WEBVTT - Perplexed Automakers Take on Tariffs, Supply Chain Struggles 0:00:02.520 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.560 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.480 --> 0:00:18.400 stay ahead with insights on the people, companies, and trends 0:00:18.440 --> 0:00:23.440 shaping today's complex economy. Plus global business, finance and tech 0:00:23.480 --> 0:00:27.360 news as it happens the Bloomberg Business Week Daily Podcast 0:00:27.720 --> 0:00:31.720 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.560 --> 0:00:35.280 As we saw with some of the last earnings, including 0:00:35.280 --> 0:00:37.680 Apple and Amazon, tariffs are definitely making their mark on 0:00:37.720 --> 0:00:40.040 many industries. We've talked about that a lot over the 0:00:40.120 --> 0:00:42.639 last couple of hours, none more though perhaps so than 0:00:42.680 --> 0:00:45.960 the auto industry, as we've reported on a lot as 0:00:46.000 --> 0:00:48.520 well here at Bloomberg, and as Bloomberg's Hannah Elliott writes 0:00:48.520 --> 0:00:51.800 in this week's Pursuits newsletter, quote, confusion and chaos have 0:00:52.120 --> 0:00:55.680 rained since President Trump signed a proclamation on March twenty 0:00:55.720 --> 0:00:58.360 six to implement a twenty five percent terrify autos and 0:00:58.400 --> 0:01:02.080 parts imported into the United States. So what's a global 0:01:02.120 --> 0:01:05.040 auto maker to do? Kind of looked into it. She 0:01:05.240 --> 0:01:08.520 is Bloomberg Pursuit's autocommist co host of the Hot Pursuit podcast. 0:01:08.560 --> 0:01:11.080 It can be found on the Bloomberg at Bloomberg dot 0:01:11.120 --> 0:01:12.880 com and wherever you get your podcast. She joins us 0:01:12.880 --> 0:01:15.520 from LA kinda great to have you here with Emily 0:01:15.680 --> 0:01:18.759 and me Big Picture if we can just start there 0:01:18.800 --> 0:01:20.679 and then we'll dig into the newsletter. But it all 0:01:20.720 --> 0:01:25.160 kind of relates when you have conversations with global automakers. 0:01:25.640 --> 0:01:29.000 How are they continuing to think about the tariffs, the 0:01:29.000 --> 0:01:32.400 global tariffs, how they're managing and how they continue to 0:01:32.400 --> 0:01:35.319 think about their global supply chains and sailing in the US. 0:01:36.760 --> 0:01:40.279 Yeah, it's been really interesting, and like we've talked about before, 0:01:40.600 --> 0:01:44.399 it seems like each automaker is doing something slightly different. 0:01:44.440 --> 0:01:47.880 I'll give you an example. Mercedes just announced this week 0:01:47.920 --> 0:01:50.920 that they are going to actually be moving production of 0:01:50.960 --> 0:01:53.240 one of their core segment vehicles. We don't know which 0:01:53.280 --> 0:01:55.560 one yet, but they will be moving production of. 0:01:55.480 --> 0:01:58.240 That vehicle into the US. So this is how they 0:01:58.240 --> 0:01:58.800 are coping. 0:01:58.840 --> 0:02:01.240 They're just saying, basically, all right, if we're gonna be 0:02:01.560 --> 0:02:04.840 taxed on vehicles we import, we're gonna start making more 0:02:04.920 --> 0:02:06.200 vehicles in the US. 0:02:06.480 --> 0:02:07.960 So that is one example. 0:02:08.040 --> 0:02:10.760 Ferrari, as we've talked about, has just said we're gonna 0:02:10.760 --> 0:02:13.280 have a ten percent across the board increase in prices. 0:02:13.680 --> 0:02:16.680 Let's be honest, probably not a lot of Ferrari owners 0:02:16.720 --> 0:02:17.320 are going. 0:02:17.120 --> 0:02:18.080 To bat any at that. 0:02:18.120 --> 0:02:20.880 In fact, maybe it makes the cars even more desirable. 0:02:22.280 --> 0:02:24.680 Asin Martin for instance, has said they're going to stop 0:02:24.720 --> 0:02:27.240 importing new cars for the moment, put a pause on 0:02:27.320 --> 0:02:30.240 it and see how this all shakes out. So again, 0:02:30.600 --> 0:02:34.000 it's like case by case by case. The main thing 0:02:34.040 --> 0:02:37.679 that I hear that everybody is saying is just it's very, 0:02:37.840 --> 0:02:40.000 very difficult to plan when you don't know what the 0:02:40.040 --> 0:02:43.920 target is. They would like some consistency and a target 0:02:43.919 --> 0:02:45.800 that doesn't move, and the target. 0:02:45.639 --> 0:02:48.600 Is still moving, which makes it difficult to. 0:02:48.560 --> 0:02:51.720 Plan well, but it sounds like Mercedes is at least 0:02:52.160 --> 0:02:55.280 planning a little bit. Do you do you know any 0:02:55.320 --> 0:02:57.600 more details about just kind of like how they're gonna 0:02:57.680 --> 0:03:01.440 do this, because are they gonna build a new factory 0:03:01.520 --> 0:03:05.240 and they still have I'm assuming many many different car 0:03:05.320 --> 0:03:08.960 parts that are all going to go into this vehicle. 0:03:09.040 --> 0:03:11.720 It it just sounds like a lot of not to 0:03:11.760 --> 0:03:13.720 have a pun here, but a lot of moving parts. 0:03:14.919 --> 0:03:16.680 That's a great question, Emily. 0:03:17.280 --> 0:03:19.920 The good thing that Mercedes has going for is it 0:03:20.000 --> 0:03:25.000 already is established in the US as a major major builder. 0:03:26.040 --> 0:03:29.000 Mercedes has been here for decades. They've got a factory 0:03:29.000 --> 0:03:31.959 in the South. They have over eleven thousand employees that 0:03:32.000 --> 0:03:35.160 are US workers, plus four hundred suppliers or so, all 0:03:35.200 --> 0:03:38.680 in the US. So this is not as necessarily a 0:03:38.720 --> 0:03:40.800 heavy lift as if they had nothing and then they're 0:03:40.800 --> 0:03:42.240 just going to decide we're going to build a new 0:03:42.240 --> 0:03:43.680 factory and do all these things. 0:03:44.320 --> 0:03:45.920 They're very firmly established. 0:03:45.920 --> 0:03:48.880 In fact, what Ola Collinius told me about a month 0:03:48.920 --> 0:03:50.680 ago when I was with him in Rome is that 0:03:51.040 --> 0:03:53.960 they consider themselves an American company. And I know that 0:03:54.040 --> 0:03:57.160 sounds a little bit weird, but considering how long they've 0:03:57.160 --> 0:04:00.200 been in the US and how many Americans they employ, 0:04:00.720 --> 0:04:03.080 Ola was really making the case that, hey, we are 0:04:03.080 --> 0:04:07.000 an American company. Let's not forget even a company like Tesla, 0:04:07.120 --> 0:04:10.600 which does have factories in California and Texas, also has 0:04:10.640 --> 0:04:13.640 a big factory in China. So you kind of get 0:04:13.640 --> 0:04:16.120 into this question of what is really American. 0:04:16.880 --> 0:04:19.120 It's a bit of a gray area when you start. 0:04:18.920 --> 0:04:22.560 Really counting components and imports and production and all of that. 0:04:22.760 --> 0:04:24.479 Now, I was kind of impressed by those numbers. I 0:04:24.480 --> 0:04:27.280 didn't realize how first of all, how long Hannah, and 0:04:27.320 --> 0:04:29.159 how much that they were doing. I knew they did some, 0:04:29.320 --> 0:04:33.080 but I didn't realize so much the presence. So they 0:04:33.160 --> 0:04:36.320 can really say made in America completely. 0:04:36.400 --> 0:04:37.799 BMW's in the same position. 0:04:37.839 --> 0:04:42.640 They've got literally, I believe eleven thousand workers in the US. 0:04:42.760 --> 0:04:45.400 Their plant in Spartanburg has been there for years. They 0:04:45.440 --> 0:04:47.880 really are part of the fabric, especially in the South, 0:04:47.960 --> 0:04:51.480 providing a lot of American jobs. So their argument is, hey, 0:04:51.520 --> 0:04:53.960 why are we being penalized as if we are not 0:04:54.360 --> 0:04:55.919 putting things back into the country. 0:04:56.480 --> 0:05:00.760 Okay, tell us about what's happening in Miami this weekend. 0:05:00.839 --> 0:05:04.280 I don't think you're going, but you know the plans. 0:05:04.960 --> 0:05:06.640 I know the plan I am this year. 0:05:06.680 --> 0:05:09.040 I am not going, but of course, this is year 0:05:09.200 --> 0:05:11.800 four of Formula one in Miami. 0:05:12.080 --> 0:05:13.320 It's funny you should mention it. 0:05:13.680 --> 0:05:16.200 Just this week we spoke with Allie Berriman, who's the 0:05:16.279 --> 0:05:19.800 driver for Hawes. He's nineteen years old. This is his 0:05:19.880 --> 0:05:22.480 first year in Formula one. Clause, of course, is an 0:05:22.480 --> 0:05:26.159 American team. He's racing in Miami this weekend. 0:05:26.240 --> 0:05:26.920 It's going to. 0:05:26.920 --> 0:05:29.880 Be a really big deal because I just saw that 0:05:29.960 --> 0:05:32.039 they have extended the deal to keep the race in 0:05:32.080 --> 0:05:36.200 Miami for until twenty forty one. So we're gonna be 0:05:36.240 --> 0:05:39.760 in Miami for a while. And the parties. 0:05:39.400 --> 0:05:41.880 Look really extreme. 0:05:41.920 --> 0:05:44.920 I just saw they've got Tso DJing too, so it's 0:05:44.920 --> 0:05:45.880 gonna be a big weekend. 0:05:46.120 --> 0:05:48.599 It's quite an event, right, no doubt about it. Hey, 0:05:48.640 --> 0:05:52.080 listen before you go. In the newsletter, you also talk 0:05:52.120 --> 0:05:55.080 about what you've been loving lately. It's actually in our backyard. 0:05:55.080 --> 0:05:56.000 It's in Brooklyn. 0:05:58.200 --> 0:05:59.720 Oh, Wheels of New York. 0:06:00.240 --> 0:06:02.719 This has been This is my favorite car show that 0:06:02.720 --> 0:06:05.359 I've been to in a year at least. 0:06:05.680 --> 0:06:06.839 It was so cool. 0:06:06.880 --> 0:06:10.400 It's Wheels of NYC is the Instagram handle. It was 0:06:10.760 --> 0:06:14.440 a car show of vintage cars, everything from Ferraris to 0:06:14.520 --> 0:06:18.520 like Grand Nationals like Kendrick Lamar loves the Porsche's to 0:06:18.720 --> 0:06:21.800 Rolls Royces, and the vibes were good and it was 0:06:21.839 --> 0:06:23.120 in the Brooklyn Navy Yard. 0:06:23.200 --> 0:06:24.720 I just had the best time. I loved. 0:06:24.839 --> 0:06:27.120 I highly recommend anyone going. They're gonna have another one 0:06:27.120 --> 0:06:27.600 pretty soon. 0:06:27.680 --> 0:06:29.600 So it's not a show that I've heard about it. 0:06:29.600 --> 0:06:31.640 I mean it's been around for a while. No, it's new. 0:06:32.120 --> 0:06:35.320 No, it's new, it's niche. This is not a big 0:06:35.480 --> 0:06:40.359 established This is like a very grassroots organic it's not corporate. 0:06:40.480 --> 0:06:43.560 It's just people who love cars. And I just love 0:06:43.640 --> 0:06:47.760 that it was all ages, all races, all different types 0:06:47.800 --> 0:06:51.080 of people and styles, and everyone was just happy. It 0:06:51.160 --> 0:06:53.960 felt like a little slice of heaven. It was really great. 0:06:54.160 --> 0:06:58.080 Okay, very quickly you got an email from Porsche. It 0:06:58.120 --> 0:07:02.240 was a mysterious note they're building this. Well, this picture 0:07:02.240 --> 0:07:03.480 that you have in the newsletter, I don't know if 0:07:03.480 --> 0:07:05.839 it's it's a makeup, if it's AI, or it's a 0:07:05.880 --> 0:07:06.440 real car. 0:07:06.520 --> 0:07:08.039 Yeah, it looks crazy. 0:07:08.600 --> 0:07:12.080 Porscha likes to tease us with these special projects that 0:07:12.120 --> 0:07:12.440 they have. 0:07:12.920 --> 0:07:14.120 The short of it is this. 0:07:14.920 --> 0:07:18.040 The Portcha nine seventeen is a very famous race car. 0:07:18.240 --> 0:07:21.040 They actually made one that was legal for the street, 0:07:21.920 --> 0:07:25.440 and Porscha has has sort of teased us, teased us 0:07:25.480 --> 0:07:28.280 with a picture of the car and then sort of saying, 0:07:28.320 --> 0:07:31.080 something's happening in June. Now we all know, as you 0:07:31.160 --> 0:07:35.520 know that Lemon, this big endurance race happens in June, 0:07:35.640 --> 0:07:37.680 so it's kind of like, are they going to be 0:07:38.120 --> 0:07:41.160 bringing a car back to race? You know, are they 0:07:41.160 --> 0:07:44.160 making a new one? We don't really know, but I 0:07:44.200 --> 0:07:46.800 think it could be something road legal that we might 0:07:46.840 --> 0:07:47.480 see in June. 0:07:47.520 --> 0:07:48.320 So stay tuned. 0:07:48.560 --> 0:07:52.520 Such cool stuff and it's all in the newsletter that 0:07:52.600 --> 0:07:55.320 you can check it out. Hannah, thank you so much. 0:07:55.560 --> 0:07:57.880 Have a good weekend. Bloomberg Pursued Auto columnist, cohost of 0:07:57.920 --> 0:07:59.040 the Hot Pursuit podcast. 0:07:59.240 --> 0:08:00.120 Download it. 0:08:00.200 --> 0:08:00.960 This is Bloomberg. 0:08:01.880 --> 0:08:05.720 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:08:05.800 --> 0:08:08.520 us live weekday afternoons from two to five eas during it. 0:08:08.720 --> 0:08:12.640 Listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:08:12.800 --> 0:08:15.040 or watch us live on YouTube. 0:08:16.080 --> 0:08:18.120 Hey, folks, we're going to stay with supply chains. We've 0:08:18.120 --> 0:08:22.840 got someone who's been following, studying, talking about supply chains 0:08:22.880 --> 0:08:25.480 for more than two decades. We head to Florida, Sarah 0:08:25.480 --> 0:08:29.280 Barnes Humphrey. She's an entrepreneur and an influencer, as we mentioned, 0:08:29.840 --> 0:08:32.480 studying supply chains for a long time. She's founded the 0:08:32.559 --> 0:08:36.000 Let's Talk Supply Chain brand and podcast. She's also co 0:08:36.080 --> 0:08:40.120 founder and CEO of a bid and freight platform called 0:08:40.240 --> 0:08:43.480 ships Inc. And she joins us. Hey, Sarah, good to 0:08:43.559 --> 0:08:46.439 have you here. Before we get into the nitty gritty, 0:08:47.400 --> 0:08:50.040 tell us about your study of supply chains for the 0:08:50.080 --> 0:08:55.320 past two decades, because it's obviously a super timely topic today. 0:08:55.360 --> 0:08:57.920 But I don't know that everybody cared so much a 0:08:57.920 --> 0:09:00.880 few decades ago, maybe during the pandemic, but necessarily twenty 0:09:00.960 --> 0:09:01.360 years ago. 0:09:02.200 --> 0:09:04.440 Yeah, no, they definitely didn't. Thanks for having me on 0:09:04.520 --> 0:09:04.920 the show. 0:09:05.040 --> 0:09:07.880 So I've basically been talking about supply chain at the 0:09:07.920 --> 0:09:09.560 dinner table since I was nine. 0:09:09.880 --> 0:09:12.320 My parents owned a logistics company. 0:09:12.160 --> 0:09:15.680 And I worked in the family business operations and sales, 0:09:16.080 --> 0:09:19.120 and then ended up funding our media business, which is 0:09:19.160 --> 0:09:21.960 let's talk supply chain, so podcasts and live shows and 0:09:22.000 --> 0:09:22.760 all sorts of things. 0:09:23.040 --> 0:09:27.240 Okay, so let's start high level. How are global supply 0:09:27.360 --> 0:09:30.480 chains looking in the here and now? There's a lot 0:09:30.480 --> 0:09:32.160 of fear about what. 0:09:32.080 --> 0:09:33.000 Tariffs are going to do. 0:09:33.200 --> 0:09:35.400 But in the here and now, what are you seeing? 0:09:36.640 --> 0:09:39.000 Yeah, so I was at a conference last week and 0:09:39.040 --> 0:09:42.359 there was a lot of optimism. It was a breakball conference, 0:09:43.360 --> 0:09:45.680 but I do know there's a lot of uncertainty. There's 0:09:45.720 --> 0:09:50.120 a lot of supply chains being redesigned. I think the 0:09:50.280 --> 0:09:54.040 mindset is going from what are the challenges to what 0:09:54.160 --> 0:09:58.200 are the opportunities? How can we design our supply chains? 0:09:58.240 --> 0:10:01.720 What does that need to look like. Examples I've seen 0:10:01.800 --> 0:10:04.920 recently so Apple a couple of years ago, they moved 0:10:05.080 --> 0:10:08.960 their production or they're manufacturing some of it into India, 0:10:09.440 --> 0:10:12.320 and they did that because they wanted to use India 0:10:12.400 --> 0:10:15.319 as a new consumer market for them. And it's really 0:10:15.360 --> 0:10:18.280 paying off today because they're going to be able to 0:10:18.360 --> 0:10:22.280 produce iPhones in India and skirt some of the tariffs 0:10:22.280 --> 0:10:25.880 in China to be able to bring iPhones to the 0:10:26.000 --> 0:10:28.559 US as well. And there's a couple of other examples 0:10:29.080 --> 0:10:33.200 where you know, the electric vehicle maker Pollstar, they've paused 0:10:33.240 --> 0:10:36.800 their annual forecast and they're shifting manufacturing to the US 0:10:36.840 --> 0:10:41.679 and Europe, whereas Aston Martin is limiting exports to the US. 0:10:41.800 --> 0:10:43.959 So I think everybody's just sort. 0:10:43.760 --> 0:10:47.320 Of taking a look at how do we want to 0:10:47.320 --> 0:10:50.280 spend our risk dollars, what does that look like, and 0:10:50.320 --> 0:10:51.560 what do we want to do right now? 0:10:51.600 --> 0:10:53.960 Well, you know, I think about all the globalization everybody's 0:10:53.960 --> 0:10:56.880 been pushing to over the last few decades, like that 0:10:57.040 --> 0:10:59.479 was the way to go, go to the low cost producer, 0:11:00.040 --> 0:11:01.679 you know, go to the countries that could do it 0:11:01.760 --> 0:11:03.600 the best. It just kind of made a lot of sense. 0:11:03.760 --> 0:11:04.600 Do you think that's over? 0:11:06.320 --> 0:11:07.680 No, I don't think it's over. 0:11:07.840 --> 0:11:10.720 I think people are waiting and seeing I think a 0:11:10.760 --> 0:11:14.160 lot of retailers were able to get product out before 0:11:14.280 --> 0:11:17.319 the tariffs hit. Some retailers are going to get hit 0:11:17.360 --> 0:11:19.440 with the new tariffs. But I think there's a lot 0:11:19.480 --> 0:11:23.400 of organizations that are pausing orders right now, which is 0:11:23.440 --> 0:11:25.440 a bit of a problem right because if we think 0:11:25.440 --> 0:11:28.760 about it, we're going into peak season, and peak season 0:11:29.040 --> 0:11:32.600 is where retailers and organizations are bringing in products for 0:11:32.679 --> 0:11:35.880 holiday season. So depending on how long this is going 0:11:35.960 --> 0:11:39.280 to go will determine whether they're going to turn on 0:11:39.600 --> 0:11:42.440 manufacturing again and whether they're going to order those products 0:11:42.480 --> 0:11:45.160 for holiday season. So we might not actually see some 0:11:45.280 --> 0:11:48.559 of the effects for another five to six months when 0:11:48.600 --> 0:11:50.800 people are starting to shop for holiday. 0:11:52.040 --> 0:11:54.640 How is shipping looking right now? 0:11:54.720 --> 0:11:57.880 Because there were a few analysts earlier in the week 0:11:57.960 --> 0:11:59.760 and even the week before who had started to fly 0:12:00.559 --> 0:12:05.160 shipping data that cargo shipments are slowing, and then that's 0:12:05.160 --> 0:12:07.880 going to mean that we're soon going to see shelves 0:12:08.000 --> 0:12:11.440 empty because trade is just going to stop. Are those 0:12:11.720 --> 0:12:12.959 fears overblown? 0:12:14.520 --> 0:12:14.679 No? 0:12:14.800 --> 0:12:15.520 I don't think so. 0:12:15.720 --> 0:12:18.360 The Port of Los Angeles came out with a stat 0:12:18.400 --> 0:12:20.640 that said that they're going to see a decline of 0:12:20.679 --> 0:12:25.319 thirty five percent, and they're also looking at every fourth 0:12:25.440 --> 0:12:29.040 vessel not stopping at the port, and so what's going 0:12:29.120 --> 0:12:31.920 to happen is not as much cargo is coming in, 0:12:32.160 --> 0:12:34.840 and so the shipping lines are actually going to start 0:12:34.920 --> 0:12:35.679 charging more. 0:12:35.520 --> 0:12:36.920 For container shipping as well. 0:12:37.280 --> 0:12:39.720 So not only are we going to have higher costs 0:12:39.720 --> 0:12:42.840 for goods, but we're also going to have higher shipping 0:12:42.880 --> 0:12:47.080 costs on container shipping because those vessels, those steamship lines, 0:12:47.120 --> 0:12:48.680 they're not gonna want to lose money either. 0:12:50.120 --> 0:12:55.280 You know. Do you think I don't know, I think 0:12:55.280 --> 0:12:57.439 about the negotiations between US and China or whether or 0:12:57.480 --> 0:12:59.599 not there really is any negotiations, right, I mean, do 0:12:59.640 --> 0:13:02.559 you think when all a said and done, that we're 0:13:02.600 --> 0:13:06.000 going to find more reasonable trade deals created and it 0:13:06.040 --> 0:13:09.240 will go back to kind of somewhat business as usual 0:13:09.400 --> 0:13:12.400 or no, things are going to change dramatically going forward. 0:13:13.400 --> 0:13:14.360 So I'm not sure. 0:13:14.440 --> 0:13:16.640 I think at this point nobody really has a crystal 0:13:16.679 --> 0:13:19.200 ball for that. I mean, if we think about what 0:13:19.280 --> 0:13:20.960 has happened, do companies. 0:13:20.800 --> 0:13:23.480 Or do companies that you talk to or that you know, 0:13:23.559 --> 0:13:25.320 do they think it's going to go back to more 0:13:25.480 --> 0:13:27.920 of kind of business as usual, or they're not quite 0:13:27.920 --> 0:13:29.440 so sure. 0:13:29.200 --> 0:13:32.120 They're not quite so sure right now either. I think 0:13:32.200 --> 0:13:35.120 everybody is sort of in a wait and see type 0:13:35.120 --> 0:13:38.679 mode at the moment with the changes that came in 0:13:38.760 --> 0:13:43.240 for Sheen and Timu today, you know, we're seeing eighty 0:13:43.280 --> 0:13:46.160 dollars shipments that now has close to sixty nine dollars 0:13:46.200 --> 0:13:50.960 in shipping and imports import charges. So these are the 0:13:51.040 --> 0:13:54.840 types of things that until it happens, we're not entirely 0:13:54.920 --> 0:13:57.920 sure how long it's going to stay and what that 0:13:58.000 --> 0:14:00.360 looks like, and so how do you plan for that? 0:14:00.800 --> 0:14:04.720 So a lot of forecasting and planning is really hard 0:14:04.800 --> 0:14:08.040 at the moment, and so supply chain teams have a 0:14:08.080 --> 0:14:09.440 lot on their plates right now. 0:14:10.960 --> 0:14:14.520 I'm also wondering, you know, you talk about manufacturing, do 0:14:14.559 --> 0:14:17.920 you think this idea that you know, companies are going 0:14:17.960 --> 0:14:21.960 to be able to bring the manufacturing to the US 0:14:22.080 --> 0:14:25.760 build factories. Here is the supply chain in the US 0:14:26.040 --> 0:14:29.520 equipped to handle, you know, what could be an influx 0:14:29.600 --> 0:14:33.520 of a ton more domestic manufacturing very quickly. 0:14:34.560 --> 0:14:37.320 Yeah, I think that's a great question, and I think 0:14:37.440 --> 0:14:40.840 there could be room for some I'm not sure we 0:14:40.920 --> 0:14:43.480 can do it all in the US. I think there's 0:14:43.520 --> 0:14:47.320 a number of different factors. There's some labor factors. I 0:14:47.360 --> 0:14:51.280 saw somebody the other day talking about how machinery into 0:14:51.320 --> 0:14:54.160 the US because of the tariffs might be more expensive 0:14:54.240 --> 0:14:54.800 as well. 0:14:55.120 --> 0:14:56.320 So I'm not sure we can. 0:14:56.280 --> 0:15:00.000 Necessarily equip those facilities with the machinery that we need 0:15:00.160 --> 0:15:04.360 to manufacture either. And also, it takes a long time 0:15:04.480 --> 0:15:08.480 to be able to set up manufacturing in a new location. 0:15:08.600 --> 0:15:11.040 I mean, if you take that example of Apple that 0:15:11.120 --> 0:15:14.360 I mentioned earlier, it's taken them a couple of years 0:15:14.360 --> 0:15:17.680 to shift some of that manufacturing into India, and it's 0:15:17.720 --> 0:15:20.960 paying off today because of the tariffs, But at the 0:15:21.080 --> 0:15:23.560 end of the day, it's a really long term play. 0:15:24.120 --> 0:15:26.800 And a lot of people were moving to Mexico and 0:15:26.880 --> 0:15:30.680 now they're unsure how that actually fits into their manufacturing. 0:15:31.920 --> 0:15:33.040 Like Cadence as well. 0:15:33.320 --> 0:15:35.480 That's what's fascinating Sarah and I think this is something 0:15:35.520 --> 0:15:37.640 that we talked about a lot after COVID. We would 0:15:37.640 --> 0:15:42.200 have just even architects or developers coming in and saying, 0:15:42.200 --> 0:15:45.040 you know where there's a lot of activity Mexico because 0:15:45.080 --> 0:15:48.800 people are moving operations to Mexico and coming off of COVID, 0:15:49.200 --> 0:15:53.760 we realized how vulnerable our supply chains really really were 0:15:53.840 --> 0:15:57.240 and that we wanted stuff closer to home. And so 0:15:57.960 --> 0:16:01.960 like that shift already started happening. I mean, what is 0:16:02.000 --> 0:16:04.840 going on behind the scenes. Even with Apple you mentioned India. 0:16:05.240 --> 0:16:07.360 We have talked with our mark German, who covers that 0:16:07.480 --> 0:16:12.120 company flawlessly and in depth, and you know, we've been 0:16:12.160 --> 0:16:16.400 having conversations how Apple was spreading out its supply chain 0:16:16.440 --> 0:16:19.680 but still so relying on China still is. But then bam, 0:16:19.760 --> 0:16:22.360 it was like, well, wait a minute, we can next 0:16:22.400 --> 0:16:24.280 year have all the iPhones that are needed in the 0:16:24.360 --> 0:16:26.400 United States come from India. So I feel like there's 0:16:26.440 --> 0:16:29.400 stuff that's been going on very quietly. What are you 0:16:29.520 --> 0:16:33.520 hearing about what companies are doing quietly as they continue 0:16:33.560 --> 0:16:36.360 to maybe spread their supply chain around. 0:16:37.280 --> 0:16:37.520 Yeah. 0:16:37.560 --> 0:16:39.880 Again, I think they're looking at the design of their 0:16:39.920 --> 0:16:42.800 supply chains. Where do I want to spend my risk dollars, 0:16:42.840 --> 0:16:46.120 Where can I actually source the components that I need 0:16:46.160 --> 0:16:48.240 to be able to create the products that I need. 0:16:49.120 --> 0:16:52.400 Just another mention on Apple, they looked at manufacturing the 0:16:52.440 --> 0:16:54.600 iPhone in the US and it would cost the US 0:16:54.720 --> 0:16:58.480 consumer thirty five hundred dollars, So there's a lot. 0:16:58.360 --> 0:17:03.560 Of on the phone. I mean fat in my household, 0:17:03.560 --> 0:17:06.720 and that's what almost ten thousand dollars. That's a lot, all. 0:17:06.680 --> 0:17:09.800 Right, go ahead, Yeah, No, I just mean like there's 0:17:10.359 --> 0:17:14.359 it's different for different organizations, and supply chains look different 0:17:14.400 --> 0:17:17.240 across the board. And so for some manufacturing in the 0:17:17.320 --> 0:17:23.240 US makes sense, especially for medications and chips, for technology 0:17:23.280 --> 0:17:25.920 and things like that what you were talking about coming 0:17:25.960 --> 0:17:28.120 out of the pandemic. Those are the things we want 0:17:28.160 --> 0:17:33.399 to manufacture close to home. But for some organizations it 0:17:33.480 --> 0:17:37.520 really doesn't make any sense. Taking that Apple example, at 0:17:37.520 --> 0:17:40.240 thirty five hundred dollars for an iPhone, nobody's going to 0:17:40.280 --> 0:17:42.600 spend that kind of money. So I think it's a 0:17:42.640 --> 0:17:45.640 bit of a push pull. Everybody's having this discussion. They're 0:17:45.640 --> 0:17:48.960 looking at the design, Where can we source, where can 0:17:49.000 --> 0:17:52.560 we purchase, Where can we manufacture? What makes the most 0:17:52.600 --> 0:17:54.639 sense for us and for our customers. 0:17:55.200 --> 0:17:59.280 Sarah, what are you seeing from small businesses? What are 0:17:59.280 --> 0:18:02.679 the particular challenges you know someone who's in the US 0:18:02.960 --> 0:18:04.960 is going to face if they're a small business. 0:18:06.119 --> 0:18:09.040 Yeah, I think if they're a product based business, they're 0:18:09.920 --> 0:18:12.440 sort of rethinking what it is that they want their 0:18:12.480 --> 0:18:15.399 business to look like. I was recently reading an article 0:18:15.680 --> 0:18:19.800 about there was a bunch of small businesses that were 0:18:19.840 --> 0:18:22.240 sort of looking at the tariffs and saying, we want 0:18:22.240 --> 0:18:23.280 to be exempt from it. 0:18:23.720 --> 0:18:24.640 And one of those. 0:18:24.480 --> 0:18:27.720 Small business actually said they're going to pivot from products 0:18:27.760 --> 0:18:30.960 into services because that makes the most sense for. 0:18:30.920 --> 0:18:31.879 Them right now. 0:18:31.920 --> 0:18:34.760 And I think back to the pandemic and some small 0:18:34.800 --> 0:18:39.159 businesses pivoted what product they were actually selling and someone 0:18:39.200 --> 0:18:42.120 into hand sanitizer. So I feel like this is kind 0:18:42.119 --> 0:18:45.680 of a similar thing at the moment that small businesses 0:18:45.720 --> 0:18:47.760 were faced with during the pandemic. 0:18:48.520 --> 0:18:51.240 All right, So when you kind of watched, like probably 0:18:51.280 --> 0:18:54.120 all of us, the news coming out of certainly the 0:18:54.160 --> 0:18:56.359 White House, and then just kind of what you are 0:18:56.400 --> 0:18:59.600 hearing from folks in terms of managing their own supply 0:18:59.720 --> 0:19:02.159 chains and what you're seeing, I don't know, how are 0:19:02.160 --> 0:19:03.960 you thinking about the next six months or so. 0:19:04.800 --> 0:19:07.760 I think that it's going to be very unpredictable. I 0:19:07.800 --> 0:19:12.600 think that it's extremely uncertain right now, and if retailers 0:19:12.640 --> 0:19:16.480 and organizations are pausing shipments at the moment, I don't 0:19:16.520 --> 0:19:18.359 think we're going to see the ripple effects for another 0:19:18.400 --> 0:19:20.840 five to six months, and I think we may see 0:19:21.240 --> 0:19:25.320 some challenges over the holiday season. I think organizations are 0:19:25.400 --> 0:19:27.760 sort of in a wait and see right And I 0:19:28.000 --> 0:19:31.000 just don't think that anybody has the answers right now 0:19:31.440 --> 0:19:34.440 until we figure out where those tariffs are going to land. 0:19:34.800 --> 0:19:36.880 Well and right, as you said, and we talked kind 0:19:36.880 --> 0:19:39.399 of kicked off in the two pm hour, talking with 0:19:39.440 --> 0:19:42.640 our Mike McKee, who follows the economy, and talking about 0:19:42.640 --> 0:19:44.639 the jobs report, and it looked like things at this 0:19:44.720 --> 0:19:48.480 point are doing pretty well. But the concern is when 0:19:48.480 --> 0:19:50.840 this data starts to hit, whether it's consumers. We've seen 0:19:50.840 --> 0:19:53.000 it in sentiment, but when it comes into the actuality 0:19:53.000 --> 0:19:57.600 of it, I am curious. Are you thinking a recession 0:19:57.680 --> 0:19:59.760 is likely too? From the conversations you're having in the 0:19:59.800 --> 0:20:00.840 pe you're talking to. 0:20:01.920 --> 0:20:02.600