Phillips surveys the impact of global supply chain issues on small businesses
WASHINGTON, D.C. –Today, Subcommittee on Oversight, Investigations, and Regulations Chairman Dean Phillips (D-MN) held a hearing examining the impact of global supply chain issues on American small businesses. The hearing occurred in the wake of product shortages and shipping delays around the world that have affected the day-to-day operations of small firms.
“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,” said Chairman Phillips. “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.”
During the COVID-19 pandemic, nearly 80% of businesses experienced a disruption in their supply chain. Initially, multiple global lockdowns due to COVID-19 slowed or temporarily stopped the flow of raw materials and finished goods. While lockdowns have dissipated, the economy continues to face labor market disruptions, production bottlenecks, and shipping and transportation barriers have helped create shortages that can hurt consumers and small businesses.
During the hearing, small business owners testified on the issues causing disruptions and the challenges their businesses face confronting supply chain shortcomings. Members also examined the steps Congress can take to strengthen supply chain resiliency in the future and ease current disruptions.
“What makes 2021 unique are the orders of magnitude and speed with which the system has gone from one extreme to another. Many parts of the supply chain were literally shutdown (some still are) and not producing any freight,” said Chris O’Brien, Chief Commercial Officer at C.H. Robinson in Eden Prairie, MN. “The world’s supply chains and transportation structure has never seen, and wasn’t built to handle the near shut down of the early months of covid, followed by the very rapid restart as many industries came back online.”
“Another supply chain challenge currently impacting our business is the cost of transportation for goods and supplies. In August 2020, the cost to ship a standard 40-foot shipping container was approximately $4,300,” said Christine Lantinen, President and Owner of Maud Borup Inc. in Plymouth, MN. “By August 2021, that figure had exploded to nearly $30,000. Like our shortage of workers, this situation is also unsustainable from a business management standpoint. We need to see action to alleviate the bottlenecks, mostly caused by labor shortages.”
The subcommittee also examined federal programs that help small businesses engage in international trade, like the Small Business Administration’s State Trade Expansion Program (STEP). STEP provides valuable assistance to help entrepreneurs market and sell their products overseas, which in turn has the potential to stimulate economic growth and create jobs in the United States.
“I want to conclude by expressing my strong support for the STEP program. It’s been vital for our ability to grow as a small business,” said Kevin Loe, Director of Customer Engagement at Redi-Rock International in Petoskey, MI. “We strongly support the reauthorization of the program and continued funding of the STEP program. We would also advocate to increase the funding to $50 million per year.”
“The stop and start nature of the pandemic has upended established global supply chains and exposed weaknesses. And the disruptions are weighing heavily on small businesses,” said Chairman Phillips. “With that said, our supply chain is complex, and there is no magic solution to these issues. Fixing our supply chain will take strong leadership and a commitment from businesses – large and small – and workers to address the problem.”