The federal government annually spends $600 billion on goods and services, with a substantial portion of that spend going to foreign companies. The new administration hopes to expand American manufacturing, boosting the economy and improving self-reliance on ‘Made in America’ products, even during tumultuous times. To that end, just days into his new role, President Biden signed an executive order to redirect future federal contracts as part of the Build Back Better Recovery plan. Let’s break down these plans to boost federal purchases of U.S.-made goods and what it means for the manufacturing industry.
Policies: Past and Present
What exactly are ‘Buy American’ policies – and how are they changing? For decades, the federal government has had extensive Buy American rules (notably, the Buy American Act of 1933, passed by Congress during the Great Depression, requires the federal government to prefer U.S.-made products in its purchases), preferentially directing federal spending toward American manufacturing and services. However, President Biden has expressed concern that loopholes and insufficient oversight allowed agencies to sidestep the rules.
“Under the previous administration, the federal government contracts awarded directly to foreign companies went up 30 percent. That is going to change on our watch,” President Biden said in a press conference addressing his new order. “Today, I’m taking the first steps in my larger Build Back Better Recovery plan that invests in American workers, unions and businesses, up and down the supply chain.”
The president’s changes intend to improve upon such obstacles. One change will involve how waivers are handled. On the basis of, for example, nonavailability or unreasonable cost associated with attempting to source goods and services domestically, federal agencies could request waivers. However, under the tighter rules of the new administration, greater scrutiny and transparency may curtail some of those requests.
The new policy will also promote the Manufacturing Extension Partnership’s (MEP) “Supplier Scouting” as a way for agencies to find American producers. This partnership was created to help manufacturers connect their production capabilities with other manufacturers, allowing them to meet market and societal needs.
What Biden’s Order
Means for American Manufacturers
As he prepared to sign the executive order, Biden addressed the big picture of investing in U.S. manufacturing, saying, “I’ve long said that I don’t accept the defeatist view that the forces of automation and globalization can keep union jobs from growing here in America. We can create more of them, not fewer of them. I don’t buy for one second that the vitality of American manufacturing is a thing of the past. American manufacturing was the arsenal of democracy in World War II. It must be part of the engine of American prosperity now.”
Many, including union leaders, are applauding this effort. For American manufacturing companies, too, these shifts may come as welcomed news, especially as businesses adjust after recent setbacks.
A website will be implemented to publicly disclose the waivers agencies are seeking, allowing transparent access to contract opportunities that were formerly opaque. Specifically, President Biden stressed the positive impact this new policy is expected to have on small manufacturers. Lesser-known American companies can stay in the loop, enabling them to pursue lucrative federal contracts by revealing themselves as alternatives to foreign sourcing.
Greater visibility, higher cost threshold and proactive MEP “supplier scouting” may spur growth for a new slate of companies, sparking an uptick in domestic manufacturing innovation. This focus on fueling American production could prove invaluable to the economy after businesses everywhere have experienced hardships since the pandemic surfaced.
COVID-19’s Impact on
The pandemic has unearthed the fragility of the supply chain model that American manufacturing companies have increasingly moved toward. Relying too heavily on a single foreign country can be destabilizing when global uncertainties arise. Many companies are beginning to restructure, eyeing a couple of possible solutions.
One solution is to create domestic partnerships for sourcing and supply chain needs. American companies may then stave off some of the disruptions global strife can cause, potentially permitting operations to continue uninterrupted, or at least helping them to become better prepared for uncertainty.
Such efforts may come just in time to take advantage of another recent executive order. This time, at issue is a concern involving COVID-19 and emergency supplies.
COVID-19 Executive Order
On his first full day in office, the president signed an executive order invoking the Defense Production Act to ramp up necessary supplies, particularly using American manufacturing, to combat COVID-19 and potential future pandemics. The executive order seeks to address several concerns and shortages the country is currently facing, including but not limited to:
- Evaluating inventory for “key pandemic response supplies” and needs, including vaccines, other treatments and personal protective equipment such as masks and sanitizer
- Assessing the country’s and individual agencies’ capacities to fill the nation’s needs
- Developing “a strategy to design, build, and sustain a long-term capability in the United States to manufacture supplies for future pandemics and biological threats,” including determining American producers’ effects on international needs
- Building redundancy into the manufacturing supply chain to prevent future disruptions of essentials
Together, these points may lead to a boost in American manufacturing. Combined, the president’s two manufacturing executive orders may be a benefit to companies otherwise left out of such supply chain considerations.
A Cornerstone U.S. Supplier
As the new administration continues to rollout policies to ramp up the industry stateside, manufacturers will benefit from a trusted, on-time supplier of visual communication products for their machinery and facilities. Whether you’re looking to avoid supply chain disruptions or are planning to expand your manufacturing capabilities, our products and services, including machinery risk assessments, are designed to reduce risk and increase safety as you move forward. Plus, our products are made in the U.S.A., manufactured straight from our state-of-the-art production facility here in Milford, Pennsylvania. Get in touch and let us know how we can help.