The Pandemic has raised the risks of relocation. Controlling the whole value chain would allow you to eliminate dependence on far east, create employment and return to the centre of the world chessboard.
After Covid, nothing will be the same as before in world trade. But the cause will not be sought in the virus. The epidemic has only brought out the fragility of the world supply chain. A weakness that already existed and which is due to the advancement of the so-called developing economies. They are no longer simply developing. Indeed, in many respects they could easily be defined as “developed”, also because they have managed to shift the centre of gravity of the world economy to the Pacific area.
If for thirty years Southeast Asia was the factory of the world, now many of those countries have become mature economies with a substantial middle class, which is starting to consume. And for China this means that it has created an internal market of hundreds of millions of consumers. Thus, the goods that were previously produced for Western markets now remain within national borders. Only excess production goes abroad.
This, therefore, is the real cause of the supply difficulties of many European industries and not Covid-19. And if the virus is destined to go away sooner or later, the supply problem can only get worse. With important consequences for the Western economic system.
First of all, we will have to deal with an inevitable rise in inflation. According to the law of supply and demand, when the latter is reduced, prices rise. And this is what is already happening in many sectors, especially as regards raw materials and semi-finished products.
The data arriving from Beijing confirm this point: the so-called factory-gate price index, the ex-factory price index, jumped by 1.7% in February, a value much higher than that of analysts’ expectations (+ 1.4%) and the January reading (+ 0.3%).
In our sector, that of bioplastics, the phenomenon is even more evident: not only have prices gone up, but in some cases the materials ordered have not even arrived.
And here we come to the second important consequence of the birth of the middle class in the Far East: the possible interruptions of the supply chain. A much more serious problem than a rise in purchase prices.
To deal with this “unexpected” event, there is only one solution: bringing production back home. Even products with lower added value.
Indeed, it is necessary to be able to control the entire supply chain. A recent and very important example of how necessary this is has come from the vaccine industry: the countries that control all the necessary steps have had no problem organising a rapid and efficient vaccination campaign. The success of the United States is all here.
Fortunately, Italian business is giving encouraging signals. The problem has been grasped and some companies are already reorganising their business model.
However, a push for change must also come from politics: it is necessary that it favours and encourages this “return industrialisation”. It is not only the economic independence of the state that is at stake, but it is also the main road to solving the serious problem of unemployment, which Covid-19 has exacerbated. In addition to bringing Italy and the whole of the Old Continent back – efforts must obviously be coordinated at the continental level, on pain of failure – to the centre of the world economy. If we really want to emerge stronger than before from this enormous economic-health crisis, we must therefore rethink our ind