Will broken supply chains stop Santa Claus?
The White House is worried about disgruntled Americans this holiday season as Santa is already struggling to deliver on his promises. In a recent speech, President Biden acknowledged the question of the season: “with the holidays coming up, you might be wondering if the gifts you planned to buy will arrive on time.” With supply chains still disrupted by the pandemic, it’s unclear what the answer to that question will be. What lies at the root of this problem? A lack of knowledge and transparency around supply chains.
The issue of supply chain disruptions is relatively new for the average American, but not unexpected when considering the decline in the U.S.’s industrial capabilities. The rise of the global economy over the last few decades led to international competition for pricing, production and transportation, with China dominating due to its impressive industrial growth. What COVID-19 demonstrated, and what the U.S. is feeling now, is what happens when the cheapest, fastest supply chains have shuttered on and off for the past two years. Relying on China and other countries for intermediate goods and critical materials (especially for cars and computer chips) has led to a shipping traffic jam, resource and product shortages, as well as the seemingly paradoxical nature of having overflowing ports and empty shelves.
In light of this exposed fragility and increasing risks due to climate change, Biden stated, “we need to take a longer view… that invests in building greater resilience to withstand the kinds of shocks we’ve seen over and over… whether it’s the pandemic, extreme weather, climate change, cyberattacks, or other disruptions.” However, we can’t take a longer view without supply chain transparency.
Even for commodities and intermediate goods, many U.S. companies aren’t able to completely trace where their products or supplies are coming from. The COVID-19 pandemic helped to illuminate supply chain vulnerabilities as different economies shut down, but this isn’t the first time the U.S. has been caught off guard. Supply chain initiatives at many of the world’s top technical universities and NGOs have been tracing the fault lines in our resource supply for years. For example, reports of child slavery providing the materials used by the battery industry came as a surprise to many U.S. companies in 2018. American steel companies also successfully lobbied to block Chinese steel imports until COVID-19 demonstrated that they still rely on China for key steel-making materials. China has posed other challenges to our supply chain stability, even sending not-so-subtle threats that they might cut off the U.S. supply of rare earth elements — essential ingredients in phones, electronics and fighter jets.
Ultimately, the U.S. is in a precarious position until it modernizes its industrial policy. The U.S. has doubled the number of mineral commodities it is 100 percent import reliant on over the last 60 years, and there is no clear path forward to gain independence.
A mine and similar industrial projects in the United States take 20 years to open, most of the largest U.S. mining companies only focus on gold and copper (38 percent and 27 percent of metal mine production in 2020 respectively), and the U.S. doesn’t support partnerships and investments in Africa, Asia and South America the way that China does.
Even from a technical perspective, the U.S.’s industrial base is struggling to modernize or find new engineers, while China has tens of thousands of students enrolled in metallurgy and other programs specifically aimed at giving them a future material advantage. The U.S. lacks the resilience it needs to compete, and it’s not clear how it is going to get out of this rut.
After years of unheeded warning, the United States is scrambling to address supply chain vulnerabilities. An executive order from earlier this year sought to strengthen the resilience of America’s supply chains and Biden’s recent speech was made to announce an update on this work: our two largest ports, located in Long Beach and Los Angeles, will now be operating 24/7, seven days a week, in order to circulate of goods across the country. There’s a good chance that this will help with the holiday rush, but it can only do so much. America’s supply chains are tied up around the world and their arrival is dependent on a number of uncontrolled, intertwining systems.
When we’re speaking not of stocking stuffers, but rather the success of U.S. technical industries, supply chain vulnerabilities risk a lot more than December disappointments. Increasing supply chain transparency is the first step toward solving these challenges and ensuring energy, technology and resource stability for the American people.
Elsa Barron is an environmental journalist at the Payne Institute for Public Policy of the Colorado School of Mines and a research assistant at the Wilson Center Environmental Change and Security Program.
Jordy Lee is the program manager for the Supply Chain Transparency Initiative at the Colorado School of Mines.