with others to meet the domestic demand for medical supplies.
While their ability to pivot and support the American medical community is commendable, so is their focus on the real issue — exposing the vulnerability in the U.S. supply chain and production. The solution is to bring back significant manufacturing and production capabilities to the U.S. and fix the broken American supply chain system.
With a staggering 26 million Americans have filed for unemployment benefits over the past five weeks, domestic manufacturing and a fully functioning supply chain may help save jobs or provide employment as a long-term solution.
Like the members of the Manufacturing Coalition, entrepreneurs no longer wish to remain dependent on products coming from overseas. Instead, they want to rely on the strength of the U.S. manufacturing system, analyzing current capabilities, and asking for government support to make up for the lack of resources.
The Coalition is strategic in its approach, which means that while it is repairing our supply chain, its members are also maintaining a diversified supply chain to get some materials that may need to come from other countries. At the core, however, they believe domestic production will strengthen America and help create a stable society.
Once they show an apparent demand to produce domestically, an investment cycle will follow in terms of plants, production, people, and equipment. More importantly, having necessary supplies through a clean and simple supply chain will strengthen national security.
The same sentiment is echoed by Michigan industrialists. Michigan’s advanced energy manufacturing industry, along with its strong automotive manufacturing base, will be pivotal in the state’s recovery and help the nation bounce back.
For the last few decades, a significant portion of global manufacturing took place in China, giving it the name the “world’s factory.”
COVID-19 is a healthcare nightmare, but it has also exposed the U.S. to significant risk during a time of national crisis due to the model of offshore manufacturing. The mass migration of manufacturing to China has severely eroded U.S. domestic capabilities. Supply chains have moved abroad for many years and are highly dependent on imports.
There is no national redundancy built into current supply networks. Once called the nation of industrialists, offshore manufacturing has damaged America’s ability to manufacture products and retain a lead in many sectors.
The first problematic consequences of this are evident in the research-intensive industries like biotech and pharmaceuticals. American manufacturers are looking to rethink the entire model of economic development. They want to begin by reducing the supply-chain vulnerabilities by building redundancies into the systems. This is the first step to mitigate undue reliance on foreign suppliers for strategically essential industries.
GlobalData recently reported that the domestic manufacturing of medical devices is trending skyward due to the COVID-19 pandemic. The U.S. needs approximately 5.6 billion N95 respirator masks and 75,000 more ventilators, a high demand that needs to be met ASAP.
From a risk-analysis perspective, ramping up domestic production capacity of medical supplies is the only answer for reducing the severe threat to public health security. COVID-19 may reset the globalization trend that was set in motion with the fall of the Iron Curtain — moving from a dispersed supply chain back in favor of domestic production for critical medical devices and eventually other forms of production.
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