The buzzword is deglobalization

Deglobalization is a word we hear more and more often regarding the current geopolitical and economic situation. Hasn’t it crossed your path yet? According to the international think-tank Chatham House, deglobalization means moving towards “a less connected world, characterized by powerful nation-states, local solutions, and border controls rather than global institutions, treaties, and free movement.”

It seems that the first person to coin the term was Filipino sociologist Walden Bello back in 2002. The word became more popular in 2017 after the Brexit referendum that saw the citizens of the United Kingdom vote to leave the European Union. For the first time in the past few years, we realized that being part of a community of states was not a priority for all western nations. Moreover, the COVID-19 pandemic demonstrated that borders are not enough to contain the greatest sanitary threats governments must face. The following disruptions in global supply chains, the problems in transportation, and - above all - the conflict between Russia and Ukraine have further upset the status quo and contributed to many companies turning to suppliers from nearby rather than distant geographic areas.
The roots of this megatrend also lie in politics, starting with Donald Trump, that imposed a long series of sanctions and introduced tariffs to defend domestic production from attacks by foreign competitors. The success of nationalist and populist parties in many countries seems to be rowing in the same direction.

But how does all this reflect on the companies we cover that are featured on expometals.net? How does deglobalization relate to players in the wire, cable, fasteners, spring, and tube manufacturing fields?
Machine manufacturers have a clear lead compared to finished product providers because - generally speaking - the demand for higher-rate technology products in international markets is still relatively high. The reason is intuitive: local companies cannot always find alternative, high-end suppliers on their home soils and, therefore, sometimes have to turn to overseas machine manufacturers if they aim for maximum productivity and performance. It goes without saying that as technological development advances in once less-developed countries, the competitive advantage of western providers is thinning out.
Companies manufacturing finished goods, tools, and consumables usually fare worse unless they also have local production subsidiaries that can maintain the standards of the parent company, but with more competitive labor and raw material costs.
Which is not always possible! Deglobalization or rather related factors such as rising fuel costs and difficulties in transportation, has pushed many companies toward reshoring or backshoring their activities, that is returning the production they had previously relocated to Asian or Eastern European countries back to the company's native headquarters. Things are not as simple as they might appear, and deglobalization itself does not touch every player everywhere in the same way.



Perhaps it would be better to talk about regionalization? Especially following the outbreak of war in Ukraine, world trade has become more regional, that is, it increasingly takes place within geographic macro-areas.
Better yet, the right term might be a tongue-twister: fragmentegration! The word, which combines fragmentation and integration, appeared a few days ago in an article written by researcher Rem Korteweg for ISPI, the Italian Institute for International and Political Studies. While on the one hand, there is deglobalization that sees world governments and stakeholders taking a step backward to guard against excessive interdependence, on the other hand, cross-border flows have reached record levels, trade agreements are booming, and there are global supply chains that could never “be deglobalized even if governments wanted it.”
“A complex interplay of centrifugal and integrationist forces will shape trade relations,” says Korteweg.
In other words, it’s complicated! And when the reality is intricate, definitions abound to try to make things simple - and understandable. However you think about it, this is not just sterile terminology, as these issues affect us in everyday life and everyone’s company. Beyond denominations, every business has to deal with these phenomena when sourcing raw materials, choosing partners and suppliers, finding new target markets, and more.
What does deglobalization mean to you? How would you name what is happening? Everyone has their own answer.

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