While elements of President Biden’s business platform may make manufacturers nervous, his unabashed pro-manufacturing stance is good news for the industry. The administration’s Made in America plan—which includes a $700 billion budget—is designed to boost the industry by creating new opportunities for manufacturers, underwriting the development of new technologies, and generating in-demand jobs for American workers.
Of course, we’ve yet to see just how fully these goals will be met—and how they’ll balance the administration’s other objectives, such as stronger unions and higher corporate tax rates.
But that’s a story for another day. As the new administration enters its second month, let’s review three aspects of the Made in America plan that offers fresh opportunities for manufacturers as they work to rebound from the 2020 downturn.
1. Refocusing Government Contracts on U.S. Manufacturers
One of President Biden’s first acts was to sign Executive Order 14005, which increases the amount of government contract spending that goes to American manufacturers, versus foreign businesses. This includes setting aside an additional $400 billion for government purchases of U.S.-made products.
It’s estimated that the federal government spends about $600 billion on contracts per year. While existing rules aim to limit contracts with foreign businesses, waivers and loopholes often render these toothless. According to Government Accountability Office data, in the past, non-U.S. companies have been able to bid on roughly 48% of the $1.7 trillion government procurement budget.
While every prior president has talked up the need to “Buy American,” not much has been done to enforce it. That appears about to change. President Biden’s executive order includes creating a new Made in America Office—within the Office of Management and Budget (OMB)—charged with the oversight of new, more rigorous rules regarding foreign contracts.
Furthermore, the administration also seeks to make government contracts more widely available to small and mid-size manufacturers. One way it plans to do so is by increasing transparency, creating a public website listing government contracts linked to proposed waivers, allowing U.S. manufacturers opportunities to offer more competitive bids. In addition, the administration plans to develop special formulas for awarding contracts to small business and offer counseling as well, with the goal of awarding 23% of federal contracts to small businesses.
2. Investing $300 Million in R&D
Another objective of the Made in America plan is to vault U.S. manufacturing and technology to a position of global leadership in specific emerging sectors. For this reason, the plan includes a $300 billion investment in research and development that’s targeted to a number of promising industries, including medicine, biotechnology, clean energy, autos, aerospace, artificial intelligence, and telecommunications.
Among other things, the initiative will provide capital financing to small businesses, sponsor technical training programs managed by the Department of Labor, and fund the development of related infrastructure.
The administration notes that federal R&D spending has declined from 2% of GDP in 1964 to just 0.7% today—the equivalent of a $250 million shortfall that has made it harder for American manufacturers to compete on a global scale. Not only is this plan expected to fuel the creation of 3,000,000 new jobs, for manufacturers operating in these spaces, it represents intriguing growth opportunities.
3. A 10% Tax Credit for Plant Improvements
Finally, the Biden-Harris administration has proposed an advanceable 10% Made in America tax credit to help manufacturers accelerate their recovery, create jobs, and bring offshored work back to the U.S. The tax credit will be available for expenses related to:
- Renovating a closed or closing factory and reopening it for business.
- Retooling facilities to advance competitiveness and employment and investing in machinery that meets the administration’s new Buy American standards.
- Reshoring production from overseas to the U.S., including shipping, moving and training costs.
- Expanding facilities to create new jobs.
- Increasing payroll, specifically the “incremental increase in overall manufacturing wages…above that company’s historic, pre-COVID baseline” for jobs paying up to $100,000 annually.
Get Ready to Seize Opportunities
Obviously, companies that do business with the federal government—and are selected to benefit from government stimulus programs—are held to higher standards in many regards, including labor standards. In this respect, your HR, time and labor and payroll software is one of your most powerful tools when it comes to maintaining compliance with these standards.
EPAY’s integrated HCM platform is designed for employers with an hourly workforce and includes a battery of solutions and safeguards for operating at this higher level.
Whether demonstrating compliance with the Service Contract Act or generating EEO-1 reports, EPAY can help you meet rigorous government requirements. In fact, our meticulous attention to detail has made us the choice of many government entities at the federal, state, and local levels, including the U.S. Army and 2020 Census.
In addition, we offer many exceptional HR tools for all manufacturers—and you can see them here.