In recent years, the U.S. government has been trying to bring manufacturing back to its own soil as part of its great power competition strategy. Manufacturing was originally the strength of the United States, but in recent decades some companies have moved overseas. Some political elites in the United States believe that the government can pressure them to return on the basis of national security. This view ignores the laws of economic development.
During the wave of globalization in recent decades, some manufacturing industries have migrated from developed to developing regions for economic reasons. Compared with digital industries, manufacturers (especially in the mechanical, chemical and textile industries) require more labor are more prone to harmful accidents. Consequently, they have higher environmental protection costs. In order to reduce the costs of labor, accidents and environmental protection, companies have adopted a strategy of relocating from developed regions to developing regions. The relocations bring opportunities for technological and economic development in the host regions, but they also bring labor problems, accident risks and environmental pollution.
This is part of globalization in recent decades. It has brought both benefits and costs to developing regions. For example, in December 1984, a major industrial accident occurred at a plant in Bhopal, India, owned by a U.S. company and local investors. A storage tank at the plant leaked, releasing a large amount of toxic gas, which resulted in thousands of deaths and serious long-term toxic effects in the environment. When developing regions take over manufacturing operations transferred from developed regions, it often takes many years to build new management systems and capacity to deal with illegal employment, accidents and pollution.
Some political elites in the United States see only the benefits of the manufacturing industry to the countries and regions where they have relocated and ignore the problems. They are unhappy with the decline of manufacturing in the United States and don’t like to see the development and growth of manufacturing in China. The U.S. political elites has securitized economic issues and pushing the government to use administrative means to deal with these issues. The U.S. government has also adopted this line of thinking. Its basic approach is to use administrative means, such as sanctions and export controls, to pressure the companies involved — in the name of national security — and forcing some manufacturers to move back to the United States.
For example, the Defense Production Act, which was originally used primarily for war and military emergencies, authorizes the president to mobilize domestic resources and prioritize the production of defense-related goods. In June 2022, Biden invoked the DPA to promote the domestic production of solar panels in the United States. The White House said in a statement that the administration would also invoke the act to boost U.S. production of other clean energy technology products, including building insulation, heat pumps, transformers, electrolyzers and fuel cells.
It is true that the administrative measures adopted by the U.S. government, using a security rationale, may put pressure on manufacturers located in other countries. But can administrative measures alone ensure the healthy development of manufacturing in the United States?
The global relocation of manufacturing has advantages and disadvantages for any country. If the U.S. government is successful in promoting a large-scale return of manufacturing, the problems associated with manufacturing will also return to the U.S. These problems fall into three broad categories: labor issues, environmental issues and accidents.
Labor
Manufacturing tends to require a larger number of blue-collar workers, so the development of manufacturing generally increases blue-collar employment. However, because of the high cost of labor in the United States, some manufacturers have chosen to leave in recent decades. When these companies return, so do higher high costs. In an effort to fight for better wages and benefits, these legal workers can sometimes have strained relationships with their employers.
Some companies may resort to illegal or unethical labor practices, such as hiring undocumented immigrants or children, exceeding legal hours, withholding worker protections or even using slave labor, to remain competitive and control costs. According to the U.S. Department of Labor, the number of child laborers in the United States has increased over the past year or two, a trend that deserves the attention of the U.S. government. As the manufacturing industry returns, the risk of illegal labor will increase. This may not just jeopardize the rights and interests of workers but also pose a threat to social stability and economic order.
Accident response
The manufacturing industry is prone to physical accidents, such as traffic, overheating, mechanical damage and power outages. Some accidents create environmental pollution. Some do not pollute but rather cause injuries, production stoppages and inconvenience.
To minimize the negative consequences of accidents, a strong emergency response capability must be established and maintained. When an accident occurs, these capabilities can be used to prevent the accident from getting worse. After the immediate response, the capabilities can be used to mitigate the consequences of the accident through repair and restoration.
Emergency response capabilities take a long time to build and will not be completed and operating effectively the moment a manufacturer returns to the United States. Until they are, accidents will continue to place a heavy burden on American society.
Environmental pressures
The manufacturing industry may produce exhaust fumes, wastewater and toxic chemicals, at the same time it is more prone to accidents. All these factors can cause environmental pollution. Therefore, the United States needs strong environmental management capabilities, including environmental protection regulations and resources.
The U.S. currently has very complete and strong environmental regulations. With the loss of the manufacturing industry in recent years, some of the resources for environmental management in the United States have migrated to address other needs. With the return of the manufacturing industry, it is unlikely that the U.S. will be able to quickly mobilize enough resources in a short period of time to deal with the possible increases in environmental pollution. As a result, American society will also be subjected to enormous environmental pressures.
The starting point of the U.S. political elite’s proposal for the return of manufacturing is power competition. The U.S. government is to promote the return of manufacturing, primarily through administrative means of securitization, such as export controls and sanctions. However, the relocation of manufacturing itself is an economic issue that is closely related to labor, accidents, environmental issues and other matters of social governance.
The U.S. political elite, and policymakers in general, have not given social governance a prominent place in considerations of manufacturing. It is conceivable that even if the U.S. is able to force some manufacturing plants to relocate to its soil through administrative pressure, the country is not prepared to deal with the associated labor and environmental issues or accidents. As a result of the inaction of the U.S. political elite and government, the side-effects of renewed manufacturing could catch U.S. society off guard.
Donald Trump, the former president, had a more direct and simple solution to the problem. During his presidency, he made several attempts to liberalize environmental protection requirements. For example, in 2019, the Trump administration introduced the Affordable Clean Energy Rule to replace the Clean Power Plan. The ACE rule loosens requirements to control emissions from power plants and allows states to decide how to manage the carbon emissions of existing power plants. This is a way to attract investment in the manufacturing sector without imposing environmental obligations on the states. This is clearly not a sustainable way forward.
