We’ve all seen the horrific scenes of the war on Ukraine and the reports of bombing civilian targets. There’s no question that the damage to infrastructure, buildings, industry and the citizens of Ukraine is devastating and will require many years to recover, if ever. Global supply chains are also being interrupted for anything that originates in Ukraine and Russia, or any business conducted in either country.
Sanctions imposed by the U.S. and European countries have had a profound effect on businesses and will most likely affect your global supply chains.
According to Interos, more than 2,100 U.S.-based companies have at least one tier-1 supplier in Russia, and 450 firms (U.S. and Europe) have tier-1 suppliers in Ukraine. But this is not where the real damage to supply chains is occurring.
More than 190,000 firms in the U.S. have tier-3 suppliers in Ukraine or Russia. Tier-3 suppliers provide much of the world’s raw materials including aluminium, neon gas and rare earth elements used in the production of all semiconductors and electronics. If raw materials are not available, this will stop or severely slow the manufacturing of all kinds of products worldwide. We are still reeling from the effects of the pandemic on semiconductors. Another question is—are we likely to experience even more shortages due to the unavailability of neon gas and rare earth elements?