It is a similar idea to Trump’s America First plans, but will it actually happen?
President Trump set about reshoring by tearing up the North American Free Trade Agreement and seeking a better deal for US manufacturers, especially in the motor industry.
Trump talked about revitalising US manufacturing using a carrot-and-stick approach.
The stick was an implicit threat that if big US tech firms did not make massive investments at home, they would find themselves on the wrong side of a vengeful president.
The carrot was the enormous corporate tax cuts he introduced which incentivised big tech firms to bring billions in offshore profits home at a reduced rate of corporation tax. The idea was that they would use this money to invest in jobs in the US .
Instead, they “invested” in themselves by buying up billions of dollars of their own shares. But have the big job investments materialised?
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Elsewhere, Foxconn, the Taiwanese electronics contract manufacturer said it would invest $10bn and bring thousands of new jobs to Wisconsin.
President Trump broke ground on the plant located in a small Wisconsin town called Mount Pleasant in the summer of 2018. It was to be called the ‘Eighth Wonder of the World’ and employ 13,000 new workers in an LCD factory.
Last month, the Wisconsin Economic Development Corporation wrote that Foxconn isn’t producing the large-sized TV display panels outlined in the original contract, hadn’t invested the pledged amount in the plant and failed to employ the minimum number of people needed to get subsidies.
According to the US Census Bureau figures, nearly 1,800 factories have disappeared during the Trump administration between 2016 and 2018.
Now to Biden. He won’t control the Senate, which not only affects his domestic policy agenda but also effectively reduces his options for Cabinet positions.
It is now expected that he will opt for more moderate personalities around his Cabinet table to ensure they get through a Republican-controlled Senate.
More moderate means rock the boat less.
Just like Trump before him, Biden will face the reality that unravelling global supply chains; forcing global corporations to up sticks and leave multi-billion dollar investments abroad; and finding the right skill sets at home to make it all work, is easier said than done.
However, there is one area where Biden stands a better chance of getting a reshoring result and that is pharmaceuticals.
The Irish pharma industry is enormous by global standards. We are now the eighth largest maker of biopharma products in the world and the fifth largest exporter.
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All of the top ten companies in the world have a presence here and we export more biopharma product than the UK and half what Germany does.
The sector accounts for 62pc of all goods exports from Ireland. Pharma and chemical exports to the US climbed to €27.3bn in the first eight months of the year and account for 80pc of what we export to the US.
On the US side, their pharma imports have risen from $65bn in 2006 to $151bn last year. The US and Biden argument here isn’t so much about jobs, as security of supply challenges, highlighted by the coronavirus.
Biden has suggested a carrot-and-stick approach. The stick would be levies on imports and instructions to all Federal agencies to buy only US-made medicines.
But there are problems with making this policy work. Firstly, he needs the Republicans to buy into it. Reshoring medicines manufacture is very consistent with Trump-era policy but Trump will be gone. What sort of Republican Party will be left in the Senate?
Secondly, making this kind of transition would take a long time. Biden is expected to be only a one-term president.
Thirdly, the impetus for a pharma security initiative could fade as vaccines come on the market. With a solution in sight, where is the problem? This will depend on whether the US gets good early access to new Covid-19 vaccines. The pharma industry will have a real incentive to make sure it does.
Fourthly, in Ireland’s case, these companies have spent billions building up their physical and human capital presence here. In the five years up to 2018 alone, the industry spent €2bn on new manufacturing and R&D capability.
Biden’s early priorities will be securing acceptable Cabinet secretaries and funding for a new coronavirus plan.
After that, Biden will want to change the Trump message; seek to re-build bridges abroad and unite some of the divisions at home. All of that will definitely be a full-time job.
