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The Government Circuit: An IPC Roadmap to Economic Recovery

As the COVID-19 pandemic exacts a growing toll, public and private actors worldwide are marshaling resources to combat the spread of the virus and save the lives of those who are critically ill. The electronics industry is doing its part by supporting the ramped-up production of respirators and other electronics-based medical equipment that hospitals need to treat the ill.

COVID-19 is also disrupting the lives of millions of people who are sheltering in place, working from home, and/or trying to find new work.

In this unprecedented crisis, IPC supports a sustained and bold policy agenda to help us all weather the economic downturn resulting from sweeping restrictions on business activity.

Actions Taken to Date

IPC commends governments and central banks around the world for responding quickly. In the United States, IPC commends President Trump and Congress for responding to the crisis with the issuance of a national emergency declaration, the invocation of the Defense Production Act, and bipartisan support for three stimulus packages. Moreover, the Federal Reserve’s decision to lower interest rates, buy government and corporate debt, and inject cash into the nation’s financial system will help maintain liquidity at a time when firms of all sizes need it most.

The Importance of the Electronics Manufacturing Sector

These moves will help support the resiliency of the electronics manufacturing sector, which supports more than 5.3 million U.S. jobs and drives more than $714 billion in U.S. GDP—almost 4% of the total GDP. Underscoring the importance of the sector, every U.S. electronics manufacturing job supports three other jobs in the U.S. economy. Electronics are at the heart of thousands of products and every industry. Clearly, the U.S. government should take extraordinary measures to keep this sector healthy.

IPC Members Concerned About Economic Impacts

The need is real. Many U.S. electronics manufacturers are feeling the effects of the coronavirus pandemic, according to a recent IPC survey of its members ^[1]. As of mid-March, almost 90% of respondents were concerned about the impacts, and more than two-thirds reported being told by their suppliers that there will be delays in shipments due to COVID-19. Almost two-thirds said they expect sales to drop in the first and second quarters of 2020 and for the entire calendar year, and some companies are cutting back on capital expenditures. Some manufacturers have closed their facilities and furloughed employees.

An IPC Roadmap for Economic Recovery

In addition to the unprecedented action already being taken in response to COVID-19, IPC urges policymakers to take additional, common-sense steps to help the electronics industry weather the economic crisis and drive the economic recovery.

Keep Essential Electronics Manufacturing Open

• States and localities should adopt the Department of Homeland Security’s (DHS) definition for “critical infrastructure,” which covers factories related to defense and healthcare.
• Commit to keeping these critical manufacturing facilities open.
• Ensure that curfews do not impede a healthy workforce from getting to and from manufacturing facilities.

Support Supply Chain Resiliency

• Congress should establish a $10 billion Electronics Manufacturing Initiative to enhance the resiliency and security of the nation’s electronics value chain by establishing public-private partnerships focused on the following priorities:
  • Capacity: Grow domestic capacity for electronics manufacturing and establish systems to monitor capacity in times of crisis.
  • Capabilities: Spur investment and R&D in artificial intelligence (AI) and other technologies that make U.S. manufacturers more globally competitive.
  • Workforce: Bridge the skills gap through more robust federal support for online workforce training and credentialing.
  • Resiliency: Establish metrics for industrial base resiliency with capacity, capabilities, and geographic diversity as key factors.
  • Security: Integrate resiliency and security initiatives to strengthen the trusted electronics supply chain.

Spur Global Trade by Cutting Tariffs

• Suspend the imposition of import duties through December 31, 2020, on all products from countries that agree to provide reciprocal treatment for U.S. exports.
• Allow companies to defer payment of import duties through December 31, 2020.
• Reinvigorate negotiations with China on a “Phase 2” deal and suspend Section 301 tariffs on imports related to healthcare and other vital supplies necessary to combat COVID-19.
• Increase funding for U.S. export promotion programs, including the U.S. Foreign Commercial Service and Small Business Administration, to help U.S. manufacturers compete in the global marketplace.

Delay Non-Essential Rulemakings

• The Trump administration should put a 90-day pause on non-essential regulatory rulemakings unless they are directly related to protecting public health, environmental health, or economic recovery.
• We need our business leaders to focus on maintaining compliance with existing regulations while taking on appropriate pandemic response actions.  
• A 90-day pause on new proposals and implementation of new requirements will likely guarantee better compliance in due time.

Facilitate Shipping and Transportation Recovery

• Support the continued and robust operation of U.S. ports to ensure so that food, medical, equipment, and other vital supplies will continue to reach people.
• Incentivize airlines to expand cargo capacity and keep air freight rates on par with historical norms.
• Enact landmark transportation legislation that, among its goals, expands capacity on U.S. freight corridors.

Support the Financial Security of Manufacturing Workers

• Facilitate federal and state cooperation to allow companies to pay a portion of wages to underemployed workers who may be receiving unemployment benefits.
• Provide a tax credit for employers who continue to pay workers who are quarantined, have exhausted their allotted leave time, or have had their workplace shutdown.

Keep Manufacturing Workers Healthy

• Issue CDC guidance related to cleaning processes, social distancing, and other operational practices that can help stem the spread of the virus in facilities that must stay open given the “essential” nature of their production.
• Enhance tax deductions for employers who invest in safety equipment, including hand-washing stations, respiratory equipment, and cleaning products.

These actions—expressed in terms aimed at U.S. policymakers but applicable to policymakers all over the world—would allow electronics manufacturers to serve the needs of a world in crisis, while also providing immediate and long-term economic stimulus.

If you agree with the proposals in the IPC Roadmap for Economic Recovery ^[2], I encourage you to download it and share it with your government officials.

If your company is experiencing any problems or uncertainties caused by the government’s response to COVID-19, we want to hear from you and assist you. If you would like to receive our weekly advocacy reports and occasional action alerts to get involved in our advocacy, visit our IPC Advocacy Team page and sign up here.

If you need information on how COVID-19 is affecting our sector, including webinars with industry experts and tips for what you can do, IPC’s coronavirus resource page is here.

References

1. IPC, “The Impact of the Coronavirus (COVID-19) Epidemic on Electronics Manufacturers: March Update,” March 2020.
2. IPC, “An IPC Roadmap to Economic Recovery,” March 2020.

Chris Mitchell is IPC’s VP of global government affairs. For more information, contact him at ChrisMitchell@ipc.org.