By John Mitchell/IPC *
Before a ventilator, respirator, or vital-sign monitor reaches a Covid-19 patient in a U.S. hospital, it has been manufactured all around the world. Sophisticated global supply chains are generally efficient in meeting societal demands, but the Covid-19 pandemic illustrates that, in times of crisis, these supply chains can break down. One of the pandemic’s lasting lessons will be the importance of resilient regional manufacturing networks to ensure the availability of life-saving equipment.
The technology behind medical equipment depends on printed circuit boards, the wiry green boards found inside computers and all other electronics. Manufacturers have said that a shortage of these printed circuit boards has slowed the production of ventilators. U.S. board manufacturers have available capacity, but the established supply chains do not currently support the kind of high-volume manufacturing in the U.S. that the crisis demands. As a result, U.S. PCB manufacturers have limited means to help given that assembly mostly takes place in Asia.
In affecting China first, Covid-19 disrupted the operations of some of the largest electronics manufacturers in the world, even as China marshaled its industrial resources to support its own medical response. The resulting global demand for medical electronics stretched manufacturing capacity even further without a strategy in place in the U.S. to ramp up production to compensate. That led to a tragic, but inevitable result: health care professionals scrambling and often competing with one another for life-saving ventilators.
According to the Society of Critical Care Medicine, the U.S. only has 200,000 ventilators to treat the 960,000 Covid-19 patients who are anticipated to need them. The U.S. government and private industry are working more closely than ever to retool manufacturing to meet the nation’s needs. Thanks to these efforts, social distancing practices and, most importantly, the brave and tireless work of frontline health care workers, we will recover from today’s novel coronavirus. However, we need to prepare for what’s next and the pending unknowns that await us.
The unprecedented Covid-19 pandemic has made clear that our dependency on overseas manufacturing can mean life or death.
It also exposes how quickly current supply chains can become disconnected and in peril. Needing to travel across the world to ramp up production of any critical item is a lesson we should avoid repeating.
In anticipation of future pandemics or even an expected Covid-19 reemergence later this year, President Donald Trump should support a sustained and bold policy agenda to combat the virus and overcome the economic downturn. He should work with our neighbors in Canada and Mexico to build a more resilient, more robust supply chain. Now, as the United States-Mexico-Canada Agreement (USMCA) is being implemented, is the right time to start a North American Manufacturing Initiative to focus on coordinating pandemic response and strengthening the region’s manufacturing competitiveness.
President Trump, along with his North American counterparts, should grow regional capacity for electronics manufacturing and create systems to monitor capacity in times of crisis. Additionally, they should set up metrics for industrial base resiliency with capabilities, capacity and geographic diversity as key factors. Finally, government leaders should determine a regional definition of what is an “essential activity,” which would more easily allow us to support the critical production of crucial materials, parts or products.
Importantly, all of this should be centered on the manufacturing of electronics and other essential equipment.
Since the 1990s, electronics have become the heart of thousands of products and hundreds of industries worldwide, with healthcare prominent among them. Much of the electronics manufacturing sector has taken advantage of economic integration across North America to maintain and grow across all three countries. The total value of U.S. electronics trade with Canada and Mexico has increased six-fold over the last 25 years, reaching $155.5 billion in 2017. It helps support 5.3 million jobs across the United States, as well as millions more in Mexico and Canada. Electronics and products containing them constitute a significant portion of trade flow among the three countries and must be protected.
Not only is this sector vital for the functioning of our economy, but it is one of a few continuing to hire workers amid the overall shutdown. Electronics manufacturers added nearly 2,000 U.S. jobs in March 2020 and over 20,000 U.S. jobs in the last year.
This region has an opportunity to think bigger – and to build stronger, more efficient, and resilient manufacturing supply chains across North America. Anyone serious about strengthening manufacturing in any one of the three countries needs to focus on advancing that goal in all three countries. This same lesson is one that all regions of the world should internalize and address.
* John Mitchell is president and CEO of IPC, a global trade association representing the electronics manufacturing industry. Twitter: @jw_mitchell
