WEBVTT - Johnson Says He Would Short Steel Based on Trump Protectionism 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.560 Podcast on Apple Podcasts, SoundCloud and Bloomberg dot com. Well 0:00:32.640 --> 0:00:37.800 at the US International Trade Commission in Washington, that's E 0:00:38.120 --> 0:00:43.480 Street just over near the Capitol within walking distance. Representatives 0:00:43.479 --> 0:00:48.559 of US Steel are speaking before the Trade Commission looking 0:00:48.800 --> 0:00:52.720 for a revival of an argument against an antitrust complaint 0:00:53.120 --> 0:00:58.720 having to do with dumping of steel by rival Chinese manufacturers. 0:00:58.720 --> 0:01:01.840 And here to tell us more is Gordon Johnson. He 0:01:01.960 --> 0:01:04.680 is managing director and the head of Alternative Energy as 0:01:04.680 --> 0:01:08.520 well as Metals and mining equipment research, and he joins 0:01:08.600 --> 0:01:10.920 us on the phone. A great great to have you 0:01:10.920 --> 0:01:13.479 with us, A Gordon at Action Capital Management. I beg 0:01:13.520 --> 0:01:15.720 your pardon, um, you know, I was looking at the 0:01:15.840 --> 0:01:18.440 at the price movement today of U S steal. We 0:01:18.520 --> 0:01:20.960 got the stock up nearly four percent. Do they just 0:01:21.000 --> 0:01:23.080 have to like wave a flag every now and again 0:01:23.080 --> 0:01:27.200 and say, um dumping tariff and then you know, depending 0:01:27.240 --> 0:01:30.679 upon whose in power it moves the stock. Yeah, I 0:01:30.680 --> 0:01:33.240 mean that does indeed seem to be the case, and 0:01:33.400 --> 0:01:36.920 it seems like the Trump administration is definitely focused on China. 0:01:37.800 --> 0:01:40.080 But I think people need to look at, uh the 0:01:40.080 --> 0:01:45.040 reality here. Uh the Obama administration h rained heavily down 0:01:45.120 --> 0:01:47.840 on China. In fact, they hit China with a number 0:01:47.880 --> 0:01:50.480 of very aggressive tariffs. And if you look at total 0:01:51.240 --> 0:01:54.480 Chinese imports as a percent of US STILL imports UM 0:01:54.520 --> 0:01:58.520 in six point one percent, seven point two percent, it 0:01:58.560 --> 0:02:03.680 dropped all the way to two points. So the point is, 0:02:03.960 --> 0:02:07.840 even if you basically completely closed China out from directly 0:02:07.880 --> 0:02:09.800 importing still into the United States, is going to have 0:02:09.800 --> 0:02:13.880 a very modest, if any impact on the overall steel backdrop. 0:02:13.919 --> 0:02:16.680 And I think that the rhetoric are you know, comments 0:02:16.720 --> 0:02:19.480 coming out of the Trump administration UH an impact on 0:02:19.520 --> 0:02:22.320 the markets. Um. You know, people have this very aggressive 0:02:22.360 --> 0:02:25.000 initial reaction, but it's just not the numbers just don't 0:02:25.000 --> 0:02:27.840 pan out well, and let's get to what US deal 0:02:27.919 --> 0:02:32.040 is actually doing. They filed a lawsuit against rival Chinese 0:02:32.080 --> 0:02:36.760 manufacturing UH companies, saying that they colluded to keep prices 0:02:36.760 --> 0:02:41.600 low to undercut American competitors. UH. They were filed this 0:02:41.680 --> 0:02:45.560 though under a statute covering unfair trade practices, which usually 0:02:45.600 --> 0:02:49.680 oversees domestic issues. I mean, does U S steal even 0:02:49.760 --> 0:02:53.960 have standing? Is their international law that would bring Chinese 0:02:54.000 --> 0:02:58.239 manufacturing companies into this? I mean, is this lawsuit a 0:02:58.320 --> 0:03:01.040 no go basically? I mean it looks like it is. 0:03:01.080 --> 0:03:03.720 I mean, a lot of the things they've done recently, UM. 0:03:04.080 --> 0:03:05.480 I shouldn't say a lot of the things, but some 0:03:05.520 --> 0:03:08.600 of the things they've done recently seemed to be UM, 0:03:08.639 --> 0:03:12.760 pretty pretty aggressive UM and trying to benefit from uh 0:03:12.880 --> 0:03:16.400 what appears to be a pro UH protectionists. UH, you 0:03:16.400 --> 0:03:19.359 know US administration. Look, at the end of the day, 0:03:19.360 --> 0:03:20.880 it seems like U S stills and this has been 0:03:20.880 --> 0:03:22.639 the case for a while. It seems like their strategy 0:03:22.800 --> 0:03:26.600 is effectively to benefit from protectionism, and that just doesn't work. 0:03:26.720 --> 0:03:29.240 We saw this UM in late nineting in the late 0:03:29.320 --> 0:03:32.880 nineties and the early two thousand's UH, when President George W. 0:03:33.000 --> 0:03:35.960 Bush implemented a Section two A one tariff, which essentially 0:03:36.040 --> 0:03:39.440 put taxes on every single still important for the United States. 0:03:39.800 --> 0:03:43.400 Shortly thereafter, the European Union ruled this UM. UH that 0:03:43.400 --> 0:03:47.600 that action unfair. Uh and and then shortly thereafter, you know, 0:03:47.640 --> 0:03:50.200 there were some reactions by the European Union and the 0:03:50.280 --> 0:03:53.840 US pulled that back. Look, protectionism does not work because 0:03:54.040 --> 0:03:56.720 effectively the bulk of US still demand is in China, 0:03:57.520 --> 0:04:00.200 not US. The global still demand is in China. The 0:04:00.280 --> 0:04:02.640 US has just roughly seven percent of global still demand. 0:04:02.800 --> 0:04:05.920 And more importantly, these still manufacturers sell the people like 0:04:05.960 --> 0:04:09.240 automakers and you know, appliance makers, etcetera. And those guys 0:04:09.280 --> 0:04:11.800 have to compete globally. So if you drive up the 0:04:11.840 --> 0:04:15.360 cost of domestic still, it's going to kill their customers 0:04:15.360 --> 0:04:18.479 and eventually kill them. So it just doesn't work. Well, Gordon, 0:04:18.560 --> 0:04:21.159 I just want to put the put the production in 0:04:21.279 --> 0:04:29.320 China in perspective, because China's steel capacity, global steel making capacity, 0:04:29.360 --> 0:04:32.840 I believe, is bigger than the United States, European Union, Japan, 0:04:32.920 --> 0:04:36.960 and Russia. Yeah yeah, I mean, I mean that they 0:04:37.000 --> 0:04:40.040 account for sevent of all steel making growth as well. 0:04:40.400 --> 0:04:43.640 That's right, and you know it looks crazy. Issue um. 0:04:43.760 --> 0:04:48.800 In two thousand eight nine, China embarked upon a massive stimulus, 0:04:48.839 --> 0:04:52.520 and that stimulus was targeted primarily at building essentially offices 0:04:52.560 --> 0:04:57.000 and homes and that benefited the global steel community massively. 0:04:57.080 --> 0:04:58.640 All these stocks went to the moon and it was 0:04:58.720 --> 0:05:00.880 driven by China, and as a result, you had a 0:05:00.880 --> 0:05:03.880 lot of capacity created in China, still capacity to meet 0:05:03.920 --> 0:05:06.600 this boom in demand. Clearly there's a lot of empty 0:05:06.760 --> 0:05:10.279 and ghost cities in China. It was inefficient capital, but 0:05:10.320 --> 0:05:13.239 nonetheless that created a lot of capacity, and the problem 0:05:13.279 --> 0:05:15.720 is that capacity is still existent, but the demand is 0:05:15.760 --> 0:05:19.240 falling so um It's like, you know, when everything was 0:05:19.279 --> 0:05:21.200 working in the favor of the U S still mills, 0:05:21.240 --> 0:05:23.840 they weren't complaining about what China was doing, which was 0:05:23.880 --> 0:05:25.880 creating a lot of this capacity. But now that things are, 0:05:26.000 --> 0:05:28.479 you know, turning around, now they're starting to complain. The 0:05:28.480 --> 0:05:31.120 reality is this, there's about eighty eight countries that ships 0:05:31.120 --> 0:05:33.479 still into the United States without a section to a 0:05:33.520 --> 0:05:36.839 one tariff going after one individual country. We've already killed China. 0:05:36.880 --> 0:05:38.919 I mean again, there are imports have trapped from like 0:05:38.960 --> 0:05:41.680 two million tons a year to roughly seven hundred and 0:05:41.720 --> 0:05:44.599 eighty nine thousand tons of year two thousand, fifteen to sixteen, 0:05:44.720 --> 0:05:46.800 six point one percent of US imports at two point 0:05:46.839 --> 0:05:49.080 six We've already killed them. But they're just gonna ship 0:05:49.120 --> 0:05:51.760 there still into another country. Uh, and eventually it will 0:05:51.800 --> 0:05:54.040 probably find its way into the United States, and I 0:05:54.080 --> 0:05:56.400 think that there's no way around that. And you know, 0:05:56.480 --> 0:05:59.200 these U. S still mills continue to focus on China, 0:05:59.240 --> 0:06:02.159 and I think China's already it's a dead horse. Well, Gordon, 0:06:02.279 --> 0:06:04.680 I think it isn't interesting though, and it is telling 0:06:04.720 --> 0:06:07.320 that U. S. Steal is reviving some of these complaints 0:06:07.360 --> 0:06:10.719 at this point and asking the major steel trade organization, 0:06:10.800 --> 0:06:15.239 the US International Trade Commission in Washington, to support its 0:06:15.360 --> 0:06:20.640 claims about collusion by Chinese manufacturers. Do you think that 0:06:20.720 --> 0:06:24.520 they are going to get a warm reception by politicians 0:06:24.560 --> 0:06:29.000 in Washington currently, or do you think that the geopolitical backdrop, 0:06:29.040 --> 0:06:32.719 including North Korea, has changed the calculus for President Trump 0:06:32.760 --> 0:06:34.960 and his advisors and that they will not take this 0:06:35.279 --> 0:06:38.200 attempt by U. S. Steal seriously. Look, there's two things 0:06:38.200 --> 0:06:40.960 all highlight. I think there's no doubt that the issues 0:06:40.960 --> 0:06:45.040 in North Korea have changed Trump's view um and stance 0:06:45.160 --> 0:06:48.960 on China. Clearly, in his um while campaigning, he said 0:06:49.000 --> 0:06:51.000 he was going to label them a currency manipulator. He's 0:06:51.000 --> 0:06:54.159 pulled that back. But let's look at the second dynamic 0:06:54.200 --> 0:06:57.080 we just had an O c TG oil Country tubular 0:06:57.120 --> 0:07:00.400 good ruling UM, and that ruling came out with respect. 0:07:00.400 --> 0:07:03.680 It wasn't Chinese, but it was on South Korean UM 0:07:04.000 --> 0:07:07.600 essentially oil country tubular goods UH STILL producers UM that 0:07:07.920 --> 0:07:11.000 service that sector rather and the overall result when the 0:07:11.000 --> 0:07:13.200 result came out, the U. S Still stocks were battered 0:07:13.280 --> 0:07:16.360 because the market was expecting a thirty to thirty five 0:07:16.400 --> 0:07:20.040 percent tariff because Navarro essentially sent a letter to the 0:07:20.080 --> 0:07:22.360 Department of Commerce and the tariff came out at roughly 0:07:23.200 --> 0:07:25.559 for most guys, but the biggest guy was they dropped 0:07:25.600 --> 0:07:28.080 the tariff from four percent to two percent. So the 0:07:28.120 --> 0:07:31.440 reality is, if you look at the rhetoric, he's pulled 0:07:31.480 --> 0:07:33.440 it back and if you look at the most recent decision, 0:07:33.600 --> 0:07:35.720 it was not in favor of the U. S Still mills. 0:07:35.760 --> 0:07:38.520 So you know, we would be shorting the stocks actually 0:07:38.600 --> 0:07:42.560 on UH strength around UH you know, Trump protectionism, etcetera. 0:07:42.680 --> 0:07:46.120 Because I think that his desire for China to help 0:07:46.200 --> 0:07:49.560 solve the North Korean problem is much bigger than the 0:07:49.640 --> 0:07:51.640 rhetoric given in the campaign season, and I think that 0:07:51.640 --> 0:07:54.120 we're seeing that play out in reality. And just to 0:07:54.200 --> 0:07:56.240 note right, I mean, you've got US steal down for 0:07:56.320 --> 0:07:58.360 the year. Right, it's down about a little bit more 0:07:58.360 --> 0:08:00.920 than ten percent, right, right, I mean it's up big 0:08:00.960 --> 0:08:04.080 today on this rhetoric. But um, you know you just 0:08:04.120 --> 0:08:06.360 had you just you are, I just reported earnings. You 0:08:06.360 --> 0:08:08.480 are as a big equipment rental company here in the 0:08:08.520 --> 0:08:11.840 US of their business in the US eight percent in Canada, 0:08:11.880 --> 0:08:15.040 and they just dropped their expectation, uh for growth in 0:08:15.080 --> 0:08:17.320 the U S. What was it. I think it was 0:08:17.760 --> 0:08:20.520 two four before now they're getting to I think two 0:08:20.560 --> 0:08:23.920 point four percent. And in in Canaday they were looking 0:08:23.920 --> 0:08:25.840 for four percent. This is industrial growth and they took 0:08:25.840 --> 0:08:28.600 it down the negative point three percent. So I think, 0:08:28.920 --> 0:08:32.040 you know, the optimism on Trump, I think reality is 0:08:32.080 --> 0:08:33.920 starting to set in and I think that you know, 0:08:33.960 --> 0:08:35.880 as earnings come out, I think that two one earnings 0:08:35.880 --> 0:08:37.719 for still guys are gonna be good. But I think 0:08:37.760 --> 0:08:39.480 as some of the earnings come out for industrial guys, 0:08:39.480 --> 0:08:41.960 I think there's just some disappointment ahead. Gordon Johnson, thank 0:08:42.000 --> 0:08:43.960 you so much for joining us. Gorton Johnson as Managing 0:08:43.960 --> 0:08:46.680 Director and head of Alternative Energy, Medals and Mining and 0:08:46.720 --> 0:08:50.360 Equipment Research at Axiomic Capital Management in New York. This 0:08:50.520 --> 0:09:06.719 is Bloombergh. We talk a lot about President Trump's infrastructure 0:09:06.840 --> 0:09:10.080 spending plan. He talked about a one trillion dollar program 0:09:10.080 --> 0:09:12.480 that he was going to implement to fix our roads 0:09:12.480 --> 0:09:16.240 and bridges and tunnel. Somebody with pretty good insight into 0:09:16.360 --> 0:09:19.800 what that plan might look like is David Compton. He's 0:09:19.880 --> 0:09:23.319 chief executive officer of Old Dominion freight Line, which is 0:09:23.360 --> 0:09:26.319 based in Thomasville, North Carolina, and it just celebrated its 0:09:26.360 --> 0:09:29.360 twenty fifth year on the NASDACT. David, thank you so 0:09:29.440 --> 0:09:32.800 much for joining us. Thank you for having me on 0:09:32.840 --> 0:09:35.320 with you today. So I wanted to start with the 0:09:35.360 --> 0:09:39.640 infrastructure spending plan because I know that you were co chair. 0:09:40.160 --> 0:09:43.400 You are the co chair of the American Trucking Association's 0:09:43.480 --> 0:09:46.880 Infrastructure Task Force, and you have met with President Trump. 0:09:47.040 --> 0:09:50.640 Can you give us some insight into how feasible the 0:09:50.679 --> 0:09:53.800 infrastructure spending plan that he was talking about is and 0:09:53.880 --> 0:09:57.840 kind of where it is right now, well as we 0:09:57.960 --> 0:10:03.080 understand it now, the the Trump administration is working on 0:10:03.120 --> 0:10:07.360 their infrastructure plan and hope to have um something out 0:10:08.400 --> 0:10:12.240 into Congress by the end of May. That's the latest 0:10:12.920 --> 0:10:16.880 we hear. You know, as far as the total infrastructure 0:10:16.920 --> 0:10:19.640 you know of one trillion. Uh. It's it's it's a 0:10:19.679 --> 0:10:21.880 little bit hard for me to address all of it 0:10:21.920 --> 0:10:27.120 because I honestly don't believe that that trucking and transportation 0:10:27.280 --> 0:10:31.720 roads and bridges will will get uh um but perhaps 0:10:31.800 --> 0:10:37.959 maybe a third of that um that excuse me, kind 0:10:37.960 --> 0:10:41.720 of frog in my throat, But that's that's basically where 0:10:41.760 --> 0:10:45.880 we where we are on that uh. But the uh, 0:10:46.040 --> 0:10:49.600 you know, the cost of under investment in our highways 0:10:49.640 --> 0:10:54.640 and bridges is absolutely huge. Congestion on the interstate systems 0:10:54.679 --> 0:10:59.960 alone are costing the trucking industry nearly uh fifty billion dollars, 0:11:00.240 --> 0:11:03.880 and it's estimated over one hundred billion for all motorists. 0:11:04.640 --> 0:11:10.959 Automobile repairs due to potholes are costing the average motorists 0:11:10.960 --> 0:11:14.480 over five hundred dollars per year per motorists, for a 0:11:14.600 --> 0:11:18.679 grand total of a hundred and twelve billion. Roadside crashes 0:11:19.600 --> 0:11:23.680 UM are causing due to you know, antiquated designs and 0:11:23.760 --> 0:11:28.319 poor insurance and exit ramps or anyone who's been in 0:11:28.400 --> 0:11:31.520 traffic understands how how it's sort of challenged US roads are. 0:11:31.559 --> 0:11:33.800 But David, do you think that we really are going 0:11:33.880 --> 0:11:38.120 to see uh material change or material construction in the 0:11:38.160 --> 0:11:41.240 next three years that could potentially even support your business. 0:11:41.880 --> 0:11:47.079 I certainly hope so. Our Infrastructure Task Force, which is 0:11:47.160 --> 0:11:51.320 made up of eleven CEO s from from small truck 0:11:51.360 --> 0:11:54.080 lines all the way with less than a hundred trucks 0:11:54.160 --> 0:11:58.080 up to the nation's largest truck lines UH, is working 0:11:58.360 --> 0:12:04.440 with the Trump administrate and UH leaders in Congress, both 0:12:04.480 --> 0:12:07.760 the Senate and the House side UH to try to 0:12:07.840 --> 0:12:12.520 shape an infrastructure bill that addresses the most critical problems 0:12:12.679 --> 0:12:16.439 of the trucking industry and provides for the most immediate 0:12:16.520 --> 0:12:21.120 and sustainable financing solutions. And we think we've got a 0:12:21.120 --> 0:12:25.280 pretty good a pretty good plan or roadmap to be 0:12:25.320 --> 0:12:28.120 able to come up with the money that's needed UH 0:12:28.280 --> 0:12:32.800 to accomplish this. All right, Mr Congan, I'm wondering if 0:12:32.840 --> 0:12:35.080 I could just attack this this topic in just a 0:12:35.120 --> 0:12:38.120 slightly different way, because I every now and again I'm 0:12:38.160 --> 0:12:40.360 on the road and I see one of your thirty 0:12:40.440 --> 0:12:44.200 thousand tractor trailers all across the country, and they have 0:12:44.440 --> 0:12:50.480 the Major League Baseball UH, you know logo on on 0:12:50.480 --> 0:12:55.000 on the side. You move the teams of Major League Baseball. 0:12:55.000 --> 0:12:59.959 It's like, uh, you know, moving chessboard or something. I mean, 0:13:00.040 --> 0:13:03.160 because you know, you move them from spring training back 0:13:03.200 --> 0:13:05.480 to the right. I mean, I'm this is something that 0:13:05.520 --> 0:13:08.240 you're this is detail and I mean, my goodness moving 0:13:08.360 --> 0:13:10.920 is it just such a stressful thing for anybody? Imagine 0:13:10.960 --> 0:13:13.240 doing this to the level that you guys at old 0:13:13.240 --> 0:13:17.320 Dominion Freight do that. What are do you feel that 0:13:17.400 --> 0:13:21.040 you're being heard by the right people to fix some 0:13:21.160 --> 0:13:23.280 of these I mean, no one is four potholes right. 0:13:23.320 --> 0:13:25.720 No one says okay, no, no, no, we love pottle. 0:13:25.800 --> 0:13:28.559 No one ever says that. So is there are there 0:13:28.679 --> 0:13:31.360 some things that you feel that you're being heard by 0:13:31.360 --> 0:13:33.800 the right people in the right place at the right time. 0:13:34.559 --> 0:13:37.080 Considering that we that you have Donald Trump as president 0:13:37.679 --> 0:13:40.600 that will help fix some of these very basic things 0:13:40.600 --> 0:13:43.000 that you've just described, and that obviously you're in a 0:13:43.040 --> 0:13:46.160 better position to tell to explain what's going on than 0:13:46.280 --> 0:13:49.200 than you know, someone just reading a paper. I believe 0:13:49.280 --> 0:13:52.240 we are in an excellent position to be heard. The 0:13:52.280 --> 0:13:56.720 meeting that we had with President Trump Vice President Pence, 0:13:57.240 --> 0:13:59.680 Just what's that like? Can you shed some can you 0:13:59.760 --> 0:14:01.600 just us what's it like to even be there? What 0:14:01.640 --> 0:14:03.600 does it feel like? Well? It was it was an 0:14:03.640 --> 0:14:07.000 exciting day it was. It was actually monumental. It was 0:14:07.040 --> 0:14:09.240 the first time in the history of the American Trucking 0:14:09.280 --> 0:14:13.160 Association for a t A to have two trucks on 0:14:13.240 --> 0:14:18.480 the lawn at the White House, represented by eleven UH 0:14:18.600 --> 0:14:22.600 top CEOs from our industry and twelve of our top 0:14:23.160 --> 0:14:27.040 truck drivers representing the America's road team, and the ability 0:14:27.080 --> 0:14:30.360 to meet the President and Vice President opened the door 0:14:30.840 --> 0:14:34.880 for further discussions. Obviously, the day that we were there 0:14:35.440 --> 0:14:39.360 was the day that the Health health Care Repeal and 0:14:39.680 --> 0:14:42.680 Replaced bill was supposed to be voted on, and and 0:14:42.720 --> 0:14:45.880 that was the top of mind for the for President 0:14:45.920 --> 0:14:51.400 Trump that particular day. But we have had subsequent we 0:14:51.680 --> 0:14:57.080 being the truck the A t A, UH President Chris Spear, UH, 0:14:57.160 --> 0:15:01.640 the Senior Vice President, Bill Sullivan, and others in leadership 0:15:01.640 --> 0:15:06.280 at A t A have had some meaningful discussions with UH, 0:15:06.400 --> 0:15:10.840 some of Trump's advisors and we are what specifically would 0:15:10.880 --> 0:15:14.600 you like to have happened or do you believe would 0:15:14.640 --> 0:15:19.840 be helpful to their mission to improve the infrastructure? What 0:15:19.840 --> 0:15:23.520 what can people do? Who here you speak and UH, 0:15:23.600 --> 0:15:26.280 well here's here and all the people that are into 0:15:26.280 --> 0:15:29.560 baseball because you're you're you're moving those baseball teams. Well, 0:15:29.760 --> 0:15:33.680 the baseball teams are are important for us, uh, but 0:15:33.680 --> 0:15:38.400 but not as important as the uh ninety thousand shippers 0:15:38.440 --> 0:15:43.160 that uh that we have UM giving us revenue. But right, 0:15:43.200 --> 0:15:46.960 your customers, Yeah, our customers. Baseball is very small part 0:15:47.000 --> 0:15:50.600 of it. But here's the deal. The annual cost of 0:15:50.760 --> 0:15:55.800 under investment in in in our infrastructure is costing motors 0:15:55.800 --> 0:15:59.280 over fourteen hundred dollars per year. And what we are 0:15:59.160 --> 0:16:04.600 proposed using, UH, what we're proposing UH is a build 0:16:04.800 --> 0:16:09.920 America infrastructure fee to be added at the to the 0:16:10.080 --> 0:16:15.080 rack cost per gallon of just twenty cents and and 0:16:15.120 --> 0:16:19.760 have this thing index to fuel economy and inflation. Twenty 0:16:19.760 --> 0:16:22.440 cents a gallon is really not very much. You recall 0:16:22.640 --> 0:16:26.280 when we were all paying uh four and five dollars 0:16:26.280 --> 0:16:30.840 a gallon for gas. UH. Twenty cents a gallon only 0:16:30.880 --> 0:16:35.640 represents an annual cost of roughly eighty dollars per motorists 0:16:35.680 --> 0:16:40.800 to address a four hundred dollar per motorists problem. To me, 0:16:41.240 --> 0:16:45.120 that is a good return on investment. And this infrastructure 0:16:45.200 --> 0:16:47.080 fee at the rack. I don't know if you know 0:16:47.120 --> 0:16:50.880 what I rack is, but there are thirteen hundred active 0:16:51.440 --> 0:16:56.360 UH terminals fuel racks across the country owned by only 0:16:56.400 --> 0:17:00.480 two fifty five owners, and they collect and pay the 0:17:01.280 --> 0:17:04.800 thanks for we gotta leave it there, David Congdon, I'm sorry, 0:17:04.840 --> 0:17:16.240 the chief executive of Old Dominion freight Line. We want 0:17:16.280 --> 0:17:18.119 to take a moment to let you know about something 0:17:18.160 --> 0:17:20.840 new from Bloomberg. Starting right now, you can use our 0:17:20.880 --> 0:17:24.040 io s app or our new Google Chrome extension to 0:17:24.080 --> 0:17:27.880 scan any news story on any website, instantly revealing relevant 0:17:27.920 --> 0:17:30.719 news and market data from Bloomberg and other sources related 0:17:30.720 --> 0:17:33.040 to the companies and people you're reading about. So no 0:17:33.080 --> 0:17:35.119 matter where you're reading the news, you can bring the 0:17:35.160 --> 0:17:38.440 power of Bloomberg's news and data with you. It's pretty amazing. 0:17:38.720 --> 0:17:41.320 Download our Io s app or search for the Bloomberg 0:17:41.320 --> 0:17:43.680 extension on the Chrome Store to try it out. Learn 0:17:43.720 --> 0:17:56.400 more at Bloomberg dot com. Slash lens Well corrosion. Corrosion 0:17:56.680 --> 0:18:01.679 is a two point two trillion dollar problem worldwide, and 0:18:01.720 --> 0:18:05.240 our next guest is trying to solve it. Christina Lamancy 0:18:05.560 --> 0:18:07.960 is the president and the chief executive and the co 0:18:08.119 --> 0:18:10.720 founder and a physicist and just happens to be in 0:18:10.800 --> 0:18:14.200 charge of Modu Metal, based in Seattle, but she joins 0:18:14.280 --> 0:18:16.480 us here in our studio, Christina, thank you very much 0:18:16.520 --> 0:18:19.760 for being here. Um. Corrosion, I guess we could say 0:18:20.000 --> 0:18:23.240 rust is a problem that is never really going to 0:18:23.320 --> 0:18:26.360 go away because of the just the nature of certain 0:18:26.400 --> 0:18:30.720 types of chemical and metal reactions, unless, of course, I 0:18:30.760 --> 0:18:33.040 guess we call modu metal. Tell us what you're doing 0:18:33.080 --> 0:18:36.920 to fight this battle? Absolutely, so, we are UM, first 0:18:36.920 --> 0:18:39.960 of all, trying to address this huge problem that today 0:18:40.080 --> 0:18:43.080 represents about four point one percent of the gross domestic 0:18:43.160 --> 0:18:45.119 product of the United States. So we spend a lot 0:18:45.240 --> 0:18:48.359 of money and a lot of energy addressing this challenge 0:18:48.359 --> 0:18:51.240 of corrosion, and we think we can reduce that impact 0:18:51.320 --> 0:18:55.240 on our economy. We're doing it by introducing an entirely 0:18:55.280 --> 0:18:59.879 new class of materials into the marketplace. That class of materials, 0:19:00.480 --> 0:19:03.840 UH is what we call nano laminated alloys. They're basically 0:19:03.880 --> 0:19:07.480 like metallic plywood, so they're layered materials, but in our case, 0:19:07.600 --> 0:19:11.320 the layers are on the nanometer scale. UM, and maybe 0:19:11.320 --> 0:19:14.000 even more profoundly impactful is that we're we're having in 0:19:14.080 --> 0:19:17.080 order to bring these materials to market, to revolutionize the 0:19:17.119 --> 0:19:20.320 manufacturing process for metals as well. So we have a 0:19:20.320 --> 0:19:24.160 process that doesn't use heat anymore. We're actually using electricity 0:19:24.200 --> 0:19:27.080 as the input form of energy to manufacture metals directly. 0:19:27.440 --> 0:19:31.680 So before we get into the specifics I'm wondering so far. 0:19:31.680 --> 0:19:34.080 I mean, the company has been around for a couple 0:19:34.080 --> 0:19:35.919 of years and this technology has been around for a 0:19:35.960 --> 0:19:41.680 couple of years. How has the demand grown by industrial companies? Well, 0:19:41.840 --> 0:19:44.000 we when we first started out with mode metal, it 0:19:44.080 --> 0:19:46.400 was just a concept, so we were really just trying 0:19:46.400 --> 0:19:49.920 to figure out how to bring this this technology from 0:19:49.920 --> 0:19:54.360 a science into really a manufacturing process. Now we're working 0:19:54.440 --> 0:19:57.840 with with major oil and gas companies to bring it 0:19:57.920 --> 0:20:01.520 into very large scale market applications. So the market has 0:20:01.600 --> 0:20:04.320 really embraced the technology. And we talk about the cost 0:20:04.359 --> 0:20:09.359 of corrosion. It's something that impacts a number of major industries. 0:20:09.400 --> 0:20:13.440 So oil and gas is just one example. Infrastructure construction, 0:20:14.000 --> 0:20:17.920 I mean, transportation, you name it. The pain is there 0:20:18.080 --> 0:20:20.399 for a lot of major industries. So it's been it 0:20:20.440 --> 0:20:24.240 has been embraced across the board. Uh, in terms of 0:20:24.240 --> 0:20:27.520 its applications. Well, I also just want to congratulate you, 0:20:27.640 --> 0:20:31.920 Christina lamos Ny. Uh. You are a finalist for the 0:20:32.040 --> 0:20:34.720 Edison Awards, So good luck with that, I know you're 0:20:34.760 --> 0:20:37.159 here in New York. You've been named the finalist for 0:20:37.160 --> 0:20:40.800 for that. Can you use let's say the Coastguard as 0:20:40.840 --> 0:20:44.920 an example. Obviously they must deal as most ship owners 0:20:45.000 --> 0:20:48.840 must deal with corrosion and rust. Tell us about using 0:20:49.080 --> 0:20:52.720 modu metal technology for the Coastguard. That's such a great example. 0:20:52.760 --> 0:20:55.160 In fact, we've done some work with the Coastguard. We've 0:20:55.160 --> 0:20:58.720 deployed technology with them. As as you mentioned, the Coast 0:20:58.760 --> 0:21:01.880 Guard operates in a very corrosive environment. So they they're 0:21:01.920 --> 0:21:06.879 typically operating in marine environments where they're salt water, oftentimes 0:21:06.960 --> 0:21:10.120 high temperature. So on the coast of of let's say 0:21:10.119 --> 0:21:13.479 North Carolina, Florida, things like that, um or you have 0:21:13.520 --> 0:21:17.840 accelerated corrosion because of heat and um and so corrosion 0:21:17.960 --> 0:21:21.560 is degrading the fleet. Even even as they're operating and 0:21:21.600 --> 0:21:24.959 building new structures, they're having to deal with the degradation 0:21:25.000 --> 0:21:27.119 of the old. We've actually done some work with the 0:21:27.119 --> 0:21:30.239 Coast Guard on something as simple as connectors fasteners like 0:21:30.480 --> 0:21:33.120 you know, bolts. It turns out that's a that's a 0:21:33.200 --> 0:21:37.320 critical point of a failure for for some of these 0:21:37.440 --> 0:21:40.600 these structures. And so basically what we've done in in 0:21:40.680 --> 0:21:43.840 some cases we actually just coat conventional steals with our 0:21:43.920 --> 0:21:46.760 nano layered alloys and we can extend the life as 0:21:46.800 --> 0:21:50.960 much as tend to. We've demonstrated thirty times increase in 0:21:50.960 --> 0:21:54.840 performance at an equivalent cost to like a conventional zinc. 0:21:55.280 --> 0:21:58.800 So it's a dramatic difference in terms of the longevity 0:21:58.840 --> 0:22:02.440 of that product in a field, the safety factor associated 0:22:02.440 --> 0:22:07.160 with that connector, and we basically are keeping cost at parity. 0:22:07.520 --> 0:22:10.040 So talking about that cost, I mean, how much would 0:22:10.040 --> 0:22:15.520 it cost to nano laminate say, all the bolts in 0:22:15.560 --> 0:22:19.120 a ship, and uh, how how do you how exactly 0:22:19.160 --> 0:22:21.880 do you nano laminate something? Yeah, the way to think 0:22:21.920 --> 0:22:25.440 about it, I think is it we're introducing a new structure, 0:22:25.560 --> 0:22:28.879 so it's the nano lamination. It's um to kind of 0:22:28.880 --> 0:22:30.520 geek out on the science a little bit. We're kind 0:22:30.560 --> 0:22:33.040 of we're galvanically coupling to similar metals when we make 0:22:33.080 --> 0:22:36.480 these layered alloys, and we're controlling that galvanic couple and 0:22:36.520 --> 0:22:39.879 that's what's extending the life of the product in a 0:22:39.960 --> 0:22:43.080 corrosive environment. We're doing it though with the same basic 0:22:43.160 --> 0:22:46.920 raw materials, So from a cost driver standpoint, we really 0:22:46.960 --> 0:22:50.240 have the same basic costs as a conventional let's say, 0:22:50.280 --> 0:22:55.639 hot dip galvanized process. We're just fundamentally changing the structure 0:22:56.080 --> 0:22:59.520 and that's resulting in a huge impact in terms of performance. 0:22:59.800 --> 0:23:03.400 Are planning on taking the public company public right now 0:23:03.440 --> 0:23:06.520 we're private and UH and we're really growing the business 0:23:06.520 --> 0:23:08.639 to try to bring the product into the market in 0:23:08.640 --> 0:23:12.120 a very very big way. But where are you getting 0:23:12.160 --> 0:23:15.000 financing from? So we do UM. We do a lot 0:23:15.040 --> 0:23:17.800 of work with within the oil and gas sector, as 0:23:17.800 --> 0:23:20.439 I mentioned, And the fun part for us is that 0:23:20.600 --> 0:23:22.880 a lot of our customers have actually joined us as 0:23:22.920 --> 0:23:27.200 partners UM. So today we're jointly owned by Chevron, Conico, 0:23:27.280 --> 0:23:30.640 Phillips BP, all of whom were customers and then they 0:23:30.720 --> 0:23:33.800 became partners in the venture. We're also jointly owned by 0:23:33.840 --> 0:23:36.800 the founders FUN out of Silicon Valley, and so we 0:23:36.880 --> 0:23:38.680 just have a great team of partners that have joined 0:23:38.760 --> 0:23:41.360 us in this venture. Christina Lamosney, thank you so much 0:23:41.359 --> 0:23:45.320