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tv   Hearing on Supply Chain Resiliency  CSPAN  July 21, 2021 12:16am-2:19am EDT

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along with of these other television providers giving you a front row seat to democracy. >> the senate commerce committee on supply chain resiliency the witnesses were asked about several topics including competition with china and the use of public-private partnerships. this runs for two hours.
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the u.s. committee on commerce, science and transportation will come to order. thank you all for being here. we have a distinguished group of witnesses today to talk about a very important issue to us in the united states ofs america. that is the state competitiveness of our supply chain and its resiliency for the future. each of our witnesses, the distinguished doctor james lewis, mr. rich, mr. william and i'm sorry, healer and john miller offer a variety of perspectives on the importance of this issue.
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i can say for me in the state of washington aviation supply chain is something we are proud of. people continue to innovate and create new products that that's where the innovation is happening in the supply chain. that's why we just recently passed the now called u.s. innovation competitiveness act that we are trying to negotiate with our colleagues because we believe in making an increase in investment and supply chain so i'm sure we will hear today also about the challenges we face in the semi conductor sector, an aspect of our supply chain which we saw great shifts over the last several decades and the
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consequence is obviously less jobs in the united states of america. needless to say, the supply chain is key to our economic strategy and a robust supply chain means we are going to continue to have robust employment in the united states of america. lywithout the resiliency, it cod be complicated as to the experience of covid, whether products can be delivered in a timely fashion, whether the services and security could be impacted and just how important it is that we have a strategy for a global economy which a variety of services can be delivered in a much more competitive fashion that means the important investments in the department of commerce should
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make. there were several steps to contribute to the resiliency of the supply chain and incentivize the manufacturing establishing the supply chain resiliency and response office within the department of commerce. it makes tremendous investment in the department of commerce national science foundation department of energy to support and translating inventions into products creating technology hubs and expanding the workforce in our innovation economy and these important facilities like the national laboratory can help with spinoffs of new technologies that become critical parts of our rmd and domestic supply chains. also, the manufacturing extended programs can help with working with developing resiliency supply chain strategies so we can continue to have just
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potential customers and supply chain connectors but understanding also how we can best innovate in and stay competitive. i look forward to hearing the testimony from the witnesses today. i feel very excited to have this group in front of us and i hope our colleagues will learn from the information here. what i was saying i'm not sure 20 years ago we would have had the same hearing. i see our colleague here, the key sponsor behind this what would have been the endless frontiers act. supply chains have changed and look forward to how the united states stays competitive. >> it's good to be with you here today and here with this distinguished group. what do we mean when we say supply chain? is the process that starts with were all materials and ends with
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sales andd consumption? there are manufacturing and distribution resiliency supplys, chains can withstand and recover from disruptions and we've hadus disruptions but we also included in addition to infectious outbreaks. in recent decades the manufacturing capacity has declined significantly between 202,010 manufacturing jobs were cut one third with small businesses heavily impacted and as we all know that is where we create the jobs in the united states of america smalle business. over the supply chains have fallen to the hands of fewer and fewer countries most notably the
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availability will require strong partnerships andrn international partners and interest in the r&d andd workforce development to dmake sure new innovations are conceived and developed here in the united states. mississippi is one great example of a u.s. company conducting rmd in the materials and whose innovations are being replicated around the world.oo the committee took steps as the chair mentioned in passing the endless frontier act known as the innovation competition act. this bill, authored by senator young passed to the vote by 68
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to 32 ways to address vulnerabilities that also includes emergency appropriations to support semi conductor manufacturing and r&d. this is a much-needed responsive semi conductor shortages that haveuc disrupted manufacturing across the nation including my home state of mississippi and we will hear about that from the distinguished panel. the legislation includes important contributions from the finance committee to combat china's manufacturing and balances and threats to free and fair trade to discuss how thee united states innovation competition act can make the supply chains more resilient anm to share thoughts on how the department of commerce might implement various positions of
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the bill. the house passed its reauthorization of the national science foundation but it still needs to take action on the broad range of topics covered by our legislation. the president recently issued ab 100 day supply chain review that identified some important vulnerabilities. the chairman and ceo of the taylor group is a leading amanufacturer in mississippi. taylor builds forklifts andha a wide variety of material handling machines for both industry and defense purposes. mr. taylor has first-hand experience with the topics we will cover and i know he and other members of the panel will make it a valuable contribution to the discussion.
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>> i've been a professor at duke and i value the center there and i've spent a number of decades with global a supply chains andi thank my neighbors and friends want to talk about that topic. not necessarily for good reasons the last couple of years as we know covid, the pandemic is introduced many disruptions and shortages of products and supply chains have come to the public
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consciousness but it was the white h house report released lt month on resilient supply chains and it's been a part of globalization in the u.s. economy. a couple of points in my written testimony and about the nature of the supply chain research and to the concept of resiliency and then i want to give a kind of bottom-up perspective of supply chains and include a couple of recommendations. supply chain research is surprisingly recent in the university context. businesses deal with supply chains all the time as a matter
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of logistics but from a research point of view it is a challenging field for two reasons. one is the boundary problem supply chains have multiple tiers of companies that stretch up and down that supply chains we might be aware of the end product or not aware so much of the first and second tier or third tier suppliers but it also has an important breadth so in many ways they are much bigger and more complicated and nontraditional sense of industries so it's been hard to create those boundaries. when we are dealing with supply chains, many of those supply chains are confidential and not the kind of thing you could go
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and find easily so the researchers working in different industries try to re-create the supply chains. resilience, i agree is aen critical concept but i think we need to look at it from several levels there's resilience from the level of the firm and howl they do they deal with risk management if supply chains are disrupted resilience viewed at the level of supply chains themselves which are bigger. the industry systems have organizational and geographic characteristics and finally the supply chain resilience in terms of countries and what we care about.rt part of that is national security and there was a key emphasis in the white house report last month. they relate to infrastructure and different kinds of economic, social and environmental
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concerns. in the written comment i talk about the supply chains from top-down or bottom-up and let me just mention a bottom-up perspective. how do were look at supply chais from a u.s. vantage point and one of the projects we had was something called the north carolina and global economy project where we look at the seven key industries in north carolina natural resource industries like the hog farming, antraditional manufacturing like the textiles and also high-tech industries like biotechnology and information technology or finance. every state in the country has critical industries they care about so i think if we start looking at supply chains from the bottom up and each state says here's the industries we care about there are things we can learn from supply chain research about how to do that kind of mapping ...
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>> in this research. so one thing i would recommend is if wet think of technology directly it's more than just engineer. engineering is embedded in the social areas that we care about so part of what we can
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do with that technology director you link universities in different parts of the country dealing with common industry issues so those initiatives proposed will be important that some of the advice you're getting from private sector university folks could help us put together these proposals in a strong and robust way. >> thank you now we will turn to our next witness thank you for. being here. >> thank you for the opportunity to testify the us benefited for decades from a global supply chain that provided lower cost and greater efficiency. but that era is over. first the pandemic had the crater resilience in second predatory china to displace in
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the quest for global primacy we're in a conflict with china and as in past conflicts industrial strategy andat industrial policy. >> we do not need to abandon the global supply chain but shrink china's role this is why the united states competition act is so important congress has already strengthened restrictions on tech transfer to china to review the modernization act and the export control reform act now to build technological resilience. that means taking into a cloud on - - into account what the global supply chain looks like in the future and the private sector innovation and to build trust into the supply chain and then to discuss 5g.
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>> it must focus on semi conductors and emerging technologies and reinforcing the strongest inhe the world us ica can do this it was implemented effectively that congress can start by fully funding the chips act and the supply chain already found in the text of the us ica fully funding the chips act will create jobs and increase funding for research and stem education and is needed for tech leadership to guide policy byon implementation the commerce department plays a key role but it faces challenges congress needs to predict not reacting better analytical and a high-tech focus and close engagement with senior levels of the
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private sector. one advantage over trainer is we do allies. supply chain increasesit resilience and the us ica. and then to identify ten technology areas where implementation should focus the us industrial policy in every major conflict of the last century that is one reason for our success this is why us ica is so important thing the committee for the opportunity to testify and i look forward to your
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questions. > n welcome into our committe conference hearing room. >> thank you so much madame chair and members of the committee i'm in stockholm that deeply honored to be here to speak with you today. and then with the recent challenges in the covid-19 pandemic and then a few things that the committee might want to consider with the industry andr supply-chain.
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so basically there are three things i would emphasize about the aviation industry supply-chain. first of all, value. in the aviation business. and effectively the sum of its parts. with that 25 percent at most. having said that it is foldable with an industry and then as a consequence of is a relatively small easily replaceable part that is not available.
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with those are just to goal challenges. and with a variety of logistical reasons. so in terms of vulnerability naturally face problems i'm afraid and thank you madame chair for highlighting this really the overwhelming goal love technological progress with the missions reduction and then with the countries of combat and from the supply chain. so it's very important that
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they have a steady stream of research and development in order to bring these new technologies to market. >> the unfortunate reality is but looking back over the many decades but in a really bad year and after the 2008 recession may be two or 3 percent losing 66 percent of traffic globally especially those that are heavily dependent upon the aftermarket so the financial challenges
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associated were very challenging for the supply-chain. most all of them have come through it but to be consumed of their ability to access capital those for the app turn that inevitably follows and it sounds counterintuitive but in a lot of ways the greatest challenges w is in the recovery having come through and especially for the labor side of things and that's why i would commend the government especially for several rounds of paycheck protection program because this hasso been vital to retain skilled workers. and then to be off-line for whatever reason it is
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fantastic for the industry and i deeply hope it continues what the committee may want to discuss the right to consider with the r&d program the government historically had been very good at basic r&d but when it comes to applied r&d there arere technologies from other sustainable initiatives and with some government assistance to play a meaningful role to maintain their competitiveness and then another thing to discuss might be an issue with china. with commercial aviation companies and there is a great deal of uncertainties with
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china and the shipments of technology to fill on - - infiltrate with the end-user there are so many complications but there's a great deal at stake. >> we worked very hard on thosee packages and then to just focus on the supply-chain manufacturers and that program just became operational or available for the actual application the last few days so i many of the supply-chain will take advantage of that. we definitely are hearing at the time we need to pick back
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up. senator worker we look forward to your comments. >> . >> . >> and the company feel like im preaching to the choir with the same goal in mind but to tell you about our company and how it's affecting us at this point in time too many companies across the nation. with those lift trucks we also bill power generators sales from commercial applications and we remanufacture equipment for the us military.
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and in 19272 still operate in proud to raise that flag. but then to be exported around the world with 1200 employees of the average annual sale of $550 million. products operate every day and then just to be a few with those parts and components to builds the products these businesses are based all over the world in critical to these products and support our customer some of these supplies are also our customers the supply-chain is very interwoven and the companies within it depend on each other to keep the
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industry and wider economy going i appreciate theis committee holding this hearing to discuss the challenges facing us and why this interruption happened in the solutions to right the ship. americans clearly headed for further economic growth at the beginning of 2020 but then the unthinkable happened. the covid-19 virus was the primary culprit to shut this industry down and shut down the supply-chain and it is where we are today. so where are we? the supply-chain is a disaster. it is in disarray. that's why we are here. those deliveries on - - those deliveries have been unorthodox with expedited methods to get critical supply this causes inflation to run rampant throughout the supply-chain and so far we have kept our lines running that facing between 30 and
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75 percent price increases from vendors and transportation companies three examples are microchips and container cost just to name a few. products operate with some form of computer interface so the trip shortedig on - - the chip shortages concerning so with the right inventory items keeping the product lines running and receiving inventory on time that is still a major component of the products and those that are madend of steel we face price increases weekly and in some casess every 24 hours and then the average cost of containers has gone from $4000 a container now at $18000 due to the low supply and high demand
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key workers are also contributing to the large national trucking companies and that have reported to us they tried to fill over 2000 driver applications and they claim the subsidy that is detrimental to get prospects to come back to work and therefore our company in order to protect financial liquidity and viability have to have price increases this is happening all over the country because inflation and on - - inflationth is rampant we don't have confidence in thehe supply-chain to meet demand we still have 40 employees now on layoff from the covid year. forty families in need with no pay or benefits we want to hire those workers back and higher even more but we don't dare make such a large investment if we cannot commit
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to fulfilling customer orders on time now. the same story plays out thousands of manufacturers across america. purchasing engineering and manufacturing teams are doing a herculean job to keep lines rolling to keep people employed so the goal is to get those on layoff back this cannotot be sustained much longer the vendorsl tell us they did not see in and to the supply problem to the end of 2022 at the earliest i suspect there are hundreds of thousands of other family businesses facing similar issues we wake up every day working all day to maintain our professional lives and a maintain employment and keep customers happy. our goal is not to overreact with solutions with unintended
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consequences. i encourage you to support a free market system tooe do wide it does best for solutions that are practical and driven by the private sector. thank you again for allowing me to speak to you today at alec forward torw any questions. >>ou . >> for those opportunities thank you for being here doctor, thank you so much we look forward to your testimony. >> the critical need to bolster senioruc vice president and director of ibm research i am responsible to develop cutting-edge technology with semi conductors in artificiall
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intelligence but then we have power. >> please call the microphone a little closer or turn it on. >> is this better? >> semi conductors are the heart of electronics to power every sector of our life for example the smart phones you semi conductors under 10 nanometers in may ibm unveiled the first 2-nanometer chip which actually are brought with me today and what it could do is quadruple battery life for our smart
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phones and with that data center consumption it really shows the power of r&d effort over a year we have experienced the consequences a semiconductor supply-chain disruption failing to produce chips in the us hinders our ability to develop future emerging technologies and the facts are simple the only manufacturers 12 percent of the world capacity global leaders turn out advanced and semi conductors get the manufacturer nothing under 10 nanometers. and with that semiconductor supply-chain to invest, create effective partnerships and then to sustain investment with domestic manufacturing and r&d for advanced chips the winning recipe is clear to
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have new technologies and then manufacture innovative and manufacturer and with that r&d manufacturing capabilities we areap lagging federal research and development represent a smaller percentage of gdp today the 1964 the 100 days supply-chain reviewy and congress demonstrate a will to invest including boosting leadership and the senate has provided by overwhelmingly in support of the chip act talking about partnership semiconductor innovation is fueled by partnerships and then nanometers chip breakthrough was decades of collaborative with partners in new york the semiconductor capacity requires a scale
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model that this is a major first step ibm encourages the senate to fully fund and empower it. we cannot afford to waste time building semi conductor capabilities from scratch and then to deliver results if we leverage to billions of dollars of semiconductor infrastructure and hold university partners is the new semi conductor material and offers an ideal environment and of the ecosystem it is prepared to take a leadership role to make it a success. it should be industry led public-private consortium to bridge gaps between academia and government in the event semiconductor r&d and
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manufacturing to enable american innovators big and small to quickly move semiconductor designs we need more than physical assets we need to invest in the american worker and those that generate dividends for all americans as i have outlined to address the supply-chain disruption by investing in creating effective partnerships for those for generations to come thank you i look forward to your questions. >> thank you for that testimony and covering a broad view of the various sectors that we want to talk about here. mr. miller thank you for joining us we look forward to your testimony. >> chair and ranking member and distinguish members of the committee on behalf of the information technology thank
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you for the opportunity to testify today with supply-chain resiliency as the current cochair the supply-chain risk management task force the preeminent supply-chain public-private partnership welcome that committees interest on this topic it represents the global ict industry has the government's's obligation resiliency of global supply chain including the broader supply chains and government and industry must work together along with international partners and allies with the global supply chains needed and that are the indispensable building block from economic growth. with a broad holistic strategic approach of the supply-chain executive order and the 100 day report which is echoed of the united states
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competition act while the testimony has supply change programs in the bill of it i take an opportunity to thank the committee for emergency appropriations for establishing a supply-chain resiliency program in with the manufacturing usa and extension partnership programs and then to have those of our strategic programs over the finish line. and then to consistently urge the government to pursue and then with the evidence approach and then designing measures international to put that competitiveness at risk and then with close government industry to resources and
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expertise. crafting sound policy measures that were laid bare by the covid-19 pandemic by the commerce department or other federal agencies. the hearing poses a key question hardly most effectively implement recent congressional and i administration policies first, should develop strategic coordinated plan and given thehe sheer volume at the doorstep by successive administrations and contemplated that coordinated and strategic approach is necessary to effectively implement supply-chain resiliency and then with congress to lead the work and
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then byog leveraging existing partnerships and information sharing programs and ecosystems. the task force workingin with the a cybersecurity and infrastructure security agency and implementation of the supply-chain executive order provides a next line modelw of public-private collaboration that congress can draww inspiration from as it launches the new supply chain task force. second, you should ensure congress had adequate resources to implement resiliency policy not only by a doing that ships back to make sure the department is resourced in termsun of funding commerce can actually help itself in this regard with the prior administration executive order to secure the supply-chain and related rulemaking that those transactions are prioritized
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and targeted to discrete national security risks. it without companies to improve us competitiveness to the full a its resources and ensure robust liability protections so with the risk information supply-chain we appreciate to have critical infrastructure program liability programs as part of the supply-chainn resiliency programm to supply the chain information but after months of careful study the task force developed a legislative proposal to amend cybersecurity information act of 2015 that would provide stronger liability protections for such sharing of their preferred reason stated. stakeholders should keep in engagement with international partners of supply-chain resiliency. we welcome the us trade technology council is providing just this sort of
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opportunity strengthening cooperationer with allies and other critical issues thank you for the opportunity to testify today i m look forward to your questions. >> thank you draw the panelist i feel like this subject that you have all been studying it but it's a new day on supply-chain analysis for what we should all be doing and eu all gave us good ideas on that. and industrial policy let's go with more analysis and very direct things with the last two witnesses what congress should be doing specifically. i want to pose my question to see whoever wants to jump in but the notion that we try to
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get out with the supply-chain but is really about innovation that if there is 2 million people working in the united states in aerospace with my conductors period the innovation is happening at mr. taylor's level or he sees the world knowing what needs to happen how do we get that input and strategic involvement. had we get their views on the table? that's my point those two proposals to strengthen those tech sectors and those tech hubs but if you have big parent companies that are just chasing the market chasing the semi conductor markets for the international aviation markets but the supply-chain knows the next level of innovation it has o to happen.
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how is it that we drive the resources down to that level? >> thank you for your question. inputting those bigger companies at the top they tend to have more of a direct pipeline to be have r&d centers within the government. the good news is that things to those mega mergers a lot of the s supply-chain is concentrated with companies like general electric or honeywell and many otherst that have become their own effective powerhouse i would like to see greater coordination between the first
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contractors but had you get the smaller companies involved that are critical to innovation and production and does that happen through the aerospace industry association or perhaps maybe just standing up other organizations like the national aerospace i think it is essential and also one of the great saving aspects of this crisis to accelerate the program by dod with a call for the transfer of dollars to the suppliers so that typeof of greater awareness is important for the supply-chain but it's a very good question underwent auspices and how but i think it is essential. >> doctor lewis calls for a
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greater role in commerce playing a more predictive role. what do you think we should do here? if the supply-chain identifies the innovation but then they run theirey business every day. they know what needs to happen but they are not in control of the supply-chain. >> thank you chair cantwell i focus on the high-tech sector and innovation and startups now spreading around the countryth silicon valley new york and boston use the research hubs spring up around the country and that's what they make a useful contribution with a strong innovation with research universities and venture capital and entrepreneurs so those three elements produce innovation. they are really good at it.
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there is one dilemma and this is a f hard one they follow the market so the next billion dollar company and and talking to friends at the defense unit with the dod effort we are doing great on software. maybe we are lagging a little behind on hardware. so how do we get greater connectivity between the national innovation system and industry? with my colleague here mr. taylor i would look where the market isn't working it's not working in a few places in the bill does a good job of fixing that but we can use both federal and private sector to make this work. >> chair cantwell we are a
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small business and therefore the overhead structure that it takes for innovative work is limited focusing and what you have to do with labor and materials and the supply-chain to produce therk product to get it to the market so we use the university system and many use that resource. i am thinking that are distinguished panelists from duke i don't know mississippi state is just 30 minutes from us there are some rules and regulations that are governed by the state to have a mandate that failing to invest capital
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and research for product information so there is patentability coming from that research it's at the university level. i am not sure if the industry is willing to make a financial investment and lose the patent downside of that so there is some play in the hand in hand of the university system. >> that is why i have held up this modelt because they don't claim anything on the patent in the research companies go and say help us solve the problem but that was more regional in various parts of the country. >> very good point madame chair i meant at the end of my
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statement to asksk unanimous consent to enter into the record the "washington post" story yesterday biden targets shipping cost with the supply-chain's i ask unanimous consent and that me mention it starts off shipping container to chicago used to cost about $6600 now the executive pays as much is $29000 as if he's lucky enough to find space on a cargo vessel and then the headaches are mirrored where shipping containers on land are stuck in real yards and logjams leading to costly and unpredictable storage fees thank you for letting me do that. mr. taylor. you mentioned you are 30 miles
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away from mississippi state university but you are not in a major technology hubs so what unique challenges you have 1200 employees you like to hiree another 40 back you are the biggest employer in that area so what suggestions do you have to make it easier quick. >> those that are not like we are our distance from the distribution have to play a factor in timingve of deliveries one thing that comes to mind is from that distance usually the interstate highway systems are used and the state highway
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systems are used at least in mississippi and many rural parts of the nation, the infrastructure bill that's being discussed and negotiated now ist finally important. but if there's anything to be done in that regard is not only refurbish our highways and bridges to get them to standards to source components and ship products out but also improve the equipment and the customer base once bigger equipment with their tools and process to put out bigger packages and more efficiency. those biggerll packages usually take weight and impact what we currently have in the nation
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if the infrastructure system could be passed and could cause an improvement in capacity of transporting goods andca services rural facilities could have a better application for delivering in and product or rail. >> so to strengthen that as we build. >> you mentioned liability. or a liability concern. we are going to want people to participate in this monetary - - monitor program they will not make people do that what is the absence of the liability protection provision have on the willingness of companies to participate
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quick. >> thank you senator worker. there are some very significant considerations that companies have to consider when sharing the type of information we are talking about with supply-chain risk information often times that information quite candidly is derogatory about suppliers someone in their supply chain there is a whole number of states and causes of action exposing them to legal risk if they would say something about a supplier for instance that this is a bad company we don't even have to get into the details but breach of contract ander defamation business disparagement there is a number of significant legal
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risks and companies want to share this information but not the clear pathway to do it. > . >> i will take a little liberty did we not get the chips act right? if anybody would like to make a suggestion our on the record that would be helpful. anyone? we will take that for the record. [laughter] >>s, thank you. i doe think it's an excellent piece of legislation and the
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consideration we should have to have a sustained effort throughout the decade with the priorities in the semi conductor industry is notorious to engage in long-term planning and long-term execution so hopefully the bipartisan act and the consensus will also be the basis to sustain over time. >> i am next in the order we are in the middle of the vote right now i want to focus on drones which may not seem to
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be a supply-chain issue that the presence of drones every day they have wonderful applications and recreational use and then more to the point of purposes of today's hearing the overwhelming number of drones anybody and disagree with that? >> you may have better information. >> and then made in the usa facility we talked about the
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need with the domestic market and those ofmo the most advanced applicationne technology. but to your point it is one doing research and investment. and that which was is incorporated as part of that package sent by the senate and then spurs the alternative.
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so dos you agree with me with that security threat from the standpoint of surveillance within the united states certainly lost opportunity because the market is going for them here and around the world and what can be done? >> l . >> and then to demonstrate the products we are in a situation the chinese company and a couple others dominate the global market it's a good question to ask how we got
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there but the rule of them is if itt connects to china in any way itnn could be a source of intelligence gathering and that is why the legislation to restrict federal agency use is essential we do not want to underestimate to seek intelligencece collection. so what do we do about it? we don't always want to copy the chinese but subsidies for research and stem education. but then also to foreign suppliers and then to bifurcate they came up with idea. and then to think how we rebuild that industry and that will not happen automatically we still do quite well for military purposes can we use
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some of that to encourage those companies? can we find ways to support the innovative startups like you were talking about? i don't think that's part of the legislation but the model that you used in us ica because it is a security risk. >> . >> my time has expired. but i want to say the prevalence of the chinese drones because they are used by companies here for commercial purposes they are di in the sky.
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and the uab used by surveillance in afghanistan or any other with military operations. so we may have a bit of a reset before senator fisher takes over and may be running late but thank you for being here today it is very useful. thank you mr. fischer?
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>> i am here senators. >> the floor is yours. >> thank you to our panel the complementary government role is essential the sound policy to strengthen the nation supply-chain resiliency it's important to policymakers with an issue that is too heavy-handed or slow to respond. noted in your testimony the commerce department should prioritize working with industry and other partners and with those scarce resources. what major way can lawmakers ensure the government and is agile in this approach?
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>> thank you senator fisher. there are ways lawmakers can do that and to lay out several ways and the manufacturing usa extension partnership programs are one example and the formation of supply change disruption task force is another the commerce department had been participating in the risk change management task force as well. commerce department has a long history of successful partnerships with the private sector and thinking of those
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programs and as stated in my testimony the commerce department should have a strategy to maximize the's efforts but if there is an opportunity to do that by authorizing these programs it would be helpful inn that regard. >> where do you suggest congress look for good examples to drill down and see if they would work at a governmental level? >> i do think in terms of existing programs. some of the suggestions in the 100 day report is one place
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the white house involved to set the tone is important. and certainly a lot needs to be done in terms of drilling down with thehe resiliency program and also as my fellow witnesses have said to make sure it's an effort with the chips act. it's the long game not just drafting a bill that getting commerce a pile of money but then to follow through on these programs but that is important.
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>> thank you very much. doctor you touched on the address the ongoing shortage so then to build the semi conductorsar with the domestic production the national semi conductors center to have the supply chain disruption but also rather than creating another program office it should use the industry led so i appreciate the suggestion but can you please expand on what key elements that make it more responsive for agile quick. >> thank you senator.
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the model to build on our strength that we have as the nation of semi conductors we have equipment manufacturers in the electronic design industry and automation on fabulous companies as well as fabrication with the r&d. so theth most important thing is to get a broad coalition with your strength and environment with that semi conductor industry and those that are industry to come together so the president for us coming to
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gather is the number one priority of a broad coalition of leaders to make it happen and to build on previous investments that we have had. and then to ignore the strength to start something brand-new that sounds exciting but that doesn't lead to the result that we want because in the end we want that innovation and capacity. >> i see my time is up. thank you very much. >> thank you to the panel we are proud of the work that was done on this bill innovation and competition act part of this bill creates the office
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of manufacturing industrialization policy and it prioritizes we have allied of agencies working on manufacturing can you speak to the importance of when it comes to the supply-chain? >> . >> so the importance of the interagency coordination cannot be over emphasized in the case andre there's a couple of different reasons there are quite a number of ongoing supply-chain related activities across the federal government. it is even more clear that the
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global supply chains are important to all us industries. so it is a situation to have a coordinated strategy we need to be in sync to make sure everyone is pointed in the right direction and that's why the program you referenced for that coordination. >> i hear you have a nano chip with you and i recently visited in bloomington minnesota a very successful chip producer and you know the testimony can you speak of investing in companies in the production of semi conductors? >> yes.
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semi conductors is the lifeblood of the electronic industry in fact the awakening of how it can affect those ordinary items they rely on. so it is imperative to have a dual mission for what we will do was semi conductors and not only electronics but the role of ai and quantum computing and new capabilities and cybersecurity to rely on this so with the ability to manufacture in the united states that's what we have to get right to left votes across all industries. >> thank you very much. >> so you note the
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supply-chain resiliency program working with the private sector. do you want to elaborate how important that is as we look to the future to do this right? >> absolutely it is a theme that emerged how important it is for the government and private sector to work together on supply chain challenges in particular there is a variety of reasons for that. not the least of which we are talking about extended global supply chain where it's impossible to see what's happening without constant and
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communication with industry and limited resources on both sides of the ledger and the forces that is great and leveraging existing partnership innovations. >> i will get the arrest in writing. in your testimony you talk about the role research and technology so can you touch on that for me? >> thank you senator there's not a lot of clarity beyond those traditional of developments but it appears to be one of the most likely ways
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but sustainable aviation fuel is way forward there is an awful lot of initiatives around the world i wouldn't want to see us industry hamstrung because it does seem it's important to get on the same page because it's essential to make these developments to put do that equipment. and with those 25000 jets that are out there. and then it might behoove the community to consider mandates as a way of creating a guaranteed market for when the products come online that can be a productive use of government resources.
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>> doctor i.e.la applied the work to achieve incredible breakthroughs with semi conductors as youes are well aware the czar the size of a fingernail basically shaping the course of the 21st century with cutting-edge technologies like supercomputing however it's important for us to remember it is just one part of the story with an entire ecosystem was semi conductor technology the economy depends on with the so-called legacy chips. and of the legacy chips and then it has a devastating
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impact on those across the country and in michigan and it could become worse inmi the coming months but i want to be clear this isn't just about automobiles but to depend on these legacy chips from farming equipment and medical devices as well as military vehicles even tim cook said in april the shortage of legacy chips and that's why work with senator stabenow to include legacy chips and a 52 billion-dollar package to re- sure those semi conductors to the us competition act so can you elaborate on the role legacy chips play in the broader economy and employment in the united states and also
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passing the competition act is essential to keeping our nation at the forefront of semi can doctor manufacturing globally. >> you are right on the reliance and the importance of many generation referring to a a semi conductor that is part of the automobile and aerospace and one that we will make to have a great urgency to address the current supply chain shortages that make the obvious point those with the future chips of a decade ago and this industry and the's elements of planning for these issues of todaye is vital and what looks like advanced notes right now five or seven years from now will become the legacy chips we are
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confronting so now the legislation of the chips act a number of things that are important so there is a great emphasis on assisting with the design of the portability and packaging and it will be very consequential to help to be more productive including the indispensable legacy and then to make a point we need to do both today and tomorrow. and then to pass the supply chain security act and then to develop a training program to prepare personnel to identify and mitigate supply chains
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cybersecurity long-term this bill addresses security and in your testimony you mentioned uncoordinated inconsistent approaches to supply-chain resiliency including cybersecurity. so how do systems mandate to improve to ensure it is the lead agency for risk management and how can those be used to fulfill the mandate quick. >> thank you>> for the question. >> i do think we have prioritized already over the past couple of years that the secretary to prioritize security in particular with
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spearheading the formation with the national risk-management center has a clear mandate to focus on supply-chain so looking at the broader lands of resiliency. so cssa is well-positioned so any support congress a can provide is well received by s
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so doctor you talked about the research everybody advocates for more expertise and definitely a larger role for commerce so how do we get that expertise so that anyone of these things and then just on aviation and semict conductors. or a better analysis with aluminum?
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so what do we need to have the research? but what about the very lowest level of the supply-chain? >> in the past we want to focus on specific industries like the sloan foundation to get those universities involved to make a more interdisciplinary approach with those key industry the areas that are cutting-edge where they can supplement so the national science foundation technology initiative and directorate
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could be a key. because nsf does tie into universities in ann direct way. so it has to connect to those industrial clusters where they are located in particular parts of the country so nsf will tie into multi- disciplinary clusters and then linking dad across those is probably one of the key ways. >> i see you nodding. and with thatce evolution that we see in that historically
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and those with those centers and that allows us to address these concerns. >> and it could be more translational or informational backup the chain. so if you want to call the shotss and then say we need a specific r&d supply chain effort and with the department of commerce making that decision. >> and those that are well developed for silicon valley
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and in all of those cases we have well-established universities connect with private companies for what's happening now we have a whole new set of technologies that is transforming the cutting-edge of research. and then computing those of the digital revolution so that's where we need to bring universities back into the equation because i worked 15 years ago is changing very now so that's the real challenge. that's really have that discussion with government. >> but that's were the hub and the center come together. >> . >> so technologies to be the
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central mission they got rid of that sometime ago but they do great work but they don't do policy but if you rebuild that capability at the senior level we might want to look at what commerce has a lot of talent and strength but i focused on the technology mission. >> thank you. i like that suggestion because i do think it changes so fast you have to get that expertise. so there is this effort that i have heard about because obviously on the supply-chain for those that you have to start over is a big deal but
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the most i've heard about this research companies like boeing are participating also from spokane that how do we get the focus on the core technologies that need to happen of these are just voices in the supply-chain or everybody works together? what is it that we need to do to identify next-generation technology that is already there in the supply-chain but they are just small individuals trying to compete what do well need to do. >> so the fact that you are hearing about thisar technology
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indicates that is coming to the public view but that is a very good example that should be accelerated because that could be brought to market quicker but that despite the emphasis of the supply-chain it's at the end of the day so bigger companies and with those smaller companies that ultimately i will slightly reverse myself they have to identify what will bring into next-generation platforms and with those avionics and then
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to sayig this is something we went to see next-generation so there is a lot of work going on in the interiors with the intermediate and user and to bring those capabilities to market but these are the technologies in the supply level of r&d and yes it is noteworthy that a lot of other companies are engaging in this research so being in another lands and belgium and other places is not taking place in france but that is important
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to remember for the us to have that greater capability to identify these technologies working with us r&d programs. >> senator scott. >> after two and a half years people always ask what can government do to solve a problem? can you talk about what your industries are doing and what we could be doing without government and without increasing debt could you talk about with the private sector should be doing? >> thank you for the question.
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so we have the unwavering commitment to invest in r&d and we had a recent division for 76 years to employ over 3000 and scientist to create the future of technology and quantum computing so i think the private sector needs to have a a strong commitment to r&d and investing our workforce so we can create differentiated products and i would advocate strongly. >> one of the things we're doing as a small manufacturer more relationships with partners there's just a lot of technology is a small company you cannot do yourself to build that relationship and i mean building a relationship
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with that vendor but takes a strategic approach to the product you to the consumer in these are very important but i think any size manufacturer of what the expansion would be. >> one thing that private sector can do that are helpful and needs tod send clear messages to government for those areas of the purview of the us ica to address like monitor policy and we need to get those signals from the private sector on the guidance for federal policy and that's
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an area. >> andld i had one thing? i think beyond the r&d investments one of the things the private sector is doing is lending expertise and resources to the government as i stated earlier particularlyme with the supply-chain context and not have a lot of visibility word is going on across the supply-chain so partner with the government and working on public-private partnerships and task forces to devote industry resources to help that shared mission and another is partnering with
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the workforce development programs to try to help to rebuild that pipeline and that's of the companies are doing. >> that help the supply-chain? i get tired of government it was a pain in the rear. >> i would get fed up with it. > senator one aspect of the government's approach to the
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supply-chain there was a rather other component and given the reliance on the aftermarket components ultimately those habits and guidance at times is an issue for the supply-chain sweat the pentagon and other components of what they are doing or their purchasing patterns would be in the next couple of years to be extremely helpful to the supplier companies but if i can quickly address your previous question of what the private sector should be doing i would likepr to see them have less of an adversarial approach many at the prime
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level see that frankly to be pressed for profit with a margin. like to see more of a partnership and perhaps this crisis will illustrate the vulnerable nature of the supply-chain and thehe importance of having that partnership and working together to be more resilient. >> thank you for this most important hearing some questions are related to doctor lewis but i was recently in south korea and taiwan was senator kearns and duckworth and i would like to
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get those of your views on this issue selective decoupling and i was very surprised and pleased both in taiwan and south korea but also private sector executives how they see this coming and then to make the choice to be in they united states with foreign direct investment and then to be more interested of the choice of the united states i was pleased by that. dennis relates to that semi conductors both of the big
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semi conductor manufacturing companies are looking at major investments as well so maybe if i start with you with this issue on taiwan and it is clear thety ultimate goal is the chinese communist party to absorb taiwan and that's a good idea forcefully the how do we think aboutin that of selective decoupling? >> thank you senator. i'm very grateful to the chinese communist party every time they opened their mouth companies move in our direction. >> i think you're right. >> how do we build a unified approach and how do we
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streamline the path it would be great sure they are a competitor. >> they are strongly contemplating that as you know. >> contemplating a location is not the same having make it easier for them to get here? even samsung has a strong presence in texas but we rely on them and an issue for congress and the administration do we feel comfortable with that dependency? that is a mixed answer. we don't have ace choice in some cases. also you are in asia but we have to think of our european allies when it is cutting off trade with china. >> more the chinese communist party the more they open the mouth the more i think they
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european allies are recognizing let's look at the results of the elections of france and germany because when those are over it might be easier to see new directions of european policy. >> you are absolutely right south korea and taiwan i refer in my testimony 100 percent of the manufacturing capacity is a dual policy that's very beneficial to the united states but they do have plans to do but to signal the chips act is sending a clear message about the importance of the semi conductor industry and on
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top of that also foster the creation of the manufacturing capacity to complement that. but this decade we have the sum of all of those. >> intention is to senator whitaker for those that are very closely tracked with the legislation. just one final question. doctor lewis the asymmetric advantage the chinese have over us with the entire finance class with private equity groups that seem very comfortable investing not just in china that chinese ai and
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communist party related companies and of course any chinese financiers who want to invest in something related to the pentagon so how do we think about our own americans? you seem very happy and free and openhi and willing to invest in our biggest competitor.
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that's why the bill is invaluable and i'm glad you reintroduced it. >> thank you this is a follow-up and related to the pandemic but that's obviously arise in the digital economy with more individuals and businesses on my our country has got to make smart investments in technologies reshaping the way we live. what steps we need to take to ensure communication supply chains meet the needs of future when we think about new technologies like 5g and a.i. and is there a role for government to play and if so,
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what is it to make sure who viewed technology advancements ahead of china flex. >> thanks again, there's a number of areas we could use a collective approach with the private sector and government. the first is standard bodies, we all know that. u.s. is doing better in standards than you might think that the chinese are not giving up. second are empty and stem, the companies tell me they have workforce shortages so we can help with that. spectrum allocation, the u.s. has made good progress moving spectrum from where the national security is. the allocations might need to be reconsidered but we have done okay with that. finally, larger business question billing infrastructure is good making sure the
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infrastructure is important but how you use the infrastructure is also crucial so we need to find ways to accelerate, innovation and the 5g and their i say it, 60. >> mr. miller, you talk about the need for strategic plan for fomenting numerous supply chain initiatives underway, what risks do we face if we don't have a coordinated approach to supply chain resiliency and are there existing public-private initiatives reviewing supply chain risk conservatives is on? >> thank you. yes, i think it has been a big theme of the hearing today about the need for coordinated approach. as i mentioned in my testimony, i think an excellent model is cybersecurity and infrastructure security agency let supply chain
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risk management force, one of the best teachers of that task force is although it's sponsored by this, involves about several agencies including the department, it includes experts and puts up his patient from the communication sectors and rolling up their sleeves and working on developing proactive solutions that could address a variety of supply chain challenges and i would say one of the things we've been working on most recently is trying to figure out how to make sure products are getting out into supply chains themselves into the bloodstream and also specifically addressing small medium size businesses who
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candidly comprise of 90% or so of the supply chain and figure out how we help those companies in particular. >> thank you. my time has expired, is expiring, i could submit the record -- >> go ahead. >> well, you mentioned your testimony aviation is experiencing recent disruptions with the pandemic and geopolitical reserves, has the pandemic received across the world, what materials or components represent the biggest constraint on domestic aircraft manufacturing? >> thank you for your question, i think there is a number of areas of concern, stations might be one of the biggest. one of commercial industry works, we are effectively deflationary, pricing for a finished systems declining real terms for quite some time now
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and it accelerated deflationary trend accelerated during the pandemic in an effort to stimulate demand so contracts for the supply chain and appropriate mechanisms, i think we're going to be stuck between higher material prices, higher energy prices and higher paper prices but just to get to the heart of your question, it is what's typically produced mostly made from the exotic metal and things along those lines. >> it seems like our investment morava exotic supply chain metals. thank you. >> thank you, senator boone. on last question, we talked about some of the adversarial site, what about the ally side?
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you've written about this with your research to prioritize things, what should we be doing thinking about building alliances on supply chains? how should we look at that and who in the government should be doing that? >> people on the panel have already mentioned for example semi conductors the alliance between the u.s. companies, i think getting the international companies best in the u.s. as we now hope will be very important. i think from the government you, i think the industry associations with government agencies are probably a good place to be. more about collaboration but i think there is cooperation among companies and also between firms and first-year summer smaller
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suppliers and perhaps an area less well developed that we don't bar down those supply chains beyond big companies and where the industries get better rooted in the grass and we can start to have that small business or medium-size business development in fact collaboration is very important. the public private sector five, oftentimes top companies encouraging small companies u.s. government as well with policies can be encouraging investment at local levels. >> anybody else on the ally front parts. >> eq. check and trade is an important step. europeans really wanted it, it was there that you they are looking for ways to partner. they are worried about trade nationalism in the u.s. by america as something react to.
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we should be afraid about tech government initiatives, the american companies, it sure looks that way but i was in a meeting with the european commissioner mother is a real desire to build partnership, not as much appreciation in europe of the rest of china is growing so we are entering along dialogue that moves us in that direction. >> thank you. i will echo both investment and attracting investment from partners and allies to the rest is one thing for sure as well as trade and technology council one of the promising features of that, as mr. lewis indicated, editing already announced one of
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the things specifically forming working group on his semi conductor and other strategic supply chains and another note from the international front on this topic for the past two or three years now there's been the proper principles and focus on 5g security which has a significant number of supply chain on it and brings together several different u.s. partners and allies to focus on the security aspects of the supply chain issue. >> one of the items going back to what senator scott said this investment in international business coming here to establishing footprint in our own american industry, i would ask the department to take a look at revitalizing or
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supporting mike, permitting process, it's long and laborious and debilitating and hinders expansions or additional lines or processes that we all have to go through to get that innovation started so i ask that that be looked at. >> thank you, did you have one last thing? >> thirty seconds, when we grow investment with this legislation, it starts for allies it is our department. >> i think that is a good summation and why we did it.
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this has been great on the supply chain, thank you for your expertise and knowledge a lot of great information has come out of it, i believe we have to look at the supply chain in a more partnership way that reflect about our discussion here what if we would have had a better partnership on this years ago, were recently in the same situation with the semiconductor industry? were trying to have more illumination receptors and how technology perspective but also what they are jobs for national security issues so thank you all very much. record will remain open until july 29 and you can submit questions for the record july 22 really i the 29th of july he
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is includes our hearing. thanks again. [inaudible conversations] in ongoing conversations. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
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[inaudible conversations]
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