- 18 hours ago
Category
🗞
NewsTranscript
00:00We want to get to national security in China and rare arts.
00:02But first, just tell us a little bit about who are your clients?
00:05Oh, thanks so much.
00:06Clients are ones that are actively working to solve the supply chain intrinsic issues
00:11that we're having here, trying to return us back to where we were as a superpower and
00:17how we made our ability to leverage our natural resources and our manufacturing base.
00:22We have to be able to be self-reliant and not be dependent upon China and multiple other
00:27places across the world that we could name and wax poetic on.
00:31So my clients are the ones that are actually the mines, the processors, and the ones that
00:34are compounding.
00:35The free market purists out there would say, we have to be reliant, meaning the companies
00:40have to be reliant and should not get handouts.
00:43What they might see as handouts or support from the government.
00:46What would you say to those folks out there who say, hey, we don't want the government
00:50doing any sort of funding, picking winners and losers when it comes to any space?
00:54I think it's a terrific point.
00:56And being a chief operating officer by trade, I'm not a big fan of the 7A program or picking
01:02winners and losers.
01:03Specifically, we do not want another Solyndra.
01:05However, what the administration is doing now is specifically saying, we're not just
01:09going to hand out grants.
01:10We're going to take equity positions in the companies that we're going to invest a significant
01:14amount in.
01:14And that's a return to the taxpayer.
01:17But is that state capitalism?
01:18It is arguably state capitalism.
01:21Because it hasn't ended well in other parts of the world.
01:22It has certainly not ended well in places where you would consider communism to be the
01:27reigning way of the day.
01:28However, it is a way to backstop no different than the guarantee that is already going to
01:34go on to that loan.
01:36So the government does not wish to have a controlling stake in these companies.
01:41But it does want to ensure that these companies are able to hit the mission.
01:45And that is one way of ensuring so.
01:46Well, we've seen investments in rare earth companies.
01:49We saw support for IBM today.
01:51And IBM is surging.
01:53We've seen support for Intel, for example.
01:55Are there any areas of the corporate landscape where you look or industries where you think
02:02have not gotten government funding yet or an investment from the government that will
02:07or should?
02:08Certainly, pharmaceutical precursors.
02:10That's going to be an absolute guarantee.
02:12So I want to be able to take my Lipitor.
02:14I want to be able to take my Metformin.
02:15We cannot be reliant upon overseas countries and adversaries in order to do that.
02:20Our precursors and our generics are 90% reliant upon India.
02:24Guess where India gets 100% of its precursors?
02:27China.
02:28Therefore, we have the math and we are 100% reliant on China.
02:31Back to the Intel deal, though, that was a very special scenario.
02:35And I would even argue one that I would not have pushed forward.
02:39Why not?
02:40I don't think taking those golden shares or that 10% stake are really going to prop up
02:45a company.
02:45I would have loved to have seen that taken by Texas Instruments or another US company
02:48and have it absorbed there.
02:50I mean, in hindsight, it's looking like a really good investment right now.
02:52It's a good investment for the markets.
02:54It's a good investment in making sure that we have jobs and that we're creating the chips.
02:57That said, how much larger is it going to go and how much longer is it going to go as
03:02we continue to advance our data centers and our AI?
03:04What about the US's build out of raw materials?
03:08Are these company stakes actually, is the administration actually making any headway there on like a
03:13domestic build out of raw materials?
03:15That is the key is that it's actually not raw materials that are the problem.
03:19We often talk about the rare earth magnet and the mind of magnet issue.
03:2295% of what we need, we have it to continue as 48 states.
03:26Most people don't know that and it's not publicized in the press.
03:29The problem is the mid-supply chain, the processing.
03:32And do we have that?
03:33The answer is no.
03:35So what's the bottleneck?
03:36Why don't we have it?
03:37The bottleneck is that we let it go overseas.
03:39This is technology that was developed here in the United States 20, 30, 40 years ago.
03:44Didn't we let it go overseas because nobody wanted this in their backyard?
03:47Like it's environmentally very, some would argue very dirty, the processing.
03:55People just like, there's no better way to explain it.
03:57People don't want this close to them.
03:59No, that's partially it when you go back to recycling.
04:02But if you're taking ion exchange, for example, as opposed to solvent extraction,
04:07it's not a very dirty process.
04:09Consequently, you can take from the mine an MRAC, a mixed rare earth,
04:13and then have that through an ion exchange separation, turn to an oxide and then metal.
04:17It's not that dirty.
04:18In fact, it's cleaner than most textiles.
04:20But again, going back to this idea of capitalism and money flowing,
04:24there is opportunity.
04:25Some people have come on our program and argued one of the reasons why we sort of let rare slip
04:31away is because companies didn't see an opportunity.
04:33That's the key.
04:34It was expensive to do.
04:36It is expensive to do.
04:37And then it's difficult to make a profit on it.
04:40It is.
04:40And that was the big problem.
04:42We ran into permitting issues.
04:43We ran into, we don't want to do dirty manufacturing, but we also wanted to race to
04:49the bottom.
04:49There's a reason why everything from Walmart is made overseas.
04:53Let's just be very blunt.
04:55Let's just say that we took towels and make that analogy.
04:57We let towels go to Bangladesh.
04:59We let rare earth processing go to China.
05:02What was your assessment of the inroads that the White House made with China in Trump's
05:08recent visit?
05:09Did we get any kind of insight into potentially what rare earth, maybe not rare earths, but
05:15just the processing in the U.S.?
05:17You're smiling.
05:18I'm smiling because it's a brilliant question and one that needs to be answered.
05:22The answer is no.
05:23But we will never be cut off by China.
05:26We need to be self-reliant.
05:29This goes back to what I said quickly earlier, and that is, how did we become a superpower?
05:33By building upon our natural resources and our manufacturing base during World War II.
05:37We have to do that again, and that will also bring interest rates down.
05:40It will create jobs.
05:42But on China specifically, it's a game.
05:44It's a geopolitical game.
05:45It was not brought up in depth.
05:47We talked about the soybeans.
05:49We talked about the meat.
05:50But it's a way to ensure that China, from an internal perspective, works on having their
05:56presence known in the South China Sea.
05:58Do you think in the U.S. it's realistic to think that we can become completely self-reliant
06:04when it comes to manufacturing?
06:06100%, when it comes to the critical minerals.
06:08Beyond critical minerals.
06:09Absolutely.
06:10You mentioned towels in Bangladesh.
06:11We could talk about shoes in Vietnam.
06:13We could.
06:14We could talk about furniture in, I don't know, probably in Pakistan and India.
06:19Yeah.
06:20The president wants, and this has been lost in the conversation over the last few months
06:24with the war in Iran.
06:25But the president, the reason we have a tariff policy as it is, is because the president wants
06:29all of this here in the United States.
06:31Is that realistic?
06:32It is not realistic, even though I agree with the president's goal on it.
06:36It's not realistic because the supply chain is not present.
06:38So I actually was chief operating officer of a textile company, and I re-shored things
06:43from Pakistan, Bangladesh, China, and India, hence why I made the analogy.
06:46There's no base supply chain here outside of cotton.
06:49So if I want to bring polyester in from China, using this again as an analogy, I'm going to
06:54be subject to a different tariff.
06:55But you think that is the choke point and not the cost of labor and the standard of living
06:59here in the U.S.?
07:00The cost of labor is not the choke point because of automated manufacturing.
07:03I mean, I've spoken to people who've manufactured, worked on supply chains, manufacturing furniture
07:10overseas.
07:11Yes.
07:11And they said it was literally cheaper to pay somebody, like, cents a day to take one piece
07:16of wood and move it to the other hand and hand it to somebody else than it was to install
07:22a conveyor belt.
07:23Like, that is the standard of manufacturing overseas.
07:27Absolutely.
07:28When you're looking at and having sat at those tables and watch those workers work, that is
07:33the standard, but it is a very limited and short-sighted view because it is not nearest
07:37to the point of sale.
07:39That means that you are stocking inventory or you're out of inventory and therefore you
07:44are not making your sales.
07:46The best case for those types of industries is to import what is necessary from overseas
07:51and then do the final assembly and the final needs here in the U.S. so you're closest
07:55to the customer and not being held onto that cash.
07:58Pardon me.
07:58Holding onto your cash and not losing your cash.
08:01And is there kind of like an appetite, at least from capital markets, to kind of fund that
08:06last mile manufacturing domestically?
08:09There was in Trump 45.
08:12I'm not seeing that in capital markets right now during 47.
08:15We're hyper-focused on what is being pushed out with regards to critical minerals in defense,
08:19and that's why it's also the sectors that I work in.
08:22What will ensure that we are able to preserve life and limb?
08:29Medicine, weapons, grid, water.
08:32I'm glad we went back to medicine because that's where I want to end up.
08:36You talked about support for generics and pharmaceutical companies here in the U.S.
08:40What does that look like?
08:41Who could be the recipients of that?
08:43I mean, I've run into situations in the past few years where I couldn't get antibiotics for
08:46my kids.
08:46No, that's terrible.
08:47And we don't want to be in that situation.
08:50No, we can't be.
08:50I mean, right now, we produce practically no generics here in the United States.
08:55We do all the R&D here, and then we let it go overseas.
08:58What we have to do is incentivize, and the president rightly wrote a very good executive
09:01order to start moving this on and make a list of the key precursor chemicals.
09:06And there will be incentives, and I will dare say there will be some grants and some other
09:10things coming out in the not-too-distant future that will support that.
09:13What companies could be the recipients of those grants?
09:15We need to identify them.
09:18That's the issue.
09:18So most of them are not publicly traded, and that's the key.
09:21We have not identified the companies.
09:23It's not going to be Johnson & Johnson.
09:25It's not going to be Merck.
09:26It's not going to be Bristol-Myers Squibb.
09:29It's going to be the companies that actually do the chemical compounding.
09:33So there's a great Israeli company out there.
09:35That's name is escaping me at the moment.
09:36But if they were doing more of that in the U.S., that's terrific.
09:39Maybe Teva?
09:40Teva's one, indeed.
09:41There's a second as well.
09:42Terrific call.
09:45But these are mostly, these would be U.S. companies?
09:47The investment needs to go into U.S. companies, so this is occurring, and we are keeping the
09:51supply chain here domestically.
09:52Really cool stuff.
09:53We were supposed to talk more about rare earths, but I got a little carried away, Emily, so
09:56I'm sorry.
09:57But when you got a trip on the program, we know we can go anywhere.
10:01That's very kind.
Comments