Competitiveness, Production, and Logistics in a Disrupted World

Pandemic Impact on Global Disruption

• The coronavirus pandemic is characterized as the most significant global disruption since the 1918 Spanish Flu.
• The crisis exposed critical vulnerabilities in global supply chains regarding just-in-time manufacturing, PPE, pharmaceuticals, and food security.
• Approximately 1.3 million manufacturing jobs were lost in the U.S. during the first few months of the pandemic.
• U.S. manufacturing has recovered approximately 650,000 of those lost jobs, yet 650,000 jobs remain unfilled due to a skills gap.

U.S. Manufacturing Sector Status

• 66% of National Association of Manufacturers (NAM) members reported a positive outlook for the third quarter, a rebound from 34% in the second quarter (a post-Great Recession low).
• Two-thirds of manufacturers do not expect revenues to return to pre-COVID levels until 2021 or later.
• Only 17% of firms reported full revenue recovery, while 12% do not anticipate recovery by the end of the year.
• 100,000 of the 170,000 small businesses closed during the pandemic are expected never to reopen.
• 460,000 manufacturing jobs remain unfilled despite the current unemployment situation.

Supply Chain Reshoring and Reorganization

• Reshoring has accelerated rapidly for critical items like PPE; Canada increased domestic PPE production from 0.5% to 70% within seven months.
• China is described by panelists as a "juggernaut" in logistics and supply chain capacity, with significant investments in 5G, talent, and proximity to the world's largest population.
• A "China Plus One" or "Plus Two" strategy is being adopted by firms to diversify electronic input sources into markets like Vietnam, Cambodia, Bangladesh, and India.
• North American nearshoring opportunities are identified in food supply chains, clean tech (leveraging natural resource history), and advanced manufacturing.
• U.S. manufacturers cite frustrations with China regarding intellectual property theft, forced localization, product dumping, and subsidies.
• Complete onshoring of all supply chains is deemed impractical for certain goods where raw materials (e.g., rubber for gloves) are not available domestically.

Small and Medium-Sized Enterprise (SME) Challenges

• Small businesses created the majority of jobs during the 78 months of consecutive growth prior to the pandemic.
• SMEs faced delays in accessing PPP funds, with sole providers excluded from the first round until a week after funds were exhausted.
• 99% of the world's consumers reside outside the U.S., highlighting the need for trade agreements with specific SME and women entrepreneur chapters.
• Venture capital is currently concentrated in only three states (California, New York, Massachusetts) and about 25 zip codes, limiting access to capital for small businesses nationwide.
• 58% of surveyed small business customers are optimistic about revenue growth in the next year.
• 47% of small businesses have already invested in new technology since the start of the pandemic to facilitate adaptation.

Infrastructure and Technology Requirements

• The American Society of Civil Engineers gave U.S. infrastructure a "D+" rating, ranking the country 13th globally in infrastructure quality.
• Deficient infrastructure costs U.S. families $3,400 annually, a figure projected to rise to $5,100 in a few years.
• 54,000 U.S. bridges are structurally deficient.
• A $1 trillion investment in infrastructure is projected to create 11 million jobs.
• Supply chain adaptation relies heavily on digital transformation, including AI, blockchain, AR, VR, and robotics.
• Panelists emphasized the need for "soft infrastructure," such as streamlined customs clearance, reduced non-tariff barriers, and international trade corridor agreements like USMCA.

Vaccine Logistics and Distribution

• FedEx has moved approximately 1.8 billion masks, a volume comparable to the 1948 Berlin Airlift.
• Future logistics challenges include temperature-controlled distribution, dry ice capabilities, and real-time visibility for diverse vaccine storage requirements.
• FedEx launched "Sensor ID" and is partnering with Microsoft on "FedEx Surround" to provide real-time monitoring of vaccine shipments.
• The ability to move vaccines globally relies on a network connecting 220 countries and the removal of border clearance barriers.

Strategic Outlook and Policy Recommendations

• Panelists advocate for a $2 trillion infrastructure investment over 10-15 years, noting it is a fraction of the $3 trillion injected into the economy in six months.
• Recommendations include tax credits for onshoring, incentives to recruit and train skilled workers, and affordable business loans for capital equipment.
• There is a call for increased government support for pharmaceutical R&D, opposing price controls to maintain competitiveness.
• ESG (Environmental, Social, and Governance) frameworks are expected to drive further regionalization, as shareholders and customers demand sustainable supply chains.
• The consensus emphasizes that long-term economic recovery requires consistent adherence to safety protocols and a "stakeholder" view of corporate responsibility rather than a purely shareholder-focused model.