During Tuesday’s House Oversight Committee hearing, Rep. Byron Donalds (R-FL) asked witnesses about the United States’ manufacturing capacity.
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00:00Thank you. I now recognize Mr. Donalds from Florida for five minutes.
00:06Thank you, Chairman. I think I'm in committee at the opportune time.
00:10Look, this is a great hearing about bringing manufacturing stock back to the United States.
00:16At the end of World War II, about 40% of the world's manufacturing capacity was here in America.
00:21Today, depending on who you ask, maybe around 15%, maybe lower, maybe a little bit higher.
00:27I would ask all three of the witnesses. Actually, I'll ask you, too, Mr. Hirsch.
00:33What has actually been the number one driver for a lack of manufacturing capacity in the United States since World War II, Mr. Power?
00:42Thank you for the question, sir.
00:45In my mind, it is specific CCP policies that have artificially subsidized well past the cost of good jobs and competitive labor in America,
00:56where, if you'll remember, there was a large language model like DeepSeek that got released by China,
01:02and they're charging, you know, one hundredth of a use case versus open AI.
01:07And they're doing that to draw the consumer into using that product more and more and more,
01:11which obviously then captures data.
01:13It is the same sort of industrial policy that has been going on for the last 40 years,
01:17where we could buy a block of raw material in the United States of aluminum,
01:22and it will be twice as expensive as the fully landed cost, including shipping, of that same component from China.
01:30And it is not possible for them to be so cheap and competitive, apart from the slave labor conditions,
01:35because they aggressively subsidize energy, raw materials, and kind of reverse tariffs,
01:41where if I sell something to you from China to the U.S., I get a subsidy back from the CCP.
01:46It is a strategic policy that has pulled manufacturing out of the United States for the last 40 years,
01:51and it's been done very intentionally.
01:54So it is artificial, anti-competitive subsidies that have pulled that cost base out of the United Straits
02:00and therefore destroyed millions and millions of American jobs, is my opinion on the one core reason.
02:05Mr. Singer, if you choose to add or bring your own knowledge.
02:09Yeah, I'll add something briefly, which is, if you look at the 2000,
02:14China had a 7% global manufacturing market share in 2000.
02:20That was a brief 25 years ago.
02:24With WTO, I'd say two things.
02:27Going to what Mr. Power said, we did not enforce any of these violations by China
02:35after we gave them most favored nation status.
02:38And obviously they understand that national security is directly connected
02:44and being a world power is directly connected to global manufacturing market share.
02:52And they went about using a set of powers of policies to capture that.
02:57At the same time, I would say driven primarily by some of our large technology companies,
03:04we started to outsource manufacturing to companies like Foxconn.
03:09So if you look at the actual kind of industry 4.0 scale up of automated CNC machining,
03:16computer numerically controlled machining, between I'd say 2006 and 2016,
03:21you saw Apple pour $100 billion plus into Foxconn, a China-based contract manufacturing company.
03:32And they went from a couple hundred CNC machines to 150,000 automated lights out by 2016.
03:41Those two things, allowing people to cheat and undermine you from a national strategy,
03:51global strategy standpoint, and then having our process IP from our most advanced
03:57and process IP relating to manufacturing from our most advanced companies
04:03offshored to contract manufacturers and building that contract manufacturing industry
04:09around Foxconn and other contract manufacturers, that's what drove it.
04:15Thank you, Mr. Zinger.
04:15Mr. Bishop.
04:17Just to echo what both of my colleagues here have said,
04:21I mean, especially if you drill into the supply chains that go into the DOD right now
04:25and the massive permissive use of waivers to, I mean, there are already plenty of rules in place
04:33that would, in theory, disallow everything from electronic components to just basic machine parts
04:39that go into all of the crucial material and devices that our warfighters use.
04:45And the reality is just the massive rampant use of waivers has been a huge problem.
04:52And when you actually go and drill down into that supply chain,
04:55you're finding not only direct links to China, which are the easy ones to find,
05:00but this huge web of shell companies and shell relationships between shell companies
05:06that effectively allow China to have a, I mean, first of all,
05:11a huge supply chain risk directly in the DOD and anywhere, wherever we want to project power.
05:18Well, gentlemen, Mr. Hirsch, I'm sorry.
05:21Five minutes goes fast in this town.
05:23I appreciate that.
05:24I think it's important for the committee to recognize that, you know,
05:28while the goal overall is to bring manufacturing back to the United States
05:32in as much of a capacity as we can, either onshore or nearshore,
05:37one thing is crystal clear.
05:39We have not been minding the store in the United States
05:42when it comes to trade policy writ large,
05:44especially when it comes to enforcement of trade policy.
05:47And with that, I yield back.