Similar announcements have been made recently in the solar, semiconductor and the biotech industries. Consider the recent decision by Schneider Electric to build three new manufacturing facilities in North America, one of which will be in El Paso, Texas, and the plan by automakers and battery manufacturers to establish 13 new electric vehicle battery factories in the United States within the next five years. Companies in about half of all global sectors in North America declared an intent to “reshore.” trade war, found that companies in a variety of industries - including semiconductors, autos, and medical equipment - had shifted, or planned to shift, at least part off their supply chains from current locations. In fact, a January 2020 survey of 3,000 firms, motivated by the China-U.S. trade war and the supply chain disruptions generated by the pandemic and climate-related events have caused the pace of supply-chain localization to rise significantly. In the last four years, however, the China-U.S. In 2019, just before the pandemic, China accounted for 28.7% of global manufacturing output while the United States accounted for 16.8% Indeed, between 20, China’s manufacturing output grew up by 21% while that of the United States rose by 13%. Yet, given the benefits of relying on China and other Asian countries for manufacturing and the growing Asian markets, the change was not radical. This led many companies to increase local manufacturing in order to reduce their exposure to global risks and to be able to respond much faster to local demand. With a significant increase in oil price in 2008 and a variety of natural disasters, from the SARS epidemic of 2003 to the 2011 tsunami in Japan and flooding in Thailand, industry leaders recognized that the strategies adopted in 1990s could increase their exposure to operational problems and compromise their ability to respond effectively to natural disasters. Things started to change after the financial crisis of 2008. China emerged as a major manufacturing hub to serve global markets, including many Asian economies that were opening up. In the 1990s, companies pursued strategies such as outsourcing, offshoring, and lean manufacturing to cut costs, retain market position, or gain competitive advantage. If China decides to back Russia in the Ukraine conflict, it would only fuel that movement. trade war and other pandemic- and climate-related disruptions, it is certain to accelerate the movement by Western companies to reduce their dependency on China for components and finished goods and on Russia for transportation and raw materials and to lead to more localized, or regional, sourcing strategies. The invasion of Ukraine by Russia and sanctions imposed on it for doing so and new pandemic-related shutdowns in China are the latest events to rock global supply chains.
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