"Davids Looks to Leverage Small Manufacturers to Strengthen American Supply Chains"

Summary

A House Small Business Committee news release dated April 29, 2021 on a hearing of the Subcommittee on Economic Growth, Tax, and Capital Access, led by Chairwoman Sharice Davids (D-KS), on COVID-19's impact on domestic supply chains and the role of small manufacturers. The release states that nearly 80 percent of U.S. businesses experienced a supply chain disruption during the pandemic and that small companies were especially vulnerable. It reports witness testimony on small manufacturers' lack of access to capital and need for technological modernization. It names SBA programs that fund small manufacturers, including the 7(a) loan guaranty program, the 504/CDC loan guarantee program and the Small Business Investment Company program. Witnesses from a safety products company, an investment firm and a textile trade group describe product shortages, capital needs and energy costs.

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Davids Looks to Leverage Small Manufacturers to Strengthen American Supply Chains

April 29, 2021

Tags:

Economic Growth, Tax, and Capital Access

Washington, D.C.— Today, the House Small Business Committee Subcommittee on Economic Growth, Tax, and Capital Access, led by Chairwoman Sharice Davids (D-KS), held a hearing examining the impact of COVID-19 on domestic supply chains and the role of small manufacturers in strengthening them.

“Small manufacturers have played a critical role during the pandemic, pivoting quickly to support our communities’ COVID response efforts,” said Chairwoman Davids. “As we work to strengthen our domestic supply chains and prepare for future economic disruption, we must recognize the significant obstacles these small businesses face in a post-COVID world and work to address them.”

Nearly 80 percent of U.S. businesses experienced a disruption in their supply chain during the COVID-19 pandemic. Small companies were especially vulnerable to these disruptions. They often have limited inventory, depend on lower costs from overseas suppliers, and don’t have the margins to sustain extended product shortages. At the same time, small firms can play a prominent role in building more resilient supply chains. These businesses are agile and can adapt to changing market conditions more quickly than their larger counterparts.

During the hearing, witnesses testified on the obstacles that small manufacturers face, including lack of access to capital and the need for substantial technological modernization. The Small Business Administration (SBA) has numerous programs to provide these businesses with capital on favorable terms. Every year, programs like the 7 (a) loan guaranty program, the 504/ CDC loan guarantee program, and the Small Business Investment Company program supply small manufacturers with billions of dollars in funding. The hearing gave subcommittee members the chance to examine these programs and look for ways that Congress can improve them to serve these businesses better.

“A company that is in the business of producing a critical product has an existing customer base that they can sell to when the pandemic subsides,” said Claudio Dente, President of DenTec Safety Specialists in Lenexa, KS. “COVID-19 has created a patriotism unlike I have ever seen before to support made in America products. We must do everything possible to continue this drive to reduce our exposure to having insufficient supply of product from foreign sources as they have their own people to take care of understandably.”

“A year after the pandemic, there are still mass shortages of simple manufactured products, like wood fence posts, as well as advanced computer processing chips. Manufacturing competitiveness and innovation does not happen in a vacuum or happen on demand,” said Wes Hampp, Co-Founder & Managing Partner Holleway Capital Partners, LLC in Overland Park, KS. “The entire manufacturing ecosystem needs to be supported because innovation comes from doing and not by government or corporate command. We need policies that focus on supporting manufacturing with an emphasis on small business investment. Tomorrow’s large and advanced manufacturers are small businesses today.”

“Many of the solutions necessary for small textile manufacturers to weather the challenges of the pandemic required access to capital. Textile manufacturing is a capital-intensive industry, with small businesses reliant on massive outlays for facilities, machinery, automation, R&D, and workforce training and retention, among other areas,” said Kimberly Glas, President & CEO of the National Council of Textile Organizations. “In addition, because textile manufacturing is increasingly automated, energy costs are a major operating expense for textile mills. For smaller businesses in our sector, Small Business Administration (SBA) programs serve an important role in ensuring they can remain viable in a highly competitive industry.”

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