1 00:00:02,480 --> 00:00:21,640 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Wall Street Week. 2 00:00:21,840 --> 00:00:25,799 Speaker 1: I'm David Western, bringing you stories of capitalism as Ukraine 3 00:00:25,960 --> 00:00:29,000 Speaker 1: enters the fifth year of its war with Russia. Contributed 4 00:00:29,040 --> 00:00:32,240 Speaker 1: Christiph Freeland travels to Kiev to report on the unintended 5 00:00:32,280 --> 00:00:35,760 Speaker 1: consequence of giving its tech industry a leg up. And 6 00:00:35,880 --> 00:00:38,800 Speaker 1: all those AI data centers are creating a golden age 7 00:00:38,800 --> 00:00:41,800 Speaker 1: for construction, but do we have the workers to meet 8 00:00:41,800 --> 00:00:46,640 Speaker 1: the demand. Plus tobacco tries yet another comeback, this time 9 00:00:46,680 --> 00:00:50,520 Speaker 1: with smokeless alternatives. The CEO of Philip Morris International makes 10 00:00:50,560 --> 00:00:53,320 Speaker 1: his case for why he thinks this time is different. 11 00:00:53,920 --> 00:00:56,680 Speaker 1: But we start with the conflict in Iran. It's a 12 00:00:56,720 --> 00:00:59,760 Speaker 1: geopolitical story and a personal story for many throughout the 13 00:00:59,760 --> 00:01:02,840 Speaker 1: Middle Least and the world, but it's also a story 14 00:01:02,880 --> 00:01:07,440 Speaker 1: with potential consequences for investors and economies. Lloyd Blankfeine lived 15 00:01:07,440 --> 00:01:11,120 Speaker 1: through several geopolitical upheavals during his time at Golden Sacks, 16 00:01:11,240 --> 00:01:14,760 Speaker 1: including as its chair and CEO. He's written of his 17 00:01:14,840 --> 00:01:18,399 Speaker 1: experiences in his new book street Wise, Getting to and 18 00:01:18,520 --> 00:01:22,039 Speaker 1: through Golden Sachs, and we welcome him now to Wall 19 00:01:22,040 --> 00:01:24,559 Speaker 1: Street Week. Congratulations on your new book. 20 00:01:25,200 --> 00:01:25,640 Speaker 2: Just out. 21 00:01:25,880 --> 00:01:28,520 Speaker 1: It is a book at least largely about risk management. 22 00:01:29,120 --> 00:01:31,720 Speaker 1: You have been a risk manager, Goldman Sachs has been 23 00:01:31,840 --> 00:01:35,760 Speaker 1: risk management. We now have new risk in the war 24 00:01:35,800 --> 00:01:38,960 Speaker 1: in Iran. If you were managing for that risk, how 25 00:01:39,000 --> 00:01:39,840 Speaker 1: would you manage it? 26 00:01:41,040 --> 00:01:46,160 Speaker 3: Well, Actually, the war itself is usually those things tend 27 00:01:46,200 --> 00:01:48,560 Speaker 3: to come and they tend to go. Look it could 28 00:01:48,560 --> 00:01:50,720 Speaker 3: be it could fall off the rails, that could close 29 00:01:50,720 --> 00:01:52,160 Speaker 3: the straight of horror moves for a long time. I 30 00:01:52,160 --> 00:01:53,760 Speaker 3: don't think that's going to happen. I don't think they 31 00:01:53,760 --> 00:01:56,560 Speaker 3: have the capacity. The Uranians have the capacity to do that. 32 00:01:57,000 --> 00:01:58,040 Speaker 2: But a lot of. 33 00:01:58,000 --> 00:02:01,360 Speaker 3: Bad things happen. My base case is that it should. 34 00:02:02,040 --> 00:02:04,760 Speaker 3: It will reflect the markets for a while, but not 35 00:02:04,800 --> 00:02:07,040 Speaker 3: for for but not forever, and maybe not even that 36 00:02:07,080 --> 00:02:10,840 Speaker 3: long a while. The price of oil will clearly be affected. 37 00:02:10,840 --> 00:02:13,080 Speaker 3: The oil is part of the supply chain, knock on 38 00:02:13,160 --> 00:02:16,120 Speaker 3: effects for other things. But I think we'll revert back 39 00:02:16,200 --> 00:02:18,720 Speaker 3: to all the anxieties that we had even before the 40 00:02:18,760 --> 00:02:22,000 Speaker 3: war started, and they were. It was an anxious market 41 00:02:22,120 --> 00:02:25,840 Speaker 3: and there were some fragility in the market even before that. 42 00:02:25,960 --> 00:02:30,480 Speaker 3: But I'm not the wars, you know. The wars is, 43 00:02:31,960 --> 00:02:34,880 Speaker 3: you know, is very, very important. It just may not 44 00:02:34,960 --> 00:02:38,639 Speaker 3: be that that enduring a problem for the markets, so. 45 00:02:38,680 --> 00:02:41,960 Speaker 1: Industryt wise, your book, you don't just emphasize the importance 46 00:02:41,960 --> 00:02:43,680 Speaker 1: of us measure. You take us sort of behind the 47 00:02:43,680 --> 00:02:47,080 Speaker 1: scenes of how you manage risk, how Goldmen Sachs manage risk. 48 00:02:47,600 --> 00:02:49,200 Speaker 3: The book book, The book is a lot about It's 49 00:02:49,240 --> 00:02:52,480 Speaker 3: a memoir. So I do start in my childhood in 50 00:02:52,520 --> 00:02:56,320 Speaker 3: the in the in public housing, in the projects, and 51 00:02:56,360 --> 00:02:59,720 Speaker 3: going through you know, you know, the culture shock of 52 00:02:59,840 --> 00:03:02,640 Speaker 3: going from there to to the Ivy League, and you know, 53 00:03:02,680 --> 00:03:04,640 Speaker 3: getting a bit of a torture from my roommates at 54 00:03:04,639 --> 00:03:10,560 Speaker 3: the time, and and those things. It ultimately is you know, appreciation, 55 00:03:10,680 --> 00:03:13,760 Speaker 3: my affection for what I think is a fantastic institution, 56 00:03:13,840 --> 00:03:16,800 Speaker 3: namely Goldman Sachs, which I know has a mystique in 57 00:03:16,840 --> 00:03:20,400 Speaker 3: the world. Some people might say famous, I might say notorious, 58 00:03:20,520 --> 00:03:23,480 Speaker 3: but always always involved in anything that that's happening in 59 00:03:23,480 --> 00:03:26,320 Speaker 3: the world, and especially involved in anything that's going wrong 60 00:03:26,639 --> 00:03:28,800 Speaker 3: time in the world, where people tend to focus on it, 61 00:03:29,600 --> 00:03:32,119 Speaker 3: and in the course of in the course of that 62 00:03:32,680 --> 00:03:36,280 Speaker 3: obviously go through the you know, once every four or 63 00:03:36,280 --> 00:03:39,800 Speaker 3: five years, crisis of the century, and so focus on 64 00:03:39,920 --> 00:03:42,560 Speaker 3: risk and you know, the moderation of risk, you know, 65 00:03:42,640 --> 00:03:47,040 Speaker 3: becomes very important. And in that you know, talk about 66 00:03:47,680 --> 00:03:49,960 Speaker 3: you know, we're Golden Sacks is known to be big 67 00:03:50,040 --> 00:03:53,720 Speaker 3: risk takers. Of course we were, but also the fact 68 00:03:53,720 --> 00:03:57,160 Speaker 3: of the matter is we were also very good risk managers, 69 00:03:57,480 --> 00:04:00,800 Speaker 3: which is a whole different exercise than going out and 70 00:04:00,840 --> 00:04:03,880 Speaker 3: taking risk for funding profit. There was also risk management, 71 00:04:04,160 --> 00:04:07,240 Speaker 3: whereby we tried to insulate ourselves as best as possible 72 00:04:07,240 --> 00:04:09,400 Speaker 3: for the things that could go the unexpected things that 73 00:04:09,440 --> 00:04:10,360 Speaker 3: would go wrong. 74 00:04:10,240 --> 00:04:12,200 Speaker 1: If you were managing the risk right now, as you 75 00:04:12,240 --> 00:04:14,000 Speaker 1: say you want to say, what's the best thing that 76 00:04:14,080 --> 00:04:16,320 Speaker 1: might come out? Is what's the worst thing? As you 77 00:04:16,360 --> 00:04:18,080 Speaker 1: think about it, what do those things look like? We 78 00:04:18,120 --> 00:04:21,440 Speaker 1: could have a reformed democracy in Iran, and being an ally, 79 00:04:21,480 --> 00:04:23,920 Speaker 1: I guess on an upside, but there's also a downside. 80 00:04:24,040 --> 00:04:26,880 Speaker 3: Look from a geopolitical point of view, very very important. 81 00:04:26,880 --> 00:04:28,920 Speaker 3: From market point of view, it might be less you know, 82 00:04:29,000 --> 00:04:32,640 Speaker 3: it might be it might be less important to don't forget. 83 00:04:32,640 --> 00:04:34,640 Speaker 3: We had a bit of a fragile market going into this, 84 00:04:35,120 --> 00:04:36,800 Speaker 3: so you know, there was a lot of anxiety about 85 00:04:37,120 --> 00:04:39,279 Speaker 3: the market. It is always anxious about something, but it 86 00:04:39,320 --> 00:04:43,839 Speaker 3: was anxious about credit having said that, we also don't 87 00:04:43,839 --> 00:04:47,560 Speaker 3: want to miss opportunities. And my base case, which I'm 88 00:04:47,600 --> 00:04:50,039 Speaker 3: willing to sacrifice our best case on a dime, and 89 00:04:50,120 --> 00:04:52,200 Speaker 3: you know, when things come up, my best case is 90 00:04:52,240 --> 00:04:56,200 Speaker 3: generally positive. You know, GDB is going well, filled with 91 00:04:56,240 --> 00:04:59,559 Speaker 3: anxiety that it might be getting soft because unemployment ticked 92 00:04:59,600 --> 00:05:01,720 Speaker 3: up a bit, but at the same time, growth is 93 00:05:02,480 --> 00:05:06,360 Speaker 3: going well, could go badly. Inflation is going in the 94 00:05:06,440 --> 00:05:09,159 Speaker 3: right direction, although we got a you know, slightly bad reaction, 95 00:05:09,240 --> 00:05:11,200 Speaker 3: but it's you know, pretty close to where we want 96 00:05:11,240 --> 00:05:15,240 Speaker 3: to be. Willing to change my mind in response to 97 00:05:15,279 --> 00:05:19,520 Speaker 3: other things. And into this market, we know we're going 98 00:05:19,560 --> 00:05:22,640 Speaker 3: to lower rates. We know a lot of fiscal stimulus 99 00:05:22,680 --> 00:05:26,039 Speaker 3: is coming from the government. Hyperscalers are spending, you know, 100 00:05:26,080 --> 00:05:28,040 Speaker 3: six hundred you know, the top ones are centering by 101 00:05:28,040 --> 00:05:30,400 Speaker 3: themselves six hundred and fifty billion dollars. That's another kind 102 00:05:30,400 --> 00:05:33,760 Speaker 3: of stimulus coming into the market. And so into a 103 00:05:33,800 --> 00:05:36,040 Speaker 3: market that's not doing so you know, an economy that's 104 00:05:36,080 --> 00:05:38,200 Speaker 3: not doing so badly, we're at in stimulus. Some of 105 00:05:38,200 --> 00:05:41,000 Speaker 3: my base cases that things are going well now before 106 00:05:41,520 --> 00:05:45,479 Speaker 3: I get the poison letters and everything. Of course, it's 107 00:05:45,520 --> 00:05:47,400 Speaker 3: going well for a lot of people and not going 108 00:05:47,400 --> 00:05:49,760 Speaker 3: well for others. You know, an economic system has to 109 00:05:49,800 --> 00:05:53,800 Speaker 3: do two important things. It has to generate wealth, which 110 00:05:53,839 --> 00:05:56,359 Speaker 3: our system is doing very very well now, and it 111 00:05:56,360 --> 00:05:59,560 Speaker 3: also has to allocate wealth distribute it according to the 112 00:05:59,600 --> 00:06:02,799 Speaker 3: values society, and it's doing less well in that regard. 113 00:06:02,880 --> 00:06:07,880 Speaker 3: So the current market is inflating, bringing up asset prices, 114 00:06:07,880 --> 00:06:10,160 Speaker 3: and if you are lucky enough to have assets, you're 115 00:06:10,160 --> 00:06:13,239 Speaker 3: getting richer, and if you're unlucky enough and you don't 116 00:06:13,240 --> 00:06:16,040 Speaker 3: have assets, you're not getting richer. And the gap between 117 00:06:16,040 --> 00:06:19,279 Speaker 3: the rich and the not rich is widening out. And 118 00:06:19,320 --> 00:06:21,800 Speaker 3: so you know, I have to acknowledge that, and you know, 119 00:06:21,839 --> 00:06:23,599 Speaker 3: we're seeing the evidence of that in terms of the 120 00:06:23,600 --> 00:06:26,880 Speaker 3: polarization of the country, which is unfortunate but kind of 121 00:06:26,880 --> 00:06:29,760 Speaker 3: predictable from the way things are going in the country, 122 00:06:30,120 --> 00:06:32,039 Speaker 3: and the political sector is going to have to deal 123 00:06:32,080 --> 00:06:32,360 Speaker 3: with that. 124 00:06:33,000 --> 00:06:35,600 Speaker 1: It looks like the account of overall is doing pretty well. 125 00:06:35,400 --> 00:06:36,800 Speaker 2: As you say to me, as a whole. 126 00:06:36,839 --> 00:06:39,920 Speaker 3: The macroeconomy is doing very very well in creating the wealth. 127 00:06:40,040 --> 00:06:42,800 Speaker 1: But you have said we're probably late cycle, and that 128 00:06:42,920 --> 00:06:46,799 Speaker 1: raises some questions about discipline. Do you manage risk differently 129 00:06:46,960 --> 00:06:48,360 Speaker 1: when you think you're late in the cycle. 130 00:06:49,160 --> 00:06:51,599 Speaker 2: Well, it's a funny concept of late in the cycle. 131 00:06:51,600 --> 00:06:53,640 Speaker 3: And I'm not sure how long the cycle has to go, 132 00:06:54,040 --> 00:06:55,840 Speaker 3: but I could tell you every day we get closer 133 00:06:55,839 --> 00:06:57,960 Speaker 3: to the end of it, it goes. That's a joke, 134 00:06:58,040 --> 00:07:00,360 Speaker 3: goes without saying that we get every day we get 135 00:07:00,360 --> 00:07:02,680 Speaker 3: closer to the end of it. But just think about this. 136 00:07:03,440 --> 00:07:06,320 Speaker 3: We haven't had a reckoning in a long time. 137 00:07:06,360 --> 00:07:08,360 Speaker 2: What do I mean? You know what's a reckoning. 138 00:07:08,600 --> 00:07:11,240 Speaker 3: We haven't had some disaster that forced people to sell 139 00:07:11,280 --> 00:07:14,000 Speaker 3: things that they didn't want to sell, you know, accumulate 140 00:07:14,080 --> 00:07:16,880 Speaker 3: cash capital, find out and have to discover what the 141 00:07:16,960 --> 00:07:22,040 Speaker 3: value of the inventories that they're accumulating in their balance sheet. 142 00:07:22,080 --> 00:07:22,960 Speaker 2: We haven't had that in. 143 00:07:22,920 --> 00:07:26,560 Speaker 3: A while, and the longer really not since the Global 144 00:07:26,560 --> 00:07:28,400 Speaker 3: financial christ that was a long time in two thousand 145 00:07:28,400 --> 00:07:30,560 Speaker 3: and eight was a long time ago. Usually we had 146 00:07:30,560 --> 00:07:32,600 Speaker 3: these things every four or five years. I could tick 147 00:07:32,640 --> 00:07:34,800 Speaker 3: through them. But we have them, and we haven't had 148 00:07:34,840 --> 00:07:37,480 Speaker 3: it for a long time. And you know, because we haven't, 149 00:07:37,680 --> 00:07:39,600 Speaker 3: the sheer fact that we haven't had it for a 150 00:07:39,680 --> 00:07:44,840 Speaker 3: long time means there's undoubtedly a lack of discipline. Interest 151 00:07:44,920 --> 00:07:47,120 Speaker 3: rates were very low for a long time, so investments 152 00:07:47,160 --> 00:07:51,640 Speaker 3: were made. You know, anytime the commodity is free, you're 153 00:07:51,640 --> 00:07:54,520 Speaker 3: not husbanding it and you're not disciplined about it. And 154 00:07:54,600 --> 00:07:58,240 Speaker 3: you know that there must be things out there that 155 00:07:58,640 --> 00:08:02,000 Speaker 3: nobody's been forced to sell, nobody's been forced a price discover, 156 00:08:02,560 --> 00:08:05,120 Speaker 3: and at some point the longer the reckoning takes, the 157 00:08:05,160 --> 00:08:07,680 Speaker 3: worse it's going to be. Again, my base case is 158 00:08:08,320 --> 00:08:11,320 Speaker 3: when did our back? But eventually it will come to 159 00:08:11,400 --> 00:08:15,120 Speaker 3: an end and people will have to take stock of 160 00:08:15,200 --> 00:08:18,920 Speaker 3: what the assets that they've been accumulating and had the 161 00:08:18,960 --> 00:08:21,600 Speaker 3: notion of what the value was. Those things are going 162 00:08:21,640 --> 00:08:23,640 Speaker 3: to have to pour into the market, probably at the 163 00:08:23,720 --> 00:08:24,640 Speaker 3: least convenient time. 164 00:08:25,280 --> 00:08:27,200 Speaker 1: One of the things you observed over the course of 165 00:08:27,240 --> 00:08:30,320 Speaker 1: your career and you talk about in the book is 166 00:08:30,400 --> 00:08:33,640 Speaker 1: the rise and at least retrenchment of globalization. You talk 167 00:08:33,640 --> 00:08:35,920 Speaker 1: about the fact that Thowas Freeman wrote the World is 168 00:08:35,960 --> 00:08:38,920 Speaker 1: Flat book, which looks a little antiquated right now. You 169 00:08:39,000 --> 00:08:41,760 Speaker 1: saw that in Age World, yeah, exactly, And you saw China. 170 00:08:41,800 --> 00:08:43,760 Speaker 1: Everybody thought China was going to surpass the United States 171 00:08:44,080 --> 00:08:46,680 Speaker 1: colored in tin the United States not working out. So 172 00:08:47,120 --> 00:08:49,480 Speaker 1: what does that mean? Sort of a multipolar world? 173 00:08:49,559 --> 00:08:52,320 Speaker 3: Loss from this is that you can't take anything for great. 174 00:08:52,320 --> 00:08:54,240 Speaker 3: I mean, you shouldn't take anything for great, and strange 175 00:08:54,240 --> 00:08:57,280 Speaker 3: things happen. And by the way, when sentiment shifts, it 176 00:08:57,320 --> 00:08:59,360 Speaker 3: affects your memory. You forgot what you used to think. 177 00:09:00,080 --> 00:09:03,360 Speaker 3: When I was starting out, you know, I went to 178 00:09:03,440 --> 00:09:06,600 Speaker 3: Wall Street in the in the kind of mid eighties, 179 00:09:06,880 --> 00:09:10,840 Speaker 3: early to mid eighties, and the idea of going to 180 00:09:11,040 --> 00:09:13,800 Speaker 3: China or Russia there's the middle of the Cold War 181 00:09:14,520 --> 00:09:17,480 Speaker 3: was crazy. Then of course it opened up. And the 182 00:09:17,960 --> 00:09:21,240 Speaker 3: idea that we'd ever be hostile to them, that they 183 00:09:21,240 --> 00:09:25,040 Speaker 3: wouldn't be joining, you know, the Western oriented capitalistic market. 184 00:09:25,400 --> 00:09:28,920 Speaker 3: You know, over time, that was crazy. Now it's not crazy. 185 00:09:28,960 --> 00:09:32,520 Speaker 3: I've seen these things shift, and with each shift you 186 00:09:32,600 --> 00:09:34,839 Speaker 3: kind of forget what you used to think. Because again, 187 00:09:34,880 --> 00:09:37,559 Speaker 3: when sentiment shifts, it's sort of a racis and reprograms 188 00:09:37,600 --> 00:09:40,520 Speaker 3: your memory. You think you always thought this. It could 189 00:09:40,600 --> 00:09:44,520 Speaker 3: yet change, it will yet change again. But it's you know, 190 00:09:44,559 --> 00:09:48,679 Speaker 3: it's very hard. People invested so much in their connections 191 00:09:48,720 --> 00:09:52,920 Speaker 3: in Russia and in China, and you know, something that's 192 00:09:53,000 --> 00:09:54,480 Speaker 3: not that turns out not to have been a prow 193 00:09:54,720 --> 00:09:56,320 Speaker 3: you know, very profitable enterprise. 194 00:09:56,679 --> 00:09:58,880 Speaker 2: But I believe that we'll come back again. 195 00:09:59,640 --> 00:10:01,560 Speaker 1: What is that mean for investors in terms of the 196 00:10:01,640 --> 00:10:05,439 Speaker 1: risk that they take as a globalized world riskier or 197 00:10:05,559 --> 00:10:07,200 Speaker 1: less risky than a multipoler rule. 198 00:10:07,240 --> 00:10:10,840 Speaker 3: Look, we found out that the world wasn't as integrated 199 00:10:10,920 --> 00:10:13,439 Speaker 3: and global as we thought. We had a lot of 200 00:10:13,520 --> 00:10:16,360 Speaker 3: data points. I'll give you a data point. The world 201 00:10:16,640 --> 00:10:21,000 Speaker 3: was integrating. Central banks were cooperating. You know, we used 202 00:10:21,040 --> 00:10:26,400 Speaker 3: to talk to talk about coordinated intervention and coordinated rate decisions. 203 00:10:27,000 --> 00:10:30,720 Speaker 3: In the global financial crisis, all of a sudden, when 204 00:10:31,240 --> 00:10:34,120 Speaker 3: governments had to fund their banking industry in some way 205 00:10:34,240 --> 00:10:36,480 Speaker 3: or had to deal with it, all of a sudden, 206 00:10:36,480 --> 00:10:37,600 Speaker 3: it stopped being so global. 207 00:10:37,920 --> 00:10:40,240 Speaker 2: It really mattered where. 208 00:10:40,640 --> 00:10:44,680 Speaker 3: An institution had its assets because the country in which 209 00:10:44,720 --> 00:10:47,520 Speaker 3: those assets were located. And we're talking about assets that 210 00:10:48,559 --> 00:10:51,360 Speaker 3: exist as electrons in some case. But where was it going? 211 00:10:51,400 --> 00:10:54,440 Speaker 3: And people kept on and it wasn't so global anymore, and 212 00:10:54,520 --> 00:10:56,640 Speaker 3: it was a little bit of beggar thy neighbor. COVID 213 00:10:56,720 --> 00:10:59,760 Speaker 3: was another example. We're a big global market, but guess 214 00:10:59,760 --> 00:11:03,080 Speaker 3: what it really mattered who had the vaccines first and 215 00:11:03,160 --> 00:11:05,920 Speaker 3: where they were manufactured. And people took care of their 216 00:11:05,920 --> 00:11:08,679 Speaker 3: own populations and then if anything was left over, they 217 00:11:08,720 --> 00:11:12,280 Speaker 3: went to their friends. And so the world turns out 218 00:11:12,400 --> 00:11:15,520 Speaker 3: not to have been as integrated as global as we thought. 219 00:11:16,040 --> 00:11:18,600 Speaker 3: And so you know, now we're just you know, kind 220 00:11:18,640 --> 00:11:20,640 Speaker 3: of acknowledging in that. And of course the rise of 221 00:11:21,280 --> 00:11:24,679 Speaker 3: you know, America first and other you know, in other 222 00:11:24,960 --> 00:11:30,199 Speaker 3: kind of nodes in the international organization. We're into that 223 00:11:30,240 --> 00:11:34,360 Speaker 3: period where it turns out supply chains matter, who has 224 00:11:34,480 --> 00:11:37,280 Speaker 3: the rare Earth's matter, and you sort of for a 225 00:11:37,320 --> 00:11:40,400 Speaker 3: matter of national security, better make sure you're not relying 226 00:11:40,440 --> 00:11:42,320 Speaker 3: on other countries and other parts of the world for 227 00:11:42,440 --> 00:11:44,520 Speaker 3: things that are existential to your well being. 228 00:11:46,520 --> 00:11:50,280 Speaker 1: Up next, Ukraine fights for its survival against Russia and 229 00:11:50,320 --> 00:11:53,000 Speaker 1: in the process puts its tech sector on the map. 230 00:11:53,360 --> 00:12:11,160 Speaker 1: Christian Friedland reports from Key. This is a story about 231 00:12:11,280 --> 00:12:14,880 Speaker 1: necessity being the mother of invention. The war in Ukraine 232 00:12:14,920 --> 00:12:18,520 Speaker 1: has passed the four year mark, with Russia doing enormous 233 00:12:18,600 --> 00:12:21,920 Speaker 1: damage to the country and its people. Our special contributor, 234 00:12:22,000 --> 00:12:26,239 Speaker 1: Christia Freeland, serves as an unpaid economic advisor to President Zelensky, 235 00:12:26,600 --> 00:12:29,000 Speaker 1: and when she traveled the Kiy, we expected to hear 236 00:12:29,040 --> 00:12:32,600 Speaker 1: about all the losses, but we didn't expect to learn 237 00:12:32,679 --> 00:12:35,840 Speaker 1: that there are also some ways the country may have benefited. 238 00:12:38,400 --> 00:12:42,480 Speaker 1: So Christia, you're working with President Zelensky to rebuild Ukrainian 239 00:12:42,640 --> 00:12:45,920 Speaker 1: economy after this war is over. As we look at 240 00:12:46,000 --> 00:12:48,720 Speaker 1: Ukraine right now, it looks like just pure devastation. But 241 00:12:48,840 --> 00:12:50,880 Speaker 1: as you work on that project, do you see some 242 00:12:50,920 --> 00:12:52,600 Speaker 1: bright spots, particularly in the tech sector. 243 00:12:53,120 --> 00:12:55,240 Speaker 4: I do, David, and I want to start by being 244 00:12:55,280 --> 00:12:59,200 Speaker 4: careful not to overstate my role. So I'm an unpaid 245 00:12:59,400 --> 00:13:03,520 Speaker 4: volunteer advisor. I don't have any executive authority, and I 246 00:13:03,520 --> 00:13:07,360 Speaker 4: want to be clear about that. Having said that, I 247 00:13:07,440 --> 00:13:11,200 Speaker 4: really believe in Ukraine. I think that Ukraine's fight is 248 00:13:11,240 --> 00:13:15,600 Speaker 4: actually the fight of the whole democratic world. And having 249 00:13:15,720 --> 00:13:19,480 Speaker 4: been there a lot in recent months, I think there 250 00:13:19,679 --> 00:13:23,360 Speaker 4: are tremendous economic opportunities. These are going to be important 251 00:13:23,360 --> 00:13:27,000 Speaker 4: for Ukraine because after the war, Ukraine doesn't have to 252 00:13:27,040 --> 00:13:31,160 Speaker 4: just rebuild. Ukraine has to transform itself. And I think 253 00:13:31,200 --> 00:13:35,000 Speaker 4: there are going to be some great investment opportunities. 254 00:13:35,280 --> 00:13:40,520 Speaker 1: So obviously Europe has been supportive of Ukraine, and Europe 255 00:13:40,559 --> 00:13:43,920 Speaker 1: needs its own defense build up besides Ukraine's spends build up. 256 00:13:44,080 --> 00:13:47,280 Speaker 1: To what extent is there integration happening between Ukraine and 257 00:13:47,320 --> 00:13:49,920 Speaker 1: the rest of Europe in tech, there. 258 00:13:49,840 --> 00:13:53,640 Speaker 4: Is a lot and what I have seen, and I 259 00:13:53,640 --> 00:13:55,720 Speaker 4: think this is something that has just happened over the 260 00:13:55,760 --> 00:14:00,160 Speaker 4: past six to twelve months, is a real transformation in 261 00:14:00,200 --> 00:14:03,280 Speaker 4: how Europe is looking at Ukraine. I would say at 262 00:14:03,320 --> 00:14:08,440 Speaker 4: the beginning of the war, Europeans saw Ukraine as you know, 263 00:14:08,600 --> 00:14:15,800 Speaker 4: kind of the righteous victim, as virtuous, as wronged, kind 264 00:14:15,840 --> 00:14:19,920 Speaker 4: of a charity case and important to support for those 265 00:14:20,000 --> 00:14:25,040 Speaker 4: moral reasons. I would say that today Europe is increasingly 266 00:14:25,120 --> 00:14:30,320 Speaker 4: seeing Ukraine as an important ally and a powerful ally. 267 00:14:30,680 --> 00:14:34,280 Speaker 1: What does Ukraine need the tech sector specifically to become 268 00:14:34,360 --> 00:14:37,560 Speaker 1: all it can be, as you rebuild the economy, as 269 00:14:37,560 --> 00:14:40,240 Speaker 1: you advise presidents of Linski, what do they need? Is 270 00:14:40,240 --> 00:14:40,760 Speaker 1: it capital? 271 00:14:40,760 --> 00:14:46,280 Speaker 4: Mainly money is the most important thing. I think that 272 00:14:46,360 --> 00:14:49,960 Speaker 4: we're going to see a lot of smart investors going in. 273 00:14:50,520 --> 00:14:54,960 Speaker 4: That has already started, and you know, it started slowly. 274 00:14:55,440 --> 00:14:58,840 Speaker 4: Twenty twenty five, the Ukrainian government estimates, you know, was 275 00:14:58,920 --> 00:15:02,640 Speaker 4: only just over one hundred million dollars of investment in 276 00:15:02,680 --> 00:15:05,880 Speaker 4: the defense tech sector. But there are now some company 277 00:15:06,000 --> 00:15:11,520 Speaker 4: Ukrainian defense companies emerging with multiple billion dollar valuations. 278 00:15:11,720 --> 00:15:16,360 Speaker 1: We've seen the use of technology for defensive purposes military purposes. 279 00:15:16,560 --> 00:15:19,720 Speaker 1: We also hear about dual use going beyond the defense 280 00:15:19,880 --> 00:15:22,640 Speaker 1: the military. What are the possible applications is you look 281 00:15:22,680 --> 00:15:27,160 Speaker 1: at it for Ukraine tech in actually civilian. 282 00:15:26,840 --> 00:15:30,480 Speaker 4: Use, you know, in a way, David, that's almost where 283 00:15:30,520 --> 00:15:35,600 Speaker 4: this all started. Even before the war, the Ukrainian government 284 00:15:35,880 --> 00:15:38,800 Speaker 4: had this idea that one of the ways that they 285 00:15:38,880 --> 00:15:41,920 Speaker 4: had to kickstart the economy, one of the ways that 286 00:15:41,920 --> 00:15:46,160 Speaker 4: they had to complete this as yet unfinished transformation from 287 00:15:46,160 --> 00:15:50,920 Speaker 4: effectively a Soviet economy to a modern Western market economy, 288 00:15:51,520 --> 00:15:55,800 Speaker 4: was through digitalization, and the government has been working on 289 00:15:55,840 --> 00:16:00,720 Speaker 4: that really really intensively. We think about Stone as a 290 00:16:00,800 --> 00:16:06,280 Speaker 4: super digital government. We think about India as having done 291 00:16:06,600 --> 00:16:09,920 Speaker 4: really really well there. I think the Ukrainians are starting 292 00:16:10,000 --> 00:16:12,640 Speaker 4: to nip at the heels of those two countries. They 293 00:16:12,680 --> 00:16:17,360 Speaker 4: have this application called Gia, which regular Ukrainians can use 294 00:16:17,680 --> 00:16:21,560 Speaker 4: to do pretty much everything they need to do with 295 00:16:21,680 --> 00:16:26,560 Speaker 4: the government, and the Ukrainians are now working on powering 296 00:16:26,680 --> 00:16:29,440 Speaker 4: GIA using AI agents. 297 00:16:29,680 --> 00:16:33,920 Speaker 1: Christia, you very recently visited Kiev again, and I know 298 00:16:34,000 --> 00:16:35,880 Speaker 1: you met with a woman who actually is on the 299 00:16:35,920 --> 00:16:38,720 Speaker 1: forefront of that digitalization for the government. Tell us about 300 00:16:38,720 --> 00:16:39,560 Speaker 1: her and what you learn. 301 00:16:40,800 --> 00:16:45,600 Speaker 4: Yeah, I had a wonderful conversation with a extremely young 302 00:16:45,640 --> 00:16:50,800 Speaker 4: woman called Negi Binlova, and she is one of the 303 00:16:51,520 --> 00:16:55,360 Speaker 4: young Ukrainians who I just find so inspiring. She works 304 00:16:55,400 --> 00:17:00,400 Speaker 4: in the Department of Digital Transformation and she is one 305 00:17:00,440 --> 00:17:04,040 Speaker 4: of the people whose job it is to provide as 306 00:17:04,160 --> 00:17:10,480 Speaker 4: many government services as possible to Ukrainians online and increasingly, 307 00:17:10,920 --> 00:17:16,040 Speaker 4: she says, they've moved from digitalization to agentization, which is 308 00:17:16,040 --> 00:17:22,600 Speaker 4: to say, bringing AI into the provision of services. When 309 00:17:22,640 --> 00:17:26,359 Speaker 4: did Ukraine start to really embrace digitization and why? 310 00:17:26,800 --> 00:17:29,760 Speaker 5: Yeah, I think that it all started back in twenty 311 00:17:29,960 --> 00:17:33,840 Speaker 5: nineteen when the Ministry of Digital Transformation was created, and 312 00:17:33,960 --> 00:17:37,760 Speaker 5: over this time we built plenty of projects. We created 313 00:17:37,800 --> 00:17:41,720 Speaker 5: the whole ecosystem was da not just being a digital platform, 314 00:17:41,760 --> 00:17:46,720 Speaker 5: but Dacity for businesses, dia Osuta for people to learn 315 00:17:46,800 --> 00:17:50,040 Speaker 5: digital skills. The Brave Onond platform, which is now related 316 00:17:50,119 --> 00:17:55,000 Speaker 5: to raising funds for the defense sector, is also everything 317 00:17:55,160 --> 00:17:57,679 Speaker 5: that is under the ministry. So we just realized that 318 00:17:57,720 --> 00:18:00,800 Speaker 5: we need to change that. But actually now our mission 319 00:18:00,920 --> 00:18:04,280 Speaker 5: has evolved and now we are moving from the digital 320 00:18:04,280 --> 00:18:07,280 Speaker 5: state to an argentic state, and for us, it's not 321 00:18:07,440 --> 00:18:11,080 Speaker 5: a distant vision. It's already a reality, it's already happening, 322 00:18:11,440 --> 00:18:14,920 Speaker 5: and we have some proofs that can highlight that that's 323 00:18:14,960 --> 00:18:16,120 Speaker 5: what happening right now. 324 00:18:16,359 --> 00:18:19,040 Speaker 4: Okay, explain what you've just said. What does it mean 325 00:18:19,119 --> 00:18:21,960 Speaker 4: to move from a digital state to an ergentic state. 326 00:18:22,400 --> 00:18:26,920 Speaker 5: An argentic state is the state where a government delivers 327 00:18:27,040 --> 00:18:34,560 Speaker 5: services actively, like anticipating citizens' needs basically, instead of going 328 00:18:34,920 --> 00:18:39,000 Speaker 5: and asking for plenty of documents, even by idea like 329 00:18:39,080 --> 00:18:43,199 Speaker 5: I need that, and that the agent can react to 330 00:18:43,480 --> 00:18:45,840 Speaker 5: your needs before you even have to ask. 331 00:18:46,600 --> 00:18:50,000 Speaker 4: What effect has the full scale Russian invasion had on 332 00:18:50,200 --> 00:18:51,760 Speaker 4: Ukraine's digital transformation? 333 00:18:52,680 --> 00:18:56,120 Speaker 5: I think that it had a tremendous effect on how 334 00:18:56,280 --> 00:19:00,640 Speaker 5: things sped up. On the one hand, Ukraine was already 335 00:19:00,720 --> 00:19:04,199 Speaker 5: moving quite fast, so we launched DA and it was 336 00:19:04,240 --> 00:19:07,760 Speaker 5: before the full scale invasion. We had this opportunity and 337 00:19:07,840 --> 00:19:10,199 Speaker 5: we had like a political will to move fast. But 338 00:19:10,320 --> 00:19:12,919 Speaker 5: when the full scale invasion started, we understood that for 339 00:19:13,080 --> 00:19:17,000 Speaker 5: us it's not just a question of leadership of technological leadership, 340 00:19:17,040 --> 00:19:20,480 Speaker 5: it's a question of national survival in a way. So 341 00:19:20,800 --> 00:19:25,000 Speaker 5: in my opinion, this full scale invasion invasion just made 342 00:19:25,000 --> 00:19:29,360 Speaker 5: things clear that we need to move even faster and 343 00:19:29,520 --> 00:19:32,920 Speaker 5: this phrase that I like to say, and that we 344 00:19:33,000 --> 00:19:35,960 Speaker 5: understood that we should take risks, we should start taking 345 00:19:36,000 --> 00:19:40,080 Speaker 5: more risks, and of course risks main taking responsibility. So 346 00:19:40,200 --> 00:19:43,239 Speaker 5: we started taking more responsibility for the new things that 347 00:19:43,320 --> 00:19:48,160 Speaker 5: we are creating and for us technologists and innovations in general. 348 00:19:48,200 --> 00:19:50,720 Speaker 5: We believe that this is the thing that can help 349 00:19:50,800 --> 00:19:55,840 Speaker 5: us win the piece and secure our economic growth and breakthrough. 350 00:19:56,200 --> 00:19:59,639 Speaker 4: Tell me a little bit about dada. 351 00:19:59,080 --> 00:20:04,359 Speaker 5: Okay is our flagman project. It's our super app. Basically, 352 00:20:04,480 --> 00:20:07,800 Speaker 5: it's a digital platform both on the portal and on 353 00:20:07,840 --> 00:20:12,719 Speaker 5: the app where we have our services. So currently Dya 354 00:20:13,200 --> 00:20:17,320 Speaker 5: has more than two hundred plus services available via portal. 355 00:20:17,480 --> 00:20:21,040 Speaker 5: So citizens can just log in, they should proceed where 356 00:20:21,119 --> 00:20:25,639 Speaker 5: they are identification process and they can find some information 357 00:20:25,840 --> 00:20:29,439 Speaker 5: about their needs, something that is related to what usually 358 00:20:29,480 --> 00:20:33,160 Speaker 5: governments provides to citizens. So basically everything that you can 359 00:20:33,359 --> 00:20:36,920 Speaker 5: think of which is related to public services. But I 360 00:20:37,040 --> 00:20:40,320 Speaker 5: wanted to add that if in the portal we have 361 00:20:40,840 --> 00:20:44,600 Speaker 5: like six plus million of users, soaplex plus million of 362 00:20:44,680 --> 00:20:50,159 Speaker 5: Ukrainians are using data base like every day on the app, 363 00:20:50,280 --> 00:20:53,879 Speaker 5: we have more than twenty three million of users. Because 364 00:20:53,920 --> 00:20:57,199 Speaker 5: people like using their phone, they can just access. We 365 00:20:57,280 --> 00:20:59,919 Speaker 5: have more than twenty three digital documents there. I have 366 00:21:00,200 --> 00:21:04,040 Speaker 5: my passport there, my international passport, my text number. If 367 00:21:04,080 --> 00:21:06,440 Speaker 5: I were to have a car, would have my car there. 368 00:21:06,520 --> 00:21:09,040 Speaker 5: If I were to have a children again, I would 369 00:21:09,080 --> 00:21:12,520 Speaker 5: have my children registered there. I even have the certificate 370 00:21:12,640 --> 00:21:16,720 Speaker 5: of a higher education there as well. And DA actually 371 00:21:16,880 --> 00:21:20,440 Speaker 5: was the first portal that created the opportunity to get 372 00:21:20,560 --> 00:21:24,240 Speaker 5: merit online. So Ukraine launched an online marriage and it 373 00:21:24,359 --> 00:21:27,840 Speaker 5: makes things way easier for people now that are separated 374 00:21:27,880 --> 00:21:32,200 Speaker 5: because of the war whileas somebody is on the front 375 00:21:32,240 --> 00:21:35,360 Speaker 5: line or somebody from the family had to move abroad. 376 00:21:35,720 --> 00:21:39,120 Speaker 5: So now it is possible for people to be together 377 00:21:39,720 --> 00:21:43,960 Speaker 5: just by if you clicks INDA without any requirements to 378 00:21:44,119 --> 00:21:45,920 Speaker 5: be present and to be on site. 379 00:21:46,320 --> 00:21:49,439 Speaker 4: And if I were to be Ukrainian and if I 380 00:21:49,480 --> 00:21:52,960 Speaker 4: had my documents on YIA, are they as good as 381 00:21:53,000 --> 00:21:53,719 Speaker 4: a hard copy? 382 00:21:54,080 --> 00:21:56,720 Speaker 5: Oh yes, they are definitely as good as hard copies. 383 00:21:56,760 --> 00:22:02,200 Speaker 5: So in Ukraine we almost never carry like physical documents 384 00:22:02,240 --> 00:22:02,840 Speaker 5: on us. 385 00:22:02,880 --> 00:22:05,800 Speaker 4: In many countries right now, when it comes to technology, 386 00:22:05,840 --> 00:22:09,439 Speaker 4: particularly when it comes to AI, people are getting worried. 387 00:22:09,600 --> 00:22:12,440 Speaker 4: They're getting worried that AI will take all the jobs 388 00:22:12,560 --> 00:22:16,119 Speaker 4: they're getting worried that maybe AI will control us all. 389 00:22:17,119 --> 00:22:20,480 Speaker 4: Do you have those worries? Do Ukrainians have those worriesh? 390 00:22:20,560 --> 00:22:23,160 Speaker 5: I think they do. I think everybody has those worries. 391 00:22:23,200 --> 00:22:25,600 Speaker 5: And if you look at the market now, there are 392 00:22:25,640 --> 00:22:29,920 Speaker 5: more and more EI specialists who are replacing or stepping in. 393 00:22:30,080 --> 00:22:33,359 Speaker 5: More jobs can be replaced in without even human intervention. 394 00:22:33,880 --> 00:22:36,680 Speaker 5: This is another revolution and we just have to get 395 00:22:36,760 --> 00:22:39,119 Speaker 5: used to that. And by getting used to that, I 396 00:22:39,320 --> 00:22:42,280 Speaker 5: do not mean to be passive or indifferent. I mean 397 00:22:42,359 --> 00:22:46,040 Speaker 5: to start actively getting more knowledge about how to work 398 00:22:46,080 --> 00:22:49,640 Speaker 5: with this thing. Of course, we cannot be confident one 399 00:22:49,680 --> 00:22:53,080 Speaker 5: hundred percent that everybody will accept that and everybody will 400 00:22:53,119 --> 00:22:56,040 Speaker 5: come will be comfortable with that, but it's been there 401 00:22:56,200 --> 00:23:01,200 Speaker 5: all the time when the Internet appear. People also we're 402 00:23:01,240 --> 00:23:03,280 Speaker 5: not sure how to use that and want to do 403 00:23:03,359 --> 00:23:06,000 Speaker 5: about it. But of course when it comes to risks, 404 00:23:06,000 --> 00:23:10,480 Speaker 5: we should be very careful here, extremely careful. And more 405 00:23:10,520 --> 00:23:13,720 Speaker 5: than that, we developed a unique framework which does not 406 00:23:13,840 --> 00:23:18,399 Speaker 5: allow users like citizens data to be transferred to the 407 00:23:18,400 --> 00:23:22,960 Speaker 5: cloud models, so personal data of our citizens always remains 408 00:23:23,040 --> 00:23:26,800 Speaker 5: within the DA perimeter, within our perimeter, so it is secure. 409 00:23:27,240 --> 00:23:31,400 Speaker 5: This hybrid approach allows us to keep the most sensitive 410 00:23:31,480 --> 00:23:35,160 Speaker 5: data in Ukraine by some parts of the data outside 411 00:23:35,200 --> 00:23:38,840 Speaker 5: of the Ukraine, because again it's a two way question. 412 00:23:39,280 --> 00:23:42,879 Speaker 5: It's not secure to have everything in Ukraine. At the 413 00:23:42,920 --> 00:23:45,679 Speaker 5: same time, we cannot allow like just PicTel companies have 414 00:23:46,320 --> 00:23:49,960 Speaker 5: all of our data coming up. 415 00:23:50,080 --> 00:23:53,639 Speaker 1: Tobacco has had a notorious history and been through more 416 00:23:53,760 --> 00:23:57,040 Speaker 1: than nine lives. Now it's making the case for satisfying 417 00:23:57,080 --> 00:24:12,119 Speaker 1: your tobacco habit, but this time without smoke. This is 418 00:24:12,160 --> 00:24:14,919 Speaker 1: a story about the many faces of a single vice. 419 00:24:15,400 --> 00:24:17,480 Speaker 1: For more than a century, tobacco has been one of 420 00:24:17,560 --> 00:24:20,919 Speaker 1: the most regulated industries in the global economy, and with 421 00:24:21,040 --> 00:24:24,240 Speaker 1: every new regulation it's come back in a different form. 422 00:24:24,840 --> 00:24:29,240 Speaker 1: Now tobacco firms are adapting again, sidelining cigarettes in favor 423 00:24:29,280 --> 00:24:33,399 Speaker 1: of smoke free products. They call it harm reduction and 424 00:24:33,480 --> 00:24:36,960 Speaker 1: are finding some business success, but critics say the long 425 00:24:37,080 --> 00:24:41,000 Speaker 1: term health effects are still unknown. Our colleague Michael McKee 426 00:24:41,160 --> 00:24:42,520 Speaker 1: takes us to Switzerland. 427 00:24:44,160 --> 00:24:46,960 Speaker 6: At a state of the art facility in New Chtel, Switzerland, 428 00:24:47,119 --> 00:24:50,560 Speaker 6: the world's biggest tobacco company is building a new future. 429 00:24:51,800 --> 00:24:55,640 Speaker 7: Nothing cigarettes for them in a museum. 430 00:24:54,720 --> 00:24:58,440 Speaker 6: Cigarettes are out and smoke free products are in. Now 431 00:24:58,480 --> 00:25:00,960 Speaker 6: consumed by more than one hundred milli million people around 432 00:25:00,960 --> 00:25:01,760 Speaker 6: the world. 433 00:25:03,320 --> 00:25:06,480 Speaker 7: Should have the cotars of the revenues coming from this product. 434 00:25:06,920 --> 00:25:09,520 Speaker 6: The products have also enjoyed a bit of a cultural. 435 00:25:09,080 --> 00:25:14,280 Speaker 2: Moment where there's smoke, there's just me vaping sins what zin? No, 436 00:25:14,520 --> 00:25:19,520 Speaker 2: everyone's sins. Zen is not a sin. That's the advertising, Kim, really, But. 437 00:25:19,520 --> 00:25:23,160 Speaker 6: The tobacco industry has been here before when cigarettes were cool, 438 00:25:23,760 --> 00:25:24,480 Speaker 6: until they weren't. 439 00:25:26,040 --> 00:25:30,280 Speaker 5: It's camel time, camel time, it's labor time for you. 440 00:25:31,160 --> 00:25:33,639 Speaker 8: So the early days of cigarettes, it was hard to 441 00:25:33,640 --> 00:25:35,920 Speaker 8: watch a movie without seeing someone holding a cigarette and 442 00:25:35,920 --> 00:25:36,560 Speaker 8: smoking it. 443 00:25:36,800 --> 00:25:40,080 Speaker 2: Bonb James Bond. 444 00:25:40,560 --> 00:25:42,000 Speaker 8: It was just a very commonplace. 445 00:25:43,320 --> 00:25:44,920 Speaker 2: Shall we just have a cigarette on it? 446 00:25:46,000 --> 00:25:46,200 Speaker 5: Yes? 447 00:25:47,720 --> 00:25:50,639 Speaker 8: The level of awareness was just not there. It was 448 00:25:50,720 --> 00:25:51,760 Speaker 8: culturally acceptable. 449 00:25:53,080 --> 00:25:55,520 Speaker 6: Ken sha is a Bloomberg analyst who has been covering 450 00:25:55,520 --> 00:25:57,959 Speaker 6: the tobacco industry for more than twenty five years. 451 00:25:58,760 --> 00:26:02,040 Speaker 8: Back in the nineteen sixty roughly half of all US 452 00:26:02,040 --> 00:26:05,399 Speaker 8: adults smoked. Today, what's down about eleven percent. 453 00:26:06,600 --> 00:26:11,960 Speaker 6: There is a definite, significant health hazard associated with cigarette smoking. 454 00:26:12,480 --> 00:26:16,480 Speaker 9: The evidence was emerging that smoking was harmful to people's health. 455 00:26:17,080 --> 00:26:19,879 Speaker 6: Laurence A. Plicky is a public health researcher at Johns 456 00:26:19,880 --> 00:26:24,399 Speaker 6: Hopkins University, who studies corporate influence on health and policymaking. 457 00:26:25,200 --> 00:26:28,760 Speaker 9: In the late nineteen hundreds and early twenty first century, 458 00:26:29,200 --> 00:26:32,520 Speaker 9: what we saw was really an emergence of public awareness 459 00:26:32,560 --> 00:26:35,520 Speaker 9: of how much the tobacco industry had lied to the public, 460 00:26:37,119 --> 00:26:40,720 Speaker 9: even in front of Congress testifying that nicotine as not 461 00:26:40,800 --> 00:26:45,399 Speaker 9: an addictive substance. That has really generated a lot of mistrust. 462 00:26:46,040 --> 00:26:50,080 Speaker 6: Philip Morris International or PMI, is the largest publicly traded 463 00:26:50,080 --> 00:26:53,040 Speaker 6: tobacco company in the world, making some of the most 464 00:26:53,160 --> 00:26:54,879 Speaker 6: well known cigarettes on the market. 465 00:26:55,320 --> 00:26:57,440 Speaker 7: I think we had the stage that we were building 466 00:26:57,640 --> 00:26:59,760 Speaker 7: the product and the functional benefits. 467 00:27:00,680 --> 00:27:04,240 Speaker 6: Yasik Olchick began his career with PMI in nineteen ninety three, 468 00:27:04,600 --> 00:27:07,760 Speaker 6: working his way up to become CEO in twenty twenty one. 469 00:27:08,600 --> 00:27:12,280 Speaker 6: Olchek's vision is delivering a smoke free future for the company. 470 00:27:12,800 --> 00:27:16,280 Speaker 6: The tobacco companies for years fought the idea that cigarette 471 00:27:16,280 --> 00:27:19,120 Speaker 6: smoke was bad for you. When did you figure out 472 00:27:19,280 --> 00:27:22,080 Speaker 6: that this was going to be a losing proposition business 473 00:27:22,080 --> 00:27:25,520 Speaker 6: wise and how did you make that transition into the 474 00:27:25,640 --> 00:27:27,119 Speaker 6: non combustible space. 475 00:27:27,520 --> 00:27:31,119 Speaker 7: When I joined Phillip Boris, I finger positions were very clear. Okay, 476 00:27:31,200 --> 00:27:36,080 Speaker 7: the cigarettes another great idea for your health. Cigarettes addictive. 477 00:27:36,160 --> 00:27:38,760 Speaker 7: The big question is what you're going to do about it. 478 00:27:39,560 --> 00:27:44,480 Speaker 7: We almost eliminated the entire investments behind the combustible cigarettes, 479 00:27:45,040 --> 00:27:48,439 Speaker 7: and we whidirected all of these resources and behindening a product. 480 00:27:48,840 --> 00:27:52,879 Speaker 7: We now understand why cigarettes such a negative impact on 481 00:27:52,880 --> 00:27:56,120 Speaker 7: a human health. On a smoker's help, the whole thing 482 00:27:56,200 --> 00:27:59,159 Speaker 7: is about the smoke, which is a result of combustion, 483 00:27:59,320 --> 00:28:01,879 Speaker 7: and then you really of the hundreds and hundreds of 484 00:28:02,200 --> 00:28:06,679 Speaker 7: quite deadly or very deadly toxicons. But if you remove 485 00:28:06,720 --> 00:28:12,199 Speaker 7: the combustion, if you eliminate the smoke, and essentially you 486 00:28:12,240 --> 00:28:16,720 Speaker 7: have a products which can allow smoke cores to continue 487 00:28:16,800 --> 00:28:20,080 Speaker 7: using the product but with a much, much, much lower 488 00:28:20,119 --> 00:28:23,119 Speaker 7: exposure to all the harmful toxics, et cetera. 489 00:28:24,400 --> 00:28:28,000 Speaker 9: In recent years, the tobacco industry has focused on creating 490 00:28:28,359 --> 00:28:33,920 Speaker 9: more nicotine products, so things that aren't necessarily combustible cigarettes, 491 00:28:33,960 --> 00:28:36,640 Speaker 9: but can be things like vapes or now we're seeing 492 00:28:36,720 --> 00:28:41,280 Speaker 9: nicotine pouches. These products still contain nicotine, which is one 493 00:28:41,280 --> 00:28:45,600 Speaker 9: of the most addictive substances that can be commercially purchased 494 00:28:45,640 --> 00:28:48,200 Speaker 9: in the United States. And around the world. Some even 495 00:28:48,280 --> 00:28:51,920 Speaker 9: say that it's as addictive as heroin or cocaine. 496 00:28:52,400 --> 00:28:53,440 Speaker 2: The health effects of. 497 00:28:53,440 --> 00:28:58,040 Speaker 9: Nicotine addiction can lead to mood this regulation, increased levels 498 00:28:58,080 --> 00:29:02,400 Speaker 9: of anxiety, maybe even influenza like feelings. If you are 499 00:29:02,440 --> 00:29:05,160 Speaker 9: addicted to nicotine and you stop using it, you're trying 500 00:29:05,200 --> 00:29:08,320 Speaker 9: to quit, you're going to experience that terrible withdrawal symptoms. 501 00:29:09,320 --> 00:29:13,480 Speaker 6: Despite warnings from public health experts, smoke free products have skyrocketed, 502 00:29:13,760 --> 00:29:16,600 Speaker 6: driven by more and more users looking for an alternative 503 00:29:16,680 --> 00:29:20,680 Speaker 6: to cigarettes. That's changing the bottom line for tobacco producers 504 00:29:20,720 --> 00:29:23,320 Speaker 6: like Philip Morris, a company which has a market cap 505 00:29:23,360 --> 00:29:28,160 Speaker 6: of nearly three hundred billion dollars, larger than Goldman, Sachs, McDonald's, 506 00:29:28,160 --> 00:29:30,360 Speaker 6: and Disney. So about forty. 507 00:29:30,160 --> 00:29:33,440 Speaker 8: Percent of Philip morris Internationals revenues are what they call 508 00:29:33,520 --> 00:29:36,520 Speaker 8: smoke free, and that includes your all nicotine products like 509 00:29:36,680 --> 00:29:39,520 Speaker 8: Zin and also Icos, the heated tobacco product. 510 00:29:40,240 --> 00:29:43,120 Speaker 6: Icos and Zin are two of Philip Morris's most successful 511 00:29:43,160 --> 00:29:45,880 Speaker 6: smoke free products that are very different from one another. 512 00:29:46,840 --> 00:29:50,320 Speaker 6: Zin is a tobacco free nicotine pouch that you insert 513 00:29:50,360 --> 00:29:52,960 Speaker 6: between your lip and gum. It comes in a variety 514 00:29:53,000 --> 00:29:56,920 Speaker 6: of flavors and nicotine strengths. Icos is a heat not 515 00:29:57,120 --> 00:30:01,360 Speaker 6: burned device that takes out the combustion part of traditional smoking. 516 00:30:01,560 --> 00:30:05,200 Speaker 7: The way with design, Icos is essentially the replical cigarette, 517 00:30:05,560 --> 00:30:07,840 Speaker 7: but they didn't have to look like a cigarette. But 518 00:30:07,840 --> 00:30:11,240 Speaker 7: it actually helped smokers to get and the big surprise, 519 00:30:11,760 --> 00:30:14,800 Speaker 7: positive surprise at that time was the adoption rate because 520 00:30:14,960 --> 00:30:17,600 Speaker 7: very early we learned that from one hundred to people 521 00:30:17,760 --> 00:30:22,600 Speaker 7: trying Icos buying Icos device, seven percent seven zero will 522 00:30:22,640 --> 00:30:25,040 Speaker 7: stay with Icos and will completely stop smoking. 523 00:30:26,280 --> 00:30:28,680 Speaker 8: Icos was kind of a pioneer in that it was 524 00:30:28,720 --> 00:30:32,200 Speaker 8: a product that was sleek, It wasn't embarrassing to bring 525 00:30:32,240 --> 00:30:35,560 Speaker 8: out as a fact simile for a cigarette. It checked 526 00:30:35,560 --> 00:30:38,000 Speaker 8: the full of boxes in terms of the ritual of smoking. 527 00:30:38,640 --> 00:30:41,440 Speaker 8: But I think the early days it was hard to 528 00:30:41,480 --> 00:30:44,680 Speaker 8: convince a smoker why would they want to fumble around 529 00:30:44,680 --> 00:30:48,800 Speaker 8: with a device. But Phil Morris was smart and going 530 00:30:48,840 --> 00:30:51,840 Speaker 8: to some of the markets where new electronic gadgets were 531 00:30:52,080 --> 00:30:58,000 Speaker 8: more acceptable, like Japan, South Korea, Italy. Whatever reason, these 532 00:30:58,080 --> 00:31:00,120 Speaker 8: markets adopted these products early on. 533 00:31:00,720 --> 00:31:03,000 Speaker 7: More than a forty two percent of the revenue are 534 00:31:03,000 --> 00:31:07,600 Speaker 7: coming from this product. Icos today by revenue is larger than. 535 00:31:07,720 --> 00:31:11,560 Speaker 6: Marlborough, which is the best performing product at this point. 536 00:31:11,560 --> 00:31:14,400 Speaker 6: Which one has been taken up most quickly, I. 537 00:31:14,320 --> 00:31:16,880 Speaker 7: Mean icons is still the best performing in terms of 538 00:31:16,920 --> 00:31:20,560 Speaker 7: a conversion. Obviously, there was a lot of excitement about 539 00:31:20,560 --> 00:31:23,960 Speaker 7: the Nwkoten pouches because they grow right month on month 540 00:31:24,040 --> 00:31:26,840 Speaker 7: quarter on quota. Royer on here is much higher than KOs, 541 00:31:26,880 --> 00:31:31,880 Speaker 7: but we're comparing two uncomparable by size. Pouches are very promising. 542 00:31:32,080 --> 00:31:35,600 Speaker 7: I think they offer very good harm reduction potential. 543 00:31:36,720 --> 00:31:40,040 Speaker 8: Zin is a product that was originally made by Swedish 544 00:31:40,040 --> 00:31:42,440 Speaker 8: Match and it done really well on the local markets 545 00:31:42,440 --> 00:31:45,080 Speaker 8: in Sweden, and Philmore's International thought it was a great 546 00:31:45,120 --> 00:31:48,960 Speaker 8: idea to acquire them in twenty twenty two and take 547 00:31:48,960 --> 00:31:52,680 Speaker 8: it to the US. It has attained pre market tobacco 548 00:31:52,720 --> 00:31:55,920 Speaker 8: approval and is by far the biggest winner in the 549 00:31:56,160 --> 00:32:00,800 Speaker 8: roughly twenty billion dollars world tobacco market. Consumer have really 550 00:32:00,880 --> 00:32:05,120 Speaker 8: embraced Zin as a product that is less harmful than cigarettes, 551 00:32:05,200 --> 00:32:08,080 Speaker 8: but also it's more discrete. It comes in different flavors. 552 00:32:08,720 --> 00:32:11,080 Speaker 10: They had the coffee flavor, they had mint flavor. 553 00:32:11,680 --> 00:32:13,680 Speaker 8: It's a product that it's not messy, you don't have 554 00:32:13,680 --> 00:32:16,400 Speaker 8: to go out and smoke it ILike a tobacco smoke 555 00:32:16,480 --> 00:32:17,680 Speaker 8: was product you don't have to spit. 556 00:32:18,240 --> 00:32:19,000 Speaker 5: It was small. 557 00:32:19,320 --> 00:32:20,959 Speaker 10: I could use it and no one would know I 558 00:32:20,960 --> 00:32:21,360 Speaker 10: had it. 559 00:32:21,320 --> 00:32:25,000 Speaker 8: In It's a product that a white collar consumer can 560 00:32:25,160 --> 00:32:26,960 Speaker 8: use discreetly at his desk. 561 00:32:27,680 --> 00:32:31,959 Speaker 10: It was a far superior product than any other nicotine 562 00:32:32,000 --> 00:32:35,520 Speaker 10: pouch and it made me feel great and all that 563 00:32:35,720 --> 00:32:38,720 Speaker 10: for a price that was pretty inexpensive. 564 00:32:39,800 --> 00:32:42,640 Speaker 6: Globals in chipments are predicted to more than double, from 565 00:32:42,720 --> 00:32:45,080 Speaker 6: just four hundred and twenty one million in twenty twenty 566 00:32:45,120 --> 00:32:49,400 Speaker 6: three to an estimated one billion in twenty twenty six. Well, 567 00:32:49,520 --> 00:32:52,200 Speaker 6: nicotine pouch sales grew by more than thirty five percent 568 00:32:52,280 --> 00:32:54,440 Speaker 6: in both the US and Europe last year. 569 00:32:54,960 --> 00:32:58,400 Speaker 11: We're here at PMISER war facility. We broke ground in 570 00:32:58,440 --> 00:32:59,960 Speaker 11: December of twenty twenty four. 571 00:33:00,600 --> 00:33:03,400 Speaker 6: This increase in demand led PMI to build a new 572 00:33:03,400 --> 00:33:06,120 Speaker 6: production facility in Aurora, Colorado. 573 00:33:06,400 --> 00:33:08,480 Speaker 11: As you can see, we have a state of the 574 00:33:08,560 --> 00:33:12,040 Speaker 11: art facility where we're producing zin nicotine pouches for distribution 575 00:33:12,120 --> 00:33:12,960 Speaker 11: in the United States. 576 00:33:13,560 --> 00:33:14,959 Speaker 12: And this is what the pouch looks like. 577 00:33:15,320 --> 00:33:18,400 Speaker 11: It's really quite simple. It's a plant based pouch and 578 00:33:18,480 --> 00:33:22,480 Speaker 11: inside there we have pharmaceutical grade nicotine that is derived. 579 00:33:22,520 --> 00:33:27,240 Speaker 11: It's extracted from tobacco leaf. We have fillers, we have stabilizers, 580 00:33:27,240 --> 00:33:29,360 Speaker 11: and we have food grade ingredients. So everything in here 581 00:33:29,960 --> 00:33:33,960 Speaker 11: is basically either a food grade ingredient or pharmaceutical grade nicotine. 582 00:33:34,120 --> 00:33:36,880 Speaker 11: It's placed between the upper lip and gum, kept there 583 00:33:36,880 --> 00:33:39,800 Speaker 11: for about thirty minutes, and it's going to deliver nicotine 584 00:33:39,800 --> 00:33:40,400 Speaker 11: over that time. 585 00:33:41,480 --> 00:33:44,920 Speaker 8: The critics would argue that these products hook either existing 586 00:33:45,040 --> 00:33:47,719 Speaker 8: users or even new users to nicotine. 587 00:33:48,920 --> 00:33:54,160 Speaker 9: The marketing for nicotine pouches often uses potentially misleading claims, 588 00:33:54,200 --> 00:33:56,920 Speaker 9: things like these are tobacco free, which might make people 589 00:33:56,960 --> 00:33:59,960 Speaker 9: believe that they're free of harm, but that actually downplays 590 00:34:00,080 --> 00:34:02,920 Speaker 9: all of the risks that are associated with nicotine addiction. 591 00:34:03,920 --> 00:34:07,520 Speaker 10: The nicotine had me. That's how addictions work, That's how 592 00:34:07,600 --> 00:34:12,719 Speaker 10: nicotine works, and I was addicted. I was probably in 593 00:34:12,760 --> 00:34:15,839 Speaker 10: my height of using Zen going through Tina Day. 594 00:34:16,280 --> 00:34:17,640 Speaker 12: Remember on our first date that. 595 00:34:17,719 --> 00:34:19,480 Speaker 9: You told me you had addition? 596 00:34:19,640 --> 00:34:20,080 Speaker 1: I did. 597 00:34:20,280 --> 00:34:21,319 Speaker 10: I forgot about that. 598 00:34:21,800 --> 00:34:24,840 Speaker 6: Will Lammis was a frequent user of Zen pouches, a 599 00:34:24,880 --> 00:34:27,640 Speaker 6: habit he claims caused a number of health issues. 600 00:34:28,520 --> 00:34:32,520 Speaker 10: So a few years into using Zen, I started having 601 00:34:32,960 --> 00:34:35,680 Speaker 10: some health problems. I remember it started with a pain 602 00:34:35,719 --> 00:34:38,640 Speaker 10: in my stomach and then for about six months, my 603 00:34:38,680 --> 00:34:42,400 Speaker 10: stomach was constantly irritated. And one day I was on 604 00:34:42,520 --> 00:34:46,400 Speaker 10: Reddit and I found a subreddit called quitting Zen, and 605 00:34:46,440 --> 00:34:48,799 Speaker 10: I was reading some of the posts and they were 606 00:34:48,800 --> 00:34:51,640 Speaker 10: by Zen users trying to quit or on their journey 607 00:34:51,640 --> 00:34:54,920 Speaker 10: to quit, and they're talking about how their stomach used 608 00:34:54,960 --> 00:34:58,880 Speaker 10: to hurt, their blood pressure used to be high, their 609 00:34:59,120 --> 00:35:02,759 Speaker 10: heart rate was a is racing, and a few weeks 610 00:35:02,800 --> 00:35:06,240 Speaker 10: after they quit, almost all those side effects were going away. 611 00:35:06,840 --> 00:35:10,560 Speaker 10: From then on, I told myself, I'm gonna quit. Zen 612 00:35:10,640 --> 00:35:14,960 Speaker 10: For me was the healthier version of nicotine. And it's 613 00:35:14,960 --> 00:35:19,440 Speaker 10: true if you are addicted to nicotine, addicted to cigarettes 614 00:35:19,520 --> 00:35:23,160 Speaker 10: or dip zen is a healthier version, but at the 615 00:35:23,160 --> 00:35:25,360 Speaker 10: same time, it's the lesser of two evils. That doesn't 616 00:35:25,400 --> 00:35:26,640 Speaker 10: mean it is healthy. 617 00:35:27,320 --> 00:35:30,920 Speaker 6: In response to health concerns, PMI says that no nicotine 618 00:35:30,960 --> 00:35:34,200 Speaker 6: product is risk free, and for those worried about their health, 619 00:35:34,400 --> 00:35:37,560 Speaker 6: the best choice is to stop consuming nicotine altogether. 620 00:35:38,200 --> 00:35:41,799 Speaker 9: The research on the long term health outcomes related to 621 00:35:42,000 --> 00:35:46,200 Speaker 9: nicotine pouches isn't there yet. These products are relatively new 622 00:35:46,600 --> 00:35:50,680 Speaker 9: on the marketplace and so that research is necessary and 623 00:35:50,760 --> 00:35:53,480 Speaker 9: needs to be supported to really understand the long term 624 00:35:53,520 --> 00:35:58,040 Speaker 9: health outcomes. But nicotine itself is at an addictive substance, 625 00:35:58,080 --> 00:36:01,960 Speaker 9: so we know that there's inherent harm using any nicotine products. 626 00:36:02,160 --> 00:36:04,920 Speaker 9: It can cause a lifelong struggle with addiction that can 627 00:36:05,000 --> 00:36:09,719 Speaker 9: lead to potentially devastating mental and physical health outcomes through 628 00:36:09,719 --> 00:36:13,839 Speaker 9: the withdrawal symptoms, and that addiction cycle can be really devastating. 629 00:36:14,640 --> 00:36:18,320 Speaker 10: I needed Zin to feel normal, and at that point 630 00:36:18,400 --> 00:36:20,880 Speaker 10: I realized this has really got a grip on me, 631 00:36:20,960 --> 00:36:22,760 Speaker 10: and I do have a problem. 632 00:36:23,160 --> 00:36:26,399 Speaker 6: Despite the potential risks, smoke free products continue to gain 633 00:36:26,440 --> 00:36:29,360 Speaker 6: traction across domestic and international markets. 634 00:36:29,840 --> 00:36:32,880 Speaker 8: The nicotine profit pool continues to grow because it's just 635 00:36:32,920 --> 00:36:37,239 Speaker 8: an innate craving that consumers have to satisfy. Consumers now 636 00:36:37,280 --> 00:36:40,960 Speaker 8: have more choices to choose cigarette as a harmful product 637 00:36:41,239 --> 00:36:42,920 Speaker 8: to things that are less harmful. 638 00:36:43,040 --> 00:36:46,520 Speaker 6: And that's the bet the nicotine craving will remain even 639 00:36:46,600 --> 00:36:49,640 Speaker 6: if cigarettes fall into the ash heap of history. Can 640 00:36:49,680 --> 00:36:52,920 Speaker 6: you imagine a day when Philip Morris does not sell cigarettes? 641 00:36:53,000 --> 00:36:53,600 Speaker 1: Absolutely? 642 00:36:54,200 --> 00:36:56,919 Speaker 7: Absolutely absolutely. 643 00:36:58,840 --> 00:37:02,240 Speaker 1: Up next, new world of AI meets the old world 644 00:37:02,320 --> 00:37:06,040 Speaker 1: of carpenters and plumbers. How data centers are making America 645 00:37:06,120 --> 00:37:17,239 Speaker 1: great for construction workers. This is a story about new 646 00:37:17,320 --> 00:37:21,120 Speaker 1: tricks needing some old dogs. Since the time of the 647 00:37:21,160 --> 00:37:24,719 Speaker 1: Industrial Revolution, Americans have relied on construction workers to build 648 00:37:24,760 --> 00:37:28,080 Speaker 1: the foundations of the economy. For over one hundred years, 649 00:37:28,120 --> 00:37:31,319 Speaker 1: it was the factories we needed for old fashioned manufacturing. 650 00:37:31,719 --> 00:37:34,800 Speaker 1: But today it's high tech data centers that are driving 651 00:37:34,800 --> 00:37:37,400 Speaker 1: the need for skilled workers to build our future. 652 00:37:41,560 --> 00:37:43,200 Speaker 13: I may be a little biased here, but if you're 653 00:37:43,200 --> 00:37:45,400 Speaker 13: an individual that wants to build great things, there's no 654 00:37:45,480 --> 00:37:47,160 Speaker 13: better time to be in the construction industry. 655 00:37:47,320 --> 00:37:51,200 Speaker 14: Everybody wants a construction worker, needs a construction worker right now. 656 00:37:51,239 --> 00:37:54,440 Speaker 12: The income that they're offering is almost doubled. Just the 657 00:37:54,480 --> 00:37:59,080 Speaker 12: demand itself for skilled tradesmen and electricians in particular, it's 658 00:37:59,120 --> 00:37:59,800 Speaker 12: definitely risen. 659 00:38:00,640 --> 00:38:03,560 Speaker 1: The explosion of AI investment has led to a boom 660 00:38:03,600 --> 00:38:05,920 Speaker 1: in the need for data centers, and that means the 661 00:38:05,920 --> 00:38:09,400 Speaker 1: country needs more construction workers, and it needs them now. 662 00:38:09,640 --> 00:38:12,200 Speaker 13: The scale of the projects and the demand coming with 663 00:38:12,280 --> 00:38:15,480 Speaker 13: projects at that megascale continues to increase. 664 00:38:15,840 --> 00:38:18,799 Speaker 1: Mark Whitson began his career as a carpenter twenty five 665 00:38:18,880 --> 00:38:23,040 Speaker 1: years ago. Today he is president at DPR construction one 666 00:38:23,080 --> 00:38:26,239 Speaker 1: of the largest data center builders in the United States. 667 00:38:26,440 --> 00:38:29,239 Speaker 13: If you read in certain places, they'll tell you, you know, 668 00:38:29,480 --> 00:38:34,200 Speaker 13: one hundred gigawatts is what the collective demand between now 669 00:38:34,239 --> 00:38:37,480 Speaker 13: and twenty thirty thirty will be. I think that's woefully understated. 670 00:38:37,840 --> 00:38:41,839 Speaker 13: From what we're seeing from our partners and owners is that, 671 00:38:42,280 --> 00:38:44,320 Speaker 13: you know, that could be what they're looking for in 672 00:38:44,360 --> 00:38:46,960 Speaker 13: twenty twenty six and twenty twenty seven. I think it'll 673 00:38:47,000 --> 00:38:50,360 Speaker 13: be a multiple of that. Construction duration, you know, also 674 00:38:50,480 --> 00:38:54,640 Speaker 13: varies from eleven to twelve to twenty four or thirty 675 00:38:54,640 --> 00:38:57,640 Speaker 13: six months, depending on the size. But as you can imagine, 676 00:38:57,719 --> 00:38:59,719 Speaker 13: with the demand that's out there right now for these 677 00:38:59,760 --> 00:39:02,839 Speaker 13: AI factories, everybody wants them faster and they want them 678 00:39:03,120 --> 00:39:05,719 Speaker 13: less costly, and so it's a challenge and an opportunity 679 00:39:05,760 --> 00:39:06,839 Speaker 13: for the industry right now. 680 00:39:07,120 --> 00:39:10,200 Speaker 1: The opportunity for a company like DPR is growing to 681 00:39:10,200 --> 00:39:13,839 Speaker 1: meet that ever increasing demand. The challenge is making sure 682 00:39:13,880 --> 00:39:16,520 Speaker 1: you have the people you need to keep up. Neila 683 00:39:16,600 --> 00:39:20,440 Speaker 1: Richardson is a Bloomberg contributor and analyzes employment data at 684 00:39:20,440 --> 00:39:25,920 Speaker 1: ADP neely is there a surge in construction related employment, Well. 685 00:39:25,760 --> 00:39:29,040 Speaker 14: There has been over the last five years. We've seen 686 00:39:29,080 --> 00:39:32,080 Speaker 14: at ADP those numbers go up by twenty percent. That's 687 00:39:32,120 --> 00:39:36,160 Speaker 14: two and a half times more than the all employees 688 00:39:36,320 --> 00:39:41,600 Speaker 14: all industries. But it's slowed recently, and that is due 689 00:39:41,600 --> 00:39:46,480 Speaker 14: to demographics. It's not just employer demand driving construction hiring, 690 00:39:46,960 --> 00:39:51,440 Speaker 14: it's the natural pacing of father time on that industry. 691 00:39:51,880 --> 00:39:54,120 Speaker 14: A lot of construction workers are retiring. 692 00:39:54,320 --> 00:39:57,840 Speaker 1: Labor shortages are nothing new to the construction industry, but 693 00:39:57,960 --> 00:40:01,200 Speaker 1: Witson says the expertise needed to be build data centers 694 00:40:01,200 --> 00:40:03,440 Speaker 1: means that this time might be different. 695 00:40:03,719 --> 00:40:05,640 Speaker 13: One of the things that makes the data centers more 696 00:40:05,760 --> 00:40:09,320 Speaker 13: unique is really around the pace and scale, especially today, 697 00:40:09,840 --> 00:40:12,440 Speaker 13: where some of the components within the data center may 698 00:40:12,440 --> 00:40:15,160 Speaker 13: not be as unique. But when when you amplify that 699 00:40:15,280 --> 00:40:17,919 Speaker 13: by the scale of these projects and the reduced pace 700 00:40:17,960 --> 00:40:22,120 Speaker 13: of these projects, it becomes different and becomes the need 701 00:40:22,160 --> 00:40:26,239 Speaker 13: for additional skill set that's more specialized than some of 702 00:40:26,280 --> 00:40:28,600 Speaker 13: the other other types of commercial construction. 703 00:40:29,880 --> 00:40:34,360 Speaker 1: Data center construction requires more specialized skilled workers, the kind 704 00:40:34,400 --> 00:40:38,879 Speaker 1: that typically come with experience over years, which means there's 705 00:40:38,920 --> 00:40:41,640 Speaker 1: a problem when retirement time comes around. 706 00:40:41,920 --> 00:40:44,560 Speaker 14: Well, let's take HVAC, because that's where we're seeing a 707 00:40:44,640 --> 00:40:48,560 Speaker 14: huge demographic hit, and it's not because young people are 708 00:40:48,560 --> 00:40:52,120 Speaker 14: coming into the industry and becoming HVAC engineers. I wish 709 00:40:52,320 --> 00:40:54,880 Speaker 14: that was the case. Older workers are leaving, and so 710 00:40:55,239 --> 00:40:58,360 Speaker 14: is their expertise and their sophistication. So when you go 711 00:40:58,440 --> 00:41:01,040 Speaker 14: back to a data center where one or two degrees 712 00:41:01,640 --> 00:41:04,879 Speaker 14: makes a big difference in how much you're admitting into 713 00:41:04,920 --> 00:41:10,239 Speaker 14: the atmosphere, into the environment, that level of sophistication expertise 714 00:41:10,600 --> 00:41:12,000 Speaker 14: is retiring at this moment. 715 00:41:12,200 --> 00:41:15,320 Speaker 1: As in any other market, when the supply for skilled 716 00:41:15,320 --> 00:41:19,440 Speaker 1: workers falls behind demand, the result shows up in prices. 717 00:41:19,840 --> 00:41:22,879 Speaker 14: It does, and wage growth has been higher. Not only 718 00:41:22,920 --> 00:41:26,960 Speaker 14: wage growth, but bonuses. We clock bonuses for construction workers 719 00:41:26,960 --> 00:41:30,760 Speaker 14: at ADP and there are twice the amount of regular 720 00:41:30,840 --> 00:41:32,800 Speaker 14: employees outside of the industry. 721 00:41:33,000 --> 00:41:33,200 Speaker 1: Now. 722 00:41:33,239 --> 00:41:36,239 Speaker 14: Bonuses were a big deal during the Great Resignation trying 723 00:41:36,239 --> 00:41:38,920 Speaker 14: to get people in, but they've kind of gone by 724 00:41:38,960 --> 00:41:43,239 Speaker 14: the wayside for most industries, but not construction. There's still 725 00:41:43,280 --> 00:41:47,600 Speaker 14: a valuable tool in getting people to drawing workers in 726 00:41:47,920 --> 00:41:50,719 Speaker 14: and drawing them away from their employer. 727 00:41:52,320 --> 00:41:55,720 Speaker 1: All this creates an attractive potential opportunity for young people 728 00:41:55,800 --> 00:42:00,680 Speaker 1: eager to meet the moment inside an electrician class at 729 00:42:00,719 --> 00:42:03,160 Speaker 1: Germanic Community College in Virginia. 730 00:42:02,840 --> 00:42:03,799 Speaker 11: The bankers right here. 731 00:42:04,719 --> 00:42:07,360 Speaker 1: Students from all walks of life are studying to be 732 00:42:07,600 --> 00:42:08,360 Speaker 1: job ready. 733 00:42:08,520 --> 00:42:11,399 Speaker 12: So I work up north and there's a number of 734 00:42:11,800 --> 00:42:17,480 Speaker 12: job vacancies that they're seeking, not just installers, not just HVAC, 735 00:42:17,719 --> 00:42:23,000 Speaker 12: but electricians in particular because it impacts safety, impacts energy, 736 00:42:23,440 --> 00:42:25,520 Speaker 12: you name it. So there's just a ton of jobs 737 00:42:25,560 --> 00:42:28,399 Speaker 12: around that field. So I think, just long term, I'm 738 00:42:28,400 --> 00:42:30,880 Speaker 12: trying to hedge my bets. I see job postings all 739 00:42:30,920 --> 00:42:33,360 Speaker 12: the time. I'm a member of a union and we 740 00:42:33,400 --> 00:42:36,000 Speaker 12: get to all kinds of postings. Just in my area 741 00:42:36,040 --> 00:42:39,360 Speaker 12: in Manassis, there's I think three different data centers that 742 00:42:39,360 --> 00:42:40,919 Speaker 12: have sprung up just in the past couple of years 743 00:42:40,920 --> 00:42:43,320 Speaker 12: that I've been there, So they're constantly hiring. 744 00:42:43,080 --> 00:42:44,640 Speaker 15: And then make sure everybody else knows. 745 00:42:44,920 --> 00:42:48,319 Speaker 1: Tina Lance is the Dean of Workforce Development at Germanas. 746 00:42:48,440 --> 00:42:52,560 Speaker 15: Our role in the community is several several reasons. One 747 00:42:52,560 --> 00:42:54,400 Speaker 15: of the things that we do is work with our 748 00:42:54,440 --> 00:42:58,040 Speaker 15: employers to make sure that we are meeting their workforce 749 00:42:58,040 --> 00:43:00,719 Speaker 15: pipeline needs. It's been really easy for students to be 750 00:43:00,800 --> 00:43:03,640 Speaker 15: hired with skilled trades in the region. Absolutely the demand 751 00:43:03,960 --> 00:43:08,200 Speaker 15: far exceeds the number of labors that we have available 752 00:43:08,200 --> 00:43:08,880 Speaker 15: in our market. 753 00:43:08,960 --> 00:43:12,880 Speaker 1: There are currently seven data centers actively being built near Germana, 754 00:43:13,239 --> 00:43:15,040 Speaker 1: with many more in the works. 755 00:43:15,480 --> 00:43:17,960 Speaker 15: The credentials that are most in demand for data centers 756 00:43:18,040 --> 00:43:24,440 Speaker 15: are electrical HVAC plumbing as well as data center operators, 757 00:43:24,760 --> 00:43:27,520 Speaker 15: so those are the ones that right now we're spending 758 00:43:27,600 --> 00:43:29,920 Speaker 15: quite a bit of time making sure we're doing our 759 00:43:30,040 --> 00:43:34,040 Speaker 15: very best to increase the pipeline. Enrollment has absolutely been 760 00:43:34,080 --> 00:43:37,560 Speaker 15: increasing over the last few years. For skilled trades, you 761 00:43:37,760 --> 00:43:41,920 Speaker 15: have many students that are now looking at skilled trades 762 00:43:42,400 --> 00:43:45,440 Speaker 15: or credentials as a way to get a skill, get 763 00:43:45,480 --> 00:43:48,160 Speaker 15: a job right out of high school. There are different 764 00:43:48,239 --> 00:43:51,920 Speaker 15: things that draw people to further their education in a 765 00:43:51,960 --> 00:43:56,160 Speaker 15: particular area. Many times it's passion what they're interested in. 766 00:43:57,120 --> 00:44:00,239 Speaker 15: Sometimes what you'll see is people do it because of 767 00:44:00,280 --> 00:44:04,160 Speaker 15: the money. Welding right now is in high demand and 768 00:44:04,280 --> 00:44:09,280 Speaker 15: so many of those students will graduate with their certification 769 00:44:10,000 --> 00:44:13,960 Speaker 15: immediately get hired. And we've had several of our students 770 00:44:14,480 --> 00:44:17,000 Speaker 15: that within the first year or two they're in a 771 00:44:17,080 --> 00:44:21,640 Speaker 15: six figure annual salary. So that's pretty significant when you 772 00:44:21,680 --> 00:44:25,960 Speaker 15: think about somebody twenty twenty one years old with really 773 00:44:26,480 --> 00:44:30,680 Speaker 15: no debt from a student educational standpoint, with a six 774 00:44:30,760 --> 00:44:31,520 Speaker 15: figure salary. 775 00:44:31,960 --> 00:44:35,200 Speaker 1: Beyond bringing more workers to the construction site by offering 776 00:44:35,280 --> 00:44:38,880 Speaker 1: higher pay and more training, companies are also bringing work 777 00:44:39,120 --> 00:44:39,880 Speaker 1: to the workers. 778 00:44:40,160 --> 00:44:41,120 Speaker 12: No, Is this all good now? 779 00:44:41,280 --> 00:44:45,719 Speaker 1: Yeah? Michael Davis is a superintendent at DPR's pre fabrication 780 00:44:45,800 --> 00:44:48,759 Speaker 1: assembly facility that looks pretty good, otherwise known as the 781 00:44:48,880 --> 00:44:51,799 Speaker 1: Prefab Lab in Raleigh, North Carolina. 782 00:44:51,960 --> 00:44:54,560 Speaker 16: Labor shortages are something we're seeing in the industry. 783 00:44:55,280 --> 00:44:56,320 Speaker 2: One way we're. 784 00:44:57,560 --> 00:45:01,200 Speaker 16: Working to fix that issue is we're prefabricating a lot 785 00:45:01,239 --> 00:45:04,960 Speaker 16: of products off site and then on on site. We're 786 00:45:05,080 --> 00:45:10,200 Speaker 16: using anyone who's a new hire to skilled labor to 787 00:45:10,239 --> 00:45:12,680 Speaker 16: be able to assemble the products we're shipping out and 788 00:45:12,760 --> 00:45:15,000 Speaker 16: we're able to keep up and if not beat schedules. 789 00:45:15,160 --> 00:45:19,080 Speaker 16: So we're doing any very complex walls, sofits radiuses or 790 00:45:19,200 --> 00:45:24,800 Speaker 16: complex geometry and turning those into various kits or even panels, 791 00:45:24,800 --> 00:45:27,799 Speaker 16: and shipping in the jobs where we can use apprentices 792 00:45:27,840 --> 00:45:30,440 Speaker 16: straight out of our apprenticeship or people off the street 793 00:45:30,520 --> 00:45:32,480 Speaker 16: just you know, starting construction for the first time, all 794 00:45:32,520 --> 00:45:34,680 Speaker 16: the way to skilled labor to be able to assemble 795 00:45:34,680 --> 00:45:38,080 Speaker 16: them within a day or two of training and we're 796 00:45:38,080 --> 00:45:39,279 Speaker 16: doing finished product with that. 797 00:45:39,400 --> 00:45:42,319 Speaker 1: Technology is the rage across all of American business right now, 798 00:45:42,360 --> 00:45:45,399 Speaker 1: including the data centers. To what extent can you rely 799 00:45:45,520 --> 00:45:48,400 Speaker 1: up a technology to replace some of the workers that 800 00:45:48,440 --> 00:45:48,920 Speaker 1: you lack. 801 00:45:49,640 --> 00:45:50,640 Speaker 2: That's a great question, David. 802 00:45:50,680 --> 00:45:52,120 Speaker 13: Then I don't know that i'd frame it in the 803 00:45:52,120 --> 00:45:55,800 Speaker 13: way of replacing workers that we have. It's actually allowing 804 00:45:55,840 --> 00:45:58,160 Speaker 13: the workforce to do more and to maybe do things 805 00:45:58,200 --> 00:46:01,560 Speaker 13: that are more productive, more effective, more impactful, and so 806 00:46:01,680 --> 00:46:05,520 Speaker 13: the technology is allowing us to help mitigate a reduction 807 00:46:05,960 --> 00:46:07,920 Speaker 13: or a lack of availability and workforce. 808 00:46:08,160 --> 00:46:11,839 Speaker 1: I think you started as a carpenter originally, did How 809 00:46:11,960 --> 00:46:15,279 Speaker 1: has the image and role the construction worker changed over 810 00:46:15,320 --> 00:46:15,880 Speaker 1: your career. 811 00:46:16,160 --> 00:46:20,200 Speaker 13: I would say that it's starting to transform. I think 812 00:46:20,239 --> 00:46:24,160 Speaker 13: that the reputation in the construction industry has not always 813 00:46:24,160 --> 00:46:26,360 Speaker 13: been the greatest, and I think that it's an unfair 814 00:46:26,440 --> 00:46:30,480 Speaker 13: stigma that is put on the industry. And I think 815 00:46:30,520 --> 00:46:33,640 Speaker 13: that we've got to continue to help change the narrative 816 00:46:34,160 --> 00:46:36,799 Speaker 13: really to reality, which is much better than it was 817 00:46:36,840 --> 00:46:39,520 Speaker 13: twenty five years ago when I started. But we've also 818 00:46:39,600 --> 00:46:43,560 Speaker 13: got to do more to improve the construction industry so 819 00:46:43,600 --> 00:46:45,400 Speaker 13: that it's more attractive to more people. 820 00:46:45,520 --> 00:46:50,400 Speaker 14: I remember my industrial arts class was my favorite class 821 00:46:50,440 --> 00:46:53,319 Speaker 14: for a very long time. And if someone had said 822 00:46:53,360 --> 00:46:55,960 Speaker 14: to me, hey, Nila, you don't have to be an economist, 823 00:46:56,040 --> 00:46:59,080 Speaker 14: you can be a carpenter, we might be having a 824 00:46:59,160 --> 00:47:02,279 Speaker 14: very different come right now. But no one said that 825 00:47:02,320 --> 00:47:05,400 Speaker 14: to me. I didn't understand that to be a field, 826 00:47:05,520 --> 00:47:09,200 Speaker 14: especially for women. But I think that is changing the 827 00:47:09,239 --> 00:47:13,200 Speaker 14: skills demands for the economy makes it so. But it's 828 00:47:13,239 --> 00:47:16,400 Speaker 14: really about getting young people excited about these blue collar 829 00:47:16,520 --> 00:47:19,680 Speaker 14: jobs as well as other places in the economy. It's 830 00:47:19,719 --> 00:47:24,080 Speaker 14: a really exciting field to produce again and to make things, 831 00:47:24,480 --> 00:47:27,360 Speaker 14: make things that feed the next technological boom in the 832 00:47:27,440 --> 00:47:28,160 Speaker 14: United States. 833 00:47:28,640 --> 00:47:32,319 Speaker 1: AI promises us a wealth of new tricks, but to 834 00:47:32,320 --> 00:47:35,719 Speaker 1: get there, we need the old dog of traditional construction 835 00:47:36,200 --> 00:47:39,520 Speaker 1: and the skilled labor. It requires putting the question to 836 00:47:39,560 --> 00:47:42,440 Speaker 1: people like the younger Niela's and marks of this world, 837 00:47:42,719 --> 00:47:48,040 Speaker 1: whether to become an economist or a carpenter. That does 838 00:47:48,080 --> 00:47:50,520 Speaker 1: it for us. Here at Wall Street Week, I'm David Weston. 839 00:47:50,680 --> 00:48:03,719 Speaker 1: See you next week for more stories of capitalism.