> For decades, Chester County, South Carolina was in decline, marked by vacant shops and abandoned textile mills after local producers packed up their operations for lower cost production abroad.
> When Albemarle Corp, the world’s largest lithium producer, announced last year it would construct one of America’s largest refineries in the area, investing $1.3bn to serve the burgeoning electric vehicle market, local people were hopeful for a revival.
> “With the new industry coming in, these uptown buildings are starting to be refurbished and utilised,” says former textile worker Marvin Waldrep, 74. He has noticed new speciality stores such as an ice cream shop move in. “The town goes from almost a ghost town to vibrant again.”
> The project by Albemarle is one of hundreds announced across the country following President Joe Biden’s radical shake-up of US industrial policies through new laws passed in August 2022.
> The Inflation Reduction Act and the Chips and Science Act together offer more than $400bn in tax credits, grants, and loans to revitalise the country’s industrial heartlands and rival Beijing on the technologies required to reduce the emissions behind climate change and electrify the world’s largest economy.
> The two laws have catalysed manufacturing investment, spurring a fierce contest between states to attract corporations eager to build factories and take advantage of the often uncapped federal support. US Census data shows that spending on construction for manufacturing sits at record highs, and the FT estimates that large-scale manufacturing commitments surpassed $225bn in the first year.
> But as the two-year anniversary arrives for the legislation, many of these factories face roadblocks linked to deteriorating market conditions, overproduction in China, and a lack of policy certainty in a high stakes election year.
> Ten months after its announcement in Chester, Albemarle paused work on the project following a global collapse in lithium pricing and slowing demand for electric vehicles. There is no start date for operations to resume and its proposed site remains a vacant grassy lot off the highway. “The reinvestment economics need to align,” says a company spokesperson.
> Albemarle is not alone. A Financial Times investigation revealed that 40 per cent of manufacturing investments of at least $100mn announced in the first year following the passage of the two laws face delays or have been paused indefinitely. Out of 114 large projects tracked by the FT worth a combined $227.9bn, some $84bn are delayed.
> The setbacks raise questions about whether the American manufacturing renaissance set out by Biden can be delivered as promised. They also underscore how difficult it will be, both practically and politically, to reconfigure America’s economy to compete in the industries set to dominate the 21st century.
> A White House official brushed off the delays, noting that “macroeconomic indicators [are] going in the right direction, even if there are headwinds out there that some companies have seen”.
> Project delays are not uncommon in the wider economy. Two-thirds of construction companies reported postponing or cancelling projects that were scheduled to start in the past year, according to a survey from the Associated General Contractors of America.
> “We are now seeing record high construction jobs and those manufacturing facilities have to be constructed. The jobs to work in them will continue to come after they’re constructed,” says Natalie Quillian, Biden’s deputy chief of staff, adding that the private sector has invested $900bn in US manufacturing and the power sector during Biden’s presidency.
> The question now is whether these delays are simply a hiccup to be expected in such a broad recalibration of industrial policy, or evidence that the process will take longer than anticipated to come to fruition, putting its overall success at risk through multiple economic and political cycles.
> “Time kills deals,” says Lauren Berry, senior manager at Maxis Advisors, which helps companies find site locations. “The longer a project is shelved, the harder it is to pick it back up.”
> The US was once the world’s manufacturing powerhouse, producing more steel, automobiles and consumer goods than any other nation. Employment in the sector peaked at 19.55mn in 1979 when manufacturing jobs accounted for one in five American workers.
> But decades of outsourcing to lower cost economies in Asia and elsewhere have cost millions of jobs, particularly in rustbelt states such as Illinois, Indiana, Michigan, Missouri, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin.
> As of May, there were 12.96mn people working in manufacturing jobs, less than 10 per cent of the US workforce and slightly up from 12.81mn in 2019, according to the Bureau of Labor Statistics.
> China overtook the US as the world’s biggest manufacturer in 2010, and has also become a top producer of the world’s clean technologies and semiconductors.
> When he came to power Biden vowed to revitalise the sector and compete with China on advanced technologies. “Where is it written that America can’t lead the world once again in manufacturing? I don’t know where that’s written, and we’re proving it can,” he said in December 2022.
> The Biden administration describes its model for the industrial transformation of the US as “government enabled, private sector-led.”
> While IRA and Chips Act incentives work to direct investment into specific sectors, companies often cannot access funding until they achieve certain milestones for production. Many have to secure their own financing through traditional capital markets and deal with structural hurdles like slow permitting and a tight labour market.
> “It’s basically achieving a form of economic planning, but doing it through the tax code and letting the private sector decide,” says Todd Tucker, director of industrial policy and trade at the Roosevelt Institute. “You still have to deal with capitalism, and you still have to deal with democracy.”
> A tough macroeconomic backdrop of high interest rates and inflation, combined with the collapse in global pricing for these particular technologies, has clouded investor interest to back manufacturing projects, even with the longer term certainty and incentives offered by the two laws. The IRA offers a 10-year window for tax credits, and the Chips Act awards generous funds to selected applicants as well as a tax credit for projects that break ground before 2027.
> It’s “phenomenal” that the government offers these credits but they “come as a lag,” says Deanna Ahmed, chief strategy officer at battery manufacturer Our Next Energy. “We . . . need to definitely do it way faster.”
> While its $1.6bn factory in Michigan backed by IRA support is on schedule, the start-up is facing a cash crunch after a failed financing round at the end of last year and has undergone numerous lay-offs.
> The troubles are not only facing battery manufacturers. After being awarded $162mn in Chips Act funding in January, semiconductor manufacturer Microchip announced earlier this month it was pausing its expansions in Colorado and Oregon, worth $880mn and $800mn respectively, owing to the “slowing macroeconomic environment, and the growth in our inventory.”
> Sometimes the threat to domestic producers are their more established — and competitive — counterparts abroad.
> Several solar panel manufacturers have delayed or put plans on hold as a Chinese-induced glut of panels drives prices to record lows and renders project economics unfavourable, even with the slew of tariffs and IRA subsidies available.
> In Inola, Oklahoma, a ranching community known for its hay fields, sits a vacant site where last year Italy’s state-controlled utility, Enel, proposed a $1bn solar panel factory under its subsidiary 3Sun, creating 1,000 jobs. Production is supposed to start at the end of this year but the company has yet to secure financing or begin construction.
> “We’re anxious for them to pull the trigger on whatever they’re going to do,” says Scott Devers, city administrator of Inola and former pipeline worker who believes it takes “all energy sources working together to provide what the world needs.”
> Multiple firms estimate China produces more than double global demand for panels, and BloombergNEF has warned that rapid innovation in south-east Asia, where the US sources the bulk of its solar panels and cells, means US factories risk being uncompetitive by the time production comes online.
> Forrest Monroy, a spokesperson for Maxeon, says the glut has had a “chilling effect” on US solar manufacturing’s momentum. The company pushed back its plans to begin production at its $1bn panel and cell factory in New Mexico by a year.
> The panels made overseas are far cheaper than domestic ones. US-made crystalline silicon panels generate energy at an average cost of 29.5 cents per watt, according to BloombergNEF. A panel sourced in south-east Asia, meanwhile, can cost under 16 cents per watt, and in China, it is 10 cents per watt.
> A top Treasury official says the administration has taken actions to make US clean tech manufacturing more competitive, such as permitting reforms and new tariffs on Chinese goods. “There’s clearly stuff that still needs to be done, and we’re seeing that happen,” they say.
moffattron9000 on
Couldn’t they have chosen an acronym that isn’t a former Irish paramilitary?
2 Comments
[Archive](https://archive.ph/HkCRI)
!ping ECON
> For decades, Chester County, South Carolina was in decline, marked by vacant shops and abandoned textile mills after local producers packed up their operations for lower cost production abroad.
> When Albemarle Corp, the world’s largest lithium producer, announced last year it would construct one of America’s largest refineries in the area, investing $1.3bn to serve the burgeoning electric vehicle market, local people were hopeful for a revival.
> “With the new industry coming in, these uptown buildings are starting to be refurbished and utilised,” says former textile worker Marvin Waldrep, 74. He has noticed new speciality stores such as an ice cream shop move in. “The town goes from almost a ghost town to vibrant again.”
> The project by Albemarle is one of hundreds announced across the country following President Joe Biden’s radical shake-up of US industrial policies through new laws passed in August 2022.
> The Inflation Reduction Act and the Chips and Science Act together offer more than $400bn in tax credits, grants, and loans to revitalise the country’s industrial heartlands and rival Beijing on the technologies required to reduce the emissions behind climate change and electrify the world’s largest economy.
> The two laws have catalysed manufacturing investment, spurring a fierce contest between states to attract corporations eager to build factories and take advantage of the often uncapped federal support. US Census data shows that spending on construction for manufacturing sits at record highs, and the FT estimates that large-scale manufacturing commitments surpassed $225bn in the first year.
> But as the two-year anniversary arrives for the legislation, many of these factories face roadblocks linked to deteriorating market conditions, overproduction in China, and a lack of policy certainty in a high stakes election year.
> Ten months after its announcement in Chester, Albemarle paused work on the project following a global collapse in lithium pricing and slowing demand for electric vehicles. There is no start date for operations to resume and its proposed site remains a vacant grassy lot off the highway. “The reinvestment economics need to align,” says a company spokesperson.
> Albemarle is not alone. A Financial Times investigation revealed that 40 per cent of manufacturing investments of at least $100mn announced in the first year following the passage of the two laws face delays or have been paused indefinitely. Out of 114 large projects tracked by the FT worth a combined $227.9bn, some $84bn are delayed.
> The setbacks raise questions about whether the American manufacturing renaissance set out by Biden can be delivered as promised. They also underscore how difficult it will be, both practically and politically, to reconfigure America’s economy to compete in the industries set to dominate the 21st century.
> A White House official brushed off the delays, noting that “macroeconomic indicators [are] going in the right direction, even if there are headwinds out there that some companies have seen”.
> Project delays are not uncommon in the wider economy. Two-thirds of construction companies reported postponing or cancelling projects that were scheduled to start in the past year, according to a survey from the Associated General Contractors of America.
> “We are now seeing record high construction jobs and those manufacturing facilities have to be constructed. The jobs to work in them will continue to come after they’re constructed,” says Natalie Quillian, Biden’s deputy chief of staff, adding that the private sector has invested $900bn in US manufacturing and the power sector during Biden’s presidency.
> The question now is whether these delays are simply a hiccup to be expected in such a broad recalibration of industrial policy, or evidence that the process will take longer than anticipated to come to fruition, putting its overall success at risk through multiple economic and political cycles.
> “Time kills deals,” says Lauren Berry, senior manager at Maxis Advisors, which helps companies find site locations. “The longer a project is shelved, the harder it is to pick it back up.”
> The US was once the world’s manufacturing powerhouse, producing more steel, automobiles and consumer goods than any other nation. Employment in the sector peaked at 19.55mn in 1979 when manufacturing jobs accounted for one in five American workers.
> But decades of outsourcing to lower cost economies in Asia and elsewhere have cost millions of jobs, particularly in rustbelt states such as Illinois, Indiana, Michigan, Missouri, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin.
> As of May, there were 12.96mn people working in manufacturing jobs, less than 10 per cent of the US workforce and slightly up from 12.81mn in 2019, according to the Bureau of Labor Statistics.
> China overtook the US as the world’s biggest manufacturer in 2010, and has also become a top producer of the world’s clean technologies and semiconductors.
> When he came to power Biden vowed to revitalise the sector and compete with China on advanced technologies. “Where is it written that America can’t lead the world once again in manufacturing? I don’t know where that’s written, and we’re proving it can,” he said in December 2022.
> The Biden administration describes its model for the industrial transformation of the US as “government enabled, private sector-led.”
> While IRA and Chips Act incentives work to direct investment into specific sectors, companies often cannot access funding until they achieve certain milestones for production. Many have to secure their own financing through traditional capital markets and deal with structural hurdles like slow permitting and a tight labour market.
> “It’s basically achieving a form of economic planning, but doing it through the tax code and letting the private sector decide,” says Todd Tucker, director of industrial policy and trade at the Roosevelt Institute. “You still have to deal with capitalism, and you still have to deal with democracy.”
> A tough macroeconomic backdrop of high interest rates and inflation, combined with the collapse in global pricing for these particular technologies, has clouded investor interest to back manufacturing projects, even with the longer term certainty and incentives offered by the two laws. The IRA offers a 10-year window for tax credits, and the Chips Act awards generous funds to selected applicants as well as a tax credit for projects that break ground before 2027.
> It’s “phenomenal” that the government offers these credits but they “come as a lag,” says Deanna Ahmed, chief strategy officer at battery manufacturer Our Next Energy. “We . . . need to definitely do it way faster.”
> While its $1.6bn factory in Michigan backed by IRA support is on schedule, the start-up is facing a cash crunch after a failed financing round at the end of last year and has undergone numerous lay-offs.
> The troubles are not only facing battery manufacturers. After being awarded $162mn in Chips Act funding in January, semiconductor manufacturer Microchip announced earlier this month it was pausing its expansions in Colorado and Oregon, worth $880mn and $800mn respectively, owing to the “slowing macroeconomic environment, and the growth in our inventory.”
> Sometimes the threat to domestic producers are their more established — and competitive — counterparts abroad.
> Several solar panel manufacturers have delayed or put plans on hold as a Chinese-induced glut of panels drives prices to record lows and renders project economics unfavourable, even with the slew of tariffs and IRA subsidies available.
> In Inola, Oklahoma, a ranching community known for its hay fields, sits a vacant site where last year Italy’s state-controlled utility, Enel, proposed a $1bn solar panel factory under its subsidiary 3Sun, creating 1,000 jobs. Production is supposed to start at the end of this year but the company has yet to secure financing or begin construction.
> “We’re anxious for them to pull the trigger on whatever they’re going to do,” says Scott Devers, city administrator of Inola and former pipeline worker who believes it takes “all energy sources working together to provide what the world needs.”
> Multiple firms estimate China produces more than double global demand for panels, and BloombergNEF has warned that rapid innovation in south-east Asia, where the US sources the bulk of its solar panels and cells, means US factories risk being uncompetitive by the time production comes online.
> Forrest Monroy, a spokesperson for Maxeon, says the glut has had a “chilling effect” on US solar manufacturing’s momentum. The company pushed back its plans to begin production at its $1bn panel and cell factory in New Mexico by a year.
> The panels made overseas are far cheaper than domestic ones. US-made crystalline silicon panels generate energy at an average cost of 29.5 cents per watt, according to BloombergNEF. A panel sourced in south-east Asia, meanwhile, can cost under 16 cents per watt, and in China, it is 10 cents per watt.
> A top Treasury official says the administration has taken actions to make US clean tech manufacturing more competitive, such as permitting reforms and new tariffs on Chinese goods. “There’s clearly stuff that still needs to be done, and we’re seeing that happen,” they say.
Couldn’t they have chosen an acronym that isn’t a former Irish paramilitary?