US Doubles Down on Buy American Act

On July 17, 2019, Gary Reber of For Economic Justice wrote the above titled article and it was published the same day on IndustryNet.  Gary’s article follows excerpt with comments below.

President Trump has built on the original Buy American Act of 1933 with the Buy American and Hire American order of April 2017 and the Strengthening Buy-American Preferences for Infrastructure Projects.  “US Doubles Down on Buy America Act” article author Gary Reber has gone on to say, “Boosting US manufacturing has been a central goal of the Trump administration.”  And as President Trump has said, “If we can build it, grow it, or make it in the United States, we will.”

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The White House unveiled a new plan this week to boost U.S. procurement of American-made products. During the annual “Made In America” showcase at the White House July 15th, President Trump signed an executive order vowing to enforce and maximize the 1933 Buy American Act to the greatest extent of the law.

The new executive order on “Maximizing Use of American-Made Goods, Products, and Materials” aims to increase the number of American-made products and components purchased by federal agencies, with the eventual goal of increasing the percentage of American-made components from 50% to 75%, and up to 95% for iron and steel.

What is the Buy American Act?

The Buy American Act was signed into law by President Hoover in 1933 and required government agencies to give preference to American-made components and parts.

It also provided the same requirements for certain third-party purchasers that use federal funds.

In 1954, President Eisenhower further refined this legislation with the Prescribing Uniform Procedures for Certain Determinations Under the Buy-American Act by declaring products that are produced with more than 50% foreign materials to be of foreign origin.

This new order seeks to push that threshold to 75%, 95% for iron and steel purchases.

Similar executive orders from the Trump administration have built on the 1933 Buy American Act, including the Buy American and Hire American order of April 2017 and the Strengthening Buy-American Preferences for Infrastructure Projects from January of this year.

Boosting U.S. manufacturing has been a central goal of the Trump administration, implementing tariffs on imported goods from China and renegotiating NAFTA in favor of a more protectionist USMCA.

“The philosophy of my administration is simple: If we can build it, grow it, or make it in the United States, we will,” said President Trump during the Made in America showcase.

Industry Reaction

The new executive order was met with enthusiasm from the steel industry.

Thomas J. Gibson, CEO of the American Iron and Steel Institute said “This announcement is another positive step in ensuring the fullest possible implementation and enforcement of existing domestic procurement laws and ensuring the steel industry remains competitive.

Strong domestic procurement preferences for federally funded infrastructure projects are vital to the health of the domestic steel industry, and have helped create manufacturing jobs and build American infrastructure. We applaud President Trump for once again affirming his commitment to the steel industry that built, and continues to build, our nation.”

On the flip side, one Associated Press article noted that the taxpayer may be on the hook for a bigger bill, as the government will likely end up paying more for products.

In addition, there is a risk, as with tariffs, that other nations may adopt similar protectionist policies.

Purchasing Power

Federal agencies are clearly a major purchasing group, pouring billions of dollars into contracts each year. The U.S. Department of Defense is the biggest spender, allocating $320 billion in exepnditures for fiscal year 2017.

According to the Congressional Research Service, of this $320 billion, manufactured goods accounted for 51% of contract spend, while 41% was spent on services and 8% on R&D.

An although 71% of non-defense federal government expenditures were allocated to services, 21% was still reserved for manufactured goods.

For fiscal year 2018, Lockheed Martin; Boeing; Raytheon; General Dynamics and Northrop Grumman were the top five vendors, with a combined $115 billion federal dollars obligated, according to the Federal Procurement Data System. And although this represents a considerable chunk of federal expenditure, a number of other industrial suppliers such as Mantech International Corporation, CGI, Inc and CDW Corportation also secured sizable contracts. 

Opportunities for Manufacturers

As this new directive takes shape, U.S. manufacturers will likely see greater demand for their products from federal agencies.

Additionally, if tariffs have their intended effect, and some new data from the U.S. Labor Department suggests they may have, U.S. manufacturers can expect more private-sector demand for their products.

Now, more than ever, it is important to be visible to industrial procurers in both the private and public sectors.

IndustryNet is a direct path for U.S manufacturers to increase their visibility among domestic industrial procurers. IndustryNet maintains up-to-date information on over 400,000 U.S. manufacturers and suppliers of more than 10,000 products and services and suppliers across a range of industries.

Suppliers on IndustryNet can upgrade their listing to include their company logo, social media links, downloadable catalogs, videos, photo libraries, ISO certifications, press releases and more.

Gary Reber Comments:

We should expand the concept of giving preference to American-made components and parts, and third-party purchasers that use taxpayer funds and ensure that the corporations providing the goods and products are significantly owned by ALL of the employees. Such a policy course will boost manufacturing in the United States rather than moving our manufacturing capabilities to slave-wage labor countries.

We should always be assessing our economic policy on building, growing and making here in the United States what we need.