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tv   Hearing on Supply Chain Resiliency  CSPAN  July 19, 2021 9:29pm-11:33pm EDT

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[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> wow supports c-span as a public service along with these other providers. giving you a front row seat to democracy. >> next, a senate hearing on supply chain resiliency. the witnesses were asked about several topics including competition with china and the use of private and public partnerships. this runs for two hours. [indiscernible]
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>> all rise. >> the u.s. committee will come to order. thank you all for being here. we have a distinguished group of witnesses to talk about an important issue to us and the u.s.. that is the competitiveness of our supply chain and its resiliency for the future. each one of our witnesses, dr. james lewis, mr. rich, dr. dario
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gill, and mr. john miller offer a variety of perspectives on the importance of this issue. i can say for me and the state of washington, aviation supply is something we are proud of. 150,000 people work in that supply chain that continues to innovate and create new products as he says in his testimony, that is where the innovation is happening. in the supply chain. that is why we recently passed the now called u.s. innovation and competitiveness act. we are trying to negotiate with our house colleagues. we believe in making an
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investment in the supply chain. i am sure we will hear today about the challenges we face in the semiconductor sector, an aspect which we saw break shift over the last several decades and the consequence is less jobs in the u.s. i think congress has caught on that the supply chain is key to our economic strategy. a robust supply chain in the u.s. means we will have to continue having robust employment in the u.s. without the resiliency of the supply chain, it could be complicated given the experience of covid whether products can be delivered in a timely fashion, whether it services and security could be impacted and just how
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important it is we have a strategy for a global economy in which a variety of ducts and services can be delivered in a much more competitive fashion than in the past. the important investments of the department of commerce should make it important. it took several steps to contribute to the resiliency of the supply chain. and incentivizing chip manufacturing, incentivizing the response in the department of commerce. it's a tremendous thought -- investment, sporting r&d, creating regional technology hubs and expanding the workforce and our novation economy. these important facilities like our pacific northwest laboratory can help with spinoffs of new
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technology that become critical parts of our r&d and domestic supply chain. also, our miss funded manufacturing program can help in working with developing resiliency in supply chain strategy. we continue to have not just potential customers and supply chain connectors but understanding again, how we can best innovate to stay competitive. i look forward to hearing the testimony from our witnesses today. i feel very excited to have this distinguished group in front of us and i hope our colleagues will learn from the information here and what i would say, i'm not sure 20 years ago we would've had the same hearing. i see our colleague here a key sponsor behind what has been the act. the world has changed. supply chains have changed and
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are changing. look forward to how the u.s. stays competitive here. thank you. >> good to be here with you today and this distinguished panel. what do we mean when we say supply chain? it is the process that starts with raw materials and ends with sale of a consumption. along the way, there are various steps. materials, refinement, manufacturing, and distribution. resilient supply chain scan with stan and recover from disruptions and we have had disruptions but they also include in addition to infectious disease outbreaks, severe weather, international conflict, things like that. in recent decades, our manufacturing capacity has declined significantly between 2000-2010, jobs were cut by one third. small businesses were heavily impacted. as we all know, that is where we
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create jobs in the u.s. >> as -- control in our supply chain has fallen to fewer and fewer countries. most notably, china. geographic concentration has led to u.s. companies vulnerable to disruption, something we are acutely experiencing. helping u.s. companies identify and address areas of vulnerability will reap where strong -- require strong international partnerships. the federal government can help by investing in r&d and workforce development to make shirt new innovations are conceived and developed here. they work in mississippi is one example of a u.s. company conducting r&d and the materials -- in the materials handling industry. there innovations are being replicated around the world. this committee took important steps in passing the endless
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frontier act known as the u.s. innovation competition act or usi ca. this bill sponsored by senator young past the senate by vote of 68-22. this will create a new supply chain program within the department of commerce to monitor key supply chains and adjust vulnerabilities. it includes emergency appropriations to support semiconductor manufacturing and r&d. this is a much-needed response to the semiconductor shortages that have disrupted manufacturing across the nation including my home state of mississippi and undoubtedly, we will hear that from our distinguished panel. the legislation includes important contributions on the finance committee to combat china's manufacturing imbalances and threats to free and fair
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trade. this can be an opportunity for witnesses to discuss how the u.s. innovation and competition act can make our supply chain's more resilient. you may want to share your thoughts on how the department of commerce might implement the various areas of this bill. the house passed the authorization of the national science foundation. it still needs to take action on the broad range of topics covered by our legislation. the president issued that 100 day supply chain review and identify vulnerabilities. we perhaps will hear about that today. i am honored that among our panel is my good friend, fellow mississippian, max taylor, chairman and ceo of the taylor group. he is a leading manufacturer in mississippi. he builds forklifts and a wide variety of material handling
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chains for both industry and defense purposes. he has first hand experience with the topics we will cover. i know him. he and other members of the panel will make a valuable contribution to this discussion. thank you. >> we are leading off with you. thank you so much for being here. we are honored to have you before the committee and your expertise in this area. please, proceed. >> madam chair, ranking member wicker, members of the senate commerce committee, it is a pleasure and an honor to be invited to testify before you today. i have been a professor at duke university for many years. i direct the global value chains center there. i spent a number of decades
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studying global supply chains and this is the first time i think my neighbors and friends want to talk about that topic. not necessarily for good reasons, the last couple of years. covid-19, the pandemic has introduced many disruptionslike.
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part of what we can do with the technology directors figure out how to link universities in different parts of the country that are dealing with common industry issues? so i think the kind of initiatives that have been proposed are really going to be important but some of the advice you might be getting from private-sector university folks and others could help us knit together these proposals in a really strong robust way. thank you very much. >> thank you, dr. gereffi. we will now turn to our next witness, dr. james lewis. thank you so much for being here. >> chair cantwell, ranking member wicker, thank you for the opportunity to testify. the u.s. benefited for decades on the global supply chain that
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provided lower costs and greater efficiency, but that era is over. first, the pandemic created an understandable demand for greater resilience. second, predatory china will use any means to displace competitors in its quest for global primacy. we are in a conflict with china, and as in past conflicts industrial strategy, industrial policy is essential. we do not need to abandon a global supply chain but to shrink china's role in it. this is why the united states innovation and competition act is so important. congress has already strengthened restrictions on tech transfer to china with the foreign investment risk review modernization act and export control reform act. now it must build technological resilience. holding resilience means taking into account what the global
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supply chain will look like in the future, but leading role of the market, and the private sector in innovation. and the need to build trust into the supply chain for technology. of course the bill touches on that when it discusses 5g and open reader access networks. it must focus on semiconductors, emerging technologies and reinforcing our national innovation system which is the strongest in the world. usica can do this if it's been committed effectively. congress can start by fully funding the chips act and by authorizing the supply chain resilience programs already found in the text of the usica. fully funding the chips act will create jobs and it is essential for resilience. increase funding for research and s.t.e.m. education is also essential to provide the input needed for tech leadership. congress and the white house will guide policy but implementation falls on
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agencies. the commerce department plays a key role but it faces challenges. commerce needs to predict not react. needs better analytical capabilities, clarity and roles and responsibilities. a high tech focus and close engagement with senior levels of the private sector to better anticipate tech trends. one advantage we have over china is that we have allies. i supply chain with allies increases resilience by diversifying sources. we benefit economically and strategically from allied approach. this is, in usica and of the bills but it's crucial for moving ahead. the u.s. must as it's done in the past strengthen strategic industries. usica identifies ten advanced technology areas. this is where implementation should focus. the u.s. has used industrial
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policy in every major conflict of the last century. it is one reason for our success in these conflicts. this is why usica is so important. i think the committee for the opportunity to testify, and i look forward to your questions. thank you. >> thank you, dr. lewis. thank you thank you so . we are not going to go virtually to mr. aboulafia. i'm not sure what part of the world you are in, mr. aboulafia, but welcome here into our committee conference hearing room. >> thanks so much, madam chair cantwell and thanks to you and to ranking member wicker and, of course, members of the committee. i bring you greetings from an island off of stockholm, so rather a long ways away that deeply honored to be here speaking with you today about the supply chain. a few things emphasize about the character of the supply chain come some recent challenges it
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has faced in the wake of the covid-19 pandemic and the associated aviation market downturn, and if you things that the committee might want to consider as it deliberates the status of our industry and of our supply chain. basically there are three things i would emphasize about the aviation industry supply chain first of all, about you, the overwhelming bulk of the value add in the aviation business happens at the supply chain. it's not at all a dig at the many great prime contractors out there but aircraft is effectively the sum of its parts, and up to 85% or more of the value of a plane comes from the suppliers, typically the prime come summer between 15, 20, 25% at most with the rest coming from its supply chain companies. having said that it's also vulnerable as an industry with
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very high barriers to entry and very low levels of substitution. as the consequence if there is a relatively small what seems like an easily replaceable part that simply isn't available, the aircraft can't be built, pure and simple. we saw this last year with of course the logistical challenges associated with the covid-19 pandemic. lockheed martin had planned on building about 140f35 joint strike fighters for a variety of logistical reasons, almost all of them in the supply chain they were only able to deliver 123. in terms of vulnerability, well, that's what he faced problems i am afraid and then finally innovation, and thank you, madam chair cantwell for highlighting this. really the overwhelming bulk of technological progress of fuel savings and emissions reduction,
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a passenger comfort, really anything you associate with aviation on at the sight of house, a lot of the combat effectiveness we associate with the countries fantastic combat aircraft come from the supply chain, not the prime. so it's very important that the companies in the supply chain have a steady stream of research and development resources in order to bring these two technologies to market. now, the unfortunate reality of course is that we face the most devastating pandemic in industry history lesson because of covid-19. looking back over the many decades of the aviation industry, typically in a really bad year you would
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globally. that cataclysmic, especially for companies that are heavily dependent upon the aftermarket on equipment utilization. so the financial challenges associated with this unprecedented fall off in business were very challenging for the supply chain. now, i'm very happy to say that for a variety of reasons, almost all companies have come through it. but i am very concerned about their inability to access capital in order to hire people and, of course, for silicon for the uptrend that inevitably follows a downturn. it may sound counterintuitive but in a lot of ways some of the greatest challenges supplier companies will face is in the recovery having come through the downturn. especially this is true for the labor side of things and that's why i would command the
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government especially for its several rounds of paycheck protection program legislation. because i think this has absolutely been vital in retaining skilled workers and keeping them from, well, going elsewhere or simply just been off-line for whatever reasons. it's been absolutely fantastic for the industry, and a deeply hope it continues. other things that the committee may want to discuss i believe the time might be right to consider basically a sustainable aviation industry r&d program. the government has historically been very good at basic r&d, but when it comes to applied r&d, less so. i think there's a number of promising technologies, particularly and sustainable aviation fuels and other sustainable initiatives that i think could be accelerated, and with perhaps a bit of government
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assistance play a meaningful role in companies ability to maintain their competitiveness. and then finally i think another thing to discuss might be the issue with china. because china is the biggest single export market for commercial aviation companies, and there's a great deal of uncertainty both about our trade relations with china and with the rules on shipments of technology and componentry due to the creation of the military in user list by the u.s. government. there are so many complications involved here but there's a great deal at stake for the future growth of the industry. thank you so much for your time. >> thank you, mr. aboulafia. i want to point out that senator wicker and i worked very hard on those covid packages as related to aviation and the most recently senator moran and i on a package that was just focused on the supply chain manufacturers. that program just became i think
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operational or available for the actual application in the last few days i hope many in the supply chain will take advantage of it. we definitely are hearing the impacts of both covid and no shortages of a workforce just at the time we need to pick back up. we will not turn to mr. lex taylor. thank you so much. senator wicker gave you a robust introduction. thank you so much for being here. we look forward to your comments. >> cantwell and ranking member wicker four, as well as the rest of the committee here and virtually, thank you for all i need to be here. i appreciate the opportunity to tell you little bit about our company. i feel like i'm preaching to the choir a little bit. we all, all have the same goals in mind i can feel a little bit about our company how it is affecting us at this point in time and i think you can translate it to many, many copies across this nation. the taylor group is a
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manufacture of dump trucks mainly for material handling industry. also build power generations for residential and commercial applications and we are remanufacture of material handling equipment for the u.s. military. the business began, it was taylor machine works in 1927 and still operates as a family primarily owned business. we're proud to wave the flag in louisville mississippi. our products are manufactured in america and exported around the world in total we have 1200 employees with an average annual sales of a little over $550 million. our products operate every day in every prime industry, steel or metals, wood, concrete, in about transportation to just name a few. approximately 430 vendors support our thousands of parts and components that go into building our products. these businesses are based all over the world and are critical to our ability to produce
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products and support our customers. somebody supplies also our customers. the supply chain is very interwoven. and the companies with it depend on each other to keep the industry and thus the wider economy going. i appreciate the committee holding this hearing to discuss the challenges facing our supply chain. why this interruption happened and solutions to right the ship. america was clearly headed for further economic growth at the beginning of 2020, but then the unthinkable happened. the virus, the covid-19 virus, was the primary culprit that shut this industry down, shut this supply chain down. and it is where we are today. so where are we? yeah, , the supply chain is a disaster. it's in disarray, that's why we're here. delays in deliveries have forced
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manufacturers like taylor to resort to unorthodox and expedite methods of getting critical supplies. this situation is causing inflation to run rampant. throughout the supply chain. so far, we have kept our lines running but are facing 30-75% price increases from our vendors and transportation companies. three examples of this are microchips, of course, steel, and container costs, just to name a few. our products operate via some form of computer interface. so the chip shortage is extremely concerning. in addition to the availability of the right inventory items such as chips, keeping our product lines running, it depends on receiving inventory on time. steel is a major component of our products both in its structure and the components that are made of steel that go into our products, and we're facing price increases weekly
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dump it and in some cases ev4 hours. these average -- within the average cost of contenders have gone from $4000 a container the $18,000 as they speak today, due to this low supply and high demand. major shortages of key workers are also contributing to the supply chain prices, two larger national trucking companies that supporters have reported to us that they're trying to fill over 2000 driver applications today. they claim the government employment subsidy is particularly detrimental to getting prospects to come back to work and then, , therefore, with all this said, our company has, in order to protect its financial liquidity and viability, we've had to institute price increases. this is happening all over the country. as i said, inflation is rampant. the worst part is we have orders but we don't have confidence in
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our supply chains to meet the demand. we still have 40 employees now on layoff still from the covid year. this means 40 families in need with no pay or benefits. we want to hire those workers back, and higher even more, we don't dare make such a large investment when we cannot commit to fulfilling customer orders on time now. that same story is playing out in thousands of manufacturers across america. for taylor, our purchasing, engineering and manufacturing team are doing a herculean job to keep our line 20, satisfied customers and keep our people employed with the goal to get those on layoff back. this cannot be sustained, however, much longer. our vendors tell us they didn't see an end to the supply problem and to the end of 2022 at the earliest. i suspect there are thousands, hundreds of thousands of other family businesses facing similar issues as us.
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we wake up every day working all day to maintain our production lines, maintain employment and keeping our customers happy. my request of this committee is not to overreact with solutions that may cause unintended consequences. rather, i encourage you to support a free market system and allow it to do what it does best and find solutions that are practical and driven by the private sector. senator cantwell, thank you again. ranking member wicker and the members of the committee i look forward to answering any questions for thank you, mr. chair and we will look for to getting more specifics on that basis and opportunities during the q&a. thank you for being here. dr. gil, thank you so much. look forward to your testimony. >> good morning, chair cantwell -- [inaudible] -- critical need to bolster for
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semiconductors. i'm senior vice president at ibm and director of ibm research and i am responsible for billiof dollars of r&d annually to develop cutting-edge technologies from advanced semiconductors to artificial intelligence to quantum computing. i am also a member of the national science semiconductors are the beating heart of modern electronics. they really power every sector of our economy and asset of our life -- >> mr. gill, i think people want you to pull the microphone a little closer or turn on. >> it's not working. >> okay. >> that's better. >> see if i can do this. is this hopefully better? >> yes, thank you. >> okay. semiconductors are really the beating heart of modern electronics and power every sector of our economy and facet of allies.
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for example, our smartphone to semiconductors under ten nanometers. in may ibm until the world's first two-nanometer chip which i have brought one with me today. what he could do is they could quadruple battery life for our smart phones and really slash the carbon footprint consumption or use of our data centers and really shows the power of r&d. but for over a year we have experienced the consequences of semiconductor supply chain disruptions. failing to produce ships in the u.s. hinders our ability to develop future emerging technologies. the facts are simple. we only manufacture 12% of the world's capacity. global leaders churn out advanced semiconductors at seved five nanometers. yet we manufacture nothing under ten nanometers. for the u.s. government to bolster the semiconductor supply
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chain, it needs to do three things. invest, create effective partnerships, and focus on results that benefit all americans. we need sustained investment in domestic manufacturing and r&d for advanced chips. the winning recipe is clear, to have products to manufacture, you need to innovate new technologies, then manufacture, innovate then manufacture. while foreign governments invest in advanced semiconductor r&d and manufacturing capability, we are lagging. federal research and development represent a smaller percentage of gdp today than in 1964. the president won her today supply chain today supply chain review on bipartisan consensus in congress demonstrate the will to invest and supply chain challenges. including boosting leadership in advance r&d. the senate has provided a strong catalyst for investment by overwhelmingly voting in support
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of usica and the chips act. now let's talk about partnerships semiconductor innovation is fueled by partnerships. ibm's two-nanometer chip breakthrough with the on decades of collaborative our intimate partners in new york. bolstering american semiconductor capacity requires a scalable partnership model. the national semiconductor technology sector is a major first step, and ibm encourages the senate to fully fund and the power it. we cannot afford to waste time building semiconductor innovation capabilities from scratch. the nsts could deliver results in much if we leverage expertise and billions of dollars in semiconductor infrastructure. the company research center o many companies and university partners is already working on advanced logic pathfinding and you semiconductor materials. it offers an ideal environment from which to build and scale to nstc. as a proud member of this ibm is
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prepared to take a leadership role to make the nstc a success. that nstc should be an industry led public-private consortium that bridges gaps between industry, academia and government in advanced semiconductor r&d, , prototypin, packaging and manufacturing. it should enable american innovators big and small to quickly move semiconductor designs to any u.s. foundry. but we need more than physical assets and manufacturing plants. we need to invest in the american worker through education and training programs to create good paying jobs and opportunities for decades. this moment demands great urgency and results that generate dividends for all americans. as i've outlined, the u.s. needs to address semiconductor supply chain disruptions by investing, eating effective partnerships, and injury outcomes that benefit americans today for generations to come. thank you, and i look for to question. >> thank you, dr. gil. thank you so much for the test
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will thank you for covering a broad view of the various sectors that we're going to talk about here. mr. mueller, thank you so much for joining us. we look forward to your testimony. >> chair cantwell, ranking member wicker, and distinguished members of the committee, beth of information technology industry council, or iti, , thik the opportunity to testify today on information supply chain resiliency. as a current culture of the information and communications technology supply chain risk management task force, the united states prima supply chain public-private partnership, i look in the committee's interest on this important topic. i iti brevis expedia the world's leading i.t. eyecup is big industry respects the as governments obligation to address the resiliency of global supply chains including the semiconductor and broader ict supply chains. we believe in a government and industry must work together along with international partners and allies to achieve the trusted secure and grizzly global supply chains need to
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protect national security in which are an indispensable building block for competitors, innovation and economic growth. iti welcomes the broad holistic and strategic approach reflected in the americas supply chains executive order and related 100 a report which is also echoed in the senate trying to innovation and competition act, or usica. while the rain testimony commits numerous promising supply chain programs and initiatives contained in that bill i would like opportunity to thank the committee for authorizing emergency appropriations for the chips act for establishing a supply chain resiliency program house in the department of commerce and for providing increased investment in the manufacturing usa and manufacturing extension partnership programs. we look for to working with congress to get these important strategic programs fully funded and over the finish line. iti has urged the u.s. government to pursue this type of broad strategic approach to supply chain policymaking which
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includes promoting a thoughtful harmonized risk-based evidence driven approach to facilitate transparency and predictability, designing measures to advance and protect u.s. national security objectives without putting american competitiveness at risk, and prioritizing close government industry collaboration to most effectively leverage resources and expertise. of course crafting sound policy measures to address the global supply chain resiliency challenges that were laid bare by the covid-19 pandemic does that guarantees the successful execution of those policies by the commerce department or other federal agencies. this hearing poses picky question, how can we most effectively implement recent congressional and administration policies to improve supply chain resiliency? i i offer four recommendations n this regard. commerce should develop and execute a strategic court need a plan for implementing its numerous supply chain obligations. given the sheer volume of supply chain castings made at commerce
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his doorstep by successive administration as well as the new responsibilities contemplated by uc, a court need a strategic approach with incomes is necessary to effectively implement supply chain resiliency. one key feature of such an approach is identify and empower one entity within commerce to lead and coordinate this work. another is to prioritize close coronation with industry including by leveraging existing partnerships, , information sharing programs and innovation ecosystems. the ict task force which is going working with the commerce department and our sponsor the cybersecurity and infrastructure security agency under publication of the americas supply chains executive order provides an excellent model of public-private collaboration that commerce can draw inspiration from an chordate with as it launches the new supply chain disruptions task force. second, congress should ensure that commerce has adequate resources to effectively implement supply chain resiliency policy, not only by fully funding the chips act but by making sure the department is adequately resourced in terms of
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both funding and staff. commerce can help itself in this regard of focusing the scope of the prior administrations executive order on securing the i cts supply chain and related rule makings to ensure covered transactions are prioritize and targeted to discrete national security risks. doing so would allow u.s. companies to conduct global business with certainty, previous competitiveness and help commerce more effectively deploy its resources. third, congress should ensure robust liability protections to promote and incentivize edition of supply chain risk information. we appreciate this committee extended contacted critical infrastructural information program liability protections as part of the you usica suppln was into program to spur a much-needed sharing of supply chain risk information. however, after months of careful study the the ict scrim task force develop alleges that proposes to amend the cyprus could information sharing of 2015 that would divide stronger
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liability protections. finally commerce and other u.s. government stakeholders should deepen engagement with international partners on supply chain resiliency. iti welcomed the recent establishment of the u.s.-eu trade and technology council has provided just the sort of opportune to strengthen cooperation between allies on this and other critical issues. thank you for the opportunity testify today i look forward to your question. >> thank you, mr. mueller, and again thank you to all the panelist. i feel like the subject is come when you all the been studying it, as i said, a new day on supply chain analysis and impact as far as what we should be doing and you all gave us some good ideas on that. some differences. doctor lose, you are unabashed, daschle policy, let's go. definitely more analysis. dr. gereffi, very direct same
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with the last to witness about what congress should be doing specifically. so i want to pose my question i think, mr. aboulafia, to you and mr. taylor and in to see whoever else wants to jump in. ..
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>> teasing international aviation marketsb& lysine is the next level of innovation that has to happen. we are going to find resources and innovation down to that level so they can access? >> thank you for your questions madame chair. it's true, i will say the digger companies are part of the conversation and tend to have a bit more of a direct line to the r and d centers within the federal government . the good news is that thanks to some of the major mergers we saw over the past 28 years a lot of the supply chain is concentrated in these centers such as raytheon
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technologies, honeywell and many others that it sort of has become their own effective economic and business powerhouses. i'd like to see greater coordination between these first tier contractors but how do you get the smaller companies involved, the ones that are also critical to the innovation and production and what does that happen through the auspices of trade groups such as the aerospace industry or perhaps maybe just other activities and organizations within say nasa's commercial aerospace directorate. i think it's absolutely essential and its greater recognition in the government would beimportant to supply these companies . one of the great aspects of this process has been accelerated program by dod which is basically called for faster dollars from the prime
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to the suppliers so i think that kind of greater awareness of the supply chain , but that's a good question under what auspices they operate and how that happens but i think it'sessential . >> has called for a greater role in commerce playing as he said a more productive role. what do you think we should do here if the supply chain is identifying innovation there like mister taylor, they're running their business every day and they know what needs to happen but they're not in control of the supply chain? >> thank you jr cantwell. i focus on the high-tech sector and some of the innovation startups we have now spreading around the country . that's a good sign for silicon valley. so silicon valley new york and boston but your seeing
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research hubs bring up around the country and that's where the billcould make use of contributions . we have gone innovations on research universities and venture capital and then entrepreneurs so those three elements i think are what produces innovation. they're really good at it. just one dilemma and this is a hard one. they follow the market so if they think they all want to be unicorns and the next billion-dollar company or the next amazon. in talking to friends at the defense innovation unit which is the startup community, are doing great on prosper, where lighting behind on hardware and so how do we get greater connectivity between the national innovation and the industry? with my colleagues here mister taylor i agree.
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let the market do it and look for the places where the market isn't working. the market isn't working in a few places and the bill does a good job of fixing that. we can use both federal and private sector. >> mister taylor. >> chair cantwell, i can relate it to we are small businesses and therefore the overs had structure that takes for innovative work, it gets limited. you are focusing on materials and labor and responding to produce the products and get it to themarket . so we use research, the university system and many small businesses use that resource. i'm thinking my distinguished panelist from duke university, i'm not sure what
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they have their. mississippi state which is 30 minutes for us, there are some rules and regulations that are governed by the state of mississippi, the institute of higher learning. they have a mandate that say taylor wants to invest capital in research of something for product innovation engaging universities. if faculty are involved immediately if there's patentability coming from that research , it stays at the university level. you know, i'm not sure about that if industry is willing to make a financial investment and lose the patent downside of that. so there's some play in the hand-to-handpartnering with the university system but that's something that could be improved . >> that is why i've held up this road holding model because they do not, they don't clean anything on the
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back end. you just go right to them and say help solve this problem. but that was more regionalin very parts of the country it would be a ready-made asset . senator wicker. >> very good point. i meant at the opening statement madame chair to ask unanimous consent to enter into the record washington post story from yesterday titled biden targets shipping costs as pandemic ravages global supply chains. and let me just mention it starts off shipping a container of hazardous chemicals from shanghai to chicago used the cost about $6600 now the chief executive pays as much as $29,000. and that's if you select one of the much sought after cargo vessels in the pacific trade routes. there's ongoing land where
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royal shipping containers tend toget stuck in the railyard's .logjams and lead to costly and unknown unpredictablestorage fees so thank you for letting me do that . mister taylor, you mentioned that your 30 miles away from mississippi state university land-grant institution and a leader in research but you're not in a major technology hub . so what unique challenges do folks in your positionhave? you've got 1200 employees and you'd like to hire another 30 back . you're a big employer and economic engine in that area. what suggestions do you have for to make it easier for small and medium-sized businesses not in these large cups ? >> those that are not in these cores like we are,
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we're distant from the distribution hubs so that distance plays afactor in timing of deliveries . one thing that comes to my mind is that from that distance usually interstate highway systems are used of course and in-state services highway systems are used. at least in mississippi and i think many rural parts. this infrastructure bill is being discussed and negotiated here in the capital now. it is vitally important but i would say that if there's anything that could be done in that regard it's not only refurbish our highways, refurbish our bridges and get them to standard to use as many alternatives to source components to us and then ship our products out but also improve. we build lifting equipment and we've seen the customer base wanting bigger equipment
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because their machine tools, their processes are putting out bigger packages, more efficiency. those bigger packages usually take weight and impact the load limits that we currently have in our nation. if infrastructure systems could be, could cost an improvement in capacity, not just the service butthe capacity of transporting goods and services , rural facilities like austin have a better application for delivering any product or getting more components for delivery or per truck. >> so strengthen our roads as we build. mister miller, you mentioned liability. a liability concern. we're going to want people to participate in this monitoring program. how voluntary do we want it?
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the government side to make people do that, what will be the absence of a liability protection provision have on the willingness of companies to constrain? >> thank you senator wicker. there are some very significant considerations that companies have to consider when sharing the type of information we are talkingabout . supply chain risk information . often times that type of information is quite candidly derogatory information about suppliers. somewhere in their supply chain. and there are just a whole number of state and other causes of action that expose them to very significant legal risks if they were to you know, say something about a supplier for instance that a, this is a bad company.
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you don't even have to get into details. things like interference with contract, breach of contract, these are all serious business disparagement so there's a number of different really significant legal risks and companies want to share thisinformation but there's not a clear pathway to doing it without this type of protection . >> thank you very much. i'll take a little liberty. does anybody want to tell us that we need to make an amendment or two, if anybody would like to make a suggestion in that regard either now or on direct, that would be helpful to us. anyone? we will take that for the record. and is it, raise your hands. [laughter] i think we are on to something.
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i assume yes, dr. gil. >> thank you senator wicker. i am reaching. i do think it's an excellent piece of legislation. i've seen the consideration that we should have a sustained effort throughout the decade. the consideration of course and the priority is to get it passed and implemented and executed properly in properly in the next five years in the semi conductor industry is notorious for having to engage long-term planning and execution of roadmaps. i think hopefully these bipartisan consensus on getting these done would also be the basisof the success we enable with that to sustain it over time. >> thank you, ideal . >> you senator. i am next in the order and then i'm going to call on the one who will have to leave
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before chairman cantwell. we're in the middle of a vote right nowand with two votes we will be selling back and forth . i want to focus on drones. which may not seem to be a kind of supply chain issue. but the presence of drones pose little he literally every day, every year creates a commercial application for relational pieces and present rate national security threats. and more to the point for the purposes of today's hearing, the overwhelming number of
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productivity in the united states flag china. would you disagree with that proposition? i'm going with public records but you may have better information. last week i had the opportunity to visit taiwan drones in connecticut to tour there made in the usa facility. we talked about the need for gross and domestic and in the components parts that go into drones. they are at the forefront of some of the most advanced application of drone technology . it's not a huge company but to go to your point, dr. gil it is one that is doing research and investment. senator scott and i introduced the american security drone act as part of the competition package passed by the senate last june. and the act to protect
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federal agents, insecure drones and it spurs domestic alternatives but it's only the beginning in my view of what we need to do. let me ask the witnesses here would you agree with me that the prevalence of chinese drones represents a security threat from the standpoint of surveillance, potentially within the united states. certainly lost opportunity because the market is only growing here and around the world. and what can be done about it ? anyone who would like to take a crack at that. >> i'll go first, thank you senator. i actually had dji come in and demonstrate their products and they are really
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good . i tried to get hold of one and they wouldn't do it. we are in a situation where dji, the chinese company and a couple other chinese companies dominate the global market and it's a question to ask how we got there. the rule of thumb i use is if you connect to china in any way it could be a source for intelligence gathering and that is why i think that the legislation to restrict federal agencies of chinese drones is essential. we do not want to underestimate our opponents ingenuity in taking intelligence collection. so what do we do aboutthat ? we don't always want to copy the chinese but we want to look at some of the things that china is using subsidies for research or education and really closing their own market. not openly closing their own market to foreign suppliers. china wants to bifurcate.
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they're the ones who came up with the idea of an indigenous economy but we will have to rethink how we build our joan drone industry and that's notgoing to happen automatically . we still do well in uavs or military purposes. can we use some of that to encourage those companies to know down market? can we find ways to support the innovative startups like you weretalking about ? i don't think that's part of the legislation that i've seen but it's the model that you've used in us ica probably needs to be adjusted because it is a security risk . >> thank you. my time actually has expired. i'm going to turn to senator fisher but before ido i want to echo what you said . i think that the prevalence
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of chinese drones because they are essentially even if used by companies here for commercial purposes or wherever, they are essentially eyes in the sky. and the uav ironically may be used by the military for the surveillance but used abroad whether it's afghanistan or any other country or military operation. so we may have a bit of a recess before senator fisher takes over. i understand he may be running late and i want to thank all of you for being here today and it's very useful. iq. thank you.
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we turn now to senator fisher. >> i am here. >> the floor is yours. >> thank you senator blumenthal. thank you to our panelists today. a harmonized and complementary government role is essential when we look at sound policy that strengthens our nations apply chain facility. it's important that policymakers avoid a bureaucratic approach on this issue which may be too heavy-handed or slow to respond . mister miller you know from your testimony the commerce department should prioritize working with it industry and
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other federal partners to create synergies. in what major ways can lawmakers ensure that the government is agile and efficient in this approach? >> thank you senator fisher. there are a variety of different ways that lawmakers can do that and i do sincerely believe that you've laid out several ways in the bill. the manufacturing usa and extension partnership programs are certainly one example. the formation of the new supply chain disruption task force is another. i will say that the commerce department has been participating in the ict
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supply chain risk management task force as well and you know, i think the congress department in particular does have a long history of successful partnerships with the private sector. i'm thinking in particular of various programs that mbia admits that run. i did state in my testimony i do think that the commerce department should develop a coordinated strategy to really create synergies and maximize these efforts but i do think that there's an opportunity to do that and congress by authorizing these programs and it's going to be very helpful in that regard. thanks. >> where would you suggest that congress look for some good examples of programs that might be valuable for us to drill down into and see if they would work at the
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governmental level? >> i mean, i do think that in terms of existing programs, some of what we have, some of the suggestions in the hundred day report is one place. i do think that having the white house involved in really setting the tone there is important. and certainly there's a lot that's going to need to be done in terms of drilling down when we look at the supply chain resiliency program and also as some of the other witnesses have said , really making sure we have a sustained effort in implementing the chips act . it's a long game.
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it's not just drafting a bill and giving commerce or anyone else a pile of money. it's asustained strategy to follow through on these programs that hold so much promise . >> thank you very much. dr. gil, in your testimony you touched upon the importance of an agile approach to address the semi conductor shortage. right now timing is the key for the next step necessary to build american sector capabilities and domestic production . you highlighted that the national technology center could be the foundation for addressing supply chain disruption but you also stated that rather than creating another government program office operate, it should use an industry led model. i appreciate the suggestion
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on this front. could you please expand on what key elements of the model may make it more responsive or agile? >> thank you senator. i think an ultra stick model is to build on our strength that we have as a nation in the supply chain of semi conductors. we have wonderful equipment manufacturers in the electronic design industry and economic designanimation . on the tablet companies as well as r and d and the r and the industrial sector but alsowith universities . so i think the most important thing we've got to get right is to bring a broad coalition where we bring the strengths and environment that lists all those quotes. and we have precedent for being able to do this successfully in the past . they we have moments in the
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semi conductor industry in the 80s when we were confronting the challenges and the context of them was japan at the time where the creation of sematech and other environments where industry and diversity of the government came together what resulted in great success. there's precedent for us coming together and i would say that would be the number one priority that is a broad coalition of leaders to build on the strengths of previous investments in infrastructure that we had. the biggest risk we would have is to sort of ignore the signs and start something brand-new. that sounds exciting, and perhaps a little bit more academic but doesn't lead to the results that were going to want because in the end you want the manufacturing capacity in the united states and we want the innovation capacity to deliver results. >> i see my time is up and senator clover chart is here so thank you very much. >> thank you senator fisher
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and thank you to the panel. where proud of the work that has been done on thisbill, the us innovation and competition act . and i guess i'll start with you, mister miller. part of this bill, the it's something i worked on with senator portman create an office of manufacturing industrial innovation policy and it prioritizes cross agency coordination because we know we have a lot of agencies working on the manufacturing . can you the importance of interagency ordination when it comes tothe supply chain . >> absolutely senator and thank you for the question . the importance of industry, of interagency coordination really can't be overemphasized in this case. there's a couple of different reasons for that. number one, there really are quite a number of ongoing
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supply-chain related activities across the federal government. i think even though i focused on the ict supply chain it's clear and it's become even more clear from the goal of the pandemic that global supply chains and the importance of supply chains are important to all us industries. so it's really a situation where if were going to have a coordinated strategy , we need to be in sync across agencies and across sectors to really make sure that we have everyone pointed in the right direction and that's why the program you referenced is important to really prioritize that sort of coordination. >> i hear doctor gill you have a narrow check with you and i actually recently visited sky water in
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bloomington minnesota very successful chip producer, produces 65 and net 90 nanometer chips area in your testimony you note the importance of this and can you speak about investing in us based companies in the production of semiconductors ? >> thank you for the question senator. semi conductors in the end is a lifeblood of the electronics industry and almost every product that we connect. it we have seen an awakening for our citizens to discover just how ubiquitous they are and how they can affect the destruction of almost every item they rely on . i think it is absolutely imperative that we maintain the dual position of innovating to imagining products and what were going to do with semi conductors and were not only talking about the traditional electronics being the role of quantumcomputing and the role of next-generation wireless . new disabilities and cyber security are going to rely on this and it's a combination
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of breakthroughs with their ability to manufacture the united states that's a dual equation that we absolutely have to get right and it will lift many boats across the industry . >> there good, thank you very much. mister miller, in your testimony you note your support for funding for supply chain resiliency programs which would include a congress department working with the private sector. do you want to elaborate on that public-private partnership and how important that is aswe look to the future in doing this right . >> absolutely. i think it's been a theme that emerged during this hearing about how important it is for the government and the private sector to work together on the supply chain challenges in particular. there are a variety of reasons for that. not the least of which is that we are talking about massive in many cases
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extended global supply chains where you know, it would be impossible for the government to have his ability into what's happening in the supply chain without constant and continuous coordination and communication with industry. their limited resources on both sides of the ledger so to the extent that people can combine together forces, that's really great and again by leveraging existing partnerships in innovation. >> i want to ask one last question in my time to mister aboulafia. in your testimony you talk about research and technologies like sustainable fuel, aviation fuel can play in reaching zero emission, can you touch on that ?
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>> thank you senator. i'm afraid there's not a lot of clarity in terms of the producing emissions beyond traditional development but sustainable aviation appears to be one of the most likely ways that i didn't for example is not so promising but sustainable aviation fuel seems to offer a way forward. there's an awful lot of different initiatives you have around the world and i wouldn't want to see us industry hamstrung the cause of the lack of parallel initiatives. it also seems it's important to get industry on the same page because it's essential to make these developments technologically ecumenical. we should be able to put sustainable aviation tools in existing equipment so make sure we're working with the 25,000 just we have out there rather than invent technology
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to work with. then finally it might behoove the committee and others to consider mandates as a way of creating a guaranteed market for when these products come online as we saw in the car industry that might be a productive use of government resources. >> everybody. >> thank you senator klobuchar. senator peter. >> dr. gil, i applaud ibm's work to retrieve incredible breakthroughs with respect to events that semi conductors. these are tiny devices the device of a fingernail that will literally shape the course of the 21st century power and cutting edge technologies like supercomputing. however it's important for us to remember that advanced chips are one part of the story. there's an entire ecosystem of semi conductor technologies that are economy
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depends on including so-called legacy chips. so i bring this up in relation to the auto industry where the check shortage right now of these legacy chips is forcing productions shutdowns. this has had a devastating impact on autoworkers in michigan as well as across the country and i'm afraid it could become worse in the coming months. but i also want to be clear as you know this is not just about automobiles. there's a wide range of devices that depend on these legacy chips from farming equipment to medical devices as well as military vehicles. even the ceo of apple tim cook said in april a shortage of legacy chips was causing the most problems for his company and that's why i worked with senator sabin out to include you see chips in a $3.2 billion package to restore domestic production in semi conductors which the
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senate last month through the us innovation and competitive act. so my question to you doctor gill is can you elaborate on the role that legacy chips play in the broader economy and employment in the united states and could you comment further on why swiftly passing this us innovation and competition act is absolutely essential to keeping our nation at the forefront of my conductor manufacturing globally. >> you're right on the reliance and the importance of many generations of semi conductor notes, different technology area that are part of our automobile industrial equipment, aerospace and etc. one observation i will make is undoubtedly the case that you have to have a great urgency on being able to address the supply chain shortages during the legacy chips. i'll make the obvious! those legacy chips were chips a decade ago and this
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industry that these elements of landing for solving issues of today but planning for tomorrow is vital. what looks like advanced nodes right now my five year from now or seven years from now will become what we are referring to today as a legacy chips that were confronting. the legislation of the checks act a number of things are important both today and tomorrow. in the context of a national my conductor center there's a great emphasis on the assisting with the design and portability of these designs and multiple boundaries. packaging and test etc. so i think this legislation is going to be very very consequential in helping the broad ecosystem the more productive the design and production of chips including the indispensable legacy ones and i'll continue to make the point we need to do both today and tomorrow. >> thank you mister miller, i
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served as chair of online security and government affairs work . yesterday we passed the supply chain security training. this legislation directs the essay to develop a coordinated training program to their personnel to identify and mitigate supply chain threats to enhance federal supply chain tiger security long-term. this bill addresses federal supply security and mister miller in your testimony you mentioned on coordinated inconsistent approaches to supply chain resiliency and the security causing cyber security so my question is how consistent is this mandate to be improved to ensure that it is indeed the lead agency to coordinate efforts on supply chain risk management and if so, how can itsresources and authorities be improved and fulfilled that mandate . >> thank you for the question senator peters. i do think that cicero has
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clearly prioritized supply chain security and resiliency . i think already over the past couple of years. it was a few years ago that the secretary really prioritized supply chain security in particular in you know, kind of a spearheading this formation of the ict supplychain risk management task force . i'd be pleased to serve as the cochair of that. i do think the national risk-management center also has a very clear mandate to focus on supply chain as well . in terms of anointing for making sure that sisa is named as your question applies would be very supportive of that. there are many different dimensions of the supply chain and others have to have
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a role in it particularly when we look through the broaderlens of resiliency . we're looking at security in particular. sisa is well-positioned to lead there so any support that the congress is able to provide i think is well received by us. >> thank you for the answer, thank you madam chair. >> i have a couple of questions, i'm not sure we're going to see other members but i want to cover a couple of things . doctor, you talked about the research of this particular issue to and our witnesses and questions from our colleagues you can definitely see everybody's advocating for more expertise. and definitely a larger role for commerce. how do we get that expertise given that any one of these things as mister aboulafia said you should have a
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dedicated supply chain focus on aviation. we're heading that way on semi conductors. i could make the case we should have had a better analysis on aluminum given where we are with the aluminum sector with the shift happening. what do we need to do if we're going to say we want a larger federal role, what is it we need to do to have the research about these sectors you again if a lot of the innovation for the awareness about the next phase of innovation is at the verybase level of this supply chain . you got to turn on your microphone. >> thank you senator. i think in the past when we want to focus on specific industries we hadprograms like national industry centers and things like the sloan foundation supporters . i think to get universities involved we end up having to become more interdisciplinary
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approach and so i think one of the critical issues is trying to find some of the key industry areas that are cutting edge where the universities help and that's where i think your national science foundation technology initiatives and technology directorate could be a key because nsf does time into university in a direct way and so i think it has to connect also to those industrial clusters where the industries are located in particular parts of the country so a combination of nsf which is going to tie into applied funding and a multidisciplinary comes from industry clusters then linking that across the different industries that are specialized is probably one of the key ways to go. >> i see you nodding doctor hill, you agree with that. >> i very much agree with that. in the context of irving on a
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national science board and the evolution we see in the potential of the technology and innovationtranslation , bringing the best of the university which historically would have gone in centers, and imagining a new catalyst where we can bring universities and industry at all sales together through these and ff sponsor centers would be a unique model that would allow us to address these concerns. >> it could be more translational and more informational up the chain, i don't mean to use that word intermittently but i believe the world is flat so when you're talking about getting somebody over at commerce to believe what's happening in mister taylor's business or what's happening in aviation or what's happening in semi conductors it's not that people are at risk when you want to call the shots and say we need a specific r and d supply chain effort for aviation or semi conductors, that's somebody farther up at
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the department of commerce making that decision. >> i think when we look at the existing technology areas in the us that are well-developed, seattle with aerospace or telecom valley or austin with it or boston 128, and all of those cases we have well-established universities are connected to private companies but one thing that's happening now is we have a whole new set of technologies that are transforming cutting edge of research so what artificial intelligence, quantum computing. all those different areas that are coming out of the digital revolution so that's where we need to bring universities back into the equation because what worked five, 10, 15 years ago is changing very fast now so that to me is the real challenge . how do we have that discussion between industry and universities and government? taking these next generation technologies.
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>> that's where the hub and the center come together and maybe a new passion did you have a comment onthat ? >> thank you chair cantwell. commerce as a technology in administration and technology should be one of their central missions. they got rid of it sometime ago and one of the things to think about is you were talking about this isn't a policy agency. they do great work but they don't do policy. so if you're going to rebuild that capability of commerce to senior-level further up the chain , we might want to look at what commerce has a lot of talent there, a lot of strength but not focused on the technology mission in the way it might have been 10 years ago. >> i like that suggestion because i do think you have to have, there's this changing so fast. you have to develop the keys. there is this effort on
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thermal classics that i heard about. i've heard about it but obviously on the supply chain getting material for airplanes that don't have the material flaws in them that you have to start over. it's a big deal so thermal plastics could use that ability but the most i've heard about this research is that it's over in europe and there are companies like boeing that are participated and i've also heard from companies in spokane for saying i'm doing this and we need to do more of this . but how do we get the focus on the core technologies that need to happen in aerospace if these are just voices in the supply chain or if say for example europe is has added associations just because they're your or plant institutes where everybody always works together, what is it we need to do to identify the next generation technologies that seem to be at already there in the supply chain but the supply
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chain is just all individuals trying to compete. what do we need to do? >> well, historically it's encouraging. the very fact madam chair that your hearing about this technology indicate that there's some equipment and technology that are coming to publicview to your view . you know, what when it comes to materials that's a good example. of the kind of thing that i think should be accelerated because it can be brought to market quicker. but despite the emphasis on materials in the supply chain it's not a crime to specify them at the end of the day so if you're companies like excel or someone like that could create these advanced materials in some of the smaller companies ultimately it comes down to the crimes and this is one point where i guess i'll reverse myself . i think it's up to the crimes
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to identify what technologies are bringing into next generation forms. be it materials, be it various control systems, be it avionics or something else . they might be the best source to say this is something we might like to see on our next veneration jetliner or a business jet or combat aircraft. in the case of thermal plastics , there's a lot of work going on in the interiors that might be a good intermediate and user, people who create interiors. and what to bring some capable is to market but these are the sorts of technologies that i think we could migrate basic to a more supplied level of r and d and yes, it is sort of noteworthy a lot of other companies or a lot of other countries are engaging in this research.
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one thing about it is that in the netherlands and other spaces these are effectively aviation towers. it's not a place in france for britain or germany, it's probably not a critical as much to us contractors. and i think that's important to remember and the reason i think it's important for the us to have a greater capability in identifying these technologies while working with us or entity programs andgetting them to market . >> senator scott. >> you. i want to thankeverybody for being here today . i have been up here for about 2 and a half years and a lot of times when people come through and do is ask what can government do to solve the problem and you all talk about what your industries are doing. what you think we could be doing without government . and without increasing our debt.
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$30 trillion of that now, and each of you talk about what the private sector should be doing and what you're doing ? >> i'll start. >> i'd be happy to start, thank you forthe question . so one element of ibm is we have had an unwavering commitment to invest in r&d. i'm proud to be the research division of ibm. we had a research division for 76 years employing over 2000 scientists who work full-time to invest and create thefuture of information technology . in quantum computing and semi conductors, etc. so i think that the private sector needs to continue to have a very very strong commitment to r&d and investing our workforce so that we can continue to create differentiated products. that's one thing i would advocate strongly . >> i would say that one of
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the things we're doing as a small manufacturer is we're building more and more relationships with partners. there's just a lot of technology that as a small company you can't do yourself. build that relationship and i'm talking about a relationship, not finding a vendor but building a relationship withthat vendor . that seeks a long strategic approach to the innovation on the product you want to present to the consumer. and these partnerships are very very important particularly the small manufacturers but i think any size manufacturer. where the expense is there. >> anybody else. >> just quickly senator and thank you for the question. one thing that private sector can do in association with efforts, it needs to send a clear message to government on what would be helpful to
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where there are areas that go outside of the purview of the us ica that we need to addresslike monetary policy , we need to get those signals from the private sector on the guidance for policy and that would be an area where i think there's room for improvement . >> could i have one thing also senator scott. i think beyond the r and d investments as well, one of the things that the private sector is doing is lending expertise and resources to the government. as stated earlier, particularly in the supply chain context government entities don't always have a lot of visibility to what's going on across the supply chain so partnering with the government, working on public-private partnerships and taskforces and really
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devoting industry resources to help advance the shared government industry mission is something that i know that it companies are doing another is also partnering on you know, some of the workforce development programs and things like that to really try to help rebuild the talent pipeline and that's another thing our companies are doing. >> is there anything any of you think governments should stop doing that would help the supply chain? a lot of people come up and say what we should do more of . i was in business and i got tired of government. [inaudible] okay.
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>> go i had mister aboulafia. >> vacuum medicare. if i may, there's one aspect i think is the government's approach to the supply chain could probably change. the pentagon has a patchy policy when it comes to aftermarket component traits and given the reliance of the supply chain on aftermarket commodities for a lot of their profits , ultimately the kind of buying habits and frankly absence of guidance at times is a bit ofan issue for the supply chain . so perhaps greater guidance from the pentagon and other government purchasers of componentry about what they're doing to fill their warehouses or when there restocking or what their purchasing guidance is going to be in the coming couple of years to be helpful i think to a lot of the supplier companies that would but if i
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may just quickly address your previous question is a really interesting one . what the private sector should be doing, one change i would like to see them make is less of an adversarial approach to the supply chain. many companies at the prime level see it as something to be frankly rushed for profit. basically they've got to harmonize margin or whatever else. i like to see more of a partnership between the prime spending and perhaps there's this crisis that will illustrate the rather vulnerable nature of the supply chain and the importance of having that partnership and working together in tandem to be more resilient. >> thank you chair. >> thank you madam chair and thanks for this really important hearing. i want to talk with a kind of a couple of questions.
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i'm going to toss out there, some of them related to doctor lewis and doctor gill. i was recently in south korea and taiwan. and bipartisan senate delegation with victor cruz and duckworth. and i like to get both of your views on this issue of selective decoupling. and i was very surprised and actually please both in taiwan and in south korea meeting with their senior government leaders also senior private sector executives how they do see this selective decoupling coming a scene very forward leaning on making the choice about being in the united states both foreign direct investment and our country which they are starting to do and being more interested in
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you know, if there's a choice , the choice is the united states. i was very pleased by that. then doctor gill, this obviously relates to semi conductors two. in terms of taiwan and south korea, both of their big semi conductor manufacturing companies are looking at major, major investments in our country as well so maybe doctor lewis, if i could start with you in this issue on taiwan where it's very clear the ultimate goal is that chinese communist party to absorb taiwan. i don't think that's a good idea forcefully or not but how do we think about that when we think about selective decoupling as well. >> thank you senator. i'm very grateful to the chinese communist party because they make our task so much easier.
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every time they open their mouth's, countries move in our direction. >> i think you're right. >> we need to think then how do we build unified approach with our allies and partners like taiwan and north korea. how do we streamline the path for them to work here. it would be great to have the smc in the us and i'm sure there a competitor but i'm confident our companies can compete with them. >> there obviously stronger stronglycontemplating that . >> contemplating and location are not the same so how can we make it easierfor them to get here ? same for sansone, a strong presence in texas but we depend on samsung and an issue for the congress for the administration is do we feel comfortable with that dependency. mixed answers there. we definitely may not have a choice in some cases will have to be smooth the path to work with it.
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you were in asia but we need to think about our european allies. there a little bit more ambivalence when it comes to cutting off trade with china. >> exchanging. >> it's more the chinese communist party opened his mouth more our european allies are recognizing what reality is. let's look at the results of the elections in france and germany because i think it might be easier to see interactions with policy. >> dr. gil. >> you're absolutely right about the strength of south korea and taiwan in terms of production area that i would refer in my testimony they represent 100 percent of the manufacturing capacity below the 10 nanometer node but arguable policy would be very
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beneficial to the united states. one is encouraging investments on shore which they do have managed to do but seeing it through and signaling that the what it does is essentially sending a very clear message about the importance and resurgence of semi conductors in the united states and the need to invest and on top of that, also be able to foster the creation of an sec and manufacturing capacity of the us manufacturers who complement that. i think that would be a wonderful outcome. we have the sum of all those in the unitedstates . >> madam chair, it was i mentioned this to senator with her and it was interesting those companies and countries were very closely tracking what was going on with our legislation in the chipset. if i can ask one final question if that's okay. >> doctor lewis out very quickly and it's a long question so i'll try to keep it very short. our one i think asymmetric
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advantage to chinese albatross is at we have an entire finance class, wall street and a lot of our big private equity groups seem very comfortable investing in not just china but chinese ai, chinese military, chinese communist party related companies and of course, any chinese financiers who want to relate or want to invest in something related to the pentagon or something that would help us . the chinesecommunist party will cost them . how do we think about our own american who seemed disturbed by this we seem happy, free, open, 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
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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, 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
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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 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
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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 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
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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 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?
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>> 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 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
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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? 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,
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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 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.
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>> 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. 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
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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 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
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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 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?
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>> 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. 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
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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 is includes our hearing. thanks again. [inaudible conversations] in ongoing conversations. [inaudible conversations] [inaudible conversations]
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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> c-span's washington journal. everyday we take your calls live on the air on the needs of the day, and we discussed policy issues that impact you. coming up tuesday morning, adam brandon on freedom works' support for republican candidates in the 2022 midterm elections. the national low income
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housing coalition coo talks about support and the -- talks about the high cost of housing for low-income americans. be sure to join the discussion with your phone calls, bespoke comments, text messages, and tweets. coming up tuesday on c-span, the house returns at 10:00 a.m. eastern to work on legislation that could expedite the visa process for interpreters, contractors, and security personnel who worked with the u.s. government in afghanistan, as well as transportation and cybersecurity bills. on c-span2 at 8:00 a.m. eastern, blue origin, owned by jeff bezos, conducts its first crewed flight space.
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on c-span3 at 10 :00 a.m., cdc director dr. rochelle walensky, dr. anthony fauci, and other members of the president's covid-19 response team testify before the senate health committee. and at 2:00 p.m., a house armed services committee will hear hearing on sexual assault in the military. former secretary of state mike pompeo was among a group of possible 2024 presidential candidates who traveled to des moines for the annual iowa family leaders summit. iowa is known to pick presidential nominees in the early stages of a presidential election. this runs about 30 minutes. [applause] >> please welcome president and ceo of the family policy alliance, credit bureaus -- craig deroache.

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