U.S. Manufacturing In A New Cold War World
Randy Wolken, President & CEO

Some might not remember a time when the world watched and waited while the superpowers, the U.S. and Russia, stared into the abyss of a potential global war or nuclear destruction. It seemed too overwhelming even to consider. We may have returned to a newer version of the same experience. So much has changed—which is why it will be different—although just as dangerous.

Ukraine is resisting the invasion militarily and is supported by many European and pro-democracy countries. Although Russia has superior military forces, it is increasingly fighting an entrenched insurgency that could bog its forces down for the foreseeable future. Worse, it could escalate into conflict in neighboring countries and then pull NATO into open conflict with Russian forces. Also, Russia has put its nuclear weapons on high alert.

The Russian invasion of Ukraine is changing the world order. Europe is responding by committing to its common defense, with NATO leading the way. Many formerly neutral countries, such as Finland and Sweden, have taken a stand against Russia and are seriously considering joining NATO. Switzerland, usually a neutral country, has joined in imposing financial sanctions. Sanctions, especially related to bank suspensions and restrictions, are placing a heavy toll on the Russian economy. It is early yet, but we are likely to see even more economic actions to deter Russia’s attempts to subjugate a sovereign nation.

The situation will also strain critical supply chains of manufacturers across the globe. Ukraine is the world’s premier provider of neon needed in producing semiconductor chips. This will further reduce the availability of chips required in cars, military equipment, and many other consumer products. It will also realign other supply chains that now involve Russia or the Russian Federation. A new Cold War will likely result in Russia and its federation aligning on its own away from the European Union and other global partners.

Domestic U.S. manufacturing has become even more critical. Creating resilient supply chains with more products and parts made in the U.S. or nearby places like Canada and Mexico will become vital. The supply chain challenges caused by the pandemic will only be exacerbated. Global markets will be altered. The U.S. will need to focus on creating future advantages with new R&D funding, investing in critical industries such as semiconductors, and supporting the skilling and training of a high-tech workforce.

Russia and China, in different ways, have highlighted the genuine risk of falling behind in manufacturing the products we need for our national and economic security. Also, it points to the need for critical consumer products to be made in the U.S. As our economy adjusts to the new Cold War and the pandemic, we need to remain committed to a robust and growing manufacturing sector in New York State and our country.