American Manufacturing has been in the doldrums for years, which is beaten by high credit costs and a strong dollar, which makes exports less competitive. But there was a ray of hope: billions of dollars that flowed into the factory construction, which means that potential recovery in production and employment is just around the corner.
The flood of investments was driven by two important categories of subsidies provided as part of the bidges. One offered incentives for the construction of several enormous semiconductor systems that should start operating in the coming years. The other loads the production of devices required for the use of renewable energies.
This second category is in danger because the Trump administration and the Congress led by Republicans try to regain support for low-carbon energy, including battery-operated vehicles, wind power and solar fields.
An option to collect money in order to compensate for the costs of your desired tax cuts are the loans for the generation of renewable streams.
“If it ends that the schedule for these credits is shortened, the incentives for the development of an onshore production facility are obviously falling,” said Jeffrey Davis, a lawyer at White & Case that specializes in incentives for renewable energies. “If you look at the prospect of sales and sales over a period of three years instead of a period of eight years, the production facility may not be able to rise to pencil.”
The strategy of bidding administration was based on pressure and a train. First push the delivery of clean energy products through tax relief, loans and direct grants to the manufacturers. It was also important to receive the demand: discounts for the purchase of electric cars, tax credits for the generation of renewable electricity and subsidies for states and individuals for installing solar systems. Companies that are considered took into account both sides when planning where a work should be built or expanded.
And there were large bets on the electrified, sun and wind-powered future- in the two years that ended in September, according to Rhodium Group, an economic research company, private investments in the production of Clean Energy in the two years that ended in September . Car companies have converted production lines for electric vehicles and entered in joint ventures to produce batteries, while mines and processing systems are in development to provide them with the minerals included.
Some of these facilities are in operation and others are under construction. But many are only planned. And these companies consider whether they should go forward, especially with the winds against them in Washington.
“Will we compete or not? That is the question that car manufacturers will ask themselves, ”said Harrison Godfrey, head of the federal government in investments and manufacturing at Advanced Energy United, an industrial association. “Is there enough of a demand to continue this investment here?”
The economy was already a challenge for several parts of the supply chain for renewable energies. Some projects were discontinued before the elections in November. For others, President Trump's victory was the last straw.
“President Trump campaigned for the reduction of the green new fraud, and that's exactly what he does,” said a spokesman for the White House, Harrison Fields.
Take hydrogen, which is intended for both the truck freight and industrial plants as an energy source. NEL, a Norwegian company that requires the electrolysis expert required for hydrogen production, believed that the law on reducing inflation in North America would increase sufficient demand to add a production facility to Michigan.
Together with the federal tax relief and additional funds from the state, NEL collected almost 200 million US dollars in federal and federal money for the construction of the work, which would have employed around 500 employees. However, the regulations for the tax credit for hydrogen manufacturers only emerged in the last month and delayed solid orders.
“It was like a biscuit glass and then you are not allowed to eat these cookies,” said Hakon Volldal, managing director of NEL. This and fluctuating power prices and doubts as to whether the Trump government would change the rules persuaded him to put Michigan's establishment on hold.
“It is not due to one thing – there is simply too much uncertainty, and this prevents boards and steering committees from approving business cases,” said Voldal. “You make an investment decision and have to live with this decision as soon as you have committed capital. It is a 20-year investment. What if you don't get the money? “
Then there is the market for electric vehicles that slowed down last year. Ford Motor's managing director, which has put billions in battery systems, said the company could be forced to reduce jobs if the Trump management has withdrawn subsidies for purchases. The view of tariffs for steel, aluminum and all products from Canada and Mexico are particularly frightening.
The impact rotates in the supply chain. The German participant ZF, who had received a grant of 157.7 million US dollars, in order to re -navigate a factory for the production of electric vehicles in Marysville, Michigan, wrapped the plan in December, although the decision was not due to the election.
“In North America, the market for e-mobility products has moved more slowly than expected when ZF applied for this grant,” said Tony Sapienza, a ZF spokesman.
The wind industry was particularly difficult, and Mr. Trump remained the permits for onshore and offshore wind development. An Italian company had plans for a work in Somerset, Massachusetts, which would have delivered underwater cables for new offshore wind turbines.
Some manufacturers push on the edge. For example, Cummins received a scholarship to add an electric vehicle production line to its system in Columbus, Indiana, and government subsidies for a battery cell manufacturing plant in Mississippi. A Cummins spokeswoman would not say whether the company was obliged to track.
“It is difficult for companies like ours to plan opportunities in the midst,” said spokeswoman Melinda Koski. “However, we continue to concentrate on our long -term goals and continue to assess the way for our investments.”
Several companies that counted on tax credits either did not respond to inquiries about comments or rejected a statement.
Some components of the supply chain are still relatively optimistic. This includes miners and processors of so-called critical minerals that are needed for the production of batteries-a industry sector dominated by China. Statements from the White House were encouraging for this sector.
For example, some tariffs could be a plus. The trade department has opened the door for the imposing tariffs of up to 920 percent on graphite. That companies such as Syrah Resources, which supports a processing facility in Louisiana, supported by a loan of the Ministry of Energy.
Mr. Trump did the concept of storing critical minerals and stated that mining activities support. Approval could be easier to get. There are also military applications, and domestic industry has emphasized its importance when China restricts its export of materials such as lithium, nickel and cobalt.
“There is a risk that it would be really bad if it were really bad to get an export ban, as it happened on rare earths” in Rochester, NY, “You would have an entire supply chain that is thrown at the deep end, And a massive transfer because the United States is a disproportionate user of these materials compared to a manufacturer. “
However, the volume is important to reduce the costs. The production of critical minerals for car batteries and battery storage on the supply scale is a way to ensure robust supply for American troops without having to be completely supported by the Pentagon.
“It becomes more expensive if we rely exclusively on the defense,” said Abigail Hunter, Executive Director of the Center for Critical Mineral Strategy at Safe, a thought factory for energy security.
Some energy managers have gained confidence from the fact that most investments for clean energy are made in conservative states, and a small coalition of Republicans has argued that the scrap incentives could lead to a waste of money that is already to support the offer for the Support of the offer was issued.
But even if the law to reduce inflation largely survives intact, the Trump administration takes steps that give more uncertainty to the use of renewable energies that could relax new orders. Interruptions of permission to solar and wind projects could extend the project schedule, the reductions of employees at federal authorities can slow down the tax credit and attribute new standards for exhaust gas emissions to the auto industry to stay longer with gas-powered vehicles.
Jigar Shah, who headed the Office for Credit Programs in the Energy Ministry under the Biden Administration, optimistically provides the condition of the industry. He estimates that more than half of the new production facilities supported by its office are under construction and that most of their managers in the business case are still confident for the conclusion, since the fundamental data in the industry are still strong without subsidies.
“Then you will find 455 of you who are probably waiting or thinking or whatever, but these 500 manufacturing facilities are larger than the number we have built in the past 10 years,” said Shah. “Will some of the projects not progress? Yes. But will we meet these large milestones that we sat down for ourselves in 2021? Clearly yes. “