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Candace Browning, head of global research at Bank of America Merrill Lynch, writes (via MarketWatch):
Six months (and a lifetime) ago, most people had never heard of Covid-19, unemployment was at historic lows, and President Trump had just signed the Phase I trade deal with China.
At the time,BofA Global Research published a study in which we argued that supply chains were shifting. On the surface, there was nothing controversial about our statement. After all, the past three decades have witnessed a dramatic globalization of supply chains as corporates moved to countries, notably China, that offered the greatest cost, scale and ecosystem advantages.
What did raise eyebrows, though, was our assertion that we were entering an unprecedented phase where companies were experimenting with a “China Plus” strategy. While keeping primary supply chains in place, managers were also experimenting with pilot projects in alternative locations.
More unusual was our observation that companies in half of all global sectors for North America were reshoring their pilot projects. These, we argued, were the first signs of reversal in a multi-decade trend that could have profound implications for manufacturing, as well as the global economy. At the time, we thought that the success (or failure) of these pilot projects would determine the scale and velocity of further change.
Instead, Covid-19 has exposed fault lines in global supply chains. In our new study published this July, we found that companies in over 80% of global sectors have experienced disruptions in their supply chains during the pandemic.
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