The Challenge of Rebuilding U.S. Domestic Supply Chains

Summery: Massachusetts-based Shawmut scrambled to expand production to meet the soaring demand for N95 masks and hospital gowns during the pandemic. Its experiences illustrates a crucial point that policymakers should take to heart: Once a country loses its industrial commons points — the capabilities needed to support the development and production of many goods — restoring it is hard. This analysis of Shawmut’s efforts offers lessons for how to rebuild the U.S. commons for critical sectors of the economy.

Shortages of essential medical supplies, semiconductors, and other goods and materials during the Covid-19 pandemic have dramatically exposed the vulnerabilities of global supply chains. U.S. government officials have been carrying out President Biden’s executive order to propose remedies to the risks that such networks pose to four specific areas (pharmaceuticals, strategic materials such as rare earth minerals, semiconductors, and large-capacity batteries) and six sectors of the economy (defense, public health, communications technology, energy, transportation, and food production). We think they will find one fundamental cause is the erosion of the U.S. “industrial commons” — the domestic capabilities needed to support the development and production of many goods deemed critical to U.S. interests.

Addressing this decline requires an appreciation of factors related to both the supply side (the industrial capabilities for making these products) and the demand side (how these products are bought and sold). To illustrate both sets of challenges, we describe the efforts of Massachusetts-based Shawmut, a producer of advanced textiles, to help satisfy the soaring need for N95 masks and hospital gowns during the pandemic. Shawmut’s experience offers insight into how the difficulty of rebuilding domestic capabilities may depend on a complex set of factors, including the health of adjacent manufacturing sectors and changes in buying and regulatory practices.

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