Manufacturing and technology executives are closely watching the U.S. House of Representatives and Senate debate two different versions of a bill designed to boost American manufacturing. Each chamber passed their own version of a bill to ameliorate our supply chain problems, support innovative research and strengthen domestic production of essential components. Now, the bills are in a conference committee where members from both chambers are trying to reconcile the differences into one piece of legislation.
The House bill is called America COMPETES while the Senate’s is called U.S. Competition and Innovation Act. Both contain $52 billion in funding for semiconductor manufacturing but there are many small differences between the House and Senate versions. The outcome of these negotiations will be critical to reshoring critical manufacturing, both for large Fortune 500 companies and small startups like Phoenix Tailings, a sustainable metals refining company that my partners and I founded in Woburn.
It is crucial that both sides reach a consensus and don’t allow small differences to scuttle vitally important legislation. Gridlock on these crucial issues will harm not only our economy, but our national security. The delay in passing these bills has already caused Intel to postpone breaking ground on their planned $20 billion semiconductor chip manufacturing plant. Further delays could lead to the abandonment of this and other necessary domestic manufacturing facilities.
Everyone, whether they are a consumer or a business owner, knows how the current supply chain crisis is harming our economy. The semiconductor industry has been one of the hardest hit. The combination of supply shocks from COVID-19, soaring demand, and U.S.-China political tensions have caused shortages and massive price increases. Because semiconductors are the “brains” of modern electronics, this impacts almost every other type of manufacturing, causing empty shelves and exacerbating inflation.
Semiconductors are not the only problem however, and it’s critical that the finished bill also includes broader support for reshoring the mining and refining of rare earth metals. These are a key component in making semiconductors, batteries and many vital components. Simply by restricting exports, China could cripple our entire manufacturing base. During the COVID-19 pandemic, China’s dominance of PPE manufacturing led to major shortages right when our frontline health care workers desperately needed masks and gloves. Restrictions of rare earth exports would be far more damaging, both because they are used so broadly and because China currently manufactures over 90% of all rare earths compared to 25% of PPE.
The Senate’s bill calls for a study and report about ensuring a domestic supply of rare earth metals. While it’s important that Congress recognizes the need to reshore rare earths, we don’t need a report to tell us what we already know — we need a vertically integrated domestic rare earth supply chain. Controlling every step in the rare earth process, from mining to processing, is the only way to protect our defense and consumer manufacturing from Chinese disruption.
China has understood the importance of rare earths since the 1980s. For decades, they used massive state subsidies and lax environmental regulations to control the rare earth market. When an American company called Molycorp resurrected a rare earth mine in California and acquired processing plants in Arizona and Estonia, China flooded the market with cheap rare earths to drive them out of business. Recently, they merged the three state-run rare earth companies into one entity so they can have even tighter control.
The only way domestic production will be able to disrupt the Chinese monopoly is with federal support. This is essential for our economy and our national security, and the final manufacturing bill should give American innovators the tools they need to meet this challenge.
Nick Myers is the co-founder and CEO of Phoenix Tailings, a Woburn-based company that has invented a novel process to refine rare earth metals without toxic byproducts or direct carbon emissions.
Original article:
https://www.bostonherald.com/2022/07/04/myers-congress-must-act-on-bill-to-boost-manufacturing-in-u-s/