Is the U.S. Innovation and Competition Act too little too late? Is the push by President Joe Biden’s administration to “Buy American” enough to revitalize America’s manufacturing industry? Are these initiatives from Washington enough to essentially change our culture in America and in manufacturing? I sure do hope so, but I am not so sure.
In case you missed it, in June, the Senate passed the U.S. Innovation and Competition Act, which is a $250 billion bipartisan bill that will be the blueprint to make New York the global tech and semiconductor hub. The bill includes $52 billion for the U.S. semiconductor industry and $10 billion for regional technology hubs to create jobs in upstate New York.
The $52 billion will be used for emergency supplemental appropriations to implement the semiconductor-related manufacturing and R&D (research and development) programs authorized in last year’s NDAA (National Defense Authorization Act) and a program to support legacy chip production that is essential to the auto industry, the military, and other critical industries.
An additional $1.5 billion was included for implementation of the USA Telecommunications Act that was also passed as part of last year’s NDAA to foster U.S. innovation in the race for 5G. The Endless Frontier Act, as reported by the Senate Commerce Committee, seeks to maintain and build on U.S. science and technology leadership through investments in research and development and strengthening regional economic development, manufacturing, and supply chains.
Advocates of this act suggest it is one of the greatest investments in American innovation in years, as it would help put the focus on advancing manufacturing and technology. If we read between the lines, a huge objective is to counter China’s political and economic influence both domestically and abroad.
This follows up President Biden’s executive order made earlier this year to strengthen rules requiring government purchases of goods made in the United States—essentially putting the Buy American Act of 1933 back into focus.
If this all sounds a little bit familiar it is because I wrote the book on the topic—Mending Manufacturing, How America can Manufacture Its Survival—nearly 20 years ago. Yes, 20 years ago I said the United States would be facing a manufacturing emergency unless Washington acts swiftly and decisively. Here we are 20 years later, picking up the pieces. But will it be enough?
OECD (Organisation for Economic Co-operation and Development) suggests between 2000 and 2010, the number of manufacturing jobs in the United States declined by one third, falling by 5.8 million to below 12 million in 2010, returning to just 12.3 million in 2016. The 2007-2008 recession can’t be ignored, but there were bigger factors at play here too. Things like trouble with capital investment, output, productivity, and yes trade deficits.
And then there was the workforce challenges, which still persist today. For too long, the working class faced declining incomes. The median income of men without a secondary school diploma fell by 20% between 1990 and 2013; for men with secondary school diplomas or some college, median income fell by 13%. The decline of U.S. manufacturing—traditionally a route to the middle class—hit these groups particularly hard.
Add in the fact that the United States is now competing with low-wage producers from China, and what the United States needs now is a complete transformation—a digital transformation, to be exact.
The industry needs innovation and change. Manufacturing needs smart factories, robotics, 3D printing, digital twin, and other technologies to spur the supply chain into the next generation of technology adoption—and we need to do all of this while continuing to remain circular and sustainable.
The directives from Washington are simply only the first step. Now, manufacturing must do the hard work of making change happen. If not now, when? We understand the challenges, but as an industry we didn’t react quick enough, so now we must apply digital transformation and a skilled workforce to achieve a better, sustainable tomorrow.
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