The New Cold War — How One Company Is Preparing For Potential Supply Chain Issues Resulting From US-China Tensions

From Moscow to Beijing, the geopolitical situation today is stark. Chinese leader Xi Jinping recently met with Russian President Vladimir Putin in Xi’s first meeting outside China since the pandemic began — a move suggesting a strengthening relationship between the two world powers.

The Ukrainian-Russian war, and the new Cold War between the West and Russia, have thrown the West into consternation. An energy crisis looms over Europe, meanwhile, tensions continue to develop in the relationship between the United States and China. Rifts are growing in the aftermath of House Speaker Nancy Pelosi’s visit to Taiwan, and fears are mounting that Taiwan could become the next Ukraine. 

One consequence of the conflict over Taiwan has been the Chinese withdrawal from climate target agreements. Despite the collaboration promised between the U.S. and China at the 2021 United Nations Climate Change Conference (known as COP26), Pelosi’s early August visit to Taiwan led to China threatening to not cooperate on climate policies — despite producing 27% of global greenhouse gases. 

Relationships have also become strained as a result of accusations of human rights violations and genocide being leveled against China for its treatment of the Uyghur minority in its Xinjiang region.

Is it Time To Move US Production Out Of China?

If the continued souring of the American-Chinese relationship is not enough to make foreign manufacturers nervous, there are also signs that the Chinese economy is starting to wobble.  The bottom is dropping out of the Chinese housing market, presaging a collapse that could cause tremors reminiscent of the 2008 U.S. housing crisis. Real estate currently accounts for one-third of economic activity in China — double the share of real estate in the U.S. — and a crisis there would cause shock waves across the entire Chinese economy.

What all this means for future geopolitical relations between China and America remains to be seen, but it will most likely raise concerns for companies whose production is located in China — with the COVID-19 pandemic having highlighted the global supply chain issues that could result from disruptions to operations there. Companies ranging from Apple Inc. APPL and adidas AG ADDDF to Tesla Inc. TSLA and Target Corp. TGT have large manufacturing facilities in China. With the future currently cloudy, how will investors maintain confidence if this economic and political uncertainty continues?

Many companies are starting to talk about moving back to American soil, with the construction of new factories in the U.S. increasing by 116% in the past year.

Leading The Pack In The Return To US Shores

One company in the energy and automotive space that is preparing in advance and making the move is Worksport Ltd. WKSP. Providing solutions in renewable energy, Worksport and its subsidiaries take their patented designs through production in an effort to innovate in the energy and automotive industries. 

Worksport’s subsidiaries include Terravis Energy Inc. (Latin for Earth and force), which produces the Non-Parasitic Electric Vehicle (NPEVTM) charging platform that it hopes will spark interest in the electric vehicle industry. Worksport’s SOLIS (Spanish for sun) tonneau covers for trucks function as on-the-go solar chargers for its COR battery systems. 

To prepare for the challenges that could soon be posed for manufacturers in China, the company will soon begin manufacturing its products in America. It purchased a new, 222,000-square-foot facility in Buffalo, New York, recently and plans to have the factory up and running at full capacity by Christmas. 

No matter what happens in the east, Worksport is working to ensure that it is positioned for continued growth and operations can continue as usual in any circumstance.

“With all the manufacturing issues plaguing multiple industries today, from supply chain issues to the risk of IP [intellectual property] being compromised, on-shoring production to a facility we own is the next logical step in Worksport’s growth strategy,” Worksport CEO Steven Rossi said. 

Excited by the prospect of new jobs and innovative technology, New York’s Empire State Development Acting Commissioner, President and CEO-designate Hope Knight said, “As Worksport’s first U.S. production facility, this project will solidify the company’s investment within New York State, help foster innovation and green technology and provide the potential for even more jobs in the future.”

To learn more about Worksport, visit its website. 

Featured photo by Abbie Bernet on Unsplash

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