Global production post Covid-19: Assessing the geographical restructuring of firms and industries in global production networks (Covid19-GPNs)

The Covid-19 pandemic disrupted the functioning of global systems of outsourced and offshored production known as ‘global production networks’ (GPNs). Factory slowdowns and shutdowns worldwide led to job losses, revised firm strategies, and new government policies. Covid-19 disruptions to GPNs have been severe and unprecedented in many ways. The project aims to understand how and to what extent the Covid-19 crisis, and now increasing geopolitical tensions due to the US-China trade and technology conflict, but also due to the Russian war on Ukraine and energy concerns, will lead to geographical restructuring of GPNs. The focus of the project is to examine changes in lead firm strategies on global production and supplier relationships and how these changes are affected by government policies and digitalisation opportunities.

The Covid-19-GPN project uses a multi-disciplinary theoretical framework that combines the GPN approach from economic geography with the concept of company production models and the role of technological change from industrial sociology, and a political economy lens on government policies. The project will carry out in-depth case studies of lead firms and their suppliers in the GPNs of three interconnected global industries - automotive, electronics, and logistics. Empirical research will be conducted in Germany which is a key host and home location within the European Union (EU) of lead firms in these industries and in Poland for the global automotive industry, and Vietnam and Malaysia for the global electronics industry. These locations are increasingly becoming tied to regional hubs of production. Research findings will contribute empirically to understanding changes to lead firm strategies and their consequences for geographies of production in response to the (post) Covid-19 crises and to advancing multi-disciplinary theorizing on geographical restructuring of global production triggered by an unprecedented global crisis.

The empirical objective of the project is to analyse the interactions of:
1) the near and long- term responses to the Covid-19 crisis and their impacts on lead firms and first-tier and lower tier suppliers in the automotive and electronics industry GPNs and the logistics industry;
2) government crisis and industrial policies which influence lead firm strategies and their relationships with suppliers in GPNs; and
3) the influence of digitalisation opportunities through automation and the digitalisation of supply chains on the restructuring of geographies of production.

The theoretical objective is to conduct a multi-disciplinary analysis of the combined effect of four variables – lead firm strategies, lead firm-supplier relationships, government policies, and technological change – for a comprehensive understanding of the restructuring of geographies of production through offshoring, reshoring and/or nearshoring in response to global crises.

The project brings together researchers from WZB, Helmut Schmidt University, and Bard College Berlin.

Within the project, the WZB is primarily concerned with changes in global production networks in the wake of the Covid 19 crisis:

The Covid 19 crisis caused sensitive disruptions to global and regional supply chains, the consequences of which continue to plague economies even after contact restriction measures have ended. Meanwhile, the consequences of the pandemic overlap with other geopolitical and economic shocks that challenge established forms of cross-border economic activity.

This project, funded by the German Research Foundation, investigates whether the pandemic is leading to extensive spatial and structural changes in global production networks. Particular attention is paid to the question of whether digitalization and a reorientation towards nation-state industrial policy favor more intra-regionally oriented production networks. Explorative case studies and quantitative surveys will be used to identify the means by which companies increase the resilience of their supply chains and the resulting effects on the geography of global production networks. The interdisciplinary study, which combines knowledge from political economy, industrial sociology and economic geography, focuses on the automotive and electronics industries as well as logistics.

The project receives guidance from an Advisory Board whose members are:

• Prof. Dr. Antonio Andreoni, Professor of Development Economics at the School of Oriental and African Studies, London
• Prof. Dr. Bolesław Domański, Professor of Economic Geography at the Institute of Geography and Spatial Management of the Jagiellonian University, Krakow 
• Dr. Robyn Klingler-Vidra, Reader in Entrepreneurship and Sustainability at King’s Business School
• Prof. Dr Stefan Ouma, Professor of Economic Geography, Chair of Economic Geography, University of Bayreuth
• Prof. Dr. Sabine Pfeiffer, Professor of Technology, Labour and Society, Friedrich-Alexander University Erlangen-Nürnberg
• Assoc. Prof. Dr. Cornelia Staritz, Tenure Track Professor of Development Economics, University of Vienna