WEBVTT - Surveillance: Auto Workers Losing For Decades Now, Alden Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane jay Ley. 0:00:13.960 --> 0:00:16.960 We bring you insight from the best in economics, finance, 0:00:17.040 --> 0:00:23.520 investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.200 Bloomberg dot Com and of course on the Bloomberg. Now 0:00:27.280 --> 0:00:29.760 let's go straight to one of the newsmakers, of course, 0:00:29.800 --> 0:00:33.320 one of the main key of newsmakers on this a 0:00:33.400 --> 0:00:36.879 Democratic Unionist Party leader Earl Foster. Earlian Foster, thanks so 0:00:36.920 --> 0:00:40.319 much for joining Surveillance. What does the Prime Minister in 0:00:40.360 --> 0:00:43.320 your eyes need to do to win your support in 0:00:43.360 --> 0:00:46.520 the House of Commons vote on Braxay. Well, good morning, 0:00:46.560 --> 0:00:49.080 it's very good to be with you. Um. The deal 0:00:49.159 --> 0:00:51.680 that has come forward from Europe but not a deal 0:00:51.920 --> 0:00:55.800 that the Democratic Unions Party can support because it makes 0:00:56.040 --> 0:00:58.960 a difference between Northern Ireland and the rest of the 0:00:59.040 --> 0:01:02.160 United Kingdom by the backstop that has been inserted in 0:01:02.240 --> 0:01:04.440 the deal. There are many good parts in the deal, 0:01:04.600 --> 0:01:08.319 such as the recognition of European citizens rights um, the 0:01:08.360 --> 0:01:13.920 fact that we future recognition of professional qualifications, but the backstop, 0:01:13.959 --> 0:01:17.120 as far as we are concerned, cannot allow to support 0:01:17.160 --> 0:01:20.800 this seal and therefore the backstop must go. Okay, but 0:01:20.840 --> 0:01:23.360 there's a suggestion that the Prime Minister would agree to 0:01:23.520 --> 0:01:27.000 a common rule book between the UK and the EU 0:01:27.080 --> 0:01:30.440 are lean faster that might be enough to actually avoid 0:01:30.440 --> 0:01:33.320 barriers between Northern Ireland and the rest of the UK. 0:01:33.520 --> 0:01:37.319 Would such a unilateral declaration be enough for you? We'll 0:01:37.360 --> 0:01:40.160 see the difficulty for us in Northern Irelanders that this 0:01:40.520 --> 0:01:43.520 withdrawal agreement, if it's accepted by Parliament, and of course 0:01:43.520 --> 0:01:46.200 there's no evidence that it will be accepted by Parliament, 0:01:46.560 --> 0:01:53.040 would bring into place allegally buyinging international treaty which is 0:01:53.080 --> 0:01:55.200 then in law and is there in black and white 0:01:55.440 --> 0:01:59.480 and cannot be superseded. Our difficulty is that the political 0:01:59.520 --> 0:02:03.080 victory that are being talked about our aspirational they are 0:02:03.160 --> 0:02:06.840 not legally binding and therefore there is a real asymmetrical 0:02:06.920 --> 0:02:11.400 relationship between those two documents. Right, So I understand from 0:02:11.400 --> 0:02:13.720 what you're saying or I'm inferring, and correct me if 0:02:13.720 --> 0:02:16.960 I'm wrong, that a unilateral declaration would not be good 0:02:17.040 --> 0:02:19.960 enough for you. We want to hear what the Prime 0:02:19.960 --> 0:02:21.919 Minister has to say, and we welcome her to this 0:02:22.080 --> 0:02:24.480 part of the unedited Kingdom, but we will be saying 0:02:24.560 --> 0:02:26.480 very clearly to her that she needs to get rid 0:02:26.520 --> 0:02:28.760 of the back stub. You know, this is going to 0:02:28.800 --> 0:02:31.240 be a waste of time today if he doesn't listen 0:02:31.240 --> 0:02:33.119 to what people have to say to her. And as 0:02:33.160 --> 0:02:36.480 far as I can see, this is not going through Parliament. 0:02:37.000 --> 0:02:40.040 And therefore, instead of wasting time over this next two 0:02:40.040 --> 0:02:43.560 weeks going on a pr offensive around her deal, what 0:02:43.720 --> 0:02:45.480 she should be doing is to try and find a 0:02:45.560 --> 0:02:49.160 third way forward, a deal that find support in Parliament 0:02:49.200 --> 0:02:52.080 and a delible work. So we're saying to her, don't 0:02:52.120 --> 0:02:55.160 waste the time, use that time profitably and trying to 0:02:55.160 --> 0:02:58.400 find a better dat right. But the UK government is 0:02:58.440 --> 0:03:00.600 telling us that there's no point in real opening talks 0:03:00.680 --> 0:03:04.280 because they want Budge on the backstop. Well, you know 0:03:04.360 --> 0:03:06.280 they would say that wouldn't play. I mean, of course, 0:03:06.320 --> 0:03:08.360 people are going to hold to their line until something 0:03:08.360 --> 0:03:10.799 else has to be done, um, and they believe that 0:03:10.919 --> 0:03:13.280 this is the best way board. The Parliament is going 0:03:13.320 --> 0:03:16.760 to tell her something very different. Okay, the DUP has 0:03:16.760 --> 0:03:21.359 already abstained in important votes on government business. How likely 0:03:21.440 --> 0:03:26.600 is that to continue? Well, the the deal, as I understand, 0:03:26.600 --> 0:03:29.639 it's coming to Parliament next week for debate and then 0:03:29.639 --> 0:03:32.920 we'll be voted on on the Tuesday, the eleventh of September. 0:03:33.840 --> 0:03:36.800 As it currently stands, we will not be supporting the 0:03:36.920 --> 0:03:40.000 stale and not as the case for many across the Chamber, 0:03:40.040 --> 0:03:42.480 whether they are remain voters or lead voters, they are 0:03:42.520 --> 0:03:46.680 not going to support the stale and therefore Prime Minister 0:03:46.800 --> 0:03:48.880 is not going to get this steal through. So instead 0:03:48.920 --> 0:03:51.400 of wasting her time, she should actually be trying to 0:03:51.440 --> 0:03:55.440 find a way that is acceptible to everybody. Okay, I 0:03:56.000 --> 0:03:59.080 was talking to Nicki Morrigan at the Treasury Select Committee 0:03:59.280 --> 0:04:02.080 yesterday and she are saying it's a chance that actually 0:04:02.200 --> 0:04:04.520 we have a hard Brexit if this deal does not 0:04:04.680 --> 0:04:07.080 get through. What do you think are is a probability 0:04:07.520 --> 0:04:11.120 of a crashing out? Well, I think people are wanting 0:04:11.160 --> 0:04:13.840 to portray this as a binary choice between this stale 0:04:13.880 --> 0:04:16.200 and no deal, and of course the Prime Minister wants 0:04:16.200 --> 0:04:18.240 to portray it is that because that's the best chances 0:04:18.279 --> 0:04:20.880 are getting the deal through. We don't accept that that's 0:04:20.880 --> 0:04:23.039 the case. If we say that there is a third way, 0:04:23.120 --> 0:04:25.400 a better way, a way that we'll get the support 0:04:25.520 --> 0:04:28.640 of the British people through their parliamentarium and we should 0:04:28.680 --> 0:04:31.440 be looking for that way now instead of wasting time 0:04:31.480 --> 0:04:34.679 on the day that's not going to get support, Okay, 0:04:34.800 --> 0:04:36.840 Arlene Foster. A lot of people think that the DUP 0:04:37.040 --> 0:04:39.039 is bluffing, right, that you will end up, you know, 0:04:39.040 --> 0:04:42.599 supporting this deal because you fear fresh elections and Jeremy 0:04:42.600 --> 0:04:45.000 Corbyn coming in, or that you will support the deal 0:04:45.040 --> 0:04:49.600 in exchange for more money. Are you bluffing? That's quite 0:04:49.600 --> 0:04:53.480 offensive actually to say that we're going to uh not 0:04:53.640 --> 0:04:55.400 vote again, that we're going to support the steal and 0:04:55.480 --> 0:04:57.560 we were giving money for Northern Island of not what 0:04:57.680 --> 0:04:59.960 this is about. This is about the future of Northern 0:05:00.000 --> 0:05:03.800 in Ireland constitutionally and economically. Therefore, we will not be 0:05:03.839 --> 0:05:06.760 supporting the deal in its current format. And by the way, 0:05:06.920 --> 0:05:09.039 if it is voted down in Parliament, that does not 0:05:09.160 --> 0:05:11.960 mean a general election, because what we have at the 0:05:12.000 --> 0:05:14.520 moment is affect plim in Parliament back and it's only 0:05:14.640 --> 0:05:17.800 in Parliament of votes for a general action that it's happened. 0:05:18.120 --> 0:05:20.839 So that's a false thing to say, and it is 0:05:20.880 --> 0:05:23.640 quite offensive to say that we're bluffing and that we're 0:05:23.680 --> 0:05:25.880 only holy Night for money. Nothing could be further to 0:05:25.960 --> 0:05:29.320 the truth. M Arlene Foster, how do you see it? 0:05:29.520 --> 0:05:32.160 So if you think that this deal will be voted down, 0:05:32.480 --> 0:05:35.679 does then the Prime Minister go back to the EU 0:05:35.839 --> 0:05:37.839 and get a better deal and then it gets through 0:05:37.880 --> 0:05:40.520 Parliament a second time? Or you know what happens after 0:05:41.160 --> 0:05:44.280 December eleventh. Well, we would much prefer if she looked 0:05:44.279 --> 0:05:46.440 for a better day now instead of within the next 0:05:46.440 --> 0:05:50.560 two weeks. Our offenses. We think that would be much 0:05:50.600 --> 0:05:54.080 better spent trying to find a better way forward getting 0:05:54.120 --> 0:05:56.200 out of that Irish back stuff, because of course the 0:05:56.240 --> 0:05:58.440 only reason the Irish back stuff is any we are 0:05:58.440 --> 0:06:01.440 tooled is because to prevent a hard border on the 0:06:01.440 --> 0:06:04.239 island of Ireland. But Leo Broadcal, the Irish pig monster, 0:06:04.360 --> 0:06:05.880 has said he's not going to put up a hard 0:06:05.880 --> 0:06:08.600 border Europe, so they're not pretty slow hard border. She's 0:06:08.680 --> 0:06:10.920 very strange to know who's going to put this hard 0:06:10.920 --> 0:06:13.520 border up. I don't think I'd come to Ireland. Um, 0:06:13.600 --> 0:06:16.440 so we have over hundreds of pages dealing with an 0:06:16.440 --> 0:06:20.159 Arish back stop that Frank Day isn't needed. But have 0:06:20.240 --> 0:06:22.920 you heard any indication from the government or Theresa A 0:06:23.080 --> 0:06:26.480 that she is willing to go back to Brussels before 0:06:26.560 --> 0:06:30.599 December eleven, then if not what happens on December twelve, No, 0:06:30.880 --> 0:06:34.120 I haven't um and she is determined for Shade with 0:06:34.200 --> 0:06:36.360 her deal. She believes that her day is the best 0:06:36.360 --> 0:06:39.920 way forward. But clearly she's not listening because Parliament. I 0:06:40.000 --> 0:06:43.440 think that was very clear yesterday when she came at 0:06:43.480 --> 0:06:45.440 to the floor of the House of Common. But she 0:06:45.520 --> 0:06:50.080 doesn't have the support to get this deal through. Arling Foster, 0:06:50.120 --> 0:06:53.279 thanks so much for joining us for a very valuable conversation. She's, 0:06:53.279 --> 0:06:56.720 of course Arlene Foster. She is a UK Democratic Unionist 0:06:56.839 --> 0:07:02.240 Party leader. If you care about Lordstown, Ohio and the 0:07:02.320 --> 0:07:06.600 other places where time will march on according to General Motors, 0:07:06.640 --> 0:07:10.400 this is without question the interview of the day. Kevin 0:07:10.400 --> 0:07:13.800 Tynan is an auto guy. He is with Bloomberg Intelligence. 0:07:14.400 --> 0:07:17.040 But John, what is so important about Kevin Tynan? As 0:07:17.080 --> 0:07:21.760 he understands that a Chrysler Slant six a Dodge Slant six. 0:07:21.800 --> 0:07:27.040 If you drop the screw into the distributor cap area 0:07:27.080 --> 0:07:30.000 where the spark plugs used to wire into you know 0:07:30.120 --> 0:07:33.400 you will ruin your distributor and your father will not 0:07:33.440 --> 0:07:38.280 bail you out in your car won't move until you 0:07:38.440 --> 0:07:40.360 This would be a little bit of personal experience. Kevin, 0:07:40.840 --> 0:07:44.040 I have the clearest memory of walking along the chain 0:07:44.120 --> 0:07:48.600 link fence of Rochester, Delco. In the early eighties when 0:07:48.640 --> 0:07:53.440 it vapored. Is that what's going to happen to these geographies? Uh, 0:07:53.480 --> 0:07:57.120 there's a there's a distinct possibility that we go through 0:07:57.160 --> 0:08:00.880 that kind of uh you know, Flint, Michion again and 0:08:00.880 --> 0:08:04.480 and and Rochester. And But at the same time, I 0:08:04.520 --> 0:08:07.680 would say, you know this, this looks a lot like 0:08:08.000 --> 0:08:11.560 General Motors clearing the deck and saying, look this this 0:08:11.680 --> 0:08:15.680 advanced into technology. We've kind of half effort in it. 0:08:15.960 --> 0:08:20.120 So let's let's just let's draw this line here and 0:08:20.160 --> 0:08:23.400 say and and I think you see this by them 0:08:23.600 --> 0:08:27.800 uh ceasing production of Chevrolet Vault with a V yet 0:08:27.800 --> 0:08:31.840 continuing the bolt with a b um to say, look 0:08:31.840 --> 0:08:35.400 that the plug in hybrid electric probably isn't the way 0:08:35.440 --> 0:08:37.560 forward here. We have to go full commitment with the 0:08:37.559 --> 0:08:40.839 battery electric and still trucks obviously, right that's going to 0:08:40.920 --> 0:08:44.720 pay the bill and give them the opportunity to innovative 0:08:45.440 --> 0:08:47.640 or catch up on the e V side. Before John 0:08:47.720 --> 0:08:50.319 jumps into the nuts and bolts of this no pun intended. 0:08:50.760 --> 0:08:53.360 Kevin I had a good friend in Flint, Michigan in seventies. 0:08:53.559 --> 0:08:55.400 He said, come on, you got to hear this. And 0:08:55.440 --> 0:08:58.320 I remember sitting in a van hearing the rumble and 0:08:58.320 --> 0:09:01.920 the roar. Is those wooden doors opened up out of 0:09:01.920 --> 0:09:04.760 the nineteen thirties and forties and everybody ran across the 0:09:04.800 --> 0:09:10.120 street to the bars. Those people weren't retrained. Then Ted 0:09:10.160 --> 0:09:14.240 Alden told us some CFR this morning, we fail at retraining. 0:09:14.600 --> 0:09:18.160 Can we retrain these people? We can? And and I 0:09:18.200 --> 0:09:20.400 was listening to that that piece, and and I think 0:09:20.400 --> 0:09:22.280 it was right on the money. And I think that's 0:09:22.280 --> 0:09:27.480 what becomes important here is that, uh, those factories are 0:09:27.520 --> 0:09:30.080 now able to and and and again I think this 0:09:30.200 --> 0:09:32.520 was one of or this is one of the sort 0:09:32.559 --> 0:09:35.760 of uh, you know, points that I look at as 0:09:36.200 --> 0:09:40.200 the industry moves towards electric technology. Is you know, how 0:09:40.200 --> 0:09:44.520 many automakers have committed plants to battery electric vehicles. We've 0:09:44.520 --> 0:09:47.040 seen Volkswagen start to talk about it in Germany a 0:09:47.080 --> 0:09:50.360 little bit. Now. I think this is General Motors opportunity 0:09:50.400 --> 0:09:53.719 to say, where we're done with this half effort. We're 0:09:53.720 --> 0:09:56.520 going all in on this. I'm not sure how big 0:09:56.559 --> 0:10:00.199 that market is globally, but GM is saying, hey, if 0:10:00.200 --> 0:10:02.880 that's ten percent of the global market, we want our share, 0:10:03.120 --> 0:10:05.959 because it may be fift Like we see our friends 0:10:06.000 --> 0:10:08.120 at benf talk about this is half the market is 0:10:08.160 --> 0:10:12.959 electrification by UM And to Mary Barr's credit, I think 0:10:13.040 --> 0:10:16.640 previous administrations at General Motors might have dismissed this as 0:10:17.040 --> 0:10:19.800 money losing technology and we're not going to get involved, 0:10:19.800 --> 0:10:22.040 and maybe not even made the bolt in the first place. 0:10:22.360 --> 0:10:24.800 And I look at that as an engineering sort of 0:10:25.200 --> 0:10:28.560 and and design experiment that says, Okay, now we have 0:10:28.640 --> 0:10:31.280 this technology, let's just scale it up into other products 0:10:31.280 --> 0:10:33.960 that we can sell. So Kevin, for a lot of people, 0:10:34.000 --> 0:10:37.640 the last twenty four hours is really really significant, and 0:10:37.720 --> 0:10:40.720 that essentially what GM has done has said that here 0:10:40.720 --> 0:10:43.640 in the United States, if it's a sedan with an 0:10:43.640 --> 0:10:48.199 internal combustion engine, it's just not worth making here anymore. Now, 0:10:48.200 --> 0:10:51.960 if that's the conclusion, my next question will be who's next? 0:10:52.800 --> 0:10:55.360 And how big? What is the scale of what's about 0:10:55.400 --> 0:10:58.680 to happen? What is it right? Well, and and look 0:10:59.360 --> 0:11:04.679 Ford said this already, Uh Chrysler did it without you know, 0:11:04.760 --> 0:11:07.920 being so vocal about it. But you know, uh, they've 0:11:07.960 --> 0:11:12.080 gotten out of the car business. I mean they're truck now. Uh, 0:11:12.160 --> 0:11:14.720 just that LX platform is the only thing they have left. 0:11:14.800 --> 0:11:18.200 So the other two guys, General is actually laid on this. 0:11:18.640 --> 0:11:21.040 And if you look at GM's numbers, look at an 0:11:21.040 --> 0:11:23.719 eight percent drop on the car side in the full 0:11:23.800 --> 0:11:27.800 year seventeen another this year. So I think the idea 0:11:27.840 --> 0:11:29.920 is that, you know, do we lose money on these 0:11:29.920 --> 0:11:34.040 products that are seeing dramatically declining demand or do we 0:11:34.080 --> 0:11:37.360 lose money on the products that have this huge upside? Uh? 0:11:37.400 --> 0:11:40.120 Potentially because now you have governments in China behind them 0:11:40.160 --> 0:11:42.800 and Kevin, let me represent the president of the United 0:11:42.840 --> 0:11:48.080 States everything you're saying, Cent and I know John and 0:11:48.120 --> 0:11:50.160 I are on the same page on this. So you 0:11:50.280 --> 0:11:54.640 gotta build something new. What is holding you back from 0:11:54.760 --> 0:11:59.600 choosing a spot in Ohio to do it other than 0:11:59.720 --> 0:12:03.439 the the the scale, right, I think I don't think 0:12:03.440 --> 0:12:06.199 there there is any reason why you wouldn't choose that 0:12:06.280 --> 0:12:08.880 spot to do it, other than you have a whole 0:12:08.920 --> 0:12:11.760 lot of installed capacity and not a whole lot of 0:12:11.800 --> 0:12:14.920 demand for those products yet. Right, So that's one percent 0:12:14.960 --> 0:12:18.880 of the global market, it's one percent of the US market. Um, 0:12:18.920 --> 0:12:22.120 you know, So so you're gonna take the Chevrolet Cruz 0:12:22.160 --> 0:12:25.280 for example, that's hundreds of thousands of units per year, 0:12:25.320 --> 0:12:27.640 and you're gonna go in and you're gonna build tens 0:12:27.679 --> 0:12:30.880 of thousands of electric deals. So it's certainly possible. It's 0:12:30.920 --> 0:12:33.719 just you're gonna have capacity utilization that's going to be 0:12:34.400 --> 0:12:36.920 on the floor, Kevin, the repress releases that gets sent 0:12:37.000 --> 0:12:39.360 to Wall Street. One of the last twenty four hours 0:12:39.600 --> 0:12:42.400 from GM was a press release for Wall Street. What's 0:12:42.440 --> 0:12:45.400 the press release for the White House? What does the 0:12:45.440 --> 0:12:47.840 president say and what is the response of this company? 0:12:47.880 --> 0:12:49.920 And I did not think I'd be asking that in 0:12:50.200 --> 0:12:52.680 the home of capitalism, but I am what is the 0:12:52.720 --> 0:12:54.600 White House say back to this? And what is the 0:12:54.600 --> 0:12:58.120 GM board and the c suite say back to them? Well, 0:12:58.160 --> 0:13:00.680 and here's the interesting thing, Jonathan to and from my 0:13:00.760 --> 0:13:04.040 perspective is that you know, when you look at the 0:13:04.040 --> 0:13:06.400 White House, I think a lot of what you see 0:13:06.600 --> 0:13:11.720 is this really dramatic, UH move to spark a response? Right, 0:13:11.760 --> 0:13:14.040 If you want change, it's gonna have to be dramatic. 0:13:14.080 --> 0:13:17.920 If we go softly through this, nothing ever happens. And 0:13:17.960 --> 0:13:20.240 I'm speaking in very general terms, and I think that's 0:13:20.320 --> 0:13:23.959 general motors move here is to say, look, we need 0:13:24.040 --> 0:13:25.840 to be here in the future, we need to be 0:13:25.920 --> 0:13:28.120 growing in the future, and for us to do that, 0:13:28.400 --> 0:13:30.839 we have to draw this line right here, right now 0:13:31.200 --> 0:13:35.079 and make this transition. Is it painful, absolutely, But if 0:13:35.120 --> 0:13:37.840 we're going to exist and be relevant in the future, 0:13:37.880 --> 0:13:39.679 we have to do this now. Is this just a 0:13:39.800 --> 0:13:43.000 labor arbitrage? I'm talking like Steve Roach of Yale University. 0:13:43.080 --> 0:13:45.880 I mean, Union used to make a hundred fifty thousand 0:13:46.000 --> 0:13:48.760 year overtime, a hundred thirty whatever it was, and then 0:13:48.800 --> 0:13:51.880 Steve Rattner came in, as cars are and we remodeled labor. 0:13:51.920 --> 0:13:53.720 I get it. I don't know what they make now, Kevin, 0:13:53.760 --> 0:13:56.199 please tell me. But is it just still a labor 0:13:56.280 --> 0:14:00.080 arbitrage where the American auto worker makes too much for 0:14:00.160 --> 0:14:03.200 GM to make money on that next suv or pickup truck. 0:14:03.800 --> 0:14:06.080 I don't think so. But but look at pricing in 0:14:06.120 --> 0:14:09.960 the industry. Right We talked about transaction prices being at 0:14:10.640 --> 0:14:14.360 record highs. But if you look at the technology UM 0:14:14.400 --> 0:14:18.320 and everything, not only in vehicle but in terms of production, 0:14:19.000 --> 0:14:22.200 it's expensive to manufacture UM, you know. And then if 0:14:22.240 --> 0:14:24.720 you look at declining volumes, it makes it it makes 0:14:24.720 --> 0:14:28.480 the equation that much more on balanced. So UM, you know, 0:14:28.520 --> 0:14:30.800 I don't I don't think it's just the labor arbitrage. 0:14:31.120 --> 0:14:35.600 There's cost inflation all across the board there and you 0:14:35.640 --> 0:14:38.440 have to adjust for it. Um. At the same time, 0:14:39.040 --> 0:14:42.480 you know there there's pushed back against moving to lower 0:14:42.520 --> 0:14:45.600 costs to Mexico without production there, and to say, look, 0:14:45.600 --> 0:14:48.640 we we want this ten percent adjusted EBIT margin. The 0:14:48.680 --> 0:14:50.840 only way we're gonna do it is if that part 0:14:50.880 --> 0:14:53.480 of them, that component of the of the cost structure 0:14:53.800 --> 0:14:56.240 isn't as low as it can be. Hey, Kevin grant To, 0:14:56.280 --> 0:14:58.720 can't sell you really really smart. Thank you so much 0:14:58.720 --> 0:15:01.880 for dropping buying giving us a kill. Kevin Sainen, Bloomberg 0:15:01.960 --> 0:15:07.160 Intelligent Senior Automotive Analysis as GM announces some big job 0:15:07.200 --> 0:15:13.000 cuts and some big factory closures as well from the 0:15:13.000 --> 0:15:17.040 Bloomberg Interactive Broker Studios, John Farrell and Tom Keene, thank 0:15:17.040 --> 0:15:20.040 you for being with us. And now a definitive conversation 0:15:20.160 --> 0:15:23.000 on trade. Edward Alden wrote one of my books of 0:15:23.000 --> 0:15:28.320 the summer, Failure to Adjust. It is a deceptively wonderful, narrow, 0:15:28.680 --> 0:15:32.520 dense treatise on trade and what America needs to do. 0:15:32.600 --> 0:15:35.440 Let's get an update at Alden. What does President Trump 0:15:35.520 --> 0:15:40.240 and what does America need to do on trade right now? Oh? 0:15:40.320 --> 0:15:42.560 Now that is that is a big question. I mean, 0:15:42.840 --> 0:15:46.800 you know, I I think the immediate challenge is to 0:15:46.920 --> 0:15:49.640 find some way to enter into serious negotiations with China. 0:15:49.720 --> 0:15:53.400 I mean, we are on potentially a very destructive road 0:15:53.480 --> 0:15:55.320 with China. That's not to say there are real problems 0:15:55.360 --> 0:15:57.880 in China. There are serious problems, but we need to 0:15:57.880 --> 0:15:59.600 find a way forward on it. And I mean the 0:15:59.680 --> 0:16:01.960 posit it. A thing with Trump is they were able 0:16:01.960 --> 0:16:04.120 to do a new NAFTA deal. There was a lot 0:16:04.160 --> 0:16:05.920 of storm and drawing, but at the end of the 0:16:06.000 --> 0:16:08.080 day they came out of with the deal. I hope 0:16:08.120 --> 0:16:10.120 the same thing as possible with China. And then we've 0:16:10.160 --> 0:16:11.880 really got to focus on what's going on here in 0:16:11.880 --> 0:16:15.160 the United States and how to boost our economic competitiveness 0:16:15.160 --> 0:16:16.800 in a whole range of ways that we're just not 0:16:16.840 --> 0:16:20.920 doing at the moment. Did the jobs GM Did they 0:16:21.000 --> 0:16:24.120 go to China? As the John Prine, the Great John 0:16:24.160 --> 0:16:28.080 Prine of Chicago would say, the jobs went to Mexico. 0:16:30.160 --> 0:16:32.480 I mean yes and no, I mean no in the 0:16:32.560 --> 0:16:34.960 sense that that you know, GM is not gonna be 0:16:35.040 --> 0:16:38.160 exporting it certainly anytimes in your future cars from China 0:16:38.200 --> 0:16:40.840 to the United States. It's not a Mexico type relationship. 0:16:41.240 --> 0:16:44.200 But China is obviously a much bigger future market for 0:16:44.280 --> 0:16:47.000 GM right now than the United States is. And GM 0:16:47.080 --> 0:16:49.600 is rationalizing in various ways in North America. They're not 0:16:49.640 --> 0:16:52.680 going to build these lower margin products in the United 0:16:52.680 --> 0:16:55.720 States or Canada anymore. They're going to focus on next 0:16:55.800 --> 0:16:58.560 generation vehicles. All that makes a lot of economic sense, 0:16:58.880 --> 0:17:01.240 but it doesn't create a whole lot of jobs for 0:17:01.240 --> 0:17:04.280 for auto workers. And and and that's been the story 0:17:04.280 --> 0:17:05.879 for a long time. And nothing that the President is 0:17:05.960 --> 0:17:09.480 under anybody else's done has changed that underlying economic reality. Said. 0:17:09.480 --> 0:17:12.000 There was a really interesting gonticle in the Washington Post 0:17:12.240 --> 0:17:15.359 yesterday following the GM layoffs that was titled GM layoffs 0:17:15.480 --> 0:17:18.919 or another victory for capital over labor? What do you 0:17:18.920 --> 0:17:23.520 think about that line? Said? You know, I think again, 0:17:23.600 --> 0:17:28.479 for better worse, that is true. I mean, you know, labor, 0:17:28.560 --> 0:17:31.680 even even the auto workers who have done better than 0:17:31.720 --> 0:17:35.440 most labor unions, have been losing for for decades now. 0:17:36.160 --> 0:17:40.800 The the owners, you know, the folks who run GM 0:17:40.840 --> 0:17:43.959 and other companies, have a lot of flexibility. They can 0:17:44.000 --> 0:17:46.320 produce anywhere they want in the world. They can decide 0:17:46.359 --> 0:17:49.639 to replace labor with technology, and at the end of 0:17:49.640 --> 0:17:51.560 the day, there's not a whole lot the unions can 0:17:51.600 --> 0:17:54.040 do to stand in the way of that. So I 0:17:54.080 --> 0:17:56.520 think this is the latest chapter in a very long story. 0:17:56.560 --> 0:17:59.000 I think that analysis is correct. Whether White House stands 0:17:59.040 --> 0:18:01.040 out head the lines of to come ready blood. Is 0:18:01.080 --> 0:18:03.520 this the White House for labor or for capital? Which 0:18:03.560 --> 0:18:07.560 one is it? That's a that is a really good question. 0:18:07.600 --> 0:18:10.080 It wants to be the White House for both. So 0:18:10.240 --> 0:18:12.280 you know, if you look at the new NAFTA, there 0:18:12.280 --> 0:18:14.400 are a bunch of provisions in there that organized labor 0:18:14.480 --> 0:18:17.520 is pretty happy with. I mean, unlike the Transpacific Partnership. Uh, 0:18:17.560 --> 0:18:19.200 the f l c i O is holding its fire 0:18:19.200 --> 0:18:21.439 on this agreement, saying, you know, the unions might be 0:18:21.480 --> 0:18:24.280 able to support it. But at the same time, obviously, 0:18:24.520 --> 0:18:26.200 so White has done a lot for capital, you know, 0:18:26.280 --> 0:18:29.439 particular at the big corporate packs cut that was signed 0:18:29.440 --> 0:18:32.760 by the President in December, and the presidents obviously very 0:18:32.800 --> 0:18:36.640 concerned about Wall Street. So so so far it's trying 0:18:36.680 --> 0:18:38.920 to be both. Um, there may come a point in 0:18:38.960 --> 0:18:41.280 which it has to make a decision. This, Uh, the 0:18:41.480 --> 0:18:43.600 GM example is a good one. President is obviously upset 0:18:43.640 --> 0:18:46.440 about this. He's upset about these factors closing. Whether he's 0:18:46.440 --> 0:18:48.600 going to do anything real to try to put pressure 0:18:48.600 --> 0:18:50.920 on GM, I kind of doubt it. Okay, Well, what's 0:18:50.920 --> 0:18:57.680 he do'ssure? Uh? You know, I mean, I suppose one 0:18:57.760 --> 0:19:00.000 source of pressure is these auto tariffs that everybody is 0:19:00.080 --> 0:19:03.440 talking about. I mean, this investigation on whether the US 0:19:03.520 --> 0:19:07.399 can can block auto imports on national security grounds is 0:19:07.400 --> 0:19:09.679 going to be delivered no later than February. And I 0:19:09.760 --> 0:19:12.600 suppose if you know, the United States puts in place 0:19:13.440 --> 0:19:16.880 steep carafs on auto imports, particularly from Europe and Korea 0:19:16.960 --> 0:19:22.000 in Japan, that could put some pressure on companies to 0:19:22.040 --> 0:19:24.439 expand production here in the United States just to serve 0:19:25.000 --> 0:19:27.440 this market, even though it isn't the fast growing market. 0:19:27.480 --> 0:19:30.080 I mean, that would obviously be a very drastic step, 0:19:30.520 --> 0:19:33.520 but in the short run might actually bring some auto 0:19:33.600 --> 0:19:36.360 jobs back to the US. Ted Alton, thank you so much, 0:19:36.359 --> 0:19:40.760 greatly appreciate it. Failure to adjust just a wonderful thought 0:19:40.800 --> 0:19:45.320 provoking book. A trade with the counts on Foreign Relations, 0:19:45.400 --> 0:19:50.480 Edward Alden, particularly for our American audience, and to be 0:19:50.560 --> 0:19:54.159 honest for myself as well. We need to triangulate. We 0:19:54.240 --> 0:19:57.720 need to do that on Russia and on Ukraine. And 0:19:57.760 --> 0:20:01.800 there's no better person to triangulate with that Andrew Woods. 0:20:01.840 --> 0:20:04.639 Sir Andrew is of course the former British Ambassador to 0:20:04.680 --> 0:20:08.840 Yugoslavia and then served a substantial five years as British 0:20:08.840 --> 0:20:14.119 Ambassador to Russia and is with Chatham House, London Surrender. 0:20:14.160 --> 0:20:16.199 We are thrilled to have you with us today. It 0:20:16.320 --> 0:20:20.320 is nine and twenty miles from Belgrade to Kiev. It's 0:20:20.359 --> 0:20:24.520 fourteen hundred miles from Belgrade used Yugoslavia up to Moscow. 0:20:25.119 --> 0:20:28.639 And I bring up this triangulation because so many people 0:20:28.680 --> 0:20:32.280 say that Ukraine is a gateway to Europe. How do 0:20:32.320 --> 0:20:38.480 you translate that? How is Ukraine a gateway to Europe? Well, 0:20:38.520 --> 0:20:42.320 in the sense that it's her an oil and gas transit, 0:20:42.440 --> 0:20:46.400 her company country brother in the sense that it's got 0:20:46.520 --> 0:20:53.040 very strong roots in Russian culture, and therefore, in principle, 0:20:53.640 --> 0:20:58.240 those two countries should be in effective communication, which they 0:20:58.280 --> 0:21:01.919 absolutely not. They're not right now. And I believe martial 0:21:01.960 --> 0:21:05.320 law enforce in Ukraine or or or soon. But so 0:21:05.440 --> 0:21:09.960 much of this to use Joseph Nay is power and interdependence. 0:21:10.520 --> 0:21:13.840 Is this just about the power of Russia versus the 0:21:13.880 --> 0:21:20.400 power of Ukraine? Or can they find a common ground? Well, 0:21:20.480 --> 0:21:23.879 they could, um, but that would really be up to Russia. 0:21:24.440 --> 0:21:26.639 I think we ought to be. In general, it's the 0:21:26.720 --> 0:21:32.080 Russians who are trying their best to stop Ukraine becoming 0:21:32.119 --> 0:21:36.600 an independent country able to make its own uh Norse 0:21:36.680 --> 0:21:40.600 and pursue its own interests, because they believe they have 0:21:40.680 --> 0:21:49.280 an innate right two make Ukraine there. John John Mersheimer 0:21:49.280 --> 0:21:52.280 of Chicago, out with a new book, has been heated 0:21:52.640 --> 0:21:57.280 in Notorious about saying that the US and the West 0:21:57.359 --> 0:22:01.320 extended too far east towards Russia. Shah, did we do 0:22:01.400 --> 0:22:05.119 that with Ukraine? As John Musheimer onto something, that we 0:22:05.280 --> 0:22:11.159