WEBVTT - P&L: The Global Nature of the Auto Industry

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<v Speaker 1>Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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<v Speaker 1>Along with my co host Lisa Abramowitz. Each day we

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<v Speaker 1>bring you the most important, noteworthy, and useful interviews for

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<v Speaker 1>you and your money, whether at the grocery store or

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<v Speaker 1>the trading floor. Find the Bloomberg P L Podcast on iTunes,

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<v Speaker 1>SoundCloud and at Bloomberg dot com. Toyota Motor Company has

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<v Speaker 1>said that it will invest ten billion dollars in the

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<v Speaker 1>United States over the next five years, and Bob Carter

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<v Speaker 1>is the president of Toyota North America. He joined us

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<v Speaker 1>for a discussion of the all new, updated camera, the

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<v Speaker 1>outlook for sedans, and also being positioned for the presidential transition.

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<v Speaker 1>The new camera is a vehicle that we're very proud of.

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<v Speaker 1>This is the eighth generation since we introduced it originally

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<v Speaker 1>back in three but this is a this is a

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<v Speaker 1>unique camera for us. We've done this entire car completely.

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<v Speaker 1>It has a new platform, new power trains, new body,

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<v Speaker 1>new interior, and all the new technology that that that

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<v Speaker 1>we have developed over the years is all comes together

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<v Speaker 1>in this eighth generation car. Uh really proud of it.

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<v Speaker 1>We've done two executions of the camera. There's one that's

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<v Speaker 1>very sporty and there's one that's very luxurious. So depending

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<v Speaker 1>on what the consumers preferences. And we're announcing it here

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<v Speaker 1>for the first time globally in in uh in the

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<v Speaker 1>Detroit Auto Show, but it will be available at our

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<v Speaker 1>dealerships later this summer. So why is Toyota focusing on

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<v Speaker 1>a camera which is a mid size smaller midsized vehicle

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<v Speaker 1>when the trend is really really moving towards light trucks.

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<v Speaker 1>The story of Team was was light trucks, and and

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<v Speaker 1>light trucks happens to be an uh more of an

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<v Speaker 1>industry slang. What it's really most popular right now is

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<v Speaker 1>car based SUVs or c uvs um like our rav

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<v Speaker 1>and like our our Highlander. However, the sedan market is

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<v Speaker 1>still an extremely large and important part of the business.

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<v Speaker 1>How big of a part of business is it for you?

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<v Speaker 1>It's about well, the industry itself, it's about two point

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<v Speaker 1>five million units, and Camray is the number one vehicle

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<v Speaker 1>not only in that segment, but it's the number one

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<v Speaker 1>selling pass in your car in the US for fifteen

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<v Speaker 1>consecutive years. What about for Toyota, it is by far

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<v Speaker 1>our number one volume vehicle and we have a four

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<v Speaker 1>O FO. We did three thousand last year, and so

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<v Speaker 1>we're looking at similar sales going into One of the

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<v Speaker 1>things I think it's going to be interesting to watch

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<v Speaker 1>because we've seen this over the years, is the midsize

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<v Speaker 1>sedan segment hasn't had a lot of innovative product, new

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<v Speaker 1>product coming in. So this year we're we're launching the

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<v Speaker 1>best camera that we've ever built, full of new technology.

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<v Speaker 1>This vehicle is so sophisticated that even if a pedestrian

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<v Speaker 1>walks in front of the vehicle, it will actually apply

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<v Speaker 1>the brakes and assist the driver of steering around it.

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<v Speaker 1>So it's automatic breaking, which is available in the market,

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<v Speaker 1>but by we've developed or that it can actually uh

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<v Speaker 1>sense soft tissue and help avoid avoid accidents. UH. There's

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<v Speaker 1>rumors that perhaps there's going to be a competitors will

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<v Speaker 1>bring be bringing their cars to market later this fall.

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<v Speaker 1>So we have seen in the past in small pickup trucks,

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<v Speaker 1>We've seen it in in subcompact cars. When new vehicles

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<v Speaker 1>come with new styling, new design, new technology, UM, there's

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<v Speaker 1>life comes back into that segment. So we we think

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<v Speaker 1>that the UH the segment that did decline last year,

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<v Speaker 1>will will plateau and who knows, perhaps even show little

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<v Speaker 1>growth next year. Bob where up rating? It seems at

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<v Speaker 1>least in the automobile industry or any big manufacturer in

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<v Speaker 1>a different world. Come January, there will be a new president.

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<v Speaker 1>Donald Trump has certainly taken to the Twitter sphere in

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<v Speaker 1>order to voice his particular perspective on where automobiles are made.

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<v Speaker 1>Do you feel, as an auto executive that you are

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<v Speaker 1>living in a different time than you were, let's say,

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<v Speaker 1>twelve months ago. Well, my quick answer to that, pen

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<v Speaker 1>would be, it's a little bit early to tell. But

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<v Speaker 1>the global the the auto industry is very much a

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<v Speaker 1>global industry. We have fifty three plants that are currently

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<v Speaker 1>operational in UM countries around the world. Ten of those

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<v Speaker 1>plants are here in the US, but the supply chain

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<v Speaker 1>is very very much global. The camera that we were

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<v Speaker 1>talking about earlier, UM cars dot Com has now for

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<v Speaker 1>four years named that the most American car consumers can buy.

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<v Speaker 1>And what they calculate that on is where are the

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<v Speaker 1>parts sourced? Whereas the labor source and by their calculation

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<v Speaker 1>of the camera is American sourced. The reverse of that, though,

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<v Speaker 1>is we still because of the global supply network, uh

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<v Speaker 1>do source of a camera across the world. So it's

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<v Speaker 1>very much a global industry. The supply chains are very long,

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<v Speaker 1>and so we're working. We look forward to working with

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<v Speaker 1>the new administration to get them to understand the complexities

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<v Speaker 1>of our industry. What's your number one fear for this

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<v Speaker 1>year as far as political interference with the auto industry,

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<v Speaker 1>I wouldn't characterize it as a as a fear. We

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<v Speaker 1>we are very confident this year. The economy is very good.

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<v Speaker 1>There was seventeen point five million cars sold in the

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<v Speaker 1>US last year. We believe it's gonna be lower in ten,

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<v Speaker 1>but we're forecasting and market between seventeen seventeen point two.

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<v Speaker 1>Uh So the economy, he's very robust right now. We think, uh,

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<v Speaker 1>we think it's going to be another good year. That

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<v Speaker 1>was Bob Carter, president of Toyota North America, speaking with

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<v Speaker 1>US yesterday about the updated Camray, as well as the

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<v Speaker 1>outlook for sedans and the potential uh for political interference

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<v Speaker 1>or perhaps lack thereof. There we are hearing is going

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<v Speaker 1>on right now at Capital Hail. Jeff Sessions is looking

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<v Speaker 1>to be confirmed as Attorney General, and John Kelly president

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<v Speaker 1>elect Trump's pick for Homeland Security. I want to bring

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<v Speaker 1>in Nancy Agnanovitch. She's a Capital Hill reporter for Bloomberg

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<v Speaker 1>b an A in Washington, d c UM, and I

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<v Speaker 1>wanted to get your sense of so far what we've learned.

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<v Speaker 1>I believe Jeff Sessions is still being grilled. Well, this

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<v Speaker 1>is only the beginning of his two day hearing. As

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<v Speaker 1>ss UM, they'll be meeting at Judiciary for two days

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<v Speaker 1>in a row to look at his qualifications. I think

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<v Speaker 1>he's one of the people who's already got all of

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<v Speaker 1>his financial information in and has complied with those requirements,

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<v Speaker 1>and so he's covered there in terms of fulfilling those requirements.

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<v Speaker 1>But I guess there are concerns about his very conservative

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<v Speaker 1>philosophy concerning immigration and other issues, and so there'll be

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<v Speaker 1>a lot of questions there. And so I was gonna say,

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<v Speaker 1>could you just outline for us how many how many

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<v Speaker 1>hearings are going to be held today and then tomorrow

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<v Speaker 1>and then on Thursday, just we have an idea of

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<v Speaker 1>how packed the schedule is this week. All overall, we're

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<v Speaker 1>looking from twelve to fifteen depending on how you calculated.

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<v Speaker 1>But today we have those three hearings, including too that

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<v Speaker 1>you mentioned. Then tomorrow Wednesday, there were six that were scheduled.

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<v Speaker 1>But Senator Schumer, the Minority leader, just a little bit

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<v Speaker 1>ago this morning, I announced that Eastern negotiated a plan

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<v Speaker 1>with joy Pretty Leader McConnell to reduce that down to

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<v Speaker 1>three on Wednesday and to push some of those off

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<v Speaker 1>till Thursday and next week. And then on Thursday we

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<v Speaker 1>have another five to six hearings. So there are a

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<v Speaker 1>lot and a lot of these deal with President elect

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<v Speaker 1>Trump's national security team, and McConnell wants very much to

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<v Speaker 1>get six to seven of the cabinet picks or national

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<v Speaker 1>security team members confirmed by inauguration day in order for

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<v Speaker 1>him to have that in place when he goes into

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<v Speaker 1>the White House. Nancy, is this typical, this type of

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<v Speaker 1>packed confirmation schedule, Well, Senator McConnell has said repeatedly that

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<v Speaker 1>on the very first day of the Obama administration they

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<v Speaker 1>confirmed seven people. But I think what Democrats are saying

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<v Speaker 1>is those people um already had their FBI tabinet I'm sorry,

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<v Speaker 1>FBI background checks done, their financial disclosure, the disclosure forms,

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<v Speaker 1>the in and all these other requirements, and a lot

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<v Speaker 1>of people who Trump as proposed to nominate haven't flied

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<v Speaker 1>without so far, and for that's one of the reasons

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<v Speaker 1>why Democrats want to slow this process down. And then

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<v Speaker 1>they also were saying that, unlike in the Obama administration,

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<v Speaker 1>we're looking at many billionaires or otherwise very very wealthy

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<v Speaker 1>people who have very complicated financial holdings that require more examination.

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<v Speaker 1>And also many of these people have never served in

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<v Speaker 1>government before, especially not at this kind of level. Rex Chellison,

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<v Speaker 1>former chief executive of ex On Mobile, slated to be

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<v Speaker 1>the nation's top diplomat. How contentious or how confrontational do

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<v Speaker 1>you believe those hearings will be? Well. Democrats will obviously

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<v Speaker 1>raise a lot of questions about his relationship with Vladimir

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<v Speaker 1>Putin and his feelings with Russia over the years, And

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<v Speaker 1>I guess the primary question is whether he can put

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<v Speaker 1>aside maybe his friendship with Putin to look out for

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<v Speaker 1>the interests of the United States as this country's top diplomat.

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<v Speaker 1>So I think there will be some contentiousness there. So, Nancy,

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<v Speaker 1>from your perspective, I mean, so far, what is the

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<v Speaker 1>tenor of the questions been, Like, I mean, is it

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<v Speaker 1>mostly just political grandstanding or are are the questions, really

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<v Speaker 1>probing and substantive and trying to get to some kind

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<v Speaker 1>of comfort with who we have. There's always political grandstanding,

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<v Speaker 1>but I think there are legitimate concerns about UM some

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<v Speaker 1>of these nominees financial holdings and trying to get a

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<v Speaker 1>look at that in order to identify potential conflicts of interest, UM,

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<v Speaker 1>when a person is in charge of a department UM

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<v Speaker 1>with billions of dollars in funding going out to different industries,

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<v Speaker 1>and you can't really look for potential conflicts of interest

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<v Speaker 1>if you haven't seen the paperwork yet. So I think

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<v Speaker 1>they're trying to slow it down, and I think Democrats

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<v Speaker 1>know that it's very unlikely that they can derail many

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<v Speaker 1>of these nominees, but they want to have a chance

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<v Speaker 1>to do what they call the advice and consent role

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<v Speaker 1>that the Senate has traditionally done before they let them advance,

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<v Speaker 1>before they're actually put to a vote on the Senate floor.

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<v Speaker 1>Thank you very much for joining us. Nancy Ognanovich, Capitol

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<v Speaker 1>Hill reporter for Bloomberg b NA, joining us from Washington,

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<v Speaker 1>d C. We're broadcasting from the North American International Auto Show,

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<v Speaker 1>and Lisa Brahmins, do you know that Cadillac is going

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<v Speaker 1>to launch a fifteen hundred dollar a month luxury car

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<v Speaker 1>subscription service. Do you get a new car every months?

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<v Speaker 1>Coming in the mouth, Well, you might be able to,

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<v Speaker 1>particularly since we're gonna be talking now with the president

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<v Speaker 1>of Cadillac. Johann didn't meet Mason. Thank you very much

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<v Speaker 1>for being in here. Tell us about this new subscription service.

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<v Speaker 1>What's it aimed at, and why are you Why are

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<v Speaker 1>you launching this? It's called Book by Cadillac, and really

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<v Speaker 1>is a response to what is a very dynamic environment

0:12:12.920 --> 0:12:15.679
<v Speaker 1>within which the order industry is doing business today. If

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<v Speaker 1>we look at the emergence of the mega cities around

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<v Speaker 1>the world. UM, these cities were initially enabled by the

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<v Speaker 1>principle of individual mobility, but the principle has become so

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<v Speaker 1>successful that it's resulted in congestion and noise and pollution

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<v Speaker 1>and all the things that are big obstacles to vehicle ownership. UM.

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<v Speaker 1>One response to that is the emergence of right shoting

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<v Speaker 1>service is like lift and Ubo, and those certainly will

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<v Speaker 1>probably containue to gain traction. And living in New York

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<v Speaker 1>I can tell you that we face significant barriers to

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<v Speaker 1>operating vehicles so we are still diplomatic. I mean, honestly,

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<v Speaker 1>I've driven down a one way street with three bike

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<v Speaker 1>riders coming at me and you know, another person walking

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<v Speaker 1>out in front. This is this is what you're talking

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<v Speaker 1>about with challenging. So it's it's it's like one benefit

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<v Speaker 1>of living in the city. I experienced it first then.

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<v Speaker 1>And what we want to do is to make sure

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<v Speaker 1>that we are part of the world that does the

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<v Speaker 1>disruption and we don't end up being disrupted. And so

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<v Speaker 1>we need to respond to a changing world. And we

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<v Speaker 1>know that for affluent customers, flexibility convenient time has value,

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<v Speaker 1>and we thought, why should we follow only the conventional

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<v Speaker 1>model of business ownership where you're right out of check

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<v Speaker 1>by the car pocket in your garage for of the time,

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<v Speaker 1>and that's kind of it. Surely there must be an

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<v Speaker 1>opportunity to respond with greater flexibility. So it's basically like

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<v Speaker 1>a new version of having a personal driver. Not quite no,

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<v Speaker 1>you will continue to drive the car yourself. But of

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<v Speaker 1>course this is a precursor to full autonomous driving capability,

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<v Speaker 1>in which gets that's no longer a point is that

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<v Speaker 1>the point of this, though partly up to it's it's

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<v Speaker 1>basically training well to have call, have cars on call,

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<v Speaker 1>rather than having ownership and being able to have that

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<v Speaker 1>car brought to them and for now they'll drive it,

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<v Speaker 1>but maybe in three years they were but precisely right.

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<v Speaker 1>So it's a setup for the future that we see

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<v Speaker 1>a little bit beyond just the the the definition of

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<v Speaker 1>the product substance today and what this really book means

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<v Speaker 1>is that you buy into a Cadillac experience, a luxury

0:14:22.840 --> 0:14:26.760
<v Speaker 1>experience that's fully immersive. It's not tied to any individual vehicle.

0:14:27.440 --> 0:14:30.080
<v Speaker 1>It gives you flexibility to change your car eighteen times

0:14:30.120 --> 0:14:32.120
<v Speaker 1>a year, so more than once a month. And if

0:14:32.200 --> 0:14:34.960
<v Speaker 1>today you feel like a sports car, tomorrow it's a

0:14:35.040 --> 0:14:37.440
<v Speaker 1>night out of the town and a luxury automobile. And

0:14:37.480 --> 0:14:39.480
<v Speaker 1>then you want to go skiing, you need a suv.

0:14:39.640 --> 0:14:42.320
<v Speaker 1>You can have all of those. And as we expand

0:14:42.320 --> 0:14:45.160
<v Speaker 1>the program, we're starting off in New York, but conceivably,

0:14:45.600 --> 0:14:47.040
<v Speaker 1>let us say you go to l A for a

0:14:47.080 --> 0:14:48.720
<v Speaker 1>week and you need a car there, Well, you take

0:14:48.760 --> 0:14:50.960
<v Speaker 1>your book by Cadillac in l A. You know, to

0:14:51.000 --> 0:14:54.000
<v Speaker 1>rent a car anymore. So it's about convenience, about flexibility.

0:14:54.400 --> 0:14:56.840
<v Speaker 1>All maintenance insurance is taken care of. They always have

0:14:56.920 --> 0:14:59.360
<v Speaker 1>a car that's clean and fully gassed, a lover to

0:14:59.400 --> 0:15:03.040
<v Speaker 1>your doorstep, and all of that convenience and flexibility we

0:15:03.080 --> 0:15:06.880
<v Speaker 1>think has value for affluent consumers. Now you have experienced

0:15:06.880 --> 0:15:09.840
<v Speaker 1>at Infinity as well as Audi, and I'm wondering what

0:15:10.000 --> 0:15:14.200
<v Speaker 1>you are bringing Cadillac, particularly to the dealership network, because

0:15:14.240 --> 0:15:16.960
<v Speaker 1>there's a big effort on the part of Cadillac to

0:15:17.440 --> 0:15:22.040
<v Speaker 1>really upgrade and streamline and stabilize the dealership. The real

0:15:22.080 --> 0:15:25.680
<v Speaker 1>thing for us is we are on a long term journey.

0:15:25.720 --> 0:15:28.720
<v Speaker 1>I would have to say to restore Cadillac what we

0:15:28.840 --> 0:15:31.680
<v Speaker 1>kind of loosely call to the pinnacle of premium, back

0:15:31.720 --> 0:15:34.480
<v Speaker 1>to that world where it occupied this position as the

0:15:34.560 --> 0:15:39.200
<v Speaker 1>unquestioned standard for the world in Project It's called Project

0:15:39.240 --> 0:15:43.080
<v Speaker 1>Pinnacle for that reason. And while we are working very

0:15:43.120 --> 0:15:46.280
<v Speaker 1>hard on expanding the product portfolio and really creating top

0:15:46.280 --> 0:15:50.960
<v Speaker 1>technology cars with great craftsmanship and and and great technology,

0:15:51.520 --> 0:15:53.880
<v Speaker 1>that's only part of the question that needs to be answered.

0:15:54.040 --> 0:15:57.280
<v Speaker 1>We also need to look downstream at the overall ownership experience.

0:15:57.600 --> 0:16:00.840
<v Speaker 1>And yeah, dealer network plays a crucial role because it's

0:16:00.880 --> 0:16:04.200
<v Speaker 1>the environment within which the customer engages the brand and

0:16:05.120 --> 0:16:08.680
<v Speaker 1>the quality of our dealer network also needs to reflect

0:16:08.760 --> 0:16:11.560
<v Speaker 1>our premium aspirations. And to be clear, we have some

0:16:11.680 --> 0:16:16.200
<v Speaker 1>really outstanding dealers that do an herculean task in terms

0:16:16.200 --> 0:16:19.840
<v Speaker 1>of elevating the overall brand experience. Reality for us, though,

0:16:19.920 --> 0:16:22.840
<v Speaker 1>is we also a very large dealer network and the

0:16:22.960 --> 0:16:27.840
<v Speaker 1>variability in the overall delivery of that experience is something

0:16:27.840 --> 0:16:30.920
<v Speaker 1>that we are trying to get into a narrower distribution,

0:16:31.520 --> 0:16:34.240
<v Speaker 1>and the Project Pinnicle is designed to set around brand

0:16:34.320 --> 0:16:39.200
<v Speaker 1>standards for our dealers in terms of that customer experience,

0:16:39.600 --> 0:16:44.440
<v Speaker 1>which we then reward with ever increasing financial bonuses as

0:16:44.480 --> 0:16:49.040
<v Speaker 1>they reach increasing compliance. Johann Denaithan, thank you so much

0:16:49.040 --> 0:16:53.000
<v Speaker 1>for being with us. It's truly fascinating development. The idea

0:16:53.120 --> 0:16:56.360
<v Speaker 1>of trying to create a precursor to what the inevitable.

0:16:56.400 --> 0:17:00.400
<v Speaker 1>The Johann Denaisan, president of Cadillac, talking about the new

0:17:00.640 --> 0:17:03.640
<v Speaker 1>car subscription service in New York City, which may really

0:17:03.680 --> 0:17:07.119
<v Speaker 1>be the stepping stone to the new version of auto

0:17:07.520 --> 0:17:10.600
<v Speaker 1>lack of ownership, which a voids the bicycles when you drive.

0:17:11.640 --> 0:17:27.600
<v Speaker 1>I'm trying. My dad tells me, this is Bloomberg. We're

0:17:27.640 --> 0:17:31.800
<v Speaker 1>broadcasting from them North American International Auto Show Earlier we

0:17:31.880 --> 0:17:34.200
<v Speaker 1>got a chance to sit down with the Joe Henrix.

0:17:34.440 --> 0:17:37.280
<v Speaker 1>He is the president of the Americas for Ford. Talked

0:17:37.280 --> 0:17:40.080
<v Speaker 1>about the new F one fift pick up, the electrified

0:17:40.200 --> 0:17:44.320
<v Speaker 1>vehicle lineup at Ford, plus investments in new jobs in Michigan,

0:17:44.720 --> 0:17:47.280
<v Speaker 1>and the Donald Trump effect. The first question we wanted

0:17:47.320 --> 0:17:49.760
<v Speaker 1>to know was what the importances of the F series

0:17:49.960 --> 0:17:52.920
<v Speaker 1>is to Ford. You know, when you when you start

0:17:52.920 --> 0:17:55.440
<v Speaker 1>with our business in North America, it starts with F series,

0:17:55.800 --> 0:17:59.080
<v Speaker 1>or of our volume in North America's our F series trucks.

0:17:59.640 --> 0:18:02.040
<v Speaker 1>FIR trucks have been the best selling vehicle in the

0:18:02.119 --> 0:18:05.480
<v Speaker 1>United States for thirty five years consecutively, the best selling

0:18:05.520 --> 0:18:08.480
<v Speaker 1>trucks for forty years. So it's a big part of

0:18:08.480 --> 0:18:12.440
<v Speaker 1>our business. Obviously, we're expanding beyond that into all kinds

0:18:12.440 --> 0:18:14.280
<v Speaker 1>of other parts of the business, but it's it's safe

0:18:14.280 --> 0:18:16.320
<v Speaker 1>to say the crown jewels of Ford Motor Company in

0:18:16.320 --> 0:18:18.720
<v Speaker 1>North America are the F series trucks. And of course

0:18:18.760 --> 0:18:21.480
<v Speaker 1>we got to announce the two thousand eighteen Molly R

0:18:21.560 --> 0:18:24.479
<v Speaker 1>F one fifties getting some upgrades and freshening, which is

0:18:24.640 --> 0:18:27.520
<v Speaker 1>all he's very exciting to talk about. Whenever we talk

0:18:27.600 --> 0:18:31.960
<v Speaker 1>about car companies. At this point in the political trajectory.

0:18:32.040 --> 0:18:34.840
<v Speaker 1>We have to uh talk about President elect Donald Trump

0:18:35.400 --> 0:18:37.919
<v Speaker 1>less than a week ago forward canceled plans for one

0:18:37.960 --> 0:18:41.600
<v Speaker 1>point six a billion dollar planned in Mexico. You have

0:18:41.720 --> 0:18:43.919
<v Speaker 1>to think it has to do somewhat with President elect

0:18:44.000 --> 0:18:50.720
<v Speaker 1>Trump's rhetoric. Will this cancelation material effect the production of

0:18:50.760 --> 0:18:54.280
<v Speaker 1>any particular vehicles and do you expect less of production

0:18:54.480 --> 0:18:57.560
<v Speaker 1>of certain types of vehicles because of the political pressure

0:18:57.640 --> 0:18:59.800
<v Speaker 1>right now? Yeah, So you know, it's a hot topic

0:18:59.880 --> 0:19:02.360
<v Speaker 1>at the moment. To be sure. I mean, we took

0:19:02.400 --> 0:19:04.320
<v Speaker 1>a look at the end of last year where small

0:19:04.359 --> 0:19:06.880
<v Speaker 1>car sales were going in the US and and did

0:19:06.920 --> 0:19:09.159
<v Speaker 1>some updated projections whether they're going to be in the future,

0:19:09.760 --> 0:19:11.840
<v Speaker 1>and we reached a point where we felt comfortable enough

0:19:11.880 --> 0:19:14.639
<v Speaker 1>that we could fit the focus volume that we forecast

0:19:14.720 --> 0:19:17.880
<v Speaker 1>for two thousand and eight, nineteen twenty and beyond into

0:19:17.920 --> 0:19:21.840
<v Speaker 1>an existing manufacturing capacity plant we have in Hermcile, Mexico.

0:19:22.320 --> 0:19:25.639
<v Speaker 1>That was the big driver decision. Uh. And because in

0:19:25.640 --> 0:19:28.800
<v Speaker 1>our in our business capacities everything, it's such a billion

0:19:28.800 --> 0:19:32.520
<v Speaker 1>dollar plants are a big deal. Capacitization is everything, and

0:19:32.680 --> 0:19:35.520
<v Speaker 1>you when you can get new capacity into existing plants

0:19:35.520 --> 0:19:37.520
<v Speaker 1>a lot cheaper than building a new plant, even though

0:19:37.520 --> 0:19:40.320
<v Speaker 1>we were pretty far along on starting the new plant.

0:19:40.920 --> 0:19:43.600
<v Speaker 1>The cancelation of that, the movement of focus into her

0:19:43.640 --> 0:19:46.439
<v Speaker 1>mas SEO and then investing some of that money into

0:19:46.480 --> 0:19:49.080
<v Speaker 1>an expansion of our plant here in Michigan to produce

0:19:49.080 --> 0:19:51.919
<v Speaker 1>two new products. That say, it's about five million dollars

0:19:51.920 --> 0:19:54.880
<v Speaker 1>of capital UM and that was the big driver read decision.

0:19:54.920 --> 0:19:57.320
<v Speaker 1>I know the timing and us of his um leads

0:19:57.320 --> 0:19:59.560
<v Speaker 1>to a lot of other questions, but but you know,

0:20:00.000 --> 0:20:02.720
<v Speaker 1>the ability to be able to forecast lower small car sales,

0:20:02.720 --> 0:20:04.600
<v Speaker 1>so that's what's been happening in the US really was

0:20:04.640 --> 0:20:06.760
<v Speaker 1>the main driver. So do you think that Ford will

0:20:06.760 --> 0:20:09.760
<v Speaker 1>make any changes to its future plans as a result

0:20:09.880 --> 0:20:12.560
<v Speaker 1>of the current political climate and sort of the focus

0:20:12.560 --> 0:20:16.200
<v Speaker 1>on American produced goods? You know, well, we are taking

0:20:16.200 --> 0:20:18.800
<v Speaker 1>into account what we expect to be some pro growth

0:20:18.840 --> 0:20:23.000
<v Speaker 1>initiatives by the Trump administration, including some taxation policy discussions,

0:20:23.000 --> 0:20:26.080
<v Speaker 1>hopefully some improvements in the competitiveness of the US economy

0:20:26.119 --> 0:20:27.880
<v Speaker 1>when it comes to corporate tax rates and some other

0:20:27.920 --> 0:20:30.800
<v Speaker 1>things regulatory and the like. So if he never say

0:20:30.880 --> 0:20:33.920
<v Speaker 1>one factor really drives a decision, there's in our business,

0:20:34.240 --> 0:20:36.840
<v Speaker 1>so many things get taken into account when you're making

0:20:36.880 --> 0:20:39.399
<v Speaker 1>investment decide of what we make. But we are taking

0:20:39.400 --> 0:20:43.199
<v Speaker 1>into account some expected changes into the into the you know,

0:20:43.600 --> 0:20:47.280
<v Speaker 1>regulatory and economic cycle in the US. You asked the

0:20:47.359 --> 0:20:50.359
<v Speaker 1>question about production, we're not. We're still moving focus production

0:20:50.359 --> 0:20:52.720
<v Speaker 1>to Mexico. We won't, it won't be any production. Kind

0:20:52.720 --> 0:20:54.840
<v Speaker 1>of mythsed by all of this. It's just making sure

0:20:54.840 --> 0:20:56.399
<v Speaker 1>that we spend the right amount of mind to do it.

0:20:56.760 --> 0:21:00.960
<v Speaker 1>Give our listeners an idea Ford's business in North America

0:21:01.160 --> 0:21:06.240
<v Speaker 1>and Ford's business overseas. It's may surprise people. Yeah, well,

0:21:06.280 --> 0:21:10.280
<v Speaker 1>in North America we're the second largest manufacturer and seller

0:21:10.320 --> 0:21:13.000
<v Speaker 1>of vehicles. We actually produce more vehicles in the United

0:21:13.000 --> 0:21:16.520
<v Speaker 1>States and anybody else. We employ more workers and manufacturing

0:21:16.520 --> 0:21:18.800
<v Speaker 1>workers in the US and anybody else. We're number one

0:21:18.840 --> 0:21:21.240
<v Speaker 1>in Canada, we're second in the U S and sales,

0:21:21.320 --> 0:21:23.320
<v Speaker 1>number one in Canada for sales, and we're you know,

0:21:23.440 --> 0:21:26.280
<v Speaker 1>fifth or six in Mexico, depending on what time of

0:21:26.280 --> 0:21:29.159
<v Speaker 1>the year we are. And our business in total of

0:21:29.240 --> 0:21:33.399
<v Speaker 1>North America is over three million units. Ford globally has

0:21:33.440 --> 0:21:35.840
<v Speaker 1>a strong presence of course in Europe, a strong presence

0:21:35.880 --> 0:21:38.760
<v Speaker 1>now in China. We're now in the top six, five

0:21:38.840 --> 0:21:42.280
<v Speaker 1>or six brands in China. UM, we have a strong

0:21:42.320 --> 0:21:45.479
<v Speaker 1>presence in Brazil and South America. Were third or fourth

0:21:45.600 --> 0:21:48.439
<v Speaker 1>or fifth, depending on what market. Second in Argentina, but

0:21:48.480 --> 0:21:51.200
<v Speaker 1>we're depending on what market you're looking at, and when

0:21:51.200 --> 0:21:55.040
<v Speaker 1>you look at our business, the majority of our revenue

0:21:55.040 --> 0:21:57.119
<v Speaker 1>comes to North America. The majority of our profits come

0:21:57.119 --> 0:21:59.160
<v Speaker 1>from North America, but we certainly have a strong presence

0:21:59.480 --> 0:22:03.240
<v Speaker 1>all around the Roman what's the weakest market right now, Well,

0:22:03.359 --> 0:22:05.960
<v Speaker 1>it's harder to find weakest market. The probably the most

0:22:06.040 --> 0:22:11.280
<v Speaker 1>challenged market would be Brazil, given the economic and political

0:22:11.359 --> 0:22:14.720
<v Speaker 1>challenges that the country faces. The auto industry in Brazil

0:22:14.800 --> 0:22:17.080
<v Speaker 1>has collapsed about half were it was a few years ago.

0:22:17.760 --> 0:22:20.000
<v Speaker 1>That puts a lot of pressure on our business. Also

0:22:20.080 --> 0:22:23.199
<v Speaker 1>the uncertainty and the political challenges that they've had. We've

0:22:23.200 --> 0:22:25.760
<v Speaker 1>seen some progress lately the president Tamarins and things that

0:22:25.760 --> 0:22:28.439
<v Speaker 1>have happened, but Brazil is certainly challenged and the Indian

0:22:28.480 --> 0:22:30.960
<v Speaker 1>market India has not grown to the level people thought

0:22:30.960 --> 0:22:32.000
<v Speaker 1>I was going to grow and there's a lot of

0:22:32.000 --> 0:22:36.160
<v Speaker 1>pressure on that business as well. That was Joe Hendrix.

0:22:36.200 --> 0:22:45.280
<v Speaker 1>He is the president of the Americas for Ford. Thanks

0:22:45.320 --> 0:22:47.919
<v Speaker 1>for listening to the Bloomberg P and L podcast. You

0:22:47.960 --> 0:22:52.080
<v Speaker 1>can subscribe and listen to interviews at iTunes, SoundCloud, or

0:22:52.119 --> 0:22:56.200
<v Speaker 1>whatever podcast platform you prefer. I'm pim Fox. I'm out

0:22:56.200 --> 0:22:59.080
<v Speaker 1>there on Twitter at pim Fox. I'm out there on

0:22:59.119 --> 0:23:02.520
<v Speaker 1>Twitter Ata Abramo. It's one before the podcast. You can

0:23:02.520 --> 0:23:13.040
<v Speaker 1>always catch us worldwide on Bloomberg Radio m