The impact of the US elections on our supply chains
US Election
On Tuesday the 5th of November the most important election of this year was held, the election of the president of the United States. The amount of news, fake news, scenarios and what/ if’s, commentary, polls and opinions were enormous, building up a local as well as global tension on the outcome. Who would win this US election, who would be in the White House for the next four years? Besides the election of the president of the US, people also voted for Congres and the Senate.
And all three seemed to be very close between Democrats and Republicans. Two days after the elections, Trump has been elected as the 47th president of the United States. And the Republicans gained a majority in the Senate as well.
Impact of US election on supply chains
Why are we paying attention to the US elections in this blog post? We are not political engaged and do not have a preference, but the outcome will have an impact. An impact on the decisions that will be made regarding support for Ukraine, decision in a stance to support Taiwan, NATO and climate policy. So much changes will happen the coming months that creates an unknown and uncertain future. Companies postponed investments due to the US election. And will decide on future investments based on the outcome, based on the new president and the corresponding new national and international policy.
Under Trump, there will be much more protection of the US economy by imposing additional tariffs on imports from EU and Asia. Which might end up in additional trade wars where prices will increase. A side effect might be that the on-shoring/ near-shoring will increase, reorganising the supply chain, having its impact on transportation and costs structures.
The impact for Europan supply chain will been enormous. Besides the current issues we already face! The postponed decision by Intel to build a new chip factory in Germany, the trade war between EU and China and possible restrictions from the US. Investments in supply chain have been postponed and it will take a while before these are back at normal level. But we need to stay competitive in Europa. China surpassed us in many ways, think about the manufacturing of electric vehicles. We all thought China was not capable of creation serious electric vehicles…until they did. And now our European car manufacturing industry is in panic mode.
European productivity has fallen far behind our US and Asia based competitors. In the Netherlands, productivity has not grown significantly the last couple of years, decreasing our ability to compete. Costs have increased, wages are rising, costs of goods and energy as well. If we want to stay competitive and increase productivity, we need to invest. Invest in new ways of working and producing, invest in technologies to do more work with less resources. But also rethink our current way of working: our workforce needs to be more flexible and willing to compete. The straight jacket of local and EU rules and regulations seem to suffocate companies and their ability to grow.
What exactly will happen by the new Administration and what the impact on supply chains will be, needs to be seen in the coming months. As long as you are planning for the future by thinking thru the different scenarios and discuss possible mitigation actions with your teams, you are prepared. Have the different scenarios ready to implement as soon as these come to life.
Preparing for a bright future
A new world order is shaping before our eyes. Europe, after World War II, rebuilt and shaped the global economy. We created an environment where growth was a given, we all became prosperous and increased our standard of living. But with these created good times, we did not pay attention to the world around us. And once we realised what was going on, Asia and the US bypassed us in many ways. And now we are facing fierce competition, an aging workforce population, decreasing productivity, a myriad of rules and regulations and increased (cost) price levels. A very difficult way to stay competitive.
The good news is that by realising the condition we are in, we are creating a fruitful soil for improvements. I’m sure that the current European conditions provoke entrepreneurs, business owners and others to come up with new inventions. to increase our productivity, to increase our competitiveness. For that, we need to invest. In people, in technology. And for companies to invest, they would like to foresee what is going to happen in the future. True, we do not know what will happen in the future, but political stability does help! And that is why the outcome of the US election has such an impact on the rest of the world, on our supply chains. The new President of the United States and the actions he will take, will impact entrepreneurial decisions around the world.
What the impact on the long term will be is hard to predict, but the fact that the US voters have chosen their President will decrease the uncertainty. And that will trigger the much needed call to action to invest, to change, to become competitive again. The old Europe is on a path of much needed change, the first steps are taken, a bit shaky, but will become more steady and firm in the coming years. And we will experience the impact of these actions the coming period, for sure. We have a long way to go, but now the new President is known, we can start building again.
