Washington — Some U.S. senators and manufacturing advocates want the next round of coronavirus legislation to have specific measures aimed at reshoring and helping the industrial sector recover from the pandemic-induced economic crisis.
While it's far from clear any of it would happen, several senators on a May 21 webinar organized by the Alliance for American Manufacturing suggested future stimulus legislation should include Buy American provisions, more use of the Defense Production Act and financial incentives along the lines of what the Japanese government has offered to encourage reshoring.
Several senators said they thought the shortage of hospital equipment and personal protective equipment for health care workers had made the American public much more aware of risks of distant supply chains.
Sen. Josh Hawley, R-Mo., said the odds were "actually pretty decent" that future COVID-19 legislation in Washington could have some manufacturing provisions.
"The coronavirus pandemic and the crisis it has caused has really opened people's eyes to our dependence, from a production and manufacturing perspective, on China and on other foreign nations," Hawley said. "I think there could be a bipartisan consensus."
The first priority, he said, should be U.S. content requirements in critical medical supply chains. But he also said the federal government should look at tax and financial incentives to encourage reshoring of manufacturing to the United States.
"This is something we see Japan experimenting with, low-interest financing for companies that reshore and move jobs back, and tax incentives to do that," Hawley said. "We have a panoply of options available. We just have to use them."
As well, Democratic Senators Tammy Baldwin from Wisconsin and Sherrod Brown from Ohio said they favored Buy American provisions and other measures.
"I think one of the priorities is Buy America policies embedded in our manufacturing strategies," Baldwin said, noting legislation she's introduced to increase U.S. sourcing requirements in government spending.
"I'm not telling the private sector what to do, but I'm saying if we're going to use our taxpayer dollars for infrastructure, for medical equipment, for things we will be purchasing, if we make clear that we expect the components as well as the final products to be made in America, that sends a clear signal," she said.
Sen. Marco Rubio, R-Fla., voiced concerns about depending on China for 45 percent of the world's protective gear in medicine and suggested support for government incentives for more U.S. manufacturing.
Perc Pineda, chief economist for the Plastics Industry Association in Washington, said it would be a "missed opportunity" if plastics companies didn't make a case with their industrial customers for more reshoring, if nothing else for emergency planning purposes.
He said that while the pandemic has made many people much more aware of the need for domestic production of critical parts, he also cautioned in a May 20 Plastics News webinar that potential reshoring will vary from industry to industry and remains hard to predict.
"There will be some form of reshoring, [but] the extent and whether it's going to be pervasive across industries is a big question, and it's going to happen gradually," he said. "Business would have to do their due diligence. Is it financially feasible? What's the ROI? What's the payback period?
"So it's difficult to say how that will shape itself as the coronavirus pandemic actually eases," he said.
Bill Wood, founder of Mountaintop Economics & Research Inc. in Greenfield, Mass., and economics editor at Plastics News, thinks the economic crisis that resulted from the pandemic is the right time for plastics firms to push reshoring to their customers in manufacturing supply chains.
Wood, speaking in the same webinar with Pineda, suggested reframing price arguments to focus on the extra costs of distant supply chains that have emerged in the crisis.
"The problem is going to be market acceptance and the price adjustments," Wood said. "The reason that our supply chain was so far flung was almost entirely due to cost. And so I think right now what we have is the opportunity to make the case that you didn't really avoid a cost by going overseas.
"You really didn't lower your risk; you raised your risk," Wood said. "You put those costs off to the future, you externalized them until down the road. You're paying for it now."