Commerce.gov is getting a facelift soon. See the new design.

Remarks at Advisory Committee on Supply Chain Competitiveness

Printer-friendly version

AS PREPARED FOR DELIVERY
Friday, October 19, 2012
CONTACT OFFICE OF PUBLIC AFFAIRS
202-482-4883

Acting Secretary of Commerce Rebecca Blank
Remarks at Advisory Committee on Supply Chain Competitiveness

Good morning and welcome to the Commerce Department.  Thank you all for serving on this critically important Advisory Committee.  I pledge to you that all of us here at the Department of Commerce will pay close attention to the issues and concerns that you raise and the advice that you give.

America’s robust, innovative, and well-run supply chains provide our businesses and workers with a competitive advantage in the global economy.

As you all know, supply-chain competitiveness involves a broad set of issues – from the inclusion of small and medium-sized businesses in supply chains, to the location of innovation, and much more.  I look forward to the future input that this Committee will have in those areas. But – due to the need for near-term input and action – most of today’s discussion will emphasize the issues surrounding freight movement and infrastructure to support the supply chain.

The U.S. has the largest and most extensive freight infrastructure in the world.  Each year, it serves over 7.5 million businesses and carries about 13 billion tons of materials and goods. The costs for this freight movement add up to about $1.3 trillion – or 8.5% of our GDP.

Importantly, that’s a lower percentage than many other nations. But we can’t rest on our laurels because it’s clear that moving American products securely and efficiently is important – both within the U.S. and in-and-out of the U.S. for exports around the world. Our ability to move goods is crucial to our ability to create jobs and accelerate the growth of our economy. 

In recent years, we have begun to see just how strong the connection is between investments in freight-transportation infrastructure and job creation.
Transportation costs account for a significant percentage of the final cost of a product.  Pushing that percentage down is important to help our businesses compete and grow.

With regard to the supply chain in particular, a recent study suggests that investments that reduce direct transportation costs by 10% can – simultaneously – help companies in the supply chain reduce their operating costs by as much as 1%.

Earlier this year, the Commerce Department released a report on American competitiveness, which identified infrastructure investments as one of the most important areas for government policy to ensure long-term U.S. competitiveness.

As that report notes, with construction crews still looking for work and with interest rates at record lows, there has never been a better time to make these investments.

So today, we have both an opportunity and – I believe – an obligation to ask the question: What is the best way to make infrastructure investments that bolster businesses throughout our supply chains?

Government can’t answer this question alone.  We need your help:

  • We need those who represent our carriers and shippers to help determine how to approach and evaluate the costs and benefits of infrastructure investments.
  • We need large businesses to tell us what kinds of investments would make the biggest difference in strengthening their supply-chain connections here at home… while expanding their exports globally.
  • We need smaller businesses – especially suppliers themselves – to weigh in.  Increasingly, we know that these small firms are seeking out new customers and strategic partners who might not be located nearby.
  • And we need the academic community to delve further into this issue – to more clearly understand the impact and the importance of these investments to our supply chains. 

Today, we have all of these players in this room.

Already, over the past year, you’ve provided us with crucial input.

  • You’ve said that the quality of our infrastructure determines the cost of everything bought, sold, moved, or made in the United States…
  • You’ve said that the status of our infrastructure is affecting where both domestic and foreign companies choose to invest, build, and hire… (and I should note that increasing investment in the U.S. is a top priority here at the Commerce Department).
  • And you’ve been unanimous in saying that these investments will help build on the strength we’ve already seen in our economy – three years of economic growth and over 5 million new private-sector jobs created.

Today, we need to hear even more about your experiences and your expertise – including which aspects of our freight infrastructure work well… and where we can do better.

In turn, the federal government needs to take the right steps to help improve our infrastructure up-and-down the supply chain… and to help our businesses do what they do best – create jobs.

And while your advice and input on supply-chain issues will technically come just to me as Acting Secretary of Commerce, I can assure you that I will make sure that it is shared throughout the Administration. 

So, as you begin today’s discussion, there are two specific goals that I want to mention.

First, we want to provide this Committee with the background on what the federal government is already doing in this space.  So, please ask questions to our experts during the sessions and the coffee breaks. 

Second, we have areas that already require our immediate attention and where we most need your advice.  I’ll mention two.

First, as you all know, President Obama signed the MAP-21 bill into law on July 6.  Flowing out of that, we have the opportunity to create a national freight policy that will lead to infrastructure investments that improve freight efficiency and make our supply chains more competitive.

  • I will leave it to Acting Undersecretary Trottenberg to say more about this since the Department of Transportation is the lead agency on this effort.
  • Suffice it to say that MAP-21 has a couple of near-term statutory deadlines related to measuring the performance of our supply chain… and developing a strategic plan to improve freight movement.  We need your help to make sure that we not only meet these deadlines, but that we get the job done right.

A second area that requires our attention – of particular interest to all of us here at the Commerce Department – is how to integrate supply-chain infrastructure and supply-chain competitiveness into our efforts to bolster U.S. exports.

As you may know, we hit $2.1 trillion in U.S. exports last year, and we are on track for another record-breaking year. Exports have been a key driver of our GDP growth and the number of export-supported jobs grew by 1.2 million from 2009 to 2011. 

That said, we are facing challenges such as the Eurozone crisis as well as slowdowns in China and India. So, we must use every tool in our toolbox to support U.S. exporters – not only through activities like counseling and financing for small businesses, but also by ensuring a level playing field for American businesses to compete by bringing complaints when foreign companies don’t follow WTO rules.

So the question becomes this: Where are the most powerful linkages between bolstering supply chain competitiveness and increasing U.S. exports?  And how can the U.S. government play a more active and strategic role in that space? I can think of no better group to help us answer that question than the people in this room.

Looking forward, I’m sure that we will explore additional topics in your future meetings – and I encourage you to actively solicit input from your peers in your respective stakeholder groups.  I’m sure that all of you have ideas ranging from…

  • how to remove barriers that inhibit movement of goods…
  • how to increase capacity and cross-modal connectivity…
  • how to accelerate the promising trends and best practices you’re seeing in supply chains… and more.

For our part, the Administration’s commitment is that we are bringing a “whole-of-government” approach to supporting your work. The Transportation Department brings its understanding of major transportation investments and regulatory issues, EPA brings its understanding of environmental issues and – as the home for this Committee – the Commerce Department brings a number of key agencies to the table (beyond just our International Trade Administration).

For example, the National Oceanic and Atmospheric Administration – NOAA – works closely with our nation’s ports which are responsible for nearly 60% of the value of U.S. exports. 

Our Economic Development Administration provides hundreds of millions of dollars each year in infrastructure grants that are crucial to retaining and attracting manufacturers and suppliers.

Our labs at National Institute of Standards and Technology and NIST’s Manufacturing Extension Partnership are working with small businesses more than ever.  For example, they’re helping bring SMEs up to the state-of-the-market in IT – so those small firms can link more seamlessly to larger firms in the supply chain.

My hope is that – this afternoon, as you begin to discuss key priorities going forward – this Committee will explore in which of these areas you can make the most useful contributions.

All of us stand ready to work with you.  And I am confident that together, we will find the right policies and actions that will further expand the potential of America’s already-powerful supply chains.

It’s a pleasure to be working with such a high-caliber group, and thank you in advance for the insights that you will provide.

·       Good morning and welcome to the Commerce Department.  Thank you all for serving on this critically important Advisory Committee.  I pledge to you that all of us here at the Department of Commerce will pay close attention to the issues and concerns that you raise and the advice that you give.

 

·       America’s robust, innovative, and well-run supply chains provide our businesses and workers with a competitive advantage in the global economy.

 

·       As you all know, supply-chain competitiveness involves a broad set of issues – from the inclusion of small and medium-sized businesses in supply chains… to the location of innovation… and much more.  I look forward to the future input that this Committee will have in those areas…

 

·       … But – due to the need for near-term input and action – most of today’s discussion will emphasize the issues surrounding freight movement and infrastructure to support the supply chain.

 

·       The U.S. has the largest and most extensive freight infrastructure in the world.  Each year, it serves over 7.5 million businesses and carries about 13 billion tons of materials and goods.

 

·       The costs for this freight movement add up to about $1.3 trillion – or 8.5% of our GDP.

 

·       Importantly, that’s a lower percentage than many other nations.  But we can’t rest on our laurels because it’s clear that moving American products securely and efficiently is important – both within the U.S. and in-and-out of the U.S. for exports around the world.  Our ability to move goods is crucial to our ability to create jobs and accelerate the growth of our economy. 

 

·       In recent years, we have begun to see just how strong the connection is between investments in freight-transportation infrastructure and job creation.

o   Transportation costs account for a significant percentage of the final cost of a product.  Pushing that percentage down is important to help our businesses compete and grow.

o   With regard to the supply chain in particular, a recent study[1] suggests that investments that reduce direct transportation costs by 10% can – simultaneously – help companies in the supply chain reduce their operating costs by as much as 1%. 

o   Earlier this year, the Commerce Department released a report on American competitiveness, which identified infrastructure investments as one of the most important areas for government policy to ensure long-term U.S. competitiveness.

§  As that report notes, with construction crews still looking for work and with interest rates at record lows, there has never been a better time to make these investments.

 

·       So today, we have both an opportunity and – I believe – an obligation to ask the question: What is the best way to make infrastructure investments that bolster businesses throughout our supply chains?

 

·       Government can’t answer this question alone.  We need your help:

o   We need those who represent our carriers and shippers to help determine how to approach and evaluate the costs and benefits of infrastructure investments.

o   We need large businesses to tell us what kinds of investments would make the biggest difference in strengthening their supply-chain connections here at home… while expanding their exports globally.

o   We need smaller businesses – especially suppliers themselves – to weigh in.  Increasingly, we know that these small firms are seeking out new customers and strategic partners who might not be located nearby.

o   And we need the academic community to delve further into this issue – to more clearly understand the impact and the importance of these investments to our supply chains. 

 

·       Today, we have all of these players in this room.

 

·       Already, over the past year, you’ve provided us with crucial input.

o   You’ve said that the quality of our infrastructure determines the cost of everything bought, sold, moved, or made in the United States…

o   You’ve said that the status of our infrastructure is affecting where both domestic and foreign companies choose to invest, build, and hire… (and I should note that increasing investment in the U.S. is a top priority here at the Commerce Department).

o   And you’ve been unanimous in saying that these investments will help build on the strength we’ve already seen in our economy – three years of economic growth and over 5 million new private-sector jobs created.

 

·       Today, we need to hear even more about your experiences and your expertise – including which aspects of our freight infrastructure work well… and where we can do better. 

o   In turn, the federal government needs to take the right steps to help improve our infrastructure up-and-down the supply chain… and to help our businesses do what they do best – create jobs.

 

·       And while your advice and input on supply-chain issues will technically come just to me as Acting Secretary of Commerce, I can assure you that I will make sure that it is shared throughout the Administration. 

 

·       So, as you begin today’s discussion, there are two specific goals that I want to mention.

 

 

·       First, we want to provide this Committee with the background on what the federal government is already doing in this space.  So, please ask questions to our experts during the sessions and the coffee breaks. 

 

·       Second, we have areas that already require our immediate attention and where we most need your advice.  I’ll mention two.

 

·       First, as you all know, President Obama signed the MAP-21 bill into law on July 6.  Flowing out of that, we have the opportunity to create a national freight policy that will lead to infrastructure investments that improve freight efficiency and make our supply chains more competitive.

o   I will leave it to Acting Undersecretary Trottenberg to say more about this since the Department of Transportation is the lead agency on this effort.

o   Suffice it to say that MAP-21 has a couple of near-term statutory deadlines related to measuring the performance of our supply chain… and developing a strategic plan to improve freight movement.  We need your help to make sure that we not only meet these deadlines, but that we get the job done right.

·       A second area that requires our attention – of particular interest to all of us here at the Commerce Department – is how to integrate supply-chain infrastructure and supply-chain competitiveness into our efforts to bolster U.S. exports.

o   As you may know, we hit $2.1 trillion in U.S. exports last year, and we are on track for another record-breaking year…  Exports have been a key driver of our GDP growth… 
And the number of export-supported jobs grew by 1.2 million from 2009 to 2011. 

o   That said, we are facing challenges such as the Eurozone crisis as well as slowdowns in China and India.

o   So, we must use every tool in our toolbox to support U.S. exporters – not only through activities like counseling and financing for small businesses … but also by ensuring a level playing field for American businesses to compete by  bringing complaints when foreign companies don’t follow WTO rules.

 

·       So the question becomes this: Where are the most powerful linkages between bolstering supply chain competitiveness and increasing U.S. exports?  And how can the U.S. government play a more active and strategic role in that space? 

o   I can think of no better group to help us answer that question than the people in this room.

 

·       Looking forward, I’m sure that we will explore additional topics in your future meetings – and I encourage you to actively solicit input from your peers in your respective stakeholder groups.  I’m sure that all of you have ideas ranging from…

o   how to remove barriers that inhibit movement of goods…

o   how to increase capacity and cross-modal connectivity…

o   how to accelerate the promising trends and best practices you’re seeing in supply chains… and more.

 

·       For our part, the Administration’s commitment is that we are bringing a “whole-of-government” approach to supporting your work.

o   The Transportation Department brings its understanding of major transportation investments and regulatory issues…

o   EPA brings its understanding of environmental issues…

 

·       And – as the home for this Committee – the Commerce Department brings a number of key agencies to the table (beyond just our International Trade Administration).

o   For example, the National Oceanic and Atmospheric Administration – NOAA – works closely with our nation’s ports which are responsible for nearly 60% of the value of U.S. exports. 

o   Our Economic Development Administration provides hundreds of millions of dollars each year in infrastructure grants that are crucial to retaining and attracting manufacturers and suppliers.

o   Our labs at National Institute of Standards and Technology and NIST’s Manufacturing Extension Partnership are working with small businesses more than ever.  For example, they’re helping bring SMEs up to the state-of-the-market in IT – so those small firms can link more seamlessly to larger firms in the supply chain.

 

·       My hope is that – this afternoon, as you begin to discuss key priorities going forward – this Committee will explore in which of these areas you can make the most useful contributions.

 

·       All of us stand ready to work with you.  And I am confident that together, we will find the right policies and actions that will further expand the potential of America’s already-powerful supply chains.

·       It’s a pleasure to be working with such a high-caliber group, and thank you in advance for the insights that you will provide. 

 

·       With that, I will turn the floor over to Transportation Department’s Acting Undersecretary Polly Trottenberg.



[1] David Jacoby and Daniel Hodge, Infrastructure Investment: The Supply Chain Connection, CSCMP Supply Chain Quarterly, April 2008.