Remarks from U.S.Commerce Secretary Penny Pritzker at the Global Supply Chain Summit 2015

Thank you, Laura for your introduction and thank you to UPS and so many companies for sponsoring this year's Global Supply Chain Summit. I also want to thank Tom Donohue, Ann Beauchesne, and the Chamber of Commerce for organizing this event and for serving as a leading voice for the priorities and interests of America's business community.

It is a pleasure to see so many leaders of enterprises large and small, who understand that strengthening America's supply chains is essential to doing business in the 21st century. to the success of U.S. manufacturers of all sizes, and to the long-term competitiveness of our economy overall. You see firsthand the challenges and the improvements needed for our infrastructure, our logistical processes, and our border management. You recognize that American companies and workers are no longer just competing with Brazilian, Chinese, European, or Indian companies and workers. In today's economy, the U.S. supply chain is competing against our competitors' supply chains.

Successfully connecting our businesses to global markets requires the close cooperation, coordination, and partnership of both the public and private sectors. Our success is interdependent and intertwined. We need to work together -- businesses and government -- to ensure our supply chains are more innovative, more streamlined, and more efficient.

This is critical to our nation's economic competitiveness and to the expansion of America's private sector, which is the driver of employment in our country and the backbone of our economic success. The challenges we face today look radically different than those of generations past. For much of the 20thcentury, supply chains were primarily local and were owned and operated by a single company. For example: in the 1920s, "30s, and "40s, Ford Motor Company's River Rouge complex in Michigan included plants for tires, stamping, engines, transmissions, radiators, frames, and more. There was a power plant on site that could light a city the size of Detroit, and a facility to turn soybeans into plastic auto parts. Ford owned 700,000 acres of forests, iron mines, quarries, and coal-rich land -- which yielded the natural resources needed to produce automobiles. All of that supported the ultimate goal: the assembly and sale of a car.

In recent decades, the situation has changed dramatically: supply chains are not only national, but global. To stick with the auto industry example -- today, close to 60 percent of the purchase price of a new car comes from value added by outside firms and designers. For instance, Chrysler's Toledo assembly complex relies on axles from a manufacturer in Dry Ridge, Kentucky; door handles from Saranac, Michigan; seats from Northwood, Ohio; wiring harnesses from Mexico; and electronics, textiles, plastics, rubber and metal products from around the world. All of this adds up to thousands of suppliers, none of them owned by Chrysler.

Even in this shifting economic framework, original equipment manufacturers still want U.S.-made parts and materials. In fact, 79 percent of manufactured goods are sourced entirely within the United States. With all this in mind, the Obama Administration has taken a holistic approach to improve our supply chain's competitiveness, focused on three key areas: innovation; infrastructure; and border management.

To stay at the forefront of global production, innovation is an absolute necessity for the small and medium-sized manufacturers that power the U.S. supply chain. While they account for 40 percent of all U.S. manufacturing jobs, smaller enterprises in the supply chain often have fewer resources, less manpower, and less capacity to invest in R&D or adopt new and potentially risky technologies. Both larger companies and government have critical roles to play in promoting innovation among smaller suppliers and throughout the supply chain. One industry example is Walmart, which, in January 2013, announced plans to buy an additional $50 billion in products from American suppliers -- part of an effort to encourage job creation at home, re-shore manufactured goods, and spark innovation within small and medium-sized enterprises. This is an outstanding opportunity for domestic manufacturers. But to take advantage of it, U.S. suppliers must rise to the challenge and embrace more innovative processes.

Government can be a key partner, serving as a convener and as a catalyst for innovation. The White House Supply Chain Innovation Initiative brings together the National Economic Council, Commerce, and other agencies to work with individual companies and their leadership to identify, lift up, and develop best practices for supply chain innovation. In addition, we will work with original equipment manufacturers to support smaller businesses, with greater technical expertise, robust financing mechanisms, and assistance to help suppliers be more nimble, more competitive, and more innovative.

Already, at the Department of Commerce, we support innovation through programs like the Manufacturing Extension Partnership. This initiative deploys experts nationwide to assist manufacturers in improving their processes, adopting new technologies, and taking new products to market. The Manufacturing Extension Partnership in Pennsylvania supports companies like Bollman Hat of Adamstown -- America's oldest hat maker. In recent years, Bollman experienced difficulty maintaining growth and profitability, partially due to the rising costs of sourcing some of its hats and fabrics from abroad. The local Manufacturing Extension Partnership worked with Bollman to find available domestic suppliers to reduce its dependence on imports and improve the flexibility and speed of its supply chain. As a result of these changes, the company cut costs and regained its competitive edge.

Through a series of programs, Commerce also empowers small and medium-sized firms to move their ideas and products from lab-to-market. Commerce brings manufacturers, academics, and NGOs together to develop cutting-edge technologies to lead the world in areas like 3-D printing, photonics, and lightweight metals. Commerce leads on workforce development, promoting better training of modern production workers to meet the demands of manufacturers in the 21st century economy. The bottom line is this: our efforts at Commerce and in the Administration support the business community's drive to reinvest in small manufacturers; boost their technological capabilities; and build tighter links between firms in every phase of production.

Supply chain innovation will only have a lasting impact if we tackle the second key challenge: infrastructure. This is a key topic for the Chamber and the more than 80 organizations supporting the third annual "Infrastructure Week," happening now, focused on "Investing in America's Economy." Indeed, the growth of our economy; the success of our trade agenda and our export strategy; our work to expand the global footprint of U.S. businesses -- all depend on our ability to bring goods to market efficiently. That means we must invest in our infrastructure. We need 21st century ports with 21st century technology; our bridges, roads, and waterways need to be world-class; companies and their customers must have access to broadband; and the logistics of moving materials and equipment around the country must be flexible and reliable.

Put simply: I have complete confidence that American-made products can compete anywhere in the world. But if we cannot move these products efficiently, we will not be able to promote and sell our goods and services to the 96 percent of customers who live beyond our borders.

Let me focus on one critical aspect of our infrastructure: our ports and related inland transportation networks. Today, we see increased congestion at the ports due to reliance on outdated technology; the need to unload larger ships carrying more containers; equipment shortages; and crumbling transportation networks linking inland production centers and the border. This situation results in higher costs and longer delays in bringing U.S. goods to market, which has real consequences for our global competitiveness. For example: according to press reports, Brazilian infrastructure investments and other factors could reduce freight costs of Brazilian soy exports to China by 34 percent. This will give Brazilian producers a leg up in the fast-growing Chinese market -- and put enormous pressure on their competitors in Iowa. According to USDA, the overall U.S. share of the world soy market is projected to decline by an additional 18.5 percent without infrastructure improvements from farms to ports. To put that in dollar terms -- each percentage point lost is equivalent to $500 million lost in export sales. This is just one example of the consequences of our infrastructure deficit. This challenge cannot be ignored.

While there is a bill before Congress to extend short-term funding for current highway and transportation projects, this measure is not the sole solution. Though necessary in the short run, this step will not afford state and local leaders the certainty needed to develop smart, multi-year strategies to strengthen our infrastructure. We need Congress to enact a long-term funding commitment to rebuild and reinforce our infrastructure.

Finally, we must modernize how our government does business at the border. President Obama has tasked the Department of Homeland Security, the Commerce Department, and our partners across the Administration to create a "Single Window" by the end of 2016. The "Single Window" will establish one portal for customs brokers to handle all import-export transactions, and replace the current system, which requires companies to deal separately with up to 47 different agencies and their diverse import-export authorities. The "Single Window" will be electronic, virtually eliminating the requirement to file paper forms -- over 300 in all -- and eliminating the collection of duplicative and unnecessary data. We will ask for only what we need and only ask for it once.

The "Single Window" will be faster and more efficient. We will utilize Big Data to target higher-risk shipments more accurately, enabling better enforcement while speeding goods to market, especially for trusted traders. In addition, traders will be made aware instantaneously of any problems flagged by a U.S. agency, so they can make needed corrections and get their cargo on the move. The "Single Window" will promote greater transparency, with metrics to ensure that the program is producing commercially meaningful results for your companies, as well as to inform where to focus our improvements as the system evolves after 2016. We will hold ourselves accountable, and we will make our measurements public.

Finally, the "Single Window" team will advance international engagement, working closely with Canada and Mexico to improve compatibility and strengthen the competitiveness of the North American export platform. We are at a critical phase with the "Single Window" project. This summer, we plan to test the new program, and we need your help. It is essential for companies like yours to participate in the pilots, provide us feedback, and help us ensure that the systems will work to achieve our collective goals.We think of you as our VIP customers for the "Single Window." For this initiative to be successful, it must work for you.

Our Administration is committed to improving our supply chain's competitiveness. But for us to succeed, your partnership is critical. Jeff Weiss, my Senior Advisor for Standards and Global Regulatory Policy, is here today and is the point-person for the Administration's outreach on all of the Department's supply chain activities, including Single Window. Jeff wants to understand your issues and gather your input; his job is to engage with all of you. And before you leave today, please be sure to get his card and to give him your contact information.

Beyond connecting with Jeff, there are other ways for you to offer us your ideas and feedback: participate in Administration initiatives, such as the Supply Chain Innovation Initiative culminating in a national dialogue at the White House this summer. Take part in our advisory councils, like my Department's Advisory Committee on Supply Chain Competitiveness. Join the Administration's Single Window Stakeholder Group.

We can only meet our shared goals if we work together in a strong public-private partnership. Together, we can strengthen the competitiveness of our supply chains. Together, we can change the way American-made goods and services are bought and sold, made and moved. Together, we can ensure our supply chains continue to connect business to global markets -- and keep America "open for business."

Thank you.

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