(Washington, D.C.) – U.S. Senate Committee on Small Business & Entrepreneurship Chair Ben Cardin (D-Md.) today convened a hearing to examine how the prolonged disruption in the global supply chain has affected American small businesses, including the restaurant industry. The hearing also examined the role that small manufacturers can play in the national effort to build stronger, more resilient domestic supply chains and reduce the costs of products.
Cardin reiterated his call for Congress to replenish the Restaurant Revitalization Fund (RRF) as many restaurants are unable to absorb additional costs from supply chain disruptions because they are still reeling from the impacts of COVID-19.
“For the last two years of the pandemic, nearly all restaurants have been under great strain as they have struggled to keep staff, and adapt to new variants while facing increased prices due to supply chain disruptions and inflation,” he said. “As we discuss our long-term effort to strengthen our domestic supply chain and manufacturing sector today, I want us to also keep in mind that there are still hundreds of thousands of restaurants and other hard-hit small businesses that require immediate relief.”
The supply chain disruptions that started at the outset of the COVID-19 pandemic were decades in the making. Many companies have outsourced their production in an embrace of cost-efficient manufacturing techniques. Between 1990 and 2008, for example, global trade rose from 39 percent of global gross domestic Product (GDP) to 61 percent.
As awareness of globalized risks such as cyberattacks and supplier disruptions have spread in recent years however, companies have begun to reshore production capacity. By 2019, global trade accounted for 58 percent of global GDP—a 3 percent reduction from 2008.
The pandemic highlighted the lack of resilience and diversification in American supply chains, as well as the nation’s over-reliance on China and other foreign nations for products critical to national security and public health. The disruptions have also led to an increase in production costs, which has been a driver of inflation. In order to ensure the ability of companies to reshore production, domestic manufacturing capacity must be strengthened, specifically through the investment in small manufacturers.
Cardin said, “When factories close, when products sit in shipping containers in ports, when production capacity decreases due to sick employees, and when products take longer to get from the warehouse to the store, prices go up… Rebuilding our domestic manufacturing sector, which has been decimated by decades of off-shoring by large corporations, will require a whole-of-government strategy, and it will require an investment in our small manufacturers, who will be key to our long-term resilience.”
The Biden Administration has made a concerted effort to support small manufacturers. Last year, the U.S. Small Business Administration (SBA) provided $4.5 billion in loan guarantees to 4,868 small manufacturers—a 54 percent increase over the prior year. In July 2021, the administration announced the formation of a Manufacturing Office within the SBA’s Office of Government Contracting and Business Development to ensure that small manufacturers are part of the solutions for supply chain resiliency and so that small manufacturers remain major contributors to the federal government’s efforts to rebuild the economy, diversify the supply chain, and expand the industrial base.
The Biden Administration has also worked to increase the number of underserved small businesses that do business with the federal government to diversify the federal government’s supplier base. In December of last year, the administration implemented reforms pushed by Senator Cardin to increase federal contracting opportunities for underserved small businesses, including increasing the federal contracting goal for small disadvantaged businesses from 5 to 11 percent and releasing disaggregated data on federal contract spending by race and ethnicity to increase transparency.
The administration’s effort to rebuild the nation’s domestic supply chain is also reflected in President Joe Biden’s FY23 Budget Request, which proposed increases to the 7(a) Loan Program, 504 Loan Program, and the Small Business Investment Companies Program. All three programs help small manufacturers secure the capital they need to start and grow their operations. The 504 Loan Program is particularly helpful because it is designed to help borrowers fund long-term capital expenditures, such as equipment or facility purchases.
Additionally, Cardin underscored the urgent need to reauthorize the SBA’s Small Business Innovation Research and Small Business Technology Transfer Programs. The programs supports small businesses that want to take their cutting edge research from the lab to market, making it attractive to many small manufacturers in high-tech industries. The programs are currently scheduled to expire in September of this year.
Click here to watch Cardin’s opening statement.