Jan 8, 2021

Onshoring and the Biden Administration

Onshoring New Admin

President-Elect Biden campaigned on a platform that included a focus on continued onshoring of the production of “critical products.” The Biden Administration onshoring plan seeks to reduce supply chain risks and national security threats by incentives to rebuild the United States’ manufacturing capacity.  The Biden plan includes both general and medical specific strategies:

General

  1. Use the full power of the Federal Government to rebuild domestic manufacturing capacity in U.S. critical supply chains
  2. Use federal purchasing power to bolster domestic manufacturing capacity for designated critical products.
  3. Implement a comprehensive approach to ensure that the U.S. has the critical supplies it needs
    1. Increase federal stockpiles
    2. Require companies to develop plans to address potential supply chain disruptions for critical products
    3. Promote surge manufacturing capacity
      1. Compensating companies where necessary for maintaining excess production capacity and inventory for designated critical products;
      2. Encouraging companies to create databases of product designs for supplies that might be needed during a national crisis;
      3. Using legal authorities during crises to ensure product designs and patents can be licensed and utilized quickly if needed to ramp up production in the U.S.; and
      4. Pursuing public-private partnerships to improve manufacturing capacity.
    4. Invest in a new Critical Supply Chains Workforce
    5. Create new incentives to spur domestic production of critical products in the United States
  4. Work with allies to protect their supply chains and to open new markets to U.S. exports
  5. Take action against our competitors when they refuse to honor trade agreements
  6. Deploy trade policy tools and regulations to create new markets for U.S.-made critical products

Medical

  1. Use the Defense Production Act (DPA) to put Americans to work manufacturing critical products, including those immediately needed to respond to the COVID-19 pandemic.
  2. Build long-term supply chain resilience for pharmaceuticals
    1. Use the Biomedical Advanced Research and Development Authority to spur medical production
    2. Leverage federal health care purchases:
    3. Ensure the U.S. tax code encourages on-shoring of pharmaceutical supply chains: (See THE BIDEN PLAN TO REBUILD U.S. SUPPLY CHAINS AND ENSURE THE U.S. DOES NOT FACE FUTURE SHORTAGES OF CRITICAL EQUIPMENT).

The Biden plan signals increased federal involvement in managing supply of critical products, including both production and stockpiling of these products.  The Biden plan also promises greater emphasis on job training to provide a skilled workforce for new manufacturing facilities, along with increased use of technology to enhance the government’s ability to respond to supply chain crisis.  Lastly, the Biden plan promises more public-private partnerships and other incentives to spur additional investment that increases domestic production capacity.

In the wake of the COVID-19 supply chain concerns, the federal, state and local governments are increasingly focused on onshoring as a way to reduce risks to the nation and its economy.  Supply chain risks are a growing concern of regulators and activists as environmental, social and governance (“ESG”) scrutiny of companies increases.  International tensions are an ever present risk to the stability and price advantage of using foreign supplied goods and components.

If you would like additional information about efforts to promote domestic production or about how to identify and mitigate supply chain risks, please contact Peter Crofton or Greg Smith.


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