High energy costs will directly impact the re-shoring trend,as well as supply chain security. As factory automation increases,we will see yet another cost input altered.The more energy that can be supplied by solar and wind,the higher capacity for production closer to consumption. I could see a trend for much higher utilization of factories in Mexico and Central America as a result. This could also ease the immigration pressure from those countries by making a reason for people to stay.
JK
JK: "High energy costs will directly impact the re-shoring trend,as well as supply chain security. "
I suspect security and access will have a bigger role.
the ‘cost’ of production can be low in China from coal fired electricity and steel mills. No big deal there. Shipping will be impacted but what is the cost per ton across the pacific when 10,000 containers are on a single ship?
More of a problem is port access and backups. However, imports are at all time highs and the cost of transport and backups doesn’t seem to be making much of a dent in US factory automation. Most factories are already highly automated or they cease to exist.
JK:“As factory automation increases,we will see yet another cost input altered.The more energy that can be supplied by solar and wind,the higher capacity for production closer to consumption. I could see a trend for much higher utilization of factories in Mexico and Central America as a result. This could also ease the immigration pressure from those countries by making a reason for people to stay.”
You might employ a 100,000 in Mexico…but 18,000 are crossing the border each day now. That’s several million a year. No way to create enough jobs to convince most to stay and factories will wind up in areas with good transportation hubs and a sufficiently large mass of people to supply low cost labor.
Solar and wind provide less that 10% of US electricity , even less when considered against ‘primary energy’ needs. Fossil fuels provide 80% and will for a long long time. A billion engines burning fossil fuels worldwide aren’t going to replaced any time soon.
t.