The current hard recession will severely test globalization.
Will countries try to protect their worker's jobs? Will they protect industries that are starting to fail? Will they start to impose tariffs and 'local content' provisions in laws and contracts?
Yes, yes and yes. They cannot politically do otherwise.
Even if just a few countries embark on protectionist paths, other countries will need to respond to these new rules or they will lose market-share, large parts of industries, and many jobs.
What is true for the pharmaceutical industry, below, i.e. offshoring manufacturing as well as most other attendant work including design, development and managing of manufactured products exposes countries to economic and political weakness and turmoil.
This process is affectinghas been ongoing and expose almost all other industries as well.
Computer technology .... aircraft manufacturing ... car and truck manufacturing ....clothing ... etc. What is made in the USA (or the West) anymore? Even in food production where the economic mantra has been the same , repeated ad nauseum, 'allow the lowest-cost producer to take over the industry. This will be good for the global economy'.
In a perfect world where all societies are in-sync politically, philosophically and religiously, this might work, but not in the fragmented world we currently live in.
While the effects of economic warfare may be critical in pharmaceuticals, what would the effect be if used with food?
We are already seeing this type of scenario played out with Russia which has Europe in a serious stanglehold because of it's control of a significant part of their energy needs.
Globalization has actually created , in our current severe economic downturn, greater instability with the promise of social upheavals and war.
Drug Making’s Move Abroad Stirs Concerns
WASHINGTON — In 2004, when Bristol-Myers Squibb said it would close its factory in East Syracuse, N.Y. — the last plant in the United States to manufacture the key ingredients for crucial antibiotics like penicillin — few people worried about the consequences for national security.
“The focus at the time was primarily on job losses in Syracuse,” said Rebecca Goldsmith, a company spokeswoman.
But now experts and lawmakers are growing more and more concerned that the nation is far too reliant on medicine from abroad, and they are calling for a law that would require that certain drugs be made or stockpiled in the United States.
“The lack of regulation around outsourcing is a blind spot that leaves room for supply disruptions, counterfeit medicines, even bioterrorism,” said Senator Sherrod Brown, Democrat of Ohio, who has held hearings on the issue.
Decades ago, most pills consumed in the United States were made here. But like other manufacturing operations, drug plants have been moving to Asia because labor, construction, regulatory and environmental costs are lower there.
The critical ingredients for most antibiotics are now made almost exclusively in China and India. The same is true for dozens of other crucial medicines, including the popular allergy medicine prednisone; metformin, for diabetes; and amlodipine, for high blood pressure.
Of the 1,154 pharmaceutical plants mentioned in generic drug applications to the Food and Drug Administration in 2007, only 13 percent were in the United States. Forty-three percent were in China, and 39 percent were in India.
Some of these medicines are lifesaving, and health care in the United States depends on them. Half of all Americans take a prescription medicine every day.
Penicillin, a crucial building block for two classes of antibiotics, tells the story of the shifting pharmaceutical marketplace. Industrial-scale production of penicillin was developed by an American military research group in World War II, and nearly every major drug manufacturer once made it in plants scattered throughout the country.
But beginning in the 1980s, the Chinese government invested huge sums in penicillin fermenters, “disrupting prices around the globe and forcing most Western producers from the market,” said Enrico Polastro, a Belgian drug industry consultant who is an expert in antibiotics.
Part of the reason these plants went overseas is that the F.D.A. inspects domestic plants far more often than foreign ones, making production more expensive in the United States.
“U.S. companies are more regulated and are under more scrutiny than foreign producers, particularly those from emerging countries. And that’s just totally backwards,” said Joe Acker, president of the Synthetic Organic Chemical Manufacturers Association. “We need a level playing field.”
The Bush administration spent more than $50 billion after the 2001 anthrax attacks to protect the country from bioterrorism attacks and flu pandemics; some of that money went to increase domestic manufacturing capacity for flu vaccines.
Even so, officials have said that during a pandemic the United States would not be able to rely on vaccines manufactured largely in Europe because of possible border closures and supply shortages. And the situation is similar with antibiotics like penicillin; researchers have found that during the 1918 flu pandemic, most victims died of bacterial infections, not viral ones.
The Centers for Disease Control and Prevention has a stockpile of medicines with enough antibiotics to treat 40 million people. If more are needed, however, the nation lacks the plants to produce them. A penicillin fermenter would take two years to build from scratch, Mr. Polastro said.
Dr. Yusuf K. Hamied, chairman of Cipla, one of the world’s most important suppliers of pharmaceutical ingredients, says his company and others have grown increasingly dependent on Chinese suppliers. “If tomorrow China stopped supplying pharmaceutical ingredients, the worldwide pharmaceutical industry would collapse,” he said.
Since drug makers often view their supply chains as trade secrets, the true source of a drug’s ingredients can be difficult or impossible to discover. The F.D.A. has a public listing of drug suppliers, called drug master files. But the listing is neither up to date nor entirely reliable, because drug makers are not required to disclose supplier information.
One federal database lists nearly 3,000 overseas drug plants that export to the United States; the other lists 6,800 plants. Nobody knows which is right.
Drug labels often claim that the pills are manufactured in the United States, but the listed plants are often the sites where foreign-made drug powders are pounded into pills and packaged.
“Pharmaceutical companies do not like to reveal where their sources are,” for fear that competitors will steal their suppliers, Mr. Polastro said.
China’s position as the pre-eminent supplier of medicines is a result of government policy, said Guy Villax, the chief executive of Hovione, a maker of crucial drug ingredients with plants in Portugal and China.
The regional government in Shanghai has promised to pay local drug makers about $15,000 for any drug approval they garner from the F.D.A. and about $5,000 for any approval from European regulators, according to a document Mr. Villax provided.
“This shows that there has been a government plan in China to become a pharmaceutical industry leader,” Mr. Villax said.
The world’s growing dependence on Chinese drug manufacturers became apparent in the heparin scare. A year ago, Baxter International and APP Pharmaceuticals split the domestic market for heparin, an anticlotting drug needed for surgery and dialysis.
When federal drug regulators discovered that Baxter’s product had been contaminated by Chinese suppliers, the F.D.A. banned Baxter’s product and turned almost exclusively to the one from APP. But APP also got its product from China.
So for now, like it or not, China has the upper hand. As Mr. Polastro put it, “If China ever got very upset with President Obama, it could be a big problem.”