00:00This week, industrial executives, White House officials, and big investors met in Detroit for the Reindustrialized Summit,
00:05which has a simple stated goal, making things in America.
00:09Speakers hammered home the idea that industrial power feeds military power, feeds global power.
00:14For too long, too many people, including on my side of the aisle, told us that we no longer needed
00:20to make things here,
00:21that trade would turn our enemies into friends, that cheap imports were a substitute for national strength.
00:27But great nations do not merely consume. Great nations create.
00:33As Secretary of State, I see this every day.
00:36Foreign policy is not just summits and speeches.
00:39Foreign policy is real power, exerting itself upon the world.
00:45And power is the ability to act, to build, to create, to do so on one's own terms, without asking
00:52permission.
00:54Colin Demarest is at Axios, where he covers the future of defense, and he was in Detroit this week.
01:00He joins us now. Colin, it's so nice to see you.
01:02I think the first time we met, you were literally standing in front of a giant drone at one of
01:05these defense forums.
01:07Talk to us.
01:08That is correct.
01:09Talk to us about this one.
01:11There are like three causes that they're rallying around, right?
01:13Improving American production scale and speed, fostering the stateside build-baby-build culture, and reestablishing supply chain sovereignty.
01:22Did any of those really rise to the front of the pack, and why now?
01:27I think you lifted that from my newsletter, so thank you in the first place.
01:31We read your stuff, buddy. We read your stuff.
01:33Okay, perfect.
01:34I think all three of those were addressed over the two days in Detroit, but I think really what the
01:40movement or the conference really boils down to is you can have a gun, but if you don't have bullets,
01:46what's the gun worth?
01:47You need to be able to build things for deterrence to work.
01:51You need to have these drones, these shells, these missiles.
01:53For someone to believe that the military is strong, you have to back it up through production, and I think
01:58that came through very strong earlier this month.
02:02Colin, talk about the moment that we're in right now.
02:06We're in this kind of 60-day period as these negotiations take place or are slated to take place in
02:10Switzerland, but a lot of the commentary surrounding the U.S. arsenal is we've depleted a lot on this war
02:16over the last 100-plus days.
02:18How much was that kind of resonant as you talk to people at this conference just about the way that
02:22this conflict has reframed the way that the Pentagon looks at its weapons supply?
02:27I think the people in Detroit saw it as evidence that they're on the right track, right?
02:30If you look at a CSIS study that just came out, it said some of America's most important interceptors would
02:36take three years to replenish.
02:38So the people on the ground in Detroit, I think, took this as a vote of confidence that they're doing
02:44the right thing, that they're trying to rebuild these factories, trying to rebuild these supply lines to replenish the U
02:50.S. stockpiles in a moment like this.
02:52And I think you actually asked our ambassador to the U.N., Mike Wells, about that ammo shortage.
02:57I think we've got the sound for you.
02:58The world also knows when we are low on munitions.
03:02They know when we've lost our industrial capacity.
03:05Is that right now?
03:06I'm not going to get in.
03:08I'm not going to get on that, but it's not where it should be, right?
03:11And so the real strength of the United States isn't necessarily our military.
03:18It's our economy.
03:20And it's that arsenal of democracy.
03:24When you look at private sector interest, are private sector entities investing in this idea?
03:30Are they interested in helping make this happen?
03:32Is it something they see an economic future and benefit in?
03:36Yeah, I think we're seeing just an incredible flood of private capital going into the defense industry right now, especially
03:42at the defense tech angle.
03:44These smaller companies, these startups who are kind of grappling and wrestling with maybe the older primes like the Lockheeds
03:50and the Northrop's.
03:51But increasingly as well, they're working together.
03:54And so I think there's a bit of a community developing here.
03:56And there's certainly a lot of money.
03:59I know earlier you guys were mentioning $9 million lost on a bet.
04:02But $9 million in this community right now is really nothing at all.
04:08This show is starting to make me feel very broke, guys.
04:11But that's fine.
04:11We'll move on.
04:13Colin, we were watching what unfolded in Evian last week.
04:17We had the president of Ukraine there talking with leaders from Europe and the U.S. as well.
04:22And a point that he's made to all of them, I think, and to leaders in the Middle East,
04:25is that Ukraine's success, such as it's had success over the course of this war that it's engaged in,
04:30is by virtue of thinking entrepreneurially about the kind of weapons it uses, relying on drones more,
04:34using technology that's effectively a lot less expensive than what the U.S. historically has been relying on.
04:40Talk a bit about that pivot point as well, if you would, and how that's kind of shaping the conversation.
04:44You mentioned the primes historically have built big, expensive weapons.
04:48Is the shift starting to affect them as well?
04:51I think the shift is starting to affect them.
04:53Maybe it's how quickly they produce something or the cost of something they produce.
04:57But I also would hazard to say we're going to need tanks and aircraft carriers and F-35s and the
05:04like for a very long time.
05:05We still have the F-47 in production with Boeing.
05:08We have, or being developed by Boeing, excuse me.
05:11You know, we have F-A-X-X in the running.
05:14That said, though, Ukraine's success is honestly incredible.
05:18They've really flipped warfare on its head, I would say.
05:20We, the use of these cheap drones worldwide is just, I don't think there's a going back to a point
05:29prior to this.
05:31Talk to us a little bit about long-term goals.
05:33Because when you are looking at these bigger, you know, industrial-based projects, they take multiple years.
05:40And it's going to take a long time to get this up and running.
05:43How concerned are these investors, are these private sector entities that, yes, this is a very, this is an administration
05:49that's very supportive of that.
05:50But political uncertainty could change that.
05:54The economy could change that.
05:56Is there a concern that the U.S. is able to be less competitive with long-term goals than someone
06:00like China, who has the ability to plan out decades in advance due to they know who their president is
06:04going to be?
06:05Yeah, I mean, it's a good point.
06:07I think re-industrialize's biggest Achilles heel is how long this will take.
06:12I mean, I talk to people, to re-industrialize America entirely might take 20, 30 years.
06:18That's a lot of elections.
06:20That's a lot of potential wars.
06:22That's a lot of boom and bust cycles.
06:25And investors definitely have this question of, like, where is my money?
06:29The Department of Defense works on very long return cycles, and I think that is definitely something to keep an
06:35eye on.
06:36Colin, before we let you go, just give us a sense of who was at this conference.
06:40You're speaking there, of course, to the U.S. Ambassador to the U.N.
06:42But in terms of government participants, corporate participants, kind of what was the mix there in Detroit?
06:47I described it as a motley crew in the newsletter you guys read.
06:51It's really an interesting crowd.
06:53It's graphic designers.
06:54It is the primes.
06:56It's the startups.
06:57It's, you know, missile makers, car makers.
07:01There's a really wide range of people there at re-industrializing.
07:05And last year, I think my favorite phrase that I used was Palantir protesters in front of the Gucci store.
07:11And I think that's the perfect summation.
07:13We're going to leave it there.
07:14How can we top that?
07:15All right.
07:15Well, if you want more, he does have a newsletter.
07:17We highly endorse it here at Bloomberg.
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