FIRST OF THREE POSTS BASED ON NACD PROGRAM ON BOARDS AND COMPANIES IN TODAY’S ECONOMY

The world economy is moving from globalization to national focus, with government industrial policy becoming more important.  This is true in the US, Europe, and has long been true in China. Companies need to consider effect of tariffs, export controls and restricted market access.  One effect is that companies are shortening their supply chains to ensure continuity.  Moving manufacture of parts and finished product to the US, in face of tariffs and restrictions of offshore supply or parts, is changing how US businesses staff and operate.

Tariffs are going to create US inflation.  This effect, delayed to some degree by US company planning in stocking up parts and changing some sourcing of parts, will assert itself over years and current lack of huge impact is not an indicator of future inflation impact.

Current US policy will not necessarily build US industry, as intended. If a company sells overseas it may well establish production overseas to meet offshore competition in those markets.  One panelist noted, in considering US tariffs as designed to drive US industry, the effect of tariffs may not be as anticipated: “It’s tough to confirm policy to logic.”

Bring industry to the US also will require more labor and that too is a problem: we do not have enough labor, and we train people not to work in production but rather in services or in intellectual capacities.  By 2033 the US will need 3.8 million more manufacturing employees and we cannot ramp up that fast.  Our educational systems need to redefine the training needed to fill these slots. And the nature of these slots is itself changing: more tech skills will be needed even in production functions (see post hereafter on AI impact).  This is referred to as a move from blue-collar work to “new-collar work.”  The US bias in many quarters to prefer white-collar jobs to the general labor force needs readjustment. The educational response is needed by companies informing high schools, trade schools, and institutions of higher learning as to the training needs of the new economy.

The current immigration policy in face of these labor needs is of course a problem.

Finally, the US has been in a decades-long decline in industrial production and other fall-outs include lack of experience in building new large-scale production facilities.