WEBVTT - Bloomberg Businessweek Weekend-November 21, 2020 0:00:00.880 --> 0:00:06.200 This is Bloomberg Business Week with Pierrol Mazer from Bloomberg Radio. Hi, 0:00:06.320 --> 0:00:08.920 I'm Carol Masser. Welcome to the weekend edition of Bloomberg 0:00:09.000 --> 0:00:12.360 Business Week. It's week thirty six. Working from home for 0:00:12.520 --> 0:00:15.600 many still, although I was mostly in the office this week, 0:00:15.960 --> 0:00:17.800 but it was a week. It was a tough one 0:00:17.840 --> 0:00:21.000 where COVID nineteen deaths top two hundred fifty thousand in 0:00:21.040 --> 0:00:23.640 the United States. We did have some good news. Fisor 0:00:23.680 --> 0:00:26.400 and Maderna both had upbeat news when it came to 0:00:26.440 --> 0:00:29.880 a vaccine, and yet the world was reminded constantly that 0:00:29.920 --> 0:00:34.199 we still are in a health pandemic, probably well into one. 0:00:34.240 --> 0:00:36.840 With that in mind, our stories are highlights this week, 0:00:37.240 --> 0:00:39.600 mostly have a virus angle, but we do have a 0:00:39.600 --> 0:00:42.440 few surprises. So coming up this hour, you're going to 0:00:42.560 --> 0:00:44.880 hear from the CEO of Maderna and the CEO of 0:00:44.960 --> 0:00:48.199 Welcome Leap. You'll also hear from the chief epidemiologist at 0:00:48.200 --> 0:00:51.519 the Chinese Center for Disease Control and Prevention. Also the 0:00:51.520 --> 0:00:55.440 president CEO at Mahindra Agriculture of North America on who 0:00:55.520 --> 0:00:59.040 is buying tractors during the shutdown. You will be surprised. 0:00:59.320 --> 0:01:02.240 We begin the with the cover story of this week's magazine. 0:01:02.280 --> 0:01:04.760 The cover art alone, I've got to say, you've got 0:01:04.760 --> 0:01:06.360 to go online or check it out on the news 0:01:06.360 --> 0:01:09.920 stance because it really encapsulates our love affair with our 0:01:09.959 --> 0:01:12.920 pampered pets and how they are training all of us 0:01:13.240 --> 0:01:16.319 to use the online retailer of everything and anything for pets. 0:01:16.520 --> 0:01:19.960 We're talking about Chewy. Blumberg News Wealth reporter Ander's Melon 0:01:20.280 --> 0:01:23.200 and Bloomberg business Week editor Joel Webber joined us for more. 0:01:23.720 --> 0:01:26.160 It's a fun one, um. And this is one that, um, 0:01:26.360 --> 0:01:28.560 I think we were we've been interested in for a 0:01:28.560 --> 0:01:32.640 while because look like the staff of Business Week has 0:01:32.680 --> 0:01:35.080 a lot of cats and dogs at home, UM, And 0:01:35.319 --> 0:01:38.200 there have been acquisitions that were made during the pandemic. 0:01:38.880 --> 0:01:41.000 And if you have a dog and go to a 0:01:41.000 --> 0:01:43.280 dog park like I do, you also recognize that there 0:01:43.319 --> 0:01:45.920 were many, many, many more dogs in this neighborhood than 0:01:45.959 --> 0:01:48.520 there were before the pandemic. And one of the big 0:01:48.560 --> 0:01:52.600 beneficial areas of this has been Chewy, the online pet 0:01:52.640 --> 0:01:55.120 retailer that does pet deliveries. And that's what our stories 0:01:55.160 --> 0:01:57.520 about it is. And I gotta say, Joel, it's one 0:01:57.560 --> 0:01:59.600 of those things in the shutdown that as I would 0:01:59.600 --> 0:02:02.880 walk Ey dog Scout around the very quiet neighborhood, I 0:02:02.880 --> 0:02:05.400 would see boxes of things, and I often saw Chewy 0:02:05.480 --> 0:02:08.760 boxes on the curb. Yeah, and you know they're coming 0:02:08.800 --> 0:02:11.360 to our house to um. It's actually in one of 0:02:11.520 --> 0:02:13.520 our story meetings that turns out that you know, there's 0:02:13.520 --> 0:02:15.560 a lot of co op apartments in New York City 0:02:15.560 --> 0:02:19.040 that aren't supposed to have pets, and Chewy Boxes are 0:02:19.080 --> 0:02:25.359 outing them because it's like, oh, look delivery exactly. So 0:02:25.520 --> 0:02:27.680 the story of Chewi, though, I think it's it's one 0:02:27.680 --> 0:02:30.520 of these amazing ones because you know, the company has 0:02:30.520 --> 0:02:35.400 been around for for nine years. Uh started basically by 0:02:35.440 --> 0:02:38.400 a couple of guys who just realized they were going 0:02:38.440 --> 0:02:42.239 to get into the jewelry business and then realized, wait 0:02:42.280 --> 0:02:45.680 a second, there could be a bigger opportunity and pets, 0:02:46.280 --> 0:02:50.080 and they basically scrapped it out for nine years, and 0:02:50.120 --> 0:02:54.239 in the process of that sort of faded from the company, 0:02:54.280 --> 0:02:56.680 and the company now has a has a new CEO, 0:02:56.800 --> 0:03:00.560 and the story sort of starts with Andrew's crunching numbers 0:03:00.600 --> 0:03:04.880 and realizing that he's actually incredibly highly compensated. How how 0:03:04.960 --> 0:03:09.680 highly compensated is about a hundred eight million the twenty 0:03:09.720 --> 0:03:13.320 nine team. That's what brought me onto to this story. 0:03:13.080 --> 0:03:17.240 I am, we ran our highest paid CEOs list this 0:03:17.320 --> 0:03:20.920 summer and assume It's thing made a hundred eight million 0:03:21.000 --> 0:03:23.040 last year. And I turned to my editor and said, 0:03:23.040 --> 0:03:26.120 who in the world assume it's thing? And it turns 0:03:26.120 --> 0:03:28.560 out to see the CEO of Chewy And that's yeah, 0:03:28.639 --> 0:03:30.720 that's where it all started, right, And it's kind of 0:03:30.760 --> 0:03:32.920 like what is to Actually, we have a market guest 0:03:32.919 --> 0:03:34.800 who comes on and every time she's like, by Chewy, 0:03:34.840 --> 0:03:36.920 by Chewy, by Chewi. I mean, this is a business, 0:03:37.480 --> 0:03:39.560 you know, and you put it in the story on 0:03:39.720 --> 0:03:43.000 theres that it's very much kind of akin to Amazon 0:03:43.080 --> 0:03:47.360 and it's early days. Yeah, it really is. It's it's 0:03:47.360 --> 0:03:51.120 what sets it apart from Amazon. Amazon was a model 0:03:51.200 --> 0:03:56.040 for much of the the quickness, the ease, and the pricing. 0:03:56.200 --> 0:03:58.280 But what really sets Chew a part is the fact 0:03:58.320 --> 0:04:00.480 that you actually have a customer so is number to 0:04:00.560 --> 0:04:02.720 call and if you call it, there's a person that 0:04:02.800 --> 0:04:05.560 responds to you within six seconds and it's willing to 0:04:05.640 --> 0:04:08.560 talk to you four hours. If that's what you feel 0:04:08.600 --> 0:04:11.720 like about your pet, about pet food, about the fact 0:04:11.760 --> 0:04:14.960 that you know anything. I've heard stories of customer service 0:04:14.960 --> 0:04:17.560 agains have literally been on the phone for several hours 0:04:17.800 --> 0:04:22.039 with with pet owners that call in. One of the 0:04:22.040 --> 0:04:24.159 things Carol, that I think is really interesting about the businesses. 0:04:24.240 --> 0:04:27.960 You know, Amazon when it started, it had that one 0:04:28.080 --> 0:04:31.279 area of expertise that it just nailed, which was books. 0:04:31.360 --> 0:04:33.559 It was like, how do we bring as many books 0:04:33.560 --> 0:04:37.359 as we possibly can online? And do um e commerce 0:04:37.440 --> 0:04:40.560 says as a bookstore, right, And I think Chewy actually 0:04:40.640 --> 0:04:44.120 kind of like it's almost like they surveyed the landscape 0:04:44.160 --> 0:04:48.159 and said, what's the thing that we could have recurring 0:04:48.200 --> 0:04:52.800 payments with that Amazon hasn't thought to do yet, and 0:04:52.839 --> 0:04:54.720 how do we figure out what that is and then 0:04:54.800 --> 0:04:59.200 do it at warp speed effectively? And they recognize that pets. 0:04:59.200 --> 0:05:01.560 So this thing, it's a the number in the story 0:05:02.040 --> 0:05:07.520 nine billion dollars a year being spent by Americans on pets. 0:05:07.880 --> 0:05:10.200 If you could get one slice of that, it's a 0:05:10.279 --> 0:05:13.159 great business. And what they figured out was that there's 0:05:13.200 --> 0:05:15.440 a lot of things that you can do that are 0:05:15.480 --> 0:05:19.720 recurring payments, whether it's dog food deliveries or medications and 0:05:19.800 --> 0:05:22.520 all of those things are just cruise control. That's a 0:05:22.600 --> 0:05:25.919 subscription revenue model, and it has just allowed them to 0:05:25.960 --> 0:05:28.080 go sort of warp speed. And they were on a 0:05:28.120 --> 0:05:31.760 pretty good trajectory before the pandemic, and then the pandemic 0:05:31.800 --> 0:05:34.440 really played to it. And so Andrews tell us about 0:05:34.440 --> 0:05:37.520 what they how how they've really capital capitalized on everything 0:05:37.640 --> 0:05:41.000 this year. Yeah, they've already in the first two quarters 0:05:41.000 --> 0:05:43.520 they added more customers than in all of the prior 0:05:43.640 --> 0:05:48.560 fiscal years. And they're on track to finally turned EBIT 0:05:48.640 --> 0:05:52.159 down positive this year. And they are also on track 0:05:52.240 --> 0:05:55.640 to hit roughly seven billion dollars in revenue from if 0:05:55.640 --> 0:06:00.159 I don't misremember around four point nine. They're definitely a 0:06:00.160 --> 0:06:02.840 lot of growth during the pandemic. That was Bloomberg business 0:06:02.880 --> 0:06:05.719 Week editor Joel Weber and Bloomberg News Wealth reporter Ander's 0:06:05.800 --> 0:06:08.960 Melon on this week's cover story and why is the 0:06:09.040 --> 0:06:11.599 Year of the Pet? Check Out that full cover story 0:06:11.600 --> 0:06:13.760 and more great coverage in this week's issue of Bloomberg 0:06:13.800 --> 0:06:17.360 Business Week magazine. It is online, on newsstands and always 0:06:17.520 --> 0:06:20.400 on the Bloomberg Coming up, from pampered pets to giving 0:06:20.400 --> 0:06:24.120 commercial renters a helping hand during the pandemic, This is Bloomberg. 0:06:28.200 --> 0:06:32.760 This is Bloomberg Business Week with Garrol Masser from Bloomberg Radio. 0:06:33.279 --> 0:06:35.000 We'll bring you some of the highlights from our daily 0:06:35.080 --> 0:06:38.359 radio broadcast and podcast, and that included a conversation about 0:06:38.360 --> 0:06:41.000 real estate in a week where we saw many stories 0:06:41.040 --> 0:06:44.200 crossing the Bloomberg about central London rents plummeting as residents 0:06:44.200 --> 0:06:47.280 fell to suburbs, office workers wanting to keep working at home, 0:06:47.400 --> 0:06:50.360 just not every day. So with all of that in mind, 0:06:50.360 --> 0:06:52.440 we caught up with Pierre de Bas. He is co 0:06:52.560 --> 0:06:54.880 founder and managing partner of Romer Debas. It's a New 0:06:54.920 --> 0:06:58.120 York City based law firm specializing in real estate. He 0:06:58.160 --> 0:07:00.120 gave us an update on the hard hit retail in 0:07:00.160 --> 0:07:04.159 restaurant industries. The biggest issue that we're encountering, especially in 0:07:04.240 --> 0:07:07.159 you know, major cities around the country, is what's going 0:07:07.240 --> 0:07:10.920 to happen, um if the second wave continues going down 0:07:10.960 --> 0:07:14.720 this path, and how the local economies of densely populated 0:07:14.720 --> 0:07:18.000 cities which are not having that same level of density 0:07:18.200 --> 0:07:21.800 and the local demand coming from the workforce and from 0:07:21.840 --> 0:07:26.160 people who fled the city impacting local businesses UM. And 0:07:26.200 --> 0:07:28.600 I'll give you a good example. We're talking about one 0:07:28.640 --> 0:07:30.640 of one of the most important topics right now is 0:07:30.680 --> 0:07:33.800 retail and restaurant and what is the future retail restaurant 0:07:33.800 --> 0:07:35.400 look like? And how is that going to impact the 0:07:35.400 --> 0:07:37.840 commercial real estate market? And when you take a city, 0:07:37.840 --> 0:07:40.360 you say, take from Manhattan for example. You know, we're 0:07:40.400 --> 0:07:44.480 sitting here in midtown Manhattan and it's roughly depending where 0:07:44.480 --> 0:07:47.840 you read, ten to fourteen of the workforces back in 0:07:47.880 --> 0:07:51.239 the office. And you know, certain pockets of the city 0:07:51.560 --> 0:07:54.920 are not resident their commercial neighborhoods where they're unit probably 0:07:55.000 --> 0:07:58.200 office buildings, so on and so forth, not apartments where 0:07:58.200 --> 0:08:01.880 people live and reside. So what impact we're seeing is that, 0:08:02.080 --> 0:08:04.720 you know, what's that going to have on restaurants in 0:08:04.760 --> 0:08:09.240 particular and retail And you know how our landlords renegotiating 0:08:09.280 --> 0:08:11.880 rents to keep these businesses afloat, and what happens to 0:08:11.920 --> 0:08:15.160 the local economies if these businesses go under. Well, and 0:08:15.200 --> 0:08:17.240 help me out here, because you understand this industry. I 0:08:17.240 --> 0:08:19.320 mean I think about and I look around the neighborhoods 0:08:19.640 --> 0:08:21.360 as I go in and out of the city. I 0:08:21.400 --> 0:08:25.280 mean there's a lot of empty retail. Uh, there's a 0:08:25.320 --> 0:08:27.520 lot of boarding up of places, And I do wonder 0:08:27.640 --> 0:08:30.760 that you know, the retail of the restaurants that we lose, 0:08:31.560 --> 0:08:34.520 how long does it take for that to come back? 0:08:34.559 --> 0:08:37.160 I mean, restaurants, It's unbelievable the cycle, right we know 0:08:37.240 --> 0:08:40.199 it's a tough business, and yet we constantly see new 0:08:40.360 --> 0:08:44.480 entries on the market on the marketplace. But you understand cycles. 0:08:44.800 --> 0:08:46.480 You know, when we've got a really tough cycle like 0:08:46.520 --> 0:08:48.400 the one we're going through right now, how long does 0:08:48.400 --> 0:08:51.360 it take to build it back up? You know, with 0:08:51.400 --> 0:08:54.640 a restaurant's based in particular, That's what everybody is sitting 0:08:54.679 --> 0:08:56.959 here and speculating in terms of, you know what I'm 0:08:57.040 --> 0:09:01.480 renegotiating leases with landlords, I'm seeing completely different you know, 0:09:01.520 --> 0:09:04.760 opinions and tactics that landlords are using in responses in 0:09:04.840 --> 0:09:08.800 terms of tenant um, concession requests and renegotiations. And from 0:09:08.800 --> 0:09:10.600 my perspective, you know, if I'm looking at it from 0:09:10.679 --> 0:09:13.000 as a landlord, you know you want to keep these 0:09:13.200 --> 0:09:16.360 tenants and businesses afloat as long as possible because you 0:09:16.400 --> 0:09:17.600 know there will be a light at the end of 0:09:17.600 --> 0:09:19.480 the tunnel. We've had great news in the last two 0:09:19.520 --> 0:09:21.240 weeks in terms of you know, the progress of a 0:09:21.320 --> 0:09:24.600 vaccine and you know, you can see that life will 0:09:24.640 --> 0:09:26.839 have some semblance of normalcy in the next year or so. 0:09:27.320 --> 0:09:30.920 Um A long time though, right, that's a very long time. Note, 0:09:31.040 --> 0:09:32.680 it's a it's a it's a great point to bring up. 0:09:32.760 --> 0:09:34.480 That's a really long time next year. So you know, 0:09:34.520 --> 0:09:37.440 I say that in an optimistic tone with the you know, 0:09:37.480 --> 0:09:41.400 with it's in with negative news and reality. But you know, 0:09:41.480 --> 0:09:45.439 the question though to ask is that if that tenant vacates, 0:09:45.600 --> 0:09:47.800 when is there going to be a next someone else 0:09:47.800 --> 0:09:49.640 who wants to come in and start a restaurant in 0:09:49.679 --> 0:09:52.040 the middle of this, right, Like, that's the thing that's 0:09:52.080 --> 0:09:54.480 mind blowing to me is that you know you're gonna 0:09:54.520 --> 0:09:57.880 sit on that vacant, that space vacant for several years 0:09:57.880 --> 0:10:02.160 in my opinion, UM where reading that unless there's relief 0:10:02.559 --> 0:10:06.120 or a quick rebound in the market. You know, we're 0:10:06.120 --> 0:10:09.760 talking roughly up to two thirds of restaurants potentially going 0:10:09.880 --> 0:10:13.040 under UM in the New York City area. Now, you know, 0:10:13.240 --> 0:10:15.000 to you to answer your question terms of how long 0:10:15.000 --> 0:10:17.920 will that teach to recover? You know, and nobody knows, 0:10:18.000 --> 0:10:21.079 but we're talking years, We're talking you know that it's 0:10:21.120 --> 0:10:23.480 too much of an absorption rate. Well, you know, I 0:10:23.520 --> 0:10:26.800 do wonder too, Um, Pierre, did the financial crisis give 0:10:26.840 --> 0:10:28.320 us a little bit of a playbook on this. I 0:10:28.400 --> 0:10:30.960 know it's not the same type of crisis, Um, but 0:10:31.080 --> 0:10:32.800 it was a tough one and it lasted a long 0:10:32.840 --> 0:10:36.200 time and took use a long time to come back. Yeah, 0:10:36.440 --> 0:10:39.000 it certainly did. And and that's the most recent crisis 0:10:39.040 --> 0:10:41.480 to compare this too. And clearly you know, that had 0:10:41.720 --> 0:10:44.160 a financial ripple effect across all of New York City. 0:10:44.440 --> 0:10:47.440 But this is just so you know, it's this is 0:10:47.480 --> 0:10:50.640 impossible to find a point of comparison, you know, given them, 0:10:50.640 --> 0:10:54.840 we're talking a global health pandemic which is causing you know, 0:10:55.040 --> 0:10:58.760 the governor to intervene in cap capacity and restaurants, which 0:10:58.800 --> 0:11:01.800 is causing people to have, you know, the fear for 0:11:01.840 --> 0:11:05.000 their own health to go outside you and congregate with others. 0:11:05.360 --> 0:11:08.440 I mean, it's it's just drastically different. You know. Back 0:11:08.480 --> 0:11:11.480 in two thousand and eight, you know, clearly, Um, the 0:11:11.520 --> 0:11:13.600 city lost a lot of money, and there was you know, 0:11:13.679 --> 0:11:15.960 people did flee the city, but it was nowhere near 0:11:16.000 --> 0:11:17.959 the same exodus of people that have left the city 0:11:18.000 --> 0:11:20.440 as a result of the pandemic. Yeah, it's pretty remarkable. 0:11:20.480 --> 0:11:21.960 I mean, you could feel it in the city. You 0:11:22.040 --> 0:11:24.280 just can feel it. You know. It's interesting. What are 0:11:24.360 --> 0:11:28.720 kind of some of the um offerings that landlords are 0:11:28.840 --> 0:11:31.160 are are putting out for their tenants to kind of 0:11:31.240 --> 0:11:34.880 help them out in this time. You know, my favorite one, 0:11:35.040 --> 0:11:38.560 we are office renegotiated a lease for a restaurant tenant 0:11:38.640 --> 0:11:41.440 where um they're located in Rockefeller Center. So when you 0:11:41.480 --> 0:11:45.240 take the location, you know, the demographic that's going to 0:11:45.280 --> 0:11:48.719 the restaurant is either tourists or people who work in 0:11:48.760 --> 0:11:51.040 the area and are going to freak with the restaurant. 0:11:51.280 --> 0:11:55.480 It's not a residential neighborhood. So clearly that that that 0:11:55.559 --> 0:11:57.720 demographic is not in New York City right now. You're 0:11:57.840 --> 0:12:01.120 on tourists in the workforce, it's not here. So we 0:12:01.200 --> 0:12:04.640 renegotiate that specific um LESA and a couple of others 0:12:04.640 --> 0:12:07.760 where the rent for the next twelve months is ten 0:12:07.840 --> 0:12:11.640 percent of the gross receivables of the restaurant. So if 0:12:11.640 --> 0:12:13.960 the restaurant makes a hundred thousand dollars this month, the 0:12:14.040 --> 0:12:16.840 landlord gets ten thousand dollars. If the restaurant makes you know, 0:12:17.040 --> 0:12:19.880 fifty dollars next month, land or gets five dollars UM, 0:12:20.000 --> 0:12:22.520 And it's really a way for landlords to show vested 0:12:22.600 --> 0:12:26.960 interest in preserving you know, small businesses and maintaining some 0:12:26.960 --> 0:12:29.640 some semblance of cash flow right, which like we said, 0:12:29.640 --> 0:12:31.920 it's when are you replacing that tenant? And it's better 0:12:31.960 --> 0:12:34.400 than none. But do those tenants then have to peer 0:12:34.520 --> 0:12:36.840 make it up later on or is that just like listen, 0:12:37.440 --> 0:12:39.440 we understand you're not making a lot of money. This 0:12:39.480 --> 0:12:40.959 is what your rent is going to be for this month, 0:12:41.000 --> 0:12:42.440 and we're not going to try and come back later. 0:12:43.080 --> 0:12:46.160 You know, I'm seeing all different approaches. The most common 0:12:46.160 --> 0:12:48.120 one landlords will first come and say, we'll give you 0:12:48.200 --> 0:12:50.480 deferment and we'll tack it onto the back end. But 0:12:50.920 --> 0:12:53.440 like you said earlier, you know, restaurant business a tough 0:12:53.480 --> 0:12:55.720 business to begin with, even in good times, could they 0:12:55.720 --> 0:12:59.199 afford one point five times rent? So that's not viable 0:12:59.240 --> 0:13:03.000 for most. UM. Some are giving you know, rent relief 0:13:03.080 --> 0:13:07.160 and forgiveness. But you know, the smart ones are committing 0:13:07.200 --> 0:13:10.000 to something for the next six to twelve months, giving 0:13:10.040 --> 0:13:12.240 them something to keep them going UM and also have 0:13:12.360 --> 0:13:15.040 incentive to keep going and then seeing what the world 0:13:15.040 --> 0:13:18.320 looks like in reassessing UM. That's why you know, I 0:13:18.360 --> 0:13:21.320 love the idea of the fixed percentage of gross revenue 0:13:21.320 --> 0:13:23.360 for you know, twelve months time period. So I can 0:13:23.400 --> 0:13:25.559 talk to you from it, from perspective of a lawyer 0:13:25.600 --> 0:13:27.840 representing a number of businesses and also as a small 0:13:27.840 --> 0:13:30.920 business owner. You know, I I co founded their firm. 0:13:30.960 --> 0:13:34.080 We have about forty employees total, and I can tell 0:13:34.120 --> 0:13:38.000 you the people love working from home. They ideally, in 0:13:38.040 --> 0:13:40.320 a perfect world to have a hybrid model where you know, 0:13:40.400 --> 0:13:42.800 they have access to an office but aren't required to 0:13:42.800 --> 0:13:44.920 come in daily. And you know, if you would have 0:13:44.960 --> 0:13:47.600 asked me back in March when we first had the shutdown, 0:13:47.920 --> 0:13:50.000 you know, I'm I'm one of the few forty year 0:13:50.000 --> 0:13:51.880 olds who still writes check. So I'm a little bit 0:13:51.880 --> 0:13:55.959 of old school myself check occasionally, just occasionally to a 0:13:56.000 --> 0:13:58.000 couple of times of months, just for old time's sake. 0:13:58.160 --> 0:14:00.800 And you know, I I love coming in office. I 0:14:00.800 --> 0:14:03.320 I don't I personally don't like working from home. That's 0:14:03.400 --> 0:14:05.719 room or debas co founder and managing partner Pierre de 0:14:05.800 --> 0:14:08.040 Bass not liking working from home, but as we know, 0:14:08.520 --> 0:14:11.679 many do and they want flexibility. You are listening to 0:14:11.720 --> 0:14:14.520 Bloomberg Business Week coming up real estate figures out life 0:14:14.520 --> 0:14:17.360 in a pandemic, So too has the agg industry. And 0:14:17.400 --> 0:14:20.880 who knew homeowners they're buying tractors while stuck at home. 0:14:21.200 --> 0:14:28.960 That's coming up. This is Bloomberg. This is Bloomberg Business 0:14:28.960 --> 0:14:33.840 Week with Carol Masser from Bloomberg Radio. One of the 0:14:33.920 --> 0:14:36.760 areas impacted by COVID nineteen is one that was deemed 0:14:36.840 --> 0:14:39.640 essential during the health pandemic. We're talking about the global 0:14:39.680 --> 0:14:44.040 agricultural industry. A major player in that industry Mahindra, the 0:14:44.080 --> 0:14:47.120 conglomerate based in India, And like other companies which were 0:14:47.160 --> 0:14:51.000 initially shut down by the pandemic, Mahindra Agriculture North America 0:14:51.080 --> 0:14:54.280 got a surprise when business actually picked up. We got 0:14:54.280 --> 0:14:56.600 more on that from Vier and Popli, president CEO at 0:14:56.600 --> 0:15:00.480 Mahindra Agriculture North America. He was in Houston, US seeing 0:15:00.520 --> 0:15:03.560 a pretty large number of cases. And so everyone's, you know, 0:15:03.640 --> 0:15:05.800 it's pretty much like the rest of the country. Everyone's 0:15:05.880 --> 0:15:09.800 kind of bearing masks and kind of isolating themselves and 0:15:10.480 --> 0:15:12.920 living further and further out from everyone each other. And 0:15:13.120 --> 0:15:15.120 so at some level, somehow it seems to be working 0:15:15.160 --> 0:15:17.720 well for the tractor business. Well, let's talk about this 0:15:17.840 --> 0:15:19.440 I mean, first of all, if you could take me 0:15:19.480 --> 0:15:21.840 back to the spring, what was going on for you 0:15:21.920 --> 0:15:24.200 and your team at the company, And I'm curious, then 0:15:24.320 --> 0:15:26.840 kind of take us forward how things have evolved. But 0:15:26.920 --> 0:15:29.840 what was it like back in the spring. Well back 0:15:29.880 --> 0:15:32.240 in the spring, I think in March when this thing started. 0:15:32.280 --> 0:15:35.200 I think, like everyone else, we were completely panicked, and 0:15:35.560 --> 0:15:38.640 you know, we really pulled back, you know, went down 0:15:38.720 --> 0:15:42.320 the roads of shutting down the plants and manufacturing and 0:15:42.360 --> 0:15:45.800 the supply chain kind of froze. We had our own 0:15:45.960 --> 0:15:51.000 versions of layoffs and furloughs, but you know, you know, 0:15:51.040 --> 0:15:54.080 we tried to focus on then. But what we found 0:15:54.160 --> 0:15:57.080 was the retail industry suddenly took off somewhere towards the 0:15:57.160 --> 0:15:59.920 end of April. And I guess as people were spent 0:16:00.200 --> 0:16:02.880 more and more time and their farms and back in 0:16:02.920 --> 0:16:05.359 their homes, they were wanting to do more home improvement 0:16:05.440 --> 0:16:08.240 moving out. So we saw the tractor industry started to 0:16:08.280 --> 0:16:11.520 pick up pretty quickly, and uh so we had to 0:16:11.560 --> 0:16:13.400 figure a way to come back. And you know, we 0:16:13.440 --> 0:16:16.320 started the same thing, which is temperature checks, you know, 0:16:16.400 --> 0:16:19.440 split shift, slowly bringing people back, putting in all the 0:16:19.440 --> 0:16:23.040 plastic barriers and separate and redesigning the production line and 0:16:23.080 --> 0:16:27.040 production flow through. So ever since that happened has just 0:16:27.120 --> 0:16:31.320 been momentum has been gaining. And so far the industries, 0:16:31.840 --> 0:16:34.800 you know, just the year to day, I think industries 0:16:34.880 --> 0:16:37.720 up twenty three. That's pretty remarkable. We'll talk to me 0:16:37.800 --> 0:16:41.120 a little bit um. You're about the demographics of who 0:16:41.160 --> 0:16:43.880 was buying because my understanding, my producer Paul Brenna was 0:16:43.920 --> 0:16:45.920 filling me a little bit earlier that I think seven 0:16:45.960 --> 0:16:49.080 percent of your sales were customers that actually never had 0:16:49.120 --> 0:16:55.880 owned a tractor before. Actually that's the people. Wow, okay 0:16:55.880 --> 0:16:58.440 we left out of zero. That's tremendous. I mean, first 0:16:58.440 --> 0:17:01.960 of all, what kind of tractor are they buy? So basically, 0:17:02.040 --> 0:17:04.760 we generally operate in the you know, the small track, 0:17:04.840 --> 0:17:09.640 the midland compact tractors that are between twenty two horseper 0:17:10.359 --> 0:17:13.919 and those are largely driven by you know, rural lifestyle 0:17:14.560 --> 0:17:17.840 small farms and the second tractor, a third tractor and 0:17:17.920 --> 0:17:20.439 a big farm. So they're not the really big road 0:17:20.480 --> 0:17:23.480 cropping tractors. They're smaller in size and they operate more 0:17:23.520 --> 0:17:28.600 in the large homeowners and rural lifestylers. A bit of 0:17:28.600 --> 0:17:32.040 a surprise for you to see that market come alive. Yeah, 0:17:32.080 --> 0:17:34.520 it was. You know, I think pretty much the whole 0:17:34.560 --> 0:17:38.040 industry has been caught by surprise. Uh we've seen you know, 0:17:38.119 --> 0:17:42.200 the industry inventory and the dealerships are down significantly obviously 0:17:42.240 --> 0:17:44.639 because of the huge demand, and you know, the supply 0:17:44.720 --> 0:17:47.720 chain being challenged, and you know, our ability to ramp 0:17:47.800 --> 0:17:50.280 up globally and get parts in has been a bit 0:17:50.280 --> 0:17:52.680 of a challenge. But now we're we're back on track 0:17:52.760 --> 0:17:55.720 and you know, being able to supply back in. But 0:17:55.840 --> 0:17:58.359 it was a big surprise. No, no, no, forgive me, 0:17:58.400 --> 0:18:01.480 I cut you have the supply chain. Was it problematic 0:18:01.480 --> 0:18:04.479 a little bit in the beginning, Oh, yes, it was. 0:18:04.840 --> 0:18:08.200 I think you know, with shipping shut down, ports, shut 0:18:08.240 --> 0:18:11.320 down factories all over the world, also going through their 0:18:11.359 --> 0:18:13.680 own world. You know, the pandemic is global, so it's 0:18:13.720 --> 0:18:16.720 not just one country that's impacted, right, So everything was 0:18:16.760 --> 0:18:20.000 shut down, so we had a tough time getting parts made, 0:18:20.040 --> 0:18:22.159 getting them moved, bringing them in. Then you know, the 0:18:22.160 --> 0:18:24.800 whole challenges of the local market of getting the workers in, 0:18:25.080 --> 0:18:28.040 getting them you know, protecting them and keeping them safe. 0:18:28.280 --> 0:18:30.280 And then even our dealers, you know, many of our 0:18:30.280 --> 0:18:33.400 dealers had to transition to this new environment, so helping 0:18:33.440 --> 0:18:35.960 them on the journey of digital marketing, helping them on 0:18:36.000 --> 0:18:39.200 the journey of safe delivery cleaning equipment. So there was 0:18:39.240 --> 0:18:42.359 a it was a pretty interesting and a lot of 0:18:42.400 --> 0:18:44.120 work to be done in the last six sad months 0:18:44.200 --> 0:18:45.800 that we had to go through. I hear and one 0:18:45.840 --> 0:18:47.840 thing I want to ask you, so Charlie Pallatt are 0:18:47.960 --> 0:18:52.200 our news broadcaster bringing that headline US covered nineteen deaths 0:18:52.240 --> 0:18:55.080 to two fifty thousand. That is according to Johns Hopkins, 0:18:55.080 --> 0:18:58.160 these are really troubling numbers. When you see these numbers, 0:18:58.200 --> 0:19:01.760 you know, and we're starting to see cities and certainly 0:19:01.800 --> 0:19:04.800 states are continuing to do rollbacks and shutting down parts 0:19:04.800 --> 0:19:08.000 of their economy. What do you think about and how 0:19:08.080 --> 0:19:10.159 might that impact your business? I mean, you guys have 0:19:10.240 --> 0:19:12.520 seen kind of a benefit as more people have been home. 0:19:12.600 --> 0:19:15.720 Do you anticipate then, in an odd way like we've 0:19:15.720 --> 0:19:17.680 seen with a lot of businesses, whether it was Netflix 0:19:17.760 --> 0:19:21.639 or some others or zoom Um or Peloton, that you 0:19:21.720 --> 0:19:26.560 will continue to benefit as a result. Well, you know 0:19:26.640 --> 0:19:29.080 it is it is a really sad situation and you know, 0:19:29.160 --> 0:19:34.240 every LifeLock is tough to deal with. Since the point 0:19:34.359 --> 0:19:36.680 is that the FED is announced. I think very a 0:19:36.760 --> 0:19:39.879 benign interest rate regime over the next twelve to eighteen months. 0:19:39.880 --> 0:19:42.359 So you know, money availability is there, and I'm hoping 0:19:42.400 --> 0:19:45.160 that you know, there will be one more stimulus announced 0:19:45.480 --> 0:19:48.440 fairly soon. And when these two come in, and if 0:19:48.480 --> 0:19:51.359 this trend continues, I guess you know, people are going 0:19:51.400 --> 0:19:54.000 to be stuck at home and you know, they need 0:19:54.040 --> 0:19:56.040 things to do. And yeah, I do think that the 0:19:56.080 --> 0:19:58.760 tractor industry will continue to do well, and you know, 0:19:58.800 --> 0:20:01.399 people will want to improve their homes or you know, 0:20:01.400 --> 0:20:03.240 you're also seeing a trend of people, you know, with 0:20:03.400 --> 0:20:07.400 this work from home, the concept of distance to distance 0:20:07.440 --> 0:20:10.119 has vanished. He's right, so many things have changed as 0:20:10.160 --> 0:20:13.679 a result of COVID. That's Mahindra Agriculture North America's CEO 0:20:13.720 --> 0:20:17.240 and president, Baron pop Late. You're listening to Bloomberg Business Week, 0:20:17.280 --> 0:20:21.000 Still Ahead, Never Again, preventing Tomorrow's health crisis from the 0:20:21.000 --> 0:20:26.200 Bloomberg New Economy Forum. This is Bloomberg. This is Bloomberg 0:20:26.280 --> 0:20:30.640 Business Week with GARYL. Masser from Bloomberg Radio. This week, 0:20:30.680 --> 0:20:34.200 Bloomberg hosted virtually it's third annual New Economy Forum. It's 0:20:34.200 --> 0:20:36.919 four days of virtual programming each day focusing on a 0:20:36.960 --> 0:20:40.520