“He is happiest, be he king or peasant, who finds peace in his home.” – Johann Wolfgang von Goethe
For many companies these days – in the U.S. and abroad – there is peace and prosperity to be found in moving their operations back to their home countries. And for investors, the opportunity to invest in certain industries located in their home countries could make them as rich as kings.
Every time a corporation transfers any facet of production back to its home country, the company’s supply chain becomes more secure. It becomes more disaster-proof against supply disruptions, no matter whether they are caused by transit bottlenecks, geopolitical events, or acts of God.
During the past three years, corporations across the globe have had their fill of disruption and are now rejiggering their supply chains to bring them back home.
The long era of globalization is over – putting an end to a trend that is almost as old as America itself.
There is security in deglobalization as new technologies emerge, like the myriad breakthroughs in the electric vehicle industry.
Passing on those opportunities, however, can make the difference between kings and peasants. It’s up to investors to act now and “find peace at home.”
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The Catalysts of Deglobalization
We’re entering a new era of “deglobalization;” the initial strike of the COVID-19 pandemic exacerbated already-problematic supply-chain issues across the globe, and we were forced to make do with what we could produce on our own turf.
Many businesses paid no mind to the precise logistics that made “just-in-time” a reliable business practice. But the global pandemic, combined with trade wars and shooting wars, have converted theoretical risks into palpable ones.
From the Russian invasion of Ukraine to China President Xi Jinping’s third win, plus ongoing supply-chain recovery efforts, keeping operations and resources closer to home whenever possible helps regain some control over uncontrollable variables.
A few questions to consider as you invest:
- What’s your portfolio’s exposure to unstable global hotbeds?
- How do China’s political actions, like zero-COVID policies and tense relationship with Taiwan, affect your portfolio?
Being mindful of potential instability could save a headache down the road, no matter how lucrative an investment may seem right now.
Other Nations Moving Back Home
“We’re seeing the balkanization of the world economy,” one prominent mining entrepreneur remarked recently. “The Chinese want to secure their entire supply chain, top to bottom, womb to tomb – the Americans also.”
Although this quotable entrepreneur was referring specifically to the metals that feed the renewable energy industry, his observation applies to most other supply chains.
Like the Chinese, we Americans also want to secure our “entire supply chain, top to bottom, womb to tomb.” The more that U.S. corporations move in this direction, the more they safeguard production.
The EV industry is at the forefront of moving things back to the U.S., and other countries and continents are following suit.
Saudi Arabia has been making headlines for importing American pro golfers as they jump ship from the PGA tour to play on the more lucrative Saudi-backed LIV tour. But don’t sleep on the back-page news when it comes to Saudi Arabia: it’s making a multibillion-dollar commitment to creating a domestic EV supply chain.
The country has established its “Vision 2030” plan to invest in new and existing industries, including facets of the renewable energy supply chain – from sourcing battery metals, to processing them domestically, to manufacturing EVs themselves. In effect, Saudi Arabia is joining the global trend toward onshoring, while also trying to reduce its economic reliance on crude oil.
As The Washington Post observes…
The world’s oil capital wants to go electric and get clean. To do so, it’s getting its hands on minerals critical for batteries and taking a stake in the electric vehicle-supply chain… Creating manufacturing and processing facilities within its borders is a shrewd and prescient move. Not only will it eventually help bring down the costs, but more immediately – and importantly – will ensure the nation becomes a key part of the global electric vehicle-value chain.
As part of the country’s plan to advance its grand ambitions, the Saudi Arabian Ministry of Industry and Mineral Resources is soliciting $32 billion in investments in the domestic mining and minerals sector.
Perhaps the costliest example of globalization gone wrong is Europe’s dependence on Russian oil. The war with Ukraine resulted in sanctions that prevented most of the continent from doing business with Russia.
After suffering through a cold, expensive winter, most European countries are relying on sources closer to home – Norway is supplying about a quarter of Europe’s fossil fuel, while the U.S. and Middle East are supplying a large portion.
The push for greener, more sustainable sources of energy is on – and the U.S. is one of the nations at the forefront.
Sitting on a Potential Goldmine
The States have a lot to offer when it comes to renewable energy sources, especially in the EV sector. One swath of the U.S. recently was nicknamed “The Battery Belt” due to the rich sources of battery metals needed to power electric vehicles.
Let’s look at where these opportunities lie…
The companies that supply the raw materials for automakers to put EVs on the market stand to profit. The Battery Belt comprises lithium and refining factories that stretch from Michigan to Alabama and beyond.
Since 2021, there have been 15 of these gigafactories or expansions announced stateside. EV automakers are all in, too: Ford Motor Co. (F), Nissan Motor Corp. (NSANY), General Motors Co. (GM), Mercedes-Benz, BMW, and Volkswagen (VWAGY) all have plans to invest billions in the industry – within that Belt – in the coming years.
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