Shortages are more than a simple supply chain problem

State and industry partnerships will be needed to close the technology and innovation gap created over the past 40 years, one expert says. Rhode Island can lead the way.

During the pandemic, many people blamed factory closures for supply chain problems and material shortages.  The problems had global implications and Rhode Island was not spared from the impacts.  But those easy conclusions ignore shifting of technology and manufacturing strategies over the past decades that established fundamental supply chain weaknesses.

The United States proved technology superiority during World War I and World War II through powerful partnerships between private industry and  federally sponsored research and development. But in the 1960s, this partnership and trend began changing as government-funded R&D did not keep pace with private industry.  According to a 2020 congressional report, that gap has only widened since then.

“In constant dollars, federal R&D declined seven straight years, from 2009 to 2016, by a total 16.8 percent; a similar drop occurred from 1987 to 1994, when federal R&D fell by 16.0percent. In FY2017 and FY2018, federal R&D grew by 1.9 percent and 2.7 percent respectively, in constant dollars,” the report said.

These investment shifts resulted in key manufacturing and technology changes which created US supply chain weaknesses that were exposed during the COVID 19 pandemic.  A lack of domestic support encouraged corporations to move production facilities to low-cost countries. Private industry began moving faster than underfunded government partners, which caused a divide between those partners and lost leverage.Supply chain logistics were optimized around fragile dependence on low-cost labor to move materials in standard and rigid mechanisms.

New federal funding policy has been proposed by the Biden administration and is the critical first step in shifting the United States back to a global technology leader.  The United States Innovation and Competitiveness Act proposes more than $100 billion of funding specifically aimed at addressing gaps:

• New Directorate for NSF focused on basic research and commercialization.
• Provide NSF with flexible personnel and programming for awardees.
• Establish at least 10 regional technology hubs under the Department of Commerce.

But state and industry partnerships will be needed to close the technology and innovation gap created over the past 40 years. These partnerships cannot be in name only.  State and local investment needs to ensure programming is driven into communities of need and address the root causes and conditions of systemic inequalities based on race, gender, disability, economic status or other historically marginalized or oppressed communities which predated and were exacerbated by the COVID-19 pandemic.

Industry must be an active participant in filling the technology and supply chain gaps expanded by the pandemic. Federal funding to support critical technology which includes semiconductors and battery technology must have long term engagement and commitment from industry.  This partnership will be critical from definition to sustainability in order to build proper resiliency into the supply chain and workforce.

Local engagement through intermediaries will prove critical through implementation of programs proposed by the new federal fund programs listed above.  There needs to be a clear continuum from large investment to local community.  For example – new semiconductor plants need to programmatically drive workforce development programming into communities of need.

Rhode Island can be looked upon as a model for the country in this recovery effort.  The state’s small size has allowed for quick and dramatic implementation of programs to support technology transfer and manufacturing growth.

Rhode Island started the industrial revolution back in the 1700s, but is now using tools like Innovation Vouchers, Real Jobs Rhode Island workforce program and powerful industry partnerships to invest in manufacturing and technology.  These state tools are in place to leverage USICA initiatives and funding in a manner not yet seen in the region, and further accelerate technology dependent initiatives like the Blue Economy.  The tools are in place for Rhode Island and proper federal funding will begin progress back to technology leadership.

Christian Cowan is the Chief Operating Officer of The URI Research Foundation.