The critics of industrial policy concern that government intervention in business will involve a government in “picking winners and losers” resulting in malallocated resources and gross market inefficiencies.
But as US national security adviser Jake Sullivan noted in a keynote speech last month pursuing a national investment strategy does not necessarily mean micro-managing the economy as China does with policies such as production quotasprice controls and five-year plans.
“A modern American industrial strategy,” Sullivan said, “deploys targeted public investment in these areas that unlocks the power and ingenuity of private markets, capitalism, and competition to lay the foundations for long-term growth.”
“This is about accumulating private investment, not replacing it,” he added.
And it seems that Inflation Reduction ActUS President Joe Biden’s landmark legislation, which includes about $370 billion in tax credits, grants and loans for clean energy technology and electric vehicles, is already accumulating investments in the private sector.
In recent earnings calls, company executives across the the energy, construction and industrial sectors recognized the effect of the IRA on increasing investment. Below is a selection of them comments.
Cleveland-Cliffs and Nucor see greater demand for steel
Lourenco Goncalves, CEO of Ohio-based flat-rolled steel producer Cleveland-Cliffssays it sees demand for steel coming from customers in the solar, wind and EV charging infrastructure spaces: “We believe the money comes from [the] Inflation Reduction Act…[and] I will support more and more investment in these areas.”
Leon Topalian, CEO of North Carolina-based steelmaker Nucorsees a similar boost in demand: “We expect [the] The IRA will spur significant investment in clean energy, adding an estimated 2 million to 3 million tons of annual steel demand for wind, solar, and transmission projects.”
“Unique” nuclear power capabilities at Constellation Energy
Joseph Dominguez, CEO of US clean energy provider Constellation Energynotes that pp. of the IRAproduction tax credits for nuclear power “create unique growth opportunities, such as increasing output from our nuclear plants through increases and hydrogen.”
Industrial producers and engineering firms predict greater demand for their products and services
Thomas Brisbin, CEO of California-based Willdanwhich provides energy and engineering services in the US, sees a steady pipeline of projects in the coming years: “We expect the strength and demand for our engineering and financial services for cities to continue… We look forward to the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, to help cities fund important new projects over the next few years.”
Will Ralston, CEO of Arizona-based renewable energy solutions provider Singlepointtold a conference in March that the IRA had helped the company “[push] more investment in the other side of the market that we’re in, which is the indoor air quality business.”
Robert Rowe, CEO of Texas-based Flowservewhich makes industrial machinery such as pumps and valves, sees “significant investment” in energy projects around the world, which in turn will boost demand for the company’s products. “This investment is further supported by various government incentives, including the United States Inflation Reduction Act,” he said, helping to boost the company’s project pipeline by 100% last year and 25% in the first quarter of 2023.