Last week, I attended the upbeat SelectUSA investment conference in Washington DC. The US’s annual foreign investment shindig attracted more visitors than ever before, as investors and state governments seek to leverage the Biden administration’s ambitious policy agenda.

Billions of federal dollars have been pledged to facilitate billions more in private investment to build clean energy and other strategic supply chains in the US. But for this programme to be successful, the country must address one of its most politically fraught debates: reform of its immigration system.

Currently, there are simply not enough people with the right skills in the US. Since the passage of the Chips Act and the Inflation Reduction Act last August, companies have made more than 75 large-scale manufacturing announcements. They collectively promise to create at least 82,000 jobs at a time of historically low unemployment.

In March 2023, there were about 9.6 million job openings in the US, according to the US Bureau of Labor Statistics, but only 5.9 million people were searching for work. In other words, even if every unemployed person was looking for a job, the country would still be almost four million workers short.

A key issue is that people with the skills needed for these factories of the future are in short supply and typically found in East Asia. Indeed, most of the world’s leading electric vehicle (EV) battery-makers and semiconductor companies have their factories and skilled workers in Japan, South Korea and China. 

“The general challenge we have is that there’s only so much history in the [EV and battery] industry. It’s all going to be net new talent,” says Ajay Kochhar, CEO of Canadian lithium-ion battery recycling company Li-Cycle, which has a commercial-scale battery resource recovery facility due to open in Rochester, New York, this year.

“Immigration reform [in the US] will be important. But how do you stage it? How do you get the people that know about the industry to upskill other people to create that large workforce for batteries?” asks Mr Kochhar, underlining the difficult balancing act needed to be struck to ensure US workers can benefit from advanced manufacturing jobs.

While workforce development programmes are afoot to train the future labour force, the US will need thousands of foreign professionals to bring these new factories online. Under the current visa waiver programme, foreign workers can only stay for up to 90 days. They then must leave and re-enter the country. An executive at a South Korean battery cell manufacturer building a facility in the country told fDi this is disruptive to getting their facility online in time.

The annual cap on H1-B visas for skilled foreign workers is another great concern for companies. Since 2004, the limit has stood at 85,000 workers per year. The H1-B programme can be abused by some employers to favour sourcing cheaper labour from outside the US. But without more of these skilled professionals, companies operating in the US complain that they will lose out to their competitors abroad.

“We have to fix our high skilled immigration system,” said Patrick Wilson, who serves as vice-president of government affairs for Taiwanese chip designer Mediatek, during a SelectUSA panel about advanced manufacturing. Mediatek has nine locations across the US, including a new design centre it set up in 2022 in partnership with Purdue University, Indiana.

“Sending the most brilliant foreign-born, US-educated talent to work somewhere else is just ludicrous,” said Mr Wilson. He notes that 50% of electrical engineering degrees in the US go to foreign-born students – a figure that rises to 75% for PhDs – but many leave due to not being able to stay and work in the US.

Immigration has helped build the US into the nation it is today. A 2022 study by the American Immigration Council found that 43.8% of Fortune 500 companies were started by immigrants or their children. Anti-immigration rhetoric and restrictive policies may score political points, but risks undermining the US’s great manufacturing renaissance.

Alex Irwin-Hunt is fDi’s global markets editor and attended the 2023 SelectUSA investment summit held at the Gaylord Convention Centre from May 1-4 near to Washington DC. More coverage from the conference can be found here.