WEBVTT - Golfer Greg Norman Uses Tech to Bring Millennials Back to Game 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.119 --> 0:00:11.200 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.560 you and your money, whether you at the grocery store 0:00:16.800 --> 0:00:19.960 or the trading floor. Find the Bloomberg P L Podcast 0:00:20.000 --> 0:00:29.360 on iTunes, SoundCloud and at Bloomberg dot com. The White Shark, 0:00:29.520 --> 0:00:32.120 the great White Shark has landed. Greg Norman, founder of 0:00:32.159 --> 0:00:35.240 the Greg Norman Company in West Palm Beach, has come 0:00:35.280 --> 0:00:38.159 to our cold little studio here in New York Studio 0:00:38.120 --> 0:00:40.440 at New York City. Greg, we're so happy to have 0:00:40.600 --> 0:00:44.159 you today. You announced a couple of partnerships your company, 0:00:44.680 --> 0:00:47.199 one with Verizon, and I want to start with the 0:00:47.240 --> 0:00:52.239 one with Verizon. It is seeking to modernize golf courses 0:00:52.280 --> 0:00:55.120 in the way that they are designed. Um, can you 0:00:55.160 --> 0:00:59.160 just describe a little bit about what his agreement really means. Well, 0:00:59.240 --> 0:01:01.200 let me just touch on the what you just asked 0:01:01.240 --> 0:01:04.160 me then about modernizing golf courses. When you look at 0:01:04.160 --> 0:01:07.280 the golf course of design business, it's been pretty much 0:01:07.319 --> 0:01:12.560 the same cookie cutter standard for generations and generations. What 0:01:12.760 --> 0:01:16.720 Verizon has done through their IoT platform is, for example, 0:01:16.800 --> 0:01:20.280 like smart cities, UM, you can learn a lot of 0:01:20.319 --> 0:01:23.320 things about a lot of individuals and about energy savings 0:01:23.360 --> 0:01:26.240 by being very, very smart. I actually think that technology 0:01:26.280 --> 0:01:30.840 works brilliantly in the golf course design business. It creates 0:01:30.840 --> 0:01:35.720 efficiencies and maintenance, It creates efficiencies and sustainability. So you 0:01:35.800 --> 0:01:38.520 make these golf courses smart and how do you make 0:01:38.560 --> 0:01:42.360 them smartest through connectivity and their actech platform? Is that 0:01:42.520 --> 0:01:44.959 it was really the reason why I fell in love 0:01:45.000 --> 0:01:46.320 with it when I saw what they were doing with 0:01:46.480 --> 0:01:51.280 the vineyards in wine districts and it's an automatic flow 0:01:51.400 --> 0:01:54.520 over into the golf course design business. So just on 0:01:54.600 --> 0:01:56.920 that one platform a line wasn't the reason why I 0:01:56.960 --> 0:01:59.840 signed up with Verizon or partner with Verizon. There was 0:02:00.000 --> 0:02:05.240 because we recognized the space in the golf industry UM 0:02:05.280 --> 0:02:09.760 that had never been not taking advantage of never being 0:02:09.840 --> 0:02:13.760 utilized before. The golf industry has gone backwards in the 0:02:13.840 --> 0:02:16.480 last decade from thirty million golfers in the US down 0:02:16.480 --> 0:02:20.000 about five may maybe even less twenty four plus million 0:02:20.720 --> 0:02:23.520 and m So how do we entice these people back 0:02:23.600 --> 0:02:25.919 to the game. Well, okay, so just to put this 0:02:26.000 --> 0:02:28.880 into perspective, you have more than one hundred Greg Norman 0:02:28.960 --> 0:02:32.040 designed golf courses around the world. Uh and and this 0:02:32.160 --> 0:02:34.560 sort of smart golf courses that Verizon could help plan, 0:02:35.320 --> 0:02:38.600 would as you were saying, would drive efficiency of course design, 0:02:38.680 --> 0:02:43.200 maintenance and sustainability. Will you talk about modernizing a golf course? 0:02:43.560 --> 0:02:46.040 You have to think there still are so many courses 0:02:46.080 --> 0:02:48.400 that don't allow you to even have your cell phone 0:02:48.440 --> 0:02:50.280 with you, let alone on. So, I mean we talk 0:02:50.320 --> 0:02:54.000 about connectivity and golf course, it seems like something that 0:02:54.400 --> 0:02:56.919 it doesn't drive so well. No, that's true that there 0:02:57.040 --> 0:03:00.560 is going to be a a segment of the market, 0:03:00.639 --> 0:03:03.640 which is some golf cup golf courses will not allow 0:03:03.680 --> 0:03:05.920 that to happen. I get that, I understand it. But 0:03:06.480 --> 0:03:08.840 how do you grow something? How do you how do 0:03:08.880 --> 0:03:11.480 you reach down to the millennials who have walked away 0:03:11.520 --> 0:03:13.240 from the game of golf basically, and how do you 0:03:13.240 --> 0:03:16.799 bring them back? You bring them back with their devices connectivity. Right, 0:03:18.160 --> 0:03:22.880 every second you're awake, you have a device in your hand, right, 0:03:22.919 --> 0:03:24.600 we all do. We're all sitting there, we all look 0:03:24.600 --> 0:03:28.160 at it. We will play with it, whether it's emails, texting, YadA, YadA, YadA. 0:03:28.320 --> 0:03:31.120 So at the same time, you have the opportunity of 0:03:31.120 --> 0:03:33.480 playing your music there. So if a kid wants to 0:03:33.480 --> 0:03:37.160 go to the golf course and experience some fun times 0:03:37.160 --> 0:03:40.360 with his other millennial friends, why not let him play music? 0:03:40.960 --> 0:03:43.360 Why not let him be connected to a device? Do 0:03:43.400 --> 0:03:46.480 you do you let people play music on your golf courses? Yeah? 0:03:46.560 --> 0:03:51.560 Absolutely absolutely. I have a a very very well known 0:03:52.240 --> 0:03:55.760 sports figure, probably the number one non sports figure in 0:03:55.760 --> 0:03:58.760 the United States. At the golf course I designed to 0:03:58.800 --> 0:04:02.120 build in South Flower. He'll play in a six and 0:04:02.640 --> 0:04:06.760 like four golf carts and four different individuals with music playing. 0:04:07.240 --> 0:04:09.120 What kind of music? What are they listen whatever, whatever 0:04:09.120 --> 0:04:10.600 they want to listen to. It doesn't really matter to 0:04:10.680 --> 0:04:13.120 people get mad at each other. No, look, I think 0:04:13.120 --> 0:04:16.360 it's great. I've played a golf course in the Bahamas, barefoot, 0:04:16.760 --> 0:04:23.920 no shirt on playing music and drinking. Margharita Gregor was wondering, 0:04:23.960 --> 0:04:26.239 you said, ask him what should I drink while I golf? 0:04:26.920 --> 0:04:29.760 So there you go, Margharita's is the answer. Just talking 0:04:29.800 --> 0:04:33.200 about expanding golf courses, which areas around the world and 0:04:33.240 --> 0:04:35.920 even in the US, do you see as the most 0:04:36.040 --> 0:04:40.279 ripe for new golf courses and expansion of your business? Great? Question. 0:04:40.320 --> 0:04:43.279 Take a country like Japan, for example, Japan is no 0:04:43.320 --> 0:04:46.600 more room for golf. They have twenty five hundred golf clubs, 0:04:46.760 --> 0:04:48.600 and within a golf club that could be eighteen holes 0:04:48.640 --> 0:04:51.800 thirty six. They have no ruined to expand because the 0:04:51.880 --> 0:04:54.040 costability golf course in Japan on the side of the 0:04:54.040 --> 0:04:57.480 mountains is too prohibitive. Then you get into places like 0:04:57.560 --> 0:05:01.000 Mexico for example, Mexico's are booming market for golf. It's 0:05:01.000 --> 0:05:04.360 a it's becoming a golf destination. Now. I've been going 0:05:04.600 --> 0:05:07.520 building golf course down there for twenty four twenty five years, 0:05:08.040 --> 0:05:12.159 and it's just increasing, increasing increasing. Take the Middle East. 0:05:12.400 --> 0:05:14.560 I built golf courses and Omar and I built golf 0:05:14.560 --> 0:05:16.839 courses in Jordan. We're gonna open up the first eighteen 0:05:16.880 --> 0:05:20.520 whole golf course in Jordan's. People go Jordan's, you know, 0:05:20.839 --> 0:05:23.839 and all of a sudden, the golf industry spreading their wings. 0:05:24.120 --> 0:05:28.359 Here in the United States, we're starting to see golf 0:05:28.480 --> 0:05:31.440 get a little bit more energy about it. Why. People 0:05:31.440 --> 0:05:33.880 are getting a little bit more disposable income in their pocket, 0:05:34.160 --> 0:05:36.159 so therefore they want to go out and enjoy the 0:05:36.200 --> 0:05:39.600 hobbies they do. And on top of that, it's it's 0:05:40.120 --> 0:05:43.600 the housing markets pretty much bottomed out, so people are 0:05:43.600 --> 0:05:47.640 going to look for golf course residential communities coming online 0:05:47.640 --> 0:05:50.440 in the next three or four years. And obviously the 0:05:50.680 --> 0:05:54.800 the It's the president of day is very much more 0:05:54.960 --> 0:05:58.159 pro business and pro development than the past one has been. 0:05:58.520 --> 0:06:00.640 Greg Norman, thank you so much for us. I should 0:06:00.640 --> 0:06:03.880 mention that not only do you have this arrangement with Verizon, 0:06:03.920 --> 0:06:06.599 but also you announced today that you have an agreement 0:06:06.600 --> 0:06:09.760 with Authentic Brands Group, which is an owner of a 0:06:09.880 --> 0:06:13.560 global portfolio fashion, sports, celebrity and entertainment brands. Uh, you're 0:06:13.560 --> 0:06:17.440 gonna be working on managing your brand, So congratulations to you. 0:06:17.560 --> 0:06:19.920 Thank you so much for joining us. Definitely fascinating to 0:06:19.960 --> 0:06:23.040 think of how different golf would be if people were 0:06:23.680 --> 0:06:27.120 driving around carts, blaring music and drinking Margarita's. But perhaps 0:06:27.120 --> 0:06:29.320 that will be the future as millennials get brought into 0:06:29.320 --> 0:06:31.680 the fold. Thank you so much, Greg Norman. As founder 0:06:31.800 --> 0:06:47.400 of the Greg Norman Company in West Palm b I 0:06:47.440 --> 0:06:51.120 am thrilled to introduce Kathleen Gaffney. She is a giant 0:06:51.200 --> 0:06:54.520 in the bond world. She's co director of Diversified Fixed 0:06:54.560 --> 0:06:58.200 Income at Eton Vance, which oversees three billion dollars in 0:06:58.279 --> 0:07:00.680 assets and is based in Boston, but she asiss here 0:07:00.720 --> 0:07:03.920 in our Bloomberg eleven three oh studio, Kathleen, So nice 0:07:03.920 --> 0:07:07.839 to see you. I want to start with how investors 0:07:07.880 --> 0:07:10.880 remain flexible in the current environment. We were just talking 0:07:10.960 --> 0:07:14.960 about how it is undergoing so much change, both on 0:07:15.000 --> 0:07:18.560 an economic and political level h in the US and globally, 0:07:18.600 --> 0:07:22.200 so you were saying flexibility is particularly important. How do 0:07:22.240 --> 0:07:25.080 you remain flexible? I think one of the best ways 0:07:25.160 --> 0:07:29.200 to remain flexible is keeping some dry powder. Having some 0:07:29.320 --> 0:07:32.760 cash right now makes an awful lot of sense. They're 0:07:32.840 --> 0:07:37.120 just there isn't a tremendous amount of value out there. Uh. 0:07:37.160 --> 0:07:39.600 We're going through a period where the central banks are 0:07:39.640 --> 0:07:44.840 going to be handing over passing the baton to the politicians. Uh, 0:07:44.880 --> 0:07:50.600 and so that makes for a very interesting environment. Um 0:07:50.840 --> 0:07:56.200 QUEWI took everything that was risk oriented. Uh, two levels 0:07:56.240 --> 0:07:58.560 that we haven't seen in a long time. So there's 0:07:58.600 --> 0:08:02.840 not a lot of value, but the fundamentals are not bad. 0:08:03.000 --> 0:08:06.240 So it's a good time to fare it around for 0:08:06.440 --> 0:08:10.800 good long term opportunities and have some cash for when 0:08:10.840 --> 0:08:13.360 the volatility picks up. Because it's certainly well. Have your 0:08:13.400 --> 0:08:17.680 cash allocations been going up in your funds. We've been 0:08:17.760 --> 0:08:22.320 holding it rather steady and around ten percent or so, 0:08:23.240 --> 0:08:27.040 which is pretty high on average, because average two, two 0:08:27.080 --> 0:08:30.360 to five would be more of a normal level. But 0:08:30.480 --> 0:08:34.080 that ten percent gives us that dry powder, so that 0:08:34.720 --> 0:08:37.520 if there is a reaction in the market, and we 0:08:37.559 --> 0:08:41.120 had a little bit of risk off last week, UM, 0:08:41.160 --> 0:08:43.400 that we're able to take advantage of it. But we're 0:08:43.440 --> 0:08:47.320 being patient about deploying that cash. It's not just every 0:08:47.360 --> 0:08:52.080 cell off that we're finding great opportunities. UM. We we're 0:08:52.160 --> 0:08:54.160 taking our time. You know. I was looking at one 0:08:54.200 --> 0:08:57.920 fund that you helped manage, the EAT Advanced Multisector Income Fund, 0:08:58.000 --> 0:09:01.080 which is performed better than percent of its peers according 0:09:01.080 --> 0:09:04.600 to Bloomberg data over the past year to date as 0:09:04.600 --> 0:09:06.760 well as the past three years. So UM, I was 0:09:06.800 --> 0:09:09.000 looking at some of the allocations. It looks like energy 0:09:09.080 --> 0:09:12.960 has contributed contributed to some of those gains. UM. Going forward, 0:09:13.000 --> 0:09:15.560 you're talking about looking for those ferreting around for those 0:09:15.559 --> 0:09:19.840 longer term opportunities, where are they? Uh? Excellent, excellent question, 0:09:19.920 --> 0:09:23.560 because I think what what I'm excited about is that 0:09:24.280 --> 0:09:27.480 with multisector we do have that flexibility to look into 0:09:27.520 --> 0:09:32.880 areas such as emerging markets. Also with currency. Credit is 0:09:32.920 --> 0:09:36.000 a big component as well. But I'm so glad not 0:09:36.120 --> 0:09:39.960 to be tied to a specific benchmark because then I 0:09:39.960 --> 0:09:44.720 can avoid the expensive securities because I don't need to 0:09:44.760 --> 0:09:47.680 own them, so I can own exactly what I think 0:09:48.080 --> 0:09:50.319 is going to generate good total return. So it was 0:09:50.360 --> 0:09:53.080 interesting that you say that because carl I Staid, who 0:09:53.240 --> 0:09:55.559 is a bond fund manager at Western Has Management, came 0:09:55.559 --> 0:09:57.600 on yesterday and he said that there's been sort of 0:09:57.600 --> 0:10:01.360 this recession going through different industries in the bond markets. 0:10:01.360 --> 0:10:04.280 He says that the next hit could be in telecommunications 0:10:04.920 --> 0:10:07.480 because some of the big behemoths have have levered up 0:10:07.520 --> 0:10:08.880 so much. We're talking to a T and T, we're 0:10:08.880 --> 0:10:13.240 talking Verizon. Do you agree with him? Uh? I think 0:10:13.280 --> 0:10:18.319 that that's quite possible because you do have an industry 0:10:18.320 --> 0:10:22.320 that is under pressure in terms of pricing. There's not 0:10:22.400 --> 0:10:25.040 a lot of flexibility in terms of what they can 0:10:25.120 --> 0:10:30.359 charge consumers, and you've got a lot of different technologies 0:10:30.400 --> 0:10:33.640 going on that are competing in the same areas. So 0:10:33.760 --> 0:10:39.840 it's ripe for some kind of uh uh switch or 0:10:39.880 --> 0:10:43.360 transition to a new technology. So I can see that 0:10:43.400 --> 0:10:47.760 they've been made, that we've seen some acquisitions, and yes, 0:10:47.800 --> 0:10:51.360 the leverages is going up at a time when if 0:10:51.400 --> 0:10:56.840 you can't grow out of it or UH receive better pricing, 0:10:57.000 --> 0:10:58.959 it's going to be challenging. So are you avoiding those 0:10:59.000 --> 0:11:01.360 bonds to A T and T and Verizon. Uh, they 0:11:01.400 --> 0:11:04.440 don't offer They definitely do not offer a lot of value, 0:11:04.520 --> 0:11:07.320 so we have no exposure there. UM. One other thing, 0:11:07.360 --> 0:11:10.320 you were talking about emerging markets, and we've seen a 0:11:10.320 --> 0:11:13.839 lot of new issuance from a lot of UH developing 0:11:13.920 --> 0:11:17.160 markets in the dollar bond market. Um. There was news 0:11:17.240 --> 0:11:20.240 over the past few days that Papua New Guinea, one 0:11:20.280 --> 0:11:24.280 of the weakest Asian economies, is playing its debut issuance 0:11:24.440 --> 0:11:28.920 five million dollars in dollar denominated debt. Does this concern 0:11:29.000 --> 0:11:32.800 you at all? Uh, it does a little bit, because 0:11:32.920 --> 0:11:37.400 it's not as if emerging markets is the place to be. 0:11:38.120 --> 0:11:41.080 You really have to be very selective. And it was 0:11:41.200 --> 0:11:45.480 interesting to note that this issuance, the supply that we 0:11:45.559 --> 0:11:48.440 started to see happened at the beginning of the year, 0:11:48.920 --> 0:11:51.160 with a big wave of it coming just prior to 0:11:51.200 --> 0:11:55.760 the inauguration. So I think there was a sense that, uh, 0:11:55.840 --> 0:11:59.440 some of these issuers, countries and companies wanted to get 0:11:59.480 --> 0:12:02.480 in ahead of the new administration in case there was 0:12:02.480 --> 0:12:06.120 going to be volatility. But actually what we've seen is 0:12:06.400 --> 0:12:11.439 a much brighter global growth story and less of what 0:12:11.520 --> 0:12:14.960 we were most afraid about in terms of protectionism with 0:12:15.000 --> 0:12:19.079 the new administration, and so there there are some really 0:12:19.280 --> 0:12:23.640 positive stories. In fact, i'd almost say that emerging markets 0:12:23.679 --> 0:12:28.600 are going more mainstream and offer better upside than the 0:12:28.679 --> 0:12:32.800 developed world. We're really struggling to get our act together 0:12:33.000 --> 0:12:36.320 in terms of handling the politics and getting growth going. 0:12:36.840 --> 0:12:39.800 Which three countries do you think offer the greatest promise 0:12:39.960 --> 0:12:45.360 in emerging markets? Mexico, Brazil and India. And then going 0:12:45.400 --> 0:12:48.000 back to what you're initially saying about this transition for 0:12:48.120 --> 0:12:53.439 monetary policy to fiscal policy, do you think that President 0:12:53.480 --> 0:12:57.600 Trump has enough political will to put forward his one 0:12:57.640 --> 0:13:00.079 trillion dollar infrastructure spending plan and if he does in 0:13:00.440 --> 0:13:02.720 give some kind of fiscal stimulus in that scale, well 0:13:02.760 --> 0:13:05.439 we see some kind of retraction, some kind of like 0:13:05.480 --> 0:13:09.240 you know, retracement in the in the stock and bond markets. Well, 0:13:09.320 --> 0:13:14.440 my thoughts about what the new administration can do um 0:13:14.520 --> 0:13:17.319 infrastructure is something that the market has already started to 0:13:17.440 --> 0:13:20.960 price in, and it does seem that that would be 0:13:21.000 --> 0:13:25.680 a good way to get UH folks at work the 0:13:25.800 --> 0:13:29.560 jobs that he so often talks about. UH. I think 0:13:29.760 --> 0:13:32.440 prior to the election there really was a mandate coming 0:13:32.480 --> 0:13:36.120 from the country to get growth and jobs going. UM. 0:13:36.200 --> 0:13:39.280 So that is out there and it needs to be addressed. 0:13:39.679 --> 0:13:41.800 The challenge is going to be how do we pay 0:13:41.840 --> 0:13:47.640 for it? UH. With the UH failure of the healthcare 0:13:48.200 --> 0:13:52.319 to repeal and replace, that was going to be some savings, 0:13:52.960 --> 0:13:58.280 and the other sources to help out with paying for 0:13:58.679 --> 0:14:02.160 the infrastructure are not as positive for the economy. So 0:14:02.200 --> 0:14:04.640 I think that's going to struggle. But I do think 0:14:05.040 --> 0:14:08.440 there's a momentum on both sides of the aisle to 0:14:08.559 --> 0:14:12.520 get infrastructure going real quick. Twenty seconds. What's the weakest 0:14:12.520 --> 0:14:17.040 part of credit markets right now? Oh, great question. I 0:14:17.080 --> 0:14:21.120 would say high yield UM. Both investment grade and high 0:14:21.160 --> 0:14:24.680 yield look expensive in the US. In the US, but 0:14:24.760 --> 0:14:27.520 I do think that high yield has become a lot 0:14:27.600 --> 0:14:30.920 more rate sensitive, and for that reason, you've got folks 0:14:30.920 --> 0:14:34.600 who have shortened up duration wise and aren't prepared for 0:14:34.640 --> 0:14:38.760 what UH kind of downside risk exists there Kathleen Gaffney, 0:14:38.800 --> 0:14:41.440 Come back anytime. Always a thrill to speak with you. 0:14:41.520 --> 0:14:45.520 Kathleen Gaffney, co director of Diversified Fixed Income at Eaton Vans, 0:14:45.680 --> 0:15:01.920 which oversees three billion dollars. Well, we heard a lot 0:15:02.040 --> 0:15:05.920 about the company Carrier, which makes heaters uh and as 0:15:06.000 --> 0:15:09.280 part of United Technology Companies, we heard a lot about 0:15:09.280 --> 0:15:12.280 it or United Technology Corporation. I should say we heard 0:15:12.280 --> 0:15:14.880 a lot of it last year when President Trump touted 0:15:15.000 --> 0:15:18.880 his plan to save almost a thousand jobs at a 0:15:18.960 --> 0:15:23.200 plant in Indianapolis. But since then, Carrier could kind of 0:15:23.520 --> 0:15:26.960 be seen as a small lens into a very big 0:15:27.040 --> 0:15:31.520 issue of globalization and the tensions that have emerged. Brian Gruley, 0:15:31.560 --> 0:15:34.040 a Business Week reporter, highlighted some of these in a 0:15:34.120 --> 0:15:37.240 recent Business Week piece. That is really terrific. Brian, thank 0:15:37.240 --> 0:15:39.320 you so much for joining us. I just want to 0:15:39.320 --> 0:15:44.840 start with what has happened since President Trump did help 0:15:44.960 --> 0:15:48.920 negotiate this deal to keep certain jobs in the US 0:15:49.640 --> 0:15:52.880 for a Carrier. The main thing is the plant continues 0:15:53.200 --> 0:15:57.520 to churn out ten thousand furnaces, gas furnaces, and their 0:15:57.560 --> 0:16:01.960 electric cousins band coils a day um. But at the 0:16:02.000 --> 0:16:04.960 same time they're moving some of the fan coil production. 0:16:05.120 --> 0:16:08.480 It's essentially two assembly lines to Mexico, and that will 0:16:08.560 --> 0:16:12.320 result in the loss of five hundred some jobs, while 0:16:12.400 --> 0:16:17.200 another seven hundred seven and fifty will remain in Indianapolis 0:16:17.400 --> 0:16:22.600 UM building gas furnaces for quite some time, and United 0:16:22.640 --> 0:16:27.840 Technologies will be UH investing about sixteen million dollars and 0:16:27.960 --> 0:16:31.200 upgrading that plant, including some automation. Brian, did you spend 0:16:31.320 --> 0:16:34.080 time in Indianapolis when you were writing the story. I 0:16:34.120 --> 0:16:36.440 did a couple of times. I was down there. It's 0:16:36.480 --> 0:16:39.280 a nice town. What was the mood like among some 0:16:39.360 --> 0:16:42.280 of the factory workers that you spoke with. Do they 0:16:42.320 --> 0:16:46.080 seem to be less angry about some of the shifts 0:16:46.120 --> 0:16:50.000 that the presidentship was talking about. Well, I think, um, 0:16:50.040 --> 0:16:55.040 certainly they would rather have their jobs than not. Some 0:16:55.160 --> 0:16:58.200 of them were of an age where they decided, you know, 0:16:58.280 --> 0:17:02.320 there's there's been a buyout of sorts negotiated, so they thought, 0:17:02.320 --> 0:17:04.800 I'm going to move on. Some We're gonna take the 0:17:04.880 --> 0:17:09.640 money and go, thinking they might get UH fired anyway. 0:17:09.760 --> 0:17:12.960 And um, there were some who were keeping their jobs. 0:17:12.960 --> 0:17:16.480 I remember one I spoke with who said, I'm happy 0:17:16.600 --> 0:17:18.399 for the people who keep their jobs. I'm happy to 0:17:18.400 --> 0:17:21.000 have my job, but it's not just about me and 0:17:21.000 --> 0:17:22.679 the people who kept them. It's about all of us, 0:17:22.680 --> 0:17:25.960 and that just the whole thing just makes me sad. Yeah. Well, Brian, 0:17:26.000 --> 0:17:28.359 I thought that your story was really compelling because it 0:17:28.440 --> 0:17:33.159 highlighted how carriers business doesn't have a lot of ways 0:17:33.240 --> 0:17:37.640 to innovate other than being cheaper. Uh, and that carrier, 0:17:37.680 --> 0:17:43.040 despite some of the political rhetoric, will continue to ride 0:17:43.040 --> 0:17:46.720 the globalization wave. Can you talk a little bit about that? Yeah, sure, 0:17:46.920 --> 0:17:50.080 you know the furnace industry, Leasa, it's uh, the furnace, 0:17:50.480 --> 0:17:52.679 while it's evolved over the years, is still a pretty 0:17:53.320 --> 0:17:57.360 basic appliance. It's not like, um, you know, Apple has 0:17:57.400 --> 0:18:00.960 a secret phone that can outdo Samsung or Ice versa. 0:18:01.280 --> 0:18:05.920 They're all pretty much the same. And so people rely 0:18:06.200 --> 0:18:09.720 on mostly on the people who the contractors and retailers 0:18:09.720 --> 0:18:13.119 who sell the furnaces. That's that's where they find the competition. 0:18:13.160 --> 0:18:15.199 And of course people look for the lowest price from 0:18:15.240 --> 0:18:18.480 the most reliable workers. So that puts the manufacturers in 0:18:18.520 --> 0:18:22.000 the position of having to build as as good a 0:18:22.040 --> 0:18:25.200 product as they can but keeping prices low, and there's 0:18:25.240 --> 0:18:28.280 certain things they cannot control the price steal, the price 0:18:28.280 --> 0:18:32.440 of aluminum, price of copper, etcetera. Um, but they can't 0:18:32.440 --> 0:18:35.880 control their labor. Labor costs for one thing, and so 0:18:35.960 --> 0:18:39.120 you can go seek lower, much lower labor costs, for instance, 0:18:39.160 --> 0:18:41.720 by going to Mexico where many of the furnace and 0:18:41.760 --> 0:18:44.760 air conditioner makers have gone. Yeah, you highlighted in your 0:18:44.880 --> 0:18:49.240 article that carriers unionized workers in Indianapolis are paid on 0:18:49.400 --> 0:18:52.320 average about twenty three dollars an hour. That compares to 0:18:52.359 --> 0:18:56.640 about three dollars an hour UH for their Mexican counterparts. 0:18:56.680 --> 0:18:59.919 How big of a proportion of the cost of carrier 0:19:00.040 --> 0:19:04.280 furnaces comes from that labor, Well, we don't know exactly, Lisa, 0:19:04.960 --> 0:19:08.560 but um, we do have information suggests that labor is 0:19:08.840 --> 0:19:12.720 somewhere between twenty the cost of the furnace, and so 0:19:12.920 --> 0:19:16.160 you know that's that's a pretty sizeable chunk. Whereas, for instance, 0:19:16.600 --> 0:19:20.960 on an elevator again technologies also builds otus elevators, labor 0:19:21.000 --> 0:19:24.040 only represents about three percent of the cost and so 0:19:24.160 --> 0:19:27.920 you can eat some higher wages wage levels there when 0:19:27.920 --> 0:19:30.040 it's a less of a big percentage of of your 0:19:30.080 --> 0:19:32.280 overall costs. You know, another thing that you highlighted that 0:19:32.320 --> 0:19:34.680 I thought was really interesting was that most of Carrier's 0:19:34.760 --> 0:19:38.280 key arrivals we're talking about Lennox International, Ingersol, rand Re 0:19:38.480 --> 0:19:43.720 Manufacturing in NorTech all manufacture most of their products outside 0:19:43.760 --> 0:19:46.960 of the US. Have they come under political pressure to 0:19:47.640 --> 0:19:51.040 keep factories here or move jobs back? No? Well, they 0:19:51.119 --> 0:19:53.720 still manufacture quite a bit here, but they've also moved 0:19:53.800 --> 0:19:56.320 quite a bit, uh to Mexico in particular, and they 0:19:56.320 --> 0:19:58.919 buy a lot from other countries. But the answer to 0:19:58.920 --> 0:20:01.600 your question is no, Uh, they've They've come under no 0:20:01.680 --> 0:20:04.639 political pressure. And interestingly, when I called those companies for 0:20:04.760 --> 0:20:07.240 some help with the story, they wanted nothing to do 0:20:07.280 --> 0:20:11.520 with it. Were you surprised? No, Um, wouldn't you talk 0:20:11.560 --> 0:20:15.760 to employees in Indianapolis? What did they think would be 0:20:15.800 --> 0:20:18.200 the solution? Because clearly, I mean, it's nice to keep 0:20:18.200 --> 0:20:21.880 a factory open, but longer term, the globalization wave isn't 0:20:21.880 --> 0:20:25.760 going away so quickly. Well, the United Steelworkers who represent 0:20:25.960 --> 0:20:32.120 those workers, UM, they have some pretty specific ideas. Um. 0:20:32.160 --> 0:20:35.720 You know, they would be in favor of some of 0:20:35.920 --> 0:20:40.480 President Trump's own proposals or his own ideas for levying 0:20:40.680 --> 0:20:45.680 border taxes on imports, for making other other countries who 0:20:45.680 --> 0:20:49.320 are who are taking our jobs pay more money to 0:20:49.400 --> 0:20:52.399 get the products sent back to here. Um. Of course, 0:20:52.400 --> 0:20:56.840 they're big on currency fluctuations and how China has supposedly 0:20:57.400 --> 0:21:00.359 manipulated its currency to give itself an advantage in trade. 0:21:00.400 --> 0:21:03.200 And the steel workers and other unions for that matter 0:21:03.520 --> 0:21:06.200 are big on those ideas, and President Trump has endorsed 0:21:06.200 --> 0:21:08.399 some of them. Brian, really, thank you so much for 0:21:08.440 --> 0:21:11.119 joining us. A really fascinating story that really highlights the 0:21:11.119 --> 0:21:15.480 broader issue that goes beyond one company and one factory. 0:21:15.520 --> 0:21:18.280 Brian Grooley is Business Week reporter, and he spoke with 0:21:18.400 --> 0:21:34.200 us from Chicago. Yesterday. President Trump signed an executive order 0:21:34.600 --> 0:21:38.040 to roll back climate change policies that were implemented under 0:21:38.200 --> 0:21:42.320 former President Barack Obama. Uh, this will have pretty wide 0:21:42.400 --> 0:21:47.280 spread ramifications, but in particular for power plant carbon regulations. 0:21:47.280 --> 0:21:49.520 And to get more details on what this may mean, 0:21:49.560 --> 0:21:52.800 let's bring in Rob Barnett. He's senior energy policy analyst 0:21:53.040 --> 0:21:57.080 for Bloomberg Intelligence. Rob, thank you so much for joining us. 0:21:57.400 --> 0:22:02.040 So what are the implications for power plant carving regulations 0:22:02.119 --> 0:22:05.560 that were I guess tightened under under former President Obama 0:22:05.560 --> 0:22:08.720 but had been in place before that. Right, Well, the 0:22:08.720 --> 0:22:12.200 basic answer is, we just don't know yet. The timing 0:22:12.680 --> 0:22:16.680 of the announcement yesterday has been expected for a while. 0:22:16.720 --> 0:22:19.399 We we knew President Trump was going to take some 0:22:19.560 --> 0:22:23.280 of this kind of action, and yesterday's executive order gives 0:22:23.320 --> 0:22:25.399 us a little bit of a sense of their playbook. 0:22:25.760 --> 0:22:29.000 But frankly, it's going to take years in all likelihood 0:22:29.560 --> 0:22:34.920 for everything to play out. So most immediately yesterday, UH 0:22:35.080 --> 0:22:38.639 lawyers for the Department of Justice asked the U. S. 0:22:38.680 --> 0:22:43.639 Circuit Court of Appeals to UH suspend an ongoing case 0:22:43.680 --> 0:22:47.080 against the Clean Power Plan, basically descend it back to 0:22:47.160 --> 0:22:50.960 the Environmental Protection Agency so that they could revisit the 0:22:51.040 --> 0:22:54.320 rule and craft it in a way that's UH certainly 0:22:54.359 --> 0:22:57.879 more lenient for electric utilities and folks who want to 0:22:58.000 --> 0:23:00.720 use coal, But there's no guarante hee that the courts 0:23:00.720 --> 0:23:04.200 are gonna do that, and ultimately the U. S. Court 0:23:04.280 --> 0:23:06.520 system is going to be the arbiter of what happens, 0:23:06.600 --> 0:23:09.159 and the courts are pretty slow moving into ties, so 0:23:09.160 --> 0:23:10.720 I think it's going to be a while before we 0:23:10.760 --> 0:23:13.880 have a true sense of what's actually going to happen. Well, 0:23:14.080 --> 0:23:17.040 can you just break down what we're talking about with 0:23:17.119 --> 0:23:22.040 some of these regulations that have tamped down the release 0:23:22.080 --> 0:23:27.359 of carbon by coal mining companies, for example in West Virginia, Kentucky, Pennsylvania, 0:23:27.400 --> 0:23:31.119 and others. I mean specific companies, specific actions. What have 0:23:31.280 --> 0:23:35.160 these regulations meant. Absolutely, So the grand irony of all 0:23:35.200 --> 0:23:37.600 of this is that the Clean Power Plan was actually 0:23:37.680 --> 0:23:40.159 stayed by the Supreme Court, so it's actually not an 0:23:40.160 --> 0:23:44.080 effect right now. Many of the coal regulations that are 0:23:44.359 --> 0:23:48.080 that have been drivers of coal retirements and the decline 0:23:48.080 --> 0:23:54.120 and coal use actually relate to conventional pollutants, so mercury requirements, 0:23:54.119 --> 0:23:58.120 ozone requirements, sulfur, nitrogen oxides, I could go on. There's 0:23:58.160 --> 0:24:01.440 a whole portfolio of those regular lations that nobody is 0:24:01.480 --> 0:24:05.800 talking about. President Trump administration is not looking at rescinding 0:24:05.840 --> 0:24:08.200 any of those, and those have been a big driver 0:24:08.880 --> 0:24:11.720 of the decline and coal use we've seen here in 0:24:11.720 --> 0:24:14.800 the United States over the past decade. Now, the Clean 0:24:14.880 --> 0:24:17.719 Power Plan, if it were to stay on the books, 0:24:17.960 --> 0:24:22.040 would sort of continue that trend into the next decade 0:24:22.560 --> 0:24:25.560 if it were to stay around, But broadly in the 0:24:25.600 --> 0:24:29.040