World Economic Forum finds new globalization model

Europe, the US or China are all seeking to consolidate their own strategic autonomy, no longer supporting economic globalization and free trade unconditionally as before. The car industry is a prime example of a production model based on economic globalization. The manufacturing process is chopped, what can be done in the cheapest country is outsourced in that country. Renault of France, for example, employs up to 17,000 suppliers worldwide to make various components. But with the outbreak of the pandemic, semiconductor chips from Asia could not reach European car assembly plants.

Mr. Peter Altmaier – German Economy Minister said: “The shortage of semiconductor chips has prevented hundreds of thousands of cars from being assembled. In a car with 6 to 7 important semiconductor chips, it only takes one missing one. car is not able to complete the car, can not deliver the car”.

Car components made anywhere in the world have the lowest production costs, provided they are delivered on time. And if the sea lanes are congested, then even for a week, that production model will be disrupted.

Mr. Salvatore Mercogliano – Professor of Campbell University said: “The big problem is the assembly line. If the BMW factory in Germany has to import components from Asia, disordered sea shipping means the factory has to stop. work”.

The war in Ukraine, another disaster for the European car industry. Ukraine processes bundles of wires, often likened to the nervous system that controls a car. Usually, transporting components from Ukraine to Western Europe by road is very easy, unexpectedly, one day bombs and bullets crippled many auto parts factories in Ukraine.

Paolo Gentiloni – European High Commissioner for Economic Affairs said: “The shock from Russia and Ukraine events is shaking the world, directly impacting the collapse of trade activities in the eastern contiguous area of ​​the European Union. Indirect negative impacts on worldwide demand are higher commodity prices, disruptions in the supply of raw materials and input components.”

Europe, America and Russia embargo each other, making the story more complicated. Economic sanctions, trade war… add invisible barriers, separating markets. Modifying the economic globalization model to fit the new context is becoming the main topic of discussions taking place here.

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