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1、NOVEMBER2021TheManufacturer9sDilemmaReshoringandResiliencyinaPandemicWorldAUTHORSWilliamReinschEmilyBensonJasmineLimAnthonyHokayemSarahMortensenAReportoftheCSISSchollChairinInternationalBusinessCENTERFORSTRATEGICftINTERNATIONALSTUDIESNOVEMBER2021TheManufacturerDilemmaReshoringandResiliencyinaPandemi
2、cWorldAUTHORSWilliamReinschEmilyBensonJasmineLimAnthonyHokayemSarahMortensenCSISAReportoftheCSISSchollChairinInternationalBusinessCENTERFORSTRATEGICaINTERNATIONALSTUDIESAboutCSISTheCenterforStrategicandInternationalStudies(CSIS)isabipartisan,nonprofitpolicyresearchorganizationdedicatedtoadvancingpra
3、cticalideastoaddresstheworld,sgreatestchallenges.ThomasJ.PritzkerwasnamedchairmanoftheCSlSBoardofTrusteesin2015,succeedingformerU.S.senatorSamNunn(D-GA),Foundedin1962,CSISisledbyJohnJ.Hamre,whohasservedaspresidentandchiefexecutiveofficersince2000.CSIS,spurposeistodefinethefutureofnationalsecurity.We
4、areguidedbyadistinctsetofvaluesnonpartisanship,independentthought,innovativethinking,cross-disciplinaryscholarship,integrityandprofessionalism,andtalentdevelopment.CSISsvaluesworkinconcerttowardthegoalofmakingreal-worldimpact.CSISscholarsbringtheirpolicyexpertise,judgment,androbustnetworkstotheirres
5、earch,analysis,andrecommendations.Weorganizeconferences,publish,lecture,andmakemediaappearancesthataimtoincreasetheknowledge,awareness,andsalienceofpolicyissueswithrelevantstakeholdersandtheinterestedpublic.CSIShasimpactwhenourresearchhelpstoinformthedecisionmakingofkeypolicymakersandthethinkingofke
6、yinfluencers.Weworktowardavisionofasaferandmoreprosperousworld.CSISdoesnottakespecificpolicypositions;accordingly,allviewsexpressedhereinshouldbeunderstoodtobesolelythoseoftheauthor(s).2021bytheCenterforStrategicandInternationalStudies,llrightsreserved.AcknowledgmentsTheauthorswouldliketothankSeanAi
7、Tieta-KennaandWillO,Neil,formerresearchinternswiththeSchollChair,fortheirresearchsupportandcontributions.ThisreportwasfundedbygeneroussupportfromtheAlcoaFoundation.CenterforStrategic&InternationalStudies1616RhodeIslandAvenue,NWWashington,D.C.20036202-887-02001www.csis.orgContentsIntroduction11Resili
8、ency,Reshoring,andNearshoring32IndustryPrimers:TransformersandHVACs6VJhatAreTransformers?6WhatAreHVACs?83IndustrySupplyChains10Transformers10HVACs114Covid-19SupplyChainChallenges13LaborShortages13ReducedAccesstoConsumers14RisingPricesandShortagesofSteel,Copper,andOtherRawMaterials15TransportationCom
9、plicationsandBottlenecks16ChangingDemand165GovernmentApproachesandPolicies18CleanEnergyInitiatives:ExecutiveBranch18LegislativeBranch19NationalSecurityandTradeBarriers20Conclusion23AbouttheAuthors26IntroductionromtheRustBelttotheWhiteHouse,policymakers,manufacturers,andconsumersaredebatingthemeritso
10、freshoring,nearshoring,andbuildingmoreresilientsupplychains.)ThepreviousadministrationmaintainedasharpfocusonstrengtheningmanufacturingintheUnitedStatesthroughtraderemedies,tariffprotection,andreshoringmeasures.PresidentJoeBidenhaslargelyfollowedsuit,maintainingmanyofthepreviousadministrationstradep
11、olicieswhileoutlininghisownadministrationscommitmentto“BuyAmeriCarrandbuildmoreresilientsupplychains.2IntheyearsbetweenWorldWarIandWorldWarII,theriseofnationalistideologiesandcrushingeconomicconditionsusheredinaneraoftradeprotectionism.Intheinterwaryears,tradeliberalizationthathadacceleratedthrough1
12、913essentiallyhalted,dismantlingpreviouslyestablishedtradingnetworks.However,theseprotectionistdynamicsshiftedwiththesigningoftheReciprocalTradeActof1934.whichinstitutionalizedtariffreductionreforms.?Then,the1944BrettonWoodsAgreementattheendofWorldWarIIlaidthegroundworkforthepostwareconomicworldthro
13、ughtheestablishmentoftheWorldBank,theInternationalMonetaryFund,andeventuallytheGeneralAgreementonTariffsandTradeanditssuccessororganization,theWorldTradeOrganization,whichwasintendedtosen,eastheglobalpromoteroftradeliberalization.Duringthistime,theworldtradingsystemwitnessedareductionintariffsandapu
14、shtowardregionalandmultilateraltradeagreements.Withnewlyrealizedaccesstoforeignmarkets,multinationalfirms-especiallythoseinthemanufacturingsector-initiatedatrendofoffshoring,whichallowedfirmstopursuelowercostsabroadandachievehigherproductivitygains.Astradeliberalizationexpanded,companiesbegantoreexa
15、minetheirproductionprocessesanddisaggregatetheminordertotakeadvantageoflowerrelativepricesandhighproductivityabroadinabidtoreducetheoverallcostsofgoodsproduction.Significantdeclinesintransportationandcommunicationcostswereinstrumentalinthisdevelopment.Theyenabledcompaniestodevelopsupplychainsthattak
16、eadvantageoflowcostsaroundtheworldtoproducepartsandcomponentsindifferentlocationsandthenassembletheminathirdlocation.Internationalcompanies,particularlywithinthemanufacturingsector,benefittedfromdecreasedproductioncostsandcheaperlabor,butnotwithoutacosttoU.S.workers.Followinga30-yeartrendofoffshoring,somefirmshavebegunrenationalizingtheirproductionchains,par