American manufacturing has been a malfunctioning industry for many years, struggling with high borrowing costs and strong dollars, and exports are decreasing their competitiveness. However, there was a bright spot. Billions of dollars flow into factory construction, indicating potential rebounds in production and employment are turning the corner.
The investment flood is driven by two major categories of subsidies provided under the Biden administration. One provided an incentive to build several giant semiconductor plants set up to begin operations in the coming years. The other was overcharged production of equipment needed to deploy renewable energy.
This second category is at risk as the Trump administration and Republican-led Congress seek to roll back support for low-carbon energy, including battery-powered vehicles, wind power and solar fields.
One option to raise funds to offset the cost of the desired tax cut is to truncate the credits for renewable generation.
“If these credit timelines are reduced, the incentives for developing land manufacturing facilities will clearly go down,” said Jeffrey Davis, a lawyer with White & Case, who specializes in renewable energy incentives. “If you're looking at three years' sales and revenue outlook rather than eight years, manufacturing facilities may not have to erase their pencils.”
The Biden administration's strategy relied on push and pull. First, it pushes the supply of clean energy products to manufacturers through tax credits, loans and direct grants. Equally important was to draw demand, including rebates to buy electric vehicles, tax credits to produce renewable electricity, and subsidies to install solar arrays for states and individuals. Companies considering manufacturing investments have taken both sides into consideration when planning to build or expand the plant.
According to economic research firm Rhodium Group, the two years that ended in September, there were big bets on the future of electrified solar and wind power. Automobile companies are taking part in joint ventures to remodel production lines for electric vehicles and make batteries, while mines and processing facilities supply minerals during development.
Some of these facilities are operating, some are under construction. But there are still many plans. And those companies are pondering whether to move forward, especially with the winds against them in Washington.
“Are we going to compete? Harrison Godfrey, head of federal investment and manufacturing at Advanced Energy United, the Industry Association's Association, said: “Demand that will help us continue this investment. Is the side market here?”
Economics has already been challenging in some parts of the renewable energy supply chain. Several projects were suspended before the November election. For others, President Trump's victory was the last straw.
“President Trump has campaigned by dismantling the new green scam, and that's exactly what he's doing,” said White House spokesman Harrison Fields.
Take hydrogen, which is intended as an energy source for both truck cargo and industrial facilities. Nell, a Norwegian company that produces the electrolytics needed for hydrogen production, believed the Inflation Reduction Act would drive sufficient demand to add manufacturing facilities to Michigan in North America.
Along with federal tax credits and additional funds from the state, NEL has raised nearly $200 million in state and federal funds that would employ around 500 workers. However, regulations governing tax credits for hydrogen producers had not been issued until last month, delaying solid orders.
“It's like a cookie jar and you're not allowed to eat those cookies,” said Hakon Bold, Nell's CEO. On top of that, changing electricity prices and doubts about whether the Trump administration would change rules persuaded him to put Michigan facilities on ice.
“That's not one thing. There's too much uncertainty and it prevents the board and steering committee from approving the business case,” Voldal said. “You're making an investment decision, so if you break capital, you need to live with that decision. It's 20 years of investment. What would you do if you don't get the money?”
After that, the electric car market began to slow down last year. Ford Motor's chief executive, who poured billions into the battery plant, said the company could be forced to cut jobs if the Trump administration withdraws subsidies for purchases . The tariff outlook for steel, aluminum and all products in Canada and Mexico is cold.
The impact ripples the supply chain. German parts maker ZF received a $157.77 million grant to remodel a factory that produces electric car parts in Marysville, Michigan, but said the decision was not an election. Ta.
“In North America, when ZF applied for this grant, the market for e-Mobility products was slower than expected,” said Tony Sapienza, a spokesman for ZF.
The wind industry has been hit particularly hard, with Trump halting permits for land and offshore wind power. The Italian company has removed plans for its Somerset, Massachusetts factory. This would have supplied subsea cables to new offshore wind turbines.
Some manufacturers are wobbling at the edges. Cummins, for example, received a grant to add an electric vehicle production line to its Columbus, Indiana facility and add a state grant for the Mississippi battery cell manufacturing plant under construction. A Cummins spokesperson would not have said if the company had promised to follow.
“It's difficult for businesses like us to plan amid the possibility of shifts,” said spokeswoman Melinda Koski. “But we continue to focus on our long-term goals and continue to appreciate our path to advancement for investment.”
Several companies hoping for a tax credit did not respond to requests for comment or declined to comment.
Some components of the supply chain are still relatively optimistic. It includes the so-called important mineral miners and processors needed to make batteries, the Chinese-controlled industrial sector. For this sector, the White House statement is encouraging.
For example, some customs duties can be positive. The Commerce Department has opened the door to impose tariffs of up to 920% on graphite. This supports companies like Syrah Resources, which are moving forward with Louisiana processing facilities supported by energy sector loans.
Trump has raised the concept of stockpiling important minerals and has shown support for mining activities. It may be easier to obtain permission. It also has military uses, and domestic industries emphasize its importance when China cuts exports of materials such as lithium, nickel and cobalt.
“We always risk exposure to an export ban, as happened in rare earths,” said Ajay Kochhar, CEO of LI Cycle, who received the energy sector loan to build the processing hub. In Rochester, New York, the US is an unbalanced user of these materials to producers, and there is an entire supply chain thrown at the deep end and a major dislocation. ”
However, quantity is important to reduce costs. Production of critical minerals for automotive batteries and utility-scale battery storage is a way to ensure a robust supply for the US military without being completely unsupported by the Pentagon.
“We're excited to be able to help you get started,” said Abigail Hunter, executive director of the Critical Mineral Strategy Center at Safe, an energy security think tank.
Some energy executives are gaining confidence from the fact that most clean energy manufacturing investments are made in conservative states, and a small coalition of Republicans has stolen supply by discarding demand incentives. They claim that it could lead to a waste of money already spent to help.
But even if the inflation reduction laws survive mostly intact, the Trump administration has taken steps to inject more uncertainty into the deployment of renewable energy, allowing new orders to cool down. Disruptions in permitting solar and wind projects could extend project timelines, reducing staff at federal agencies slows down tax credit processing, rolling back new standards for tailpipe emissions This will allow the automotive industry to stick to gasoline vehicles for a long time.
Jigersher, who operated a loan program office in the energy sector under the Biden administration, has put an optimistic spin on the state of the industry. He is confident in the business case for completion, as more than half of the new manufacturing facilities his office supported are under construction and the industry basics remain strong even without subsidies. It is estimated that it has
“So we'll find 455 people who are probably waiting, thinking, etc., but these 500 manufacturing facilities are bigger than they've built in the last decade,” Shah said. “Wouldn't you move forward with some of the projects? Yes. But will they hit these epic milestones that they set for themselves in 2021? Clearly, yes.”
