Rapid Factory Development Signals a New Industrial Era

The Inflation Reduction Act (IRA) is proving to be an era-defining legislation, allocating nearly $400bn towards energy security and climate change. This boosts factory developments, R&D, and other areas. But the stipulations tied to the IRA's tax credits are intriguing. A major one mandates factories to meet "prevailing wages" to be eligible for the tax credits. This means companies must meet or exceed the average regional wage for that specific job role. The implications? It curbs firms from cutting labor costs and positions unions as wage setters. Thus, non-unionized employers paying the same as unionized ones feels like indirect unionization.

But there's more to the IRA than just facilitating rapid factory growth. Manufacturers will grapple with labor wage challenges. Reshoring has already proven tricky for manufacturers due to cultural and economic reasons – the Netflix documentary "American Factory" and the recent UAW strikes are testaments to this. To navigate this, manufacturers might lean towards higher-skilled labor for factory automation, instead of traditional manual labor. This shift mirrors the IT and tech sectors, with knowledge workers creating solutions for automated factories, benefiting production, safety, and timelines.

On the geopolitical front, growing tensions necessitate defense and commercial strategies, with climate change becoming a key focus. The Army’s 2022 climate strategy and the CHIPS Act highlight this, the latter restricting IP exchanges with manufacturing partners like China. This pivot is significant. China's response? Bolstering its high-tech sector, especially in areas like semiconductors. It appears a high-tech arms race, extending to space exploration and sectors like AI and defense, is brewing between major global players.

Yet, the IRA brings cautious optimism. It might either hamper or accelerate a robust, automated American industrial base. The 2020s is challenging the New World Order notions of the 1990s, largely influenced by the U.S.-China pandemic tensions and global geopolitical upheavals. Given this backdrop, nations' tech and defense sectors are gearing up to collaborate and innovate, reminiscent of past races but with an energy-focused twist.

At First Resonance, we find ourselves at the nexus of these opportunities and challenges. Our product, ION, is a Factory OS designed to enhance manufacturing productivity. Its modern data platform and open API architecture facilitate AI and ML applications, propelling manufacturers to operate efficiently. As supply chains shift from specialized systems to localized, adaptable ones, the need for digitizing and standardizing operations becomes paramount. As the leading Factory OS in onboarding speed, we're poised to champion this new industrial era.