ST. GEORGE — Implications of the Russia-Ukraine War and what that means for Southern Utah’s businesses and the future at large were topics at the heart of a discussion led by Aaron Starks, the guest speaker during a recent meeting of the St. George Area Chamber of Commerce.
“Any threat to democracy is a threat to us,” said Starks, who serves as the chief revenue officer for the Utah World Trade Center and managing director of Global Business Services.
Having worked for FranklinCovey for 10 years, Starks said he has had clients in Ukraine, adding that he oversaw the education division in Ukraine and worked to implement their products and programs in schools. But due to the current war, some of those schools have been destroyed and are no longer there.
Since Russia declared war on Ukraine on Feb. 24, the United States, the European Union and NATO countries have imposed some of the harshest sanctions in history. Gasoline prices are climbing, supply chains are being interrupted and Russia’s economy is crumbling. This act of war has a ripple effect on the global economy, Starks said, and local businesses are already feeling the impact.
Southern Utah will feel the impact of the Russia-Ukraine war through supply chains more immediately than anything else, he added.
“Ukraine last year outpaced the United States for the first time in history in the No. 1 corn producer in the world,” Starks said. “So start growing corn in your backyard, right?”
Ukraine is also a top exporter of wheat around the world. As such, Starks said the public should expect to see commodities like bread and bread-related products increase in price due to a scarcity in the market. Currently, Russia is the world’s top wheat exporter. Together with Ukraine, both account for roughly 29% of the global wheat export market.
Russia and Ukraine are also significant suppliers of metals and other commodities, which is tied to another way the war is expected to hit the local economy. The price of automobile components is expected to skyrocket due to the supply chain being interrupted. Shortages of palladium and aluminum are increasing, which are used in parts for wiring, harnessing the chassis and catalytic converters.
“The Ukraine war is impacting European car manufacturing,” Starks said. “For example, Volkswagen and BMW have been closing assembly lines in Germany due to the shortage of wiring harnesses manufactured in Ukraine by the German company Leoni.”
The cost of make-up is also expected to jump since sunflower oil is largely used in the production of cosmetics.
“There’s going to be a huge shortage because a lot of that was produced in Russia and Ukraine,” Starks said of sunflower oil. “Their environment allows for the growth of sunflowers, so this will impact cosmetics … in a big way.”
To alleviate some of Utah’s dependence on world trade, Starks said that one option is to reshore the supply chain, which would bring manufacturing and shipping closer to local areas.
“As a state, there are things that we’re going to start doing so that Utah is not dependent on the rest of the world,” Starks said. “We can stand on our own two feet independently, regardless of what’s happening with supply chains.”
Part of not depending upon others is to have Utah become an inland port versus depending upon cities worldwide that have ocean ports, Starks said.
According to the Utah Inland Port Authority website, 80% of Utah’s international containers come through California. Utah Inland agreements with the Ports of Oakland and Long Beach are critical first steps in improving cargo movement throughout the Intermountain West. These agreements optimize the rail connection between the coastal ports and Utah.
“By creating the UIPA, Utah has opened the way to become the ‘Crossroads of the World’, allowing the state to benefit from and help influence and be a leader in the global economy,” the website states.
Starks said eventually, the Utah Inland Port Authority could reach other parts of the state from northern Utah.
“The great thing about Utah business is we’re young. We feel young – we’re scrappy. We’re entrepreneurial,” Starks said.
Utah has a an environment where businesses can come and thrive, he said, adding that the state has a great tax structure and an educated and diverse workforce.
“So it’s no wonder that we have the strongest economy in our country, and the best managed and the lowest unemployment rate. And we speak more languages per capita than any other state in the country. As business owners and business leaders, all of you contribute to great things,” Starks said.
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