Friday, June 11, 2021

What Does the U.S. Innovation and Competition Act Mean for U.S. Manufacturers?

Malcolm Kerr, Head of Growth and GTM Strategy  

On Tuesday, the Senate passed the U.S. Innovation and Competition Act, a bipartisan bill that aims to spend $250 billion on scientific research and development to bolster competitiveness against China. It has not yet passed the House.

The bipartisan support for this bill reflects the sense of urgency policymakers feel with regards countering the substantial investments China has made into bolstering their technological sophistication.

“It is long past time that we invest in American workers and American innovation,” Biden said in a statement. “We are in a competition to win the 21st century, and the starting gun has gone off. As other countries continue to invest in their own research and development, we cannot risk falling behind.”

The manufacturing gap between the United States and China is often described only as a cost of labor issue alone, but China’s heavy investment in automation has played a huge role as well. By this year, China was forecasted to account for 45% of the world’s supply of new robotics equipment, in comparison the 7% forecasted for the United States, according to Bloomberg.

So what specifically would this bill mean for American manufacturers?

The first piece of the bill is a $52 billion dollar injection into the semiconductor industry with little stipulation on how those funds are used. This would be a lifeline to the industry, as well as other industries where semiconductors as crucial inputs, such as auto and technology manufacturing. 

The bill would also pour hundreds of billions of dollars into scientific research, encouraging research universities and corporations to collaborate on research breakthroughs in artificial intelligence and machine learning, robotics, high-performance computing and other advanced technologies

Another component of the bill is subsidies into U.S. robot producers, advancing their capabilities, and further broadening their accessibility to all sectors of the market. 

This robotics subsidy could have big implications for U.S. manufacturing in two ways: firstly, U.S. manufacturers could have greater access to higher-quality American-made robotics. Secondly, manufacturers that produce input components to robotics systems could see an uptick in orders. Big auto has long held a prominent position in American manufacturing, in large part due to the vast amount of component purchasing. One can imagine a future in which the American robotics industry approaches similar gravitas in the American supply chain. 

The Big Picture

The bipartisan support for this bill demonstrates what we at Formic believe to be true: the future of manufacturing competitiveness will be determined by broad access to cutting-edge technology. 

That is why our mission at Formic is to expand access to top-tier automation technologies. We believe that technology doesn’t change the world until you make it accessible to those who need it most. Automation is a necessity to compete in an increasingly globalized economy, not a luxury.

Robotics

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