Statement of the Hon. Dean Phillips on Global Supply Chains and Small Business Trade Challenges
Washington, October 20, 2021
I wish to start by thanking our distinguished witnesses for joining us today for this vital hearing on the state of the global supply chain and its impact on small businesses.
The ongoing COVID-19 pandemic is a once-in-a-generation crisis that has created massive economic challenges for businesses and consumers alike. An extraordinary increase in demand for goods has exacerbated the many weaknesses in our supply chain which predated this pandemic, and has inflicted chaos on supply chains worldwide, delaying the delivery of critical goods and products.
The complexities of the global supply chain are often unseen and unappreciated, especially in an age where consumers have come to reliably expect rapid delivery of these goods. That a port closure in Shanghai can impact a hardware store in Chaska, Minnesota is not a reality that lends itself easily to a soundbite on cable news, or to political posturing in Washington, D.C.
We are here today because we have a duty to investigate the challenges facing our small businesses and – using what we’ve learned – come together to address them. As I mentioned, the COVID-19 pandemic has exposed cracks that have long been present at nearly every connection point in our global supply chain, and this is adding considerable economic stress to small businesses already suffering from the economic fallout of the pandemic.
COVID helped create the perfect storm for the disruptions we’ve seen over the past 19 months, adding to dwindling natural resources, climate change, workforce development problems, trade wars, and a lack of investment in our infrastructure in undermining the entire foundation of the supply chain.
What’s more, as our economic recovery has picked up, these problems have worsened. Private businesses whose operations slowed during the height of the pandemic have struggled to keep pace with the steep rise in demand as the economy roars back to life, putting even more stress on the supply chain. All these factors have combined to create difficult circumstances. Disruptions have led to supply shortages, backlogs in major ports, and severe delays in delivering goods.
These disruptions aren’t only harmful to consumers; they can also be disastrous for small businesses. Small companies have limited inventories and can’t afford to wait weeks or months for the products or supplies they need. At the same time, they often depend on lower prices from overseas goods, making the skyrocketing costs of imported materials prohibitive.
These higher costs might be manageable for bigger businesses that can absorb higher shipping costs and negotiate favorable terms with shipping companies, but small firms engaged in international trade have no choice but to accept the prevailing market rate.
Throughout the last year, surveys have shown that over half of small business owners feel supply chain disruptions are hurting their business. I have heard from many of them directly – and in fact, Ranking Member Van Duyne and I met with several personally, including one of our witnesses here today, when she visited my district in September.
So, we must take a closer look at how weakened supply chains are hurting small firms and what Congress can do to strengthen them. By making our supply chains more resilient, we can help ensure the uninterrupted flow of vital goods and better prepare ourselves for future disasters.
As part of that, I believe the federal government must work closely with the private sector to find new solutions to alleviate pressure on our supply chains.
We must also look to existing measures that we can utilize to help small businesses with issues surrounding the supply chain and foreign trade, which is one reason I look forward to hearing more about SBA’s State Trade Expansion Program that aids entrepreneurs as they market and sell their products overseas.I am on a mission to get to the bottom to this issue, and I commit today to work with chairwoman Velasquez, Ranking Member Van Duyne, and the White House to make certain this Administration is doing everything in their power to help our small businesses weather this storm.