Post-Covid shift away from global supply chains could boost the North East Wales economy

A backlash against globalisation, in the wake of the Covid-19 crisis, can reignite a powerful North East Wales manufacturing sector still reeling from the shock waves of over 1400 Airbus redundancies.

Bangor University economics lecturer Dr Edward Jones says that a boom in cutting edge technologies like 3D printing can boost the area’s recovery despite the fear that there may be more immediate pain to come.

He predicts that when the dust settles more businesses and governments will want to have their supplies closer to home as they emerge from months of unprecedented lockdown.

Dr Jones, who works in the university’s renowned Business School, says the industrial heritage of Flintshire and Wrexham may make the area perfectly placed to take advantage of the rapidly evolving Fourth Industrial Revolution technologies as the nation and the world takes on a new shape.

These include Artificial Intelligence, robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.

He said: “It is the fusion of these technologies and their interaction across the physical, digital and biological domains that makes this industrial revolution different from those previously seen.

“Analysis by Bangor Business School has shown that the manufacturing clusters in North East Wales are among the most competitive in Britain at creating new manufacturing jobs.

“We could find that this past knowhow and experience works to our advantage as we come out of the pandemic induced economic crisis to embrace these new technologies.

“The appropriate manufacturing skills, knowledge, experience and culture are already strong in North East Wales and could therefore adapt to activities being brought home as part of the drive for self-reliance.  The shift away from global supply chains could be the catalyst to grow the manufacturing sector and drive the North East Wales economy forward.

“Only eight per cent of the British workforce was employed in manufacturing in 2018, compared with 11 percent in Wales.  But in North East Wales, this proportion was even higher at 14 percent and has been consistently at this level for the past few years. This puts us in a stronger position.”

Dr Jones expects many Western governments and companies to put the brakes on decades of globalisation and pull back from outsourcing supply chains and customer services to providers thousands of miles away.

Instead he believes there will be a sea change as UK-based company owners seek out more self-reliant production processes, either in-house or geographically closer to their core businesses. 

He envisages many may also turn to technology developed as part of the Fourth Industrial Revolution, such as 3D printer production methods which were exemplified by a recent community project in Wrexham which saw more than a thousand protective visors for NHS frontline staff produced on 3D printers, set up at a school.  There are other 3D manufacturing centres across the region, including in Rhyl and on Deeside where PPE has also been manufactured.

Dr Jones said: “Flintshire and Wrexham are better placed than many to rebound from the economic impact experienced in the wake of the Coronavirus pandemic.

“North East Wales could even help herald a new era of manufacturing as it is already in a very strong position in terms of its manufacturing base.”

He pointed to the long tradition of manufacturing industries based in the region, the legacy of which is that it still has vital resources and a workforce armed with the inherent skills needed to meet any future demand for more local production hubs.

“Combine this with North East Wales having embraced new technologies, such as 3D printer production processes, and it is in a prime position to move forwards as pandemic conditions improve,” he said.

Dr Jones added: “During the national emergency we have already witnessed a mini boom in 3D printing technology with some manufacturers in this field being urged to produce vital personal protective equipment for key workers.

“This is a significant move which has put the spotlight on 3D printing technology. Before the pandemic we were only really at the outer edges of 3D printing production capacity but now I think we’ll see much higher demand for this revolutionary system in a whole range of different spheres.”

He said the area was lucky to have leaders in the field based on home turf, adding: “I think in the months and years ahead we will really see this technology come into its own.”

He voiced his views on the back of work carried out over recent months to shape what comes next for the Welsh economy in a post-Covid-19 world.

Economists have been working with epidemiologists to develop economic forecasts, which highlight the relationship between our future economic prosperity and its success in tackling the virus. 

Dr Jones said: “Unfortunately, there is much we don’t know about this novel coronavirus and this makes the task of predicting the direction of the economy very difficult.”

He conceded there will be hurdles and setbacks as the region and the nation work to overcome the downturn, especially given that The Economist magazine recently predicted world goods trade may fall by 10 to 30 per cent this year.

But he said there are reasons for optimism and it is important not to fall into the trap of expecting the future to be all doom with no bright spots on the horizon.

He added: “In recent decades the rest of Britain has seen a decline in manufacturing activities, but the same cannot be said about North Wales and Flintshire and Wrexham in particular.

Using Business Register and Employment Survey data between 2015 and 2018, research by Dr Jones has shown that North Wales regions are among the most competitive in the UK at creating manufacturing jobs.  Flintshire is in the top 20% of UK regions in terms of its competitiveness.

He said: “One thing that is certain is that globalisation – the process by which the world becomes increasingly interconnected as a result of massively increased trade between nations – is in trouble.

“During the era of hyper-globalisation between 1990 and 2008 firms organised production using global value chains: relocating production to low wage countries.  China became the world factory and borders opened to people, goods, and capital and information.

“However, the open system of trade that had dominated the world economy for decades was already damaged by the 2008 financial crisis and the China–United States trade war. 

“Globalisation is now reeling from its third body blow as lockdowns have sealed borders and disrupted commerce.  Factories and shop closures have caused demand to tumble and prevented suppliers from reaching customers.  The damage has not been universal but the overall effect is savage.

“As economies re-open, activities will recover but we shouldn’t expect a quick return to a care-free world with unfettered movement and free trade.  We’re likely to be living with Covid-19 for a long time, and the economy of the future will need to reflect that. 

“Around the world, public opinion is shifting away from globalisation.  People have been disturbed to find that their health depends on a brawl to import protective equipment, and on the migrant workers who work in care homes and harvest crops.

“A situation where Western countries were queuing up to outbid each other for Chinese PPE equipment will never be allowed to happen again.

“The push to bring supply chains back home in the name of resilience is accelerating.  The race for economic self-reliance has begun.”

He predicts that world supply chains will truncate dramatically, become less extensive, and much closer to home – an interesting opportunity for Wales and the North East of the country in particular with its history of developing industrial clusters which have helped see it through difficult times in the past.

Pictured - Bangor University economics lecturer Dr Edward Jones.