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Industrial shortages and the fifth wave a precursor to an upsurge in the crisis and an exacerbation of economic nationalism

2021-07-25 | Global News

The industrial shortage is not limited to chips anymore. Hundreds of large companies are stopping production at different points in the global chain. The EU and Japan, fearful that U.S. harassment of Chinese products will affect their international investments, are pushing for accelerated repatriation of low-profit but high-impact industries. However, the new Covid wave and the floods in Germany and China have shown that industrial destocking and its aftermath for workers -temporary layoffs and even more precariousness...-are not a passing phenomenon.

Industrial shortages and the fifth Covid wave

Containers and tankers anchored en masse off the port of Los Angeles. Landing bans and crew rotations have been the trigger for the latest wave of industrial shortages

Containers and tankers anchored en masse off the port of Los Angeles. Landing bans and crew rotations have been the trigger for the latest wave of industrial shortages

One of the lesser-known drivers of the current industrial shortage crisis is the lack of international freight crews. Ninety percent of trade in physical goods is now moved via merchant ships. The maritime industry regularly employs well over 800,000 seafarers, most of whom come from the Philippines, China and Indonesia and to a lesser extent from Russia and Ukraine. The reason is simple: seafarers are recruited where wages are lowest.

Until now the industry's expectations have been bright. According to the International Chamber of Shipping there was nothing to suggest that the seafaring situation would change for the worse. They complained of a deficit of 16,500 officers, but with a steady surplus of some 119,000 seamen, they feared neither strikes nor wage hikes.

But they didn't count on Covid's Delta variant. Many countries do not allow crews to disembark when they make port. Crews, exhausted, can't rotate. As of today there are already 100,000 sailors stuck in port with their contracts terminated and thousands of ships waiting for a crew change to sail.

The impact on all types of freight - from raw materials to electronics - has been immediate: never before have so many container ships been at capacity and so many ships anchored in Asian and U.S. ports waiting to sail or unstow. Industrial shortages due to the lack of available freight are already a reality. And the shipping industry expects no change until the end of the year.

For the time being, shipping costs are rising, driving global inflation even higher. And large industrial groups in countries such as South Korea claim that rising international transport costs have raised their production costs by nearly 10%.

Of course, rising costs, inevitable in the face of shortages, revive alternatives. Russia is steadily reviving the Trans-Siberian as an alternative route to the great merchant routes linking Asia to Europe via the Suez Canal. But neither is it enough at the moment in order to avoid industrial shortages in Europe, nor does it seem to be a long-term option when the USA imposes on Germany and the EU to make Russia a dispensable supplier.

To top it off, Covid surges can lead directly to the temporary closure of production chains. That's what's happening in Britain and what we've seen in recent weeks at plants like Stellantis in Lutton. With normal workforces already stretched to the limit, an abrupt but not massive increase in quarantines suffices to lead to the closure of the factory and the temporary layoff of hundreds of workers.

Industrial destocking gives rise to new waves of economic nationalism, trade war and the impoverishment of workers

Macron expounds at the Renault factory in Douai on the benefits of repatriating production and promises an end to industrial destocking from which he is promoting a new strategy against living and working conditions.

Macron expounds at the Renault factory in Douai on the benefits of repatriating production and promises an end to industrial destocking from which he is promoting a new strategy against living and working conditions.

Medical shortages in the early stages of the pandemic extended the "decoupling" rhetoric pushed by the Trump administration to Europe. Not only did the change of government in the U.S. not stop the discourse but, in a way, it has become radicalized under Biden. And yet, the global trade figures, so far seem to contradict that a fundamental fracture in the international division of labor is occurring.

The reality is that so far this rupture has focused on very specific elements of the chain and its harshest expressions have been in the capital market. China's agri-food imports into the US have grown, for example.

And let's not even talk about coal. In its own trade war with Australia, China has made up for its energy shortfalls by buying even more coal from the US and Canada. The terrible floods this week, which have cut off transport from coal regions on the Russian and Mongolian borders, have further increased demand - despite rising freight rates - amid fears that the situation could lead to blackouts and industrial shortages.

But the march towards "decoupling" is unstoppable. We already saw how the EU wants to move manufacturing suppliers from Asia to its own low-wage industrial region, within its borders or at least next to them. The reason invoked: to avoid industrial shortages by gaining economic sovereignty and placing capital en masse in "safe countries". Imperialism by the book.

But it is not only or even mainly Brussels that is expressing a deliberate attempt under the discourse of economic nationalism to revamp the international division of labor, avoid industrial shortages and reduce the risks characteristic of a pre-war period.

Since June Macron has been on a campaign to attract capital and selling workers a solution a la Trump: renationalization of production as a promise of a halt to precariousness, at the cost of.... "flexibility" and "moderation". In his last speech on national TV the package was explicit: the two big industrial targets for the political course that will begin in September will be to repatriate the entire automotive production chain and a substantial part of pharmaceuticals.

It is no coincidence that in the same package come dual professional education -free young labor in exchange for a promise of job placement- and the first sketches of a new pension reform that seeks to replicate what is happening with wages: raising the minimum pension, reducing the averages and ending up paying overall less to workers while espousing a hypocritically social discourse.

Industrial shortages are just a symptom

Overstocking at ports, industrial stockouts in factories

Overstocking at ports, industrial stockouts in factories

The industrial shortages of these months, which are likely to last until February or March 2022, are neither a one-off phenomenon nor an isolated problem. They are the result of the deformities of a mode of production which destroys productive capacities by over-concentration -in the whole industrial network, not only in chip manufacturing- and has been doing so over 4 years of unleashed trade war and growing imperialist conflict.

Industrial shortages are now becoming even more acute as a result of the inability of the states to stop the pandemic globally within this framework of heightened global competition. The bourgeoisie has shown itself incapable of facing a global crisis such as Covid by putting ahead, even temporarily and at the national level, universal human interests. Let alone prevent the proliferation of variants that perpetuate the pandemic through global contagion. On the contrary, to date, beyond empty gestures, they have not even been able to temporarily waive patents in order to use all the available production capacity to its full capacity.

The response of states and national capitals to this industrial shortage is to accelerate the path of economic nationalism and trade and currency wars. Even the ruling class think tanks acknowledge the similarity to the pattern that followed the crash of 1929. We workers should also recognize the path they are proposing for us: attacks on our employment, working, retirement and housing conditions in the short term and ten years down the road, if not sooner, the move from trade war to outright war.