Things were normal.
Then they weren’t.
Then critical global supply chains closed.
It all happened that fast. In some instances, it happened even faster. The World Health Organization (WHO) determined that coronavirus was a pandemic on March 11, but for nearly two months prior to that significant parts of a Chinese manufacturing sector that American companies depend on had been locked down or affected by COVID-19.
Then, in the midst of a crisis, our dependency on foreign supply chains became all too evident and crippled our ability to respond.
Panjiva, a London-based import/export service, found that more than 450 importers in the United States use suppliers in Hubei province, where researchers believe the disease originated. Panjiva also found that American electronics manufacturers rely on Chinese suppliers for 50 percent of their components. Domestic automotive manufacturers get 15 percent of their parts from China. When experts state that the collapse of Chinese supply chains could cripple American manufacturing, they mean it.
This time, it was the coronavirus.
Next time, it could be a different pandemic.
Or one of a thousand other things that could disrupt global supply chains in a rapidly changing world.
The era where domestic manufacturers could securely rely on foreign supply chains while treating disruptions to the flow of critical components and parts as theoretical risks ended this spring.
“Made in America” is no longer a marketing campaign or political slogan.
It is a strategic necessity—and that won’t end when the coronavirus crisis ends.
Because of that, the American economy needs strategic solutions, and the ability to respond quickly when unexpected challenges arise.
Reshoring U.S. Manufacturing No Longer a “Nice to Have”
In the manufacturing sector, one of those strategic solutions should involve reshoring manufacturing capacity wherever possible, as fast as possible.
We need to manufacture everything we can right here in America. We should not fight the next crisis with vital supplies manufactured in whole or in part by nations that inevitably have to prioritize their own citizens first. Like a business, our nation needs to recognize its strengths, weaknesses, opportunities, and threats. One of those weaknesses is our reliance on foreign manufacturing. One of our opportunities is bringing that manufacturing capacity back to America through technology-driven productivity gains.
Doing so will require American parts and component manufacturers to elevate their productivity, adaptability, and responsiveness at all levels. It will also require an expanded labor pool with the skills and training necessary to work in the modern, technology-driven manufacturing sector. Advancements should not be limited by narrowly focusing on the need to manufacture more medical equipment and supplies in the United States. Instead, we must invest during the downturn in fundamental, sustainable improvements that will both accelerate the recovery and reduce our future reliance on foreign supply chains.
It is hard to be competitive when your advantage relies on the presence of employees that are restricted from entering your facility. The restrictions imposed by COVID-19 made the need for remote access to manufacturing data more urgent than ever. “While we expect more employees to return to work on-site as authorities allow, this data availability is a clear game-changer,” said Jo De Vliegher, CIO at European aluminum giant Norsk Hydro AS A in a recent Wall Street Journal article. While the next crisis may not feature that specific restriction, access to real-time, remote data will continue to be a growing source of competitive strength.
New technology and data-driven tools are available today that can help domestic manufacturers improve productivity by unlocking the value trapped in the resources and data they already own. That productivity increase—which can be as high as 30%—is a technology-aided advantage American manufacturers can tap into now to gain a competitive advantage in the global marketplace.
These and other benefits are expected to spur annual spending by global manufacturers on data management, analytics and other advanced capabilities to nearly $20 billion by 2026, up from roughly $5 billion this year, according to a report by ABI Research.
According to ABI’s report, advanced data tools will give factories a clearer view of operations and equipment performance, allowing them to speed up production, reduce waste, improve their product quality and avoid downtime by more quickly identifying maintenance issues.
For decades we have debated the impact of outsourcing on moral terms. Was it “right” to send jobs overseas? Is it “fair” to ask low-income Americans to pay more for a product so it can be Made in America? Those questions are complex—but what isn’t complex is a supply chain or manufacturer closed indefinitely because of a virus that, as of now, lacks an effective vaccine or treatment.
I cannot promise you a cure for the coronavirus.
But I can promise you that American manufacturers and their employees can and will be better prepared to handle the (inevitable) next crisis with the technology and skills to make Made in America the best choice.
Duane Clement is the founder and CEO of Data Inventions, Inc.