WEBVTT - Ford Motor CEO Jim Farley Talks Rare Earth Supply

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, Bloomboxman Miller is standing

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<v Speaker 1>by with a special guest. Good morning, Matt, Good morning Jonathan.

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<v Speaker 1>I'm here with the CEO Ford, Jim Farley and Jim.

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<v Speaker 1>A lot to talk about here at Lamar with you.

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<v Speaker 1>You just got out of a race car. But before

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<v Speaker 1>we do that, I want to ask you about the

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<v Speaker 1>Israeli strike on Iran and the counter attack. Are all

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<v Speaker 1>of the Ford employees that you know of in safe places?

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<v Speaker 2>You do have operations in the Middle East? We do.

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<v Speaker 2>It's a really important region for us. We're watching Turkey

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<v Speaker 2>as well. We have a huge operation in Turkey. We

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<v Speaker 2>export all the way through Europe and the UK. So

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<v Speaker 2>so far, so good, but it's clearly a concern for

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<v Speaker 2>all of us in business.

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<v Speaker 1>One of the things we've seen as a result, obviously,

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<v Speaker 1>is the oil price rise five or six percent really

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<v Speaker 1>across the board. Has the low oil price been helpful

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<v Speaker 1>to you or has it not helped to encourage people

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<v Speaker 1>to buy electric car?

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<v Speaker 2>Yeah, it's interesting because it cuts both ways. At forward,

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<v Speaker 2>we're sixty percent almost of the commercial business in the US,

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<v Speaker 2>and a lot of that is energy. So you go

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<v Speaker 2>to Odessa, Texas. Everyone drives the forward zuper duty. So

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<v Speaker 2>you know, if oil isn't in that sixty five seventy

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<v Speaker 2>dollars range, our customer suffer. But you know, obviously, I

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<v Speaker 2>think for the economy and for everything, it needs to

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<v Speaker 2>be in that kind of range. That makes sense for everything.

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<v Speaker 2>Large spikes, big changes in oil prices and gas prices

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<v Speaker 2>have huge impacts on our demand. We see truck and

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<v Speaker 2>full sized SGUV demand go down when they're big spikes.

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<v Speaker 2>Happened in eight it happened many times. So no, I

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<v Speaker 2>don't think our business likes big changes. For the consumer,

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<v Speaker 2>it's very stressful for them.

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<v Speaker 1>The electric business, though, I would imagine, also is dependent

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<v Speaker 1>on kind in some sense higher gas prices.

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<v Speaker 2>I drove your Lightning. It was fantastic, spent a week

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<v Speaker 2>in it.

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<v Speaker 1>I've driven the Machi for a couple of weeks, and

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<v Speaker 1>one of the great pleasures is you don't ever have

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<v Speaker 1>to go to a gas station. Right How are those

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<v Speaker 1>businesses doing right now because you've taken such big losses

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<v Speaker 1>there and maybe slowed down in terms of your progress

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<v Speaker 1>into evs.

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<v Speaker 2>Yeah, we've really changed because we're thankful we've been number

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<v Speaker 2>two to Tesla for three years in the US because

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<v Speaker 2>we spent our capital like five six years ago and

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<v Speaker 2>all that product's been out for four years that you mentioned.

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<v Speaker 2>So we've learned a ton now. We've changed our capital

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<v Speaker 2>allocation for evs. We've reduced the spending, changed the battery

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<v Speaker 2>chemistry a lot to focus on more profitability. We've gone

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<v Speaker 2>down market and mostly in commercial. Those are the only

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<v Speaker 2>markets where we think in the US, you know, an

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<v Speaker 2>age seven percent of the industry is going to make

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<v Speaker 2>sense for EV where you can actually make money. And

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<v Speaker 2>the EPA requirements have a big impact on the EV

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<v Speaker 2>investments by OEMs. During the last several years, you know,

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<v Speaker 2>we had to kind of sell like fifteen to twenty

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<v Speaker 2>percent of our mix to be EV's both for the

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<v Speaker 2>ZEB States California, Colorado, New York, but also you know,

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<v Speaker 2>to meet the national tailpipe emissions. And so what's happened. Interestingly,

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<v Speaker 2>the total number of evs in the US has grown,

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<v Speaker 2>but the total revenue has not changed in three years

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<v Speaker 2>because the prices have come down equal to the volume

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<v Speaker 2>going up. So the EV market has not been going

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<v Speaker 2>for three years. If you look at total revenue. Everyone

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<v Speaker 2>looks at unit volume, don't look at that, look at

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<v Speaker 2>the price and the volume, and I think we now

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<v Speaker 2>have a good strategy going forward. A lot of our

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<v Speaker 2>competitors are just investing for the first time, and good

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<v Speaker 2>luck if you're selling an eighty thousand dollars SUV electric vehicle.

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<v Speaker 2>We've invested a lot in hybrid. We are really successful

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<v Speaker 2>with our truck. Hybrid's twenty five the best selling vehicle

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<v Speaker 2>in the US for forty seven years, been in the

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<v Speaker 2>F one fifty. Twenty five percent of those customers now

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<v Speaker 2>by hybrid, and a lot of it is exportable power.

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<v Speaker 2>You can run your house for six days with an

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<v Speaker 2>F one fifty hybrid now and the others don't offer

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<v Speaker 2>that at all. So yeah, we think hybrid is really

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<v Speaker 2>the mainstream technology. We'll see erevs come to the US

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<v Speaker 2>soon as the next technology for partial ELECTRICI I want

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<v Speaker 2>to ask you about.

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<v Speaker 1>Race on Sunday, sell on Monday, since we're here at LAMA,

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<v Speaker 1>since you just got out of a Mustang race car,

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<v Speaker 1>how does this racing effort, and it's a big effort

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<v Speaker 1>trickle down to the bottom line for Ford shareholders.

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<v Speaker 2>Well, for us, the biggest is off road market. You know,

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<v Speaker 2>we have you know almost twenty percent of a global

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<v Speaker 2>profit coming from our enthusiasts off road products, and we

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<v Speaker 2>race it to car. We said Baja, we have said

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<v Speaker 2>King and the Hammers. That's a big thing, you know.

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<v Speaker 2>I don't think there's a better way to promote your brand.

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<v Speaker 2>Look what Ford winning in sixty six at Lama did

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<v Speaker 2>for Ford Motor Company. It made us a global company.

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<v Speaker 2>We're American company, but that moment changed us completely, and

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<v Speaker 2>that's why we're going back in twenty seven to take

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<v Speaker 2>on Ferrari and take on Porsche. We think we have

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<v Speaker 2>the technology, but also the tech transfer, software, battery, tech,

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<v Speaker 2>error dynamics. It's different than the seventies, but the tech

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<v Speaker 2>transfer over to our road cars is immediate. You'll see

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<v Speaker 2>hundreds of Ford engineers here who will be working on

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<v Speaker 2>Monday on our road cars. And it's really important tech transfer,

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<v Speaker 2>but we do it, I think as smart as we can.

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<v Speaker 2>And maybe as a racer I'm more sensitive about wasting

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<v Speaker 2>money on racing, and we challenge ourselves to be really smart.

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<v Speaker 2>I think we've done a great job with the off road,

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<v Speaker 2>the raptors, the tremors, you know, all the broncos. I

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<v Speaker 2>think that's been frankly some of the smartest investment we

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<v Speaker 2>had in racing.

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<v Speaker 1>You say you're an American company, You've outed yourself as

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<v Speaker 1>literally the most American car maker. Eighty percent of the

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<v Speaker 1>cars that you sell in America are made there.

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<v Speaker 2>Donald Trump was out overnight saying maybe he's.

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<v Speaker 1>Going to go after even higher auto tariffs. While you've

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<v Speaker 1>said in the past that causes costs and chaos, does

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<v Speaker 1>it also kind of help you because no one else

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<v Speaker 1>makes as many cars as you do in America.

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<v Speaker 2>Well, for Forward, this is a moment for us. You know,

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<v Speaker 2>we have employee pricing out there. We gained a couple

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<v Speaker 2>points a share year over year. A lot of Americans

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<v Speaker 2>are shopping Forward because now they're starting to think, hey,

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<v Speaker 2>half the cars in the US are imports, and if

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<v Speaker 2>all the car companies were like Ford, there'd be fifteen

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<v Speaker 2>new factories in the US, a million new jobs. You know.

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<v Speaker 2>I think a lot of Americans are starting to pay

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<v Speaker 2>attention to where these where these cars come from. And

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<v Speaker 2>for us, yes, I think Donald Trump's policies, especially around

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<v Speaker 2>the Asian countries where you know they've supported with substies

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<v Speaker 2>direct or indirect for their automobile industry. You know, this

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<v Speaker 2>is a great thing. We have to sort out as

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<v Speaker 2>Mexico Canada thing because we need to keep the vehicles

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<v Speaker 2>affordable in the US and there's actually a lot of

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<v Speaker 2>parts we can't even make in the US, Matt as

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<v Speaker 2>you know, and so we have to kind of sort

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<v Speaker 2>out what it ruled does Mexico and Canada have in

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<v Speaker 2>our North America market from supply chain and manufacturing keep

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<v Speaker 2>the vehicles affordable. And that's something that we're talking the administration.

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<v Speaker 2>We found the administration to be very positive to work with.

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<v Speaker 2>They want to help companies like Ford that did the

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<v Speaker 2>right thing for Americans. But we have more work to

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<v Speaker 2>do in.

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<v Speaker 1>Terms of what the administration has been trying to do

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<v Speaker 1>with China. Are you satisfied with the rare earth minerals

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<v Speaker 1>that you have access to? I know that you had

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<v Speaker 1>to slow down production in the past. Yes, Have you

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<v Speaker 1>been able to secure the amount of magnets.

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<v Speaker 2>That you need? It's stay to day. It's stay to day.

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<v Speaker 2>These high payern magnets, the raw materials for them only

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<v Speaker 2>come from certain places in the world. They're all processed

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<v Speaker 2>in China and they go in your speakers and your autosystem.

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<v Speaker 2>They go in your motors, for your wipers and your seats.

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<v Speaker 2>They're all over our F one fifty for example. We

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<v Speaker 2>have applications in them offcom. They're getting approved one at

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<v Speaker 2>a time. You know, we're educating the administration, we're educating

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<v Speaker 2>the Chinese leadership about how important these jobs in the

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<v Speaker 2>Midwest are. There dependent. We have had to shut down factories.

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<v Speaker 2>It's hand to mouth right now, and I'm reading the

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<v Speaker 2>paper like everyone else. I was very happy to read

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<v Speaker 2>about London and having a good meeting there because it

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<v Speaker 2>has a direct impact and our jobs in Michigan, Ohio.

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<v Speaker 2>So we'll see. It's hand and mouth right now.

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<v Speaker 1>Jim, thanks so much, really appreciate your time and congratulations

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<v Speaker 1>on the race.

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<v Speaker 2>Thank you this morning. Look forward to you and the

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<v Speaker 2>challenge tomorrow.