Dhe impact of American industrial policy has triggered shocks in Europe. With the Inflation Reduction Act and a Semiconductor Promotion Act (CHIPS), the Biden government is making huge sums available for the transformation of the economy towards climate-friendly production, a stronger semiconductor industry and for the settlement of all future industries. This feeds the fear that the US will pull away forever.
The first investors, attracted by the US subsidies, buried their European expansion plans. The gap between the two economic areas is constantly growing. Most EU countries rank behind the poorest state, Mississippi, in terms of GDP per capita. According to World Bank data, the United States had a per capita GDP of $76,000 last year and Germany was $48,000. 15 years ago, both countries were still at almost the same level. Since then, stagnation has reigned in Germany, while America’s economy has grown vigorously.
Sometimes appearances are deceptive
Red tape, lack of productivity, anti-technology and overly secure, immobile workers are seen as European ailments that deter investors. The United States shines in comparison. But sometimes appearances are deceptive. The country is struggling with its own location problems. One thing in particular stands out: the shortage of skilled workers.
At the end of July, the semiconductor lobby sounded the alarm. She calculates that around 115,000 additional jobs will be created in the industry by 2030, of which 67,000 cannot be filled. The researchers entrusted with the study extrapolated the graduating classes for engineers, computer experts and technicians.
The announcement by the most important contract manufacturer for sophisticated semiconductors shows how virulent the problem is. TSMC reported that the start of mass production of microchips in the state of Arizona will be delayed by a year. 2025 is now the target for the start of production. The reason given by Mark Liu, Chairman of the Taiwanese group, was that the construction of the factory was affected by a lack of qualified personnel. He flies in hundreds of specialists from Taiwan.
Investors are very familiar with the lack of suitable employees: A survey by the German-American Chamber of Commerce this year confirmed this. Recruitment is the biggest problem in the USA, even before inflation, according to the German companies surveyed. Nine out of ten companies surveyed struggle with it. For four out of ten companies, this is even a serious problem. However, this finding does not deter companies from investing in the USA. Above all, the size of the market is convincing.
Rain of subsidies with pitfalls
The subsidy rain that the world envies America for has its own pitfalls. Semiconductor companies that want to benefit from this better read the fine print. The Biden administration has enriched bipartisan legislation with rules that complicate the allocation of funds. Companies receiving subsidies should provide childcare, cooperate with unions and respect diversity rules when recruiting. One of the drafters of the semiconductor subsidy bill in Congress, leftist Rep. Ro Khanna, recently warned TSMC not to ditch unionized workers. Anyone who thinks they are leaving behind captivating European social standards in America could be in for a surprise.
In fact, the approval processes for new production facilities or energy projects are complex. The think tank Center for Security and Emerging Technology warned in a report that the US was taking longer than the rest of the world to license semiconductor factories. Democratic Senator Joe Manchin is trying in vain to streamline permitting processes for critical energy projects. The senator complains that it takes between 5 and 10 years to get important projects approved.
His Senate colleague Angus King warns that the Inflation Reduction Act will miss its climate goals if green energy projects get stuck in “approval hell”. The concern is well founded: Across America, developers are rethinking their offshore wind power projects. The cost of capital has increased. At the same time, approval procedures for wind farms are extremely complex, as are those for new lines.
The state of Idaho provided the chilling example. When an energy supplier applied for a high-voltage line in 2008 to transport clean electricity from a hydroelectric power station, he reckoned the process would take five years. The last permits came this year. A 2020 White House analysis shows that environmental impact assessments take an average of 3.5 years. According to the well-known climate protection activist Ted Nordhaus, there are plenty of regulations that lawyers can use as a basis for lawsuits.
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