Here we are, two years later, in the same boat as the last time a major global event disrupted manufacturing supply chains.
The war in Ukraine could cause severe disruptions in the transportation of raw materials and finished products like semiconductor chips. That is bad news for huge portions of the domestic economy, including automobile manufacturing and other goods that depend heavily on the type of material supplied by both Russia and Ukraine. Coming on the heels of a still active pandemic, U.S. economy, consumers, and manufacturers are all left wondering how events they can assert almost no control over will affect their daily lives and their ability to provide for their families.
We said it two years ago. And we will say it again. We can’t keep doing this.
Strengthening Domestic Manufacturing Ensures Continuity
The modern, globalized economy started taking shape in the
1980s, gained steam in the 1990s, and became dominant when the World Trade
Organization (WTO) admitted China in December 2001. The assumptions driving the
expansion of free trade at the end of the 20th and beginning of the
21st centuries were simple: If one nation was better at making snow
shovels while another nation excelled at making blenders, then it only made
sense for the snow shovel makers to focus on making snow shovels and the
blender makers to focus on making blenders.
And for a while, that setup worked well.
Global supply chains appeared to be a good thing—and broadly speaking, they still are. No one is realistically arguing for anything that looks like isolationism, even though two years of unexpected challenges have left many supply chains in tatters.
However, we need to rethink how we think about globalization and the domestic manufacturing sector.
Reshoring the U.S. manufacturing sector doesn’t mean we isolate ourselves from the global economy. It means that the U.S. has the manufacturing capacity to meet its own needs, as well as the needs of others when necessary. It means that America can face a new era that will be defined, at least for a while, by events like pandemics and conflict knowing we have the essential goods and supplies we need.
Technology Essential to Empowering Domestic Manufacturers
Of course, no one can wave a wand and change something as enormous as the domestic manufacturing sector—and there are limits to how much the government can intervene to strengthen the sector. But besides help from policymakers, domestic manufacturers need to become more efficient, effective, and competitive. Doing so means embracing and adopting new technology. It means empowering the human capital on your shop floor to use innovation in ways that make the entire plant more efficient.
Government and industry need to make a commitment to doing whatever it takes to minimize the impact global turmoil can have on domestic manufacturers.
And let’s do that before another major event happening halfway across the world disrupts our U.S. shop floors.