Submitted by Charles Barbour
The economic numbers lately are not encouraging. Inflation is on the rise as are interest rates while America’s GDP is on the decline. Prices at the pump are near $5.00 a gallon nationwide and average four-and-a-quarter dollars a gallon here in Mississippi. And while we’ve seen a slight relief in the last week or so, prices are still double what they have been. Meanwhile, supply chain issues have resulted in low inventories of retail goods, medical supplies, food products and other items. You are undoubtedly keenly aware.
With so much to consider economically where do we begin? Let’s consider an option that can provide us success today and in the future. Revitalizing our manufacturing capabilities is an important step to put us back on track and reinvigorate our economy. More specifically, growing our ability to manufacture semiconductor chips, components necessary for so many products we rely on today, is a step our nation needs to take.
America has squandered our position in semiconductor manufacturing capacity over the last three decades. China, our country’s number one economic threat, has marshalled government resources in recent years to overtake U.S. semiconductor manufacturing capacity. America now relies on overseas plants for the great majority of the semiconductors we use, which are subject to the precarious nature of the global supply chain and the issues currently plaguing our nation.
While China is on track to be the world’s largest producer of chips by 2030, the United States is projected to decline to only 10% of global manufacturing capacity in the same time period. Unless we take action to disrupt their plans and secure our future.
Right now, Congress is negotiating the outcome of two competing bills that have passed in the House and Senate respectively to increase economic competitiveness with China. Each version of the bill includes $52 billion in funding for the CHIPS Act that provides federal investments to reinvigorate the U.S. the semiconductor manufacturing sector. In addition, the final version of the bill should build on this initiative by creating sustained investment tax credits found in the Facilitating American-Built Semiconductors (FABS) Act, which would supercharge the industry’s plans to construct new plants and make necessary upgrades to the high-tech tools used in the manufacturing process.
Congress needs to act for the betterment of our economy and to improve our ability to manufacture products that are an integral element of our digital age. This is also just good business that charts a bold path for growth over the next decade.
Manufacturers, across all sectors, in Mississippi account for 16% of the total output in the state, and employ over 12% of the workforce, according to the National Association of Manufacturers. Those manufacturing jobs constituted an average annual compensation of $63,000 in 2019. Strengthening the semiconductor supply chain to allow these businesses to grow and thrive would only improve those numbers.
For example, defense manufacturers right here in Mississippi rely on advanced chips to produce everything from military helicopters to warships to advanced missile defense radar systems.
The semiconductors they use are often supplied by the same commercial market that all of our state’s manufactures depend on. These businesses need a reliable supply chain to meet current demand, grow their companies and continue to provide good paying jobs for Mississippi families.
Congress has a chance to do something positive for our economy. I’d encourage the congressional delegation to push to ensure CHIPS Act funding and the FABS Act tax credit are included in the final version of joint competitiveness legislation. Let’s have America lead again.
Submitted by Charles Barbour