We are facing big public health challenges, but smart policy can help build a stronger America.
Earlier this month, the state of New York made Buy America permanent, guaranteeing that all structural steel and iron used in Empire State road and bridge construction projects with contracts worth more than $1 million will be Made in America.
The timing was critical. The coronavirus crisis is showing the limits of existing supply chains that have spread across the globe, and by committing New York to support domestic iron and steel, Gov. Andrew Cuomo (D) – who championed this effort as part of his Buy American Plan – is setting an example that other states should follow.
But Cuomo is also finding out firsthand how decades of policy decisions to offshore much of America’s critical manufacturing is causing serious issues.
In an address to the public on April 3, Cuomo lamented: "It is unbelievable to me that in New York state in the United States of America we can't make these materials and that we are all shopping China."
NY Gov. Cuomo: "It is unbelievable to me that in New York state in the United States of America we can't make these materials and that we are all shopping China." pic.twitter.com/HpCNSBJDGb
— The Hill (@thehill) April 3, 2020
As the Alliance for American Manufacturing noted on Twitter: “It might be unbelievable, but it was predictable. Despite the noble efforts of many American manufacturers & workers over the past few weeks to begin to make things like masks and ventilators, decades of offshoring left the U.S. unable to quickly respond to this crisis.”
As a nation, we have to fix this, and policies like Buy America can play a critical role.
Buy America preferences ensure taxpayer money is reinvested right back into local communities, supporting good-paying jobs and the economy, rather than being sent overseas to the lowest bidder.
Now is a time when we are seeing the effects of always looking for the lowest bidder. It is a mentality that, while it may save a few bucks on upfront costs, ends up costing us in the long run.
For years, the U.S. economy has relied on cheap imports, as many corporations opted to shift production overseas to places like China, where there are little-to-no labor and environmental regulations. Corporate America increased its profit margins, but all that offshoring led to tens of thousands of factory closures and millions of lost jobs. The middle class shrunk; deaths of despair rose.
The economic devastation has been covered extensively, of course. What has gone largely unnoticed is the impact offshoring had on America’s critical supply chain, and its ability to make the things it needs in a crisis.
The United States has seen shortages in everything from testing kits to face masks to ventilators to medicine – around 80% of America’s pharmaceuticals come from China or India – and it is costing lives.
But even when there are U.S. companies able to do this work, our dependence on imports makes it harder to ramp up production.
Take Prestige Ameritech, which is the largest domestic manufacturer of surgical masks and respirators in the United States. The company was inundated with requests once the coronavirus crisis hit, but the response wasn’t all that simple, as CEO Mike Bowen explained.
That’s because during more normal times, Prestige Ameritech often loses out to the lowest bidder, even when it can do the work at a fair price. As the Dallas Morning News pointed out:
“It’s tough to win a bid to supply U.S. hospitals through their group purchase agreements that seek the cheapest price when your competitor pays low wages, ignores environmental concerns and is subsidized by a Communist government.”
Columnist Dave Leiber continued: “during an outbreak like this, everybody wants to be his customer. But as soon as an outbreak subsides, his customers dump him and run back to China.”
Prestige Ameritech masks may cost a dime each, but a Made in China mask might go for two cents.
We all understand the value of saving a buck. But now that the commercial price of masks has risen from a $0.58 to around $7.50 each when we most need them, perhaps we should make us rethink what we are really saving.
We need to look beyond the initial price tag of an item, and look at the costs over the life cycle of the product.
When we do not consider the costs that go into a product like research and development, design, promotion, maintaining capacity, manufacturing, distribution, product support, as well as the retooling or shutdown of facilities to respond to market conditions, we end up in a situation like we see now with medical masks.
American manufacturers have responded to the need, but even as they are happy to pitch in, it is indeed strange that we are in a situation where T-shirt manufacturers are pivoting to make masks.
Meanwhile, at Prestige Ameritech, Texas Gov. Greg Abbott deployed the Texas National Guard to work a shift in order for the company to ramp up to make 2 million masks a week.
One of the long-term lessons from the coronavirus crisis must be to reshore much of our critical manufacturing, and support the American manufacturers already doing this work here.
That’s where Buy America comes in.
Federal, state, and local entities need to examine where they are buying their manufacturing goods, so when needs arise, those manufactured goods are available, and the scale of the needs can be met.
The federal government should look at what manufactured goods beyond infrastructure and national defense will be needed going forward and apply Buy America preferences accordingly. States that do not apply any sort of domestic preference to what they procure with their tax revenue should re-examine that approach, and states like New York need to look beyond iron and steel and include other manufactured goods.
After all, as we are seeing in this crisis, it is not just iron and steel that we need. By ensuring taxpayer dollars are used to support American manufacturers and workers, the United States will strengthen its critical manufacturing base and be better positioned to respond to the next crisis.
But Buy America also can help the United States rebound from the economic devastation of the current one.
In three weeks, more than 16 million people in the United States have applied for unemployment benefits, and that is a mere snapshot of what is going on across the country. We have no clear timeline as to when many of those people will be able to return to work, or even if the jobs they once had will be there.
Many believe that the economy is in a depression.
Buy America preferences reinvest taxpayer money right back into communities, creating jobs and strengthening local economies. Should Congress actually manage to pass a long-awaited infrastructure investment package that includes Buy America, millions of new jobs would be created.
But the positive economic impact of Buy America goes beyond direct job creation.
As we now are in the early days of a global pandemic, we are very much in need of research and development to find a potential vaccine and discover better ways to meet the needs of an exponential number of patients.
With tens of millions of unemployed people, and the way of life we all became used to under threat, we are also going to need a lot of jobs to get our communities back on their feet. Deploying the technology born from doing research and development here in the United States is one way to help do that. When we create something in the United States, we should also aim to make it in the United States.
What our elected officials can do right now to help mitigate the damage of the coronavirus crisis is to make sure that the Buy America preferences on the books are used to their fullest extent, as well as look to expand coverage beyond some of the obvious materials like iron and steel to other manufactured goods. States that do not have such domestic preferences on the books should take a closer look at how they can be part of the solution.
Now is the time to learn from the challenges we are facing, so we are better prepared to face what comes next.