[House Hearing, 116 Congress] [From the U.S. Government Publishing Office] SUPPLY CHAIN RESILIENCY ======================================================================= HEARING before the SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION __________ HEARING HELD JULY 2, 2020 __________ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 116-085 Available via the GPO Website: www.govinfo.gov ______ U.S. GOVERNMENT PUBLISHING OFFICE 41-296 WASHINGTON : 2021 HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman ABBY FINKENAUER, Iowa JARED GOLDEN, Maine ANDY KIM, New Jersey JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland JUDY CHU, California DWIGHT EVANS, Pennsylvania BRAD SCHNEIDER, Illinois ADRIANO ESPAILLAT, New York ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANGIE CRAIG, Minnesota STEVE CHABOT, Ohio, Ranking Member AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member TROY BALDERSON, Ohio KEVIN HERN, Oklahoma JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota TIM BURCHETT, Tennessee ROSS SPANO, Florida JOHN JOYCE, Pennsylvania DAN BISHOP, North Carolina Melissa Jung, Majority Staff Director Justin Pelletier, Majority Deputy Staff Director and Chief Counsel Kevin Fitzpatrick, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Brad Schneider.............................................. 1 Hon. Kevin Hern.................................................. 3 WITNESSES Dr. Eswar Prasad, Professor of Trade Policy, Cornell University, Senior Fellow, Brookings Institution, Ithaca, NY............... 6 Ms. Christine Fagnani, Co-Owner and Vice President, Lynn Medical Instrumentation Company, Wixom, MI............................. 7 Mr. David Billstrom, CEO, Kitsbow Cycling Apparel, Old Fort, NC.. 9 Ms. Sheila Lawson, Chief Operations Officer and Vice President of Supply Chain, RL Hudson, Broken Arrow, OK...................... 12 APPENDIX Prepared Statements: Dr. Eswar Prasad, Professor of Trade Policy, Cornell University, Senior Fellow, Brookings Institution, Ithaca, NY......................................................... 24 Ms. Christine Fagnani, Co-Owner and Vice President, Lynn Medical Instrumentation Company, Wixom, MI................. 32 Mr. David Billstrom, CEO, Kitsbow Cycling Apparel, Old Fort, NC......................................................... 38 Ms. Sheila Lawson, Chief Operations Officer and Vice President of Supply Chain, RL Hudson, Broken Arrow, OK..... 64 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: None. SUPPLY CHAIN RESILIENCY ---------- THURSDAY, JULY 2, 2020 House of Representatives, Committee on Small Business, Subcommittee on Economic Growth, Tax and Capital Access, Washington, DC. The Subcommittee met, pursuant to call, at 9:00 a.m., via Webex, Rayburn House Office Building. Hon. Brad Schneider [member of the Committee] presiding. Present: Representatives Schneider, Davids, Delgado, Chabot, Hern, Stauber, and Spano. Mr. SCHNEIDER. Well, I thank everyone for joining us today for our Committee's Hybrid Hearing. I want to make sure to note some important requirements. Let me begin by saying that standing House and Committee rules and practice will continue to apply during hybrid proceedings. All members are reminded that they are expected to adhere to these standing rules, including decorum. With that said, the technology that we are utilizing today requires us to make some small modifications to ensure that members can fully participate in these proceedings. During the covered as designated by the speaker, the Committee will operate in accordance with House Resolution 965 and the subsequent guidance from the Rules Committee in a manner that respects the rights of all members to participate. House regulations require members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, if you have to participate in another proceeding, please exit this one and log back in later. In the event a member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available member of the same party and I will recognize that member at the next appropriate time slot provided they have returned to the proceeding. Should a member's time be interrupted by technical issues, I will recognize that member at the next appropriate spot for the remainder of their time once their issue has been resolved. In the event a witness loses connectivity during the testimony or questioning, I will preserve their time as staff address the technical issue. I may need to recess the proceedings to provide time for the witness to reconnect. And finally, remember to remain muted until you are recognized to minimize background noise. In accordance with the rules established under House Resolution 965, staff has been advised to mute participants only in the event there is inadvertent background noise. Should a member wish to be recognized, they must unmute themselves and seek recognition at the appropriate time. For those members here in the room today, we will also be following the health and safety guidelines issued by the attending physician. That includes social distancing and especially the use of masks. I urge members and staff to wear masks at all times while in the hearing room, and I thank you in advance for your commitment to a safe environment for all of us here today. Again, good morning, and thank you all for being here. I would especially like to thank the witnesses for taking time out of their busy schedule to be with us this morning. I want to also thank the Small Business Committee staff for their extremely diligent work during this unique time. It is no secret that small businesses are reeling from the ongoing coronavirus pandemic which brought entire sectors of the U.S. economy to a standstill. Unemployment is at its highest level since the 1930s. Many businesses have been forced to shut their doors to comply with stay-at-home orders. Businesses and essential services that have been able to remain open face shortages for high-demand products, higher costs for production materials, and an inability to get finished goods to market. The COVID-19 pandemic has exposed many weaknesses in our supply chains, both global and domestic, affecting virtually every industry. Most notably, we have seen hospitals, states, and local governments scramble to ensure the integrity and continued flow of desperately needed personal protective equipment (PPE) and medical devices such as ventilators. Too many times our communities, healthcare systems, and businesses were competing with each other, bidding up prices and creating supply dislocations across the country. As well, severe COVID outbreaks at food processing facilities made consumers also experience the heavy costs of the pandemic on our food supply chain. Small firms can be particularly vulnerable to disruption in supply chains. Many spent years refining just in time supply systems, maintaining only a few days or a few weeks of inventory. Many others have limited control of their supply chain and depend on lower priced suppliers from overseas to support razor thin margins here at home. An overreliance on foreign countries for manufacturing components was already an issue before the pandemic hit. As the health crisis spread, Americans realize that too much of our medical supply and personal protective equipment sourcing was in China and other countries hit by COVID. As these countries nationalize their manufacturing capacities, shipments to the United States started to dry up. Initially the crisis was with PPE, than other finished products, but quickly moved to raw materials and components U.S. manufacturers depend upon to produce their goods for market. These supply disruptions affected businesses large and small in every state. However, as they so often do, American small businesses across a variety of industries have demonstrated incredible resiliency, resourcefulness, and ingenious flexibility shifting product lines, moving to more ecommerce and utilizing alternative supplies and modified distribution chains. Some shirted to making PPE and hand sanitizer in a matter of days. Others came up with new and innovative ways to source their products while they are still discovering new delivery channels in entirely new markets. We will hear inspiring stories of this adaptability today. So why are we here? Small businesses are the heart and soul of our local communities. They represent more than 40 percent of our national GDP and more than half our country's jobs. Today's hearing will focus on how we can help sustain our Nation's small businesses and explore potential solutions to establish more resilient supply chains through this crisis and into the future. Improving our Nation's supply chain resiliency will require an ``all hands on deck'' approach as both domestic and global supply chains are vastly interconnected, yet can vary significantly from industry to industry, product to product. We must also recognize that trade is an essential part of supporting small business in a modern economy. Ninety-five percent of the world's population reside outside the United States, and exporting provides small businesses with literally billions of new customers. However, it is important that we prioritize making things here at home to protect our national security and public health. Doing so will also create jobs and ultimately help us build a stronger economy and a better future for all of us. Second, to enhance our economy's resiliency, we can do better utilizing the distinct strengths and greater adaptability of small companies. In many ways, smaller firms are more nimble than larger ones and can quickly shift their manufacturing, distribution, and sales capacities to meet increased demands for certain goods. Third, much of the disruptions we are experiencing currently were both predictable and preventable. We need to establish better lines of communication and develop better coordination so that we can anticipate shortages, identify additional and alternative sources, and get critical goods and products where they are needed in the most timely, efficient, and cost-effective way. And finally, we need to help small companies be ale to diversify, reinforce, and scale their supply chains to better deal with unforeseen surges. I look forward to hearing from all of our witnesses today about their experiences and their ideas for charting a path so we avoid future crises. Hopefully this hearing can help us establish best practices for our small firms and some principles for our Federal government as the economy recovers. Thank you to everyone for being here today. I now recognize the Ranking Member, Mr. Hern, for his opening statement. Mr. Hern, I think you may still be on mute. Now we have you. Mr. HERN. All right, thank you. I would like to thank my colleague for sitting in the chair today and leading our Committee. You know, there is no question that this black swan event has sent a shock wave through the world and forcing supply chain leaders to rethink current operating models, questioning their operation's emergency preparedness and dependencies on primary sources. Industries of all kinds from medical to agricultural to automotive, retail, and manufacturing and more have been discriminately harmed by cascading effects of the novel coronavirus. In the medical industry, the pandemic created an international shortage of personal protection equipment necessary to protect healthcare workers and to heal patients. The flow of lifesaving pharmaceuticals in the United States has also choked disrupted the supply chains across the Nation. However, small businesses were able to quickly fill the gaps in supply chains pivoting from their operations to quickly produce critical medical supplies potentially saving countless lives. COVID-19 also rattled the agricultural foodservice industry, disrupting all parts of supply chain from farmers to processing plants and distributors with significant uncertainty still on the horizon. However, many farmers are rising to the challenges of the moment, adjusting the way Americans now shop and eat by experimenting with direct customer sales and deliveries. Additionally, the President's Executive Order 13917 takes one step towards keeping food supply chains intact. In the manufacturing sector, businesses face several logistical hurdles trying to regulate their accounts payable and receivables. Having to reassess market demand (inaudible) output, tremendous hurdles exist in trying to manage the workforce, move inventory from one place to another, and keep customer relationships intact during the trying times. As we have seen in a number of other industries, small and local businesses have stepped into the breach, filling the void where traditional suppliers and distributors (inaudible). Unfortunately, for every small business success story that comes out of this pandemic, we also see mom and pop shops shutting down. Long unemployment lines (inaudible) country and other (inaudible) to the rippling effects of the coronavirus. Where a big company might have a contingency plan and a larger network built into their supply chain, many small businesses operate on a more linear path leaving them at a greater risk when disruptions occur. Even though the overall picture may seem bleak, the silver lining (inaudible) to reshape the supply chain (inaudible). (inaudible) with the local and small businesses to fit in anywhere along their supply chain. My hope today is that we can learn more about what we can do to help small businesses affected by the COVID-19 outbreak and how we can leverage the power of small businesses to fortify our national supply chain. With that, Mr. Chairman, I yield back. Mr. SCHNEIDER. Thank you, Mr. Hern. I would now like to take a moment to explain how this hearing will proceed. Each witness will have 5 minutes to provide a statement, and each Committee member will have 5 minutes for questions. Please ensure that your microphone is on when you begin speaking and then that you return to mute when you are finished. With that, I would like to introduce our witnesses. Our first witness is Dr. Eswar Prasad. Dr. Prasad is the Tolani senior professor of trade policy at Cornell University. He is also a senior fellow with the Brookings Institution. He was previously chief of the Financial Studies division in the International Monetary Fund's research department, and before that he was head of the IMF's China division. Thank you, Dr. Prasad for being here today. Our second witness is Christine Fagnani. Ms. Fagnani is the co-owner and acting vice president of sales and marketing for Lynn Medical. She has held this position for the past 18 years. Prior to working at Lynn Medical, Christine worked for Johnson and Johnson for 16 years in their pharmaceutical division. Christine is also active with the Health Industry and Distribution Association, the leading trade association representing medical distributors. Thank you, Ms. Fagnani, for being here as well. Our third witness is David Billstrom. Mr. Billstrom leads Kitsbow Consulting Apparel in Old Fort, North Carolina. Along with a 39 year career that includes Intel Corporation and Walt Disney, he founded an Internet search engine company, helped build the Clover Coffee Company acquired by Starbucks, and 2 years ago became the leader of Kitsbow, a cycling apparel company that recently moved from California to North Carolina. Thank you, Mr. Billstrom, for being here today as well. I now would like to yield to our Ranking Member, MR. Hern, to introduce our final witness. Mr. HERN. Thank you, Mr. Chairman. I would like to welcome our final witness who is from my district, Ms. Sheila Lawson. Good morning, Sheila. Ms. Lawson is the chief operations officer for RL Hudson and Company located in Broken Arrow, Oklahoma. RL Hudson and Company was founded in 1980, and founder Rick Hudson was at the tip of the sphere organizing the coming trend of Asian manufacturing where he began establishing relationships abroad. Soon, the small company that started out as a distributor of rubber O-ring sales became a booming success story with the capability to research, design, and test unique and patentable rubber compound. In 2017, the company launched a new in-house capability and continues to expand (inaudible) competitive industrial landscape. Ms. Lawson brings with her a deep well of experience having lived in the supply chain and operations world for 30 years. She has been with RL Hudson for the past 14 years serving as COO for the past two. She is currently in her third term as president of the Association for Operations Management, previously known as the American Production and Inventory Control Society, where she has also been on the board of directors since 2004. Ms. Lawson is a thoughtful and intelligent leader continuously striving to stay informed as the landscape in her profession evolves. Thank you or your participation today, and I look forward to hearing your testimony. Mr. Chairman, I yield back. Mr. SCHNEIDER. Thank you, Mr. Hern. We will now recognize the witnesses. Dr. Prasad, you are recognized for 5 minutes. STATEMENTS OF ESWAR PRASAD, PROFESSOR OF TRADE POLICY, CORNELL UNIVERSITY, SENIOR FELLOW, BROOKINGS INSTITUTION; CHRISTINE FAGNANI, CO-OWNER AND VICE PRESIDENT, LYNN MEDICAL INSTRUMENTATION COMPANY; DAVID BILLSTROM, CEO, KITSBOW CYCLING APPAREL; SHEILA LAWSON, CHIEF OPERATIONS OFFICER AND VICE PRESIDENT OF SUPPLY CHAIN, RL HUDSON STATEMENT OF ESWAR PRASAD Mr. PRASAD. Small businesses are indeed the bulwark of the American economy, and in this very trying time when the COVID- 19 pandemic has ravaged the entire American economy, small businesses have taken the brunt of the burden. They have smaller tax buffers and smaller other sorts of buffers to deal with the shock of this sort. But the (inaudible) recognized factor that is affecting small businesses is, of course, the disruption of supply chains. So I commend the Committee for holding this hearing, and thank you, Chairman Kim and Ranking Member Hern, for allowing me to share my views with the focus especially on global supply chains which many of my distinguished fellow panelists will also be speaking about. Now, global supply chains have been a boom for small businesses in many ways. One of the reasons the supply chains have proliferated (phonetic) is that (inaudible) leadership over many decades, both tariff and nontariff barriers to trade have fallen around the world and transportation costs have declined. Small businesses have taken full advantage of these supply chain possibilities around the world and this has allowed them to reduce costs, increase efficiencies, and even expand into broader aspects of business that they might not have been able to do in other circumstances because for small businesses the option of vertical integration, that is basically trying to integrate all parts of the production process within one firm is not really a viable option. So I think the vitality of small businesses in the U.S. (inaudible) to the integration of supply chains. Now, supply chains are subjected to (inaudible) for a variety of reasons. One reason, of course, is health and natural disasters, such as the COVID-19 pandemic that we are experiencing right now. But there are other factors as well. Trade relationships are very important in terms of maintaining the viability of these supply chains, and trade tensions among the major economics, for instance, the U.S.-China trade relationship or even the North American trade relationships which are both very important for small business supply chains have certainly had their fair share of tensions in recent years. Geopolitical tensions in other parts of the world and weaknesses in other countries which are very important, export markets for small businesses, in addition to being part of supply chains also create vulnerabilities. So what can small businesses do to increase the resiliency of the supply chains? One potential strategy, of course, is onshoring. That certainly reduces vulnerability to global supply chains, but it also takes away many of the advantages of global supply chains that small businesses have benefitted from. So it is not clear that that is the optimal strategy. Another possible strategy is diversification. That is not relying just on one source of suppliers but trying to diversify across countries, across suppliers. Now, this has both advantages and costs. Certainly having a more diversified supply chain is going to create more resiliency, more redundancy, but it comes at a cost, especially in terms of efficiency. And for small businesses, cost is clearly a very important consideration. Small businesses can, of course, also increase the resiliency of the supply chains through using technology that can improve the logistics and other parts of their management. So there are many strategies that small businesses can employ but government has a crucial role to play as well. So what can the government do? In the short term it is very clear; small businesses are hurting as we will hear from my fellow panelists, and the sort of assistance the government has provided so far, both through the Paycheck Protection Program and also the Main Street Lending Program of the Federal Reserve have been very important and it is crucial that this assistance be continued, and more importantly, that congressional oversight, including by your Committee, make sure that this assistance does reach these firms and reaches them in a timely manner. In addition, the government can also play a useful role in terms of tapping (phonetic) down the uncertainty that is created by trade tensions around the world. Certainly, there is a case to be made, but effective negotiations by the U.S. would help to level the playing field that would help small businesses, but uncertainty in trading relationships and trade frictions suddenly do not help. Providing more assistance to the Export Import Bank for exporting drugs can certainly help as well, and America's support for the multinational institutions such as the International Monetary Fund and the World Bank, which in turn can help other countries of the export markets of the U.S. is a crucial factor as well. So between small businesses themselves and the government, I think this very difficult patch can be gone through. This is my hope, that working together, governments, the Federal government, local governments, and small businesses themselves can maintain the resiliency that they have shown in many times in the past and continue to remain very important bulwarks of the U.S. economy, especially as we start, as I hope we will, getting into the economic recovery. Thank you. Mr. SCHNEIDER. Thank you, Dr. Prasad. I would now like to turn to Ms. Fagnani. You are recognized for 5 minutes. STATEMENT OF CHRISTINE FAGNANI Ms. FAGNANI. Yes, good morning. Thank you, Chairwoman Velazquez, Chairman Kim, Ranking Member Chabot, Ranking Member Hern, and distinguished members of the Committee for the opportunity to testify today. My name is Chris Fagnani, and I am the owner of Lynn Medical. Established in 1966, my company is a second generation, family-owned medical products distributor. We have 30 employees and we are located in the suburb of Detroit, Michigan. We represent over 100 medical manufacturers, and we distribute nationally to hospitals, doctors' offices, and clinics. For this hearing, it is important to know the significant part of our customer base is also small businesses, practices owned by the physicians themselves. I also have the pleasure of appearing before you today as the Board Chair of the Health Industry Distributors Association (HIDA), the association that represents 100 distributor companies operating 500 distribution centers across the country, providing services to virtually every provider in the country. Small business is a significant part of our industry as 73 percent of HIDA members are small businesses. COVID-19 created several challenges and also opportunities for Lynn Medical, both as a small business and as a distributor in the healthcare market. The main challenge we had to deal with was the significant product shortage and disruptions to the healthcare supply chain. Representing quality products is a pillar of our organization. As demand was in many cases three times the capacity from our traditional manufacturer partners, we found ourselves having to vet new sources, something we were not used to doing as we had a very solid stream of manufacturer partners. We are also used to operating in a very black and white world. Products were either FDA approved and we distributed them, or they were not FDA approved and we did not distribute them. We now had to include understanding the FDA's guidance on products approved under Emergency Use Authorization and timely awareness of the shifting guidance from the FDA. As a small business, we do not have a legal department or a regulatory department or a very large purchasing department whose role it is to navigate through these complex issues. We found this a critical task we had to take on but very important that we navigate and very difficult to navigate through. I have two examples of how shifting EAU guidance affected Lynn Medical. The first is KN95 masks. KN95 masks were allowed under EAU due to the shortage of N95 masks in the United States. Guidance on what factories were approved to provide the KN95 masks and the labeling on the packages, the guidance from the FDA has shifted throughout this pandemic. We had product that had left China. When it left China it was on the approved list and it was labeled properly. Hours later when it reached the United States, the guidance had shifted. Our product was still allowable and approved, but the labeling on the box was not, so the product had to be flown back to China, the boxes needed to be relabeled, and then flown back to the United States. The product was already sold. We had already prepaid for the product. Our customers were faced with a 6-week delay in receiving product that was very important to them. Another example that highlights the challenge is the COVID- 19 antibody test. We had shipped product that was allowable as the manufacturer had filed for an EAU and the EAU was pending based on a March 16, 2020 FDA guidance document that deemed product allowable while EAU approval was pending. However, subsequent FDA guidance on May 4th stated it was not allowable to ship the product until the EAU was formally granted. It was very difficult to obtain clear answers from regulatory agencies and very difficult to explain to medical facilities why allowable product was now not allowable. There were significant hardships in searching for clear documentation to assure we were complaint. Currently, we are very concerned about payables from our healthcare customers. Many facilities closed or reduced operations while at the same time had large expenditures to procure PPE that was not budgeted for. Their cash flows are not at normal levels and they are asking for delayed payment plans. And with the shortage in product, we are being asked for prepayment of product. My company did apply and received approval for the Paycheck Protection Program. It was an easy and painless process for us, and I want to thank you for including this program in the CARES Act. This assistance is critical to Lynn Medical's financial health. It allowed us to stay whole and maintain our commitment to both our employees and our customers. While the regulatory environment was confusing, we utilized the flexibility and agility small business has to become adept at vetting new suppliers and becoming a resource for our customers. We found our biggest success in dealing with other small businesses domestically. We partnered with small manufacturing businesses whose primary product was deemed non-essential but wanted to keep their employees working and also assist in the COVID-19 response. Two examples. We partnered with a family-owned business in Michigan that was primarily a cut-and-sew shop for the automotive industry. They made seat coverings and arm rests for cars. We collaborated with them, so they could transition to isolation gowns and fill a critical need in the COVID-19 response. We also partnered with a drum-making company in New Jersey who retooled to make face shields. We found in the small business community innovation, a willingness to shift priorities and take risks to keep their businesses relevant and employees working. I would like to thank this Committee for its leadership on small business issues and the policies Congress has included in previous stimulus packages. As the Committee considers future opportunities to support small business---- Mr. SCHNEIDER. Ms. Fagnani, your time has expired. If I can ask you just to wrap up. Ms. FAGNANI. Thank you. All right, thank you. Mr. SCHNEIDER. I am sorry. Thank you very much. We will now turn to Mr. Billstrom. You are recognized for 5 minutes. STATEMENT OF DAVID BILLSTROM Mr. BILLSTROM. Good morning, Chairman Kim, and Ranking Member Hern and all of the members. Thank you for having me here today. It is an honor to testify alongside these thoughtful and passionate witnesses. I am speaking to you this morning from North Carolina about a journey a bicycle clothing company took to respond to a national crisis and what we learned. It is an incredible story and one we never could have imagined. Our story is also remarkable because we are not an old- school established apparel company in the South. In fact, we just got here. After 7 years in California, we moved to Old Fort, North Carolina in October to create a modern, made-to- order clothing factory. Only one of our employees relocated from California, so nearly everyone at Kitsbow is a local. And for us, the COVID arrived in February. I say this with some irony because knew the situation in China was real in February because of our supply chain. You see, we make premium clothes, very expensive, designed very carefully. We use the latest technical fabric and every detail is considered. We use snaps, not buttons, for example, and the best snaps in the world are made in Japan. So, when our Asian suppliers of fabrics and snaps would not return emails and phone calls in February, we knew it was real. We took immediate precautious, established social distancing. We cleaned doorknobs. We stopped sharing tools and we even canceled events. By mid-March, we were considering layoffs or furloughs. But on the same day, our founder in California showed us how we could start making PPE. We elected to keep everyone and do our part to help first responders and medical. Now, the full story of we launched into PPE would take more time than we have today, but suffice to say that on the first day we showed the world that we were making PPE, the orders came pouring in. In fact, at the end of that first day we had orders for more than 25,000 units. It is the biggest shift in customer demand I have seen in 40 years in business and it happened in one day. We also knew that our community needed what we could do, so we made the pivot. We are now on day 104 in making PPE and we have shipped nearly 90,000 units in those 100 days from a cold start. We still cannot make enough, and it would be months before we could sell to the public. All of our output initially was reserved for first responders and medical professionals. Now, there are several reasons why a small business like ours can make this pivot. First of all, we have a modern, flexible factory. We can reconfigure the sewing machines and equipment in a few hours. We do this all the time. Second, we have an awesome product team. These leaders are experts in locating suppliers, designing products, and then moving them immediately into production. Third, we had the support of other businesses in the region, supplies and suggestions. We helped each other making PPE just as you heard a few moments ago from Lynn Medical. Fourth, and most importantly, we knew where our products would be going. I had connections in the public safety community, and we had a distribution partner. It is one thing to make PPE for the good of your community. It is another thing to get paid for it so the business can survive and so that you can pay your employees. Our distribution partner is a private foundation in our region called the Dogwood Health Trust. Dogwood is focused on health and the wellness of 18 counties in the far western portion of North Carolina where Kitsbow is located. The team at Dogwood heard about what we were doing and made contact literally on that first day. They apparently recognized our capabilities and commitment and immediately made an order, paying for it in advance to help our cashflow. They would, in turn, share our PPE with those who needed it. Now, I want to take you back in time. This is March 21. North Carolina had its first confirmed case just 2 days earlier, and California had issued the stay-at-home order just the day before. So this was early, and it was strategic. Dogwood's CEO, Antony Chiang shared with me that their concern was lack of enough PPE for the region should we experience a surge. His hope was that Kitsbow would become one of several local manufacturers of PPE. It was time to act, so we did. And together we created a local supply of PPE, and for bonus points, eventually most of our supply chain was in the U.S. Now, as the other people testifying here today already know, a manufacturing operation has two big knobs you can turn if you want to crank up the volume--the labor force and the raw materials. Word went out that we were looking for help, and within 2 days we doubled the number of employees to over 50. We had turned up that knob, so we went for the raw material. Our product design team hit the phones and the Internet. They worked 10 hours a day for weeks to source material. It is hard to describe the frustration after you have turned your entire workforce to making PPE only to find out that all the elastic in the United States has been purchased in the last 4 days. We were competing with hundreds of other businesses. Now, after 2 months of work by our product team and many disappointments, we now source almost 100 percent of the raw materials for our PPE here in the United States. It was a very heavy lift for a small business, just as you heard about Lynn Medical. Our team came in every day for months despite orders to shelter in place which, frankly, would have been the smart thing to do. In closing, we have a couple of requests for your consideration. First, we cannot overstate how appreciative we are of the FDA and their efforts to make it easy for small businesses to sell face shields. An emergency use authorization on April 13th allows Kitsbow to tell buyers that our shields are FDA authorized, that black and white that you just heard about. This is an absolute requirement for any buyer in a large organization because their internal policies require PPE to be FDA approved. Second, now we need the same thing for fabric masks. We are busy making thousands a week, but very few large organizations are allowed to buy them because of the lack of FDA guidance or an emergency use authorization. Third, we agree with HIDA that a streamlined information source for small businesses would be a huge help. Small businesses rarely have even one full-time administrative person able to address Federal requirements---- Mr. SCHNEIDER. Mr. Billstrom, your time has expired. Mr. BILLSTROM. Thanks for the invitation to speak today. Mr. SCHNEIDER. Thank you very much, Mr. Billstrom. We will now turn to Ms. Lawson. You are recognized for 5 minutes. Ms. Lawson, I think you may still be on mute. STATEMENT OF SHEILA LAWSON Ms. LAWSON. Sorry for that. Good morning, Congressman Hern and other congressmen members. I am honored to be speaking with you today. Over RL Hudson's 40-year history, we have made the progression from distributor to custom molded part manufacturer by beginning (inaudible) plastic injection molding in 2017. The link between that chasm was superior supply chain management and engineering design support which is still heavily relied upon today by our OEM customers. Our primary products were molded rubber and plastic parts, extruded and formed hoses, shock and vibration isolation products, and sealing devices. Industry served our medium and heavy-duty trucks, agriculture, medical, power sports, recreational marine, hunting, and others. As an essential manufacturing company, it has been important for us to think safety first for our team members. Our leadership team took quick actions to augment our safety culture, including hospital drape cleaner, PPE, remote work and meeting options. Although we did have a few momentary concerns, we are thrilled to say we are all healthy. External supply versus demand has been a key challenge. Importing from 14 countries (over 400 containers and 92 million units annually) and exporting to 20 countries (380 customers and 78 million units annually) across the globe brought a list of challenges from the very onset of the COVID- 19 pandemic. As the Chinese New Year was being extended, customer forecast indicated inventories would be consumed soon if we did not respond with swift and creative action. Through strong relationships with our external partners and many conference calls, we were able to secure inventory availability details along with more challenging tasks and finding space on vessels sometimes, talking to new ports in order to get faster boats which allowed 2 additional weeks for production. Forty percent of production during March and April moved in this mode adding 50 percent to our transit cost. All the while, customers were asking for daily meetings to ensure product availability. When COVID-19 reached the balance of the world, (inaudible) expedited containers began arriving to RL Hudson. With the U.S. implementing stay-at-home orders, and with many customers halting production, we needed to find a place to store the inbound inventory. We had had 18 containers lining our parking lot with an additional 30 moved to offsite storage. Both came with challenges and increased costs. Predicting future customer consumption required new tools. The customers had no way of predicting how they would be impacted. Our inventory dollars grew by 30 percent. Today, our in-transit inventory has been controlled and reduced by 50 percent on average. Needless to say, this has placed a strain on our manufacturing partners. The events resulted in payables being greater than receivables for a short time which was a first during my 14 years with the company. As customers reopened their doors, we were forced to change company policies to not allow for ship dates on orders to be canceled or pushed out. Our company prides itself on flexibility, so this change has been challenging for both our team and the customer. We have allowed the policy to continue, however, should the customer factory be nonoperational. Our key customers provided a mountain of support by accepting earlier ship dates to make up for loss consumption in April. We are thankful for the true partnerships and support they have provided. Internal workforce versus demand has proven to have its own set of challenges. Late raw material arrival in Q1 forecasting need to remain strong. Our manufacturing team (inaudible) action to ensure product availability. As demand decreased due to the stay-at-home orders and factory closures, we kept our teams in production by building stock for products that are higher volume but with zero firm orders. With machine utilization in our injection molding dipping to 30 percent in April and finished goods filling the warehouse, we did move to a 4-day work week during May for all team members. We were thankful that the PPP loan allowed us to avoid layoffs and furloughing our team members. In addition, although our work hours were reduced in May, we were able to pay employees for that full 40 hours of work. Due to our flexible supply chain, RL Hudson has been able to gain 10 new customers during the pandemic. While we have responded very well, we would like to point out that we had begun a process of diversification long before this event. Using in-house manufacturing as an example, we have been taking more production in-house. We have a new strategy to diversify our global production even more, and while not yet fully implemented, this crisis revealed the wisdom of the strategy. We still appreciate our international partners and realize we need them for certain components which only frees up our expertise for items where we can excel in manufacturing domestically. Just as our society is trying to learn how to better celebrate diversity and the blessings it can bring, we believe diversity to be a principle that works well for business, even supply chains. Making America strong as a manufacturing leader will require diverse partnership with factories worldwide. Thank you very much. Mr. SCHNEIDER. Thank you, Ms. Lawson. And again, I want to thank all of our witnesses for joining us and sharing their experiences. I will begin now with the questioning and recognizes myself for 5 minutes. So I will start with something Ms. Lawson said in her comments. Customers are asking for daily meetings because there is so much uncertainty. This pandemic and the uncertainty in our supply chain has created extra costs, more uncertainty, higher risk, and certainly more frustration. As we heard from Mr. Billstrom, the level of frustration trying to figure this out in a very difficult world. And Mr. Billstrom, I am going to quote from your submitted testimony which I thought was fascinating, the full story, I wish we had time to hear it all, but on page 25 you say, ``Kitsbow was competing with dozens, hundreds, of other manufacturers for the same key material-- plastic, elastic, HEPA filter media, et cetera, all of which was obviously critical and essential supplies in a worldwide disaster. This could have been recognized and the appropriate material secured by a central authority.'' I want to explore that idea. I have been searching for a centralized supply chain czar because this is so critical. We see it for our small businesses in their need to get everything from raw materials and supplies to manufacture their goods, one leading to another as small businesses rely on each other as we have heard from the witnesses, but also the fact that if we compete with each other prices are going up and it is making it very difficult for small companies. In particular, we have seen this with the PPE, the personal protective equipment--gloves, masks, gowns, et cetera. So I would like to start with Dr. Prasad. When you are looking at essential goods like PPE, medical devices, the food supply, et cetera, where do you see the Federal government has fallen short in the early months of this pandemic, in the spring, and what can we be doing to make sure that we do not fall short in the months ahead of us? Dr. Prasad, you are still muted. Mr. PRASAD. Sorry, Mr. Chairman. Your question is a very pertinent one, and as I think my fellow panelists have indicated, regulatory certainty is certainly one of the most critical aspects that small businesses seem to be contending with. Certainly, there are facts changing on the ground by (inaudible). Mr. SCHNEIDER. I think we lost the signal again, Dr. Prasad. You may be muted. Mr. PRASAD. Sorry. I think I was emphasizing the issue of regulatory certainty to make the point that the experiences that my fellow panelists suggest that while the FDA and other regulatory agencies have been flexible (inaudible) very welcome, the lack of certainty (inaudible) ultimately challenging for them. And that I think needs to be (inaudible) a critical element that the government can help with, in addition to providing more (inaudible) such programs. Mr. SCHNEIDER. Great. Thank you, Dr. Prasad. And let me turn to Mr. Billstrom because I quoted you. How would you see a centralized authority for supply chain possibly making a difference in the work you were trying to do as you touched on getting the raw materials and ultimately getting finished product to your customers? Mr. BILLSTROM. You know, I hate to say this, but I do not know. That is not my area of expertise. So I can explain the need, which is as scarce materials that are essential and cannot be replaced any other way are identified, we need some way of organizing it but I do not have a specific proposal on it. Mr. SCHNEIDER. And I appreciate you not wading in where you did not feel confident. One of the things I think, and just from my experience in business, is that to the extent we can have a centralized authority who understands where there are opportunities, as you touched on in your company, Kitsbow did a pivot and then you mentioned in your testimony, a pivot within a pivot within a very short period of time. Helping coordinate that in a centralized authority, understanding what is happening, the needs across the Nation, the resources across the Nation and trying to match those I think is a good opportunity. But I have used my time. I will now turn to my colleague, Mr. Hern, to ask his questions. Mr. HERN. Thank you, Mr. Schneider. I really appreciate it. Again, thanks for all the testimony that we just heard regarding supply chain. Ms. Lawson, I have had an opportunity to tour your manufacturing. Can you tell us more about how doing in-house productions is fair compared to working with outside manufacturing partners outsourcing? Ms. LAWSON. Sure. As we insourced, we had our own set of challenges. As we began pulling in from outside, we found that, you know, they had secondary operations and we needed to learn to (inaudible) ejected part out of the machine (inaudible) secondary operations. And we were able to control that, the quality of that much better because as it came out there were new additional trimming operations and such which can create gouges (inaudible) and those type of things. So, controlling that has been great. However, we do believe that there are sectors where we will need (inaudible) useful location for the means of production because there are some items that are better suited to be produced elsewhere and it frees our expertise for items that we can excel in manufacturing domestically. So we see (inaudible). We do and our customers do appreciate the additional control (inaudible) as we bring product in-house. Mr. HERN. I have got a series of questions. One question I am going to ask for all of you, and I will start with you. There has been a lot talked about across multiple industries-- pharmaceutical (inaudible) PPE and others that relate to bringing things in from Asia, and more specifically, China and Taiwan and places like that. What do you see (inaudible) Asian community and importing and exporting to them as well, what do you see changing right now among the perception of the American people, even if we talk buy American, how practical is that to bring what some would like 100 percent of all sourcing back to the United States? Or certainly to North America? Ms. LAWSON. RL Hudson has more than 5,000 parts numbers which we procure abroad in the Asian factories. And to bring all those back, the dollars for tooling, even if you are moving the tools, in some cases you can build new ones for the same cost as the other ones. There is testing. (inaudible) they have product that has good quality which requires testing. So the cost associated with that would really be (inaudible) for us. New product and where it makes sense to move them from critical parts, we support that and believe that (inaudible) parts will be great. But there is a (inaudible) to be left where they are, and we do see concern from our manufacturing partners that we worked with. And if they want as businessmen their selves and women, they want to provide good quality service to us, so it is a bit of a strain on a relationship and we want to make sure that we are able to provide product as promised to customers throughout the U.S. Mr. HERN. Thank you. Professor Prasad, just from a policy standpoint, when you are looking at what you are seeing the movement across the United States because of the pandemic, this bringing back, this acceleration and bringing back manufacturing from specifically China back to North America, yesterday was the first day of the USMCA bill, how do you see that opportunity that confluence of opportunity from China to now USMCA with free trade, lower labor costs in Mexico, how that would soften the blow of price increases and might affect the willingness to buy? Mr. PRASAD. Certainly, the onshoring and also the regionalization of supply chains as opposed to using global supply chains is going to have some positive benefits in the short term in terms of employment in the U.S. and on the North American continent. But I think with small businesses there are some real constraints enforced by that because the very limited supply chains here in a certain place, many of which are going through Asia as was the case for Hudson Manufacturing, has left enormous gains in efficiency, and frankly, it has allowed them to create certain products. Sometimes it might not be possible if you had much or regional supply chains. So I think it is going to be a tradeoff for every small business. There are huge benefits to be trained from a much broader supply chains, especially if you think about the sort of diversification that the lady from Hudson Manufacturing talked about. And that has to be offset against the fact that there are going to be job gains certainly if you have more onshoring. But from a longer- term Perspective, I think the broader diversification of the supply chain is certainly going to be better for small businesses. Mr. HERN. Thank you. Mr. Chairman, I yield back. Mr. SCHNEIDER. Thank you, Mr. Hern. And I would now like to recognize the gentleman from Ohio, the Ranking Member of the Small Business Committee, Steve Chabot. Mr. CHABOT. Thank you very much, Mr. Chairman. I understand that my connection may have some challenges here, so hopefully you can hear me okay. If not, let me know. I will start with Ms. Lawson if I can. I want to thank all the witnesses for being with us today. You alluded to this in your testimony, but could you describe in a little greater detail some of the more significant tradeoffs that your company had to navigate in order to keep your supply chain intact, and do you think these tradeoffs could result in any long-term damages or challenges or disadvantages for your company? Ms. LAWSON. Sure. Some of the biggest challenges we are going to face as we go forward is that we have really strained your manufacturing partners. One of the keys to our success is making sure that we are an important customer to our partners, so we want to make sure that we are in that top one, two, three on their customer list. That we are a big percentage of their business. But we have some manufacturing partners who are only manufacturing 2 or maybe 3 days a week at this time. So as business begins to increase, we are going to face challenges for those products that must come from them because everything that we purchase is a one-one relationship between the customer. There is nothing that we can sell to another customer nor can it be produced by anyone else without additional tooling being built. So we are going to need to support these factories as they begin bringing up their production, maybe in some cases rehiring on their own and building back up their timelines to be able to manufacture. So it is going to be a big challenge. I also said in my statement we are looking to diversify, and we have already began through that process. We went through 101 different manufacturing companies. We have narrowed it down to almost 30. And due to the pandemic, we are a little bit strained opening up new factories as we cannot put boots on the ground to make sure that we do those full-scope audits to ensure the qualities are in place that our products require. Mr. CHABOT. Okay. Thank you very much. I will stick with Ms. Lawson at this point. What would you say was your greatest asset in weathering the disruptions in your (inaudible) COVID-19, and what would you say was your biggest challenge? Ms. LAWSON. Okay. I would say that we have built very strong relationships, and we communicate very well with our supply chain all the way from the supply chain being our factories and also being our customers. So communication has been key. And being very open with what we are being faced with. So we have had conference call after conference call. You know, 10, 11 o'clock at night followed by 7 a.m. conference calls with other countries in the morning. It is very important that we are communicating and that everyone knows what is the situation. And that includes our freight-forwarding teams. On the other side, the biggest challenge has really for us been where will we place this inventory and our payables have also, I forgot which one of my colleagues talked about payables, but it is a strain because we have seen some customers close their doors throughout this process, and that is concerning with our payables. And for the first time we had our receivables less than our payables. And it was a strain and a concern. But I am very thankful that our team members who have had long-term stability with our factories have been able to move from one side of our business to the other, so we have been fluid in being able to keep our headcount where it needs to be and manage our expenses accordingly. Mr. CHABOT. Thank you. Thank you very much. Mr. Chairman, on my screen the time clock is frozen, so I have no idea how much time I have left. Could somebody educate me on that? Mr. SCHNEIDER. You have 30 seconds. Mr. CHABOT. Okay. All right. Well, at this point, probably not having sufficient time to really get into, you know, another question, have the answer, to be fair to my colleagues I will yield back in a second. But I just once again want to thank all the witnesses for their testimony today. I think it has been very helpful. Supply chain is absolutely critical, and during these times, you know, a clear challenge. And it was helpful to hear how you all are dealing with it and recommendations that we can work as we are moving forward for potential legislation or other things that we are involved in. So thank you very much. I appreciate it, and I yield back. Mr. SCHNEIDER. Thank you, Mr. Chabot. And we will have a chance to go to a second round of questions if you want to stay on. But the gentleman's time has expired and yields back. I would now like to recognize the gentleman from Minnesota, Mr. Stauber. Mr. Stauber is the Ranking Member of the Subcommittee on Contracting and Infrastructure. He is now recognized for 5 minutes. Mr. STAUBER. Thank you very much, Mr. Chair. And thanks for the witnesses for being here. You know, since the beginning of the COVID-19 crisis, we have seen over 70 countries impose some sort of export restrictions on an array of different products, including medical supplies, pharmaceuticals, and food products. Can any of the witnesses tell me what would happen if tomorrow the communist country of China chose to implement an export ban on active pharmaceutical ingredients, medicines, and critical minerals that power our renewable energy? Anybody? Well, I can tell you what would happen. We would be in deep trouble. You know, currently, the United States relies on communist China and other foreign actors who do not have our best interests in mind for too many of our goods and services. China, for example, is one of the top producers of API active pharmaceutical ingredients, which are the basic components of antibiotics and other prescription drugs. And because of their poor environmental and labor standards, China manufacturers and exports many of the minerals critical to our national security. The Democratic Republic of the Congo exports about 60 percent--60 percent of the world's cobalt supplies. Cobalt is used in batteries, computers, and yes, renewable energies. According to Amnesty International, this cobalt is mined by children in appalling conditions. These kids do not go to school. They do not get any protective equipment. They do not have a minimum wage or a limit on the hours worked. These kids mine cobalt for our renewable energy and our cell phones and our technology. Most of the United States, estimated 1 million tons of cobalt reserve are in my district and could be safely and responsibly mined with strong environmental standards and union-protected jobs. You know, during this pandemic it has become apparent more than ever, we must improve our domestic supply chain. We can no longer rely on our adversaries, like the Congo, Russia, and China, for resources that are critical to our economy, our national security, and our health. For these reasons, I recently introduced two pieces of legislation to bolster self-reliance on our own supply chain. First, I introduced Securing America's Critical Mineral Supply Chain Act, a bill that would incentivize manufacturers to purchase domestic minerals, like those mined in Northeastern Minnesota. And second, I introduced the Securing America's Pharmaceutical Supply Chain Act, a bill that would require our Federal agencies to purchase drugs made in the United States. And by incentivizing investments into America's supply chain, I am confident we can become a more self-reliant and resilient Nation. We have the opportunity. We now know the deficiencies in our Supply Chain Act. And I will state this to you all: The state of Minnesota is ready to help our Nation with its supply chain issues. We can supply the critical minerals for our national defense, our national security, to build our pharmaceutical instruments, to build ventilators. And we must take this opportunity and not falter. The supply chain is broken. We have relied, and we cannot rely any longer on nations that do not have our best interest at hand. The state of Minnesota played a big role in World War II with mining the iron ore that makes our steel, built our tanks, our ships, our airplanes, our weapons. And Northern Minnesota stands ready to secure our supply chain, both pharmaceuticals and our critical minerals. And I yield back. Mr. SCHNEIDER. Thank you so much. With that, that wraps up our first round of questioning. I would like to go to a second round if that is okay with the witnesses. And I will start by recognizing myself for 5 minutes. And I want to turn to Ms. Fagnani. And I hope I am pronouncing your name right. I have a feeling I am close but not quite on. But you described in your written testimony some of the challenges you face but also shared some ideas. One of them was streamlined information source for small businesses. Having had my own small business in a prior career before coming to Congress, I know how important information is and how hard it is for small companies to get that information, especially because oftentimes there is not a dedicated resource, whether it is for compliance or for human resources, et cetera. People wear many, many different hats. And I also know that through the first few months of this pandemic, from the SBA, from Treasury, there has been fits and starts, changes in direction, whether it is applications for the IDA program or guidance on the forgiveness process for the PPP. So my question to you is, how important is that clear and simple communication? And what would be the impact of streamlining that communication and reducing the complexity for small businesses? Ms. FAGNANI. Well, thank you for the question. It is critical. We are selling medical supplies, medical equipment that are either going to protect our frontline workers or be used on patients. And it is critical that we understand what the FDA's guidance is. I mentioned in our old world it was very black and white. Things were FDA approved. They went through long laborious processes. But in an effort to get more product available, the FDA did enact emergency authorization use for many products. So our ability to understand guidance, guidance changing so that we are buying correctly is critical, that we are not distributing product that we should not be distributing. And then the other complication, and it was just explaining to our medical customers why guidance had changed and why perhaps the product that they had bought can no longer be bought or, you know, just why things were changing. There was a lot of information about bad product being distributed, and so a lot of skepticism as there should have been. And just it was critical to us to make sure that we were supplying the right product and we were able to communicate accurately with our customers. So the FDA website is a tremendous resource, but it is difficult to navigate through. And it became very cumbersome. So streamlining that for small business, some type of alert, letting us know that there has been a change in guidance so that we know to look would be helpful. But that would really be critical for us at this point. Mr. SCHNEIDER. Thank you. Thank you for sharing your thoughts on that. I want to shift gears and turn to Dr. Prasad for a moment. In your testimony, you talked about things that the government could do, you know, from developing consistently enforced domestic regulatory policies to providing greater certainty with our trade relationships around the world, including deescalating trade wars, your words, but you also talked about the advantages of multilateral versus bilateral approaches to our trading partners. I would ask you to expand on that a little bit. Mr. PRASAD. So one issue is, first, access to export markets in other countries. And second, access to reliable sources of intermediate goods, imports, and so on. As the previous congressman made a statement about China pointed out, one needs consistent standards and the ability to rely on trading partners around the world. And bilateral trading relationships do create complications in particular for small businesses because it creates an array of different types of regulations that small businesses (inaudible) as they look to diversify. For instance, Ms. Lawson spoke about trying to diversify her suppliers and sources across a number of countries, and that becomes difficult if you are dealing with individual trading partners and their old requirements and provisions of an individual trade beam (phonetic). So if you think about something like the Trans-Pacific Partnership that the U.S. stepped back from, the other 11 countries went ahead, and what they did was institute a common set of regulations, a common set of neighbor, environmental, and other standards that now all those countries can use and they become benchmarks for further trading relationships. So these sorts of multi-lateral approaches I think would be good to be with the trading partners of the U.S. and could also be used to bring onboard countries like China because then they will be forced as well to take onboard those standards that the U.S. has negotiated with many of its trading partners. And frankly, many countries around the world have concerns about China's economic and trading practices. And rather than going it alone, I think if the U.S. joined forces with other trading partners it would certainly get a lot more of China than we have seen so far. Mr. SCHNEIDER. Great. Thank you. And my time has expired. I would like to turn now to the Ranking Member, Mr. Hern, for 5 minutes if he would like. Mr. HERN. Thank you. Professor, let us just continue on with that thought since we are on this train of thought. You talk about a standardized approach. I will just say for the last 20 years, certainly since 2001 and China's introduction into the World Trade Organization, some would argue there have been books written on it. Maybe you have written books on it. I am not sure. I would love to read them if you have. About China's just methodical move through tackling and taking over columns of industry to be able to take over that supply chain with low cost, very broad acceptance across the world. I want to go back to the onshore piece of this as well. You mentioned that I guess on the margin that it would be very difficult for businesses to realize the same cost of goods cost, if you will, as they would with China, and probably the breadth of the source as well. But do you not see that it is a possibility as we are all looking at USMCA, most people do not realize that Mexico is our largest trading partner second to Canada, and third China? And again, with the push for Buy USA, Buy North America, whatever, that we are going to see some of these more easily stood up industries come to Mexico so that more of the Western Hemisphere can join us without the geopolitical constraints (inaudible) of what China is trying to do? Mr. PRASAD. Congressman Hern, I think you have a legitimate point, that one could think about re-onshoring as part of a diversification process. Certainly, one does not want to leave American manufacturers, either small or large vulnerable to geopolitical tensions. And we have been vulnerable to single sources and suppliers that could be disruptive even by bilateral tensions or by conflicts that those countries might be engaged in that create disruptions within their own economies. So certainly it could be an effective part of onshoring. But I think one has to think about the other aspect as well. While we try to move jobs back to the U.S., one also needs to recognize that small businesses are very important exporters as well. So I think a far better solution might be to think about how in addition to using onshoring as a diversification strategy one tries to level the playing field in terms of creating relationships with all of our trading partners so that small businesses have diversified sources of production, but also diversify export markets which I think are equally important. Mr. HERN. And I guess to piggyback off of that, too, since we are on the policy conversation, that most of this is driven by (inaudible) markets' ability to grow your small business on the export side, but on the import side it is to drive down cost. We are a free enterprise society that we are looking at seeking for low cost providers, as well as to Mr. Billstrom's conversation earlier, just being able to find the product, or sourcing that from the Asian continent so that what China has done to deflect a lot of geopolitical issues is to disburse manufacturing across some of their allies in the Asian continent. Mr. Chairman, I think we can spend, probably I encourage Mr. Prasad to write a book. If you have one, I would love to read it about this whole concept because I think all of us here, we heard Ms. Fagnani talk about what happened with the discrepancy between the appropriate labeling of boxes of the KN95 masks and other PPE that had to go back in delays. And I think, you know, when we have these geopolitical problems, as we know, we are talking about supply chain here but there are other columns of air that stand up here from military, intellectual property issues, a vast verse engineering of our products, all these things are paramount for us to all understand and get our arms around. And I just want to again thank the witnesses for being experts in your areas and sharing with us your thoughts. This will go a long way to formulating our policies as we go forward. It is great to hear people that deal directly with the supply chains and also use them as an export market in many cases. I think as I said yesterday in a Small Business Committee hearing that we all need to learn from this pandemic, put together a pandemic playbook, and as just one column again of thought was with the IDA loans is to capture all these different communication breakdowns, these issues with labeling, all these things we could put into a nice book and be able to step away into legislation or to have. Hopefully, all of us will never have to experience another pandemic, but our country will, and that we have the playbook on the shelf to do things differently and better so that we do not have disruptions like we did this time. Thank each of you for being on this call. Mr. SCHNEIDER. Thank you, Mr. Hern. And I could not agree more. May we never experience anything like this again. Before I wrap up I would like to ask unanimous consent to submit to the record a letter from 14 associations, including the AICPA, the National Retail Federation, and others, calling for the Fed to create a short-term lending facility to help companies bridge supply chain disruptions. Without hearing objection, so ordered. Thank you. And let me now take a moment to close. And in closing, I want to thank our witnesses. Thank you for sharing your experiences, your perspectives, your insights. I know there were more members who would have liked to have joined us today. Unfortunately for many, it is a travel day. We have been in session this week and many are traveling back to their home districts. But I can assure you they will follow the testimony. I appreciate everything you said, for all that you have done. Before the COVID-19 pandemic, global supply chains were built to be linear and efficient, maximizing profits but leaving as vulnerable to disruptions. The pandemic has made clear the need to build a more resilient supply chain because we know future disruptions will occur. We heard today from experts and entrepreneurs that took the initiative early on to make their supply chains more resilient and establish some best practices we can employ at the Federal level as we move forward. I hope this is a wakeup call to our business community and our Federal policymakers to support policy that allows small businesses to survive and bounce back after a large-scale disruption like the COVID-19 pandemic. Doing so will allow our Nation's small businesses to successfully confront unforeseen circumstances and it will be critical to building a strong domestic economy. I ask unanimous consent that members have 5 legislative days to submit statements and supporting materials for the record. Without objection, so ordered. And if there is no further business before this Committee, I ask everyone to stay safe, stay healthy. I ask our small businesses to stay nimble, and this meeting is adjourned. [Whereupon, at 10:12 a.m., the Subcommittee was adjourned.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]