President Biden recently signed an executive order that will require that the federal government buys more goods produced in the United States. This was done to promote American jobs and to keep profits at home. It’s a great idea, but it suffers from one big flaw – we don’t manufacture a lot of things in the US anymore. Statistics are hard to pin down, but something like 40,000 US factories have shut down over the last decade.
We’ve tried to implement this rule with telecom before. The American Recovery and Reinvestment Act of 2009 funded billions in fiber projects. One requirement of those grants was that newly built networks had to buy American whenever possible. I worked with clients who tried to find American electronics to no avail – they largely did not exist. Even the electronics made by US manufacturers were all built overseas.
It’s time we have a serious discussion about bringing telecom manufacturing back to the US. We learned during the pandemic that the US is totally dependent on other countries for basic goods – countries that in many cases are not our allies.
And a lot has changed since we’ve shipped electronics manufacturing overseas. Consider if we wanted to start manufacturing fiber ONTs in the US. This is the device that terminates fiber to a home or business. US ISPs are likely to buy a hundred million such devices over the next decade, not counting the demand in nearby Canada and Mexico. That is more than enough demand to justify building a US factory to make these devices. Even more basic than ONTs is fiber lasers – is there any reason we can’t build fiber lasers in the US?
The most important change that can reinvigorate US manufacturing is robotized factories. A modern factory can compete in cost and efficiency with the lower labor costs in places like Wuhan Province, China, where a lot of the ONTs are manufactured today. Where an older factory making ONTs in the past might have had thousands of jobs, a robotized factory might have only have 500 jobs – but good-paying technical jobs.
We know this idea can work because we see it in action. Germany decided a long time ago that it needed to keep manufacturing jobs at home, while also paying good wages. Germany passed legislation that encouraged manufacturing at home. This meant tax breaks for factories. It also meant big penalties for companies that used foreign goods when domestic ones were available.
It may turn out that we can’t make an ONT for $100. But our economy is is far better off if we can make one for $110 or $120 and if we buy all of the ONTs from a supply chain wholly inside the US. However, I’m betting that our smart engineers can design an efficient factory that can meet and beat the cost of overseas ONTs.
What is needed to make this happen is the will to do so. We need changes in laws that heavily favor using US manufacturing and that reward owners for building modern robotized factories. There are tens of thousands of empty factories around the country and communities that will welcome new manufacturers with open arms.
It’s one thing to issue a call to buy American. I can remember a similar government rule several times during my career. What’s needed instead is a government call to move US manufacturing back to our shores. We have the smart technical people who can make this happen and we have a lot of workers eager to return to good-paying factory jobs. I hope that ‘Buy American’ finally becomes more than a feel-good slogan.