Are we on the road to deglobalization?
I wrote back in June of 2020, as the country was still reopening in many places, how many manufacturers’ confidence in the global economy had been shaken. Our supply chains had been greatly tested — and we quickly realized how reliance on China was impacting our ability to get much needed goods.
Now, it’s eight months later and there is even more of a razor-sharp focus on the fact that we can’t continue on the path of global trade the same way we have done the past several decades.
In his book, The Smart Student’s Guide to Smart Manufacturing and Industry 4.0, Mike Nager points out how in recent years there has been a realization that a strong defense requires a strong and nimble manufacturing base that can quickly build and reliably supply American forces. We are certainly not at that point right now. He quotes journalist John Markhoff, highlighting that “The Pentagon now manufactures in secure facilities run by American companies only about 2% of the more than $3.5 billion of integrated circuits bought annually for use in military gear.”
Nager’s position is that we need to reinvest more in smart manufacturing, for manufacturing creates wealth and jobs — 3.6 additional jobs are created by every manufacturing job, as Harry Moser, Founder of the Reshoring Institute, has said. And more importantly, we need to reeducate the American public, and young people, on what manufacturing careers look like today.
And as geopolitical strategist Peter Zeihan, an NFPA favorite, hints he’ll be discussing at this month’s NFPA Annual Conference, the volume of global trade is going to collapse for reasons political and strategic, before we even begin to consider global demographics. As we see that mass consumption is pretty much over, we will start seeing smaller, more secure supply chains that are closer to the consumer.
“We are not at the end of globalization anymore. Globalization is now over, and anyone who is trying to hold onto links internationally, you have to think very carefully about just how sustainable that is going to be. Between the demographic flip, political shift s on both sides of the Pacific and especially because of Covid, we’ve run out of time now,” Zeihan indicated in a pre-conference chat. “We will never get back to where we were in January 2020. It’s a new world.”
I am looking forward to taking a deeper dive on this topic with Zeihan in the coming weeks. In the meantime, I’d love to hear from readers on this topic. Do you see more jobs coming this way as we refocus on shorter supply chains and local manufacturing?
Mary C. Gannon • Editor
On Twitter @DW_marygannon