Independence Day
To be truly free again, we need to re-invent how we make — everything
America’s infrastructure has eroded. We can no longer make our own goods, including the basic building blocks and assemblies that comprise our cars, our computers, our buildings and our roads. We’ve become noncompetitive, vulnerable, slow and fragmented. We’ve not only become noncompetitive in our ability to supply our own basic goods and infrastructure, we’ve taken ourselves out the race. It’s time for a reboot, and as we approach the Fourth of July, now is the perfect time to reflect on the level of our dependence on international production and off-shored supply chains.
Fortunately, we’re beginning to see a more unified national focus on the right industries and innovations to regain our footing: reinvigorating U.S. manufacturing, making our supply chains more secure and sustainable, getting more Americans back to work via domestic production, and of course, addressing the semiconductor shortage and the threat it poses across every aspect of our economy.
Deeply embedded dependence
The specific focus on silicon acknowledges the reality we’ve all watched unfold over the past few decades: that digital technology has become deeply integrated into all of the systems that support society. Banking, transportation, public utilities, telecommunications — there isn’t a facet of our economy that doesn’t depend on digital technologies to operate at the speed and efficiency that modern life requires.
So yes, semiconductors are core infrastructure for the 21st century and for our future — and reliance on other countries for them is a serious national security issue. Global dependence on computer chips, mostly made in Asia, has been likened to the world’s past reliance on oil from the Middle East.
As the founder of a venture firm focused on accelerating the digital transformation of old-line industries such as manufacturing, supply chain and logistics, I’m glad to see the national acknowledgement that massive investment in these long-neglected, bedrock sectors is needed.
Specifically, our firm believes America must build out its capabilities in these six core areas of infrastructure to compete and lead: materials and manufacturing, energy, supply chain and logistics, cloud and communications infrastructure, healthcare and skilled-labor education.
Energy is — literally — power
Among those, upgrading our energy infrastructure will be vital to achieve multiple goals: making our nation’s power grid more resilient, creating good jobs, and putting us on a path to achieve carbon-free electricity within the next two decades.
“Today, America relies heavily on importing the inputs for fabricated advanced battery packs from abroad, exposing the nation to supply chain vulnerabilities that threaten to disrupt the availability and cost of the critical technologies that rely on them and the workforce that manufactures them,” the U.S. Department of Energy (DOE) stated in its summation of the 100-day battery supply chain review ordered by President Biden.
Globally, China dominates battery production by far, with 93 gigafactories that manufacture lithium-ion battery cells, compared to the four currently operating in the United States. Against that backdrop, the various DOE programs offering $20 billion in loans and loan guarantees to help reinvigorate, advance and transform America’s energy infrastructure feels long overdue.
One of the companies we work with is doing just that. Through a novel three-dimensional cell architecture and use of non-traditional materials, this company has manufactured a lithium-ion battery (here in America) that increases energy density by about 30 percent. It is currently found in many consumer electronics and can be scaled in size to power laptops — and one day — electric vehicles and even our energy grid.
Re-shore or re-invent?
Unfortunately, re-shoring industries via a simple copy-paste approach — where we try to replicate how they work in other countries — is doomed to fail. If we take manufacturing as an example, it’s clear that we don’t have the process knowledge or the ability to scale. China has been the world’s factory for years, and it’s not just about possessing a cost-effective workforce. The country has leaned in to investing in the technical sophistication of its manufacturing lines, with over $370 billion invested in 2020 alone.
The result? China is now the world’s superpower when it comes to manufacturing of all types, with key know-how and massive capital-expenditure investments that make the production of everything — even the most complex electronics — highly sticky and risky to move elsewhere. Over the last two decades, China and the companies that manufacture there have invested trillions into the country’s manufacturing capacity.
The United States pales in comparison and lacks those competitive advantages. We will need technology not only to reinvigorate our manufacturing sector, but to re-invent it, using first principles and leveraging our strong suits — technology and innovation. A good example of this is another company we work with, which has built a modular form of advanced automation that combines computer vision, machine learning, 3D simulation and adaptive factory robotics.
Using touchscreens, manufacturers easily configure these “microfactories” to automate repetitive tasks such as assembling, welding, gluing, labeling and testing. Placed one after another, the units replicate entire assembly lines, collectively learning and continually refining their movements thanks to AI and cloud connectivity.
Today, everything from single-cup coffee makers and medical test kits to intricate infotainment consoles for automobiles are made this way, allowing some manufacturers to produce over 70 percent more units per hour, slash assembly costs by a similar percentage, and reduce headcount by up to 90 percent.
By investing in technologies that exponentially increase America’s manufacturing capabilities, we can succeed at recapturing our economic independence. And once adopted industrywide, we can move toward a more localized, on-demand model of manufacturing that would yield profound benefits for society at large: By eliminating the costly need for inventory, we would reduce the massive environmental impact and energy consumption associated with shipping and storage, perhaps free up land for much-needed housing instead of more warehouses, while still improving the bottom lines for businesses.
While infrastructure has never been exciting, it can — and should — be inspiring. It’s the foundation our economy is built on, and it’s what will keep the United States competitive with other countries that have outspent us on their infrastructure and surpassed us in global production. And if we succeed in this ambitious reboot, we can express a true form of national pride — knowing that we as a country laid the foundation for our industries and economy to lead once again on the world stage.
