The experience of one of the last domestic producers of the N95 mask, Prestige Manufacturing, is emblematic. During the swine flu pandemic in 2009, the company geared up production and hired more workers, only to see hospitals shift back to foreign producers once the crisis was over.
“Hospitals didn’t stick with us; we had to lay off 150 employees,” Mike Bowen, the president of Prestige, told us. After Covid-19 hit, the company made additional masks only for hospitals willing to sign contracts guaranteeing they would stick with the manufacturer for the long term. As a result, there was a six-month delay in scaling up production, and its output was significantly smaller than what Prestige might have produced had there been more certainty about the stability of future demand.
If products are going to be successfully manufactured in the United States, there must be sustained purchases by the government at the federal, state, and local levels, certainly for medical supplies but also in other industries.
After all, taxpayer money should not be used to subsidize foreign production. Companies that are given federal aid for crises should be required to move a significant percentage of their sourcing and production back to the United States. Stopping predatory pricing by foreign manufacturers is also necessary to ensure stable demand.
Consumers are another overlooked source of stable demand for U.S.-made products. Indeed, their passion is cynically being used by companies that sell their made-in-China products as “proudly American.” Further, some consumers are clearly willing to pay more for products that they know are better, healthier and more ethically sourced. Thus, once consumers learn that not all generic drugs are alike, with pronounced differences in quality and safety, depending on the country of manufacture, many will gladly add a few cents for drugs using American-made active ingredients, perhaps with packages stating that their products are free from foreign-made active ingredients and were manufactured by fairly treated workers.
Stoking demand is all about certification, labeling and marketing. The Senate is considering proposals calling for disclosure of pharmaceutical production and sourcing. That’s a great step, and it should be extended to other industries.
Federal law should require all manufacturing industries to disclose how much of their sourcing and critical production takes place in the United States. It should be illegal for companies to use terms such as “an American tradition” on the packages of goods that were completely produced in China.
Covid-19 has brutally exposed national weaknesses. The task is difficult and will take years to bear fruit. However, there is also the chance to secure prosperity for future generations of Americans, as well as ensure that the next crisis will not find us so vulnerable. It is time that the United States believed in itself again.
Dan Breznitz is the Munk Chair of Innovation Studies and a co-director of the Innovation Policy Lab at the Munk School of the University of Toronto. His next book, “Innovation in Real Places: Strategies for Prosperity in an Unforgiving World,” will be published next month. David Adler writes frequently about industrial policy, as well as liquidity and financial frictions.
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