Competitiveness, Production, and Logistics in a Disrupted World

greetings everyone and thank you for joining us today my name is kevin clouden i'm executive director of the center for regional economics at the milken institute and i am thrilled to be discussing today what i consider to be an incredibly pertinent topic in the middle of one of the greatest global disruptions that we have had in a hundred years it's a tremendous combination of the world's largest and most impactful pandemic certainly since the spanish flu but for this panel in particular what we are looking at is the issue of competitiveness production and logistics in this disrupted world and as we focus on and consider the number of different issues that we are facing today we have to realize that in a globally interconnected world a world where mass where manufacturing the logistics transportation issues of services issues of basic support whether it is food whether it's your phone whether it is your parts for your car whether it is uh something as important as your personal protective equipment your masks your gloves the various things you have in need for going out and working in this environment that this is a tremendous challenge and a tremendous level of disruption this session is going to discuss not only the challenges that we have faced this year but the challenges that we are facing in terms of reorganizing to restructuring manufacturing logistics retail in various other ways to uh deal with the fact that just in time which we all really rely on in this modern world is a much greater challenge than we thought how do we adapt how do we move forward and how do we keep our essential industries whether they're large whether they are small open and functioning and how do we achieve essentially a semblance of normal in the middle of this pandemic and then afterwards this session is going to be talking about a number of these different issues quite honestly we have so much to talk about we won't get all of it today but i am joined by an excellent group of panelists today uh these panelists i include uh ian mckay uh ceo of investment canada jay timmons who is president and ceo of the national association of manufacturers maria contreras suite who is chairman and ceo of rockaway equity partners in former administrator of the u.s small business administration and having some technical issues and soon to rejoin us is rajesh subraman subramanyam who is president chief operating officer of fedex corporation so what i would like to do to start everything off is to ask some opening questions fortunately i was planning to start with uh jay who's already on with us so i can uh direct the first question to you jay which is uh you represent manufacturing in america from your perspective how does the economy look and how did we get here well uh good afternoon from the east coast uh good morning on the west coast and good day around the world everybody uh kevin you know great question uh obviously no one planned for this year uh things were going just fine up until the pandemic hit and we found ourselves in quarantine and so many businesses had to make some some pretty significant changes in how we were operating from the manufacturing side you know we are we're actually doing pretty well that's the good news um we had a pretty hit right at the beginning um we had a tremendous loss of jobs 1.3 million jobs were lost in the first few months of the pandemic but we've recovered about 650 000 of those also on the good news side our our members of the national association of manufacturers report about 66 percent of them two-thirds report a positive outlook for their company in the third quarter and now that's up from just 34 in the second quarter and that was the worst reading that we had seen since the great recession it's still a little bit under the historic average of about 74 so we have a way to go and getting that confidence back on the revenue side about two-thirds expect their firm's revenue aren't going to get up to pre-covered levels until 2021 or later only about 17 percent say their revenues are already recovered and 12 say they're not going to bounce back uh by the end of the year so they've been through a lot uh output has plunged come back but we but we are seeing some good signs but here's the problem kevin and i know we'll get into this a little bit later we cannot fully recover as a sector or as an economy if we are not doing everything possible to protect ourselves and to protect our people from the spread of covid and that means very simple things like ppe wearing ppe social distancing and not gathering in large groups manufacturers have been pushing that message literally since early february and i'm really proud of the work that the manufacturing sector has done in keeping our workers safe and trying to keep our communities safe but we need everybody in this country to be doing the same thing or we will never get this economy back to where it needs to be absolutely and i cannot emphasize how much i agree with that statement more uh uh fundamentally we need people to behave in a way that they are thinking long term they're thinking about the economy about each other and that's a theme that we are going to continue throughout this panel and in the discussions so in reshoring has become one of the great topics uh even before the pandemic in the middle of all the different disputes and everything else that was going on in the realignments how is reassuring and reorganization supply chains accelerated and what are the limitations uh well first of all thank you kevin and thanks to the entire milking group for putting on this panel in for the invitation it's truly a a pleasure and an honor to be on the panel with rajesh and maria and jay to the question of reshoring as you alluded to resharing has been a topic it's been a word that's been talked about over years and decades in fact kind of sporadically when there were bilateral trade tensions or waves of protectionism or some geopolitical shifts in economic might but the re-shoring word appeared obviously every day upon the pandemic uh hitting the world and it was almost like um you know the tide worn out suddenly and the tide went out and it hasn't come back yet and so a lot of countries national governments multinational companies are all trying to look at where they're vulnerable as a result of the pandemic so the notion of reshoring has become urgent and i think it became urgent early in the days of the pandemic specifically to ppe to personal protective equipment who had the capacity to rely on themselves to have it in many cases pharmaceuticals medicines there were some vulnerabilities exposed in many many different countries and even food supply was impacted so governments around the world had a really hard look and they were forced to look at where they were vulnerable and some were able to effectively do some immediate work to reshore some of those very very important things in canada's case and as an example we determined that in up until march canada only produced about half a percentage of all the ppe that we used on a daily basis um the government really shifted very very prominently and issued a call to action to companies and to see if we couldn't develop some of that supply chain capacity domestically and i know this happened in the united states as well but in this past seven months canada has retooled re-skilled and got to a level where 70 percent of the ppe now is domestically supplied so that's the urgent immediate reshoring there are limitations to broader reshoring of other sectors that are a little more complicated a little more complex and i know we'll get into that uh later in the discussion um but there were issues where countries were vulnerable they acted quickly and certainly in our case we were able to to solve the the pharmaceutical and the ppe uh industry very very quickly which is great to know and great to see now as we are still dealing with some technical issues jay i'm coming back to you with another question and we'll go back to maria and rajesh when they're able to reconnect so uh that the issue of ppe is absolutely uh very prominent and one of the things in connection to that that i we alluded to early on in your comments and more broadly is that why did worker and workplace safety present such a major issue at the start of the pandemic what could have been done then what was done uh to overcome that particularly for manufacturers and even more broadly and what can and should be done differently now you're talking about safety measures kevin am i talking about safety measures i'm talking about being awareness of protecting workers various things that you know what you talked about in the beginning yeah no and it's a great question and i think it's a fundamental question we're going to have to keep answering literally every day we have not had a consistent um uh consistent set of uh guidelines or messaging from the federal government which i think is so incredibly important when you're dealing with something of this magnitude we know what science tells us i mean manufacturers are all about science and we know what science tells us science tells us a particular virus transmits so much more efficiently than anything we've seen since the pandemic of 1918 the spanish fluid which you mentioned earlier and because it is so virulent we have to do everything we can to make sure it doesn't spread now this is not we know this is not a common cold in fact right before this panel presentation began i was reading some information from some millennials who are quote-unquote the long-haulers they're facing long-term disabilities they're going to impact their quality of life for many years if not for the rest of their life these are also folks who have found themselves in our hospitals in our medical facilities and in some cases early in the pandemic and we're starting to see this happen again those facilities are being overwhelmed and so cases that that we would be treating on a regular basis whether it's cancer not of course but of other issues like cancer diabetes other ailments that we would want to make sure that we had access to a hospital or medical facility for oftentimes those are those aren't possible i've had a health issue in my own family that required um a a an inordinate amount of hospital time and it became almost impossible during this pandemic and i've just seen it firsthand and it's frightening i have three children at home school-aged children they're down in the basement right now so if you hear some noise you're going to know what it what it's all about so our schools are closed our our hospitals are overwhelmed our businesses are failing we have when maria gets back on i'm sure she will talk about the fact that 170 000 small businesses have closed a hundred thousand of those permanently that is what a lack of adherence to any type of consistent safety measures dug to our economy manufacturers are really proud again that we started this process early that we that we sent the message this is the way that we protect ourselves this is the way we protect others this is the way we protect our communities and our economy but everybody and i mean everybody has to be in it together or it just won't matter absolutely in how how how were things particularly implemented you talked about uh the re-shoring of ppe but also just in terms of what jay's talking about safety measures and keeping the economy open what has canada done well what do you think that it could be potentially doing differently and given the fact that right now i can't go to canada without a couple week quarantine uh how is that affected in terms of some of the international connections that are so important to supply chains in the midst of this yeah it's a super good question there's so many ways we can go with that obviously starting with there is nothing more important that jay alluded to than the health and safety of individuals in any country in every country that's just a the first step that everybody needs to take and one of the reasons for that importance is that you can't get an economic recovery and you can't have people interacting and supply chains returning to some sense of normalcy if people can't go to work now one of the consequences of course of that pandemic with people not being allowed to move about and be in factories or in supply chain locations is there's an acceleration of you know digital digitization in supply chains there's an acceleration of automation there's an acceleration in the use of robots and so jurisdictions that have capacity the technical capacity the skills capacity including a focus on ai on blockchain on ar and vr all those technologies that are working their way into the supply chain have been accelerated and certainly in our case we're seeing uh some global investment capital shifting to our jurisdictions because we do have certain strengths in ai and br and ar the things that are going to be accelerated into supply chains globally hey kevin can i can i just point out that um first and foremost again we hope a lot of that investment happens in the united states as well but but kudos to you kudos to canada for really focusing on the need to to really strengthen your own um your own supply chain but what i will say is thankfully we have we have gotten the usmca um finalized so that we have these good relationships between our north american trading partners in case another issue like this arises in the future that's why these trade agreements are so vital and and in uh thank you for for all you all did on that we're really pleased of what manufacturers contributed here and and our partners in mexico as well that'll really matter for for issues like this in the future i'm sure yeah indeed and if i could just kevin i respond the the usm mcas is really part of the fabric in the dna of canada's competitiveness and we're so delighted that that has been resolved and it speaks to the broader point of in terms of global free trade access and trade corridor infrastructure absolutely key attributes to solving supply chain adjustments when they happen and inevitably they will happen indeed they will now speaking of supply chains uh even if video is a slight issue we are thrilled to have rajesh back with us so if rajesh if you're ready i was going to ask you uh a key question that i think ties into this is that as an essential business in the pandemic what operational challenges have faced uh both you as fedex and your clients and what lessons have you learned that are going to be essential for us going forward yeah hopefully you can hear me and uh you know i'm not sure what exactly happened on the video i can actually see you all but uh nonetheless yeah thank you for the question and thanks for being uh thanks for inviting me to part of this great panel um you know it's from the very get-go uh fedex has been on the front lines of this pandemic and uh you know when the you know when the virus started spreading in china we were moving a lot of ppe to china and then essentially as the event globally you know we started moving a lot of ppe's from china to the rest of the world um in effect we have you know just to give you an example we have moved about 1.8 billion masks in this time frame the airlift from china to the rest of the world would be the equivalent of the airlifts after the 1948 berlin airlift just like so many um so much ppes and healthcare related products uh and uh test kits and you know all those things were moving on our network and it was a in a very uh you know we were when the very get go i would just say that i was very very proud of the fedex team members around the world who really did an outstanding job really a core of who we are and what we do and as the as as this evolved over time uh clearly we had operational challenges operating a network of 700 airplanes and 180 000 motorized vehicles around the world in in different formats but again those were just you know in fact some of them were ad hoc some of them changed daily uh operational requirements and so on and so forth and we are you know the ability for us to flex our network was very important the fact that we already have a network in place and we're able to add nodes to the network on a reasonably quick time frame was very very important for us to be able to connect the globe so that's that's really critical and then you know more on a more lighter note with the fact that as people started working from home uh then of course we saw a surge in e-commerce and um then now we're delivering more and more packages to people working from home as well so we have a in a very interesting few months here moving a lot of healthcare equipment hot a lot of healthcare material around the world um and then of course now dealing with e-commerce shifts press uh kevin can i just say to rajesh uh first of all thank you for everything that fedex has done during this pandemic to help relocate ppe from around the world um i i we spent a lot of time working with the federal government trying to locate with fema and also state governors to try to locate ppe in our facilities and other locations around the world and get it to those hot zones especially in the early days of the pandemic um gina adams in your dc office rajesh is just a best of the best she was able to to help secure um transport for a lot of these um a lot of these pieces of ppe to various locations in in this country and we just can't thank you and other carriers as well for just diving in to literally save america during this time of crisis it was it was really uh amazing to watch i appreciate the saying that jay and i think it's you're 100 right gina is a superstar for us and uh but you know we also have a lot of other superstars around the world who have made this happen and i think we realized the fact that you know you know we the ability for us to pick up something in one part of the world and put it in another put it down in another part of the world in one or two days is something that's you know comes in very very handy in this these circumstances so again i appreciate you saying that all right rajesh it's interesting you mentioned the berlin airlift years and years ago i had the chance to actually visit the airport in berlin and templehof uh where which was the main site of the airlift and they had a statue up commemorating it and it'd be interesting it would actually be great that at some point we can have a statue up in memphis to commemorate how much of a role was done in this regard for you i don't i don't know about my statue i think statue is a fedex airplane would be more like it well it would really make the kids happy let's put it that way but uh uh but that actually does bring something up also and we've been talking about this with ppe and shifting things that from a competitiveness logistics standpoint we do need to talk about the global side of things that we even with reshoring and with regionalization i it is worth asking for each of you is that how essential is china in chinese manufacturing it was certainly essential in terms of some of the ppe supplies early on it's certainly essential in terms of a number of the components and supply chains and if it's not china if there's regionalization whether it's to canada mexico the u.s or it's to southeast asia or elsewhere how much can things realign in shift in this environment it's a question for all of you so if uh happy to jump in it it's a it's a real a real question we've spoken about the the immediacy of reshoring things like ppe or food supply or medicines but of course global supply chains go through every sphere of the economy and frankly china has become a bit of a juggernaut in its logistics and supply chain capacity we are as consumers addicted to just-in-time highly sophisticated supply chains at the lowest cost that has been the priority we're now looking at what are the limitations to reshoring and what are the opportunities that certain regions could have and should have um to either complement or maybe take some market share away from that part of asia clearly they have enormous investments in technology 5g capacity they have enormous investments in talent and people and of course proximity to the largest population zone in the world but there are opportunities certainly in the north american context for food supply chains to be enhanced by ai and free trade corridors opportunities in clean tech essentially based on the fact that north america has canada and the u.s have enormous history in natural resource development which is really the foundation of cleantech r d and commercialization and there's also opportunities i think in advanced manufacturing as jay had alluded to before so recognizing that china is in fact a juggernaut there are opportunities for regionalization uh vertical supply chains closer to home and i think that governments industry associations and companies will be looking at how that's accelerated in the uh in the months ahead yeah and again kevin uh to the previous point that's why agreements like usmca are so absolutely important and ian you're very diplomatic and you've said a lot of great things about some of the some of the investments that china has made and and how they operate let me take a little different tact and and point out that um for manufacturers in america uh it has been extraordinarily frustrating dealing with china um they have they have stolen intellectual property from our manufacturers they have forced localization they have dumped their products they've subsidized their products so they really haven't been operating on the same playing field that we have here in the united states and that has disadvantaged us over time and i think you know we're going to be looking back years from now and we're going to know what huge dark cloud that the pandemic cast over the entire world but we're going to be looking for a few silver linings one of those silver linings i think will be that we will have made a decision to to bring some supply lines back to the united states uh we are a global economy we know that we know that 95 of the customers uh reside outside of the united states so we know we have to operate around the world as well but i don't think we ever want to be in a position where we are so frankly subservient to other parts of the world for for basic survival uh when it came in this case to ppe there are other instances though where when we're talking about trade we have to be very careful i had a robust discussion with someone in the administration who was try we were trying to get 60 million uh surgical grade gloves uh to detroit and new york in may i believe it was it's having a robust discussion about why don't we make these in the united states well we could and as in as the end suggested you know we we've enjoyed a low cost of doing business when we're making things in various places around the world i don't know what a spooky glove costs i'm assuming it's pennies but one of the reasons that they're made in kuala lumpur which is where we were trying to get them from to detroit and new york is because we don't grow rubber trees in the united states so you know taking the basic input uh products that go into making the gloves and bringing them here there's a lot of cost to that and it would drive up the cost of that particular product so it's a balance we need to look we need to create some incentives to to support the onshoring of manufacturing facilities here in the united states including a tax credit i want to see us provide incentives to help our companies recruit train and retain skilled workers one of the things we haven't talked about is yeah we still have 650 000 jobs that haven't come back to us since the pandemic began but ironically uh and paradoxically we have 460 000 jobs that we can't fill ian talks about a lot of the the robotics and technology that's going into manufacturing now we need folks who can actually do those things and so we need to provide those incentives we need to support innovation and we need to make sure that business loans and capital equipment purchases remain affordable all of those things will help us grow manufacturing here in the united states and in the north america region jay i couldn't agree more with everything you said especially at the beginning in terms of the uh the challenges that the united states and other free and fair trading nations have had in competing with some other jurisdictions um the you know and i think it really leads to the importance of uh free trade and and the fact that in in our country we have i think uh 14 multi-multinational trade deals with 55 countries representing about a billion and a half consumers and so the challenges that you articulated i think can be met halfway by having at least freer and freer flow of goods and services between countries to enhance the supply chains in north america which is absolutely the solution that you're talking about yup you're exactly right this is an important uh subject and i think so i'm glad you get this discussion is very interesting as i listen to this you know we when you know we move about almost 20 million shipments per day and we look as we'll see the global supply chain unfold in our front of our eyes every single day and we're seeing some trend changes and we're watching it very carefully you know the firstly firms at the lower end of the value chain have already begun relocating supply chains as the chinese labor costs grow that's already happened what is now happening is the process is moving up that value chain and i've talked to several of our customers and several many of them are asking this question about china plus one plus two plus three strategies and um they're diversifying the source of electronic input so markets like vietnam and cambodia and bangladesh have already benefited from the early supply chain shifts and now i mean more and more hearing india and mexico uh as and we just talked about the usmca and so the whole notion of near or re-showing those things are happening now i think it's not that simple but i i think there is a bow wave of change potentially about to happen and the supply chain shortening could continue as countries encourage firms to bring production back just like we just talked about to diminish the national security risk increasing self-reliance and so on and so on so forth and so anyway this is this is a very dynamic area and we literally see it in our transportation networks every single day absolutely all right maria since uh if you uh since uh glad to see your back up the connections are working this is part of our challenges in this entire process so if i i i was gonna use the opportunity uh rajesh and thank you very much i was gonna use the opportunity particularly just once again and talking about the issues and pressures on supply chains to ask the question i was in the middle of asking you earlier which is uh how have the various crises and pressures on supply chains particularly affected small and medium-sized businesses so i guess that means you didn't hear what i said before no we did not uh well anyway let's first of all wanted to thank you for including the topic small businesses because so often you know we forget about the job creators and small businesses create a majority of our jobs in the us uh i used to brag at cabinet when the president would boast that we had had 78 months of consecutive job growth i'd always say but it's the small businesses that are delivering a majority of those jobs and create this vitality on main streets as well as across american manufacturing and the many that we're so proud of they've been able to scale and really define what america represents uh so let me just say that um but let me just speak to uh what's taking place around the world and that is that uh as small businesses try to navigate what we saw was that we want they needed to expand their their view of the market and so we wanted them to we wanted them to be a little bolder and explore the international market but our trade agreements didn't have a place in which they could resolve disputes protect their patents and have a way to navigate through these these vast opportunities 99 of the world's consumers are outside of the united states and so it is important for the small business uh community to be able to partake of this and so i was delighted that we were able to negotiate some really important agreements in those trade agreements and that they were adopted by the current administration and so now for the first time ever in a trade agreement we have an sme small medium enterprise chapter and we have for the first time a chapter for women entrepreneurs and so that's really great progress uh so now what we have to think about is the infrastructure investments that other countries are making what we're seeing is that as we've pulled back that other companies now other countries have naturally uh taken an important role i want to complement this administration on understanding that it's important for us to address the china issue what i regret however is that we're not working with our strategic allies unilateral sanctions sometimes don't have the effect of what total strategic allies could do collectively so that's one of my regrets let me just say i hear uh domestically that uh what i do see is that small businesses even still understanding the role that they can play are still oftentimes thought of after the fact when we rolled out the ppp for example our sole providers uh were left out of the first round because they didn't get the guidelines they were uh received the guidelines about a week afterward and so by then the funds were out so i was delighted that congress passed a second round for them we know that after 30 days uh 25 of businesses will not be able to come back online after 90 days that they're down we find that i typically 50 of those businesses aren't able to come back online so i think it is important that we think about the not just loans but actually subsidies as we're doing for the large corporations we need the small businesses so many corporations maybe where jess might might attest to this so many of the large corporations say that their r d departments have diminished and they've now expanded their m a departments to be able to get the latest cutting edge technology and that they need their supply chain to be able to deliver so many of the innovations that they're doing so for all those reasons i think we have to think hard about the role that small businesses play and really prevail upon not just the federal government but even localities to make sure that they're reducing regulation that they're treating the small businesses as as they should and i'll just say this um i know that uh when i was uh traveling around that i saw so many investments by the chinese around the one belt one road program and so it is important for us not only to invest in infrastructure domestically but to think about how we can continue to build bridges figuratively and physical ones around the world to make sure that we remain as the preeminent force in the world thank you kevin i want maria to actually uh go out on the road with me because you're saying exactly what our members want to hear maria 90 of the members of the nam are small and medium-sized enterprises and you brought up the you brought up the ppe program or ppp program pardon me and you know we need congress to get off the stick right now kevin with that that that program quit making loans uh in august and there's a deadline of december 31st for using those funds it's not going to be over by the end of the year so we need congress to act and act quickly or we're going to lose even more small businesses maria while you were in no man's land technologically i was talking about the number of small businesses that have had to close during this pandemic 170 000 and 100 000 i've already said they're not even going to reopen their doors think about what that does for the vitality of the main streets that maria is talking about many of those are are small and medium-sized manufacturers and that will have an impact on the ability of manufacturers writ large to be able to to be able to navigate the the future thank you for acknowledging that you know so many of our entrepreneurs have risked their lives savings their children's educational funds and so i think it's also important to contemplate how we access capital so not only do they need policies and programs but they also need capital and what i i lament greatly is that right now bc capital as an example is concentrated in three states and about 25 zip codes california new york and massachusetts and we can do better than that because we know that ideas come from all across the country and and so we want to make sure that businesses are all given an equal opportunity so many times i see that our large uh investment houses think about how they're going to invest in the large cap companies and so we have to find a way to get more capital investments into the small cap to make sure that we are still expanding the middle class and deepening democracy domestically as i said and abroad thank you for that one of the things i'd also like to build off of in that regard uh and direct back to rajesh is that uh you talked about technology earlier on and how when particularly for small businesses and for adapting in supply chains how can data and technology help that adaptation and what you know seen so far in this pandemic yeah no thank you i think you know i was listening that very good conversation on small business earlier i think was i couldn't agree more on some of the things mentioned here i mean it's very very critical for the future um of recovery of the global economy and especially here in the us and we see it and then we oft talked about the k-shape recovery uh that you know the la the smaller companies are the ones are not not getting the traction right now but however we just finished the survey and i was happy to note that about 58 of those small customers we surveyed were optimistic that their revenues were going to increase the next year which is honestly to be higher than what i thought it's going to be but the other half of the equation and none another half other part of the survey was around this notion of digital and i think we almost heard uniformly from across the sector that you know a there is a definite push towards digital transformation and especially in the area of customer preferences and they see technology as a very very important tool to continue to operate through the pandemic and then of course in the life change you know when it comes back to whatever the new normal is um that that this is very important 47 of the small businesses we surveyed said that they have already invested in new technology since the start of the pandemic and the expectations are only going to get higher as we go along now from our own set of views even even you know our company we have thinking about digital transformation very very differently during this period and technology becomes plays a much more important role if you think about it you know we are sitting on the world supply chain data every single day 20 million shipments going through our system getting multiple scans so systems a lot of data that we're sitting on and to figure out how to be best able to help our customers leverage that information and data to be more successful is something that we are thinking very deeply about that go ahead i was just going to say that um you recall the report that i published when i was california's secretary of transportation noting the importance of a proper definition of infrastructure you know now all of a sudden now that we're uh in this pandemic more people are calling me about infrastructure uh concepts and investment opportunities and that sort of thing but i remember when i first started you know talking about infrastructure trying to make a little quote sexy uh it was difficult but i thought it was important to define the term because sometimes it you know we all have a different definition of it and so i think for a proper uh ecosystem that really supports trade you also need to have the physical investments and so you will you'll recall um kevin when i was in office i made sure that up and down the state that we invested in double tracking in great separations you know the alameda quarter the alameda quarter east and so i think these investments you know also help the entire country not just the small but the mid and the large cap and so i think we have to also as we think about uh what i call enterprise risk management erm we have to think about the internal challenges but also the external challenges so you know when uh we were in office we thought about the three types of challenges one is of course what we're finding ourselves in is this global pandemic maybe that's redundant um second is a cyber security threat or third a natural disaster and so large cap companies are more able to drop on their resources to address these issues but the small and the medium-sized companies have a larger challenge i have to make sure that as a country as a community think about all those things that we have to invest to make sure that all of our businesses are able to thrive and one of those is of course what i what i've said is to have a national priority we've talked forever about the importance of the role that infrastructure investments create uh will play in job creation but also in trade and everything else that our economy depends on we take for granted we take for granted that we can go to the grocery store and then they're going to be a bunch of apples there and and berries and you know and pears that come from peru and all over the world but it's all because of you know the companies like rajesh here on the phone and so i'm so grateful to them for what they do to make sure that we that we exist in in a healthy and nutritious way but i think it's really got to be a national priority that we really urge whoever is in office you know i've heard this administration currently in office say that it's very important for them to prioritize infrastructure investment so i'm eager to see when that would happen we'd like to see a proposal around that because it's so vital we need to make certain that small businesses can get their materials to the large corporation you know you referenced just in time a minute ago and i can tell you when i was in corporate we had these massive warehouses that we considered liabilities because we had to stock for 90 days ahead because we weren't sure when everything was going to arrive and fortunately i was delighted to see that once we studied back then i'm 18 myself the japanese talk to us about kanban inventory and just in time we turn these liabilities into assets by actually renting out the face to our vendors to say you can't get it to us at two o'clock that's that fructose at two o'clock well then you can park it in our warehouse so that we can pull it out just in time and so we're able to turn those uh those liabilities into assets which was a really you know phenomenal thing that's happening and now i'm seeing the beginning of the reverse of that because we haven't made the investments so many companies are now saying that they're having to stock longer to make sure that they get their supplies in time and certainly i know that at a personal level we're all doing that every one of us uh you know if we have a pantry it is now full and if we don't have a pantry our closets are full with uh non-perishable goods because we don't know when the next supply will come in so kevin thank you sorry uh jay go ahead sorry about that i'm just gonna thank kevin i just want to give three cheers again to maria because this issue is so vital about the future if we're talking about what the economy is going to look like what manufacturing is going to look like what the world's going to look like post-pandemic infrastructure investment has got to be right at the top of the list and you're exactly right maria we've been talking about this for decades decades and you know i'll throw out a few i'll throw out a few of those statistics that we all know or some of these data points that we all know but that i think are actually really great talking points to encourage our elected officials to get off the stick and do something about this the american society of civil engineers gave us a d plus rating for infrastructure in the united states a d plus that's crazy that doesn't make any sense we're we're ranked way behind our global competitors 13th in infrastructure quality it's a that's a 3 400 hit for every family uh every year because of deficient infrastructure and in just a few years that number rises to 5100. we talked about jobs maria 11 million jobs for a trillion dollar investment in infrastructure that's critical we've got here's another data point 54 000 bridges in the united states 54 000 that are structurally deficient you know i drive my kids across bridges every day and and some of them are ranked deficient and that just makes me it's just mind-boggling to me i got to put in a plug for the nam's building to win proposal because it's available by the way nam.org and we talk about what's needed to to fix our crumbling infrastructure and again it's not just roads and bridges it's airports it's it's inland waterways it's it's broadband it's 5g it's it's pipelines between the united states and canada too ian all of that is so important and we talk about the need for a two trillion dollar infrastructure investment and then of course the conversation stops because who wants to you know who wants to stand up and talk about two trillion dollars over say 10 or even 15 years well guess what we just pumped three trillion dollars into the economy in the last six months without batting an eye because we knew what we needed to do to help our economy thrive two trillion dollars over the course of 10 or 15 years that's a drop in the bucket to what we have just done to for our economy in a half of a year we can do this we need to hold everybody accountable and i don't care who who the president is i agree with you maria whether it's a president trump or president biden both of them have been talking about this they need to put a plan on the table and if we're not quite wait if we're done right now in chime in for just one second since he's been very patient no thanks a lot kevin we we clearly could do another hour just on the infrastructure piece it is so critically important i'm glad maria articulated it so well in ja as well um trade quarter infrastructure is is the foundation for the future of of supply chain reshoring or regionalization certainly in canada we're doing a lot on infrastructure to get our resources to market both in asia and to the united weather st or oil but there's also infrastructure pieces like high-speed rail that we need between centers like vancouver and seattle or toronto montreal and new york those are infrastructure pieces that we have to think about as we contemplate more regionalization in our supply chain capacity and the other piece very quickly on why the updated infrastructure piece is so important is the other externality that is going to impact supply chains and that is climate change so with the enormous increase in the ferocity of hurricanes and typhoons all over the world they're affecting critical ports airports energy hubs the the focus on infrastructure can never ever be overstated because the climate change um effect on supply chains is real today and it's going to be a lot more real in 20 years time i you know this is so obviously we drive millions and millions of miles every single day and then and and of course and the infrastructure conversation uh is very relevant to us but let me uh so i want to add to that conversation right now as i just said we need to think about also in addition to the hard infrastructure some of the soft infrastructure you know we talked about customers and thank you maria you know from you know customers small customers in any one part of the world today are able to sell their goods and services to anybody else in the world because of the technology and then transportation systems like ours the combination of the digital and the physical and that infrastructure along with the soft infrastructure that's required you know whether it is what it's going to take to drive technology drive education but also things like you know clearance across borders what are the tariffs of course that's one thing it takes a lot of a lot of conversation around that but what are non-tariff barriers that we can eliminate uh whatever the tariff is to make sure that the goods can cross borders in a more seamless manner so we need i'll be i'll be very quick here because you know we already talked about the heart infrastructure but let's not and i also want to bring in that notion that there's a soft infrastructure component to it that we should be thinking about absolutely and i will know two things one is uh that over a decade ago the milken institute actually partnered with the national association of manufacturers to do a report called jobs for america and one of the sections in that which i actually was the lead author on in that section was on the need for infrastructure investment and none of the principles of that have changed and it's good to hear it be brought up again uh and i think it's it or ju whether it is for smes whether it's for manufacturing whether it is for logistics it's a key element and it's a key element of the recovery one thing rajesh i do want to actually direct back to you uh in terms of uh what i would say a soft a soft element the infrastructure is essential on and in logistics is that there's been a lot of talk for months about vaccines and vaccines playing an essential role in protecting workers stably affecting and creating a new uh a normal for or perceived normal for the economy what is it going to take to get vaccines to the general public what yeah how is and then and then for every for the others uh how essential is this in many ways for businesses for manufacturers in making sure that people are perceiving inability to go back to a a more stable slightly more open environment so register you can go first yeah no thank you for uh that you know of course is a big topic for us we are right in the middle of this um the most important thing is for the you know healthcare manufacturers to get the vaccine done but that's immediately thereafter there is this huge logistical challenge to get those vaccines from the place of manufacture to the place where it's needed really across the world so you know this is a long topic but i'll try to sum it down to three or four things you know i think first of all and foremost we need to have a network uh to move things from one one part of the world to the other and we'll get it to get it everywhere so that's it's a given that a network is very very important to make it happen so we connect 220 countries around the world and i think that's going to be really critical but that's not enough uh we're going to have to have a methodology method to move these and the temperature control uh through that network so we you know we have those capabilities over time and building on those ability to cause cold storage as required again different vaccines that we're hearing now that have different requirements and so we have to adjust to that ability to have dry eyes in you know and able to use use that and so there are in addition to all that there's need of technology to provide visibility and so we just literally launched you know six weeks ago i mean even before those vaccines was even a con conversation piece something called sensible id which is a something that monitors not only just you know proactively tells you where the package is but also you know monitors other parameters around the package and then we you know we're working with microsoft to launch what's called fedex surround to be able to fully on a real-time basis view it so it's a combination of our network our technology tools uh the coal storage uh the you know ability to intervene as needed and then working with the different authorities to make sure that these clear borders in a seamless manner so there's a lot to this uh we are right in front of this right now and it's something that you know we pride ourselves on we think this is going to be really really critical over the next few months hopefully that we can get this done great that's great to hear jay can't hear you jay i think you're muted sorry about that uh can i put in a good word for those pharmaceutical manufacturers who are going to hopefully be supplying hundreds of millions of doses to uh be distributed by fedex and other carriers as well um they're they are moving it at at as fast as speed as possible to get these vaccines developed we are all in the business community going to have to lead by example and encourage widespread usage of the vaccine or we simply will not get the virus under control and i will also say this i am i am continually amazed and inspired by pharmaceutical manufacturers who every single day are engaging in research and development to cure the world's deadliest diseases and obviously covet is one of those and i get pretty frustrated when both both political parties tend to beat up on them and do what i think are unconscionable things like composing price controls and other things that make them less competitive so pharmaceutical manufacturers are are are companies that frankly we should be celebrating we should be celebrating their successes and we want to do everything we can to get this vaccine out to the general public and other cures in the future and we don't want to have government impeding our progress on our ability to do so i just want to add um first of all my compliments to the group for uh engaging this really important topic into the milk institute again for for convening us let me just say that um from my view and remember that i was born in mexico in guadalajara jalisco mexico so i'm an american by choice and so i love this country it's given me so much opportunity and i want to make sure that we preserve that so i do get a little nervous when i see the chinese uh since 2013 when they launched that one bell one road program i was referring to a minute ago making huge infrastructure investments in other countries that are our strategic allies and uh you know it it sort of you know you concern yourself about what that relationship could ensue for the us if they continue to make investments and we have a win-lose point of view so i think it is important whoever wins uh this november that we have a win-win view that it's not a zero-sum game because we have to have positive relationships when i was in estonia and these you know the people there said we look to the us to protect us we're concerned we are looking facing the west that's what we want to become that is our view of the world and whatever country you go to i mean they always have seen the us as the stalwart as the high as the archetypical leader and so it's important that we maintain this sectional exceptionalism and i do think that it is by and large by allowing people individuals families to be able to take a dream an idea and be able to get some capital and scale it that's the beauty of america and so i want to see this country continue to flourish and it will be in large measure with the strong partnership between our small our medium and our large caps to end with the compliment to large corporations to say how heartened i was when i saw them define their constituency in a new way that it's not just the shareholders that are their primacy anymore but actually they're stakeholders and that they're now looking to see what their supply chain looks like what their communities look like as well as their shareholders and this larger view i think will make them stronger i think that the new millennial generation is now looking to companies that are giving them strong returns but also having environmental and social and governance uh advancements and so i say that my story is possible because of this america i mentioned i was born in mexico i came here at the age of five and through the grace of god and the bounty of this country that has been so embracing of people who want to come and contribute i've been able to go as my grandmother said i want you to go to to the us and somehow you know you're going to be able to work in an office although we've been migrant workers and sunday be a secretary but you never imagined that i would hold office and to be a cabinet secretary and that's the beauty of our country and that's what i hope will continue to bring us all together and be one country so that we can make sure that we're providing the other country the leadership role that we deserve and they indeed and yen i want to give one last i want to hear one last thought from the beauty of canada as well uh just two very quick points on uh certainly on the pharmaceutical companies um i couldn't agree more of jay on the importance of the work they're doing now ten of the largest in the world of course have significant presence in canada but every one of them is significantly expanding their r d and commercialization footprint in canada right now that's a good canada story that's a good north america story that's eventually reshoring to canada as well as in the north american context and the other very quick thing kevin is esg as a framework is going to affect supply chains going forward if you're a manufacturer of consumer products whether it's a cell phone or an easy car battery your shareholders your customers your boards will insist that you're developing those products supply chains in sustainable jurisdictions and that again is where i think there's going to be a significant acceleration of regionalization for those supply chains i'm from canada in the north american context well thank you and i want at this point to note that we are indeed out of time so i we could talk tremendously about any more of the any of these topics that we've talked about and several more that we haven't even gotten to so i want to thank this wonderful and excellent panel thank you very much to all of you who are watching and i'm listening and we wish you the the best of health of safety uh and prosperity in the midst of this pandemic wherever you are so thank you everyone thank you to the panelists [Music] [Music] [Music] [Music] you

Channel: Milken Institute

Views: 296

Rating: 5 out of 5

Keywords: Milken, Institute

Id: 4R9edQZ7vkw

Length: 61min 42sec (3702 seconds)

Published: Tue Feb 23 2021