Supply chain problems threaten more than Christmas

Logistical breakdowns and empty store shelves reveal long-term economic weaknesses that must be addressed

We are a consumer society – and an impatient one at that. When we can’t get what we want we get cranky. Right now, people are very cranky as container ships sit waiting to be unloaded and employers on dry land scramble to find workers to deliver their cargo to stores.

Current discussion about the supply chain focuses mostly on whether consumers will be able to buy Christmas presents. That’s a politically potent message because the holiday season matters to a lot of people. However, the implications of this logistical bottleneck are not limited to Christmas. The U.S. economy also is experiencing a shortage of workers, contributing to inflation and turning shopping into a scavenger hunt. While inflation is most likely a temporary phenomenon, the supply chain crisis has magnified three long-term weaknesses in the U.S. economy: over-reliance on foreign manufacturing for essential products, a mismatch between workers’ skills and employers’ needs, and a broken immigration system.

Oregon, which has an economy strongly linked to trade and manufacturing, is particularly vulnerable to these circumstances and has an opportunity to contribute to solutions. Here’s a look at each friction point:

Manufacturing: The debate over the economic effects of reliance on foreign-produced goods and the related loss of U.S. manufacturing jobs is more than two decades old. The current supply chain crisis has helped bring attention to another point. Does offshoring manufacturing make product shortages more likely? A shortage of athletic apparel manufactured in Asia doesn’t matter much, but a shortage of semiconductors,

 which are used in everything from personal electronics to automobiles, matters much more. And the shortage of some medicines is literally a matter of life and death. We are experiencing shortages in all these categories.

Some of the most tangible progress toward alleviating shortages has been made in semiconductor manufacturing. Intel, Oregon’s largest manufacturing employer, has announced plans to build three new plants in the United States. Micron, which is based in Boise and is particularly strong in the market for chips used in automotive manufacturing, also has announced potential expansion plans. Both companies would benefit from legislation proposed by U.S. Sen. Ron Wyden, D-Oregon, to provide tax credits for semiconductor manufacturers that commit to expanding their operations in the United States.

The path to making the U.S. less dependent on foreign countries for ingredients used in the production of life-saving medicines is complicated. I lack the knowledge needed to propose a specific solution, but I recommend this Harvard Business Review article for those who are interested.

Workforce: Assuming plants can be built and components can be obtained, companies still need qualified workers to staff those plants. Even before the COVID-19 pandemic, the labor outlook was challenging because of an aging workforce. Now, the

Korn Ferry consulting firm projects that 85 million positions will be unfilled by 2030 because of the combination of demographic change and an imbalance between the skills workers have and what employers need.

The size of the gap illustrates the importance of matching training and educational programs to critical workforce needs as closely as possible. Community colleges, which offer training programs geared toward the industry sectors most in need of workers, must be a key part of that effort. But the U.S. is unlikely to meet its workforce needs with workers already in the country. This leads us to an issue that has been central to increasing partisan polarization and is one of the biggest obstacles to preparing the U.S. economy for the future.

Immigration: Few issues are as divisive among elected officials as immigration. Existing immigration pathways such as H1B visas and employer-sponsored green cards could help address the worker shortage if they were enhanced and improved. But any proposed expansion – in number or length – draws immediate controversy. Immigration has become an all (let everyone in) or nothing (let no one in) debate with no room for nuance. The unemployment rate is low and headed lower. The U.S. birth rate is not going to explode, and even if it did, it wouldn’t affect the workforce for 20 years. Immigration has to be part of the solution to the worker shortage.

None of these problems, or the ideas for solving them, are new. They’ve been debated for the last two decades. Democrats and Republicans have alternated control of government and promised to enact their favored reforms. And both parties have failed – in large part because partisans at each extreme have resisted any type of compromise on key issues.

That’s why I’m drawn to The Oregon Way’s emphasis on building community over specific policy proposals. There’s more than one way to solve these problems, but they won’t be solved until majorities in state legislatures and Congress agree that reaching some solution is more important than enacting their solution.

Mark worked 20 years at The Oregonian in positions including business editor & editorial writer. He currently is a communications consultant.

Photo credit: "Walmart on Black Friday 2009" by laurieofindy is licensed under CC BY-NC-ND 2.0