‘Buy America’ Needs Rethinking
All of these sound bites were used by elected officials and administrators to advance a public policy idea that sounded good, but ultimately backfired, or produced unintended consequences in some way.
Now we have “Buy America.” This provision can be found in Moving Ahead for Progress in the 21st Century, or MAP-21, the federal highway reauthorization bill passed by Congress which provides federal funding for infrastructure projects in every state of the union. “Buy America” has been recently interpreted by the Federal Highway Administration to mean that components used to build or repair roads, bridges, transit and rail should be manufactured in America.
Sounds good, right? A little motherhood and apple pie. A way to help spur jobs creation in the U.S. as the economy recovers.
Here’s the problem: for decades, this country has discouraged U.S. manufacturing with its tough regulations, environmental, tax and labor laws. Further, in a global economy, Apple may innovate in Silicon Valley, but it manufactures all over the world, very little in the U.S. So, too, do the builders of infrastructure – from steel to asphalt, suppliers of products that make up the components of those roads, bridges, buses and trains.
It gets even more complicated.
Major freeway improvements often require the relocation of utilities underground – telephone, electricity, cable. Under the new interpretation of “Buy America,” if $1 of federal funding is used on any part of that freeway subject to federal environmental review, all contracts for services – whether or not they get federal funding – must certify that they comply with “Buy America.” So Edison, PG&E, AT&T, for example, and the 100,000-plus parts they have contracted for under Public Utility Commission regulations and their own union contracts must now also be certified as American-made, with few exceptions.
Major utilities have committed to complying with the law and the new interpretation, but warn that it will take time to develop a protocol to review their existing supply contracts, analyze suppliers, confer, determine parts’ manufacturing origins, locate alternative sources, meet regulatory agency requirements, etc. The time estimated to complete this process is not certain but it is clearly not days or months but years, covering everything from nuts and bolts to electrical transformers.
Yet today, Caltrans has approximately $2.5 billion of infrastructure projects – over 30,000 jobs on 10 projects that have been suspended due to “Buy America” or will be in the near future. Thirty-eight more projects valued at another $3 billion not yet in construction are in limbo due to utility relocation issues, and the deteriorated Gerald Desmond Bridge – a vital link in the nation’s trade system now under renovation at the Port of Long Beach with 3,000 jobs at stake – is at risk pending “Buy America” certification. The 91 Freeway, notoriously congested, is the only major link between Orange County and the Inland Empire – at risk because two major utility companies cannot begin their relocations due to “Buy America.”
So the irony of “Buy America” is that its implementation will not create jobs, but massive layoffs – exactly the opposite of its sound bite intent and exactly the opposite of what President Barack Obama called for in his May 17 address to rebuild the nation’s infrastructure and spur job creation.
President Obama, the U.S. Department of Transportation and California’s Congressional delegation must review this policy immediately. They must recognize the global economy for what it is and embrace it, while changing the way we do business in the U.S. to encourage manufacturing and a ramp up to compliance that is meaningful.