(Bloomberg) — Commerce Secretary Gina Raimondo made a whistle-stop trip to Detroit to build momentum for government investment in the semiconductor industry, a move that’s fast becoming a key issue for Democrats.
Raimondo pressed Congress to pass legislation that would put about $52 billion toward U.S. chip manufacturing in a speech to the Economic Club of Detroit during a visit to the city that’s the capital of American auto manufacturing. Earlier Monday, she led a roundtable discussion on semiconductors with Michigan Democrats, including Senators Debbie Stabenow and Gary Peters and Representatives Debbie Dingell, Dan Kildee and Rashida Tlaib, among others.
With President Joe Biden’s approval rating slipping and Michigan’s Democratic Governor Gretchen Whitmer seeking re-election next year, the party is trying to show it’s pushing for a solution to the microchip shortage that has hit production of vehicles and other industrial products. Michigan is a vital battleground state and has endured layoffs and lost profits at the auto companies due to the shortage.
“We can’t wait because the rest of the world isn’t waiting,” Raimondo told the Detroit Economic Club. “China, Taiwan — they are incentivizing the production of chips right now and have been for a long time. We need the House to pass the Chips Act immediately because the stakes are just that high.”
The worldwide auto industry has been suffering production disruptions for almost a year from the global chip shortage, leading to furloughs for American autoworkers. The Biden administration has acknowledged there’s no quick fix.
Raimondo said money from the Senate-passed legislation would provide incentives for manufacturers to build at least a dozen semiconductor facilities in the U.S. She said funds would come with strings attached but didn’t elaborate.
“We’re creating a fund to incentivize companies to create manufacturing in America and to employ Americans,” Raimondo said.
United Autoworkers President Ray Curry attended the roundtable, as did representatives of automakers Ford Motor Co., General Motors Co. and Stellantis NV.
Dingell said the goal is to get the bill, which the Senate passed this summer, approved in the House and on Biden’s desk before Christmas so the Commerce Department can start allocating the money.
Earlier this month, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi announced plans to negotiate a bill aimed at countering China’s rise.
The House has debated several related measures but doesn’t have a cohesive legislative package to mirror the Senate legislation, which includes the chips manufacturing money and several other provisions aimed at boosting U.S. competition.
Raimondo is leading the Biden administration’s response to the shortage. Her department recently asked companies in the semiconductor supply chain for information to detect bottlenecks and potential hoarding of supplies.
The submissions of more than 150 companies from around the world exceeded Raimondo’s expectations, she said. Her team is still evaluating the responses and plans to share a high-level summary of the findings in coming weeks.
The Biden administration is working with allies to develop new capacity to ensure early detection of supply-chain disruptions and prevent future shortages.
None of the legislation can resolve the near-term shortage because it takes at least a year and a half to build a new plant, said Kildee, a Democrat.
“It’s tough,” he said. “Everything is at least 18 months out.”
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