In just a couple of years, “chips”, “semiconductors” and “polysilicon” have entered the everyday lexicon.
One company based in Michigan’s Upper Peninsula has been making the microscopic electrical connections that have kept our cars, phones, and TVs running for over 50 years.
Calumet Electronics Corporation was founded in 1968 after the closure of the copper mines. The closure caused a massive exodus from nearby areas. To support the local economy, a banker with an interest in semiconductors found local investors to support the new business.
According to Chief Operating Officer Todd Brassard, the unique start shows that the region prides itself on its ability to solve problems.
“This company was created as a whole to create jobs in a small community,” he said.
Calumet is currently a leader in aerospace, defense, communications, electrical power, medical, industrial, space and national security, and it could benefit from federal funds made available under the recently passed Chip and Science Act.
The legislation, signed by President Joe Biden this month, aims to bring semiconductor manufacturing back to America.
Chip factories, called foundries, typically take three to five years to build. Strengthening the chip ecosystem, where Calumet excels, is something the country can invest in now, Brassard said.
Calumet has succeeded as it enters the new millennium, driven by the expectations associated with the Internet and telecommunications. According to the trade association Institute of Printed Circuits, in 2000, 30% of the world’s printed circuit board production was in the United States.
But, according to the institute, outsourcing quickly undermined the industry, leaving the country today with only 4% of that global share.
To survive, Calumet kept its earnings from the telecommunications boom, bought up the remaining equipment, and employed itself as domestic engineers and manufacturers.
Brassard estimates that only 40 to 60 stores like Calumet still rely entirely on US labor.
“Offshore design or production has always been very tempting, but we didn’t want to lose control of our company,” Brassard said.
This resilience has paid off as the pandemic has exposed vulnerabilities in global supply chains and dependence on Asian factories.
According to the Semiconductor Industry Association, despite the fact that semiconductors are invented in the US, America’s share of world production has fallen from 37% to 12% in just three decades.
Connected: $52 billion semiconductor package is ‘big deal for Michigan’
Semiconductor innovation is indeed where the US holds its ground.
American semiconductor firms have retained their competitive edge in microprocessors and other advanced devices. According to the industry association, it continues to lead in research and development, design and manufacturing processes.
“To create a product, you need the whole process,” he said. “You don’t just need a handful of silicon.”
Brassard’s team has taken up the “chips don’t float” mantra, which means the tiny fingernail-sized chip needs a package to sit in it and an electrical system to connect it. Brassard compares it to an engine without a transmission.
Calumet engineers designed substrates to route this connection between the chip and an application such as a phone or car.
Connected: Michigan adds about 600 jobs in automotive, electric vehicles and semiconductors.
Earlier this year, Calumet received $2.6 million in business and community development grant programs from the Michigan Economic Development Corporation.
The investment aims to expand Calumet’s newly built 35,000-square-foot manufacturing facility to increase substrate production capacity. About 80 new production and engineering positions will also be created.
“We’re just one store at UP, but we can lead by example,” Brassard said. “If a bunch of bullies can do it, what’s the excuse for everyone else?”
Pride and patriotism were great recruiting tools.
“We want engineers to be engaged, have fun and get the hard work done,” Brassard said. “Would you rather collect a toaster every day or save the country?”
It seems counterintuitive that Calumet’s geography is one of its competitive advantages, given that it takes almost a full day to get to facilities from any major metro area. But just 20 minutes away is Michigan Technological University.
“The people who are tackling all these really scary and critical issues for the US are all 25 and under,” Brassard said.
Michigan Tech and UP’s rural nature could also make the Keweenaw Peninsula a contender for a much less publicized piece of chip law.
Included in the massive $280 billion bill are two place-based initiatives.
The first is offering $10 billion to 20 communities over five years to set up regional technology hubs in the country’s underprivileged areas.
The second initiative is offering $1 billion to 10 communities over five years. This “Recompete Act” pilot will target “underprivileged communities” with employment-to-population ratios well below average.
Recompete Act is based on the work of economist Tim Bartik of the WE Upjohn Institute in Kalamazoo.
Bartik said he sees these initiatives as complementary and there may be areas in the US where both boxes are ticked.
For example, most of UP employs less than 78% of workers in their prime. In addition to government contractors, UP also already has a university of engineering technology presence.
The budget has been cut from the original $175 billion over 10 years, Bartik said, but the funds could still have a significant impact on UP.
“It’s easier for a small community, a rural community with a relatively modest population, with less funds to really make a difference in the growth path,” he said.
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Brassard said he doesn’t yet know if Calumet will receive funding from the Chip Act, which will provide $52.7 billion to subsidize manufacturers and research.
Funding will be disbursed over a period of five years. Brassard sees this as an opportunity to connect politicians with engineers and manufacturers. He laments that he recently heard a politician call printed circuit boards an expensive piece of plastic containing a chip.
Dealing with bureaucracy is new to Calumet employees, but creating something out of nothing has been the company’s specialty for 54 years. And that, according to Brassard, makes UP “Michigan’s secret weapon.”
“At the end of the day, what we do here is that we build things, we make things,” he said. “We survive.”
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