Step Up – NJBIZ

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New Jersey’s manufacturing expansion program CEO John Kennedy said “normal has failed” during the pandemic, so a better system is needed. –Aaron Houston

Congress is considering a measure designed to address some of the biggest challenges facing manufacturers in New Jersey and across the country. The bill comes as lawmakers and manufacturing leaders and executives here consider ways to build capacity.

Supply chains collapsed in 2020 and early 2021 as the pandemic swept the world, forcing factory closures or reduced operations in some places. Following the shutdowns, the manufacturing, shipping and trucking industries were hit by labor shortages; at the same time, soaring demand for goods fueled backlogs that kept products from reaching store shelves.

“A lot of people talk about ‘let’s get back to normal.’ I don’t want to. Normal has failed,” John Kennedy, CEO of the New Jersey Manufacturing Extension Program, said at an event in December.

The America COMPETES Act calls for tens of billions of dollars to be spent on American manufacturing – especially semiconductors – and scientific research. Additionally, the bill would make major changes to trade policies relating to China. It was approved by the United States House of Representatives on February 4 in a vote of 220 to 210 along party lines. Although President Joe Biden has expressed support for the measure, it faces a tougher fight in the US Senate where Democrats and Republicans each hold half the seats.

House Republican Leader Kevin McCarthy in a statement criticized the bill as “toothless” and said it “does not include any measures to make China pay for the chaos they have created.”

According to the proposal, the United States would spend $52 billion to boost microchip production; $45 billion to strengthen supply chains and prevent future disruptions; and $160 billion for science, technology and research.

The bill is essentially a response to the US Innovation and Competition Act, passed by the Senate last June, which provides $50 billion for chip manufacturing and $250 billion for scientific research.

“Not only would its provisions help fight inflation and alleviate the supply chain challenges we face today, but the bill provides for significant investment in semiconductor manufacturing in the United States. United, which would also help us avoid future crises,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “This legislation would strengthen American leadership in global climate innovation, improve environmental research and close critical data gaps, while holding China accountable as the world’s largest emitter.”

US Senator Bob Menendez noted that the pandemic has exposed the vulnerability of the country’s supply chain.

The details

An important component is the creation of a national supply chain database that would be managed by the National Manufacturing Extension Partnership and done in collaboration with all 50 states. The provision was added as an amendment and was part of a measure sponsored by Democratic U.S. Senator Bob Menendez, who warned in a recent statement that the COVID-19 pandemic “has exposed deep vulnerabilities in our security bases. national supply chain data that continues to impact our long-term economic recovery.

Such a database would provide manufacturers and government officials across the country with real-time information on the raw materials or finished products they need to manufacture any type of product, saving time and money while reducing dependence on foreign products.

Manufacturing executives told NJBIZ that of all the bill’s proposals, creating the supply chain database would be the most helpful to the industry. “It’s reasonably simple to understand that to properly use your supply chain; you need to know what assets/capabilities are there before you can effectively close the gaps,” Kennedy said.

“It’s easy to find products. It’s almost impossible to find capacity,” Unionwear President Mitch Cahn said. –Aaron Houston

Mitch Cahn, founder and chairman of Newark-based manufacturer Unionwear, said the proposal would bring “outsourcers and part makers out of the shadows”.

Unionwear, which makes hats, bags, binders and other promotional materials, shifted in 2020 to manufacturing personal protective equipment such as plastic face shields, gowns and non-surgical face masks .

“It’s easy to find products. It is almost impossible to find abilities. When there is a national emergency and the federal government needs supplies immediately, there is currently no way to locate who has the capability and capacity to fill critical infrastructure gaps,” Cahn explained.

Kennedy said that while New Jersey has its own database of about 9,000 manufacturers and companies, databases run by other states “have not spoken to each other” during the pandemic.

“Here, we’re trying to gather the parts here to try to figure out who makes parts for certain types of PPE and ventilators, and that was taking us weeks,” he said in December.

But the bill doesn’t assign responsibility for maintaining such a sprawling database once it’s established, said Kevin Lyons, associate professor of supply chain management at Rutgers Business School. . If it works, Lyons said, the database can “provide real-time alternatives” in the event that “a manufacturer cannot meet delivery time or cost.”

The $52 billion in chip funding would be spread over five years to spur research, design and production of semiconductors in the United States, according to a summary of the bill. With most of the chips coming from China, proponents say the current shortages have revealed vulnerability in that country.

Grants and loans totaling $45 billion over the next six years would be available to support the manufacturing of goods deemed to be of national and economic importance, such as products used for public health; energy and transport; and agriculture and food.

The $160 billion in research funding would go to the Department of Energy Office of Science and the National Science Foundation. And $3 billion would be spent to strengthen the country’s solar power manufacturing supply chain.

The existing trade adjustment assistance program, which provides wage subsidies to manufacturing workers who lose their jobs or whose wages are reduced due to increased imports, would be expanded. U.S. Representative Bill Pascrell, D-9th District, said the provision was partly inspired by the closure of the Mondelez cookie factory in Fair Lawn, which resulted in the loss of 600 jobs.

“The continued relocation of good jobs to Mexico and overseas by many large corporations has done incalculable harm to the American worker,” Pascrell said in a statement.

At the state level

Supporters of manufacturing argue that most of the proposals crafted in New Jersey to bolster the industry deal with state subsidies and additional training and apprenticeship programs. “One area is supporting our manufacturers by creating and expanding state programs and assistance,” said Sen. Linda Greenstein, D-14th District, who chairs the Legislative Manufacturing Caucus.

A $30 million tax incentive package included in New Jersey’s $14.5 billion Economic Recovery Act subsidizes PPE production. The Made in New Jersey Tax Credit Act, A881, would provide tax breaks to businesses that purchase products made in New Jersey. Senate Bill 594 would provide tax breaks covering 20% ​​of the cost of new equipment purchased by New Jersey manufacturers and 20% of the cost of renovations, upgrades or expansions of existing facilities in New Jersey. And Manufacturing in Higher Education Act A2014 would require various state entities to promote manufacturing career paths and provide student aid.

State agencies responsible for higher education, vocational schools, four-year universities and county colleges would be required to design a “manufacturing career path.” The bill would create a $10 million grant program for public institutions of higher education to create or expand manufacturing curricula and programs.

The state would designate a particular college as a business resource center for manufacturers needing to modernize their operations. And it would create an 11-member New Jersey Advanced Manufacturing Council, which would also support the expansion of the state’s manufacturing workforce.

“We see this as a great opportunity to connect vo-tech, four-year high schools and colleges, and county and community colleges,” said Catherine Frugé Starghill, former state labor officer and current Senior Director of Workforce Strategy and Partnerships at the New Jersey Community College Consortium for Workforce and Economic Development.

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