01 Oct Two new federal laws that mean it’s time to build new relationships for your business
Sometimes changes in the landscape reveal that you don’t have the relationships you need to succeed. The CHIPS Act and the Inflation Reduction Act are two examples that are loaded with programs and opportunities. To take advantage of them, your company is going to have to work closely with local and regional partners who you may not have had a chance to meet yet. Washington is hugely important but you also need to concentrate on your own backyard. With new Governors are coming in Massachusetts (where we are) and 35 other states. And they get a big say in how new federal programs will play out on their turf. Now is the time to start building those relationships or you may find yourself on the outside looking in – with unhappy consequences.
The CHIPS Act
President Biden signed the “Creating Helpful Incentives to Produce Semiconductors Act” into law in August, with a clear intention to promote semi-conductor production. Why? Because everything needs chips and there simply are not enough in this world to meet demand. More than $200B will be appropriated to boost production, $50B of which can be made available right away. In addition the new law created significant tax credits for investing in chip production.
You might have noticed that there has been a bit of a supply chain issue over the past 18 months. Many factors from COVID to labor shortages contributed. And chip production of course got hit hard with a perfect storm of many other factors as well, including a nearly inconceivable explosion in demand. The CHIPS Act is good news for all of us who rely on our cars, laptops, microwave ovens and smart soccer balls not to mention the equipment that makes, packages and distributes them all.)
Lots of companies want to qualify for a piece of the federal investment that is coming out right now — and to have a say in the allocation of the lion’s share which will have to be further defined by Congress before it can be distributed, To participate, a company will have to do more than fill out forms. Your company will need local and regional champions who can help make the case for dealing you in. That means more than the cliché about “having a seat at the table” today. It has to do with who you are and who you are with when you take that seat. Some of the factors in the new definition of “eligible” will be about where your sites are located, which research partners you have chosen, what uses you are creating chips for because some are more important under the Act than others.
Another important consideration that the federal government is clearly prioritizing is positive social impact. As noted by Mark Muro of the Brookings Institute, the CHIPS Act is “a milestone for policies to ensure that underrepresented people and places can participate more in the nation’s innovation economy.” Simply put, unpacking the opportunity presented in this landmark legislation is going to take time and a careful consideration of what kind of story your company is telling with its work. Who are your partners? How does your approach demonstrate understanding of the deep and fundamental commitment the CHIPS Act is making to widen the base of the American economy? It’s time for a deeper dive and some meaningful consideration of mission, impact and for building or at least strengthening important partnerships. There is plenty of reason to go and spend time with government officials as well, especially with your partnerships and impact focus in place.
Climate Change and The Inflation Reduction Act
The Inflation Reduction Act covers lots of ground and the same ideas that apply to executing on the opportunities created by the CHIPS Act will apply here. Specifically to look at the climate change oriented provisions, federal analysis indicates that “[m]ost of the projected emissions reductions in the nearly $375 billion spending package would come in promoting “clean energy,” mostly solar and wind power and electric vehicles.” Again this will be good news for those of us who want to do better in our personal and household energy consumption. But the law aims at the biggest levers in the economy: the flow of capital, the creation and scaling of enterprises ready to produce energy and products for an entire world of consumers. To get in the flow of the grants, loans, incentives and other resources made available will of course require knowing who to call, and who to get in front of to make your case. And again, that is the easy part. The hard part is answering the question “who are we going to be as a company and how thoroughly do we understand what decision-makers want from us in order to make us part of this inflection point in our industry.”
There is no doubt that having the right relationships in your state capital and in Washington are table-stakes and incredibly important. There is also no doubt that authenticity is in demand. You do not want to show up at those meetings without a compelling and very real story about how investing in your company helps your region and the country achieve the massive economic, social and environmental goals it has laid out in these new laws.
Andy Tarsy is Principal and Founder of Emblem Strategic LLC. He has been appointed to roles in state government in Massachusetts by Governors of both parties. His experience in the US Department of Justice and in helping to shape key elements of the innovation economy in Massachusetts help define Emblem’s approach.