RANE, a threat intelligence firm, displays a number of dangers around the globe pertaining to security and safety in addition to cyber, geopolitical, and authorized, regulatory, and compliance points. A few of these dangers may affect engineering initiatives and selections in 2024.
Design Information requested Matthew Bey, senior world analyst for RANE, in regards to the present provide chain dangers that may very well be confronted this 12 months. (Bey additionally helped us out final 12 months.) Round this time annually, RANE shares the important thing world traits and constraints that would affect the 12 months forward.
What dangers are there to engineering materials provide chains around the globe, and what’s driving these dangers? Are there any explicit supplies of concern that may very well be tough for engineers to acquire?
Bey: The 2 most important dangers for engineering materials provide chains in 2024 are more likely to be delivery delays and challenges and elevated restrictions—primarily by China—on uncooked supplies. Heading into 2024 there are two important bodily provide chain challenges within the world delivery trade. The primary is a drought in Central America that has led to low waters within the Panama Canal, forcing authorities to scale back transit considerably to preserve water. These restrictions have triggered delays, significantly for dry bulk shipments (similar to iron ore, coal, and so forth.), as ships have longer wait instances or are utilizing longer transit routes. The second has been the Houthi militant group’s assaults on delivery within the Crimson Sea, which has led most container delivery firms to shift to utilizing the longer route round Africa to succeed in Europe and North America. Lastly, subsequent 12 months we may additionally see labor points in america affecting Gulf and East Coast ports because the Worldwide Longshoremen’s Affiliation on the finish of September may search important concessions from port operators, given the success that unions have had in 2023.
China (in addition to different nations) has considerably elevated export controls on uncooked supplies amid rising financial nationalism and strategic competitors. Already China has restricted gallium, graphite, and germanium exports and will widen the web to incorporate uncommon earths and different supplies the place China is dominant in subsequent 12 months. Furthermore, China has additionally positioned restrictions on expertise used for uncommon earth processing, which may disrupt firms plans to provide uncommon earth merchandise outdoors of China, like magnets. Challenges in securing these items caught in the course of geopolitics are more likely to solely enhance in 2024.
Do considerations about local weather change and/or any pending laws current any dangers to the engineering and manufacturing communities?
Bey: In 2024 the largest give attention to local weather change shall be many nations rewriting their nationally decided contributions by the tip of the 12 months underneath the Paris Settlement. Following the so-called International Stocktake at COP28, which discovered that world nations had been removed from hitting their targets underneath the settlement, local weather negotiators agreed to revise NDCs one 12 months sooner than anticipated. As such we’re more likely to see extra plans introduced by governments in 2024. Nevertheless, regardless of this it’s also value noting that america’s polarized political surroundings will result in much more anti-ESG—together with vitality transition targets—insurance policies by Republicans, significantly on the state degree the place Republicans at the moment have extra energy.
What threats do authentic gear producers face around the globe?
Bey: Along with provide chain challenges, OEMs will proceed to see a rise in provide chain necessities and export controls stemming from Sino-American competitors subsequent 12 months. The Biden administration is, for instance, contemplating new tariffs on Chinese language EVs, battery expertise, and different inexperienced expertise along with new tariffs on non-strategic items. As each the Republicans and Democrats try to show they’re robust on China, the White Home could lastly transfer ahead with long-delayed plans on sure points, like adjustments to tariffs in an effort to indicate that it’s taking a powerful stance on China.
Does the rise of Business 4.0, automation, robotics, and synthetic intelligence pose any dangers to engineering and manufacturing communities?
Bey: The rise of AI and automation creates new challenges for firms from a cybersecurity and regulatory perspective. The rise of ChatGPT particularly will result in a raft of recent proposed laws, together with the EU AI Act, in 2024 that may have an effect on AI techniques nicely past simply generative AI. Generative AI’s emergence will speed up laws on different AI techniques. This implies for 2024, engineering and manufacturing groups must intently watch regulatory and compliance developments.
Do inflation and rising rates of interest pose any dangers to the engineering and manufacturing communities?
Bey: In 2024 rates of interest are more likely to begin coming down considerably as inflation slows and will get nearer to central financial institution targets. Whereas this may assist engineering and manufacturing firms borrow to extend funding and ease inflation on home prices (and for his or her gross sales), it may result in a weaker greenback, significantly to the yen. A weak greenback will assist U.S. manufacturing exports however will scale back buying energy for imported supplies, elements, and gear.
Are there every other dangers impacting the engineering and manufacturing communities?
Bey: This 12 months is basically a 12 months of world elections, with quite a few vital nations scheduled or more likely to maintain elections. Whereas the massive focus shall be on america election for apparent causes, the European Union, United Kingdom, South Africa, Indonesia, India, and Mexico are all holding elections as nicely. Every current their very own distinctive dangers that would have an effect on regulatory coverage in addition to in some nations provide chain dangers, such in South Africa the place the ruling African Nationwide Congress could also be compelled to rule as a minority authorities for the primary time and cope with important demonstrations that would have an effect on its mining—and crucially platinum mining—sector.
Are there any markets which can be most susceptible to any of those dangers? (Automotive, client electronics, medical, meals/agriculture, vitality, or others?)
Bey: Industries closest to nationwide safety—excessive expertise, semiconductors, aerospace, and automotive industries—are more likely to be probably the most susceptible to those dangers, significantly because the U.S. and China give attention to them.
How ought to engineers and producers shield themselves in opposition to these dangers in 2024?
Bey: Given the number of dangers firms face this 12 months, firms must be placing into place complete enterprise threat administration methods going past conventional focuses on monetary, compliance, and safety dangers, as geopolitical dangers are extra often the foundation reason for different dangers that firms are extra accustomed to.
