A WEEK ago, I watched a video about the North Atlantic Treaty Organizatio (NATO) ramping up production of war materiel.
I don’t need to expand on what this is all about, though I wish to cover America’s sudden return to manufacturing and industrialization, now that the world has become more uncertain.
Although the US has never really lost its ability to manufacture and produce its own weapons, I get the sense that they feel that the situation has changed.
The news that NATO is now ramping up production, to me, is an inflection point. The West must re-industrialize across a wide range of industries because they can no longer rely on a “free and open” world system to supply them the things they need, especially if war breaks out.
For a long time, the West and the United States, in particular, have embraced offshoring as a practical economic strategy. The US GDP is around 85% services for example. It was cheaper to produce certain items on another country and then ship them back to the home market than to produce them locally.
The caveat to this arrangement, however, is the assurance of peace and stability.
The country you are sending your manufacturing needs to must be stable enough to cater to your needs. The same is true for the sea lanes. Trade routes must be stable for offshoring to work. Now, that the world is becoming more uncertain, that business model is becoming a little obsolete.
A good example of this is the US reindustrialization of semiconductor manufacturing, and I don’t think it will end there.
Any country that plans to fight a modern war needs to have a larger industrial base. If the West is unwilling to accept that, they will be at a disadvantage.
Both Russia and China have strong industrial bases, while the US has offshored many of its own. Can it take back its manufacturing capabilities or will it continue to cling on to an increasingly outdated economic strategy?
Only time will tell./PN
