September, 2016
www.us-
tech.com Politics and the Supply Chain By Philip Stoten (@philipstoten) I
recently took part in a survey on European electronics manufacturing and the first ques- tion I was asked was my impression of the like-
ly impact of Brexit, the referendum decision by the U.K. to leave the European Union. This, along with my observations of the U.S. presidential race, led me to wonder how much impact politics has on the electronics manufacturing supply chain. I’ve always believed that politics has shaped
the current supply chain and continues to do so. It’s been my impression for some years that China has enjoyed substantial dividends due to its own political system for one reason only; not because the supply chain likes the country’s particular pol- itics, but because the supply chain benefits mainly from stability. Stabil- ity, in this case, from a lack of elec- tions, a lack of change and hence a lack of supply chain risk. In other places, political instabil-
ity has hurt the supply chain. Take an extreme case like Ukraine, which was just starting to establish itself as a manufacturing geography due to its proximity to the consumer markets of Europe and Russia, low-cost labor and reasonable infrastructure. Every- thing looked bright and exciting for this new addition to the Eastern Eu- ropean manufacturing base until Russia moved into the Crimean peninsula to shake the whole region up, stalling any development that was taking place. For some time Turkey has been
seen as a potential manufacturing lo- cation and slated for real growth by the international consulting commu- nity, but surely the recent failed coup and ensuing unrest will not help the country in attracting international business and investment. Mexico too has had its share of
political challenges and in the past, these challenges have affected the pub- lic’s view of it as a serious player in the global market. Now, with a relatively stable government, Mexico seems to be doing very nicely, not just in EMS, but also in automotive, medical and a few other manufacturing sectors. Then there’s the U.S. presiden-
tial race. As a foreigner living in the U.S., it has been entertaining, to say the least. The constant thirst of the TV news stations for content has been ad- mirably sated by Trump’s inflammato- ry sound bites, as he has apparently
tried to outrage every minority in the country, and by Clinton’s inability to shake off scandals around email servers and foundation contributions. In fact, we have yet to see any clear policy differences that would help in the debate around which candidate would be best for U.S. manufacturing and U.S. jobs. I don’t intend to share my political views, nor
do I have any idea of which way the race will go, but the rest of the world awaits the outcome with bated breath and with some trepidation. The U.S. plays a major role internationally and its political position will impact investment, trade and much more. In answer to the original question, “Will Brexit be good or bad for the U.K. and for Europe?”
I answered “Bad for the U.K., and good for the rest of Europe.” My impression is that anyone consider- ing investment in the U.K., be it in manufacturing or other services, will want to wait and see. The whole Brexit process is likely to be a long, slow one, starting with invoking article 50 and requir- ing the renegotiation of agreements that have de- veloped over the U.K.’s long membership. In many ways, it’s like negotiating a divorce settlement af- ter a 40-year marriage, there is a lot to be agreed upon, fallout will be complex and the long-term ef- fects, as yet, are unknown. What’s more, Scotland, who voted marginally to remain in the U.K. in an
Continued on page 25
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Philip Stoten is an internation- ally recognized EMS industry expert. Known for his skills as an inter viewer, reporter and
panel moderator, Philip is a fea- tured multi-media contributor to U.S. Tech on a regular basis.
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