Decoupling of Supply Chains

September 21, 2022

“Covid-19, Russia’s invasion of Ukraine, and rising geopolitical risks in Asia have thrown a wrench into global supply chains,” writes The Wall Street Journal (Sept. 20, 2022). That has reinvigorated the push to put key supply links back onshore—particularly those currently located in China. A full “decoupling,” meaning the breaking of economic links with China, remains unlikely, but supply chains would become less integrated than in the past.

Two proposed laws in Europe are the latest case in point. The EU just set forth a ban on products made using forced labor. (It doesn’t name China but forced labor in the Xinjiang region is clearly a main target.) Recent U.S. legislation puts the onus on importers to prove that products from Xinjiang aren’t made with forced labor—an incredibly high bar. Such rearrangements could be challenging in some cases: For example in the solar supply chain, which is dominated by China. Xinjiang is a major producer of polysilicon, a crucial precursor of solar cells.

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Megacasting Revolutionizes Electric Auto Production

August 14, 2022
One of Tesla’s 8 Giga Presses

New cars like the Tesla Model 3, Maserati SUV, and Volvo EV depart from convention by building the cars atop just a few very large, very complex aluminum alloy castings. These bolt together to form the entire chassis, with front, center, and rear sections that replace, in Tesla’s case, 370 discrete parts that would need to be joined together to form the car’s chassis.

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Coal Gets Hot

July 6, 2022

An energy-starved world is turning to coal as natural-gas and oil shortages exacerbated by Russia’s war against Ukraine lead countries back to the dirtiest fossil fuel. From the U.S. to Europe to China, the world’s largest economies are increasing coal purchases to ensure sufficient supplies of electricity, despite prior pledges by many countries to reduce their coal consumption to combat climate change.

“The global competition for coal—also now in short supply after years of declining investment in new mines and resources—has driven benchmark prices to new records this year,” reports The Wall Street Journal (July 5, 2022). The push is being led by Europe, which is boosting coal purchases to ensure it can keep power flowing to homes and factories after Russia cut gas supplies. Germany, which has promised to eliminate coal as a power source by 2030, is among the nations now importing more.

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