Financial Times: Investing in America Summit Assistant Secretary Grant T. Harris Remarks Next Generation Supply Chains
New York, New York
December 10, 2024
As Prepared for Delivery
Thank you, Peter, for that kind introduction, and to the Financial Times and Nikkei for organizing this Investing in America Summit.
This topic has been an animating theme of the Biden-Harris Administration. I hope that today’s discussions will highlight the widespread impact that the CHIPS and Science Act, Inflation Reduction Act, Bipartisan Infrastructure Law, and other legislative accomplishments are having by driving investment into communities across the country.
I am proud to be a part of an Administration that has had such a consequential impact on American manufacturing. In the last four years, over 700,000 new manufacturing jobs have been created, and over $910 billion in private manufacturing investments have been announced nationwide.
Today, I want to focus on a foundational need that is key to spurring and sustaining investment in the United States: strong supply chains.
We’ve made tremendous progress on this front by reorienting our efforts towards a more proactive, strategic approach to addressing U.S. supply chain challenges, and I’ll share a few highlights of that work with you. In addition to marking this progress, I want to talk about what the next generation of supply chain work for the U.S. Government could and should be.
When the Biden-Harris Administration came into office, the world remained in the midst of the COVID pandemic. Many supply chains were broken. Individuals and companies could not get the goods they needed, when they needed them. The Administration was in crisis mode, working day-and-night with industry to get our supply chains back on track.
The pandemic, along with the understanding that foreign adversaries were deliberately looking to create dependencies in global supply chains, made crystal clear that the United States Government needed to become more strategic and proactive in advancing supply chain resilience.
Secretary Gina Raimondo recognized that the Commerce Department was uniquely positioned in the U.S. Government to play a leading role in these efforts. Specifically, my team in the Industry and Analysis business unit set forth to help tackle this problem.
For those of you who do not know, the Industry and Analysis team is the analytical engine helping to drive the government’s efforts to promote U.S. economic competitiveness.
Because this business unit covers over 90% of the U.S. economy – from raw materials like critical minerals, to vital components like semiconductors, to finished goods like autos and airplanes – it has a unique understanding of upstream and downstream supply chains.
The team had been working on supply chains for years. For example, it was the first team in the U.S. Government to sound the alarm on competitiveness in the semiconductor supply chain and spring into action. They mapped out chokepoints, created an early warning system, and helped drive tens of billions of dollars in investments. This work helped lead to the creation of the CHIPS and Science Act, which is reshaping the U.S. semiconductor industry and creating thousands of jobs.
But we knew we could do more. We pulled together a dedicated team to fuse qualitative and quantitative insights, to think cross-sectorally, and develop the tools and playbooks needed to help us get ahead. That team became the U.S. Government’s first Supply Chain Center, charged with creating data analytics tools, driving efforts to go deep on industries where we see vulnerability, and working with trading partners, stakeholders, and government colleagues to strengthen supply chains.
From the outset, we saw the need to enhance the government’s ability to systematically assess supply chain risk across the entirety of the U.S. economy. We wanted to create something that would allow us to see the vulnerabilities and weigh where our greatest risks lie – and then drive towards solutions.
This approach has paid dividends. We developed a new, first-of-its-kind data analytics tool called SCALE.
This tool utilizes a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy. It is a data-driven way for the U.S. Government to assess systemic risk in supply chains – especially economic and national security risk. It tells us where hidden risks are and points out specific vulnerabilities so that we can seek to address them.
Through our new Supply Chain Center and our revolutionary data tool, we are applying our work across a range of areas.
For example, in recent years, there has been enhanced recognition of the need to secure minerals critical to many components of our economy. We have put our industry expertise and new tools to work to conduct mineral-by-mineral assessments to understand chokepoints, and we’re working with industry and international partners to spur new investment and policy approaches to help reduce risk.
We have also conducted deep dive and quick turn analyses across a range of both existing industries as well as emerging technologies.
We did a deep dive, for example, into the material supply chains for AI data centers, understanding that if the U.S. is to maintain its advantage in hosting these data centers, which we see as in our national security interest, we need to ensure that companies can secure the materials they need, when they need them. This includes everything from building materials to backup generators to emerging cooling technologies that are only on the cusp of commercialization.
We are also leveraging our supply chain analysis to strengthen investment security, including to inform U.S. decision-making in the Committee on Foreign Investment in the United States, CFIUS. We are able to more comprehensively assess, for instance, where specific transactions could create supply chain vulnerabilities that threaten U.S. national security.
We can also better respond to disruptions. During the recent work stoppage at East and Gulf Coast ports, the Industry and Analysis team provided extremely in-depth and data-driven assessments that enabled us and other U.S. Government colleagues to work with industry to help mitigate potential supply chain impacts.
Our efforts are enabling the U.S. Government to better “meet the moment” required by this era of economic and national security imperatives. That said, this work needs greater investment to scale and sustain this positive momentum.
At the same time, we know that the challenges and opportunities motivating this work do not stand still. We need to be prepared for what is coming around the corner. We need to ask ourselves, what will meeting the moment look like in the years ahead?
To that end, I want to offer five thoughts on what the next generation of U.S. supply chain work can and should look like.
First, we need to clearly define success.
Thanks to the tools that we and others across the U.S. Government have developed, we are making incredible strides to have a much more realistic and thorough picture of our risk across many critical industries.
The next step is to continue to define the government’s long-term objectives and desired end-state – and identify a path to achieve them. What does success look like? How much risk is the U.S. Government comfortable assuming? How will we measure success and hold ourselves accountable for it?
These types of questions should be continually reassessed as the U.S. Government considers priorities, defines what resiliency for specific industries and products should mean in practice, and identifies metrics to gauge progress along the way.
Second, we need to make data more actionable.
We have leveraged existing data in new and innovative ways to help us develop a dramatically more comprehensive assessment of supply chain risk. But the analysis is only as good as the data that underpins it, and we have more to do to generate and leverage that data.
This includes finding smart ways to collect and share more granular data – both among international partners and between government and industry. We need better systems for tracking inputs into emerging technologies, for instance, where our trade data lags behind real-world technological developments.
It also includes better leveraging machine learning and AI to spot risks – something that the U.S. Government is frankly already behind on.
Data is no panacea, but more is needed to assist risk identification and decision-making. These are the types of steps that will help us make data-driven analytics not just better, but also more actionable in informing policies and investments that drive resilience.
Third, we need to go on offense, particularly on critical and emerging technology supply chains.
It is important to see supply chains as a vital part of the U.S. technological agenda. We simply cannot wait to see what path an emerging technology takes before asking ourselves what supply chains it may require – and where and how U.S. industries can support and benefit from those supply chains.
This is why we have done deep supply chain analysis on technologies like hydrogen, quantum, and AI. We’re thinking about where supply chains are going or might need to go – not just to identify potential vulnerabilities or threats, but also to uncover opportunities.
We need to view strong supply chains as a sword, not just a shield. Strong supply chains can and should be a source of competitive advantage – for the U.S. Government, but also for companies. And the U.S. Government should relentlessly work to create the conditions and global standards to support U.S. companies in commercializing technologies, innovating solutions that bolster supply chains, and maintaining industry and market strength in new technologies and their related supply chains.
And upon making this progress, it is equally important to sustain it. With too many technologies, we’ve seen the same pattern play out again and again – U.S. companies develop a new product, approach, or technology, test it, and bring it to market. But over time, especially as technologies mature, they lose market share to China, which produces it more cheaply, including by leveraging unfair and non-market practices that undercut U.S. companies. This Administration has taken a strong stance to combat unfair trading practices and support a level playing field for U.S. companies, and this work will need to continue.
Supply chain “resilience” as a concept is certainly important, but it cannot be the full encapsulation of U.S. supply chain work. It conjures up images of weathering a storm or withstanding a challenge. By going on offense, we can think not just of buying down risk but also about creating and seizing opportunities for economic competitiveness, job creation, and technological leadership.
Fourth, we need to ensure that friendshoring doesn’t turn into just a buzzword.
We’ve already begun the work of cooperating with allies and partners on making our supply chains for critical industries like semiconductors and chemicals more secure. But we can go further, taking this approach around the world and creating new partnerships and expanding existing ones to make investments in global supply chains that support U.S. companies and competitiveness.
This isn’t about sacrificing where the U.S. has a comparative advantage – it’s about helping to ensure U.S. companies have access to the inputs they need, from reliable, diverse sources. We have a shared interest in supply chain resilience with our allies and partners, and supply chains need not, nor should be, seen as zero-sum.
The key is identifying shared interests with the right partners and specific actions on specific supply chains. We have created a Supply Chain Exposure Tool to enable data-driven dialogue with partners on vulnerabilities and opportunities. We have also forged a new framework for supply chain cooperation with partners in the Indo-Pacific to create action plans on particular supply chains. Expanding and refining these approaches can drive significantly greater action than what one government could generate alone.
Fifth, we need to advance shared priorities with the private sector, including with respect to geopolitical risk.
At the end of the day, it is primarily the private sector that manages supply chains, and private sector decision-making is vital to driving resiliency.
One of the most critical steps that the U.S. Government can take to strengthen supply chains is to offer insights and data to aid companies as they price supply chain risks into their business decisions, seek to reduce the impact of disruptions, and navigate geopolitical risk.
By providing Wall Street and Main Street with a greater understanding of what the U.S. Government views as a national security risk, for example, it will afford companies the ability to make more informed and holistic choices when it comes to sourcing decisions.
This is particularly true when the U.S. Government has a more complete view of a critical complex supply chain, the risk of particular inputs, or greater insights on where, say, a foreign adversary may be looking to create leverage or strategic advantages.
Let me be clear: this is not about the U.S. Government directing companies on what to do. Rather, it’s about helping companies gain a fuller understanding of the risks they face, particularly those related to U.S. economic and national security. With this clearer risk awareness, companies can better assess and price those risks, which in turn can strengthen supply chains. This approach benefits both sides, as a shared understanding of particular supply chain risks between the public and private sectors leads to better decision-making overall.
Now this, of course, is not meant to be an exhaustive list of everything needed to build more secure supply chains. And all of this requires encouraging the strongest domestic investment climate possible and development of a workforce that fits the changing economy.
The stakes are high. Advancing strong supply chains is vital to our economic and national security. If done right, if we are strategic, proactive, and effective, we can drive greater investment into our communities and fuel the competitiveness of U.S. industry around the world to the benefit of jobs across the country and America’s technological leadership. We can be safer and better able to protect our communities and respond to disasters and other disruptions. And we can prevent and reduce vulnerabilities to adversaries seeking to create dependencies and geopolitical leverage.
In closing, it’s not just about buying down risk. It’s also about identifying and seizing opportunities. By considering what “meeting the moment” will require in the years to come, we can advance the next generation of supply chain work and drive actions, partnerships, and solutions that strengthen the global competitiveness of U.S. industry and the security of the nation.
Thank you.