CFR and U.S. Department of Commerce Supply Chain Summit

Please click here to view the full agenda with all speakers.

The Supply Chain Summit, cohosted by the Council on Foreign Relations and the U.S. Department of Commerce, explores efforts taken by government and industry to shift from reacting to global supply chain disruptions to proactively strengthening supply chain resilience.

The event gathers leaders from industry, government, academia, and civil society to collaborate and share best practices for preventing and addressing supply chain vulnerabilities, including launching a new supply chain risk assessment tool.

This summit is presented by RealEcon: Reimagining American Economic Leadership, a CFR initiative of the Maurice R. Greenberg Center for Geoeconomic Studies.

 

GOODMAN: Can I have everyone’s attention? Good morning from another lovely day in Washington. Welcome, to those of you in this packed room and the hundreds watching online, to the Council on Foreign Relations and to this Supply Chain Summit, which we’re delighted to cohost with the U.S. Department of Commerce. 

My name is Matthew Goodman. I direct an initiative here at CFR that we call RealEcon, or Reimagining American Economic Leadership. And if I can just do thirty seconds of shameless advertising for RealEcon, it’s a platform for a conversation about America’s role in the international economy, what’s at stake for the American people, and the tradeoffs involved in different policy approaches. So we’re delighted to be focusing here on supply chains. It’s one of the areas that we’re looking at in a broad set of policy issues that we’re following on trade and investment, development policy, economic security, this sort of relatively new area of international economic policy. And supply chains are right at the heart of that story. 

I’m guessing that five years ago most people in this room had a sort of vague understanding of what supply chains were but weren’t really focused on them. And then we had the COVID-19 pandemic, and all of a sudden we realized that we were very dependent on products—both sort of everyday products and critical ones—that were produced and distributed in these distribution and supply chain lines across the globe. Supply chain concerns, of course, now are frontpage—a frontpage issue, and efforts to make them more resilient are a major preoccupation in capitals and boardrooms around the world. So that work starts with understanding these highly complex and, frankly, often murky supply chains, and the vulnerabilities and risks that they create, which is really the heart of today’s event. You’ll see that the Commerce Department has created an innovative new data analytics tool that’s going to be rolled out shortly to help with this work. 

So we have a fabulous lineup of topics and speakers throughout today’s event, starting with the leaders of our two host institutions, Secretary of Commerce Gina Raimondo and CFR President Mike Froman, who we’ll introduce in just a second. But first, let me introduce my friend and former colleague and co-MC for the day, Marti Flacks. Since the start of this year, Marti has been the director of the new Supply Chain Center at the Commerce Department and she’s been leading a lot of the efforts that you’re going to hear about today. So over to you, Marti. Please, come on up. (Laughs.) 

FLACKS: Thank you, Matt, so much. As Matt said, I’m Marti Flacks. I’m the director of the Supply Chain Center at the Department of Commerce. And I want to join Matt in welcoming everyone here today. 

I’m particularly excited to see so many familiar faces in the room, including members of our Advisory Council on Supply Chain Competitiveness; some of our new strategic partners from industry and academia; our Indo-Pacific Economic Framework for Prosperity partners; colleagues from across Commerce and the U.S. government; and of course so many of our industry, labor, and other key stakeholders. 

I want to thank the Council on Foreign Relations for cohosting today’s summit and for being such an outstanding partner in doing so. There really is no more fitting place for this strategic economic and national security conversation than CFR. 

Today is pretty monumental for us. This is the first-ever Supply Chain Summit, and it’s been quite a tall hill to climb. As you know, the Biden-Harris administration has made supply chain resilience a priority from day one, signing an executive order on America’s supply chains and establishing a White House Council on Supply Chain Resilience. Last year, Secretary Raimondo launched the first-of-its-kind Supply Chain Center housed within our Industry and Analysis business unit, and our center aims to expand and amplify our supply chain capabilities, our analytical capabilities to bolster our ability to understand and address supply chain risk and provide policy recommendations across sectors and industries. This summit is an outgrowth of those efforts and many years’ worth of work. It was also a recommendation from our advisory council, and we thank them for that. 

We have a packed schedule today, so we’re going to move straight into it. And I hope we can use this time together to reflect on the learnings of the past three-and-a-half years and to sketch out the contours of what more we can do together going forward. So without further ado, it is my honor to introduce our first guest to the stage. Please welcome Secretary of Commerce Gina Raimondo; Ambassador Mike Froman, president of the Council on Foreign Relations; and Tom Polen, chairman, CEO, and president, of BD. (Applause.) 

(END) 

FROMAN: Well, welcome, everybody. My name is Mike Froman. I’m president of the Council on Foreign Relations. And it’s really a great pleasure and honor to be collaborating with the Department of Commerce and the Supply Chain Center on this important conference. 

It’s a particular pleasure to have Secretary Raimondo here and Tom Polen, the CEO—chairman, CEO, and president of Becton Dickinson, one of the leading medical device and medical equipment companies in the country. We’re going to be talking about that as well. And we’ve got a great group here in person, and I understand we have several hundred more that are listening and participating online, so thank you all for joining us. 

Madam Secretary, let me start with—let me start with you, the whole purpose of this conference and the work on supply chains. For years, our whole focus in international economics was on efficiency, and companies put their supply chains wherever it made the most sense to get the cheapest product for consumers. Now we have focused not just on efficiency, but on resilience, redundancy, diversification, national security. Those are all likely to make products at the end of the day more expensive. How do you think about that tradeoff, how to balance it? And what—are there limiting principles in your mind about how much needs to be made in the U.S., how much can be made in trusted partners like Canada, Mexico, Europe, elsewhere; and then how much we can actually rely on imports from China and elsewhere? 

RAIMONDO: Yeah. Thank you. Thank you for hosting. And thank you, Tom, for coming. 

This is incredible to me that we could pack a room—(laughter)—of this size with such serious high-level people to talk about supply chains. I’m not sure we could have filled the room, you know, pre-COVID, five years ago. 

FROMAN: I’m not sure we could have filled the stage. (Laughter.) 

RAIMONDO: Well, you’re a big draw, so maybe we could have. 

So, first of all, this right here I view as a partially mission accomplished, which is to say having an extreme focus in the private sector and public sector on supply chain resiliency is more than half of the battle, right? Like, monitoring, being proactive, strategic, comprehensive, collecting the—finding the chokepoints, and targeting, and getting ahead of the problems, these are things that the government hasn’t done a fantastic job of, to say the least, and private industry really hasn’t either. So the fact that we’re here and engaged in this way is the way we will solve these problems. 

In fact, Tom and I got to know each other in COVID. I was a brand-new secretary of commerce. You were struggling to get access to semiconductors that go into all your medical devices. And we—I’m not exaggerating—you would call me for want of a single chip or small handful of chips, and I would, like, get on the phone and call the CEO of Texas Instruments. So that’s not scalable. (Laughter.) 

POLEN: Not at all. 

RAIMONDO: So I realized— 

FROMAN: But we’ll be giving out her number at the end of this. (Laughter.) If any of you have issues, you can give her a call. 

RAIMONDO: Yeah. So I realized, like, holy cow, we need to do something better, which is what Grant Harris has done an amazing job doing, and I assume we’ll get into the tools he’s built and such. 

But, look, the question you asked is really hard. You know, we can’t really answer it properly here because the biggest lesson I’ve learned is that supply chains are complicated and the answer is often in the minutiae, you know, I find. I have learned that you have to get deep into the supply chain and figure out where are the chokepoints and points of vulnerability, and then sort of do your best to make sure you have some amount of resiliency or redundancy. 

And it’s true what you say about efficiency. I think if—like anything in life, if you focus obsessively on a single metric, you do—you do— 

FROMAN: Over-rotate. 

RAIMONDO: Over-rotate or under-rotate on the risk. You know, if all you focus on, for example, is return and you ignore liquidity, you reduce the risk illiquidity here. If all you focus on is profit and price, you undervalue the risk of lack of resiliency. So it’s true, you know, China has provided an incredibly inexpensive place, but you know, we have other friends and allies around the world. And I was just in Costa Rica, for example; a lot to like about Costa Rica. It’s a democracy as it relates to packaging and assembly for semiconductors. I spent a huge amount of time in Malaysia, the Philippines, et cetera. 

So, you know, it’s a balance. It is a balance. And I think what we have to do is, like I said, get ahead of it. And if you—if you are utterly reliant on a single country for a product that you really need, there’s a cost to that, too, if you’re actually baking in the full cost of that risk. And I think it’s worth working with the government to try to figure out how to find some resiliency. 

FROMAN: One of the—one of the issues around friendshoring or relying on other countries for some of this is, is it the country or the company that matters? Are we OK with Chinese companies moving to Mexico and exporting product from there? Is that reducing our dependency on China, or is it—does it matter whether it’s rules of origin or rules of ownership? 

RAIMONDO: Lookit, first, when it comes to China specifically, you know better than I do that, as we were just saying, it’s not a discussion. China puts BYD factory in Mexico. That’s a Chinese company. If China decides to subsidize a company or, you know, overly subsidize an industry, I think you can expect that that’s going to distort the global market and hurt U.S. companies no matter where it is. So I’m not going to, like pretend to talk about the details of trade with this guy, but I am highly skeptical of any Chinese company no matter where it is precisely because these supply chains are so complex it’s pretty easy for them to obfuscate the level of their subsidy and dumping; and to pinpoint it and accept it hurts us, it shows up at some point in time in the global market when they have so much control. It’s a leverage point. It’s a leverage point. And as long as they decide to play nice it can be OK, and the minute they decide not to they can control the global price and it could cause a lot of pain. 

FROMAN: I’ve watched with great admiration the way you’ve brought your private-sector and governor’s experience to the Commerce Department. It really transformed the Commerce Department, I believe—chips investments, broadband investments, Inflation Reduction Act really bringing a lot of private-sector capability to the Commerce Department. One of those areas in the area of supply chains is this new tool that you are developing and rolling out. Tell us about Scale and how it’s going to help us avoid the kind of disruptions that we saw during COVID. 

RAIMONDO: Yeah. I love this tool. If you haven’t seen it, you should check it out. 

By the way, you’re very kind what you said about the Commerce Department and me. Just to put a fine point on what Mike just said, in the next few months every month, September to December, the Commerce Department is aiming to deploy the same amount of capital each month that the traditional Commerce Department did annually. So, like— 

FROMAN: It’s a big transformation. 

RAIMONDO: It’s big. 

FROMAN: Including people that you have been able to attract. 

RAIMONDO: Including people. You know, the chips team— 

FROMAN: Process. 

RAIMONDO: —is a couple hundred people. They were zero people. They are—the supply chain office that Grant has started did not exist when we—when we started. 

So the Scale—so, first of all, under Grant’s leadership we have created a supply chain office. As I said, I didn’t think it was scalable for CEOs to call a secretary and me to call other CEOs. (Laughs.) So I also didn’t think—you know, we would get these requests from the White House, and I would—I would, like, call a guy, and he would whip up an Excel spreadsheet—not exaggerating—(laughter)—around how we would figure out what was going on in the supply chain. So we built an office, and then we said, OK, we need some analytics. 

And today we’re unveiling the Scale tool. It’s impressive in its scope. It has all the data on the—on all domestic production, so it’s massively comprehensive. And it tries to take into account all of the various factors that can affect a supply chain. It’s geopolitical risk, but not just geopolitical risk. It’s inputs and materials and where are they concentrated. It’s labor shortages. It’s climate issues. So there’s this part of the tool where it’s kind of a spiderweb of risk, and you can decide once again in a proactive way that the key piece of this puzzle—you know you’re in trouble when you can’t get hold of a chip. How do you get ahead of that, right? 

So you could say—like, I just—things that I’m worried about is the supply chain for AI datacenters. Everybody knows power is an issue. OK, fine. Everyone’s focused on that. But how about the racks and the components and the cooling systems for an AI datacenter, which are different from a cloud datacenter? And, like, what are the components in a liquid cooling system? So we’re doing an analysis, and you can get really granular and look at this web and say—and then evaluate the risk. Evaluate the risk, right? As you say, like, yeah, we can handle that level of risk, whatever it is, and vis-à-vis the cost that’s a risk we can handle, or not. 

And so that’s—we’re just trying to get much more sophisticated, proactive, comprehensive around our supply chains, and then of course work with industry. We have an amazing supply chain. Is Jeff Wilke here? 

POLEN: I think he is. Yeah. 

RAIMONDO: Jeff and Ursula are co-chairing this incredible advisory board to us. The thing is, it just—it has to live. This has to be a living, breathing thing. We have to be, like, a constant pitch and catch with industry. 

FROMAN: Tom, let me turn to you with that about industry. We were—in the—in the green room beforehand you were telling the story about the U.S. government calling up your company in the context of World War II, saying we’re worried about German U-boats and the effect it could have on your factories on the coast; we’d prefer for you to move inland. 

POLEN: Yes. 

FROMAN: That’s, I guess, a public-private partnership of sorts. How do you think about the role of the private sector, your experience of working with Commerce? And you became CEO of this incredibly important medical device and medical equipment company just as COVID was hitting. What lessons do you draw from COVID for supply chain resilience and what BD is doing about it? 

POLEN: That’s a great question, actually. And we are one of the largest manufacturers in Nebraska now due to that request—(laughter)—from the government, just during World War II. 

RAIMONDO: That’s pretty good. Good. 

POLEN: And I’ll be going there on Thursday. 

Actually, I met Secretary Raimondo—you may remember this or not—while you were governor of Rhode Island— 

RAIMONDO: Yeah. 

POLEN: —which we have one of our businesses headquartered in, right at the start of the COVID pandemic. And it was—it, obviously, just shows the hand(s)-on nature, which will be no surprise to anyone who knows the secretary, where the first thing during COVID, when testing was scarce, was getting swabs. There was a big run on swabs. You couldn’t get them. And I got a call from Secretary Raimondo and said— 

RAIMONDO: I do. 

POLEN: —my Department of Health needs swabs. Here’s the catalog number. Can you get these to me immediately? There’s no other governors who called me at that—at that time to get into that level of detail, to specifically get something for the people of their state. And I think that resonated with me from that moment on, just—(inaudible)—oh my God. (Laughter.) 

RAIMONDO: By the way, he delivered. I do—I remember that vividly. And you did deliver, for which I’m grateful. 

POLEN: And it was—you know, it just really showed, again, the hands-on approach and making things happen that has, obviously, characterized, you know, the Commerce Department. 

RAIMONDO: Thank you. 

POLEN: As you said, the time of COVID, I started about three months—it was not part of my thirty-, sixty-, ninety-day plan—(laughter)—but it certainly became then immediately. And so our goal was to do three things. For those not familiar with BD, we’re often known as a backbone of health care. While we often have large, $5 million robotic systems and plantable stents and grafts, we also make the products that really run health care. So think about needles, syringes, catheters, hernia meshes, Vacutainer tubes—something we invented that collects your blood—et cetera. And so when the COVID pandemic struck, we focused on three things. One was get people diagnosed, get people vaccinated, and for those who were sick help them get well. 

And that really took, you know, a whole different level of supply chain coordination that we could never have done alone. Ultimately, at the end of the day as we focused on those three things, we were one of the first two companies on the planet to develop a rapid COVID test. Something that takes us three years we did in three months. 

RAIMONDO: Amazing. 

POLEN: We ended up scaling and making an extra 2 billion syringes to deliver 2 billion doses of COVID vaccine around the world. And we ended up scaling as field hospitals were set up around the country and around the world. Things like infusion pumps, medication dispensing systems, IV sets, catheters were needed at scales that hadn’t been produced. We literally opened new factories that didn’t even exist to be able to produce and meet those needs. And none of that could have happened without the support of the government, and certainly the Commerce Department and the White House. 

And as I think back on those moments, the anecdotes, whether or not it was products when the L.A. ports were backed up and we had raw materials coming in that if we didn’t get them in there would be a shortage of being able to collect blood, they were rerouted, right, by the government. When we needed product air freighted in, ultimately, our products, because we were one of the first in the markets with rapid testing, they ended up—70 percent of nursing homes in the U.S. ended up with our diagnostic tests if you remember when there was huge mortality happening among patients in nursing homes. It was to get that under control. And those were air freighted in on Air Force jets, actually, into the country to help make sure that that was addressed. 

That really just was a big eye opening into, you know, the importance of how industry can never do these types of unbelievable things on their own, and vice versa, right? It’s a true partnership between the two entities. 

And what that taught us longer term, we’ve always had a very strong resilience program. We focus a lot on resilience. It’s part of our obligation to our customers. Of course, patients, health-care providers rely on us. Every year we go through with medical staff, our financial team, and also our operations team, and we look at everything we make from different angles, right? What’s the importance to patients? How much does that provide to the company’s profits, to keep us resilient? And what are the manufacturing implications of those? And we double down, and we invest in secondary sources, making sure there’s alternative supplies. After COVID, one of the things we did was we took AI and machine learning, and we created what we call our N-level system, which, as Secretary Raimondo alluded to, we go down to N-level suppliers—so a supplier of a supplier of a supplier—could go all the way down to your N-level of a supplier to understand what could happen.  

An example of that was actually during the COVID pandemic, when we put this AI machine learning tool in. We found that there’s—the paper industry in Finland was going to go on strike. And that was deep, deep, deep down in the supply chain. Comes to be that about 80 percent of all paper used in labels that go on medical devices and drugs come from Finland. You never would have guessed that. And so suddenly there is this flag of we’re going to have a massive shortage of labels that can be sterilized of a special type that can go on medical devices. And we were able to work, find alternative suppliers, and keep our devices going. And I know pharma went through the same process because those types of systems were in place. This is just a good example of the system that, for example, Grant and the team have developed here, and how that can have a benefit, you know, across many, many industries.  

FROMAN: Let me ask one more question of Tom, then we’re going to open up to the audience. So please be ready for your questions.  

The medical area that you work in, this seems to be an area where the U.S. still is quite dominant globally. How concerned are you about Chinese competition in this area? What do you see coming from China in terms of investing in this sector? And how does that—how does that get incorporated into your strategy going forward?  

POLEN: China for us is—so we serve all—our focus is on advancing the world of health. And so China is an important market for us that we manufacture in China, for China, particularly our core medical devices, for the same reason that we manufacture in the U.S., for the U.S., right? Health care security is national security for countries around the world. And so we often have a local manufacturing strategy for those critical devices, because it’s important to nations around the world. Those critical devices that we sell in Europe we mostly make in Europe, because they view that from a security perspective. We do the same thing here.  

Again, we spent a lot of time looking to make sure that we’re not reliant upon one location for supply of those critical devices as well. And, you know, we have a very specific process that we go through, the one I described earlier, where we look at where is there risk of single sourcing and making sure that we’re investing to diversify to multiple suppliers so that we don’t get into those issues.  

FROMAN: Great. OK. I think we have time for a couple of questions. Yes, this gentleman here.  

Q: Thank you very—thank you very much. Damon Porter, life member the Council. 

When we talk about supply chains, often the question of what’s being imported—raw materials, active ingredients, finished goods. But I’d like to know a little bit more about exporting. And so we’ve seen a lot of discussion around tariffs as a tool for domestic supply chain resiliency. We’ve also been hearing a lot about export controls. And how do we strike the right balance in terms of not stifling innovation and the ability for the United States to export what we do best around the world, as well as inviting retaliation particularly from China?  

RAIMONDO: Yeah. 

FROMAN: I swear I didn’t put him up to that. (Laughter.) 

RAIMONDO: I don’t believe you. I think both tariffs and export controls should be used in a way that is as narrow as possible to protect our national security. And anyone who works for me, knows I strongly believe we should not use export controls, particularly, as way to give the U.S. economic advantage. That’s not what they’re used for. That’s not right. That’s not fair. But it’s hard. You know, I mean, these are tough decisions, because increasingly, more than ever, technology is our weapons of war. You talked about AI, especially true.  

And so, you know, the dual use area of technology is really complicated. So we’re constantly checking ourselves, literally constantly checking ourselves. What are we doing here? Are we trying to give ourselves some kind of commercial advantage? Are we trying to—we don’t—I want to be very clear. We do not want to hold back China’s economy, or any other country’s economy. That is not in our interest. So constantly ask ourselves, are we doing—are we holding back their economy? Or is it really, truly narrowly tailored to protect our national security? And there are difficult judgment calls, but that’s the principle,  

And I think similar with tariffs. You know, we want to trade with China. We want to trade more with China. But the truth of it is, you know, they don’t always play by the rules. And so medical devices, for instance, you know, if China were to develop their medical device industry through subsidies to a level that they could control the price, or distort the price, that hurts BD. That’s bad for America. So, you know, that’s why I get paid the big bucks, to make these decisions, as they say, or not. (Laughter.) It’s hard, but that is the principle that we do. And that’s why I’ve been so focused on talking with industry.  

But, I’ll tell you, listening to you talk, sometimes—you know, people say it often. Mostly my family tells me that I’m a nerd. And it’s a fact. However, with supply chains it’s lifesaving. It’s not that I—that we just enjoy getting into the weeds of getting down to the N-supplier. It’s that it really saves lives. And your company is a perfect example of that. So I constantly am motivating the team to try to say, it isn’t about the data. It’s not about the tool. It’s not about how cool the Scale tool is. It’s about if we do this right we really will save lives, in America and all over the world. And so if—you know, like, if you try to focus on the person at the end of all this data, I think that is motivating. 

FROMAN: Another question. Yes. You might introduce yourself. 

Q: Shannon O’Neil from the Council—Shannon O’Neil, from the Council on Foreign Relations.  

And I know it’s not all about the data, but let me ask you about the data. Because talking with various companies, you don’t actually—it’s some of them don’t actually know down their supply chain where things come from. And I’m sure the paper example was one that probably you didn’t know right off the top of your head when that came about. So as you bring out Scale, what are the data sources you already have? What are the data sources you need? Where do you need to go get them? And sort of, how are, you know, private companies, or academics, or others—how are you kind of bringing in these different scales? Because I can imagine you need so many different sources from around the world to really make this robust.  

RAIMONDO: Yeah. I should—let me say a couple things, and then I don’t know if you want to answer that, Grant. Tom is—BD, under his leadership, is, in my experience, quite a bit further ahead of many, many companies that we deal with. Which is a credit to you. I’m constantly surprised in dealing with companies how they’re really not in touch with the vulnerabilities in their supply chain. Which is not a criticism of any particular company, it’s just a reality. Like, if it’s not broke—you know, if it’s not broken, don’t fix it. I mean, COVID was such an eye opener.  

The supply chain with which I have become exceedingly familiar is the semiconductor supply chain. And it’s unbelievable to me—unbelievable to me how we are, as a world, in many cases dependent on, like, a single company in Japan for a chemical that goes into, you know, every substrate of every chip. Or, a single company in the Netherlands, and not just ASML, that provide—or Germany, that provides a component in a light source 

that goes into, you know, 90-plus percent of all equipment. It’s remarkable.  

So, you know, the thing about the Commerce Department, one of the reasons—Commerce is ideally suited to build this tool, number one, because we interface with industry. But, number two, we have tons of data. So the Bureau of Economic Analysis, we collect all the data for the Census, all the data under the GDP, all the data, et cetera. So we have all of those data sets. And then what other—what else have you combined? 

FROMAN: Yeah, microphone here. 

Q: Yeah, I’m three minutes away from describing all that, so. (Laughter.) 

RAIMONDO: Oh, OK. So maybe wait. 

FROMAN: Stay tuned for our second session.  

RAIMONDO: But I can tell you, we check everything with industry. That’s the thing we’ve become quite focused on. Like, does this make sense to you? Does this fit with what you’re seeing?  

FROMAN: Our last question. There was somebody in the back there. There you go, gentlemen on the aisle. There we go, coming behind you.  

Q: There we go. OK. Jonathan Gold with the National Retail Federation. 

Secretary Raimondo, thank you very much for your comments this morning. Obviously, supply chain is kind of the lifeblood for many industries. And we continue to face many different challenges, both import and export. However, we have an event coming up potentially on the horizon next couple of weeks, with the potential shutdown of all the East Coast and Gulf Coast ports because of the ongoing labor negotiations between the ILA and USMX. Has the administration been looking at the potential impact this could have, obviously, looking at all the other industries we’ve had—all the other examples we’ve had, from COVID, from the, you know, Baltimore bridge going down, this could be pretty significant.  

I know my members are extremely concerned. They’ve taken action to ensure continuity for their supply chains. But what is the administration doing to ensure that we don’t see a massive labor disruption in the next couple of weeks, because of negotiations? Obviously, we’d love to see the parties stay at the table and negotiate. It’s the best way to get a deal. But how do we ensure that that’s going to happen, and we don’t see a coast-wide strike on October 1st? 

RAIMONDO: Yeah. I will say, I am not familiar with the details of that. So I would—I can get information. I’m sure DOT, Department of Labor, and the White House—I do feel confident that my colleagues are all over that, because, unfortunately, we have some experience with it. So we’ll have to get back to you. I would say your question gets back to what I was saying before about the web of risk. Labor is a big deal. Labor shortage, strikes, the ports. We’ve had a lot of challenges in the administration with the ports. President Biden cares deeply about labor, as you know. And so we’ve—he has tried, with his leadership, to avert strikes. We recently averted an American Airlines strike. You know, you made your example of labor, there’s going to be a strike.  

POLEN: We’re very pleased, actually, that the railroad strike was averted. 

RAIMONDO: Right. 

POLEN: That was one, though, that, because we had known about it, we actually have our own railroad spurs off of—BD spurs, off of the main railroads. Because we produce so many billions of units, we need our own—we bring in resins on cars. And so when we heard of that strike, we parked six cars full of resins just in case—on our spurs—just so that we didn’t shut down our factory, so the patients weren’t impacted by the strike. But again, that’s just an example of how you have to connect contingency planning from manufacturing, particularly for things where people die if they don’t get medical devices. Integrating the importance of this work that you’re doing with labor being a component that needs to be considered in that. 

RAIMONDO: Yeah, absolutely. By the way, to your point, as I’m listening to you I’m thinking that’s amazing. And I hope every company’s listening. It’s also expensive. Your original question, it costs some amount of money to build that in. But, you know, insurance costs money. Other forms of risk mitigation and redundancy cost money. And so when running businesses, I think the big lesson is to take into account the real cost of the risk of supply chain vulnerability, not sugarcoat that risk. Price it in adequately, and then, you know, make your decisions like you do with the rest of your business.  

FROMAN: Terrific. Please join me in thanking Secretary Raimondo and Tom Polen for—(applause)— 

RAIMONDO: And Mike Froman, fabulous. 

(END) 

GOODMAN: All right, can I have a moment of empathy for our next speaker, Grant Harris? (Laughter.) Because first of all, he has to follow that. Secondly, his name’s already been mentioned multiple times, and so the expectation level is really high, Grant. So Grant Harris is the assistant secretary of commerce for industry and analysis, a position he’s been in since April 2022. He leads a team of about 275 industry experts and economists, providing critical sectoral and analytic expertise on policy and industry competitiveness. And he’s going to introduce this tool that you’ve already heard a little bit about, but he’s going to give you a little more detail. So with no further ado, Grant. (Applause.) 

HARRIS: Empathy, I love it. Thank you, Matt, for the introduction. Thank you to Ambassador Froman and the entire Council on Foreign Relations team. When we were figuring out where we could have this global conversation, there seemed to be no place more fitting than here at CFR for such an important global topic. So listening to Secretary Raimondo speak on this panel a few minutes ago, it brought me back to an early conversation that I had with her. It was a Saturday. It was April of 2022. I was on vacation with my family, and I was hoping to hit the ground running as a newly confirmed assistant secretary for industry and analysis.  

It was also 6:00 a.m. And the phone rang. I was checking to see who might be calling me, and it turns out it’s Secretary Raimondo. This is no surprise to anyone who knows Secretary Raimondo. So I tiptoed out of my hotel room. I tried not to wake sleeping kids. I went into the hallway. She was calling to congratulate me on my confirmation. But it was a quick hello, and then down to business. And she essentially said, listen, I’m so thrilled to have you on the team. We’ve got you leading a critical business unit at Commerce. And I have big hopes for what you and the team can achieve.  

You know that security for supply chains is a vital national interest. You know that it is a key focus of the president’s. And now you need to be Mr. Supply Chains. Wasn’t sure what that meant at the time, but she continued to point out that the administration was working tirelessly to address supply chain issues caused by the pandemic and doing a great job reacting to the crisis. But what we needed to do was to think beyond the immediate issue. How do we get ahead on the supply chains that matter most to American competitiveness and economic and national security?  

Her charge and its urgency made a lot of sense. So that’s exactly what we got to work doing, to try to address how the U.S. government can be more proactive and strategic in developing supply chain resiliency. It was a big task, but the secretary knew—and I quickly could see—that the Industry and Analysis Business Unit was uniquely positioned to help take on such a challenge. The team already housed the broadest set of industry experts available in any one place in the U.S. government. We already covered over 90 percent of the U.S. economy, everything from raw materials like critical minerals to vital components like semiconductors to finished goods like autos and airplanes. It gave us a unique understanding of upstream and downstream supply chains.  

And this small but mighty team had been leaning in for decades to advance industry competitiveness. And their sectoral insights and analytics capabilities were exactly what we needed to mobilize and draw on. So this Industry and Analysis Unit, just by way of example, was the first team in the U.S. government to be sounding the alarm on the competitiveness in the semiconductor supply chain and to spring into action. They not only mapped out choke points, but they moved on to work on early warning systems. They helped drive tens of billions of dollars of investment. This was part of the activity that helped ultimately lead to the creation of the CHIPS and Science Act, which is having a profound effect on the industry and creating thousands of jobs.  

Secretary Raimondo wanted us to tackle a monumental problem, to disrupt the normal course of action. So we decided to treat ourselves like a startup and not confine ourselves to the old way of operating. And as any good startup does, we started by asking ourselves the underlying and foundational questions around where the gaps exist in current efforts, where we have a comparative advantage, and where can we get access to the data and the resources that we would need to be successful? And after a lot of reflection, and research, and consultation with stakeholders, we came to believe that proactive and strategic approach requires these elements.  

We thought about it in the form of a pyramid. You need to first leverage data and industry expertise to identify systemic economic geopolitical risk. You’ve got to have deep dive analyses on critical products and on industries of strategic importance. As you move up, you have a greater ability to anticipate and prevent, where possible, or otherwise quickly analyze and respond to disruptions to minimize their impact. And you need strong international partnerships to develop global solutions. You need the ability to play offense on supply chain risks and opportunities in emerging technologies to commercialize technologies to the benefit of U.S. jobs. And actionable and evidence-based policy recommendations that drive smart policies.  

Finally, you need to support investments in R&D to affect change in the market. This recognizes that, at the end of the day, it is primarily the private sector that manages supply chains, and private sector decision making is therefore crucial to driving resiliency. Underlying all these efforts, first and foremost, we saw the criticality of enhancing the government’s ability to systematically assess supply chain risks across the entire U.S. economy. Filling that gap would strengthen all other elements. And we needed something that would allow us to see the vulnerabilities and weigh where our greatest risks lie, and then drive towards solutions.  

So we pulled together a dedicated team to fuse these qualitative and quantitative insights to develop the tools and playbooks that would be needed to help us get ahead. And that team became our supply chain center. It’s charged with creating data analytics tools, driving efforts to go deep on industries, where we see vulnerability, working with trade partners, stakeholders, and U.S. government colleagues to strengthen supply chain resiliency. This approach has paid dividends and today I wanted to particularly draw attention to one of our early successes, a new, first-of-its-kind data analytics tool coming out of these efforts.  

It’s called Scale, as Secretary Raimondo already mentioned, and we’re thrilled to be launching it here at the summit. This tool utilizes a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy. It’s a data driven, objective way for the U.S. government to assess systemic risk in supply chains, especially economic and national security risk. It tells us what to be most concerned about and points out specific vulnerabilities so that we can seek to address them.  

We do that by measuring criticality, how important the industry is to the U.S. government, vulnerability, how exposed this industry might be to disruption, and resiliency, how difficult is it for that industry to recover from a disruption. We do this using over forty indicators across three—those three buckets capturing geopolitical, logistical, technological, and other types of risks. As well as indicators of resiliency like how substitutable a product is or how long we project an industry might take to recover from different types of disruptions.  

So together these indicators, using thresholds and weights set by our industry and economic experts, allow us to look across the economy at a heat map of risk, with the riskiest industries showing up as red, the least risky appearing in green. Rest assured, I’m not crowing about a bubble chart. We’re talking about a small fraction here on display of the analytical horsepower of the tool. It’s like the equivalent of you taking your favorite data analytics textbook down from the shelf and just staring at the cover page for a few minutes. So there’s a lot of depth.  

We can also examine the economy top to bottom. It ranks industries from most to least risky, helps us identify which industries we should be most focused on in government. And once we identify an industry of interest, we can dig into the findings. So for each of those forty-plus indicators, we can take a closer look. There are only two represented here, but we can look then at what’s driving that risk. So we can pull up a picture of risk for any given industry and immediately which indicators are flashing red, and then for many indicators which specific products within that industry are flashing red, so that we can get insights about why. 

We can also compare risk across products and different industries. In short, Scale is a revolutionary tool because it allows us to do two things that the U.S. government has never previously been able to do. First, it weighs supply chain risk across the entire U.S. goods economy, identifying both economy-wide risks as well as which specific industries and products are most risky relative to one another. And second, it provides an in-depth diagnostic assessment of what’s driving risk in any particular industry by providing a comprehensive analytical framework that considers dozens of factors simultaneously. Think of it as your annual physical, combined with your X-rays, your blood work, and your MRI. It’s helping identify problems before symptoms appear while helping diagnose any issues that are found.  

If we had had this tool five years ago, Scale would have flagged PPE is facing systemic risk and needing more attention. Previously, the U.S. government had no such tool. So, to be clear, this is a focus on structural and systemic risk. It’s not a real-time tactical movement tracker or a real-time tracker of disruptions. It will not tell us where disruptions are taking place or their real-time impacts. It’s also different from commercial tools that are focused on helping companies ensure their products get from point A to point B. And given the national security-related and other factors that it contains, we’re not going to be public sharing—publicly sharing a risk rating dashboard or showcasing all of the internal mechanics. But in the coming weeks and months, we will be sharing the findings. 

And building the tool was admittedly daunting and difficult. Wrestling with how to define and quantify concepts like vulnerability and resiliency, and confronting gaps in availability and comparability of data, are not simple tasks. Embracing the startup culture though that I mentioned, the team created a prototype. They met with hundreds of stakeholders to crowdsource and road test their ideas, and they iterated. It was no easy endeavor. It, for us, was a moonshot. And we know that the tool is no panacea. But we will continue to improve it with the best available data and the inputs that we can find.  

So what is the path forward for Scale? We envision at least four use cases. First, although it’s only a month old, Scale’s already generating unique and powerful insights from our efforts—and that inform our efforts on supply chain resilience. For example, recognizing the effect that artificial intelligence will have on the U.S. economy. As Secretary Raimondo mentioned, she asked us to think about and explore the potential underappreciated supply chain risks related to the rapid expansion of AI data centers. So, as she mentioned, we conducted a deep dive into the materials needed to build and operate these data centers, everything from the building materials, like cement, to printed circuit boards, to networking equipment, to emerging cooling technologies.  

And leveraging Scale alongside our in-house industry expertise and broad engagement with dozens of companies and experts in the space, we were able to identify what we saw as the greatest vulnerabilities, and where they exist, and why they are vulnerabilities. So Scale helped validate some of the risks that we had heard from industry. It also, though, gave us leads and generated insights that we wouldn’t have had otherwise. This helped us merge those qualitative and those quantitative findings and inputs. And it drove our focus on specific components of the AI data supply chain. It worked exactly as we’d hoped. And now Secretary Raimondo will be gathering relevant stakeholders in the coming months to drive action.  

This is one of several industries that our teams have been working on, including other areas like broadband, chemicals, home appliances, just to name a few, where Scale is giving us new insights. We’ll be digging in further with colleagues across the government. And we’ll discuss those and other sectoral and cross-economy insights with industry and stakeholders in the months to come.  

Second, we will also use Scale to inform the U.S. government’s priorities and agenda. For example, we will be sharing findings and policy recommendations with the White House Council on Supply Chain Resilience, Congress, and other departments and agencies. We’re already putting Scale to work to help inform the White House-led Quadrennial Supply Chain Review that will be published later this year. And we’ve already also put Scale to work in helping us identify key goods and sectors for potential cooperation under the Indo-Pacific Economic Framework for Prosperity Supply Chain Agreement. And it’s an honor to have so many of our IPEF partners with us here today.  

Third, Scale will also help us facilitate data-driven conversations with industry on pricing supply chain risk, enabling us to work with companies in entirely new ways. We know that we cannot achieve U.S. supply chain resiliency without the private sector, as Secretary Raimondo, Ambassador Froman, and Tom Polen were just discussing. Creating a more quantifiable understanding of supply chain risk, including geopolitical risk and what we would call national security risk, is key to driving real action. Finally, we believe that Scale will give us a more holistic understanding of foreign adversary risk and help us to address it. Just as strenuously as we seek to create resiliency, U.S. adversaries seek to create dependencies to the detriment of U.S. industry and national security. We cannot let that happen. And that’s why having a more accurate and nuanced understanding of foreign adversary strategy is so important.  

As I mentioned, we’re not stopping here. We’ll continue to improve the tool. We’re seeking more ideas and input from all interested parties. Today we’re announcing new strategic partnerships and we’re planning to launch a competition aimed at developing new data or analysis that can be used to further iterate and develop Scale. This summit is meant to be a springboard for action, not a readout of good work completed. It will take all of us working together to create a more economically competitive and secure nation. We believe that Commerce, particularly the Industry and Analysis team, has shown strong ROI on our efforts to date, but in order for us to continue to scale our supply chain work, we will need to leverage these partnerships and more, along with sustained investment, to build on this progress and ultimately achieve our shared mission. 

When it comes to supply chains, an ounce of prevention is worth a pound of cure. And not only that, smart supply chain policy isn’t just about playing defense of buying down risk. We have an opportunity, an opportunity to be building, innovating, and strengthening supply chains to the benefit of U.S. economic and national security, technological leadership, jobs, and the health and quality of life of Americans across the country. To do so, we need to work quickly and collectively to meet the moment.  

So thank you for all—thank you, all, for taking the time to join us for this inaugural summit. I hope our conversations today help drive action. We’ll have many more consultations and convenings coming in the weeks and months ahead. The Commerce Supply Chain Center and the Industry and Analysis team is also looking forward to reconvening next year to take stock of progress and actions from today, and to tackle the next frontier in supply chain resilience. Thank you so much for your time. (Applause.) 

GOODMAN: OK, terrific. Well, I do encourage you to look more in detail at Scale. It’s really impressive, and got a lot of colorful data in there, which I encourage you to look at. So thanks, Grant.  

(END) 

GOODMAN: We got a lot still to come, including now a panel with a group of deputies, as they’re called in the U.S. government. This panel’s on “How Far We’ve Come: U.S. Government’s Efforts to Build More Resilient Supply Chains.” 

And we’ve got a great group of people to speak to that: Don Graves, who’s the deputy secretary of commerce; Dave Turk, who is the deputy secretary of energy; Daleep Singh, who’s the deputy national security advisor for international economics and deputy assistant to the president at the National Security Council; and Anne Neuberger, who is deputy national security advisor for cyber and emerging tech and deputy assistant the president at the National Security Council as well.  

And this panel will be presided over, and I think we’ve just with perfect timing, by Rana Foroohar, who, as you know, is a columnist at the Financial Times, and covering business issues. Wrote a piece yesterday, or at least in the hard copy—which I still get, by the way, because I do the crossword puzzle—it was in yesterday’s hard copy edition of the Financial Times on this topic. So I would commend that to you. And so with that, I’ll introduce Rana and let her take it from here. Thanks. 

FOROOHAR: OK. Everybody hear me, OK? Great. Well, thank you so much for being here. I’m Rana Foroohar. I am an associate editor and columnist at the Financial Times, analyst for CNN, author and supply chain geek. (Laughter.) So I’m very happy to be here—(laughs)—in a crowd. And, as the secretary says, I cannot believe how many notable, interesting people are here to talk about this topic, how far we’ve come in the U.S. effort to build resilient supply chains. And we have an awesome panel, who you’ve just heard introduced so I’m not going to stay on ceremony there.  

I want to jump right in and talk a little bit about lessons learned over the last few years. You know, we’ve come through COVID, but we’ve also come through war in Ukraine, U.S.-China tensions, any number of logistical issues that affect supply chains. I could go on and on. And one of the lessons that I feel like I learned as a journalist covering this, and it sort of touches on an issue from the first panel, which is the idea of demand signals and inflation, and how you can create scale and actually change the dynamic. And one of the things I was fascinated by during COVID is how, all right, we all know the story—shortage of PPE, no masks. And yet, after a few months you got U.S. industry involved from different parts. The textile industry, people that were making T-shirts were suddenly making masks. There was a demand signal that actually drove down prices.  

And I was fascinated by that. You know, because it was a challenge, but it was also a tremendous opportunity. So that’s my one anecdote that I’ll share. And I want to maybe go and just go down the line here, and Secretary Graves we can start with you. What was your lesson learned? Post-game this for us, and tell us what it says about the effort to create more resiliency? 

GRAVES: Rana, thank you for the question. Great to be here. I think it’s important for us to take one step back, to remember where we were, as you said, before we got into this cavalcade of disasters. We were in a place where the world had shifted to more global reliance, where we were really focused on just-in-time delivery. There was perhaps an overreliance on supply chains from other parts of the world. We go through COVID. We go through an economy that is reeling as a result. Through the war in Ukraine, et cetera, et cetera. And I think we’re realizing that, yes, we can move relatively quickly on certain types of things, such as PPE, but the demand signal doesn’t actually allow us to move quite as quickly on things that are more complex, on critical emerging technologies, for instance. 

You think about things like household appliances, you think about, actually, medical devices, and that was a huge issue. And it took a long time for us to build that supply chain back up, to make sure that companies all across this country were able to produce those medical devices that were critical for so many Americans. So that’s part of what, you know, you heard the assistant secretary talk about this Scale Tool. That’s where government has to do a better job of looking ahead. We started that early in this administration by providing more information for companies like the big auto companies on semiconductors. We have to do that in a more robust way, working across our partners in government to share information and allow folks to look a little bit around the curve so they can see those critical areas of sensitivity and vulnerability.  

FOROOHAR: OK. Deputy Secretary Neuberger, I’m going to ask you to jump in. You cover tech. You know you’re deep in the weeds of cyber. Lessons learned for you.  

NEUBERGER: So maybe building on Don’s point. First we saw the same strategic point, that the model needed to change. Making decisions just on the economic competitiveness side, what was the cheapest product, versus considering the national security angle as well. So a great example was really Kaspersky software. And that was also the first action that was taken under a prior administration executive order to show the bipartisan nature of this kind of supply chain work. And the amount of time—as we looked at Kaspersky software, Russia has for a decade been the primary and most aggressive—most aggressive national user of offensive cyber operations around the world.  

The antivirus software, Kaspersky software, was often packaged with tech. People didn’t even realize what they were buying. As we got a better understanding of the risk of software deployed on networks that has access to devices, how that could enable a country like Russia where the intelligence service have ties to companies to access networks, we started to take steps. It started first with government, then work to critical infrastructure. And the core lesson learned is that the same principles that apply to industrial companies applies to tech, and that timing matters. It’s far harder to be reactive once a supply chain has moved out of the United States, once software is broadly deployed across the United States, because then there are considerations of costs. Are there replacements? Who bears those costs, that we have to consider? 

So the wisdom of what Secretary Raimondo and Grant have done here, of building a proactive analysis tool to give that visibility and transparency so we can make those forward-looking decisions, really struck us because once we’re reacting—and it needs to be done in certain very significant supply chains, it’s far harder, it’s more costly. And it’s far preferable if we can do it in a proactive way.  

FOROOHAR: Interesting. I’m going to come back to the interplay between tech and sort of actual goods at some point with you. But, Daleep, let’s move on to you. Your thoughts. 

SINGH: Sure. I mean, I guess not only because I’m a massive nerd—(laughter)—I’m going to agree and say when we came into office in January of 2021, we were blind. We didn’t have the data, the analytics, the tools to risk manage. I mean, you know, everybody remembers the first line from Anna Karenina. Every disrupted supply chain that’s lost its resilience has become so for its own reasons. (Laughter.) But, you know, it’s true. And so every, every disrupted supply chain has its own diagnosis. It deserves its own geoeconomic forensics. And you’ve got to get the diagnosis right to design and calibrate the appropriate remedy.  

So, you know, lessons learned, we have—we’ve recognized the need to build muscle to understand what are the bottlenecks and the chokepoints? Where are the dependencies at home or abroad? What are the binding constraints in labor, land, capital? What’s the market structure? Who has bargaining power, the most and the least? Do we have stockpiles? Do we have surge capacity? Do we have substitutes? Could we change the equilibrium of the market by changing policy, in terms of tax or regulation, immigration, education reform, procurement, investment, subsidies?  

Now we understand the options, the policy options, at our disposal. And, you know, the kind of tools that the department has introduced, it gives us the chance to start thinking about answering these questions in real time in a global context. Because, yes, we have choices to make, but so does China. So do other adversaries. So do nonaligned countries. So do allies and partners, for that matter. And I always say it, you know, we need tools to think about multiplayer, multistage game theory that plays out over the course of decades. And the kind of tool we have—we are building here at the Commerce Department gives us a chance to do so. It gives us an opportunity to think about scenarios, to stress test and simulate how those may play out over the course of time and across countries. 

And it’s going to help us become better risk managers, to think probabilistically, to see our blind spots, to avoid failures of imagination, and ultimately make better ex ante judgments. So, you know, I think that’s what—that’s what industrial policy in an era of intensified geopolitical competition is going to look like. It’s much more empirical than people realize.  

FOROOHAR: That’s for sure. And I think we’ve heard just how detailed and granular you have to get already.  

Dave, give us the view from Energy and how it plays in. 

TURK: Yeah. So put simply, burying your head in the sand and hoping for the best is a strategy that really sucks. (Laughter.) Like, that just hasn’t worked, doesn’t work. And to hope and expect that it would work is just—is just nuts. So what does a real strategy look like? I think, first and foremost, it is exactly what Daleep has been talking about, and why this Scale Tool is so important. Like, you actually have to know what’s going on. You have to actually have some real analytics and real expertise. You also have to, in order to do that, have the kind of intense public-private partnership. Your piece in the FT most recently I think hit the nail on the head.  

FOROOHAR: Thank you for the plug.  

TURK: Yeah, happy to do it. (Laughter.) 

FOROOHAR: Didn’t ask him. 

TURK: But, like, the point you made in there, which I think is itself obvious to a certain extent, but I think it bears really thinking through with some rigor, is the private sector has a lot of data, has a lot of analysis. The government has an incredibly important role, especially if you take a look back, take a step back, and look at the system, and look how different sectors play with other sectors. And so you need to bring both of those to bear if you’re going to actually have the analytical tools, if you’re going to have the foundation upon which any rational strategy depends on.  

The other big lesson learned is you also need to have tools in the tool belt, if you’re the federal government, if you’re going to actually do things here. Especially the kind of taking really tough issues head on. So one that we focus a lot on in the energy sector, it’s not just the energy sector but more broadly, critical minerals—especially the processing of critical minerals. When you do the analysis, which we did early on in this administration, it’s incredibly striking just how much vulnerability we have in our critical minerals. Especially the processing piece of it, and China in particular.  

So what do you do about that? Well, you pass legislation like what President Biden and Vice President Harris were able to pass. And now we have so many more tools in our tool belt—grant money, loan money, tax incentives—to the point where we had to create a whole new office at the Department of Energy called our Supply Chain Office, which is actually utilizing six billion (dollars) of grant money to do this, eight billion (dollars) to do that, tax incentives, $295 billion in the pipeline of our loan program. And we’re actually seeing real progress.  

So we’ve seen, with the investments so far that we’ve made—and there’s a lot more in the pipeline—we’ve seen an eighty-five-fold increase in our lithium processing in our country that is coming online. Now, not all of that’s built yet. When you make an investment, it takes a few years to bring that on. But by 2030, we’ll have eighty-five times the amount of processing of lithium in our country. And that’s just in our country, let alone our international strategy going forward. On the graphite front, it’s twenty-five times. Twenty-five times increase. Those are numbers that may be striking to a lot of you, but that’s actually what’s happening when you have a strategy based on analytics and you actually have tools in the tool belt that are fit for purpose for what we need to do.  

FOROOHAR: That’s really encouraging. I actually want to draw you out and also bring in Secretary Gaves on this idea of how intra-agency cooperation is part of this process. So you have a Supply Chain Office. Commerce has its tool, and its office, and all the things that it’s done. How would you all—like, maybe you can take a specific challenge or problem—and, Secretary Graves, maybe we’ll start with you. Talk about how you would at this point now, several years on, work in different ways with agencies than you would have in the past. It would have been quite siloed in the past, right?  

GRAVES: Absolutely. Frankly, I think back to my time in the Obama administration, or even before that in the Clinton administration. We just didn’t have these tools. Certainly folks had conversations, but that was more one-off conversations more than sort of a regular cadence of sharing and planning. The way that we’re thinking about—it builds off of what my colleagues have said—we have to do that initial analysis to fully appreciate the—not just where we have potential vulnerabilities, where there’s opportunities, but to also look at the global framework as well. We have to understand where foreign investment is going, where there’s shares of, or controls of our critical supply chains that we need to know about.  

So we work together to share information across agencies on that piece. That then allows us to think more critically about ways that we do exactly what Dave was just talking about, investing in a more directed fashion in these critical technologies. Whether it’s critical and emerging technologies. Whether it’s AI, quantum, biotech, directed energy, quantum semiconductors. Whatever the case may be, we have to be able to understand how Department of Energy and Department of Commerce investments, as well as other departments across the federal government, can interplay and also allow the private sector to make better decisions.  

I carry a card with me all the time that has some of the things that the president and vice president have said about the foundations of a prosperous world economic order. Something the president has always said is transparency, clarity, and predictability. That’s what we’re trying to provide for the private sector. We are going to make certain investments that we see the lack of private sector investments where we can spur—where there’s not enough private sector resources, or where there’s—where there are challenges for the private sector to invest, that we can crowd in more private sector investment.  

And critical minerals is one of these areas where we’re doing this work. It’s never been done before across the federal government. But we have to invest together to make sure that we have access to lithium, to gallium, to germanium, to all these types of minerals that power the emerging technologies that will allow our private sector to out-compete our adversaries.  

FOROOHAR: Dave, do you want to add anything, just in terms of how the two agencies work together?  

TURK: Yeah. Happy to do it. Maybe two points additionally to what Don said. One is, don’t hire assholes. (Laughter.) So I remember being part of the transition team for the Biden-Harris administration when it was coming on board. And the leadership of that team said, we’re going to only hire team players and, like, we’re going to make that a priority. And I was like, sure, that’s probably what every transition team says. (Laughter.) Then they hire a bunch of assholes. (Laughter.) And I’m, like, there you go. But, like, I actually think the team did a phenomenal job, and credit the president and the vice president, who live and breathe this. And, like, we’ve got team players across the board at the secretary level—Don, and Daleep, and Anne, other deputies that we’ve got. Like, we’ve been a really good collegial group that actually works well with each other. 

GRAVES: We actually hang out together.  

TURK: We actually hang out.  

FOROOHAR: Wow. OK. All right. I like it. A supply chain drinks club. 

TURK: In the—(laughter)— 

NEUBERGER: There are other reasons for that. (Laughter.) 

TURK: So the personnel piece, I don’t think, can be overstated just how important it is. Just to hire—you know, Grant’s a perfect example as well over at the Commerce Department, just going about what he does.  

And then a big part of that too is having a sense of humility. Like, we’ve got energy nerds like you wouldn’t believe at the Department of Energy in our seventeen national labs. But trying to carry a sense of humility that just because you know energy doesn’t mean you know the other parts of the equation, right? Whether it’s on the Commerce, private sector side, or any number of expertise the Treasury Department brings to the table, or Transportation would be, with our transportation nerds. And so having a little bit of humility and trying to make sure that you’re bringing your piece to the table, but you know that there’s other pieces that are incredibly important.  

FOROOHAR: Yeah, Daleep, jump in, please. Yeah. 

SINGH: Can I jump in on this? Because I also think it’s important to have a coherent strategy that brings together all the various departments and agencies. So if you think about what is our—what is our industrial policy strategy? I mean, it’s—everybody understands it’s centered around making investments in our own productive capacity, and the size and skills of our labor force, R&D, technology, infrastructure. That’s where it starts. And, you know, there’s certain departments and agencies that focus on that objective.  

There’s a second—there’s a second leg of the strategy, which is we’re going to form diplomatic agreements with countries playing by the same rules and give each other access to our productive capacity and purchasing power. So, you know, the State Department, Treasury, others are more frontally engaged in that objective. And then there’s a third leg, which is—and it’s regrettable, but it’s necessary—we’re going to use restrictive tools against trading partners that are not playing by the same rules to remedy the harm that it causes and to prevent our investments from being undercut, and to sustain the financial viability of the overall strategy.  

So, you know, USTR, Commerce, Treasury, lots of different agencies have a role to play there too. It all comes together. There are various tools and various authorities, but if you have a coherent strategy you recognize that what we’re ultimately trying to do is to change the terms of the competition. And the terms of the competition that we’re willing to engage in involve attracting ideas, and talent, and investment from across the world. We want to compete on our capacity to innovate, on our ability to have broad and deep alliances. And we think if we’re competing on those terms we very much like our chances. We like the chances of all of our allies. We’re all bought into that idea.  

FOROOHAR: Mmm hmm. Let me—you actually teed up the question that I wanted to talk to you about, and then, Anne, I’m going to come to you after. We talked—you and I spoke recently about the icebreaker deal that the U.S. did. And that’s kind of a great example of this where, OK, we have two icebreakers, we’re going to need a lot more as the poles are melting. There’s commerce channels, rare earths. The U.S. has cut a deal with Finland and Canada, two partners, as you say, shared values. How could this new database and all this empirical information that’s being built help to shape what partnerships, of the many, that you might target, and how you might prioritize them? How are you thinking about that right now? 

SINGH: Well, I mean, look, when we identify chokepoints and bottlenecks or vulnerabilities, you know, there’s a—there’s a decision we have to make. We could—there are lots of different ways to create resilience. You can—you can create productive capacity at home. Maybe we have the right factor inputs to do so. Maybe we have comparative advantage. Maybe we don’t. If we don’t, perhaps we have allies and partners that do, and are perfectly willing to surge capacity to us when it’s needed. And, you know, maybe we can create a coalition of countries that don’t have productive capacity that they could share with us, or stockpiles that we could take advantage of, but they play by the same rules that we do and want to create a different kind of competition. So they’re willing to use restrictive measures and create a club of sorts in which technology, and trade, and capital can flow freely.  

Well, now you’re changing the incentives. And, I mean, I really meant what I was saying about Anna Karenina. Every supply chain has a different story. There’s a different—you know, Secretary Blinken uses the phrase “variable geometry.” It’s much more microeconomic than macroeconomic. And it really is much more empirical than ideological. I mean, every supply chain you have to decide, if we make an intervention—whether it’s an affirmative inducement, a diplomatic agreement, or using a restrictive measure—we’ve got to think about, well, how is the private sector going to respond to that intervention? If it’s an investment, what’s the multiplier? How are the elasticities of supply and demand going to change? Are we going to have enough factor inputs to lift binding constraints? And that’s the kind of, like, roll up your sleeves work that we’re doing.  

And I think there’s a cultural point. It goes to something that Dave said. Humility is tremendously important. We have to have enough humility and agility to recalibrate our priors in terms of exactly—is there a market failure here? Can we identify it? Is there a targeted government intervention that’s going to leave us better off in equilibrium, factoring what everybody else is going to do? That takes a lot of humility. And as the data and analytics evolve, so should our thinking. 

FOROOHAR: Interesting. Anne, I want to come to you and talk about the challenges and opportunities of tech as it relates to supply chains. I’ve been really interested in things like, for example, the concerns about crane—the Chinese-made port cranes. You know, the potential of certain kinds of equipment, particularly with the rise of the Internet of Things, to be compromised from an espionage point of view. There’s also opportunities, obviously, with AI, with sensor technology, to get really super precise about where things are at any given time. Talk a little bit about how you see the potential and the challenge there with tech and supply chains.  

NEUBERGER: Absolutely. So, first, tech and industrial supply chains have just come together. Many companies’ competitiveness is driven by automated manufacturing in that way, in terms of bringing in the precision, the reduction of errors that having tech in your supply chain enables. During COVID, one of our biggest worries was a cyberattack against a vaccine manufacturing company that could bring their supply lines to a halt. That drove the focus on ports, because as we think of national-level cyberthreats, one of the key concerns we have is China’s pre-positioning in U.S. critical infrastructure—water, ports, power—in order to disrupt a potential military deployment during crisis or conflict, in order to put pressure on the U.S. economy, or just to foment questions of why are we getting involved in a crisis half a world away?  

So as we looked at the deployment of tech across critical infrastructure from that angle, really ports came high up on the list, both from an economic perspective—so many of the goods we export and we import come to our ports—and our military deploys through our ports. There’s no longer military infrastructure and civilian infrastructure. We have one set of airports, one set of ports, one set of power plants that power every military base around the country. And as a result, as we looked at ports, manufacturing of cranes—which are massive gantry cranes that move goods in and out—left the United States in the 1980s, for all the reasons manufacturing left the United States.  

The president’s bipartisan infrastructure law gave a rare opportunity in terms of funding investing in infrastructure around the country, both physical and digital infrastructure. And what we saw was that local governments were routinely applying for Made in America waivers because there was no American manufactured cranes. Now, obviously, first choice would be manufacturing in the United States. But second choice, to the point Daleep made, was likeminded partners, international governments. Because the reality is that what we want is trusted supply chains for technologies and industrial areas where we have a specific reliance, where they’re strategic. And doing that with likeminded partners is the best way to show that alliance and partnership.  

So we looked around the world and saw that there are Japanese and Finnish crane manufacturers who were really interested in bringing back manufacturing to the United States, really with the inducement of the infrastructure investments that the president and Congress approved. So both using those funds to attract manufacturing back, the role of the private sector as Dave talked about, specifically private equity firms who were willing to invest in partnering with, for example, Paceco, a Japanese firm, to find the right manufacturing in the United States, where that was located, to help finance that. And then, of course, government coming in as a partner to say we—when we looked at Made in America waivers, Made in America or made in a key ally would work in that way.  

So that’s an example of really the three principles that we’ve been talking about here. First, the way industry and tech supply chains have come together. They’re key to economic competitiveness in American manufacturing. They’re key to both automation that is making so much of industry attractive around the world. You saw in the European Union’s competitiveness report that was released this morning the point about how digital is really leading. That’s what’s driving American leadership. The role of public-private partnership, not only in financing but also in finding key strategic supply chains around the world and treating those as alliances in ensuring that we get trusted supply chains in the most important strategic areas.  

FOROOHAR: Interesting. I want to ask both you and Daleep, actually, if—because you’re talking a lot about not just Made in America but made with friends, made with allies. Are you beginning to see as you do these, you know, individual experiments by industry, by sector, by supply chain, are you seeing any interesting new guidelines for what a new global trade paradigm should look like, for example? I know that’s a big question. I’m going to ask you to swim outside your lane a little bit. (Laughs.) But—and at CFR even. But what do you think?  

NEUBERGER: I’ll start on that one, because I realized there was a part of your question I didn’t answer, which is Internet of Things. And we’ve started to take steps in that area. So the Internet of Things are all the connected devices our lives rely on, right? Whether it’s a baby monitor that a mom uses to monitor a child upstairs, whether it’s fitness monitors, frankly, whether it’s the small routers that homes, schools, and offices all use. There are billions of such devices. They’re connected to the internet. They’re connected into our homes and lives. And while standards exist for their security, these are cheap devices and they’re generally not used.  

And we realized that there was this holy triangle that was it was important to connect. The consumer, whether it’s the mom who wants to buy a home safety system that she can trust. Whether it’s the company that says, you know what? We know we have a responsibility to build those devices more securely, to maintain and patch them. Or, frankly, whether it’s the U.S. government. It’s in our interest to not have millions of devices—like smart meters—not be secure. And that triangle, we realized we had a model, which was Energy Star. The Department of Energy really led on this work with the EPA a number of years ago to say that there’s a government standard. In that case, it was for energy efficiency. Any products that meet that standard are tested to meet it, can bear the mark. And, as consumers, we don’t necessarily need to know what makes it energy efficient, but we all know the Energy Star symbol.  

So the Biden administration launched a program like that for cyber called Cyber Trust Mark. It was launched at the White House a year ago. And what it essentially says is any Internet of Thing device that meets the NIST, part of the Department of Commerce, standard for cybersecurity and is tested, the FCC administers the program’s certified labs, will bear the Cyber Trust Mark label. And we’ve talked with companies from Best Buy to Amazon, whether you’re shopping in person or online, and they’ll put products that have been tested higher on the list because they know that consumers will start looking for this Cyber Trust Mark label. Much as we know, the Energy Star label for energy efficiency, they’ll look for the Cyber Trust Mark label for cybersecurity.  

Coming to your global question, the reality is that these are global products. And frankly, they’re cheaper products. So in an ideal world, we want that a product that’s tested against the same standard—whether it’s tested in Paris, Georgia or Paris, France—can be sold in both of those large markets. So we signed an agreement with the European Union, a mutual recognition of labeled devices, to where we’ll use a common cybersecurity standard. And whether a product is tested, as long as it’s tested against that common standard, it’ll be our label in both the European Union and the United States. And we’re working on similar agreements specifically with Japan and Korea, because they’re largescale manufacturers of consumer devices, like smart TVs.  

FOROOHAR: Well, that’s interesting, because you’re raising some really important points. Standards matter. The Chinese have known that for several years now. Demand signals matter. You need more in order to lower prices and in order to get people into the—into a system that is sustainable. Daleep, any final thoughts before we go to questions? 

SINGH: Yeah. So I think, you know, a galactic trade—you said global trade regime. (Laughter.) I think that’s a good term. 

FOROOHAR: Galactic? Wow. Well, I mean, we can go there if you want. (Laughs.)  

SINGH: I think what—let me—I think what is happening, short of a galactic trade regime, is we’re starting to have convergence in terms of diagnosis. What are the problems that we’re trying to solve? And we all—these problems were laid bare during the pandemic. They were building during the decades of hyper-globalization. We all are worried about supply chain resilience. We’re all worried about the loss of technological preeminence. We’re worried about hollowing out our industrial base. We’re worried about high and rising inequality. We’re worried about the compounding damage from climate change. We’re worried that more and more people feel like they’re being left behind, and it does seem to more and more countries that the previous model of political economy rested on faulty assumptions—that markets had all the answers, and that it was the end of history in terms of geopolitical competition. 

Now in terms of remedies and whether that leads to a global kind of arrangement, my view is that’s going to be bottom up. So the icebreaker deal is a great example of we all recognize the Arctic is melting four times faster than anywhere else. That’s creating new shipping lanes. There’s commercial opportunity in those shipping lanes. You don’t have to go through the Panama Canal or the Suez. There’s also an ability to project power. Russia and China are doing so. And, you know, you need polar icebreakers to actually have a surface presence. We don’t actually build any icebreakers. We haven’t done so since the 1970s. 

Well, who does? Finland, a newly minted NATO ally, and Canada. So can we share—can we learn from them? Can we borrow their expertise? Can they invest in U.S. shipyards in exchange for creating more interoperability in our supply chains? That creates a commercial opportunity for Finland and Canada. And can we—can we together create a suppliers’ club for all the allies and partners that want to build icebreakers? There’s seventy to ninety in the pipeline. Then we get economies of scale, and now we’re financially viable. That’s what I mean by a bottom up—a bottom-up exercise. It makes sense on the economics. It makes sense in terms of geopolitics. And it—you know, it’s the kind of example that I think we’re going to replicate.  

FOROOHAR: Interesting. We’ve got about five minutes left before we go to coffee break. So let’s take a couple of questions. This is on the record. We’ll get a mic over here. A few rows up, there. There’s a very tall hand with a pen. (Laughter.) 

Q: Hi. My name is Rodrigo Aguilar, a CFR member and international analyst.  

What will be the challenges for Mexico to become a more reliable country for you guys? (Laughter.) 

FOROOHAR: Who wants to take that one? (Laughter.) Secretary Graves, do you want to— 

GRAVES: I was going to let the White House take that one. (Laughter.) 

SINGH: You get first dibs, Don. I’ll follow you.  

GRAVES: Look, we—Mexico is our largest trading partner, critically important partner and ally of the United States. I think it’s—again, I go back to those three words that I said—predictability, transparency, clarity. When we have—when we have that from any nation with whom we partner, it makes it easier for us to invest. It makes it easier for us to not do the types of things that that Daleep was talking about, and impose any types of restrictions on trade. So my expectation is that as President Scheinbaum—President-Elect Sheinbaum takes office, that the conversations that we’ll want to have are: How can we ensure that our companies can partner with Mexican companies to get that predictability, that transparency, and clarity that they need? That the rules of the road will allow us to engage in an expansion of that trade?  

As Anne mentioned, we need to invest with our partners and allies where we can’t do it ourselves all of the time. Sometimes that’s because of just the supply chain inefficiencies across global markets. Sometimes it’s because other countries have more access to critical minerals, et cetera. So that’s the type of engagement that we’re going to want to have as the president-elect takes office so that we can make sure that we’re expanding our trade in a way that is certainly—is helpful to our partners, but we’re also the U.S. government. And we have to look out for the American people, for American consumers, for American businesses as well. So we will certainly try and get that balance right.  

FOROOHAR: OK. We have time for one more quick question. Let’s take it up front here.  

Q: Hi. I’m Trent Reasons with EY-Parthenon.  

I’ll do a Caddyshack quote. (Laughter.) Don’t sell yourself short supply chain. You’re tremendously opaque. (Laughter.) And with that opaqueness and lack of visibility, what you all have been discussing and the tool that I’m excited that Grant’s team is releasing is going to bring some clarity, some light. But it’s a moving target. And I think the undercurrent here is around the fact that while we’re trying to identify with some look back about where vulnerabilities exist, that’s going to change through time. That requires constancy and sustainable focus. Our recent critical minerals research highlights the efforts that China made forty, fifty years ago in cobalt, lithium, et cetera. These were long bets. How are we going to address in our republic, with our different voices and changing revolving policy priorities—how can we have a constancy to stay focused on this issue, when both the vulnerability and the—you know, the areas of resiliency are shifting? It’s not like when we were doing Dodd-Frank and it’s, like, banks need more capital.  

FOROOHAR: So, basically, how do we institutionalize and keep—and keep what we have going? Anne, do you want to take a shot at that?  

NEUBERGER: Yeah. So one of the things that’s been really remarkable in looking at it has been the consistency across the prior administration and the current administration on these issues. The recognition, as Don talked about, that the model of supply chains go where the market takes them doesn’t serve our economy well, doesn’t serve our national security well. It certainly doesn’t serve us well during a crisis. And that we need to have the visibility to make proactive decisions. Those are then the longer-term most impactful decisions. And to approach it with allies and partners.  

You know, the reality is—there was a question earlier today about a labor strike in the United States. And I think the CEO of Becton Dickinson talked about a labor strike in Finland. We were tracking in the last few weeks a labor strike in Canada, because 80 percent of chlorine in this country comes from Canada and it was right before Labor Day weekend. Those are the kinds of issues that are really broadly bipartisan. They serve us as a country. They serve us as a society that wants to be secure, that wants to be able to project global power on the stage. So sessions like these—with a thank you, again, to CFR for hosting us—where we talk about these issues are really ways to get the broad buy-in for strategies that are built to last.  

FOROOHAR: Yeah. I think that sounds right. I have to say, I think the news and the story, you know, both at a company and a country level, is just going to continue to push interest in this topic.  

I want to thank all of you for a wonderful panel. We are now going to have a coffee break. And if folks want to be back in the room at 11:40, that would be great. Thank you. (Applause.) 

(END) 

This is an uncorrected transcript.