TIME TO READ: 10 MINUTES
Big changes happen in times like these, whether we act on them or not. Let's seize on an opportunity to make a big change that benefits America for decades to come.
In the past 50 years, America slowly moved from a manufacturing economy to a service economy. We shut down entire manufacturing industries within our borders, with politicians paving the way for companies to move their production to nations like China.
Now, thanks to COVID-19 and the worldwide supply shock it created, we can see how over-dependent the U.S. economy has become on Chinese goods.
We don’t have to be, though. We can take this opportunity to repair our economy, and make America stronger and more secure.
How? By returning tech manufacturing to the U.S.
By "tech manufacturing" we mean American workers in American facilities, making computer components like motherboards, CPUs, and memory/RAM. LCD screens. Cellphone parts. Cables. Networking equipment. Electronic circuits. All of it.
Debunking the Top 9 Objections to Tech Manufacturing Coming Home
We've seen objections to bringing back tech manufacturing for years. Usually spawned by the same organizations invested in offshoring manufacturing of all kinds, and profiting from the process.
The whole game has changed.
To prove it, we'll respond to those objections in this issue. You'll see how, in light of the world as it is now, the case for reshoring our tech manufacturing has only gotten stronger.
1. "IT WOULD TAKE HUGE INVESTMENTS TO BUILD NEW FACTORIES."
Yes, it will take investment. However, the investments would take advantage of newer technologies like 3-D printing and automation to reduce costs. Newer technology also grants us major efficiency improvements, up front and over time.
Where would we place these factories? We have hundreds of potential locations...the "Opportunity Zones" across America.
Designated by the federal government in 2017, an "Opportunity Zone" is an area which has economic potential, but needs investment. Investors get tax breaks when they invest & help the area grow.
Opportunity Zones exist in every state. Here's an Opportunity Zones FAQ from IRS.gov with lists.
These Zones not only provide tax incentives, they revitalize an area that needs it. Millions of people live in/near these zones, many of whom will need work.
Bringing in money, manufacturing jobs, and IT jobs (for the technologies supporting those new factories) triggers economic growth for everyone.
Some of the Opportunity Zones also have inactive factories and unused U.S. government properties within their borders. We can look to these for cost savings. This Brookings article shows that the government possesses over 70,000 unused/vacant properties.
Perhaps they could sell some of these properties to tech manufacturing businesses at a discount? This would save the U.S. taxpayer maintenance costs on unused buildings, and reduce start-up costs for the new manufacturer.
There's more public interest in Made-in-USA goods than ever before. We have proof of this—traffic to PlanetMagpie’s WOOF article on "Computer Components Made in USA" went up over 300% in April!
2. "THE EXTRA COST ISN'T WORTH IT."
As with all business, it's important to look at the ROI. What would the ROI be for reshoring tech manufacturing?
- Savings on distribution
- Shorter, more reliable supply chains
- More skilled job prospects, in manufacturing & support manufacturing areas
- A stronger, more independent America
- No tariffs
- Improved cybersecurity nationwide
If you want to find out the true cost, use the Reshoring Initiative’s TCO (Total Cost of Ownership) Estimator. You may find that it makes more financial sense than you thought: http://www.reshorenow.org/tco-estimator/
What about cybersecurity? Right now, the U.S.' cybersecurity as a whole teeters on a dangerous edge. Cyberattacks skyrocketed at the start of the year (a 37% increase in Q1 alone).
Why? A burgeoning market for cybercrime. It's easy money for work performed from the comfort of your home.
According to Emsisoft, COVID-19 has given us a bit of a breather – ransomware attacks have gone down at the moment. That's good news, but how long will it last?
Worse, a huge amount of existing IT hardware in use now actually weakens our cybersecurity. How? It enables spying and hacking by China, due to state-mandated collusion. Huawei is an often-cited example of such a practice.
Huawei stands accused of accessing mobile phone networks that use its hardware, stealing data through backdoors intended for law enforcement. Huawei denies wrongdoing, but the evidence was strong enough to prompt a full ban on Huawei networking equipment.
Think about that for a second. A Chinese company, with a long history of cooperating with the Chinese Communist Party (CCP), sells hardware that contains backdoors. The CCP can intercept data from individuals, corporations, and governments who use Huawei hardware at any time. Thereby facilitating IP theft and cyber-espionage.
Huawei isn't the only example of this. We banned 5 other Chinese companies for the same reasons in 2019. The 2019 ban would have helped American manufacturing…if companies like Intel, Micron, and Qualcomm hadn't sidestepped it and resumed trade with the banned Chinese companies days later. How 'American' is that?
By 2021, cyberattacks are expected to reach $6 trillion in global damages annually (according to a Cybersecurity Ventures report). Reshoring tech manufacturing promotes our cybersecurity, via the IT infrastructure supporting those facilities & related industries.
It's one of the few ways America could get ahead of the cybercrime wave coming. That is definitely a strong ROI.
3. "WHERE WOULD WE GET THE MATERIALS?"
Many of them already exist in the United States. We have elements in abundance for making computers – silicon, steel, copper, etc.
- STEEL – America still has plenty of iron to make steel.
- SILICON – Comes from sources like quartz. We already produce lots of silicon domestically, and can scale that up.
- TIN – Look to Alaska! It has most of our country's tin deposits.
- COPPER – The U.S. already produces large amounts of copper.
- LITHIUM – A useful metal for batteries. America does have a decent amount, as do Chile and Argentina (the world's #1 lithium producer).
- PLASTICS – Comes from oil, which we have here in abundance.
We can leverage international trade to source other materials – South Africa, for instance, produces more chromium than any other country. The U.S. doesn't produce a lot of cobalt, but several allies do: Australia, the Philippines, and Canada, among others.
4. "IT'S CHEAPER TO SHIP MATERIALS TO CHINA THAN TO MAKE ANYTHING HERE."
Cheaper because China makes it that way, at the expense of their own people. China keeps their costs artificially low with several unsustainable practices:
- Paying workers very low wages
- Working people to burnout
- Replacing workers at the first sign of burnout or protest
- Running after-hours government operations on the same lines as U.S. products, meant to copy the same technology for Chinese use
Not only is this horrible treatment of workers, even a high-population nation like China can't maintain the productivity level forever. In fact, China has already begun raising pay rates to keep workers in this "system"…which makes those cost savings go away.
We must also consider the fact that shipping anything halfway across the world still costs money. More money than it would to ship materials from one state to another.
5. "RESHORING WOULD MAKE BIG CHANGES TO OUR SUPPLY CHAIN."
Yes. It would shorten them to within our nation. Resulting in cheaper, faster supply chains that consume less energy.
COVID-19 has taught us the perils of sourcing hardware from China. Supply chain delivery delays have been rampant. Which means relying on 1 source – China – is no longer economically viable. One supply shock and the chain breaks. We're living the proof now.
Even if we couldn't fully manufacture every product within the nation, we could also use 'nearshoring' – manufacturing in nearby countries like Mexico & Canada – keeping supply chains shorter & cheaper. IBM practiced this in the 80’s and 90’s, producing server components, desktops, and laptops in North America.
6. "RESHORING WOULD INCREASE POLLUTION IN THE U.S."
Pollution surrounds the tech manufacturing industry, both in the manufacturing process and in shipping.
China has some of the world's worst air pollution. Decades of ignoring the problem resulted in hazardous air quality across all of China's major industrial cities. Air this bad leads to mass premature deaths – 852,000 deaths in 2017, in fact.
China's leaders have responded with air quality improvement measures, but only within the past 10 years. It will take them decades to reduce the damage to the world's air.
Does that mean we'd face the same pollution levels here if we reshored tech manufacturing? No.
Manufacturing here in the U.S., where we have higher environmental standards, would translate to improvements in the entire process.
Consider everything we've done to reduce pollution in the U.S. to date: Carbon capture, cleaner energy, less long-distance transportation, robotic assemblies. It all works for tech manufacturing too.
Reshoring itself reduces pollution – by cutting out the shipping of products across the seas. Beyond Green reshored for exactly this reason. The pollution created from overseas shipping went against their desire for sustainability. So they moved production to California—and improved their products' quality at the same time.
If that's not enough, what about polluting the oceans? Containers fall off container ships often—an estimated 1,500 containers per year. That's thousands of tons of product dumped directly into our oceans. Expensive and dangerous to the environment.
7. "CHINA HAS A BROAD RANGE OF HIGH-QUALITY TECH MANUFACTURING FACILITIES. WE CAN'T DUPLICATE THAT ELSEWHERE."
Why not? America wrote the book on technology and ingenuity.
We still manufacture components here. A wide range of them. Expanding the existing facilities isn't impossible by any stretch.
One of our own customers fabricates electronic circuits & boards, for use in self-driving cars and long-range communications gear. They operate right here in Silicon Valley...an example of tech manufacturing still made in America.
China built out its manufacturing capacity through constantly overworking people, some to death – a phenomenon they call "guolaosi." America can & will find a better way.
8. "WHERE WILL WE GET THE WORKERS? AMERICA DOESN'T GRADUATE ENOUGH STEM GRADS."
We have millions of STEM grads & tech pros already. The STEM gap is a proven lie.
Professor Hal Salzman of Rutgers University has researched the H-1B situation for years. His research found that American colleges typically produce between 40 to 100% more STEM grads than are hired into STEM occupations each year!
Companies like Google, Facebook, Twitter, and HP want you to believe a shortage exists. Meanwhile, they lobby Congress to increase H-1B visas, and to create programs like the "Highly Skilled Immigrant" bill (HR1044). These provide tech giants with what amounts to slave labor from India, at the cost of our American workers' jobs.
Professor Salzman's research proves we DO have the workers. If an opportunity presents itself – as it has right now – we have the talent to act on it.
Even better, we could quickly retrain out-of-work people to work in manufacturing facilities. Imagine the explosion of success from millions of people with stable jobs!
9. "WE CAN'T OUT-COMPETE CHINA."
They do use underhanded tactics:
It's hard to compete when your opponent stacks the deck. Still, we can do it.
How do we compete when China uses such tactics?
- Deny China the opportunity. Start manufacturing back up in the U.S., using the materials we would have sent to China (e.g. copper, coal, aluminum). Break the hold they have on our supply chain, and our demand for their products..
- Trade more with America's allies, and make each other stronger in the process. They have the same opportunity before them. Spread the trade done with China across our Allies: Raw materials, foodstuffs, manufactured goods, etc. Use trade to encourage reshoring for their economies as well.
Making the Case for "Made in the USA" Technology Products
There is no downside to bringing our manufacturing back home. It's a large, complex effort. However, the pandemic has shown us three things about America:
- It has millions of good people ready & willing to work.
- Americans want to buy & use technology made in the USA.
- It can rise to the challenge of a large, complex effort. We've done it before, and we're doing it now.
How You Can Help Reshore Tech Manufacturing
Ready to help encourage a nationwide reshoring effort? We can do it, if we do it together. Here are some steps each of us can take.
- Buy American products. When faced with a new purchase, do some online research and find out which brands are made in America. Ask vendors about American-made brands too, so they start seeing the trend.
- If you're looking for a new opportunity, create a manufacturing startup. Look into funding from: the SBA, Y-Combinator, or 500 Startups.
- Buy IT hardware from existing manufacturers here in America. We have a list of these on our website.
- Email your state representatives and ask them to support tech manufacturing in the U.S. Use this page to locate your state representative: Find Your Legislators – OpenStates
PlanetMagpie sources hardware from a number of vendors. Visit our Hardware Procurement page to learn more about what you can find "Made in the USA."