FuelCell Energy, Inc., one of the global leaders in fuel cell technology, has faced a harsh economic decline this past year. Despite the consistent growth of interest in renewable energy, COVID-19 has halted the development of these technological advancements and damaged existing renewable energy companies. Over the past eleven months, the value of FuelCell Energy, Inc. (FCEL) has dropped from $26.20 per share down to $7.29 as of Friday, December 3. Even still, the stock remains overvalued and bearish, in the perspective of investors. So how does a company, which has a current contract with NASA and high demand for their product, lose so much value in such a short period of time? This question leads to a more broad, international, issue that the world is currently facing – supply chain disruptions.
This supply chain disruption affects all manufacturing industries. If the product you make doesn’t require overseas materials, chances are the machines that build your product do. Although, in the grand scheme of things, such a disruption does little to influence the trajectory of technological advancement, it does reveal a fatal flaw in the current state of the manufacturing industry. Although most people know of this issue due to the chip shortage, which delayed the production of cars, computers, and most notably phones, it festers in far more sectors of the industry. As mentioned previously, even manufacturing plants that use domestic materials for production, of which there are very few, have often been unable to purchase new machinery, limiting production and sometimes halting it all together. Then, as a result, they are unable to keep up with demand for their manufactured goods, which leaves buyers waiting for months, or indefinitely. The buyer, as a result, must also delay their own manufacturing as they wait for the necessary goods from the seller. This cycle can continue and cause extensive delays and further disruptions in the manufacturing industry as a whole. For as long as required materials come from a single supplier, these sort of issues will continue to damage the industry. Without a functioning manufacturing industry, a nation is completely dependent on imported goods and technology. But what truly makes this issue so important is not the consequences now, or even the threat of future impacts, but the reason why such a disruption could occur at all.
It seems as if there was a perfect storm of calamities that caused this economic disruption. What started as just a lockdown, which was severe in its right, has bloomed into a complete economic crisis. Shortages, such as the chip shortage and the cargo ship congestion in China, in combination with China’s sudden economic decline has left the U.S. scrambling for the necessary imported goods to keep its economy on its path towards recovery. Clearly, the U.S. is relying heavily on China for all of these necessary goods to come at a constant, uninterrupted, rate. What at first seemed like a symbiotic relationship, is very quickly turning into a fatal threat against the U.S. As China expands into Africa and Taiwan, it is clear they aim to control the manufacturing and distribution of both rare earths and microchips. If successful, China would have complete control over the U.S. manufacturing industry, therefore gaining total dominance over the rate of technological advancements in the United States. Furthermore, should it reach this point, it would be too late for the U.S. to intercept China’s goal as they will have obtained too strong a hold over the industry. This reveals a vulnerability in the U.S. economy, one that is already being exploited.
So what does all of this mean for companies like FuelCell Energy? Well, it is necessary to decentralize manufacturing plants, moving them overseas. FuelCell Energy already has manufacturing plants in Germany and power plants in South Korea. If the U.S. wishes to retain it’s manufacturing industry, it must start addressing the economic misstep that is the U.S.-China trade deal. But it does not appear that the U.S. government is concerned with this issue. As of November 24, 2021, President Biden advanced Trump’s “Phase One” trade deal as China agreed to purchase an additional $200 dollars in U.S. goods and services – further strengthening China’s hold over the U.S. economy. It seems as if the U.S. is moving away from manufacturing and, as a consequence, losing control over the rate of technological advancements, only hosting tech companies who manufacture their goods abroad. This is not necessarily a bad thing, but it is important that the U.S. government recognizes and speaks about the implications of such a decision. In order to promote a financially stable future for the country, it is necessary that the government explain the economic goals to the people. Without this sort of communication, the U.S. economy, and individual consumers, could suffer greatly.
