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Speaker 1: Welcome to the next generation of Wall Street Week, bringing

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Speaker 1: you stories of capitalism, stories that will help you think

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Speaker 1: about business, markets, economics, geopolitics, climate, and technology. This week,

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Speaker 1: we tell a story of the pride of an auto

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Speaker 1: industry and its home city pride that led to their

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Speaker 1: fall and their efforts to restore that pride. We have

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Speaker 1: a story about the business behind that restaurant where you

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Speaker 1: feel like you belong. We start with a story about value.

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Speaker 1: The value of a college degree one of the biggest

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Speaker 1: investments many of us will ever make. But it's getting

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Speaker 1: more and more expensive for the students and for the institutions.

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Speaker 2: But is it worth it?

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Speaker 3: Yes, one hundred percent. I mean, you know, financial considerations

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Speaker 3: is the main motive, and Purdue is an affordable college.

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Speaker 3: But yeah, no, I could have never imagined having access

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Speaker 3: to the amount of resource that I have access to

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Speaker 3: do here.

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Speaker 1: Rebecca Senior is a rising junior at Purdue. She pays

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Speaker 1: about forty one thousand dollars a year as an out

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Speaker 1: of state student, just over the national average of thirty

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Speaker 1: six thousand dollars, a number that's gone up forty percent

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Speaker 1: since two thousand and four. With students like Senior making

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Speaker 1: ends meet through a combination of grants, scholarships, and federal loans.

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Speaker 3: I am very appreciative of the scholarship and grant Purdue

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Speaker 3: has offered me. I would not be able to be

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Speaker 3: here without it.

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Speaker 1: As hard as it may be for many students and

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Speaker 1: their families to cover the costs, historically colleges and universities

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Speaker 1: haven't had to worry all that much about what they charge.

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Speaker 1: The cost of higher education rose faster than the cost

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Speaker 1: of living for most of the last forty years, something

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Speaker 1: interrupted only by the big spike in inflation in twenty

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Speaker 1: twenty two. But Mitch Daniels, who ran omb and then

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Speaker 1: served as governor of Indiana and as president of Purdue,

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Speaker 1: says that is changing, that people are no longer willing

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Speaker 1: to spend whatever colleges charge.

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Speaker 4: The systems sort of built for higher pricing. I mean,

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Speaker 4: if you had total pricing power in any business, in

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Speaker 4: other words, you could raise prices and you not only

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Speaker 4: don't lose customers, you may gain more. Because there's no

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Speaker 4: quality measurement, people have associated the price with quality, no

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Speaker 4: proof that that's true. That's certainly one reason the hardest

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Speaker 4: business to change is one that's succeeded for a long time,

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Speaker 4: and this model you call it, that was very successful,

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Speaker 4: had the wind at it's back and young people being

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Speaker 4: told you got to go to college, four year college,

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Speaker 4: and they followed the path at least resistance. Now, very belatedly,

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Speaker 4: there's a little consumer resistance. Finally, slowly the market has

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Speaker 4: begun to react to that. So you're seeing now a

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Speaker 4: system beginning to experience the shakeouts that other sectors have.

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Speaker 1: The shakeouts Mitch Daniels talks about are becoming more common

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Speaker 1: in the United States as colleges have cut programs places

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Speaker 1: like UNC Greensboro Drake and West Virginia University. The State

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Speaker 1: Higher Education Executive Association reports that over five hundred private,

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Speaker 1: nonprofit four year colleges have closed down all together in

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Speaker 1: the last ten years. Some American students look to Great

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Speaker 1: Britain for an alternative, seeing high quality at much lower prices,

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Speaker 1: but Jillian Ted, who has added provost of King's College,

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Speaker 1: Cambridge to her responsibilities as US editor at large at

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Speaker 1: The Financial Times, says British schools are facing their own

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Speaker 1: financial pressures.

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Speaker 5: The challenge today is that essentially the numbers have exploded dramatically,

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Speaker 5: which in many ways is a good thing, but it

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Speaker 5: also means that the huge strain on public sector budgets,

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Speaker 5: which at the moment the government simply can't pay the

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Speaker 5: bill for all the students to have cheap education, let

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Speaker 5: alone free education. So what universities are facing today is

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Speaker 5: a squeeze where on the one hand, they are allowed

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Speaker 5: to charge students today for their tuition, but that's capped

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Speaker 5: at nine thousand pounds a year, and even that level,

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Speaker 5: which looks very low americanized, is seen as grotesquely high

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Speaker 5: by many people in the UK.

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Speaker 1: As if the business model for higher education weren't challenged enough,

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Speaker 1: it's consumers. The students and the parents are starting to

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Speaker 1: doubt that they're getting good value for their money, at

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Speaker 1: least in the United States, where polls indicate that only

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Speaker 1: thirty six percent of adults say they have a great

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Speaker 1: deal or quite a lot of confidence in higher education,

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Speaker 1: a number that's down from fifty seven percent in twenty fifteen.

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Speaker 1: Is this system succeeding right now? And what is the goal?

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Speaker 1: How do we measure success for higher education?

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Speaker 6: Well?

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Speaker 4: When I said succeeding, I meant they were able to

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Speaker 4: perpetuate themselves in their institutions. I didn't mean it was

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Speaker 4: necessarily succeeding for the students. That's a whole other question, which,

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Speaker 4: again way too late, is being asked more and more forcefully.

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Speaker 4: But no, a whole other discussion. Whether the system, as

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Speaker 4: we've been operating it has been teaching what it ought

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Speaker 4: to teach, teaching it as rigorously as it ought to

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Speaker 4: be taught, And therefore whether the young people emerging meet

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Speaker 4: either of I would say the two basic tests of success.

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Speaker 4: One are they ready for highly productive work somewhere in

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Speaker 4: the economy. Two are they prepared to be knowledgeable, engaged,

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Speaker 4: active citizens. And by those two measures we have the

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Speaker 4: system hasn't been doing, in general, too good a job.

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Speaker 1: The question of whether an increasingly expensive college education is

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Speaker 1: truly worth it is being asked on both sides of

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Speaker 1: the Atlantic.

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Speaker 5: The explosion of digital technologies, the rise of AI, the

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Speaker 5: rise of homeworking means that the question of what we're

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Speaker 5: educating for is becoming increasingly unclear. And it's worth remembering

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Speaker 5: that so much of what we've had as higher education

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Speaker 5: and secondary education in the last century was created very

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Speaker 5: much post the Industrial Revolution in order to prepare a

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Speaker 5: workforce to either manage factories or work in a factory

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Speaker 5: and to have the discipline and the skills quad for that.

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Speaker 5: And today, of course, manufacturing is such a small part

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Speaker 5: of the economy that the question of what we're educating

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Speaker 5: for is becoming increasingly uncertain and challenged.

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Speaker 1: It should come as no surprise that, given the challenges

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Speaker 1: to the value of higher education, leaders are looking to

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Speaker 1: make changes. Eight years ago, Mitch Daniels shook things up

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Speaker 1: at Purdue, freezing tuition just two months in his job,

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Speaker 1: something that continues to this day. When you were on Purdue,

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Speaker 1: what business principles did you try to bring to bear

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Speaker 1: in managing.

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Speaker 4: I'd love to tell you some brilliant set of brilliant strokes.

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Speaker 4: It was, and a lot of it had to do

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Speaker 4: with what question you asked. I used to say, we

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Speaker 4: saw if we decided we solve the question the equation

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Speaker 4: for zero. Instead of asking how much money do we

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Speaker 4: need next year to keep operating and keep peace and

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Speaker 4: happiness on the campus, we asked the question, what would

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Speaker 4: we have to do this year not to raise tuition?

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Speaker 4: What combination of things? It's not hard to find them

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Speaker 4: if you make that your goal. Capital spending is one

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Speaker 4: place it's the look. You can have very first rate

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Speaker 4: facilities without the gold plating that I've seen in so

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Speaker 4: many other places. If you watch things carefully, like staff

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Speaker 4: to student ratios, faculty to administrator ratios, things like that,

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Speaker 4: it's not hard, as I say, to pick the low fruit.

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Speaker 1: One of those places where the fruit may be hanging

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Speaker 1: low is in the administrative staff.

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Speaker 4: Look at these schools that astonishingly have more administrators than students.

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Speaker 4: I mean, a lot of that could disappear. I used

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Speaker 4: to say to people, you'd be amazed how much government

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Speaker 4: you'd never miss.

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Speaker 1: But as is the case elsewhere, it's awfully hard to

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Speaker 1: cut your way to success. In the end, it comes

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Speaker 1: back to providing a service, a product of real and

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Speaker 1: sustainable value, one tailored for today, that will leave you

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Speaker 1: in good stead well into the future.

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Speaker 4: Twelve years ago, on my arrival, more than forty percent

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Speaker 4: of the students were already studying the STEM discipline. Today

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Speaker 4: it's closer to two thirds, and the student body is

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Speaker 4: thirty percent bigger. But those are students' choices. The students

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Speaker 4: are seeing that these are exciting things to learn, exciting

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Speaker 4: careers beyond them. And we responded to what we thought

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Speaker 4: was going to be that demand.

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Speaker 1: And yes, for Mitch Daniels, one investment that is well

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Speaker 1: worth the price paid is an education in business, something

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Speaker 1: that at Purdue is now granted by the Mitch Daniels

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Speaker 1: School of Business.

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Speaker 4: We sensed a growing appetite and I think this is

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Speaker 4: positive of students who want to study business and hope

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Speaker 4: and hope to have a career there. First of all,

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Speaker 4: I want them to be grounded in a little broader

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Speaker 4: way than much business education today is. They'll have read's,

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Speaker 4: some economic history, some economic philosophy. They'll have been able

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Speaker 4: to compare systems. They'll make up their own minds which

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Speaker 4: system is better for the vast majority of people. But

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Speaker 4: they ought to know something about that, not just how

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Speaker 4: to read a balance sheet or how to calculate an MPV.

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Speaker 4: Beyond that, I want them to leave with a sense

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Speaker 4: that this career they've chosen is a noble one.

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Speaker 1: Over at King's College, Camber Jillian and Ted is similar

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Speaker 1: focused on making sure that students are being prepared for

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Speaker 1: a world transformed by technology, but not defined by it.

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Speaker 5: British OIGH education is starting to play around with online learning,

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Speaker 5: partly as a result of COVID. But the path that

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Speaker 5: Oxford and Cambridge are going down and most of the

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Speaker 5: other British universities is to say that there is a

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Speaker 5: real value in face to face education, not just because

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Speaker 5: it's chat GBT resistant, because it is actually by the way,

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Speaker 5: but also because face to face education gives kids the

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Speaker 5: skills they're going to really need for the future, such

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Speaker 5: as the ability to get along with people they might

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Speaker 5: disagree with, such as the ability to present an argument

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Speaker 5: but to have a socratic debate which doesn't just take

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Speaker 5: one side. And any higher education establishment that can teach

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Speaker 5: kids to not just be able to amass knowledge in

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Speaker 5: a computer, but also the skills to navigate people will

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Speaker 5: have an advantage. So we used to talk about the

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Speaker 5: digital divide being between kids who knew about tech skills

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Speaker 5: and kids who don't. Today there's another digital divide, which

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Speaker 5: is the kids who know about tech skills but can

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Speaker 5: still talk to humans effectively and manage them and be

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Speaker 5: creative as a human. They will be the really advantage

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Speaker 5: ones in the future.

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Speaker 1: However, the leaders running higher education sort it all out.

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Speaker 1: The one thing they agree on is that although it's

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Speaker 1: a business, we must never lose sight of the fact

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Speaker 1: that it's also much more than a business.

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Speaker 5: It's a mission, and it's something which is much higher

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Speaker 5: than any commercialization mantra would suggest, and we need to

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Speaker 5: keep that in mind above all else. We're really investing

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Speaker 5: in kids, but not just in money, in all kinds

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Speaker 5: of other ways as well. And yes, we need to

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Speaker 5: pay the bills, but it cannot be just about paying

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Speaker 5: the bills. It's fundamentally about championing the source of ideas,

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Speaker 5: creation and learning.

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Speaker 4: Higher education are not supposed to be a business. I

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Speaker 4: used to say the same thing about government, But it

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Speaker 4: can be much more business of life. It just didn't

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Speaker 4: have to in too many cases until recently. I hope

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Speaker 4: we don't overreact, though, because the college degree as we've

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Speaker 4: known it, if it's well done, I think, is still tremendous.

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Speaker 4: There's still a great return on that very expensive investment.

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Speaker 1: But in the end, the question of whether a college

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Speaker 1: education gives value that justifies the cost is for those

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Speaker 1: receiving it to decide. People like becka senior.

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Speaker 3: I think the personal growth and professional development that Purdue

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Speaker 3: has offered me is definitely going to take me to

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Speaker 3: a good career or grad school.

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Speaker 1: Coming up the story of a city and an industry

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Speaker 1: fighting to regain their pride. That's next on Wall Street

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Speaker 1: Week on Bloomberg. This is a story about pride, pride

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Speaker 1: and the way up pride that comes before a fall,

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Speaker 1: and what its to restore the pride of a business,

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Speaker 1: an industry, and a city when they've lost their way.

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Speaker 1: Our Bloomberg Radio colleague Michael Barr is a native of

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Speaker 1: Detroit who watched his city burn during the Riots of

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Speaker 1: nineteen sixty seven, as a once great economic hub edit

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Speaker 1: a period of decline.

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Speaker 6: I'm going to give away my age because that happened

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Speaker 6: in sixty seven and I was three years old, and

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Speaker 6: I was in southwest Detroit, and at the time I

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Speaker 6: saw the National Guard Enerje go by. Now being a

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Speaker 6: stupid kid, I'm thinking, oh Gi, Joe, I didn't realize

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Speaker 6: that the dagone city is burning down. Between that, how

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Speaker 6: the auto industry really took a hard nosedive.

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Speaker 1: The story of Detroit is all the more dramatic given

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Speaker 1: what it had once been, the motor city that helped

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Speaker 1: drive the US economy. Autoproduction once accounted for almost five

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Speaker 1: percent of USGDP and nearly a million jobs at its peak.

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Speaker 1: Detroit was the fourth largest city in the nation. That

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Speaker 1: would have been a happy story if it had ended there,

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Speaker 1: but it didn't. Rising costs, new competition, particularly from Japanese automakers,

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Speaker 1: and an oil crisis hit the industry hard, reducing US

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Speaker 1: auto industry employees by more than a third in thirty years,

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Speaker 1: from more than nine hundred thousand nineteen fifty to run

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Speaker 1: six hundred thousand by nineteen eighty two. Today, auto abuile

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Speaker 1: production accounts for under three percent of US GDP, and

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Speaker 1: Detroit has fallen from fourth to twenty sixth in the

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Speaker 1: ranks of US cities. According to current Ford CEO Jim Farley,

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Speaker 1: an entire industry, including his own Ford Motor, had failed

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Speaker 1: to see and respond to the changes happening around it.

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Speaker 7: I think World War two is a big challenge for

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Speaker 7: the company, and when Henry Ford the second led the

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Speaker 7: company back to a revitalized state through the Whiz Kids.

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Speaker 7: We hired all these logistics experts from the army after

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Speaker 7: the World War Two and they really created this kind

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Speaker 7: of bureaucratic but an incredibly efficient machine. And the company

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Speaker 7: was back in the sixties, and then the energy crisis came.

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Speaker 7: The company didn't have efficient vehicles, it wasn't competitive among quality,

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Speaker 7: and it really lost its way in the seventies, as

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Speaker 7: well as the city of Detroit after the riots and.

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Speaker 1: We were lost, and from there things just got worse.

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Speaker 1: By the end of the twentieth century, it was hard

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Speaker 1: to remember where it had all started, back in eighteen

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Speaker 1: ninety six, when Henry Ford invented his quadricycle and then

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Speaker 1: moved quickly to found the company he named after himself

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Speaker 1: in Detroit, introducing his iconic Model T in nineteen oh eight,

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Speaker 1: and then inventing the first moving assembly line, which went

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Speaker 1: on to produce twenty million of those Model t's in

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Speaker 1: the nineteen twenties.

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Speaker 7: My grandfather is a good example, you know. He was

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Speaker 7: an educated man, but he had a great job at

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Speaker 7: Ford and built his family. His kids went to college eventually,

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Speaker 7: and just like your family.

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Speaker 1: My family was one of those affected by Ford, where

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Speaker 1: my dad went to work in lower level management in

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Speaker 1: the nineteen sixties and continued until cutbacks in the nineteen

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Speaker 1: nineties led him to take a buyout. But long before

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Speaker 1: my dad went to work there, long before it all

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Speaker 1: went south, Detroit erected an emblem of the growth and

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Speaker 1: strength of the new auto industry the Michigan Central station.

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Speaker 1: At its peak, over two hundred passenger trains left that

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Speaker 1: station every day, carrying over four thousand passengers, and another

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Speaker 1: three thousand people worked in the office tower above the station.

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Speaker 1: Michigan Central continued it to rain well into the nineteen fifties,

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Speaker 1: when Detroit was the home to some two million people.

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Speaker 1: But then the American auto industry went into a long

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Speaker 1: period of decline as Autoplant after Autoplant began to shut down.

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Speaker 1: As the auto industry went, so went Michigan Central. The

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Speaker 1: last Amtrak train left the station in nineteen teen eighty eight,

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Speaker 1: leaving the Detroit Lambark to fall into disuse and decay,

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Speaker 1: its windows broken, its roof open to the sky, It's

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Speaker 1: marble scavenged. By twenty thirteen, the Detroit City Council had

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Speaker 1: voted to tear the train station down, and it took

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Speaker 1: a determined Mayor Duggan leading a group of detroiters to

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Speaker 1: restore Michigan Central to what it is again.

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Speaker 8: From my first day in office, getting that train station

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Speaker 8: reoccupied was a central focus. There was no way it

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Speaker 8: was going to be a demolished just meant too much

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Speaker 8: to too many generations. And so my first month, Matt Moron,

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Speaker 8: the owner, was in my office had a list of

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Speaker 8: things that they wanted, and I said, I want one thing.

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Speaker 8: I want you to put windows in that abandoned train station.

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Speaker 8: And he looked at me like I was crazy, and

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Speaker 8: I said, all people see when they look at that

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Speaker 8: train station is blight.

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Speaker 2: I remember when it was beautiful.

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Speaker 8: And so we made a deal on some other things

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Speaker 8: where they spend a million dollars to put in windows.

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Speaker 8: And when the windows started to go in, it hit

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Speaker 8: an electric effect in the city. Everybody driving by in

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Speaker 8: the freeway said, oh my God.

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Speaker 1: To bring Michigan Central and Detroit back from the brank,

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Speaker 1: it took more than private industry and government. Darren Walker

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Speaker 1: runs the foundation the Ford family created in the nineteen thirties,

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Speaker 1: and he helped lead philanthropies like his to step in.

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Speaker 9: The crisis of twenty thirteen was significant, to say the least.

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Speaker 9: The moutheisence that was committed was shocking and criminal, and

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Speaker 9: of course the city found itself in this very odd

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Speaker 9: situation with the museum being an asset of the city

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Speaker 9: which was a debtor. The Ford Foundation made the first

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Speaker 9: grant one hundred and twenty five million dollars. Of that

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Speaker 9: four hundred that helped I believe to insent others to join,

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Speaker 9: and it was one of my proudest moment.

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Speaker 1: But above all, Detroit needed the auto industry to come

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Speaker 1: back to set aside the pride that it caused it

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Speaker 1: to underestimate its foreign competitors for too long, and to

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Speaker 1: take a hard look at what those competitors were doing

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Speaker 1: better than they were where I worked.

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Speaker 7: At Toyota a young person with my family from Detroit.

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Speaker 7: That was the best car company when I graduated in

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Speaker 7: business school, you know, efficient and really focused on the customer,

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Speaker 7: and we became the best selling car with the camera

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Speaker 7: because we had a better car and it was built

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Speaker 7: in Kentucky. You know, ultimately, the competition in America, it's

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Speaker 7: a free society, is going to be you know, open market.

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Speaker 7: But ultimately, ultimately, in the end of the day, as

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Speaker 7: a CEO, I have to be completely competitive on quality

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Speaker 7: and cost to their quality and cost, take out all

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Speaker 7: the subsidies, all the tariffs. We have to be full competitive.

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Speaker 7: If you look at the company, this has happened many

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Speaker 7: many times. It's a company that's been through a lot,

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Speaker 7: but here we are. There is I think fifty companies

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Speaker 7: that have survived after fifty the fifties to be still here.

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Speaker 7: The average company now big companies stays on the stock

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Speaker 7: to change for like twenty years. You know, we've been

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Speaker 7: there for every year. So it's a company though that

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Speaker 7: when it gets is back against the wall, something magical happens.

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Speaker 1: Where are you on the roadback? How far along that

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Speaker 1: road are you?

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Speaker 7: Our backs are off the stove pipes.

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Speaker 1: Ford, along with GM and Stilantis, has clawed its way

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Speaker 1: back from the worst of it, with the three automakers

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Speaker 1: selling over six million units in the United States last

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Speaker 1: year and reaping more than a half a trillion dollars

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Speaker 1: in revenue. They're profitable again, with Ford making over four

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Speaker 1: billion dollars in net income in twenty twenty three, all

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Speaker 1: of which has brought jobs back as well. Michigan unemployment

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Speaker 1: peaked apart from the pandemic in nineteen eighty two at

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Speaker 1: sixteen point six percent, well above the national average. Last year,

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Speaker 1: it had fallen all the way down to three point

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Speaker 1: six percent.

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Speaker 2: Done.

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Speaker 1: As Mayor Douget explains, one plant at a time.

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Speaker 2: But when I started, I sat with Bill Ford.

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Speaker 8: I sat with Mary Barr and I sat then with

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Speaker 8: Sergio Marcioni, who was running Fiat Chrysler, and I said, look,

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Speaker 8: if Detroit's going to come back, we've got to come

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Speaker 8: back on our strength. We're not going to be the

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Speaker 8: tech cobb, the biomedical hibe. The next time use cite

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Speaker 8: of parts plant, please ask them to come talk to

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Speaker 8: me first. And it was Bill Ford who was the

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Speaker 8: first one had flexingate made parts for Ford trucks. Ultimately,

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Speaker 8: we landed a jeep plant with five thousand employees, almost

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Speaker 8: all Detroiters being hired. So that was terrific because I

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Speaker 8: had a large number of unemployed who had high school

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Speaker 8: degrees and we needed good paying manufacturing jobs. Now, with

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Speaker 8: the University of Michigan Grads School being built, we are

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Speaker 8: now competing for the tech jobs, the jobs of the future.

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Speaker 8: And that's exciting as well, because in this city we

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Speaker 8: need both. We need the people building the cars, we

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Speaker 8: also need people designing the jobs of the future. Son

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Speaker 8: on Fourteenth Street, next to the train station, is the

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Speaker 8: only public street in America where the road charges your car.

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Speaker 8: We have a self charging road while you park there

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Speaker 8: because the coil is underneath will charge it.

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Speaker 2: That's what we're doing. It's the technology in the future.

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Speaker 1: Now once again, as it did over one hundred years ago,

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Speaker 1: Michigan Central stands as a symbol for the potential of

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Speaker 1: the American auto industry, driven by the vision of another forward,

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Speaker 1: William clay Ford, the great grandson of patriarch Henry Ford.

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Speaker 7: I think it is you know, obviously it's a family company,

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Speaker 7: build's vision, but also the train station is very much

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Speaker 7: a symbol, a kind of a mark along our journey

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Speaker 7: to create a great company and we avoid a bankrupt

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Speaker 7: which was amazing in the early two thousands, has been

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Speaker 7: two thousands, but to build a vibrant company, you know,

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Speaker 7: in the.

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Speaker 2: Ev world, the digital vehicle world.

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Speaker 7: The train station felt like the right kind of challenger

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Speaker 7: project for four to be part of, so that we

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Speaker 7: could be part of the you know, revitalization of Detroit,

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Speaker 7: which had really been kind of used by almost the

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Speaker 7: national media as a example of the decay of the country.

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Speaker 7: And this felt like the kind of project that would

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Speaker 7: be emblematic of our recovery as a company.

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Speaker 1: With the US auto industry and the city of Detroit

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Speaker 1: on the rise again, the question is whether it can

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Speaker 1: continue on its path, can it avoid the tunnel vision

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Speaker 1: born a pride that led it to stumble fifty years

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Speaker 1: ago Like its competitors, for it has concluded that its

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Speaker 1: path the future lies through solving the riddle of electric vehicles.

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Speaker 1: And that is where we turn next on Wall Street

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Speaker 1: Week to the perplexing question of how and when to

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Speaker 1: make that transition to an electric future. This is Wall

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Speaker 1: Street Week. I'm David Weston. At the beginning of the

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Speaker 1: twentieth century, the United States radically changed how we move

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Speaker 1: people and cargo around. It was the dawn of the

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Speaker 1: internal combustion engine, pioneered by people like Henry Ford. According

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Speaker 1: to current Ford CEO Jim Farley, it changed our economy

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Speaker 1: and our world.

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Speaker 7: At that time, Ford was the pinnacle. We had eighty

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Speaker 7: percent market share globally of the car business. We were

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Speaker 7: working on our second vehicle called the Model A, built

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Speaker 7: at the Rouge. We were going from the moving as

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Speaker 7: semily line but basically buying our parts from other people,

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Speaker 7: to a completely integrated plant at the Rouge.

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Speaker 1: In nineteen oh eight, when Ford began producing the Model T,

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Speaker 1: there were only about two hundred thousand registered cars and

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Speaker 1: trucks in all the United States. In less than twenty years,

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Speaker 1: that number had exploded to over seventeen million. Today it's

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Speaker 1: edging toward three hundred million, around nine cars for every

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Speaker 1: ten people. Now many see another transportation revolution, one that

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Speaker 1: will rival or even exceed that of one hundred years ago. Ironically,

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Speaker 1: Tesla was not the true pioneer in electric vehicles. General

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Speaker 1: Motors introduced its Evy one back in nineteen ninety six.

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Speaker 1: That experiment was quickly abandoned, and the Detroit automakers returned

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Speaker 1: to their core businesses of internal combustion engines, a business

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Speaker 1: on the upswing again, thanks in no small part, to

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Speaker 1: help the government during the Great Financial Crisis.

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Speaker 10: I was young staffer on the transition operation, standing before

438
00:24:41,320 --> 00:24:44,280
Speaker 10: the forefront of this new administration.

439
00:24:45,400 --> 00:24:49,800
Speaker 1: Michigan Congresswoman Haley Stevens served in the Obama administration, which

440
00:24:49,840 --> 00:24:52,480
Speaker 1: faced the imminent demise of the US auto industry. Back

441
00:24:52,520 --> 00:24:54,520
Speaker 1: in two thousand and nine.

442
00:24:54,560 --> 00:24:57,840
Speaker 10: All I could do in my spare time is read

443
00:24:57,840 --> 00:25:02,120
Speaker 10: the Detroit Free Press online and look back to what

444
00:25:02,240 --> 00:25:07,600
Speaker 10: was going on in Michigan, in my hometown. This was very,

445
00:25:08,040 --> 00:25:15,200
Speaker 10: very troubling, scary, and unique, in part because the word

446
00:25:15,280 --> 00:25:20,119
Speaker 10: bankruptcy started to enter this sentence as it related to

447
00:25:20,200 --> 00:25:24,199
Speaker 10: General Motors and to Chrysler, and particularly to hear the

448
00:25:24,240 --> 00:25:30,120
Speaker 10: words General motors and bankruptcy in a sentence was foreign

449
00:25:30,280 --> 00:25:35,080
Speaker 10: and newfound territory. And so I knew that if I

450
00:25:35,160 --> 00:25:39,160
Speaker 10: was going to serve in the administration of Barack Obama,

451
00:25:39,359 --> 00:25:41,280
Speaker 10: I had to do something for Michigan.

452
00:25:42,080 --> 00:25:47,240
Speaker 1: It was catastrophic, But now comes the hard part converting

453
00:25:47,280 --> 00:25:50,280
Speaker 1: to a world of electric vehicles, and there is a

454
00:25:50,440 --> 00:25:53,640
Speaker 1: long way to go. Tesla led the way, going from

455
00:25:53,720 --> 00:25:56,920
Speaker 1: nineteen thousand EV sales in twenty thirteen to one point

456
00:25:56,960 --> 00:26:00,720
Speaker 1: eight million a decade later. GM, Slanted, and Ford are

457
00:26:00,800 --> 00:26:04,000
Speaker 1: trying to catch up and are growing their EV businesses,

458
00:26:04,320 --> 00:26:07,439
Speaker 1: but off of a much lower base, selling around one

459
00:26:07,560 --> 00:26:09,600
Speaker 1: hundred and fifty thousand EV's in the United States in

460
00:26:09,600 --> 00:26:13,000
Speaker 1: twenty twenty three, or less than three percent of their output.

461
00:26:14,200 --> 00:26:17,840
Speaker 1: EV success will require a fundamental rewiring of all the

462
00:26:17,880 --> 00:26:19,840
Speaker 1: car companies, including Ford.

463
00:26:20,840 --> 00:26:25,000
Speaker 7: We're well into the messy middle of the most transformational

464
00:26:25,080 --> 00:26:28,240
Speaker 7: time other than the Model T you know, we've never

465
00:26:28,400 --> 00:26:33,680
Speaker 7: gone through this electrification transition for low co two drive trains.

466
00:26:33,960 --> 00:26:37,120
Speaker 7: We've never had a digital product before. We never could

467
00:26:37,119 --> 00:26:40,520
Speaker 7: give people time back like we will with Level three autonomy.

468
00:26:41,720 --> 00:26:45,920
Speaker 7: We're investing in all that enabling technology. We're very profitable

469
00:26:45,920 --> 00:26:50,359
Speaker 7: with our pro business and our combustion business. I'd say,

470
00:26:50,480 --> 00:26:52,960
Speaker 7: you know, we're just a few years away from another

471
00:26:53,160 --> 00:26:56,280
Speaker 7: vibrant period for the company, and as leaders, we see

472
00:26:56,320 --> 00:26:58,800
Speaker 7: it before everyone else sees it, and so it's it's

473
00:26:58,840 --> 00:27:01,720
Speaker 7: exciting for us, but we feel a tremendous amount of

474
00:27:01,720 --> 00:27:07,640
Speaker 7: responsibility for your parents, for you, for my grandparents.

475
00:27:09,240 --> 00:27:13,360
Speaker 1: Reinventing a huge legacy company takes money and lots of it.

476
00:27:13,960 --> 00:27:15,959
Speaker 1: Ford has said that it plans to invest twenty two

477
00:27:16,040 --> 00:27:19,760
Speaker 1: billion dollars in electrification through twenty twenty five, and in

478
00:27:19,760 --> 00:27:23,160
Speaker 1: twenty twenty one, GM set a bold target of transitioning

479
00:27:23,240 --> 00:27:26,800
Speaker 1: its entire fleet to EV's by twenty thirty five, all

480
00:27:26,840 --> 00:27:29,560
Speaker 1: to make a product the vast majority of consumers have

481
00:27:29,760 --> 00:27:30,880
Speaker 1: yet to embrace.

482
00:27:31,600 --> 00:27:35,760
Speaker 10: I'm so proud of our domestic automakers for continuing to innovate,

483
00:27:36,760 --> 00:27:41,560
Speaker 10: continuing to lead the way. They've doubled down on, particularly

484
00:27:41,640 --> 00:27:45,840
Speaker 10: electric vehicles in the plight towards zero emissions. They've made

485
00:27:45,880 --> 00:27:49,719
Speaker 10: the strategic investments and the automakers that we have today

486
00:27:49,880 --> 00:27:52,680
Speaker 10: as we head into the year twenty twenty five are

487
00:27:52,720 --> 00:27:56,680
Speaker 10: so different than the automakers of the turn of the century.

488
00:27:58,280 --> 00:28:01,720
Speaker 10: The world is moving towards electric vehicles. We're seeing this

489
00:28:01,880 --> 00:28:06,360
Speaker 10: in markets on all continent. We want the United States

490
00:28:06,440 --> 00:28:09,880
Speaker 10: automakers and workers to be leading the way. We want

491
00:28:09,960 --> 00:28:11,200
Speaker 10: them to be dealt in.

492
00:28:12,080 --> 00:28:15,359
Speaker 1: Ford's Jim Farley admits that traditional US automakers have a

493
00:28:15,480 --> 00:28:19,280
Speaker 1: long way to go, but insists they are making progress.

494
00:28:20,119 --> 00:28:22,359
Speaker 7: The growth in the US is still you know, we

495
00:28:22,359 --> 00:28:25,000
Speaker 7: were up thirty forty percent in electric sales, were number

496
00:28:25,040 --> 00:28:28,160
Speaker 7: two in the US to Tesla. We're also number three

497
00:28:28,160 --> 00:28:30,040
Speaker 7: in hybrids. We're the only company that kind of you

498
00:28:30,080 --> 00:28:32,680
Speaker 7: can buy an F one fifty electric or hybrid, or

499
00:28:33,560 --> 00:28:35,879
Speaker 7: or a V eight. You know, it's your choice. And

500
00:28:35,920 --> 00:28:38,240
Speaker 7: so we've learned a lot from customers. I think what's

501
00:28:38,280 --> 00:28:41,480
Speaker 7: happened is we're in the mainstream customer, and the mainstream

502
00:28:41,520 --> 00:28:43,800
Speaker 7: customer is totally different than their early adopters.

503
00:28:44,680 --> 00:28:47,640
Speaker 1: That consumer resistance to the next round of EV sales

504
00:28:47,640 --> 00:28:50,480
Speaker 1: has caused Ford and the other US automakers to trim

505
00:28:50,520 --> 00:28:53,440
Speaker 1: back their aggressive goals, at least for the time being,

506
00:28:54,000 --> 00:28:57,200
Speaker 1: with Ford announcing it will entirely shut down its plans

507
00:28:57,240 --> 00:28:59,720
Speaker 1: for an all electric suv at a cost of over

508
00:29:00,120 --> 00:29:05,160
Speaker 1: four billion dollars, something Congressmen Stevens monitors closely. Even as

509
00:29:05,200 --> 00:29:08,000
Speaker 1: she remains sure of where things are headed over the

510
00:29:08,120 --> 00:29:09,000
Speaker 1: long run.

511
00:29:09,640 --> 00:29:13,360
Speaker 10: None of us fully know how the consumers are going

512
00:29:13,400 --> 00:29:16,840
Speaker 10: to embrace electric vehicles. I know anytime I get with

513
00:29:17,600 --> 00:29:21,360
Speaker 10: an automaker, I'm asking how are these cars being sold?

514
00:29:21,440 --> 00:29:24,840
Speaker 10: What needs to be done? But one thing is very clear.

515
00:29:25,480 --> 00:29:28,840
Speaker 10: The world is moving towards electric vehicles.

516
00:29:30,720 --> 00:29:34,640
Speaker 1: Whatever resistance some consumers may have to evs Ted Cannis,

517
00:29:34,760 --> 00:29:37,840
Speaker 1: president of ford Pro, the commercial arm of the company, says,

518
00:29:37,840 --> 00:29:41,360
Speaker 1: the story is very different for businesses running fleets of trucks,

519
00:29:41,560 --> 00:29:43,200
Speaker 1: fans and emergency vehicles.

520
00:29:44,440 --> 00:29:47,040
Speaker 11: A retail customer is making the decision of choice and

521
00:29:47,120 --> 00:29:49,480
Speaker 11: might be a very personal decision about their own commitment

522
00:29:49,520 --> 00:29:51,640
Speaker 11: to what they like are the fast cars. But in

523
00:29:51,640 --> 00:29:54,800
Speaker 11: a business, it's a business. You're trying to improve fuel costs,

524
00:29:55,000 --> 00:29:58,479
Speaker 11: run maintenance, enter a quiet neighborhood in the working hours,

525
00:29:58,840 --> 00:30:01,360
Speaker 11: there's real business res sands to have an electric vehicle.

526
00:30:01,880 --> 00:30:05,000
Speaker 1: Give what Cannis says about commercial demand, it's no surprise

527
00:30:05,120 --> 00:30:08,320
Speaker 1: that his Ford Pro is now the company's most profitable unit.

528
00:30:08,880 --> 00:30:11,680
Speaker 1: The challenge is keeping up with the demand.

529
00:30:12,200 --> 00:30:14,760
Speaker 11: The demand remains so strong, but it's for the rest

530
00:30:14,760 --> 00:30:16,440
Speaker 11: of this year. I t it's going to be a backlog.

531
00:30:16,880 --> 00:30:17,640
Speaker 2: Do you have any.

532
00:30:17,440 --> 00:30:19,800
Speaker 1: Concern that that may give an opportunity to competitors If

533
00:30:19,800 --> 00:30:21,400
Speaker 1: they can't get the vehicles they want when they want

534
00:30:21,440 --> 00:30:22,760
Speaker 1: to get it, they might go to someplace else.

535
00:30:23,480 --> 00:30:24,640
Speaker 2: That has been a concern.

536
00:30:24,760 --> 00:30:28,720
Speaker 11: There's no question if there's open capacity, people prefer our product,

537
00:30:29,680 --> 00:30:30,080
Speaker 11: whether on.

538
00:30:30,120 --> 00:30:33,760
Speaker 1: The consumer or the commercial side. The transformation to electric

539
00:30:33,880 --> 00:30:38,000
Speaker 1: is about more than just propulsion and connectivity. The manufacturing

540
00:30:38,040 --> 00:30:41,760
Speaker 1: process itself is fundamentally different, which could come at the

541
00:30:41,800 --> 00:30:45,840
Speaker 1: cost of some employment, a major issue in the last

542
00:30:45,880 --> 00:30:49,320
Speaker 1: collective bargaining agreement with the UAW and something that the

543
00:30:49,320 --> 00:30:53,160
Speaker 1: congresswoman who represents many of the Detroit area autoworkers has

544
00:30:53,480 --> 00:30:54,360
Speaker 1: very much in mind.

545
00:30:55,000 --> 00:30:59,680
Speaker 10: We're certainly seeing some volatility in the market. I'm eyeing

546
00:30:59,720 --> 00:31:03,760
Speaker 10: still is very closely, in part because as they're transitioning,

547
00:31:04,200 --> 00:31:09,120
Speaker 10: they're winding down some manufacturing. Then they're announcing job layoffs.

548
00:31:09,400 --> 00:31:14,520
Speaker 10: They've got tight contracts, but there's also some tough conversations

549
00:31:14,520 --> 00:31:17,240
Speaker 10: that are taking place even though those contracts have been set.

550
00:31:17,560 --> 00:31:21,720
Speaker 10: In part, we don't want to be ushering in anything

551
00:31:21,760 --> 00:31:24,880
Speaker 10: that isn't fair for the hard working men and women

552
00:31:25,080 --> 00:31:26,160
Speaker 10: of our auto industry.

553
00:31:27,040 --> 00:31:29,480
Speaker 1: As if making the transition to EV's work hard enough.

554
00:31:29,840 --> 00:31:32,040
Speaker 1: The Detroit automakers are doing it in the face of

555
00:31:32,080 --> 00:31:36,600
Speaker 1: stiff competition, first from Tesla and now from Chinese EV makers,

556
00:31:36,800 --> 00:31:40,560
Speaker 1: with Byd alone now producing over three million cars last

557
00:31:40,640 --> 00:31:43,880
Speaker 1: year and threatening to export their much less expensive models

558
00:31:43,880 --> 00:31:46,840
Speaker 1: into the United States, something that Biden administration says it

559
00:31:46,880 --> 00:31:49,680
Speaker 1: will at least slow down by imposing tariffs of over

560
00:31:49,720 --> 00:31:53,120
Speaker 1: one hundred percent. For his part, the Ford CEO says

561
00:31:53,120 --> 00:31:56,600
Speaker 1: that he doesn't object to the competition, provided it's fair.

562
00:31:57,480 --> 00:31:59,320
Speaker 7: I've been doing this for forty years. I worked for

563
00:31:59,360 --> 00:32:02,880
Speaker 7: Toyota for a couple of decades. I've never seen a

564
00:32:02,920 --> 00:32:07,120
Speaker 7: competition like this. They have full sponsorship of their government.

565
00:32:07,320 --> 00:32:10,120
Speaker 7: The government bent on evs before anyone else in the world.

566
00:32:10,520 --> 00:32:12,560
Speaker 7: They're the largest market in the world, and now they're

567
00:32:12,600 --> 00:32:15,400
Speaker 7: the most important market in the world. We can compete

568
00:32:15,440 --> 00:32:17,840
Speaker 7: and win against them, but we have to bring our

569
00:32:17,840 --> 00:32:19,720
Speaker 7: a game, and we have to learn of a lot

570
00:32:19,720 --> 00:32:20,400
Speaker 7: of new things.

571
00:32:20,760 --> 00:32:21,800
Speaker 2: This will be the.

572
00:32:22,080 --> 00:32:25,160
Speaker 7: Ultimate test of companies like Ford for the next one

573
00:32:25,200 --> 00:32:28,840
Speaker 7: hundred years. I fully believe we can do it.

574
00:32:28,840 --> 00:32:31,440
Speaker 1: It's been a long journey for the auto industry and

575
00:32:31,560 --> 00:32:35,440
Speaker 1: for Detroit, from the peaks of production, employment, and profitability

576
00:32:35,440 --> 00:32:38,280
Speaker 1: of the mid nineteen hundreds to the deep valleys at

577
00:32:38,320 --> 00:32:40,760
Speaker 1: the end of the century. Now it looks like it's

578
00:32:40,760 --> 00:32:44,240
Speaker 1: truly regained some momentum and some of that pride that

579
00:32:44,320 --> 00:32:47,920
Speaker 1: it lost, But the industry and Detroit may have their

580
00:32:47,960 --> 00:32:51,600
Speaker 1: biggest challenges still ahead. We've talked about a very proud

581
00:32:51,640 --> 00:32:54,880
Speaker 1: time for Detroit and for Ford and then losing some

582
00:32:54,960 --> 00:32:57,200
Speaker 1: of that pride with sort of losing the way, both

583
00:32:57,200 --> 00:32:59,960
Speaker 1: for Detroit and for Ford. How do you make sure

584
00:33:00,120 --> 00:33:02,080
Speaker 1: you don't lose it again? How do you make sure

585
00:33:02,120 --> 00:33:04,800
Speaker 1: you don't make the same mistake in a different time,

586
00:33:04,840 --> 00:33:05,520
Speaker 1: in different places.

587
00:33:08,080 --> 00:33:12,280
Speaker 7: This is the most important question for a CEO, and

588
00:33:12,360 --> 00:33:15,720
Speaker 7: I think really the only answer is culture.

589
00:33:18,560 --> 00:33:19,560
Speaker 2: It can't depend on me.

590
00:33:21,160 --> 00:33:24,640
Speaker 7: It has to depend on kind of the heart and

591
00:33:24,760 --> 00:33:28,360
Speaker 7: soul of our workforce who comes in every day, and

592
00:33:28,480 --> 00:33:32,640
Speaker 7: their commitment to quality and cost is really only the

593
00:33:32,680 --> 00:33:36,280
Speaker 7: only way to be enduring and sustainable. Great companies like

594
00:33:36,320 --> 00:33:39,840
Speaker 7: Toyota did that to empower the factory worker to pull

595
00:33:39,880 --> 00:33:42,640
Speaker 7: the hand on cord when they saw something wrong. And

596
00:33:42,680 --> 00:33:46,400
Speaker 7: the only way I believe to sustain that afford is

597
00:33:46,440 --> 00:33:46,800
Speaker 7: not me.

598
00:33:48,440 --> 00:33:51,440
Speaker 1: The future of Detroit can't depend on any single person

599
00:33:51,560 --> 00:33:54,480
Speaker 1: or any single company. At its best, the story of

600
00:33:54,480 --> 00:33:57,120
Speaker 1: the auto industry over the last century and more has

601
00:33:57,200 --> 00:34:01,760
Speaker 1: been one of innovation and investment. Is not letting unimaginable

602
00:34:01,760 --> 00:34:06,840
Speaker 1: success lead to complacency. As Andy Grove said, complacency breeds failure.

603
00:34:07,520 --> 00:34:12,840
Speaker 1: Only the paranoid survive. Coming up a story about the

604
00:34:12,880 --> 00:34:15,959
Speaker 1: restaurant business and the people behind it that's still ahead

605
00:34:16,000 --> 00:34:26,880
Speaker 1: on Wall Street week on Bloomberg. This is a story

606
00:34:26,920 --> 00:34:29,920
Speaker 1: about what makes the restaurant business work when it all

607
00:34:29,960 --> 00:34:33,640
Speaker 1: belongs food. It appeals the right atmosphere, people who make

608
00:34:33,719 --> 00:34:36,400
Speaker 1: us feel welcome, prices we are willing to pay, and

609
00:34:36,440 --> 00:34:39,360
Speaker 1: in the end, revenue to cover costs and make a profit.

610
00:34:39,960 --> 00:34:43,200
Speaker 1: It can be a tough business, but ultimately, like any

611
00:34:43,239 --> 00:34:46,240
Speaker 1: good recipe, it works only when it all comes together,

612
00:34:46,800 --> 00:34:50,040
Speaker 1: all driven by a vision that turns a business into

613
00:34:50,080 --> 00:34:50,560
Speaker 1: a calling.

614
00:34:51,040 --> 00:34:54,600
Speaker 12: I'm born bread and Buttered in Harlem and one hundred

615
00:34:54,640 --> 00:34:58,239
Speaker 12: and fourteenth Street in Frederick. Douglass was one of the

616
00:34:58,280 --> 00:35:02,160
Speaker 12: most notorious drug in the community. There's a school down

617
00:35:02,160 --> 00:35:05,160
Speaker 12: the block, like halfway midway down the block. And it

618
00:35:05,239 --> 00:35:08,279
Speaker 12: broke my heart to know that school kids on their

619
00:35:08,320 --> 00:35:13,080
Speaker 12: way to school to learn how to witness that type

620
00:35:13,120 --> 00:35:16,120
Speaker 12: of activity. And I always said, you know, I complained

621
00:35:16,120 --> 00:35:17,719
Speaker 12: about it, and I'm like, but what am I going

622
00:35:17,800 --> 00:35:18,440
Speaker 12: to do about it?

623
00:35:18,760 --> 00:35:21,120
Speaker 1: Melbolle Wilson is one of those who had a vision

624
00:35:21,320 --> 00:35:23,680
Speaker 1: which led her to start her own restaurant in Harlem,

625
00:35:24,120 --> 00:35:26,440
Speaker 1: as much for the sake of the neighborhood as for

626
00:35:26,560 --> 00:35:27,040
Speaker 1: the food.

627
00:35:27,440 --> 00:35:29,719
Speaker 12: My parents are from the South. My father is from

628
00:35:29,760 --> 00:35:33,280
Speaker 12: a very very small town, three stop lights, Hemingway, South Carolina.

629
00:35:33,960 --> 00:35:38,160
Speaker 12: So they grew up saving money under their mattress. You know,

630
00:35:38,360 --> 00:35:40,680
Speaker 12: they didn't trust the banks. So what did I do

631
00:35:40,960 --> 00:35:43,719
Speaker 12: when I got paid? Whether it's at Sylvia's or Rosa

632
00:35:43,760 --> 00:35:46,919
Speaker 12: Mexicano Windows on the world, Every Friday when I got paid,

633
00:35:46,920 --> 00:35:50,200
Speaker 12: I put a little bit under my mattress. This particular day,

634
00:35:50,239 --> 00:35:53,080
Speaker 12: I said, let me see how much I've saved up. Well,

635
00:35:53,239 --> 00:35:56,160
Speaker 12: I started counting and counting and counting.

636
00:35:56,239 --> 00:35:57,759
Speaker 2: Then I got scared. I'm like, oh my god, it's

637
00:35:57,800 --> 00:35:58,480
Speaker 2: a lot of money.

638
00:35:58,719 --> 00:36:02,200
Speaker 12: I'd saved up three one hundred and twelve thousand dollars

639
00:36:03,040 --> 00:36:06,920
Speaker 12: in cash, in cash, five dollar bills, one dollar bills,

640
00:36:06,920 --> 00:36:09,279
Speaker 12: twenty hundreds. But I said, what am I going to

641
00:36:09,320 --> 00:36:12,600
Speaker 12: do with this? And I decided to change my neighborhood

642
00:36:13,480 --> 00:36:15,280
Speaker 12: to be the change that I wanted to see.

643
00:36:16,200 --> 00:36:19,160
Speaker 1: It's not just Harlem that's been changed by restaurants like Melboury's,

644
00:36:19,360 --> 00:36:23,040
Speaker 1: restaurateur of Danny Meyer, creator of the famed Union Square Cafe,

645
00:36:23,160 --> 00:36:26,680
Speaker 1: and Grammercy Tavern says, the New York restaurant business overall

646
00:36:26,840 --> 00:36:31,040
Speaker 1: is thriving, often driven by connections to particular neighborhoods all

647
00:36:31,160 --> 00:36:32,480
Speaker 1: over the city, and.

648
00:36:32,440 --> 00:36:36,520
Speaker 13: I think people more and more crave getting out to restaurants.

649
00:36:36,520 --> 00:36:40,719
Speaker 13: In my entire career, I have never seen our restaurants

650
00:36:41,320 --> 00:36:42,960
Speaker 13: nearly as full as I are today.

651
00:36:43,440 --> 00:36:46,200
Speaker 1: Our restaurant won't make it without the passion and vision

652
00:36:46,239 --> 00:36:49,080
Speaker 1: of a Danny Meyer or a Melboe Wilson, but it

653
00:36:49,120 --> 00:36:52,320
Speaker 1: also has to make it as a business. So Miley

654
00:36:52,560 --> 00:36:55,320
Speaker 1: tell us about the restaurant business. How does the restaurant

655
00:36:55,320 --> 00:36:56,719
Speaker 1: business work? What drives it?

656
00:36:57,080 --> 00:36:59,720
Speaker 14: I mean, this is a tough business. It's a small

657
00:36:59,719 --> 00:37:03,360
Speaker 14: margin in business, and I think as customers were probably

658
00:37:03,400 --> 00:37:06,480
Speaker 14: not always aware of just how much it takes to

659
00:37:06,520 --> 00:37:07,799
Speaker 14: make a restaurant successful.

660
00:37:07,880 --> 00:37:10,760
Speaker 1: Miley Carpenter is the founding editor in chief of Food

661
00:37:10,880 --> 00:37:14,000
Speaker 1: Network magazine, and she says, as tough as the business is,

662
00:37:14,239 --> 00:37:17,640
Speaker 1: it's also essential to the economic dynamism of cities like

663
00:37:17,800 --> 00:37:18,239
Speaker 1: New York.

664
00:37:18,560 --> 00:37:21,680
Speaker 14: I can't express how important the restaurant scene is to

665
00:37:21,800 --> 00:37:24,319
Speaker 14: the energy and the like. It's our life, but it's

666
00:37:24,360 --> 00:37:25,439
Speaker 14: everything to New York.

667
00:37:25,520 --> 00:37:28,200
Speaker 1: There are over seven hundred thousand restaurant businesses in the

668
00:37:28,280 --> 00:37:31,960
Speaker 1: United States, bringing in revenues approaching ninety billion dollars a month,

669
00:37:32,239 --> 00:37:36,240
Speaker 1: or about four point six percent of the national GDP. Nationwide,

670
00:37:36,480 --> 00:37:40,000
Speaker 1: restaurants employ over twelve million people, according to the Department

671
00:37:40,000 --> 00:37:43,399
Speaker 1: of Labor, making it the sixth largest labor sector in

672
00:37:43,440 --> 00:37:46,400
Speaker 1: the country. But as important as restaurants are to our

673
00:37:46,440 --> 00:37:49,680
Speaker 1: economy and to our everyday lives, many were driven to

674
00:37:49,719 --> 00:37:52,360
Speaker 1: the point of extinction when the pandemic hit in early

675
00:37:52,440 --> 00:37:53,120
Speaker 1: twenty twenty.

676
00:37:53,280 --> 00:37:57,680
Speaker 13: The pandemic brought really the entire industry, and I would say,

677
00:37:57,800 --> 00:38:00,080
Speaker 13: especially in New York City, brought us to our knees

678
00:38:00,160 --> 00:38:04,080
Speaker 13: because we were not allowed to have revenue outside of

679
00:38:04,120 --> 00:38:06,279
Speaker 13: some pitily things like can you sell a bottle of

680
00:38:06,320 --> 00:38:10,280
Speaker 13: wine out the door? And horribly one of the toughest

681
00:38:10,320 --> 00:38:14,160
Speaker 13: things to reconcile was being an employee first company, and

682
00:38:14,200 --> 00:38:16,400
Speaker 13: then being in a position where the only way to

683
00:38:16,719 --> 00:38:19,280
Speaker 13: stay in business was to lay off a huge, huge

684
00:38:19,320 --> 00:38:20,880
Speaker 13: percentage of our company.

685
00:38:20,960 --> 00:38:23,920
Speaker 1: In New York City alone, restaurants employed over three hundred

686
00:38:23,960 --> 00:38:27,160
Speaker 1: thousand workers before the pandemic hit, but nearly half of

687
00:38:27,200 --> 00:38:30,319
Speaker 1: those lost their jobs when the city shut down. Many

688
00:38:30,400 --> 00:38:33,759
Speaker 1: restaurants didn't survive the crisis, and the rest had to

689
00:38:33,760 --> 00:38:37,160
Speaker 1: make immediate changes to their businesses to keep them alive.

690
00:38:38,400 --> 00:38:41,279
Speaker 1: The pandemic upended the world of commercial real estate and

691
00:38:41,440 --> 00:38:44,279
Speaker 1: with it the restaurants that depend on it, with much

692
00:38:44,280 --> 00:38:46,960
Speaker 1: of the industry still struggling to recover as people have

693
00:38:47,040 --> 00:38:49,759
Speaker 1: been slow to return to the office, something that has

694
00:38:49,800 --> 00:38:53,320
Speaker 1: both affected restaurants near those offices and created a potential

695
00:38:53,400 --> 00:38:55,520
Speaker 1: incentive to get people to come back.

696
00:38:55,920 --> 00:38:58,960
Speaker 15: We have diversified quite a bit our business model, especially

697
00:38:59,000 --> 00:39:00,919
Speaker 15: going through COVID. I think we've learned the hard way

698
00:39:01,200 --> 00:39:04,320
Speaker 15: because Daniel old model, as we all own and operated

699
00:39:04,360 --> 00:39:07,680
Speaker 15: like he owns this resturant physically, the walls and everything else,

700
00:39:08,280 --> 00:39:10,759
Speaker 15: becomes a lot of obligation to do this.

701
00:39:10,920 --> 00:39:15,400
Speaker 1: Sebastian Silvestri is CEO of Dynex, which runs Daniel Blude's company.

702
00:39:15,760 --> 00:39:18,719
Speaker 1: He says restaurants like Ballues can be a magnet for

703
00:39:18,840 --> 00:39:19,600
Speaker 1: office workers.

704
00:39:19,880 --> 00:39:21,480
Speaker 15: I'm going to take like one like a cel Green,

705
00:39:21,600 --> 00:39:24,040
Speaker 15: for example, the one of our partner, and they have

706
00:39:24,080 --> 00:39:28,600
Speaker 15: those spectacular building like when Vanderbilt one Medicine. They're trying

707
00:39:28,640 --> 00:39:31,399
Speaker 15: to get tennant in. They're trying to bring people back

708
00:39:31,440 --> 00:39:34,440
Speaker 15: to work in the office. That's their own business. They

709
00:39:34,440 --> 00:39:36,920
Speaker 15: need to bring world class ammenities, and then they come

710
00:39:36,960 --> 00:39:39,640
Speaker 15: to people like us and say, hey, what could we

711
00:39:39,680 --> 00:39:42,399
Speaker 15: do here? But I think a company like a cel Green,

712
00:39:42,640 --> 00:39:45,640
Speaker 15: a larger commer show real estate company, they need world

713
00:39:45,640 --> 00:39:47,640
Speaker 15: class commenity and then this is when they come to us.

714
00:39:47,719 --> 00:39:50,359
Speaker 15: So it's been a win win for them and for us.

715
00:39:50,520 --> 00:39:53,200
Speaker 1: As hard as the pandemic hit commercial real estate, one

716
00:39:53,280 --> 00:39:56,600
Speaker 1: might think rensfree restaurants would come down, but Danny Meyer

717
00:39:56,680 --> 00:39:58,439
Speaker 1: says he hasn't seen that in New York.

718
00:39:58,800 --> 00:40:02,279
Speaker 13: Interestingly, the side rents are not down at all. It's

719
00:40:02,320 --> 00:40:06,520
Speaker 13: almost seems like whatever struggles developers and landlords are having

720
00:40:07,200 --> 00:40:11,239
Speaker 13: getting office tenants to come back, they're taking out on

721
00:40:11,320 --> 00:40:13,840
Speaker 13: the people who are on the street, the retail people.

722
00:40:13,920 --> 00:40:17,760
Speaker 13: So I would say that it's not necessarily a better

723
00:40:17,840 --> 00:40:21,279
Speaker 13: time to open a restaurant than it was. But I

724
00:40:21,320 --> 00:40:23,799
Speaker 13: have no question at all that the restaurants that have

725
00:40:23,960 --> 00:40:28,480
Speaker 13: opened post pandemic have been some of the most exciting

726
00:40:28,600 --> 00:40:31,200
Speaker 13: vintage that we've ever seen in New York City. Anyone

727
00:40:31,239 --> 00:40:34,520
Speaker 13: who opened a restaurant after the pandemic had a very

728
00:40:34,640 --> 00:40:38,320
Speaker 13: very real sense of where their neighborhood was at that point,

729
00:40:38,560 --> 00:40:39,680
Speaker 13: so that was a much better thing.

730
00:40:39,840 --> 00:40:42,520
Speaker 1: Well, in other businesses that would cause a renegotiation at

731
00:40:42,520 --> 00:40:43,080
Speaker 1: that twenty.

732
00:40:42,920 --> 00:40:46,120
Speaker 13: Year lease, Well we tried, We tried with what success.

733
00:40:47,400 --> 00:40:53,160
Speaker 13: Modest modest look. Landlords have the best subscription business in

734
00:40:53,160 --> 00:40:56,839
Speaker 13: the world. It doesn't matter whether it's raining, they're going

735
00:40:56,880 --> 00:40:59,359
Speaker 13: to get their rent. It doesn't matter whether there's an

736
00:40:59,400 --> 00:41:02,719
Speaker 13: economic downturn, They're going to get their rent. So it's

737
00:41:02,719 --> 00:41:05,680
Speaker 13: a good business to be in. And unfortunately in New

738
00:41:05,760 --> 00:41:07,759
Speaker 13: York City, one of the things that I find quite

739
00:41:07,840 --> 00:41:11,319
Speaker 13: frustrating is that a lot of the landlords would rather

740
00:41:11,440 --> 00:41:14,680
Speaker 13: warehouse their space waiting for a sunny day, and so

741
00:41:14,760 --> 00:41:17,760
Speaker 13: that's not necessarily good for the streetscape of the city.

742
00:41:18,920 --> 00:41:22,320
Speaker 1: Despite all the challenges and uncertainties of running a restaurant,

743
00:41:22,320 --> 00:41:25,279
Speaker 1: there are some that not only succeed, but succeed year

744
00:41:25,440 --> 00:41:28,279
Speaker 1: after year and become a part of the DNA of

745
00:41:28,280 --> 00:41:31,120
Speaker 1: New York City, something that New York restaurateur is like

746
00:41:31,200 --> 00:41:35,080
Speaker 1: Danny Meyer and Danielle Ballud have shown over decades, with

747
00:41:35,239 --> 00:41:38,560
Speaker 1: Danny starting Union Square Cafe back in nineteen eighty five

748
00:41:38,680 --> 00:41:41,880
Speaker 1: when he was just twenty seven and Danielle Ballude opening

749
00:41:41,960 --> 00:41:43,680
Speaker 1: Danielle eight years later.

750
00:41:44,239 --> 00:41:48,320
Speaker 16: We don't want to this oriental customer, neither these orient

751
00:41:48,400 --> 00:41:51,879
Speaker 16: out team, but we want to continue to progress and

752
00:41:52,440 --> 00:41:56,840
Speaker 16: keep us a level of excellence always and a style

753
00:41:56,880 --> 00:42:02,160
Speaker 16: of cooking that belonged to us. Danielle, me, myself, my team,

754
00:42:02,560 --> 00:42:06,319
Speaker 16: So there's always a French DNA in what we do.

755
00:42:06,960 --> 00:42:10,200
Speaker 16: And yet you know, after so many years in America,

756
00:42:10,840 --> 00:42:15,480
Speaker 16: there is this temptation of borrowing flavors, Like right now

757
00:42:15,480 --> 00:42:19,480
Speaker 16: we're doing a beef dish and we're using miso as

758
00:42:19,600 --> 00:42:24,319
Speaker 16: a curring and seasoning and flavoring around it.

759
00:42:25,320 --> 00:42:27,799
Speaker 15: I can talk about a place like Danielle. So it's

760
00:42:27,840 --> 00:42:29,120
Speaker 15: thirty one years, so there's.

761
00:42:29,080 --> 00:42:29,600
Speaker 6: A lot of people.

762
00:42:29,680 --> 00:42:31,040
Speaker 15: I have been with Danielle for a long time, and

763
00:42:31,080 --> 00:42:33,239
Speaker 15: I think that's the success in the Russian industry. That's

764
00:42:33,239 --> 00:42:35,160
Speaker 15: what I tell people all the time is when you

765
00:42:35,160 --> 00:42:37,319
Speaker 15: have good people, your job is to retain them, take

766
00:42:37,360 --> 00:42:40,239
Speaker 15: good care of them, make sure they're happy, give them,

767
00:42:40,640 --> 00:42:44,080
Speaker 15: you know, care and love and support, and give them

768
00:42:44,080 --> 00:42:46,120
Speaker 15: a career. But every time we open a new place,

769
00:42:46,160 --> 00:42:49,279
Speaker 15: it's like you have to start almost from scratch. And

770
00:42:49,400 --> 00:42:52,560
Speaker 15: you know, every ration is an enterprise in itself, you know,

771
00:42:52,680 --> 00:42:55,920
Speaker 15: Russian like Danielle employ over one hundred people, Same with

772
00:42:56,000 --> 00:42:58,799
Speaker 15: La Pavillon, same with Cafebulu, same with Central New York.

773
00:42:59,200 --> 00:43:01,800
Speaker 15: So every rasta and he's a business on his own.

774
00:43:01,960 --> 00:43:04,160
Speaker 13: You know, I'm so proud of the fact that our

775
00:43:04,200 --> 00:43:08,279
Speaker 13: two I was going to say oldest, but our two

776
00:43:08,480 --> 00:43:13,000
Speaker 13: senior restaurants, Union Square Cafe is going to be forty

777
00:43:13,080 --> 00:43:17,000
Speaker 13: years old in twenty twenty five. Grammercy Tavern is going

778
00:43:17,040 --> 00:43:20,720
Speaker 13: to be thirty this year, The Modern is twenty this year,

779
00:43:21,640 --> 00:43:23,640
Speaker 13: and Shakeshak is going to be twenty this year. So

780
00:43:23,719 --> 00:43:27,000
Speaker 13: that's pretty good. And what I'm really proudest about is

781
00:43:27,000 --> 00:43:28,959
Speaker 13: that in a city whose first name is New, where

782
00:43:29,000 --> 00:43:31,520
Speaker 13: people definitely want to talk about what's new? Have you

783
00:43:31,560 --> 00:43:34,480
Speaker 13: been any new restaurants? They love that that's part of it.

784
00:43:34,760 --> 00:43:38,000
Speaker 13: But I think what any restaurant strives to do that

785
00:43:38,640 --> 00:43:40,520
Speaker 13: is here for keeps, or that wants to be here

786
00:43:40,560 --> 00:43:43,000
Speaker 13: for keeps, that wants to become an institution in this

787
00:43:43,600 --> 00:43:47,759
Speaker 13: amazing city. If you go to ten restaurants, I'm going

788
00:43:47,840 --> 00:43:50,440
Speaker 13: to expect that seven of those ten restaurants are restaurants

789
00:43:50,480 --> 00:43:52,480
Speaker 13: you've never been to. Because it's fun to discover a

790
00:43:52,480 --> 00:43:54,440
Speaker 13: new place. I want to be one of the three

791
00:43:54,800 --> 00:43:57,880
Speaker 13: that make your list, ther rotation that you go back to,

792
00:43:58,239 --> 00:44:00,560
Speaker 13: and you go back to him because your favorite restaurant,

793
00:44:00,640 --> 00:44:03,279
Speaker 13: like mine, is someone that loves you the most.

794
00:44:03,840 --> 00:44:06,840
Speaker 1: As you've watched restaurants come and go over the years,

795
00:44:07,000 --> 00:44:08,520
Speaker 1: is there some sort of rule of thumb of which

796
00:44:08,560 --> 00:44:10,080
Speaker 1: ones work and which ones don't work?

797
00:44:10,200 --> 00:44:12,200
Speaker 14: I mean, I'm always fascinated by this. And when I'm

798
00:44:12,200 --> 00:44:16,000
Speaker 14: eating out, I'm looking around, is what's making this place packed?

799
00:44:16,040 --> 00:44:18,120
Speaker 14: Why is no one here when the food is great

800
00:44:18,160 --> 00:44:21,880
Speaker 14: and it's this sort of magical combination of elements. And

801
00:44:21,920 --> 00:44:25,040
Speaker 14: I think it's changing. And so restaurants that are able

802
00:44:25,080 --> 00:44:27,840
Speaker 14: to quickly adapt to the way we eat now versus

803
00:44:27,840 --> 00:44:30,120
Speaker 14: how we ate before COVID or how we ate ten

804
00:44:30,200 --> 00:44:32,880
Speaker 14: years ago, those are the ones that tend to survive.

805
00:44:33,000 --> 00:44:37,120
Speaker 14: And when I look now at which restaurants are really

806
00:44:37,280 --> 00:44:39,719
Speaker 14: you know, packing people in and able to keep them there.

807
00:44:40,560 --> 00:44:42,440
Speaker 14: I mean, there's so many elements. I think fun is

808
00:44:42,920 --> 00:44:46,200
Speaker 14: a very important element that wasn't as important maybe ten

809
00:44:46,280 --> 00:44:49,319
Speaker 14: years ago. An element of sort of levity when we

810
00:44:49,400 --> 00:44:52,160
Speaker 14: go out to eat, we want to be entertained. Surprise

811
00:44:52,520 --> 00:44:56,120
Speaker 14: hugely important. Think about the restaurant experiences that you go

812
00:44:56,200 --> 00:44:59,040
Speaker 14: tell other people about. It's an element of surprise. It

813
00:44:59,120 --> 00:45:01,000
Speaker 14: is something something and grabbed you, whether it was a

814
00:45:01,040 --> 00:45:03,560
Speaker 14: little gift when you laugh, just that little something that

815
00:45:03,600 --> 00:45:06,480
Speaker 14: makes you tell a story. I mean, I think the

816
00:45:06,520 --> 00:45:08,360
Speaker 14: best restaurants are storytellers.

817
00:45:09,080 --> 00:45:12,640
Speaker 1: Whether it's surprise or fun or a story, it all

818
00:45:12,719 --> 00:45:15,560
Speaker 1: has to come together and make us feel welcome.

819
00:45:15,960 --> 00:45:18,240
Speaker 13: When people come to a restaurant, they want to belong.

820
00:45:18,480 --> 00:45:20,840
Speaker 13: They want to feel like if they've been there before.

821
00:45:21,120 --> 00:45:23,399
Speaker 13: They want to know that you recognize that. They want

822
00:45:23,400 --> 00:45:25,560
Speaker 13: to feel seen. I don't think is ever going to change.

823
00:45:25,600 --> 00:45:29,239
Speaker 13: People want a hug, a virtual hug, but they want

824
00:45:29,280 --> 00:45:31,600
Speaker 13: to know that you are happy to see them back there.

825
00:45:32,760 --> 00:45:36,200
Speaker 13: And in a time when there's more alienation and if

826
00:45:36,239 --> 00:45:39,640
Speaker 13: you can point your finger at social media, work from home,

827
00:45:39,719 --> 00:45:42,600
Speaker 13: whatever you want to talk about. I think restaurants are

828
00:45:42,640 --> 00:45:45,440
Speaker 13: one of the great places that they're almost like a

829
00:45:45,480 --> 00:45:50,360
Speaker 13: town hall that bring people together, and restaurants can recognize

830
00:45:50,360 --> 00:45:52,360
Speaker 13: you and can be that part of your day that

831
00:45:53,080 --> 00:45:55,359
Speaker 13: just makes you feel happy that you're in New York City.

832
00:45:56,280 --> 00:45:59,719
Speaker 1: And when all the pieces belong together, restaurants can help

833
00:45:59,760 --> 00:46:03,239
Speaker 1: trans form a community or a city. We felt the

834
00:46:03,280 --> 00:46:06,560
Speaker 1: loss when the pandemic hit, and perhaps we appreciate the

835
00:46:06,560 --> 00:46:09,719
Speaker 1: connection all the more now that we can return to

836
00:46:09,800 --> 00:46:13,200
Speaker 1: our favorite restaurant that does it. For this episode of

837
00:46:13,239 --> 00:46:16,359
Speaker 1: Wall Street Week, I'm David Weston. This is Bloomberg. See

838
00:46:16,360 --> 00:46:31,080
Speaker 1: you next week with more stories of capitalism.