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One World, One Industry: A Lasting COVID-19 Lesson—Resilient Regional Manufacturing Networks

According to the?Society of Critical Care Medicine ^[1], the?U.S.?only?has?200,000?ventilators?to treat?the?960,000?COVID-19?patients?who are anticipated to need them.?The?U.S.?government and private industry are working more diligently to retool manufacturing to meet the nation’s needs.?Thanks to these efforts, social distancing practices, and—most importantly—the brave and tireless work of frontline healthcare workers,?we will?recover from?today’s?novel coronavirus. However,?we need to prepare for?what’s?next and the?pending?unknowns that await us.  

Sophisticated global supply chains?are?generally efficient in meeting?societal?demands, but the COVID-19 pandemic?illustrates that—in times of crisis—these supply chains?can break down.?One of the pandemic’s lasting lessons will be the importance of resilient regional manufacturing networks?to ensure the availability of life-saving equipment.  

The?technology behind medical equipment depends on PCBs. Manufacturers state that a shortage of?PCBs has slowed the production of ventilators. U.S. board manufacturers have available capacity, but the established supply chains do not?currently support?the kind of high-volume manufacturing in the U.S. that the crisis demands. As a result, U.S. PCB manufacturers?have?limited means to help, given that assembly mostly takes place in Asia.

In affecting China first, COVID-19?disrupted the operations of some of the largest electronics manufacturers in the world—even as?China?marshaled its industrial resources to support?its own?medical response. The resulting global demand for medical electronics stretched manufacturing capacity even further without a strategy?in place?in the U.S.?to ramp up production to compensate. That led to?a?tragic but inevitable result: healthcare professionals scrambling and often competing with one another for life-saving ventilators.? 

The unprecedented?COVID-19?pandemic?has made?clear?that our dependency on?overseas?manufacturing can mean life or death. It?also?exposes?how?quickly current supply chains?can?become disconnected and in peril.?Needing to travel?across the world to ramp up production of any critical item is a lesson we should avoid repeating.? 

Since the 1990s, electronics?have become?the heart of thousands of products and hundreds of industries worldwide, with healthcare prominent among them.?Much of?the?electronics manufacturing sector has?taken advantage of economic integration across North America to maintain and grow?across?all three countries. The total value of U.S. electronics trade with Canada and Mexico?has?increased?six-fold over the last 25 years, reaching $155.5 billion in 2017.?It helps support 5.3 million jobs across the United States, as well as millions more in Mexico and Canada.?Electronics and products containing them?constitute a significant?portion of trade flow among the three countries?and must be protected.? 

Not only is this sector vital?for the?functioning of our economy,?but?it is?one?of?a?few?continuing?to hire?workers amid the overall?shutdown.?Electronics manufacturers added nearly 2,000?U.S.?jobs in March 2020 and over 20,000?U.S.?jobs in the last year.  

In anticipation?of?future pandemics or even?an expected?COVID-19?reemergence?later this year ^[2],?we encourage the Trump administration to support a sustained and bold policy agenda to combat the virus and overcome the economic downturn. President Trump should?work with our neighbors in Canada and Mexico?to build?a?more resilient and robust supply chain.?Now,?as?the United States-Mexico-Canada Agreement (USMCA)?is being implemented,?is the?right?time to start?a?North American Manufacturing Initiative to focus on coordinating pandemic response and strengthening the?region’s?manufacturing competitiveness.  

President Trump,?along with his?North American?counterparts,?should?grow regional capacity for electronics manufacturing?and?create?systems to monitor capacity in times of crisis. Additionally, they should?set?up?metrics for industrial base resiliency with capabilities,?capacity,?and geographic diversity as key factors. Finally, government leaders should?determine a regional definition of what is an?“essential activity,”?which would more easily allow us?to?support?the?critical production?of?crucial?materials,?parts, or products.  

Importantly,?all of this should be?centered?on the?manufacturing?of electronics and other?essential equipment.  

This?region has an opportunity?to think bigger and build stronger, more efficient, and resilient manufacturing supply chains across North America. Anyone serious about strengthening manufacturing in any one of the three countries?needs to focus on?advancing?that?goal in all three countries.?This same lesson is one that all regions of the world should internalize and address.?  

References 

1. Society of Critical Care Medicine, “United States Resource Availability for COVID-19,” May 12, 2020.
2. S. Gorman, “CDC chief warns second COVID-19 wave may be worse, arriving with flu season,” Reuters, April 21, 2020. 

This column originally appeared in the July issue of PCB007 Magazine