In late 2012, we created the Manufacturing Law Blog with the goal of providing our manufacturing clients with a holistic approach to the unique issues they face in their global operations. Starting in 2016, we began a new tradition of dedicating our first three posts of the year to a yearly outlook from our different vantage points.
This year, I’m starting us off by addressing corporate compliance and litigation issues that manufacturers might expect to face in 2022:
- Reshoring – Hype or a fundamental change? Yes, there will be reshoring, but I am not convinced that this trend will explode in 2022 as there are significant challenges for doing so particularly when the manufacturing involved is labor-intensive. That said, I do believe the attitude towards manufacturing domestically has changed throughout the supply chain during the COVID era.
- “Buy American” – Efforts to require manufacturers to buy domestically have been around for many years. Other countries are imposing “protectionist” laws to require more investment. I expect to see more foreign direct investment into the United States for this reason.
- Force Majeure – This legal phrase was the “word” of 2020-2021 as it offers a basis to excuse contractual performance. We are starting to see some of these cases work their way through the courts, and we will be watching closely to see if any of them has a lasting impact on manufacturers. You don’t need to be a lawyer to predict that the word “pandemic” will be in all force majeure clauses going forward.
- Acquisition Activity – There is no shortage of potential buyers of manufacturing companies, including strategic buyers and private equity buyers. There has been an increase in so-called proprietary deals (i.e., where one buyer negotiates exclusively) as opposed to auctions. I think this will continue in 2022.
- Creative Solutions to Supply Chain Issues – Everyone wants to talk about the supply chain crisis that is impacting both consumers and industrial companies. In 2022, I will be working with companies as they develop creative solutions to these issues. As an example, some companies are trying to find alternative ports of entry.