Source: Blog – Alliance for American Manufacturing
President Biden signs his Made in America executive order in January 2021. Screen grab via White House
Supply chain woes, infrastructure, Buy America, and more dominated the headlines.
The end of 2021 is approaching, which means it’s time for retrospectives on the biggest events of the past year — and it certainly was a busy year for manufacturing. Below, we reflect on five things that shaped manufacturing in 2021, and look ahead to how the events of the past year may impact 2022.
1. Supply Chain Shocks
Empty store shelves. Cargo ships stuck waiting at ports. Factories shut down due to lack of inputs.
This year might go down in history as the year that America’s overreliance on globalization and just-in-time manufacturing caught up with us. There isn’t a single reason for the supply chain shocks that struck the country in 2021, but rather a series of reasons, from the lingering effects of factory shutdowns at the start of the COVID-19 pandemic to overcrowding at ports to a lack of available truckers to drive things to their final destination.
But there’s no doubt that diminished domestic manufacturing made the problem worse. The current trading system depends on everything going right to work. When things go wrong — and when a bunch of things go wrong at once, as was the case in 2021 — the whole thing collapses. And it’s a lot harder to get things back on track when factories are located halfway around the world.
Now it appears more companies are working to localize their supply chains. That may not solve every problem, but as Alliance for American Manufacturing President Scott Paul told the New York Times, it certainly makes it easier to deal with problems when they arise. “The more control you have over your own supply chain, the better,” he said.
American Giant CEO Bayard Winthrop, whose company maintains an entire U.S.-based supply chain, put it this way: “This highly complex, multinational supply chain is vulnerable to fundamental disruption. And when something breaks, the entire thing collapses. Maybe it was meant to be broken.”
2. Infrastructure Investment Actually Happened
After years of unfilled promises and countless Infrastructure Weeks on social media, Congress managed to get its act together in 2021 and pass a $1.2 trillion infrastructure investment package to rebuild the nation’s crumbling roads, bridges, electric grid, pipelines, public transit, ports and airports, water systems, broadband, and more. There’s also money in the new law to build a national network of electric vehicle charging stations and jumpstart electric vehicle manufacturing.
It’s hard to overstate just what a big deal this is, given the amount of money in the package and the years and years (and years) it took to get something done. For manufacturing, it could very well be a gamechanger, as it has the potential to create millions of new jobs for workers to make the goods that supply all those new infrastructure projects.
“There’s going to be a lot of skilled work that’s eventually going to come about because of that,” United Steelworkers (USW) International President Tom Conway told Labor Press. “On the electrical grid there’s a lot of aluminum work, and even in the building of the [Electric Vehicle] EV stations and preparation for the EV transformation of the vehicle – there’s a lot of copper in there so and there’s a lot of aluminum in the distribution center in the upgrading of the electrical grid. Sort of across the board. In the rails – we manufacture electric buses, we manufacture rail systems, and so, there’s a lot of railroad work in here. So I think it’s going to create a lot of jobs for people.”
3. Buy America Gets a Boost
One of the things about the government spending money on things like infrastructure is that it is essential steps be taken to ensure that all those taxpayer dollars are reinvested back into American workers, companies, and communities. Otherwise, that money often heads overseas to places like China or Russia.
That’s why it’s so important that robust Buy America preferences be put into place to ensure American companies and workers get the first shot at taxpayer-funded projects. Policymakers get this in theory, and both Republicans and Democrats often tout Buy America as part of their messaging effort. But in practice, loopholes can emerge, sending tax money overseas. Federal agencies also have abused the waiver system to get around Buy America.
But in 2021, several actions were taken to strengthen Buy America and keep taxpayer money stateside. President Biden issued a Made in America executive order his first week in office to kickstart the process, and the Biden administration announced a series of additional actions throughout the year, including the creation of a new Made in America Office (MIAO) at the Office of Management and Budget. The MIAO is tasked with strengthening Buy America and ensuring that federal agencies follow the preferences. Headed by Celeste Drake, that office has already gotten to work, including via the launch of a new website to track Buy America waivers, bringing much-needed transparency to the process.
There’s a lot more work to be done, of course. In 2022, proper implementation of the infrastructure investment bill to ensure Buy America guidelines included in the new law are enforced will be critical. But there’s no doubt the commonsense policy got a big boost this past year.
4. Lots and Lots of Factory Announcements
For many years, the announcement of a single major American factory could dominate headlines for weeks (remember all the press surrounding the ill-fated Foxconn facility in Wisconsin in 2017?).
But 2021 saw so many factory announcements even we couldn’t keep up. Part of this is related to the upcoming transition to electric vehicles (EVs), as automakers announced a series of moves to jumpstart production. That also led to efforts to strengthen the supply chain for EVs, including new factories to make the batteries needed to power those new vehicles. Meanwhile, there were announcements tied to clean energy production, like the upcoming USW-represented facility at Baltimore’s famed Sparrows Point to build the foundations needed to anchor wind turbines to the ocean floor.
As we mentioned above, the supply chain woes of 2021 also led to a resurgence in domestic manufacturing, particularly around desperately needed semiconductors. While these new plants won’t come online for years — it takes a long time to get a semiconductor plant operational — it did mark the first crucial steps to reshoring this critical production.
While we’re optimistic about all these new factories, we aren’t popping open the champagne quite yet. The failure of the solar panel industry to maintain domestic production over the long term offers a cautionary tale about what happens when there’s demand, but it isn’t coupled with the right policy and investment to strengthen domestic production. It will be vital for the United States to put a strong industrial policy in place in 2022 and beyond to encourage further factory openings — and the U.S. shouldn’t hesitate to enforce our trade laws, either. Which brings us to…
5. A Permanent Change in the U.S.-China Relationship
Former President Donald Trump’s time in the White House saw a shift in how the United States approached China, as that administration issued a series of trade enforcement actions to address China’s rampant trade cheating. But when Trump exited office earlier this year, some wondered whether that shift would last, given that Biden and his team had pledged to reverse much of what the always-controversial Donald Trump had done.
By the end of the year, the answer was clear.
It is likely that 2021 will be the year that marked a permanent sea change between the world’s two superpowers. Not only did Biden maintain a tough stance on China — his administration notably (and rightly) upheld the Trump-era designation that a genocide is taking place in Xinjiang — the current commander-in-chief took plenty steps of his own to counter China’s regime.
The Biden administration recently announced a diplomatic boycott of the upcoming winter Olympic games in Beijing to protest the human rights violations China’s government is overseeing in Xinjiang, for example. The White House says the president will also sign the recently passed Uyghur Forced Labor Protection Act, which bans all imports of Xinjiang unless companies can prove their goods aren’t made with forced labor.
Biden himself has also identified the competition with China as the storyline of the 21st century. He tied passage of the infrastructure investment package to this battle, noting that “China is eating our lunch” when it comes to these types of investments. And his Summit for Democracy aimed to strengthen democracy both at home and abroad in the face of rising authortarianism.
Oh, and on the trade front: Biden kept most of the Trump-era tariffs with China in place.
Congress likewise has taken a more confrontational stance with its China policies. The passage of the Uyghur Forced Labor Protection Act is a historic move, and legislation to invest in efforts to help the U.S. better compete with China also earned widespread bipartisan support.
But 2021 wasn’t just notable for the shift in U.S. government relations with China; the private sector also began to realize the dangers of doing business with China’s regime. Companies like Yahoo and LinkedIn announced in 2021 that they are departing China amid a “challenging environment.” Likewise, it appears Hollywood studios are also heading for exits, as the Chinese film industry is “decoupling from the broader global film industry as a whole.”
The question for 2022, however, is what all this change with China will mean for companies like Nike and Apple, who have dedicated so much to doing business there and thus far have refused to budge in the face of growing criticism that they benefit from China’s forced labor practices. With tensions only likely to increase between the U.S. and China — and the human rights violations perpetrated by the Chinese government clearer by the day — pressure on these American corporations to exit China is only bound to increase.
What big news stories did we miss on this list? What predictions do you have for 2022? Send us a tweet via @keepitmadeinusa.
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