The war in Ukraine has already upended countless lives. Now, it’s upending business models as well. With the exodus of western multinationals from Russia and Ukrainian supply chain disruptions coupled with Covid-related disruptions in China, companies are having to rethink everything.
The challenges range from how they pay local Ukrainian staff (in some cases with cash delivered to Poland) to how to get hold of parts they sourced from the region before the war (the answer so far: slowly and spottily). Among those hard hit have been German carmakers that depend on components from Ukraine. Their plants are idle as they struggle to figure out a new system.
But even companies that don’t have suppliers or operations in the thick of the conflict recognise they need to move from assumptions of unfettered globalisation to more regional — or even local — hubs of production and consumption. They also see the benefits of more decentralisation and system redundancy (namely having extra resources to provide back-up support) to avoid future shocks. “The ongoing supply chain disruptions have now lasted longer than the 1973-4 and 1979 oil embargoes — combined!” says Richard Bernstein, CEO of RBA, the investment firm. This isn’t a blip, but rather the new normal.