The growth in investment in U.S. industrial equipment has not kept pace with the rapid increase in construction investment.

People have started to question whether the industrial transformation promoted by the Biden administration can bring employment and economic returns to the United States.

In the latest global competition for dominance in clean energy, chips, and other future technologies, countries around the world are scrambling to adopt strong industrial policies and invest huge sums of money in manufacturing.

Developed economies such as the United States, the European Union, and Japan are vigorously promoting the development of green energy and cutting-edge chip fields, leaping to the forefront of the first echelon.

An expert in the U.S. manufacturing industry told Caijing, "Made in the USA" is an important part of leading this new narrative.

Advertisement

After adhering to the free market concept for decades, the resurgence of government support for the manufacturing industry is more of a political act, which is particularly prominent in Western countries like the United States.

The outbreak of the 2008 financial crisis forced the United States to re-emphasize manufacturing.

Reviving U.S. manufacturing has become a key part of national economic policy since the Obama era, with the Obama administration implementing a "reindustrialization" plan; the Trump administration then championed the "Bringing Manufacturing Back to America" plan, encouraging the production of COVID-19 vaccines, partly by stockpiling key ingredients and equipment needed by domestic pharmaceutical companies.

The Biden administration has focused on a "Manufacturing Revival Policy," launching the Inflation Reduction Act and the Chips and Science Act in its first year in office, providing more than $400 billion in tax credits, loans, and grants to promote the return of U.S. clean technology and semiconductor supply chains.

Compared with the Obama and Trump administrations, investment in manufacturing has seen a significant increase during the Biden administration.

The Inflation Reduction Act passed on August 16, 2022, has given rise to 316 new projects related to the clean energy sector, with 259 related to manufacturing, totaling $114.3 billion in investment.

Among them, the electric vehicle sector is particularly prominent, with a total of 145 new projects announced, involving an investment of $81.3 billion, more than half of the total investment, echoing the rapid growth in construction investment in transportation equipment manufacturing.

Photo by Jin Yan.

The ambition of the Biden administration's manufacturing revival has two main pillars: one is the reflow of manufacturing, and the other is large-scale investment.

One sign of the revival of U.S. manufacturing is the significant increase in domestic investment, especially in the fields of semiconductors and electric vehicles.

This trend has even started before the United States passed new industrial policies aimed at increasing domestic production.

A focus of these investments is companies' efforts to reflow, bringing manufacturing jobs back to the United States.

It is described as the right choice in history: investing in American communities, addressing climate change by limiting the carbon emissions of ocean-going containers, and committing to improving the reliability of supply chains and reducing dependence on foreign production.

The surge in U.S. manufacturing projects lends credibility to the view of a manufacturing boom.

Building new factories and expanding existing ones across the United States has become a major landscape.

According to data from the Semiconductor Industry Association, by the end of 2022, the U.S. chip industry had invested nearly $20 billion in building and expanding 40 factories in 16 states, creating 40,000 jobs in the future.

The advocacy organization Natural Resources Defense Council said that the U.S. government has promised similar levels of funding for U.S. factories producing electric vehicles and batteries.

In the early stages of manufacturing reflow, U.S. manufacturing construction experienced a rapid rise, and in March 2022, it historically broke through the $100 billion mark, with growth peaking in the second quarter of 2023.

However, since 2024, the growth rate of construction investment in U.S. manufacturing has slowed down.

The latest media survey found that among large-scale projects with investments exceeding $100 million, a total investment value of $84 billion in projects has been delayed by two months to several years, or suspended indefinitely, accounting for about 40% of the total number of large-scale projects.

The survey tracked 114 large-scale projects with a total investment of $227.9 billion.

Companies involved in the projects said that market conditions have deteriorated, demand has slowed down, and policy uncertainty in the election year has led them to change their plans.

Analysis suggests that these project delays have led people to question whether the industrial transformation promoted by the Biden administration can bring employment and economic returns to the United States.

Moreover, these delays may also complicate Vice President Harris's efforts to attract blue-collar voters with a beautiful manufacturing data record in the November 2024 election.

In June of this year, Caijing conducted exclusive interviews with economic officials in several important U.S. manufacturing states such as North Carolina and Pennsylvania.

They all mentioned that the revival of U.S. manufacturing is indeed happening in reality.

This revival continues the policy of U.S. manufacturing reflow after the financial crisis, enabling the United States to achieve a conversion of new and old momentum in industrial development, cultivating and developing emerging industries in the process of industrial adjustment, with the aim of building and seizing the opportunity of the next round of technological and industrial revolutions.

At the same time, officials in these manufacturing states also complained about problems in investment, mainly that the allocation of funds is too complex.

The funds provided by the bills need to be allocated through multiple levels of government agencies, including coordination between federal, state, and local governments.

This complex funding allocation mechanism often leads to low efficiency in the use of funds.

Technically, the priority of investment projects has become a major problem.

Among many applications, how to determine the projects and companies to be supported first is a thorny issue.

Faced with the different needs of different companies and projects, how to choose the right investment targets according to their potential is also not easy.

The U.S. government has received hundreds of applications from companies hoping to receive grants.

Intel received the largest amount of funding, with several projects totaling up to $8.5 billion in grants.

TSMC, Samsung Electronics, and Micron Technology each applied for more than $6 billion in chip project funding.

Some companies have missed opportunities.

Some investors are worried about the scale of funds used for new projects.

Activist investor Elliott Investment Management, which holds a $2.5 billion stake in Texas Instruments, wrote to the company's board urging it to slow down spending on manufacturing growth to increase cash flow.

Texas Instruments is expected to receive funding from the CHIPS Act.

Some views even believe that U.S. manufacturing is facing huge obstacles, which may herald the beginning of a manufacturing recession.

Although signs of a manufacturing recession are still not obvious, Biden's manufacturing revival plan has been delayed as investors press the pause button.

On the second anniversary of Biden signing the Inflation Reduction Act and the CHIPS and Science Act, the Financial Times reported that the two landmark manufacturing bills have encountered difficulties in their first year of implementation, with nearly 40% of announced projects with a cost of over $100 million lagging or suspended.

Among them, some of the largest projects are in a state of stagnation, including the $1 billion solar panel factory of Italian energy giant Enel in Oklahoma, the $2.3 billion battery storage facility of LG Energy Solution in Arizona, and the $1.3 billion lithium processing plant of the world's largest lithium producer Albemarle in South Carolina.

At the same time, although many project delays have been made public, some have not been announced.

For example, near the site where Albemarle's project has not started, semiconductor manufacturer Pallidus announced last year that it would move its headquarters from New York to South Carolina and start manufacturing operations, investing $443 million and creating more than 400 jobs, expected to start operations in the third quarter of 2023, but the building is currently vacant.

Ted Henry, the city operator of Bel Aire, Kansas, said that due to the uncertainty of government funding, the $1.8 billion semiconductor factory project announced by U.S. semiconductor packaging and testing company Integra Technologies last year has not been advanced.

The focus of the CHIPS Act funding is on cutting-edge chip factories that require tens of billions of dollars in capital expenditure.

If the investment goes smoothly, a report by the Boston Consulting Group estimates that the U.S. share in this field will increase from zero to 28%.

By 2032, the number of chips produced in the United States is expected to triple.

However, the severe macroeconomic environment has hindered plans.

Some analysts believe that although the tax credits of the Inflation Reduction Act extend to 2032, and the CHIPS Act also provides generous funding support for some selected applicants, according to the requirements of the bills, companies often need to reach certain production targets before they can obtain funds.

Craig MacFarland, the mayor of Casa Grande, Arizona, said: "Due to labor and supply chain reasons, everyone has encountered higher costs than expected."

The slowdown in demand for electric vehicles in the United States is also a reason for some project delays.

For example, South Korean auto parts manufacturer Samkee has postponed its plan to increase electric vehicle production lines in Alabama by one to two years.

At the same time, auto parts manufacturer Lear promised to invest more than $100 million in the production of electric vehicle parts in December 2022, and is expected to open a new factory near Detroit at the beginning of this year, but the company no longer continues to expand.

In addition, some delays are caused by policies.

Media reports indicate that the slow allocation of funds under the CHIPS Act and the unclear rules of the Inflation Reduction Act have caused many projects to be stuck.

Electrolyzer manufacturer Nel Hydrogen suspended its $400 million factory project in Michigan due to the uncertainty of hydrogen tax credit rules.

Battery parts manufacturer Anovion postponed its $800 million factory in Georgia for more than a year due to the unclear regulations on electric vehicles under the Inflation Reduction Act.In an election year, the possibility of former Republican President Trump winning the November presidential election has also increased uncertainty.

Although most manufacturing investments related to the Inflation Reduction Act have gone to areas controlled by the Republican Party, the bill did not receive any support from Republican congressmen in Congress.

At campaign rallies, Trump has stated that if elected, he will "terminate" the Inflation Reduction Act.

VSK Energy has canceled its plan announced last year to invest $250 million in Brighton, Colorado, and create 900 jobs, and is looking for a site in a Midwestern state that leans Republican to safeguard its project from potential impacts of the Trump administration.

The company's plan to invest $1.25 billion in a solar panel component factory has also been postponed.