Looming Government Shutdown and Ongoing Union Strikes May Derail Manufacturing Initiatives

Many of the things I’ve talked about in this column over the past several months seem to be coming to a head this week. We’ve looked at trillions of dollars earmarked by the Infrastructure Bill and the CHIPS Act, geared at reshoring manufacturing and green initiatives. We discussed the history and effect of unionization within manufacturing. And we’ve considered the geopolitical climate, the labor shortage, and the other economic factors affecting the industry.

I thought it would be interesting to shift to a round-up format, bringing together the current events of the week as they relate to the manufacturing world. Here are some top stories and my take on what they mean for our industry.

Government Shutdown May Slow Manufacturing 

It looks likely that we’ll see a government shutdown beginning this weekend. Although a short-term shutdown may not have a significant effect on manufacturing, the longer one lasts, the larger the ripple effect.

Since a government shutdown halts all non-essential services, manufacturing may be impacted if companies have government contracts or rely on government-produced data to make decisions. In addition, businesses waiting to receive government funds to begin manufacturing products such as solar panels or semiconductors may need to wait a little longer.

Big Production Facilities Just Breaking Ground

I wonder if all this talk about a government shutdown is raining on the parades of those companies just launching new production facilities. Both First Solar and Wolfspeed have recently broken ground in their respective hometowns, funded in large part with public money from the Inflation Reduction Act and the CHIPS Act.

First Solar’s $1.1 billion facility in Iberia Parish, Louisiana, broke ground on September 21, and Wolfspeed, based in Durham, North Carolina, just started construction for its $2.5 billion materials manufacturing facility.

Money Still Awarded for Railway Safety and Expansion

The threat of government shutdown hasn’t stopped the current administration from announcing new spending. Just a few days ago, more than $1.4 billion was awarded to projects to improve railway safety and boost capacity. The majority of that money was put aside in Biden’s 2021 infrastructure law.

While some of this money is geared to improving passenger safety and access, one of the biggest grants gave the Palouse River & Coulee City Railroad in Washington $72.8 million to upgrade track so they can handle modern 286,000-pound railcars designed for shipping raw materials and finished products.

Ongoing UAW Strike Doubling the Blow to EV Manufacturing

Besides green initiatives like the production of solar panels and reshoring technology manufacturing of critical semiconductors, the government has also pushed for domestic production of electric vehicles and their components in recent years.

The ongoing United Auto Workers strike is a double-whammy to those auto manufacturers trying to increase EV availability through component and battery-related production.

This week, Ford paused construction of its $3.5 billion EV factory in Marshall, Michigan. Executives point to the UAW strike as one reason for the decision. The EV battery-manufacturing facility was part of a $50 billion effort to grow its EV business.

It’s been a banner week in manufacturing with the ongoing UAW strike, potential government shutdown, and other expansion projects in various stages of development. Hopefully, agreements can be reached across the board quickly, and we can get back to many of the exciting developments on the horizon.