Despite the rise in populist protectionism so clearly underlined by the UK's recent vote to leave the EU and Donald Trump's surprising US election win, working together remains the only sensible way forward
Supply chain experts will spend 2017 dealing with the aftermath of the protectionist sentiments that helped propel the UK vote to leave the EU and Donald Trump to win the US election – and could impact other elections quite soon. After the populists' victories, someone must confront the technical minutiae around tariffs, customs codes and logistics costs.
The minister charged with Brexit, David Davis, met recently with industry leaders to discuss such issues. It is not just huge trade values at stake; many parts move across the English Channel multiple times before reaching plants. In the US, Trump will have similar briefings where perhaps advisers may try to point out that every dollar Mexico exports to the US has, on average, 40 cents of value from the US. Perhaps others will insist that smooth logistics is essential to serving lean plants and competitive markets.
Will it matter? Logistics rarely captures the electorate’s imagination, and in this age of populism, political leaders may be tempted to appease core voters. It is thus important for the automotive logistics industry to make its case, and ensure governments – including anti-establishment leaders – understand the importance of connecting high-tech manufacturing and international markets.
For while governments retrench around trade and immigration, other forces march on. Brexit and Trump voters might blame de-industrialisation on the EU or Nafta, however, more jobs may have gone as a result of technological change – or failing to keep up with it. The coming age of ‘industry 4.0’ makes this even more vital. Logistics is already seeing more automation, with carmakers such as BMW exploring AGVs, image processing and vehicle connectivity to improve material and vehicle handling.
But its head of logistics, Jürgen Maidl, predicts logistics won’t be as automated as body or paint shop, and will instead be ‘cooperative’ in assisting workers. Indeed, European carmakers seem more worried about ageing workers and labour shortages than they do mass job losses. Developments like autonomous driving and data analytics could even enhance supply chain jobs – if workers have the skills to use them. Maidl stresses a need for training to achieve this, but also collaborative networks and open-source platforms.
That goes for supply chains and borders, too. Protectionism won’t shield a country from technology, but could set it behind. There is no alternative to working together – as unpopular as that sounds right now.
The impact of more protectionist new US policies on international trade will be among the key issues discussed at this year's Automotive Logistics Mexico conference, taking place in Mexico City from January 31st to February 2nd.