WEBVTT - Businessweek Extra - Pehr Gyllenhammar

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. I'm Jason

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<v Speaker 1>Kelly and I'm Carol Master. Welcome to the Bloomberg Business

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<v Speaker 1>Week Extra. It's our weekly podcast bringing you an in

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<v Speaker 1>depth interview you will not hear anywhere else. This week

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<v Speaker 1>we caught up with Parrott yellen Hammer. You might know

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<v Speaker 1>him as the former CEO of Volvo. He's got a

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<v Speaker 1>new book out it's all about leadership and character. But

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<v Speaker 1>in our conversation he really took us to task in

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<v Speaker 1>many ways, to think about the worker, not just the

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<v Speaker 1>white collar workers, but the blue collar workers, well, their

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<v Speaker 1>importance in the economy, not just now but going forward.

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<v Speaker 1>What does character mean to you? Character remains to me,

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<v Speaker 1>you know, to be independent, to understand what's happening in

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<v Speaker 1>the world, to be tough when it is necessary, and

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<v Speaker 1>to be supporting your people whenever. And so how much

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<v Speaker 1>has that put This has this epidemic put that rather

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<v Speaker 1>vaunted view to the test. If you are sitting in

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<v Speaker 1>a boardroom right now, you're sitting We're probably not in

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<v Speaker 1>the corner office. You're sitting in your home office trying

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<v Speaker 1>to run a company. Yes, well I'm not running a

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<v Speaker 1>company now, but I have had. I have been with

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<v Speaker 1>not less than five companies in my career and the

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<v Speaker 1>longest one was Volvo twenty four years. And so as

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<v Speaker 1>you think about this on behalf of other chief executives,

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<v Speaker 1>what do you think they're feeling right now having gone

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<v Speaker 1>through I mean, you managed through crises, but you know

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<v Speaker 1>this is a big one. Yeah, this is a big one.

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<v Speaker 1>But I must say that the early nineties were difficult,

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<v Speaker 1>and the seventies before you were born probably were also

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<v Speaker 1>very difficult. So I've been I've been through two crop

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<v Speaker 1>recessions and now I'm witnessing the press and one well,

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<v Speaker 1>and so tell us you know, I do agree with

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<v Speaker 1>you that in I certainly on a personal and a

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<v Speaker 1>professional level, moments of crises have taught me an awful lot.

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<v Speaker 1>And I do wonder what you have learned, you know,

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<v Speaker 1>take us back to one of those difficult times. What

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<v Speaker 1>was going on, and what what you had to do

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<v Speaker 1>and what you learned from it. Well, what I had

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<v Speaker 1>to do was to be convinced that I should keep

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<v Speaker 1>the blue collar workers completely and not have any layoffs.

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<v Speaker 1>Although the recession in the seventhies was we're deep and all.

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<v Speaker 1>In the early nineties so, and I thought that the

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<v Speaker 1>blue color workers were really the spine of the company

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<v Speaker 1>and if they did well and were productive, we would

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<v Speaker 1>do well. Well. You know, this is so fascinating because

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<v Speaker 1>if you look at what we're going through right now,

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<v Speaker 1>those you know, key workers, right, those frontline workers. Okay,

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<v Speaker 1>we get the healthcare workers, how important that's been through

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<v Speaker 1>the pandemic. But who would have thought, right, folks who

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<v Speaker 1>work in supermarkets where all of a sudden, you know,

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<v Speaker 1>those necessary workers that needed to be in place to

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<v Speaker 1>take care of the rest of society. And I do

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<v Speaker 1>think about blue collar workers, workers you know at the

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<v Speaker 1>bottom of or or you know, at the lower end

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<v Speaker 1>of the ccio economic scale. You know, we haven't always

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<v Speaker 1>treated them with much respect. And I do wonder if

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<v Speaker 1>we're going to learn something, I mean, tell us about

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<v Speaker 1>how important that is. And I do wonder, you know,

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<v Speaker 1>if you think that there's something on the other side

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<v Speaker 1>of this virus where we treat workers all along the

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<v Speaker 1>scale better. Well. I think that in the United States,

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<v Speaker 1>which is a country that I have admired and love

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<v Speaker 1>except the last three years, and the layoffs are plenty,

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<v Speaker 1>and they are gross, and the people are unemployed, and

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<v Speaker 1>they are the first to go. The top. People that

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<v Speaker 1>never go, perhaps one or two one might be fined

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<v Speaker 1>if they are not doing a good job at CEOs.

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<v Speaker 1>But I I always have thought that the blue collar

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<v Speaker 1>worker is the stamina and the card of the company,

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<v Speaker 1>and I've always protected them. But Pere, is that capitalism

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<v Speaker 1>or politics? Sorry? Is that capitalism or politics that the

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<v Speaker 1>blue collar workers? I think it's it's neither. I mean,

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<v Speaker 1>I've never been political in my way of managing a business.

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<v Speaker 1>I've always been looking at the shareholders and their interest

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<v Speaker 1>the employees and their interests, and I think that the

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<v Speaker 1>without good employees, you cannot have good productivity and good quality. Well, Pear,

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<v Speaker 1>one of the things that has exacerbated this, certainly, this

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<v Speaker 1>divide is the dividing compensation. And I know that this

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<v Speaker 1>is something that that you've thought a lot about. And

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<v Speaker 1>when you think about the massive gap, the growing gap

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<v Speaker 1>between CEO compensation and frontline worker compensation, that is a

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<v Speaker 1>big contributor here. How did that happen? I don't know

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<v Speaker 1>how it happened, but it has happened gradually, and towards

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<v Speaker 1>the end, the last the last percent or less than

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<v Speaker 1>one percent are executives. Top executives, and they have a

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<v Speaker 1>median term obvious, say four and a half or five

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<v Speaker 1>and a half years. I was with my company almost

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<v Speaker 1>twenty four years, and I never gave up. What do

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<v Speaker 1>you mean you never gave up? I never gave up

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<v Speaker 1>by stayed there. I stayed there. And then also I

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<v Speaker 1>had a council of blue collar workers and white collar workers,

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<v Speaker 1>but majority blue collar workers already after my first year

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<v Speaker 1>at Volvo, because we were in a recession, and I said,

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<v Speaker 1>now I will bring the blue collar workers and the

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<v Speaker 1>white collar workers to a council that is not just

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<v Speaker 1>an advisor, but it is a real body. They thanked

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<v Speaker 1>me for that. There. I have to ask you, you know,

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<v Speaker 1>when you think about the car industry specifically, and Volvo

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<v Speaker 1>even more specifically, what did you learn that maybe you

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<v Speaker 1>think about during this time of upheaval, either about the

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<v Speaker 1>industry or about sort of how you ran that particular company. Well,

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<v Speaker 1>I my experience is fairly long, as you understand, and

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<v Speaker 1>it's been up and down, up and down. And I

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<v Speaker 1>was there during two sharp recessions, and I had patience.

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<v Speaker 1>I kept my blue collar workers, I kept all our employees,

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<v Speaker 1>and if they wanted to leave, that was their business,

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<v Speaker 1>not my business, and I thought that to have a

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<v Speaker 1>card of people who are productive, who understand quality, and

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<v Speaker 1>where I started a whole new type of factory for

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<v Speaker 1>for my employees and in in in the best case,

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<v Speaker 1>it was not much longer cycles than the one and

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<v Speaker 1>a half to two minutes. It was about twenty minutes,

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<v Speaker 1>and that improved our quality and the safety of our

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<v Speaker 1>people and the motivation of our blue color workers. When

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<v Speaker 1>you see a situation like this, knowing social distancing and

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<v Speaker 1>manufacturing processes and everything else, do you think we will

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<v Speaker 1>have to radically rethink how cars are made or is

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<v Speaker 1>it just going to be sort of tweaks on the margins. Well,

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<v Speaker 1>I don't think it will be tweaks on the margin,

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<v Speaker 1>but I think that it's a good lesson. And I

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<v Speaker 1>think that unfortunately, everybody thinks that we're going back to

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<v Speaker 1>normal now, and that's that is wrong because if you

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<v Speaker 1>look at the United States, I mean, the the the

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<v Speaker 1>the the top is not over yet of difficulties. And

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<v Speaker 1>I think that with with now about hundred thousand unemployed

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<v Speaker 1>and also gone, it is more or less a disaster.

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<v Speaker 1>And I think this will be worse. I don't think

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<v Speaker 1>it's over. I think that in a couple of months

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<v Speaker 1>it will be more difficult and less salutes on good times.

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<v Speaker 1>Why have we become so bad at taking care of workers,

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<v Speaker 1>whether it's blue collar and below. Well, I think that

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<v Speaker 1>one of my old friends who who is gone, Henry

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<v Speaker 1>Ford too, he and that he came over to visit

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<v Speaker 1>my most rational and modern factory and he was delighted.

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<v Speaker 1>And then when I came over to him, because we

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<v Speaker 1>made good friends, he they laid off people. He said, well,

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<v Speaker 1>you know, I'm sorry, I can't really can't really accept

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<v Speaker 1>your model. I think it's too difficult, it's too radical,

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<v Speaker 1>and that that was it. Whereas he the head of

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<v Speaker 1>ua W at the time, Leonard Woodcock, who then became

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<v Speaker 1>Ambassador to China although he was not didn't have that title,

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<v Speaker 1>he loved the the cyclist that we had in our manufacturing.

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<v Speaker 1>And so as you think about the car business and

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<v Speaker 1>even the car consumer coming out of this, it seems

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<v Speaker 1>like such an interesting moment when you think about Tesla,

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<v Speaker 1>you think about the trials and tribulations that many global

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<v Speaker 1>automakers have gone through. How do you think this will

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<v Speaker 1>change the car consumer in many ways and their expectations. Well,

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<v Speaker 1>I think that they must be fairly disappointed because there

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<v Speaker 1>is very little innovation in the car industry. And I

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<v Speaker 1>think that Tesla has been a disaster at least financially,

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<v Speaker 1>and I don't know how they will recover and if

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<v Speaker 1>they will ever come into a profitable position. So when

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<v Speaker 1>it comes to shareholders, I think that they have been

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<v Speaker 1>extremely optimistic if they invest in Tesla, and I think

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<v Speaker 1>that it's not over yet. I think that they will

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<v Speaker 1>have much more problems prepare. What do you think of

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<v Speaker 1>him kind of up ending the model and and and

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<v Speaker 1>safe to say that his person e vs. Electric vehicles

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<v Speaker 1>has really made kind of all of the old line

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<v Speaker 1>auto manufacturers kind of step up and take notice and

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<v Speaker 1>amp up their efforts. Yes, no, I totally agree. And

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<v Speaker 1>I think that the technology it's it's still factories, you know,

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<v Speaker 1>bactories that start the engines before in the past, and

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<v Speaker 1>I don't think they've taken the step that a new

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<v Speaker 1>type of fuel and contraction is. It's not done yet.

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<v Speaker 1>Still early days. Interesting, still very early days, and the

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<v Speaker 1>old technology that they use as modern technology. He wasn't

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<v Speaker 1>just got about forty seconds here one quick question. I

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<v Speaker 1>mean the balance between making a profit but also taking

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<v Speaker 1>care of your workers. What would be your advice to

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<v Speaker 1>CEOs out there. My advice to CEOs is take care

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<v Speaker 1>of your blue color worker. They are the blue color workers.

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<v Speaker 1>They are the most productive core of a company that

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<v Speaker 1>you can have. And that was pare yillen Hammer. He's

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<v Speaker 1>the former CEO of Volvo. He was there for about

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<v Speaker 1>twenty four years. Jason, his book that's just out is

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<v Speaker 1>called Character Is Destinate, reflects on innovation and integrity during

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<v Speaker 1>his tenure at the Automaker. There's a line that um

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<v Speaker 1>I saw in a review about him, but he said,

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<v Speaker 1>you know, companies are not only laying people off, but

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<v Speaker 1>they're doing it brutally, and that's not the way to lead.

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<v Speaker 1>So some great leadership lessons from him. Yeah, pause and

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<v Speaker 1>reflect on that as we think about what we're all

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<v Speaker 1>like on the other side of this. Well, you've been

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<v Speaker 1>listening to Bloomberg Business Week Extra for sure to tune

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<v Speaker 1>into Bloomberg Business Week Radio Live Monday through Friday at

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<v Speaker 1>t pm Wall Street Time. I'm Bloomberg Radio. I'm Carol Masser,

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<v Speaker 1>and I'm Jason Kelly. This is Bloomberg