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Biden administration to call pandemic a “wake-up call” to restore manufacturing base

·3 min read

National Economic Council director Brian Deese will label the coronavirus pandemic a "wake-up call" to bring manufacturing jobs back to America in a speech Wednesday unveiling the Biden administration’s industrial policy, Axios has learned.

Why it matters: President Biden’s campaign was predicated on providing well-paying jobs for millions of Americans who've seen the country’s industrial heartland hollowed out by automation and competition for lower-cost labor from other countries.

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  • "Our private sector and public policy approach to domestic production prioritized low, short-term costs over security, sustainability and resilience," Deese is expected to say in a speech to the Atlantic Council Wednesday morning.

  • "Markets — on their own — will not make investments in the technologies and infrastructure that would benefit an entire industry."

  • "These failures require a different role for government, one where public R&D lays a foundation for breakthrough technologies, and government pulls forward the deployment and dispersion of innovation."

The big picture: Early in the pandemic, the shortage of personal protective equipment for medical workers raised awareness that America didn’t produce many basic items to protect its citizens.

  • Deese will note that "nearly 90% of generic active pharmaceutical ingredient facilities are located overseas and have been moving offshore for the last 50 years."

  • The rest of his speech articulates Biden’s approach to reversing those trends and lays out the administration's long-term strategy for how America can compete with China and other global challengers.

Driving the news: Deese’s speech comes as he and other White House officials work with Congress to try to pass a bipartisan infrastructure deal, which includes roughly $580 billion in new spending.

  • But that effort is just a sliver of the more than $4 trillion in new spending the president has proposed as part of his “Build Back Better” agenda, another cornerstone of his campaign.

  • This month, the White House announced a new task force to focus on solving the supply chain disruptions created by the pandemic.

  • That dovetails with Deese's advocacy for the public spending on research and development, as well as a bigger role for the federal government in the procurement process.

By the numbers: Manufacturing jobs reached their peak in 1979, at 19.6 million.

  • Forty years later, the number declined to 12.8 million, down some 35% from the all-time high, according to the Bureau of Labor Statistics.

  • Under President Trump, the economy added roughly 500,000 manufacturing jobs, before the pandemic wiped them all away.

  • Trump ended his term with a loss of some 240,00 manufacturing positions.

Between the lines: As the economy has shed manufacturing jobs, it's added positions in other sectors that typically don’t pay as well. The Midwest has been particularly hard-hit.

  • For example, between 2001 and 2019, Indiana lost over 72,000 jobs in the manufacturing sector, while adding 228,000 in the hospitality, administrative services and health care sectors, according to a study from the left-of-center Brookings Institution.

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