The changing global economy in pandemic times
In speaking to a few different fluid power manufacturers recently, one theme seems to run true for many — this COVID-19 pandemic has rattled confidence in the global economy and reliance on far-fetched supply chains may be decreased.
Reshoring is a term anyone in the industrial world already knows well. In the past 10 years or so, we’ve seen this trend of manufacturers producing more “local for local” products, equipment and machines, as even foreign companies have located manufacturing and assembly facilities in the U.S. to reduce lead ti mes.
Will this continue with a more isolationist idea, as manufacturers quit relying on far-reaching suppliers, particularly in Asia and, more specifically, China?
Some experts think so. Geopolitical strategist Peter Zeihan, a favorite at NFPA conferences, has been hinting that the U.S. is becoming more closed and nationalist attitudes will prevail as we need to rely less on the outside world. And this was well before the pandemic — it’s a sentiment he’s shared many ti mes in recent years. And now, in a blog post on April 9, Zeihan said, “Combine a longer American economic shut-off with pending deeper epidemics in the developing world than what we have seen thus far, and the end result will be a global economic system that both splinters and faces a very long period of subdued activity.”
It’s not just the U.S., either. As early as late February, France’s Finance Minister urged French industries to review their dependence on Asian supply chains.
It’s impossible to imagine a world where global trade and manufacturing don’t go hand-in-hand. This pandemic is not likely to end the global world economy as we know it. But it’s certain to change things. Supply chain lead times will need to be reduced, as the shortages and long waits we saw worldwide for key PPE were seen as unacceptable. The question that remains is how will this be accomplished?
I’d love to hear from manufacturers and users of fluid power technologies to see how they are responding to this changing world. Are you seeing more reshoring, more in-house manufacturing or design that may have taken place elsewhere? Are your own vendors and suppliers changing how they operate to reduce these lead times? Are you looking for more local vendors and suppliers?
We’re only in the beginning of how this coronavirus will impact our world. Here’s hoping manufacturers — particularly the users and suppliers of fluid power technologies — use this crisis as a springboard for positive change.
Mary C. Gannon
On Twitt er @DW_marygannon