The recent floods in western Germany have added more pressure to supply chains that were already struggling from the effects of the COVID pandemic. Multiple events worldwide have contributed to a huge global shortage of microchips and semiconductors, among other components, which have hit the automotive industry harder than most. A recent drought in Taiwan, where many goods that Germany requires are made, has been another factor contributing to the supply shortage. Germany imports 8% of its intermediate products from other countries, meaning that it relies more heavily than countries such as the United States (which imports less than 5% of its intermediate products) on supply chains working effectively. The imports that can be made are much more expensive than usual, as the disruption to production and the decreased numbers of staff caused by the pandemic means that the price of containers used to ship goods from Asia to Europe has multiplied eightfold since last year.

It seems that these shortages may continue for years to come, as the uncertain situation with COVID-19 and the increasing climate-related events occurring globally will undoubtedly impact the supply chain. Germany is taking the initiative to counter this, with Bosch opening a chip-manufacturing plant in Dresden to benefit the automotive industry. Intel is also looking to open a semiconductor factory on the continent, using funding from the EU. These plants will work in conjunction with those based in Asia, where the majority of tech components are currently created. By creating multiple factories, and therefore multiple possible suppliers, across the world, these companies intend to protect themselves and their industries against future events that would otherwise have caused issues for the global supply chain.

Source: www.diplomaticcourier.com