Recently, head of BofA Global Research, Candace Browning authored an article in Barron’s based on the theme centered on the cost of remaking supply chains. She describes how Covid-19 has exposed fault lines in the global supply chain by highlighting BofA’s new study which finds companies in over 80% of global sectors have experienced disruptions in their supply chains during the pandemic.
While disruptions from Covid have acted as an accelerant, she believes the underlying structural reasons are grounded in a tectonic shift to “stakeholder capitalism” where corporations focus on shareholders’ interests, as well as a broader community of consumers, employees, and the state. Candace explains that although the reshoring proposition is accompanied by some trepidation about higher costs, surprisingly our headline conclusion is that it would be manageable.
In fact, her team believes that a $1.0 trillion capex cycle could substantively remake supply chains without a prohibitive impact on corporate profitability.