March 8, 2022

White House Outlines Strategy to Revitalize and Fortify U.S. Manufacturing, Supply Chains

Holland & Knight Alert
Taite R. McDonald | Kevin L. Turner | Hannah M. Coulter | Reese Goldsmith | Kelsey M. Hayes

Highlights

  • The White House has announced key government-wide initiatives for the coming year that are focused on long-term domestic supply chain resilience.
  • The Biden Administration released a capstone report on key actions it has taken over the past year to reduce U.S. supply chain vulnerability across a range of key sectors.
  • As a complement to the capstone report, seven cabinet agencies published reports identifying weaknesses and strategies to strengthen supply chains for these sectors.

The White House has announced key government-wide initiatives for the coming year that are focused on long-term domestic supply chain resilience. On the one-year anniversary of President Joe Biden's Executive Order (EO) 14017 on America's Supply Chains, the Biden Administration released a capstone report on key actions the administration has taken over the past year to reduce the vulnerability of U.S. supply chains across a range of key sectors. In complement to the capstone report, seven cabinet agencies published reports identifying weaknesses and strategies to strengthen supply chains for key industrial sectors:

The reports follow a preliminary set of 100-day reviews released in June 2021, which focused on four critical product supply chains: 1) semiconductors and advanced packaging, 2) critical minerals and materials, 3) large-capacity batteries for vehicles and grid storage, and 4) active pharmaceutical ingredients.

These reviews identified common vulnerabilities and weaknesses across U.S. supply chains: insufficient U.S. manufacturing capacity; misaligned incentives and short-termism in private markets; industrial policies adopted by allied, partner and competitor nations; geographic concentration in global sourcing; and limited international coordination.

The new reports focus on addressing the nation's dependence for critical products and materials on foreign economic competitors, recommending that the U.S. diversify supply chains to improve resilience to global crises. Several common themes emerge among the reports, such as stressing that significant investment in training and educating U.S. workers is essential to any supply chain actions. The reports call on the U.S. to invest in infrastructure and expand domestic manufacturing capacity, while also highlighting the need to work with foreign partners to establish global standards to prevent supply chain vulnerabilities.

Biden Administration Actions to Shore Up Supply Chains

To build on the conclusions outlined in these reports, the Biden Administration announced additional, concrete actions that it will take in the coming year to build long-term resilience across critical supply chains and formally institutionalize supply chain resilience throughout the federal government. Additionally, the White House announced that over the coming months, a number of federal departments and agencies will host regional summits with stakeholders to discuss ways to align regional economic development strategies. Among the actions:

  • Export-Import Bank (EXIM) financing for domestic projects. In the spring, the EXIM board will consider a new domestic initiative to provide financing in support of the establishment and/or expansion of U.S. manufacturing facilities and infrastructure projects that would facilitate U.S. exports. This initiative includes providing financing priority to "environmentally beneficial, small business, and transformational export area transactions, including semiconductors, biotech and biomedical products, renewable energy, and energy storage." This announcement follows EXIM's December 2021 public notice of a draft proposal for a domestic financing facility through the expansion of its medium- and long-term buyer financing programs.
  • Expand access to capital for small manufacturers. The U.S. Department of the Treasury will deploy $10 billion in American Rescue Plan (ARP) funding through the State Small Business Credit Initiative (SSBCI) to provide recipient jurisdictions funding for a range of programs that will increase access to credit for small businesses, including through lending and equity capital investments, to help businesses grow in the years ahead.
  • Advance technological leadership of small and large manufacturers.
    • The Biden Administration will host a series of roundtables with the 16 Manufacturing USA institutes focused on scaling innovative technologies, promoting sector-based regional workforce initiatives, partnering with unions and supporting small and medium-sized suppliers, to develop specific proposals for how the institutes can strengthen our supply chains.
    • The U.S. Small Business Administration will host the inaugural America's Seed Fund Startup Expo to support Small Business Innovation Research (SBIR) awardees seeking to access resources and assistance they need to help them commercialize and manufacture innovative technologies addressing critical supply chain challenges.
  • Move critical goods faster and more affordably by leveraging investments made in the Infrastructure Investment Jobs Act. DOT announced a Notice of Funding Opportunity (NOFO) for the $450 million Port Infrastructure Development Program, dedicated to investments in port infrastructure. DOT also committed to issuing NOFOs for the Infrastructure for Rebuilding America, Megaprojects (MEGA), Consolidated Rail Infrastructure and Safety Improvements (CRISI) and grade crossing grant programs, which will fund a diverse set of transportation infrastructure projects of regional and national significance.
  • Invest in sustainable domestic production and processing of critical minerals and high-capacity batteries.
  • Bolster clean energy manufacturing.
  • Reform the Buy American Act. The White House Office of Management and Budget (OMB) will issue a new Buy American rule that establishes a new category of critical products that will be eligible for enhanced price preferences.
  • Establish a Defense Production Act (DPA) Investment Program to build and expand the health resources industrial base. HHS will fully establish a DPA Title III Program to provide loans, grants and other financing to build and expand the health resources industrial base.
  • Restore U.S. global leadership on supply chains. Later this year, President Biden will host a Summit on Global Supply Chain Resilience to address near-term bottlenecks and tackle long-term challenges.

Legislative Recommendations to Congress

The reports also make numerous recommendations to Congress to increase funding through existing or pending legislation, including:

  • implementation of the Bipartisan Infrastructure Law, enacted as the Infrastructure Investment and Jobs Act (Public Law 117-58), including use of "strong Buy America provisions" for projects funded by the bill
  • passing the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS Act), which has strong bipartisan support in Congress
  • passing comprehensive competitiveness legislation, such as the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (America COMPETES Act) (R. 4521), and the Senate-passed U.S. Innovation and Competition Act (USICA) (S. 1260)
  • passing the Build Back Better Act, President Biden's domestic agenda, which remains pending in Congress

Holland & Knight Insights

As policymaking develops, entities should stay abreast of these developments, including more domestic manufacturing incentives and new Buy America policies. For more information or questions about how the new supply chain initiatives could affect your organization or industry, please contact the authors.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


Related Insights