Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason
Speaker 1: Kelly and I'm Carol Master. Welcome to the Bloomberg Business
Speaker 1: Week Extra. It's our weekly podcast bringing you an in
Speaker 1: depth interview you will not hear anywhere else. This week
Speaker 1: we caught up with Parrott yellen Hammer. You might know
Speaker 1: him as the former CEO of Volvo. He's got a
Speaker 1: new book out it's all about leadership and character. But
Speaker 1: in our conversation he really took us to task in
Speaker 1: many ways, to think about the worker, not just the
Speaker 1: white collar workers, but the blue collar workers, well, their
Speaker 1: importance in the economy, not just now but going forward.
Speaker 1: What does character mean to you? Character remains to me,
Speaker 1: you know, to be independent, to understand what's happening in
Speaker 1: the world, to be tough when it is necessary, and
Speaker 1: to be supporting your people whenever. And so how much
Speaker 1: has that put This has this epidemic put that rather
Speaker 1: vaunted view to the test. If you are sitting in
Speaker 1: a boardroom right now, you're sitting We're probably not in
Speaker 1: the corner office. You're sitting in your home office trying
Speaker 1: to run a company. Yes, well I'm not running a
Speaker 1: company now, but I have had. I have been with
Speaker 1: not less than five companies in my career and the
Speaker 1: longest one was Volvo twenty four years. And so as
Speaker 1: you think about this on behalf of other chief executives,
Speaker 1: what do you think they're feeling right now having gone
Speaker 1: through I mean, you managed through crises, but you know
Speaker 1: this is a big one. Yeah, this is a big one.
Speaker 1: But I must say that the early nineties were difficult,
Speaker 1: and the seventies before you were born probably were also
Speaker 1: very difficult. So I've been I've been through two crop
Speaker 1: recessions and now I'm witnessing the press and one well,
Speaker 1: and so tell us you know, I do agree with
Speaker 1: you that in I certainly on a personal and a
Speaker 1: professional level, moments of crises have taught me an awful lot.
Speaker 1: And I do wonder what you have learned, you know,
Speaker 1: take us back to one of those difficult times. What
Speaker 1: was going on, and what what you had to do
Speaker 1: and what you learned from it. Well, what I had
Speaker 1: to do was to be convinced that I should keep
Speaker 1: the blue collar workers completely and not have any layoffs.
Speaker 1: Although the recession in the seventhies was we're deep and all.
Speaker 1: In the early nineties so, and I thought that the
Speaker 1: blue color workers were really the spine of the company
Speaker 1: and if they did well and were productive, we would
Speaker 1: do well. Well. You know, this is so fascinating because
Speaker 1: if you look at what we're going through right now,
Speaker 1: those you know, key workers, right, those frontline workers. Okay,
Speaker 1: we get the healthcare workers, how important that's been through
Speaker 1: the pandemic. But who would have thought, right, folks who
Speaker 1: work in supermarkets where all of a sudden, you know,
Speaker 1: those necessary workers that needed to be in place to
Speaker 1: take care of the rest of society. And I do
Speaker 1: think about blue collar workers, workers you know at the
Speaker 1: bottom of or or you know, at the lower end
Speaker 1: of the ccio economic scale. You know, we haven't always
Speaker 1: treated them with much respect. And I do wonder if
Speaker 1: we're going to learn something, I mean, tell us about
Speaker 1: how important that is. And I do wonder, you know,
Speaker 1: if you think that there's something on the other side
Speaker 1: of this virus where we treat workers all along the
Speaker 1: scale better. Well. I think that in the United States,
Speaker 1: which is a country that I have admired and love
Speaker 1: except the last three years, and the layoffs are plenty,
Speaker 1: and they are gross, and the people are unemployed, and
Speaker 1: they are the first to go. The top. People that
Speaker 1: never go, perhaps one or two one might be fined
Speaker 1: if they are not doing a good job at CEOs.
Speaker 1: But I I always have thought that the blue collar
Speaker 1: worker is the stamina and the card of the company,
Speaker 1: and I've always protected them. But Pere, is that capitalism
Speaker 1: or politics? Sorry? Is that capitalism or politics that the
Speaker 1: blue collar workers? I think it's it's neither. I mean,
Speaker 1: I've never been political in my way of managing a business.
Speaker 1: I've always been looking at the shareholders and their interest
Speaker 1: the employees and their interests, and I think that the
Speaker 1: without good employees, you cannot have good productivity and good quality. Well, Pear,
Speaker 1: one of the things that has exacerbated this, certainly, this
Speaker 1: divide is the dividing compensation. And I know that this
Speaker 1: is something that that you've thought a lot about. And
Speaker 1: when you think about the massive gap, the growing gap
Speaker 1: between CEO compensation and frontline worker compensation, that is a
Speaker 1: big contributor here. How did that happen? I don't know
Speaker 1: how it happened, but it has happened gradually, and towards
Speaker 1: the end, the last the last percent or less than
Speaker 1: one percent are executives. Top executives, and they have a
Speaker 1: median term obvious, say four and a half or five
Speaker 1: and a half years. I was with my company almost
Speaker 1: twenty four years, and I never gave up. What do
Speaker 1: you mean you never gave up? I never gave up
Speaker 1: by stayed there. I stayed there. And then also I
Speaker 1: had a council of blue collar workers and white collar workers,
Speaker 1: but majority blue collar workers already after my first year
Speaker 1: at Volvo, because we were in a recession, and I said,
Speaker 1: now I will bring the blue collar workers and the
Speaker 1: white collar workers to a council that is not just
Speaker 1: an advisor, but it is a real body. They thanked
Speaker 1: me for that. There. I have to ask you, you know,
Speaker 1: when you think about the car industry specifically, and Volvo
Speaker 1: even more specifically, what did you learn that maybe you
Speaker 1: think about during this time of upheaval, either about the
Speaker 1: industry or about sort of how you ran that particular company. Well,
Speaker 1: I my experience is fairly long, as you understand, and
Speaker 1: it's been up and down, up and down. And I
Speaker 1: was there during two sharp recessions, and I had patience.
Speaker 1: I kept my blue collar workers, I kept all our employees,
Speaker 1: and if they wanted to leave, that was their business,
Speaker 1: not my business, and I thought that to have a
Speaker 1: card of people who are productive, who understand quality, and
Speaker 1: where I started a whole new type of factory for
Speaker 1: for my employees and in in in the best case,
Speaker 1: it was not much longer cycles than the one and
Speaker 1: a half to two minutes. It was about twenty minutes,
Speaker 1: and that improved our quality and the safety of our
Speaker 1: people and the motivation of our blue color workers. When
Speaker 1: you see a situation like this, knowing social distancing and
Speaker 1: manufacturing processes and everything else, do you think we will
Speaker 1: have to radically rethink how cars are made or is
Speaker 1: it just going to be sort of tweaks on the margins. Well,
Speaker 1: I don't think it will be tweaks on the margin,
Speaker 1: but I think that it's a good lesson. And I
Speaker 1: think that unfortunately, everybody thinks that we're going back to
Speaker 1: normal now, and that's that is wrong because if you
Speaker 1: look at the United States, I mean, the the the
Speaker 1: the the top is not over yet of difficulties. And
Speaker 1: I think that with with now about hundred thousand unemployed
Speaker 1: and also gone, it is more or less a disaster.
Speaker 1: And I think this will be worse. I don't think
Speaker 1: it's over. I think that in a couple of months
Speaker 1: it will be more difficult and less salutes on good times.
Speaker 1: Why have we become so bad at taking care of workers,
Speaker 1: whether it's blue collar and below. Well, I think that
Speaker 1: one of my old friends who who is gone, Henry
Speaker 1: Ford too, he and that he came over to visit
Speaker 1: my most rational and modern factory and he was delighted.
Speaker 1: And then when I came over to him, because we
Speaker 1: made good friends, he they laid off people. He said, well,
Speaker 1: you know, I'm sorry, I can't really can't really accept
Speaker 1: your model. I think it's too difficult, it's too radical,
Speaker 1: and that that was it. Whereas he the head of
Speaker 1: ua W at the time, Leonard Woodcock, who then became
Speaker 1: Ambassador to China although he was not didn't have that title,
Speaker 1: he loved the the cyclist that we had in our manufacturing.
Speaker 1: And so as you think about the car business and
Speaker 1: even the car consumer coming out of this, it seems
Speaker 1: like such an interesting moment when you think about Tesla,
Speaker 1: you think about the trials and tribulations that many global
Speaker 1: automakers have gone through. How do you think this will
Speaker 1: change the car consumer in many ways and their expectations. Well,
Speaker 1: I think that they must be fairly disappointed because there
Speaker 1: is very little innovation in the car industry. And I
Speaker 1: think that Tesla has been a disaster at least financially,
Speaker 1: and I don't know how they will recover and if
Speaker 1: they will ever come into a profitable position. So when
Speaker 1: it comes to shareholders, I think that they have been
Speaker 1: extremely optimistic if they invest in Tesla, and I think
Speaker 1: that it's not over yet. I think that they will
Speaker 1: have much more problems prepare. What do you think of
Speaker 1: him kind of up ending the model and and and
Speaker 1: safe to say that his person e vs. Electric vehicles
Speaker 1: has really made kind of all of the old line
Speaker 1: auto manufacturers kind of step up and take notice and
Speaker 1: amp up their efforts. Yes, no, I totally agree. And
Speaker 1: I think that the technology it's it's still factories, you know,
Speaker 1: bactories that start the engines before in the past, and
Speaker 1: I don't think they've taken the step that a new
Speaker 1: type of fuel and contraction is. It's not done yet.
Speaker 1: Still early days. Interesting, still very early days, and the
Speaker 1: old technology that they use as modern technology. He wasn't
Speaker 1: just got about forty seconds here one quick question. I
Speaker 1: mean the balance between making a profit but also taking
Speaker 1: care of your workers. What would be your advice to
Speaker 1: CEOs out there. My advice to CEOs is take care
Speaker 1: of your blue color worker. They are the blue color workers.
Speaker 1: They are the most productive core of a company that
Speaker 1: you can have. And that was pare yillen Hammer. He's
Speaker 1: the former CEO of Volvo. He was there for about
Speaker 1: twenty four years. Jason, his book that's just out is
Speaker 1: called Character Is Destinate, reflects on innovation and integrity during
Speaker 1: his tenure at the Automaker. There's a line that um
Speaker 1: I saw in a review about him, but he said,
Speaker 1: you know, companies are not only laying people off, but
Speaker 1: they're doing it brutally, and that's not the way to lead.
Speaker 1: So some great leadership lessons from him. Yeah, pause and
Speaker 1: reflect on that as we think about what we're all
Speaker 1: like on the other side of this. Well, you've been
Speaker 1: listening to Bloomberg Business Week Extra for sure to tune
Speaker 1: into Bloomberg Business Week Radio Live Monday through Friday at
Speaker 1: t pm Wall Street Time. I'm Bloomberg Radio. I'm Carol Masser,
Speaker 1: and I'm Jason Kelly. This is Bloomberg