• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » U.S. Is Winning Globalization’s Next Wave — and Not Because of Trade Wars

U.S. Is Winning Globalization’s Next Wave — and Not Because of Trade Wars

U.S. Is Winning Globalization’s Next Wave — and Not Because of Trade Wars
Source: Shutterstock
January 21, 2019
Bloomberg

From Rust Belt America to Europe’s de-industrialized hinterlands, the focus of plenty of economic policy debates in recent years has been on globalization’s victims in the rich world and the political populism they have fed. But what if that’s yesterday’s story?

In a new report researchers at the McKinsey Global Institute argue that even before President Donald Trump launched his trade wars, the era of offshoring and disruption that left many factory towns in the advanced world reeling was over. They also predict that shifting trends in technology and manufacturing mean advanced economies including the U.S. may be in the best position to benefit from a new wave of globalization already underway.

“We have already started the next chapter of globalization and we think it’s important for everyone — companies and policy makers — to realize which chapter we are in. Not make the mistake that the world is as it was in the 1990s and early 2000s,” said Susan Lund, one of the authors of the report.

The McKinsey team’s work came just ahead of this week’s World Economic Forum in Davos, where the future of globalization and its various new iterations are at the top of the agenda. It also hits at a broader debate over just how much shape-shifting Trump’s trade wars are causing in the global economy.

Tariffs imposed over the past year by the Trump administration on imports from China and foreign aluminum, steel, solar panels and washing machines have caused many U.S. trading partners to fire back with import taxes of their own. As a result, many companies have started to reexamine and even alter their international supply chains.

But rather than causing a new shift, the tariffs are simply speeding up one that began in the mid-2000s that had been masked by the economic fallout from the 2008 financial crisis, the McKinsey report’s authors argue.

“Companies are responding but if anything some of the new tariffs and trade barriers are accelerating trends that we saw taking place anyway,’’ Lund said.

For their study the McKinsey researchers looked at the supply chains of 23 industries spanning 43 countries from 1995 to 2017.

Over that time they predictably found big emerging economies playing a growing role. Emerging markets’ share of global consumption rose by roughly 50 percent over the past decade with 40 percent of advanced economies’ exports now heading for emerging economies.

Labor Costs

They also found labor costs were playing a declining role in decisions over where to locate production and that investments in intangible assets such as intellectual property and research had since 2000 more than doubled as a share of revenue from 5.5 percent to 13.1 percent.

Those findings, Lund said, point to why the next wave of globalization plays to the strengths of the American economy.

With the increasing importance of innovation, companies put a premium on protecting intellectual property and the rule of law as well as skilled workforces, or things that they can find in developed economies like the U.S. At the same time, data and services are playing a growing role in globalization, shifting the push for economic integration into areas where the U.S. has a real advantage.

“All of those things really create tailwinds for the U.S. and other advanced economies,” Lund said.

Tech Change

Technology is also changing manufacturing with companies now opening high-tech factories closer to rich-world consumers in a way that is already starting to cause a return of some industries and that may leave poorer countries dependent on labor-intensive exports the new victims.

As an example Lund points to shoemaker Adidas, which in the past two years has opened highly automated sneaker factories in Germany and outside Atlanta, effectively bringing production home from hubs in Indonesia and Vietnam.

Manufacturing employment has been growing in the U.S. in recent years. But any manufacturing returning home is far less labor intensive than what left. “The work is going to be different,” Lund said. “I don’t think it is going to create millions of manufacturing production line jobs.’’

RELATED CONTENT

RELATED VIDEOS

Global Logistics Global Trade Management Supply Chain Finance & Revenue Management Sourcing/Procurement/SRM Supply Chain Planning & Optimization Supply Chain Visibility Technology Global Supply Chain Management Global Trade & Economics HR & Labor Management Apparel Industrial Manufacturing
KEYWORDS Apparel Asia Pacific China Global Logistics Global Supply Chain Management Global Trade & Economics Global Trade Management HR & Labor Management Industrial Manufacturing North America SC Finance & Revenue Management SC Planning & Optimization Sourcing/Procurement/SCM Supply Chain Analysis & Consulting Supply Chain Visibility Technology
  • Related Articles

    Trade Wars Put U.S. Small Business on the Front Line

    Trump’s Next Round of Trade Limits Could Hurt the U.S. Tech Industry He Wants to Help

    Perhaps Globalization Is Not Quite as Advanced as Some Thought - and Some Descried

Bloomberg

Amtrak Bottleneck Turns Biden’s Focus to His Favorite Rail Route

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A MAN IN A SUIT SHAKES HANDS WITH A WOMAN IN A HARD HAT, NEXT TO A STACK OF CONTAINERS

    Three Procurement Technology Evolutions for 2023

    Sourcing/Procurement/SRM
  • DOCUMENTS BEARING THE INSIGNIA OF US CUSTOMS AND BORDER PROTECTION LIE ON A TABLE

    New CBP Regs Call for Greater Diligence by Brokers in Reporting Security Breaches

    Freight Forwarding/Customs Brokerage
  • The blank stare of a child's eye who is standing behind what appears to be a wooden frame

    The Alarming Continued Rise of Modern Slavery in Supply Chains: How Procurement Can Help Reverse the Trend

    Sourcing/Procurement/SRM
  • A GROUP OF WORKERS RANGED IN AN OFFICE, OF DIVERSE RACE, GENDER, AGE AND PHYSICAL ABILITY

    Podcast | The Supply Chain Workforce of the Future Is Already Here

    HR & Labor Management
  • A WORKER IN A WAREHOUSE, SUPERIMPOSED WITH GRAPHICS SHOWING SUPPLY NETWORK

    Enabling Intelligent Visibility With Supply Chain Analytics

    Data Management (Big Data/IoT/Blockchain)

Digital Edition

Scb nov 2022 sm

2022 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing