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Executive Order Seeks to Identify Weaknesses in U.S. Supply Chains

  • President Joe Biden signs executive order to review weaknesses in American supply chains
  • Action marks a first step in efforts to creating a resilient supply chain that is better able to endure major disruptions
  • Initial review to look at four areas, with follow-up within one year of supply chains for six sectors

Summary by Dirk Langeveld

Federal officials have been directed to do a broad review of American supply chains and deliver recommendations on how the United States can better prepare for and withstand disruptions.

Under an executive order signed by President Joe Biden, a review of supply chain risks in four critical areas will be completed within 100 days. Seven Cabinet secretaries will issue reports on the supply chains for six sectors within one year.

The intent of the order is to pursue “resilient, diverse, and secure supply chains” to promote economic prosperity and improve national security, while also revitalizing domestic manufacturing capacity, supporting small businesses, and creating jobs. Biden also said that improving the nation’s supply chains will allow it to better endure disruptions and shortages caused by major events such as pandemics, climate events, or terrorism.

The first review will identify risks affecting the supply chains for semiconductors and advanced packaging; high-capacity batteries, including those for electric vehicles; “critical minerals,” including rare earth elements; and pharmaceuticals and pharmaceutical ingredients.

Within one year, the designated Cabinet officials will submit reports on the supply chains for the industrial bases of the defense, public health and biological preparedness, information technology and communications, energy, transportation, and agricultural sectors. Each report will include information such as critical and essential goods and materials and each sector, weaknesses such as gaps or single points of failure, and other topics such as workforce development or research and development needs.

The reviews are set to be followed by actions necessary to build resiliency in the supply chains, including improved domestic production, surge capacity to ramp up production as needed, built-in redundancies, adequate stockpiles or critical goods, and secure digital networks. These will include reforms, diplomatic outreach to close allies, and an ongoing quadrennial review of the supply chains.

Semiconductor shortages have been a particularly pressing concern in recent months, disrupting the auto industry and leading to shorter worker hours. This issue is also stymying development in technological areas such as quantum computing and 5G networks. An expansion of semiconductor production capacity is likely to take several months to complete.

The review of supply chains is meant in part to identify areas where manufacturers are relying too heavily on foreign producers. Reliance on China is one major concern, as the nation is dominant in the production of rare earth minerals and other critical components and could cause disruptions by curbing exports or diverting materials to its domestic markets, as occurred during the COVID-19 pandemic. However, the Biden administration is also seeking to address vulnerabilities arising from severe weather events, climate change, and other crises.

Potential remedies for strengthening supply chains could include company incentives, onshoring, or invoking the Domestic Production Act to increase the manufacturing of essential materials in short supply.

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