Thefts, accidents and production problems have wreaked havoc on the country’s supply chains, which have shaken businesses throughout the world as demand rises in reaction to COVID-19. With Congress and the administration working on a solution to this supply chain issue, American small and medium-sized enterprises, as the backbone of the economy, need to be at the forefront of everyone’s mind.
It’s been difficult to miss the increase in prices, and in some cases, total lack of alternatives, whether it’s at the gas station or checking off items on Christmas wish lists.
Inflation is at a 30-year high, and businesses all over the world are suffering from supply chain bottlenecks as a result of the COVID-19 epidemic. Because of the increase in demand from a more active public colliding with sluggish industrial production that has been hindered by COVID-19 closures, there have been numerous disruptions.
The most serious problem, however, is that matters linked to the supply chain, as well as labor shortages and price increases, appear to be getting worse rather than better. That is why the most recent roundtable discussion with corporate executives by President Biden was concerning.
On November 2, President Biden hosted four major company CEOs and shipping executives to discuss how his administration might collaborate with the private sector to combat these supply chain disruptions.
The presidents of large corporations, such as Walmart, UPS, FedEx, and Target, were all there at the table. The conversation turned to the president’s action plan to reduce port bottlenecks and the just-passed infrastructure measure, which provides funding for different aspects of the domestic supply chain.
This discussion, while positive and beneficial, failed to account for a crucial element that might have added a strong voice to the debate: American small and medium-sized company executives.
Small businesses account for around half of the United States’ workforce, where most economic development occurs. It’s a no-brainer that assisting these failing firms is the same as aiding their employees.
According to recent census data from the United States Small Business Pulse Survey, over half of all small businesses in the country have experienced a delay from a supplier. This is an increase from the 26.7% seen at the beginning of 2021, according to this data.
The study also uncovered that two-thirds of manufacturers, more than half of foodservice and hospitality companies, and over 60% of retail firms are under pressure from supply chain delays.
During the roundtable, Vice President Biden addressed the specifics of his action plan, which includes allowing port authorities to reallocate idle funds in order to address supply chain concerns.
This is certainly an interesting development, but most small companies in the United States do not have the same flexibility as Amazon or Walmart’s businesses, which can charter their own planes or ships to transport goods.
Small businesses across the country face particular issues when it comes to our fragile supply chain, and those needs must be met.
Despite the fact that certain firms are prepared to absorb greater expenses in the short term by airlifting goods from abroad in order to avoid losing sales and money, it is not an option for most.
There are alternatives that Congress has in the immediate to assist American small and medium-sized companies that are looking for new suppliers .Congress can correct an error in the recently passed infrastructure bill to assist businesses in deal with these scarcities and concerns on the supply chain.
The Employee Retention Credit, one of the most valuable business incentives accessible to firms hit by the epidemic, was shortened as part of the recently passed Infrastructure Investment and Jobs Act.
The payroll credit, which has been utilized by thousands of small businesses in the United States to retain workers and obtain much-needed funding, was originally scheduled to last until the end of 2021. However, with the passage of the infrastructure bill, eligibility for the incentive will conclude at the end of this year’s third quarter.
Congress should immediately reinstate the payroll tax credit, which encourages employers closing as a result of COVID-19 to maintain personnel. Doing so would open the door for struggling small enterprises to access much-needed financing when it is most needed, long after the pandemic’s effects have worn off.
Congress should at least consider reinstating the credit, or something similar, for those small businesses that employ less than 500 people and have seen business difficulties as a result of domestic supply chain bottlenecks.
Congress should also discuss the advantages of a larger tax deduction or credit for supply chain disruptions-related expenses. Businesses are increasingly able to predict disruptions in the supply chain, but these costs are out of reach for most companies. These types of incentives might assist these firms to obtain the additional cushion or resources they need to weather the storm.
The Department of Transportation will also provide $240 million in grants under the Infrastructure Development Grant program to help businesses improve systems.
The administration should explore a comparable program targeted solely at American small and medium-sized firms that are impacted by the disrupted supply chain, as an alternative.
When it comes to dire situations, small businesses must take drastic action. Small firms have never been able to compete with larger companies on price, but many owners of small businesses are in a bind now because they can’t obtain necessary goods or services.
According to a new study by researchers at Harvard Business School, approximately 800,000 small businesses permanently closed their doors during the first year of the pandemic, with those that survived are continuing to struggle. The fact that the consumer price index in the United States rose 6.2% above last year’s reported figures is even more frightening.
These are grim figures that will hit the country’s lower and middle classes especially hard. Despite these facts, we believe that the economy is ripe for a major change. While recent economic indicators are encouraging, such as an increase in employment numbers, there’s still a long way to go.
Now is the moment to develop a strategy that works for businesses of all sizes.
There is no “quick fix” for reducing supply chain conflicts across the board, but there are small modifications that may be made immediately to assist in moving things ahead and give all American businesses some much-needed aid.
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