House debates Biden’s global supply chain policies

Oct. 20, 2021

By Keely Bastow

A House hearing Wednesday tried to narrow down the causes of the global supply chain disruption. Republican lawmakers attempted to lay the blame on labor policies enacted by the Biden administration while Democrats blamed long-term trends, like the decrease in truck drivers.

“I don’t care who’s responsible, I want to find solutions,” Chairman Dean Phillips from Minnesota said in the House Small Business hearing on Global Supply Chains and Small Business Trade Challenges.

Challenges to the global supply chain have been in the public eye recently as disruptions continue to affect domestic consumers. Major ports, like Los Angeles and Savannah, have shipping containers stacked on port docks and boats waiting offshore for days, according to a hearing memo distributed by the committee. There is a shortage of truck drivers to pick up the containers, and a shortage of containers to move all the goods, the memo states.

The economic shutdown in 2020 closed factories around the world and led to decreased production and insufficient supply of goods, according to CNBC. Now, demand is high and back-ups in the global supply chain are making it difficult for producers to transport their goods.

Ranking member Beth Van Duyne from Texas said this supply chain disruption is keeping not just consumer goods, like toys, but also necessities out of the hands of Americans.

John “Chuck” Fowke, founder of Homes by John C. Fowke Inc., spoke on behalf of the National Association of Home Builders about the difficulties facing his industry, such as the price of lumber and lengthy delivery times.

Not knowing the exact delivery date or the price until the lumber arrives makes a “once challenging endeavour now almost impossible,” Fowke said.

He said the housing industry has been under producing for decades and this type of challenge will mean a lack of accessibility to affordable housing for consumers.

President Joe Biden came to an agreement with FedEx, UPS and Walmart for them to operate 24/7 last week, said the trucking industry association. Fowke said small firms are being left out by this type of solution because “we don’t have those opportunities.”

“Small businesses are left to bear the brunt of Joe Biden’s crisis,” Van Duyne said.

Democratic representatives attempted to understand the issue by focusing on systemic trends. Phillips said the recent change in demand has exposed broader challenges in the supply chain.

Frank DuBois, a professor of international business at American University, said in an interview at the beginning of the pandemic there was little demand for things like gas, cars and gaming consoles, but demand rebounded strongly in 2021. That change in demand, from the collapse in 2020 to the rapid rejuvenation in 2021, was a major cause of the current supply chain problem.

DuBois said the global supply chain wasn’t built to start and stop like it did and sees “no blame to be laid at the desk of the president or any policy.”

Chris O’Brien, chief commercial officer of logistics solutions provider C.H. Robinson, testified before the committee that current congestion in the supply chain is due to predictable factors, like economic growth, labor trends, weather, and capacity of transportation.

He said a major problem, occurring before the pandemic, is that there are fewer truck drivers in recent decades. O’Brien told lawmakers one solution would be to invest in recruitment programs like Women in Trucking and the Drive Safe Act, which implements an apprenticeship program for drivers under 21.

Christine Lantinen, founder of specialty candy producer Maud Borup Co., focused her testimony on the impact of the labor trends on her supply chain. She says the “dire shortage” of workers is “unsustainable” for her business and is the number one challenge she faces.

Republican Rep. Jim Hagedorn from Minnesota said that to combat the labor shortage there should be a work requirement for people on welfare. He also criticized the Biden administration’s COVID relief bill from March, which provided stimulus checks and weekly unemployment insurance, implying that the relief bill was a cause of the current labour shortage.

As of September 2021, unemployment was at 4.8%, according to the Bureau of Labor Statistics.

As for solutions, the answers were partisan as well.

Democrat Rep. Sharice Davids from Kansas said, “we’ve been depending on a pretty precarious supply chain for far too long.” She challenged the success of the “just-in-time” business model that most global companies rely on.

This model means that companies do not keep a stockpile of goods and materials and only ship what they can sell. This creates difficulties when demand increases but the supply chain slows.

But Republican Rep. Hagedorn opposed increased government intervention, stating, “if you want to stop the bleeding of this whole supply chain issue and inflation, let’s quit micromanaging the economy.”

DuBois said it’s unlikely there will be more reaction than reconsideration of resiliency plans by major players in the supply chain currently being impacted, blaming corporate leaders.

“Corporate executives in the U.S. tend to think short-term, short-term solutions, short term fixes. When things get back into balance and shipping prices go down, supply chains start opening up again, they may just fall back into their old habits,” he said.

The supply chain dilemma comes as Democrats are hoping to enact the Bipartisan Infrastructure Framework, which invests heavily in things like roads, bridges, ports, and other major transportation projects.

Patrick Penfield, professor of supply chain management at Syracuse University, said in an interview this type of investment would allow goods and materials to “get to places quicker.”

Penfield said it is “ludicrous” to think that any policy led to this situation, except perhaps “the infrastructure bill and the lack of it passing.”