August 8, 2025 • 48 mins
This week, college graduates struggle to find entry-level jobs - is AI part of the problem? And, Centerview Partners’ Blair Effron on CEOs weathering policy uncertainty, and the importance of New York's next mayor to the city's business community. Plus, how will President Trump’s tariffs impact the textile industry? Later, a small town pushes back against an Amazon data center - the pros and cons the town sees in data centers.
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Episode Transcript
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Speaker 1 (00:13):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. President Trump managed to get a slew
of tariffs in place, either unilaterally or by agreement before
his August one deadline, but at least so far, we
haven't seen them do much to the economy. We explore
what CEOs of major companies are doing to make sure
their business stays on track despite the tariffs, and we
(00:37):
get a somewhat different perspective from the head of a
modest sized textile company in Colorado that counts heavily on
imports and exports. Plus, not everyone is welcoming all those
data centers with open arms. We travel to Warranton, Virginia,
a town where some are concerned about what they will
mean for their community. But we start with another comfortable
(01:00):
truths linked to AI, the possibility that this time it
really is different. Different in what technological change is doing
to recent college graduates trying to start their careers. There
is no question that AI is here to stay. Just
last month, we reported that Anthropic, a company that didn't
exist six years ago, could be worth more than Nike
(01:21):
or Starbucks.
Speaker 2 (01:22):
Anthropic one hundred and seventy billion, XAI and talks for
two hundred.
Speaker 3 (01:25):
Billion, then I think there's nowhere to go about up.
Speaker 1 (01:28):
And there's no question that at least some employees stand
to make a great deal of money for their ride
on the AI train. Apple's top executive in charge of
AI models is leaving for meta platforms.
Speaker 2 (01:41):
I'm told this pay package is probably somewhere north of
two hundred million dollars.
Speaker 1 (01:46):
We have never seen anything like this before, and there's
a lot we don't know about what it will do
for business and the economy, but we do know that
leaders of the world's largest and most powerful firms expect
a title wave, are preparing for it, and already some
people are feeling the effects on the ground right now,
people not at the very top of the corporate ladder,
(02:08):
but those trying to get a step on the bottom rung.
This year, Jacob Ayub and Tiffany Lee are joining millions
of their fellow college graduates trying to get their career started.
Speaker 4 (02:20):
This is just one of the case studies that I've done,
but it's pretty representative of what you can expect if
you're applying for any full time role at a private
equity company. Luckily, Boston College does a really good job
of setting that financial background. We've done in class DCFS
and class LBOs.
Speaker 3 (02:41):
Manchesk, Milk, thank you, thank you agree today me too.
I have a few case studies on my portfolio, just
showcasing the work that I've done at school for the
companies and nonprofits that I've worked for. The last experience
I have is another contract role with a startup that
I did through a club at Cornell as well.
Speaker 1 (03:01):
They have studied different subjects at different schools, Tiffany information
science and psychology at Cornell, Jacob economics and finance at
Boston College, but the two graduates have a lot in common.
They both got good grades, networked widely, and lended prestigious internships,
Tiffany at Apple and Jacob at a boutique private equity firm,
(03:23):
and for both it has yet to add up to
a job.
Speaker 4 (03:27):
Since graduating college. I would say I've applied to around
two hundred jobs.
Speaker 3 (03:33):
I would say I've applied to about one hundred and
fifty maybe more now.
Speaker 4 (03:39):
Some of the interview processes consist of constructing models and valuations.
Some of them are pitch decks.
Speaker 3 (03:47):
I made it to the final round for one like
big tech company, didn't know getting it. I passed round
two for another one, and the other ones I either
haven't heard back or just like ghosted.
Speaker 1 (04:01):
It's a story that's becoming more common, and it's being
reflected in an unusual new trend in the economic data.
As far back as the numbers go, the unemployment rate
for recent college graduates has been below the rate for
all US workers. But over the past few years, unemployment
among recent grads climbed above the rate for the broader population.
Speaker 5 (04:22):
This is essentially the first time on a ongoing basis
of this has occurred in the forty five plus years
that we have data going back.
Speaker 1 (04:29):
To Matthew Martin is a senior economist at Oxford Economics.
Speaker 5 (04:34):
So really this is pointing towards a lot of people
who have that higher educational attainment are actually worse off
than many of their peers who have lower educational attainment.
That's an interesting dynamic to have in a market where
you're told you go to college, you work hard, you'll
have a job after graduation, and unfortunately for many at
the moment, that's just not happening.
Speaker 1 (04:54):
Recent college grads may be having a harder time right
now finding their first job but it depends in part
on what kind of job they're seeking. Entry level jobs
in the areas Tiffany and Jacob want, tech and finance, respectively,
turn out to be particularly hard to find.
Speaker 4 (05:11):
A lot of my peers who were in years advance
for me and trying to give me insights on how
the process worked, all either had had internships or were
in the process of getting them, or had full time offers.
And these are sometimes people that are just juniors who
have a full time offer at a bank or different firm.
(05:31):
And I think with my graduation class there's been a
pretty drastic change. I'd say about fifty percent of my
graduating class is unemployed.
Speaker 3 (05:43):
I see a lot of job descriptions that are asking
for two years of experience or like three years of experience.
And in design specifically, it's been pretty hard. I think
it's just a very saturated field and there's a lot
of talent out there.
Speaker 5 (06:00):
Tech is one of those that has been really slowed
down from a lot of that comes down to the
hiring boom that they did post pandemic and then looking
to the right size. You also have other mathematical occupations
and finance, legal. Some of these fields that you would
again have been in high demands over the last couple
of years that just aren't seeing as much.
Speaker 1 (06:19):
Economists say the reasons can be difficult to trace. Some
of it is likely the overall labor market cooling after
the post pandemic hiring surge, But now there's a new
cause coming on the scene. Artificial intelligence AI will leave
a lot of white color people behind. All junior level
jobs in any industry are at high risk.
Speaker 3 (06:40):
This is like a tsunami hitting the labor market.
Speaker 1 (06:47):
For months, economists and executives have been raising concerns about
AI or publicly embracing it, sometimes both. Amazon CEO Andy
Jesse wrote a note to employees in June saying that
AI would change the way work is done at the
tech giant and that jobs would be cut as AI
increased efficiency, and Thropic CEO Dario Amoday told one news
(07:10):
outlet that AI could potentially wipe out half of all
entry level white collar jobs and send unemployment rates surging.
We may not be seeing anything quite that bad yet,
but AI's impact does seem to be showing up in
unemployment figures for recent college graduates.
Speaker 5 (07:27):
I think there is definitely a link between the two.
It's hard to very parse through and just say, you know,
X amount of this issue is because of AI, X
amount is because of just a slower demand overall. But
when we look at the numbers, there definitely could be
a connection there. So one of the things we're seeing
is that a the tech sector is one of the
industries with the highest adoption rates AI. They have around
twenty five percent adoption rates for all businesses using it
(07:48):
in their day to day operations, whereas the national average
is around five percent. So clearly the sector is just
using it more in general. And then when we look
into the specifically the recent college graduate data, we see
that in the last years employment for recent college grads
twenty two to twenty seven, they've seen a decrease in
employment opportunities overall, whereas if you look in the same
fields for those twenty eight onwards, they've actually seen slightly
(08:12):
flat to maybe a little bit up overall.
Speaker 1 (08:14):
A similar story appears in the latest company hiring data.
An analysis by Indeed conducted for Wall Street Week shows
junior level job postings have tumbled over the last two
years and are now twenty one percent below their pre
pandemic level, even as senior level openings are up. Although
tech maybe one area where AI is particularly affecting entry
(08:36):
level positions, it's not the only one. As Martin says,
they see vulnerability in finance jobs like the one that
Jacob is seeking. To learn more, we sat down with
Blair Ephron, co founder of center View Partners, one of
the world's most prestigious investment banks. We see an awful
lot of money being invested in AI. Are we far
enough into the process now to know whether it's going
(08:57):
to work?
Speaker 6 (08:58):
Now?
Speaker 1 (08:58):
Obviously there are different ways it could work high, medium, low,
But do we know it's fundamently going to work that
There's no chance this is a bubble.
Speaker 7 (09:04):
So it's not a bubble. I am always a believer
in progress. AI is progress over the long haul. It
will be good in the short term. I have big concerns.
I believe the impact on employment is going to be
dramatic sooner than we think now.
Speaker 8 (09:23):
With that set, AI for us as an example, is
a positive.
Speaker 7 (09:28):
We're less focused on productivity, more focused on freeing up
someone's time so that they can use that time more productively.
But given all the positive, we have to absolutely look
after the watchout sign.
Speaker 8 (09:41):
What is going to go on with employment.
Speaker 1 (09:44):
One outcome could be a workforce that looks very different
than it does today, fewer jobs in computer science, finance,
or law, and more jobs that benefit from interpersonal interaction.
Matthew Martin says these trends are already showing up in
the data, whether or not they can be traced to AI,
and they are affecting men and women differently.
Speaker 5 (10:05):
While the recent college graduate unemployment has raised overall, it's
really been concentrated in males specifically. A lot of that
comes down to what industries are they looking to work in.
If we do a quick breakout of the industries of
recent college graduates, females tend to move towards healthcare services
and educational services or demands quite high. I think between
those two they account for over forty percent of recent
(10:26):
college graduates for females, whereas males specifically in healthcare services
only counts around five percent. So it's an imbalance of
what positions are these males versus females going into. Males
tend to skew towards these computer science professions, whether that's
programming or the tech sector just in general. That's closer
to twenty twenty five percent for them. So you just
(10:49):
have this imbalance of males tending to want to go
to these industries where demand is really low at the moment,
whereas females are entering industries where demand remigins quite high.
Speaker 1 (10:57):
Although a picture of AI's economic impact may be just
starting to come into focus, we can be sure that
the best and the worst are yet to come. Some
advice from the C suite to help the next generation prepare,
stay flexible, and develop the skills that remain so far
uniquely human.
Speaker 8 (11:16):
Broad based thinking, deep thinking.
Speaker 7 (11:19):
And there are just so many different fields and so
many different kinds of enterprises, big and small, that will
help you do that wide in the aperture of what
you think might be a fit. Taking a lot of
writing courses, a lot of humanities, learning how to think, critically,
learning the art of learning, curiosity, thinking about judgment, thinking
about coming out with an output and answer based on
(11:39):
facts that is contrary to what a model.
Speaker 8 (11:41):
May show you.
Speaker 7 (11:42):
This is what we need, because this is what I
think will never got a style.
Speaker 8 (11:46):
Judgment's not going out of style.
Speaker 1 (11:48):
The benefits of AI in the long run may well
dwarf the problems, but when you're in the middle of
that first job search, the long run may seem very
far off.
Speaker 4 (11:58):
You put in a lot of work starting from high school.
I get the right SAT score, go to the right college,
get internships, get experience. You come out with kind of
an uncertainty.
Speaker 3 (12:11):
It kind of makes me want to consider a master's
but I know that it's really expensive, and I just
don't know if it's worth all that money just to
get an entry level job.
Speaker 4 (12:25):
It's more so frustration towards the system and overall process,
but you also start questioning your underlying abilities.
Speaker 1 (12:35):
Jacob and Tiffany, it seems did everything right, and it's
not quite that they're falling behind, but that the entire
world is shifting under their feet. The rules have suddenly changed,
and what are those new rules for all of us?
That still remains to be seen. Coming up, we hear
(12:55):
more from Blair Ephron, this time not on what AI
means for corporate leaders, but on what those leaders are
doing to make sure that Trump tariffs don't disrupt their businesses.
(13:17):
This is a story about adapting. Charles Darwin taught us
that it is not the smartest or strongest that survive,
but those who are best able to adapt to the
changing environment. And when it comes to CEOs of major companies,
there's no question that President Trump's approach has changed their environment.
Blair Ephron, co founder of Centerview Partners, has watched them adapt.
(13:41):
President Trump came to office saying I'm going to change
the economy in fundamental ways. Has it changed the lives
of American.
Speaker 7 (13:48):
CEOs much less than you think. And the fact of the
matter is they're growing well under Biden. They're going well. Now,
what is that about for the most part the US economy?
In my world, the big company CEOs, big company senior executives,
they've learned to one operate quite apart from policy in Washington,
(14:09):
and two they have been operating a period of volatility
for so many years now they've just gotten much better
about how to remove uncertainty in their own businesses. However,
coos certainly talk about long term impacts of policy, and
what I hear about most more than anything is our
federal debt situation, which is clearly dramatic and clearly something
(14:31):
that at some point will create a problem.
Speaker 1 (14:35):
CEOs may have the tools to adapt to short term
changes in trade policy, but they may not have the
same ability to do anything about the US fiscal imbalance
over the long term.
Speaker 7 (14:45):
Twenty ten Simpson Bowls put together talk about the debt.
We had sixteen trillion dollars of debt. Thet we're heading
towards forty three times what we had. Then trillion dollars
of interest expense.
Speaker 8 (14:57):
Being spent by the government.
Speaker 7 (14:58):
That's almost twenty percent of what they do, more than
they do on defense. That is something that CEO's are
attuned to. They know that it wasn't this crowding out effect.
Speaker 8 (15:08):
You could have even more growth. They would benefit.
Speaker 1 (15:11):
President Trump's goal in imposing substantial tariffs on imports is
to move manufacturing back on shore, and so far EFRON
sees them as having mixed results.
Speaker 8 (15:21):
It goes two ways. I think you have to start
with what.
Speaker 7 (15:23):
Is the most secure way to help your supply chain,
and that certainly can be on shore. It certainly can
be to more friendly markets in Southeast Asia, can certainly
be to Mexico. It's been going both ways. I know
of a company that services Canada with its plants in Michigan.
It's thinking about putting capital in Canada because of what's
(15:44):
going on, so they can produce locally, so it actually
goes both ways. And the kind of manufacturing we're talking about,
for the most part, is a very advanced manufacturing, so
it's not labor intensive, it's not people in a plant,
it's the equipment. So I think that on balance, it's
hard to talk to any CEO who thinks that tariffs
are a good thing and that high tariffs more't heavy
(16:04):
dramatic negative impact.
Speaker 1 (16:06):
There's a good deal to talk about uncertainty, and the
uncertainty over everything from tariffs to who's going to be
the FED share the interest rates. Now, does that really
affect the real economy?
Speaker 7 (16:17):
The answer is clearly not, okay, And CEOs have gotten
so good about blocking all noise, all noise from all
political quarters. They focus on facts, substance, real policy. They
know that something said today by any elected official doesn't
mean much unless there's consisting to it and staying with it,
(16:39):
and they just block out the noise.
Speaker 8 (16:40):
That CEOs for the most part are really.
Speaker 7 (16:42):
Experienced, really talented, and have been through the volatility wars.
But the reason I have been, and we've talked about it,
more optimistic about the economy is because of that, and
I believe.
Speaker 8 (16:53):
I can make a case for dark clouds well down
the road.
Speaker 7 (16:56):
But barring some unforced error, which certainly we are prone
to make, I think the economy will continue to show
tailwind and resilience.
Speaker 1 (17:06):
That tailwind may look a bit different in New York City,
where New York State Assemblyman Zorian Mamdani is in a
strong position to become its next mayor and is running
on policies not generally seen as pro business.
Speaker 7 (17:19):
So let's first talk about New York trillion dollar economy,
sixty three million visitors, ten percent of every student graduating
college comes to the city.
Speaker 8 (17:28):
New York will be fine.
Speaker 7 (17:30):
That said, the mayor, whoever that person is, needs to
be mayor for eight and a half million people in
every borough. It has to be a mayor who appreciates
what it means to attract business formation, what attracts capital formation,
what it means to keep people in the city and thriving.
For example, Zoramndani, he's going to have to make the
choice whether he must be mayor or whether he must be.
Speaker 8 (17:51):
An effective mayor.
Speaker 7 (17:52):
And I believe to be an effective mayor, a talented
political official, and he's talented will have to be attuned
to that a lot of us met with him in
the business community the other.
Speaker 8 (18:03):
Day, and clearly one it was worthwhile meeting.
Speaker 7 (18:08):
He listened creatus for him to come to this group.
The questions were pointed, and my goal is that the
more he hears from the business community, and now the
business community helps drive the engine of New York along
with many other communities here, the more he is the
mayor will appreciate that he needs to be the mayor
for everyone.
Speaker 1 (18:26):
Having heard from him directly, do you have a sense
that he knows what he doesn't know? Because that may
be one of the most important things in life. To
really say there are things I don't know I need
to learn.
Speaker 8 (18:37):
I would say I don't know. However, I'm going to
make a judgment.
Speaker 7 (18:41):
He has said publicly, publicly informs where I've been just
that that he wants to get the best people in
every position, people who know more about that ptic area
than he does. He strikes me as someone who is
absolutely willing to learn, and I don't think you can
do as well as he's done as a candidate without
(19:02):
that ability. Whoever the mayor is, I hope, really appreciates
that the skill set of a mayor as opposed to
somebody in Congress, is less about policy and more about
making sure day to day the city is affordable and livable.
Speaker 1 (19:17):
It's hard to be against being affordable and livable. But
as far as I can tell, an essential work of
governance is unintended consequences. For example, we can say we're
going to freeze rents, which sounds good for people who
are renting, but it doesn't necessarily give incentive for building
a lot more units. We will bring prices down. Is
(19:37):
he learning? Can he learn those sort of understanded consequences that,
in fact, the best way to make things more affordable
may not be the most obvious way.
Speaker 8 (19:45):
It's going to be very clear.
Speaker 7 (19:46):
I don't know yet or does anyone what he's learning,
But make no mistake, rent control will reduce housing stock.
Speaker 8 (19:55):
Putting at grocery store in each borough.
Speaker 7 (19:59):
That's five relative to the twenty five hundred grocery stores
we have in the five boroughs doesn't do much. Let's
be clear, anyone here is already paying a lot of tax.
It's a privilege to live in New York. There is
a point where, and we sit in studies, it has
(20:19):
an impact if it gets out of line with other states.
So the point is we all need to focus on
a probability. I think he is spot on, But to
your point, there are many ways to attack it. I
think we need to be much more focused as a
city to do just that.
Speaker 1 (20:37):
You make a powerful case for why New York will
be just fine in terms of the economy overall. But
do we need in New York City to be more
concerned with competing with other centers around the country, around
the world, but particularly around the country than we have
it in the past. We've heard allowed to talk about
moving to Dallas, about moving to Miami. Is that a
real issue for New York City?
Speaker 8 (20:55):
Is it a real issue? Absolutely? Have you risen to
the challenge? You bet?
Speaker 7 (20:59):
New York is longer today than it was four years ago.
We have more people coming in than not. We have
the second biggest tech hub in New York City. We
have more drugs and healthcare coming out of here than
any other city.
Speaker 8 (21:10):
But for Boston, we're doing fine.
Speaker 1 (21:13):
Where is the Democratic Party right now and what do
you see as a forward path?
Speaker 8 (21:17):
Great question.
Speaker 7 (21:17):
I think the Democratic Party is a work in progress,
and the next test.
Speaker 8 (21:24):
Will obviously be in a few quarters. November twenty six.
Speaker 7 (21:28):
What I can tell you is as a party, Democrats
ought to have the base case that the economy will
have a tailwind. I ought to have his base case. Therefore,
it has to be much more about what the party's for,
not for the other guys for. And when I think
about that, the party has to do a much better
job diagnosing what the issues are, coming up with solutions
(21:49):
that meet the needs of all Americans. I don't think
we've done a very good job focusing on affordability in
a very practical way, understanding that policy should be driven
from people up, not from thinkers down, and has to
clearly be much more unified about how that's going to happen.
Speaker 8 (22:09):
I think that has been an issue for us. I
do find.
Speaker 7 (22:14):
Parties in general are pretty nimble about course correcting, whether
a Republican or Democrat. I assume by the time midterms
come around, Democrats, well, I figured out how Court's correct.
But it better be not just an agenda based on
fairness as opposed to fairness and growth.
Speaker 1 (22:31):
Who will help guide the Democrat Party away from a
very obvious alternative, which is to go to the other extreme.
I mean, some people think we're seeing that right now.
With you could name names aoc or Bernie Sanders, or
even Mamdani. There's a natural reaction to say, Okay, we've
got to compensate. If we've got right wing populism over here,
let's go left from podcism. How will the Democratic Party
(22:52):
avoid that? If in fact it should so.
Speaker 7 (22:54):
I'm quite confident that the Democratic Party has enough voices
across the spectrum that by the time.
Speaker 8 (23:03):
We get to.
Speaker 7 (23:05):
The election, we will have a strong group of candidates
will reflect the thinking of most Americans, which is less
about political ends of the spectrum, more about just getting
tomorrow put on the table, getting a good job, raising
your family the right way.
Speaker 8 (23:23):
And I believe that the party always should.
Speaker 7 (23:28):
Focus on all ends of the spectrum, but I do
believe it will end up unifying on what matters most,
solving people's issues.
Speaker 1 (23:37):
Next, we turn from the c suites of some of
America's largest companies to one specific, modest sized company that
depends on imports and exports for its textile business. We
go to Bend, Oregon and hear from Jeff Bowman, CEO
of Cocona Labs. This is a story about friendly fire.
(24:08):
President Trump has embraced tariffs as a way to protect
domestic US businesses from unfair foreign competition.
Speaker 9 (24:15):
I might go up with that tariff in the not
too distant future.
Speaker 7 (24:18):
The higher you go, the more likely it is they
build a plant here.
Speaker 1 (24:21):
Last week, we've brought you the story of a music
accessories company that is finding new ways of getting the
supplies it needs and maintaining its export business despite those tariffs.
But for some industries that's easier said than done.
Speaker 2 (24:37):
Already, it's impacted our business because it's reduced the amount
of volume of business that's out there.
Speaker 1 (24:44):
Jeff Bowman is the CEO of Cocona Labs, which makes
a compound used in fabric.
Speaker 2 (24:49):
We have a technology called thirty seven point five technology.
The purpose of it is to remove humidity from the
microclimate next to your skin. That helps you stay more
comfortab in both warm and cold weather conditions, and it
helps you operate at a peak performance. If you're an athlete,
you can operate in peak performance longer. And what we
(25:11):
do is we mine a mineral in the United States.
Essentially it's a volcanic sand. We convert that into what's
called master batch, which is a concentration of that mineral
that's then put into the spinning operations for things like
nylon and polypropylene and polyester. They make filaments and yarns
(25:32):
out of that. Those yarns and filaments are then made
into fabrics.
Speaker 6 (25:38):
Those fabrics are.
Speaker 2 (25:39):
Made into clothing or bedding or footwear, and we make
money by selling the master batch, which we make in
the United States. Primarily we export that because most yarn
spinners are outside of the United States. And then we
also license the technology to brands that use it. Sleep
Numbers for betting, the Men's Warehouse for clothing, Solomon for
(26:04):
technical clothing. If they're hunters, they know first light. So
there's well over one hundred brands that we license the
technology to.
Speaker 1 (26:13):
And that's a proprietary process.
Speaker 6 (26:16):
It is.
Speaker 2 (26:16):
It's very difficult to take a water loving mineral and
put it into manufacturing operations at hate water, So we
have patents on it and a ton of trade secrets.
You know, we're very cognizant of keeping those trade secrets secret.
Speaker 1 (26:33):
The United States is the world's second largest exporter of textiles.
It used to be first, employing one and a half
million workers, but now it employs only about four hundred
and seventy thousand. As China has risen to become the
number one producer, we.
Speaker 2 (26:48):
Do have customers in the United States. Generally, the spinners
outside of the United States are more competitive from a
price standpoint, and they've got more capacity, more infrastructure. Decades ago,
most of that did reside in the United States and
eventually moved outside of the United States. China at one
point in time decided that it was a strategic industry,
(27:09):
so they worked with their business people to develop that infrastructure,
and now that's primarily where.
Speaker 6 (27:15):
The most of it's done today.
Speaker 2 (27:17):
India is also a big export country for US as well.
Speaker 1 (27:21):
The tariffs being imposed by the Trump administration affect a
textile business like Cocona Labse both in the cost of
its raw products and ironically in its exports to places
like China.
Speaker 2 (27:32):
People are not placing orders because they're uncertain in terms
of what the ultimate pricing is going to be. I
spent this morning all morning talking to my team about
a business that we're working on right now with one
of the largest hotel chains in the United States. They're
looking to incorporate our technology in their bedding, and one
of the questions that we're getting from our Chinese partners
(27:55):
who would be spinning the yarn for that is, how
should they price the yarn based on the tariffs, And
of course that's a very difficult question for us to answer.
We did exports some product of China last week. We
ate the tariff ourself of about sixteen and a half percent.
Speaker 6 (28:14):
We actually ate ten percent of that.
Speaker 2 (28:16):
Previously there was six and a half percent tariff in
place already, So it's kind of a wait and see
right now. But in the short term, it is reducing
the amount of business that's out there, and it's reducing
the amount of investment that people are willing to make
in new products. Specific to us, because we're a small
company that exports as opposed to imports, you know, from
(28:38):
China and Indian those other places, the reciprocal tariffs also
impact us. And when Trump first announced, you know, the
large tariffs on China, China retaliated with one hundred and
forty five percent tariff. That would have been a killer
for us, It would have killed our business. We just
happened to have a bunch of our product in our
(28:58):
Shanghai warehouse the time, so within thirty six hours we
were able to sell that to our customers, move it
out of the warehouse, and that brought us a few
months traff free. We're waiting to see what's going to
happen with the tariffs. It impacts our business in several ways.
We're also trying to develop a domestic business in those countries.
(29:20):
So this shirt is an example. It's a shirt made
in China and it's sold to Chinese customers. And when
the price of the yarns increase, then it impacts the
price of the finished products, and it impacts our business.
Speaker 1 (29:34):
They charge us.
Speaker 6 (29:35):
We judge him.
Speaker 1 (29:36):
In pursuing his approach to tariffs, President Trump has said
again and again one of his main goals is to
bring manufacturing back on shore in the United States. Would
that work out that way in your business.
Speaker 6 (29:47):
No, definitely not.
Speaker 2 (29:49):
You'd have to cut and sew this garment or bedding
or any other garment. You'd have to make that garment
in the United States, and people just don't want those jobs.
Number one, and number two, the cost of labor here
is so much higher that the price of those goods
would dramatically increase if they're made in the United States.
(30:10):
So it would make everything much more expensive. You know,
even the deal with Vietnam is a case in point.
I don't think most people understand that those goods coming
into the United States already had a tariff on them,
And the case of clothing coming from Vietnam as an example,
there was a sixteen and.
Speaker 6 (30:27):
A half percent tariff before Trump.
Speaker 2 (30:29):
With the additional twenty percent that was just negotiated, that
means that there's a thirty six and a half percent
tariff on apparel now coming into the United States from Vietnam.
Some of that's going to get passed on, there's no
question about it. So the price of goods will go up.
With the increase in the price of goods, the amount
of business will go down. I mean, Trump and I
both went to the same business school, Wharton, and apparently
(30:52):
he didn't take the tariff class, because certainly the teachings
and the empirical history showed is that when you impose tariff,
the net effect is that you reduce the amount of
business that takes place, and we're seeing that happen.
Speaker 6 (31:07):
Already, costs go up.
Speaker 2 (31:09):
Consumers pay the price eventually, and there's just less business
being conducted.
Speaker 1 (31:15):
Whatever proves out from President Trump's tterarf at this point,
it appeers there are going to be tariffs. We already
see fifteen percent effective and think in some place it
could be higher than that. So assuming that happens, just
let's assume from it's fifteen to twenty percent effective tariff.
What do you do to change your business to make
sure it's still a good business, it's viable.
Speaker 6 (31:37):
Well, what we have.
Speaker 2 (31:37):
Been doing is number one, making sure that our customers
have options, So we ship master Match around the world.
We ship it to Turkey, we ship it to India, Taiwan, China, Korea,
et cetera. Making sure that they have options so that
there's so we can mitigate the tariffs hopefully in any
(31:58):
one country.
Speaker 6 (32:00):
That's the first thing that we're doing.
Speaker 2 (32:01):
And second is, you know, we're looking at in some
cases potentially moving some of our manufacturing out of the
United States into China, something that we're loath to do,
just to reduce the reciprocal tariffs that are being placed
on our goods. You know, ultimately it will help with
the cost of goods coming back to the United States.
(32:22):
It will certainly help even more with the goods that
are being sold into those countries we're worried about tariffs.
I mean, candidly, we shipped a master batch to China
two weeks ago. We paid sixteen and a half percent
tariff on it. We eight ten percent of that. That's
not sustainable for us long term. You know, we'd have
to raise our prices. When we raise our prices, it
(32:43):
will ultimately affect the amount of volume that's being sold.
So it's not good.
Speaker 1 (32:48):
How elastic or inelastic is that demand for your product?
I mean, how what pricing power do you have to
pass along some or all of those increases?
Speaker 2 (32:56):
You know, we have to pass on some otherwise we'll
go out of business. And there's trade off. And that's
the fact what I was talking about this morning. Our
Chinese partners are trying to figure out how to price
their yarn for this very large hotel chain opportunity, and
they want to know how to account for the tariffs,
and we don't have an answer form candidly, other than
(33:17):
to tell them that we're not going to eat that tariff.
Speaker 6 (33:21):
We may eat a portion of it.
Speaker 2 (33:23):
I think we're waiting to see what ultimately happens and
what the tariffs actually end up being, and then we'll adjust,
you know, accordingly as best we can there will be collaboration,
I'm sure throughout the supply chain. Ultimately you'll see higher
prices at the consumer level.
Speaker 1 (33:40):
And if in fact these tariffs continue, what's going to
happen to your employment situation in general?
Speaker 2 (33:45):
You know, we don't lay anybody off. We were actually
voted one of the top fifty small companies in the
United States to work for last year, so you know,
we value our employees greatly and try to hold on
to them. Definitely, during COVID, everybody took a pay cut
for a period of time. It's just so that we
can survive. So we'll do what we have to do
(34:05):
to survive. We'll do it we have to do to
hold on to our employees. Ideally, we'll do we have
to do to continue manufacturing in the United States.
Speaker 6 (34:14):
We're very adaptable.
Speaker 1 (34:15):
As difficult as the tariffs may be for kcona Lab's business,
Bowman does believe they deserve to have a role in
economic policy, just not quite as broad a role as
they are being given. If you got to sit down
with your fellow Wharton graduate in the White House and
give him a piece of your mind about what he
should be doing, what would you advise him.
Speaker 2 (34:36):
Well, I think tariffs are a strategic tool. I think
if they're used surgically, they can help. I think broadbrushed
tariffs don't work in my opinion, so I would encourage
him to be surgical about it. We're a small American
company trying to do business in China, where historically there
(34:57):
has been very little tariff of our goods go into China.
It's still very difficult to do business in China because
of the non tariff barriers to doing business, things like
the banking laws and the marketing laws and the administrative
issues that you have to deal with on a daily basis.
Speaker 6 (35:14):
And it's not.
Speaker 2 (35:15):
Clear to me that this tariff war that we're in
is going to impact any of that. All I see
happening is that we're going to increase the price of
goods coming into the United States. We're not going to
address the fundamental issues that are making it different difficult
for companies like mine to do business in places like China.
And that's those non tariff barriers to doing.
Speaker 1 (35:36):
Business, whether it's to break down barriers to US exports
or to discourage production abroad. One of President Trump's main
goals is increasing US manufacturing overall something special contributor to
Larry Summers of Harvard says, tariffs will not accomplish.
Speaker 10 (35:52):
This isn't a debate about whether manufacturing is important or not.
That's an important debate to have as we go forward.
But even if you take as given the central importance
of cutting edge manufacturing, taxing inputs, alienating partners, and enraging
(36:19):
those who control the external markets can't possibly be the
right strategy for rebuilding American manufacturers. Look, I take another
way of looking at this. We think of ourselves. We
think of automobiles as like a traditional industry that we're
(36:41):
trying to protect in a good way. But this is
slashing general motors profits. This is slash all the automobile
companies are complaining about our tariff policies because what they
mean for integrated production in North America. So even for
(37:08):
the people who were the traditional constituency for this kind
of policy, they're not seeing it as as a positive.
So this is not some debate between the coastal people
(37:29):
who like finance and movies as businesses and the people
in the middle of the country who are focused on
the heartland of manufacturing. Even if you just look at
what you're doing for the heartland of manufacturing higher priced inputs,
(37:50):
much more uncertainty for investors and alienating of customers can't
be the right strategy. There's a winner here. There really
is a winner here in the strategy that we are pursuing.
His name is she Jinping, and I hope we'll stop.
Speaker 1 (38:13):
Up next. Data centers may be the path to an
AI future. But what if a community isn't sure they
want more data centers? We go to Warrenton, Virginia to
find out. This is a story about needs and wants.
(38:36):
Sometimes what we need may not be what we want.
We need more productivity from AI, but we don't want
young college graduates going unemployed. And at least some of
us may not want our local communities transformed by the
building of all those data centers we need for AI.
Speaker 11 (39:00):
Warrenton is a tiny town ten thousand people. Picture Norman
Rockwell Pictures picture Mayberry and Andy Griffith.
Speaker 1 (39:10):
Cindy Burbank lives in Warrenton, Virginia. She took us to
what would have been a data center down This.
Speaker 11 (39:17):
We did pathway is the forty two acre site that
Amazon purchased to build a data center.
Speaker 1 (39:23):
On without data centers to process, store, and distribute information.
We don't have AI with everything from internet search.
Speaker 8 (39:32):
We are on an exponential curve and a relatively steep.
Speaker 1 (39:35):
One to drug discovery and approval.
Speaker 12 (39:37):
Is going to propel the biological research AI in unprecedented ways.
Speaker 1 (39:43):
To reap all the benefits AI has to offer. Global
data center capacity is expected to grow at a rate
of fifteen percent per year, and even that may not
be enough to keep up with demand. Christine Wood is
the data center practice lead at Burns and MacDonald and
consults with company building data centers.
Speaker 13 (40:01):
Power is becoming the long pole in the tent to
be able to find a data center site, and so
it really starts with that is the power puzzle that
we're seeing associated with the data center site.
Speaker 1 (40:14):
But supplying all that power can cause disruption to the
communities where data centers want to be located. Not everyone
wants a data center for a neighbor.
Speaker 9 (40:23):
We're situated about forty five miles to the west of Washington. D. C.
Speaker 1 (40:28):
Carter Neville is a native of Warrenton, Virginia. He has
been the mayor of the town since twenty nineteen.
Speaker 9 (40:34):
We are heavily depended upon our meal taxes, and our
largest meal sax provider is Chick fil A. We have
very fortunate to have as residents very low taxes in
terms of real estate taxes, and so pretty much our
largest employer is the school board, followed by the hospital
in Walmart.
Speaker 1 (40:53):
Warrenton's data center journey began in twenty twenty three when
the town council voted to consider an Amazon data center
on a forty two acre site.
Speaker 9 (41:01):
On the up side to provide a significant amount of revenue,
which we are desperately in need of. Our infrastructure is aging.
We're behind the eight ball and a lot of our
improvements needed to our water treatment and wastewater treatments especially.
You know, we have parts going back that can't even
be produced anymore, you know, parts of dating back to
the nineteen fifties, and we're desperate need of upgrading that
facility for the safety of our community.
Speaker 1 (41:22):
But even the economic benefit couldn't outweigh the town's concerns.
Speaker 11 (41:26):
Our frustration was the fact that we were being kept
in the dark. Then finally a year and a half later,
we learn about it because Dominion is proposing these massive
transmission lines, and that is what was like throwing a
match onto a powder keg. The citizens exploded and first
(41:48):
against the transmission lines and dominion, and then they learned
it was tied to the data center. Then we learned
from our neighboring jurisdictions what data centers were and the impacts.
They had a lot of noise, huge energy generation, monster
size to dominate your landscape and bringing transmission lines and
(42:11):
other problems. We did a Freedom of information Act for
the town records how many people spoke up or wrote
in support of the Amazon data center, how many opposed it?
And the result was, I'll show you this number, two thousand,
(42:33):
three hundred and eighty nine of our citizens, our residents,
took the time to oppose the data center. They came
to the town council meetings, they wrote emails to the
town council, and so forth. Eleven, only eleven people here
wanted that data center to happen, and yet we were
(42:55):
ignored because Amazon had cut a deal with our elected
officials before we even knew about it.
Speaker 9 (43:03):
As the opposition grew, it got very very heated, it
got very very emotional. I think that there was a
lot of information that was selectively put out to the
community and so by the time it came to a vote,
it was a very divided community, and I'm grateful for
the council members that had the courage to do what
they believe was right.
Speaker 1 (43:23):
Last month, Warrenton's City Council voted unanimously on a zoning
change that effectively bans data centers altogether. Among the citizens'
concerns is the amount of power a data center needs,
which would eat up their own access.
Speaker 12 (43:37):
Yeah.
Speaker 9 (43:37):
I think the biggest concern, and the one that the
industry itself really needs to address, is the energy usage.
That is just huge, and that is something as I've
pointed out to many people, the data centers are coming.
Whether one community says yes or no, does not ultimately
impact them to demand on energy. The industry and the
energy producers have got to figure that out. They've got
to find a better way of providing of that energy
(43:58):
without hitting the rate payers like you and me.
Speaker 13 (44:01):
Fifteen years ago, a twelve megawatt data center was a
huge data center. Now with AI, what we're seeing on
the development side is more than a gigawatt.
Speaker 6 (44:11):
On the campus.
Speaker 13 (44:12):
And to put that in real terms for you, I'm
sitting in Dallas Dallas takes about three gigawatts to five gigawats,
depending on the time of year, to power the entire city.
Speaker 1 (44:25):
One alternative to drawing the needed power from the grid
is small modular nuclear reactors, but even they may not
be enough to keep up.
Speaker 12 (44:33):
When it comes to AI data centers, they are an
order of magnitude more power hungry than the data centers
we are used to since the Internet age.
Speaker 1 (44:45):
Kr street Ar is the founder and CEO of Bloom Energy,
which just signed a deal to provide power to Oracle
for its infrastructure data centers in the United States. Is
there an overall approach to addressing that enormous demand.
Speaker 8 (45:01):
For power today?
Speaker 12 (45:03):
It is a scramble for that AI data centers. Collectively,
they're investing more than six hundred billion dollars just this year.
That's the publicly uttered commitments. That's mind boggling, right, almost
two billion dollars a day to feed this beast.
Speaker 1 (45:21):
Sweetheart's. Bloom Energy was created to do just that, provide
clean energy on site, eliminating the need for transmission lines
and traditional power generators.
Speaker 12 (45:31):
The world is completely digital dependent. Not having power even
for a millisecond is not an option because critical life
functions depend on it, like a surgery happening in a hospital,
for example.
Speaker 8 (45:48):
So we said.
Speaker 12 (45:49):
Power needs to be extremely reliable. You cannot get that
redundant reliability at very high nines unless you have on
site power. If you're going to have on site power,
because you're going to be breathing that air when you're
sitting in your office or when you're in your bedroom,
(46:10):
by definition, it needs to be clean, and it needs
to be very efficient, and it needs to be quiet.
So this is the principle on which we found a
bloom energy.
Speaker 1 (46:21):
For the citizens of Warrenton, Virginia. Finding that optimal solution
of providing data center power in ways the community can
tolerate has been elusive, but that has real fiscal consequences
for the town.
Speaker 9 (46:33):
We are so revenue strapped, but we're facing about ninety
one million dollars of investment in our waste water and
water treatment plants, and so you know that money is
just going to have to come out of debt unless
we find revenue streams. Our streets are cracked, you know,
we have things that are falling apart, and we're just
kind of keeping trying to keep the lights on.
Speaker 1 (46:49):
Amazon declined to comment on the status of the warrant
and data center. For now, the fate of the project
will have to be decided by the courts.
Speaker 9 (46:56):
There's a March hearing data on that. There's a citizen
group that challenged it in court, and so we are
waiting to see what that decision is in March. And
I believe that Amazon is probably moved on, but I
do expect that, you know, if they remain, if the
courts favor the town and Amazon, that they will eventually
build there. But as of now, I'm not sure where
(47:19):
it stands.
Speaker 1 (47:20):
The transformative power of AI means that we need to
have it, and that means we need to have data
centers even with their enormous power demands. The question now
is where they will go and whether we can find
ways to make them the good neighbors that people in
towns like Warranton, Virginia will welcome. That does it for
(47:42):
us Here at Wall Street Week, I'm David Weston. See
you next week for more stories of capitalism.
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. President Trump managed to get a slew
of tariffs in place, either unilaterally or by agreement before
his August one deadline, but at least so far, we
haven't seen them do much to the economy. We explore
what CEOs of major companies are doing to make sure
their business stays on track despite the tariffs, and we
(00:37):
get a somewhat different perspective from the head of a
modest sized textile company in Colorado that counts heavily on
imports and exports. Plus, not everyone is welcoming all those
data centers with open arms. We travel to Warranton, Virginia,
a town where some are concerned about what they will
mean for their community. But we start with another comfortable
(01:00):
truths linked to AI, the possibility that this time it
really is different. Different in what technological change is doing
to recent college graduates trying to start their careers. There
is no question that AI is here to stay. Just
last month, we reported that Anthropic, a company that didn't
exist six years ago, could be worth more than Nike
(01:21):
or Starbucks.
Speaker 2 (01:22):
Anthropic one hundred and seventy billion, XAI and talks for
two hundred.
Speaker 3 (01:25):
Billion, then I think there's nowhere to go about up.
Speaker 1 (01:28):
And there's no question that at least some employees stand
to make a great deal of money for their ride
on the AI train. Apple's top executive in charge of
AI models is leaving for meta platforms.
Speaker 2 (01:41):
I'm told this pay package is probably somewhere north of
two hundred million dollars.
Speaker 1 (01:46):
We have never seen anything like this before, and there's
a lot we don't know about what it will do
for business and the economy, but we do know that
leaders of the world's largest and most powerful firms expect
a title wave, are preparing for it, and already some
people are feeling the effects on the ground right now,
people not at the very top of the corporate ladder,
(02:08):
but those trying to get a step on the bottom rung.
This year, Jacob Ayub and Tiffany Lee are joining millions
of their fellow college graduates trying to get their career started.
Speaker 4 (02:20):
This is just one of the case studies that I've done,
but it's pretty representative of what you can expect if
you're applying for any full time role at a private
equity company. Luckily, Boston College does a really good job
of setting that financial background. We've done in class DCFS
and class LBOs.
Speaker 3 (02:41):
Manchesk, Milk, thank you, thank you agree today me too.
I have a few case studies on my portfolio, just
showcasing the work that I've done at school for the
companies and nonprofits that I've worked for. The last experience
I have is another contract role with a startup that
I did through a club at Cornell as well.
Speaker 1 (03:01):
They have studied different subjects at different schools, Tiffany information
science and psychology at Cornell, Jacob economics and finance at
Boston College, but the two graduates have a lot in common.
They both got good grades, networked widely, and lended prestigious internships,
Tiffany at Apple and Jacob at a boutique private equity firm,
(03:23):
and for both it has yet to add up to
a job.
Speaker 4 (03:27):
Since graduating college. I would say I've applied to around
two hundred jobs.
Speaker 3 (03:33):
I would say I've applied to about one hundred and
fifty maybe more now.
Speaker 4 (03:39):
Some of the interview processes consist of constructing models and valuations.
Some of them are pitch decks.
Speaker 3 (03:47):
I made it to the final round for one like
big tech company, didn't know getting it. I passed round
two for another one, and the other ones I either
haven't heard back or just like ghosted.
Speaker 1 (04:01):
It's a story that's becoming more common, and it's being
reflected in an unusual new trend in the economic data.
As far back as the numbers go, the unemployment rate
for recent college graduates has been below the rate for
all US workers. But over the past few years, unemployment
among recent grads climbed above the rate for the broader population.
Speaker 5 (04:22):
This is essentially the first time on a ongoing basis
of this has occurred in the forty five plus years
that we have data going back.
Speaker 1 (04:29):
To Matthew Martin is a senior economist at Oxford Economics.
Speaker 5 (04:34):
So really this is pointing towards a lot of people
who have that higher educational attainment are actually worse off
than many of their peers who have lower educational attainment.
That's an interesting dynamic to have in a market where
you're told you go to college, you work hard, you'll
have a job after graduation, and unfortunately for many at
the moment, that's just not happening.
Speaker 1 (04:54):
Recent college grads may be having a harder time right
now finding their first job but it depends in part
on what kind of job they're seeking. Entry level jobs
in the areas Tiffany and Jacob want, tech and finance, respectively,
turn out to be particularly hard to find.
Speaker 4 (05:11):
A lot of my peers who were in years advance
for me and trying to give me insights on how
the process worked, all either had had internships or were
in the process of getting them, or had full time offers.
And these are sometimes people that are just juniors who
have a full time offer at a bank or different firm.
(05:31):
And I think with my graduation class there's been a
pretty drastic change. I'd say about fifty percent of my
graduating class is unemployed.
Speaker 3 (05:43):
I see a lot of job descriptions that are asking
for two years of experience or like three years of experience.
And in design specifically, it's been pretty hard. I think
it's just a very saturated field and there's a lot
of talent out there.
Speaker 5 (06:00):
Tech is one of those that has been really slowed
down from a lot of that comes down to the
hiring boom that they did post pandemic and then looking
to the right size. You also have other mathematical occupations
and finance, legal. Some of these fields that you would
again have been in high demands over the last couple
of years that just aren't seeing as much.
Speaker 1 (06:19):
Economists say the reasons can be difficult to trace. Some
of it is likely the overall labor market cooling after
the post pandemic hiring surge, But now there's a new
cause coming on the scene. Artificial intelligence AI will leave
a lot of white color people behind. All junior level
jobs in any industry are at high risk.
Speaker 3 (06:40):
This is like a tsunami hitting the labor market.
Speaker 1 (06:47):
For months, economists and executives have been raising concerns about
AI or publicly embracing it, sometimes both. Amazon CEO Andy
Jesse wrote a note to employees in June saying that
AI would change the way work is done at the
tech giant and that jobs would be cut as AI
increased efficiency, and Thropic CEO Dario Amoday told one news
(07:10):
outlet that AI could potentially wipe out half of all
entry level white collar jobs and send unemployment rates surging.
We may not be seeing anything quite that bad yet,
but AI's impact does seem to be showing up in
unemployment figures for recent college graduates.
Speaker 5 (07:27):
I think there is definitely a link between the two.
It's hard to very parse through and just say, you know,
X amount of this issue is because of AI, X
amount is because of just a slower demand overall. But
when we look at the numbers, there definitely could be
a connection there. So one of the things we're seeing
is that a the tech sector is one of the
industries with the highest adoption rates AI. They have around
twenty five percent adoption rates for all businesses using it
(07:48):
in their day to day operations, whereas the national average
is around five percent. So clearly the sector is just
using it more in general. And then when we look
into the specifically the recent college graduate data, we see
that in the last years employment for recent college grads
twenty two to twenty seven, they've seen a decrease in
employment opportunities overall, whereas if you look in the same
fields for those twenty eight onwards, they've actually seen slightly
(08:12):
flat to maybe a little bit up overall.
Speaker 1 (08:14):
A similar story appears in the latest company hiring data.
An analysis by Indeed conducted for Wall Street Week shows
junior level job postings have tumbled over the last two
years and are now twenty one percent below their pre
pandemic level, even as senior level openings are up. Although
tech maybe one area where AI is particularly affecting entry
(08:36):
level positions, it's not the only one. As Martin says,
they see vulnerability in finance jobs like the one that
Jacob is seeking. To learn more, we sat down with
Blair Ephron, co founder of center View Partners, one of
the world's most prestigious investment banks. We see an awful
lot of money being invested in AI. Are we far
enough into the process now to know whether it's going
(08:57):
to work?
Speaker 6 (08:58):
Now?
Speaker 1 (08:58):
Obviously there are different ways it could work high, medium, low,
But do we know it's fundamently going to work that
There's no chance this is a bubble.
Speaker 7 (09:04):
So it's not a bubble. I am always a believer
in progress. AI is progress over the long haul. It
will be good in the short term. I have big concerns.
I believe the impact on employment is going to be
dramatic sooner than we think now.
Speaker 8 (09:23):
With that set, AI for us as an example, is
a positive.
Speaker 7 (09:28):
We're less focused on productivity, more focused on freeing up
someone's time so that they can use that time more productively.
But given all the positive, we have to absolutely look
after the watchout sign.
Speaker 8 (09:41):
What is going to go on with employment.
Speaker 1 (09:44):
One outcome could be a workforce that looks very different
than it does today, fewer jobs in computer science, finance,
or law, and more jobs that benefit from interpersonal interaction.
Matthew Martin says these trends are already showing up in
the data, whether or not they can be traced to AI,
and they are affecting men and women differently.
Speaker 5 (10:05):
While the recent college graduate unemployment has raised overall, it's
really been concentrated in males specifically. A lot of that
comes down to what industries are they looking to work in.
If we do a quick breakout of the industries of
recent college graduates, females tend to move towards healthcare services
and educational services or demands quite high. I think between
those two they account for over forty percent of recent
(10:26):
college graduates for females, whereas males specifically in healthcare services
only counts around five percent. So it's an imbalance of
what positions are these males versus females going into. Males
tend to skew towards these computer science professions, whether that's
programming or the tech sector just in general. That's closer
to twenty twenty five percent for them. So you just
(10:49):
have this imbalance of males tending to want to go
to these industries where demand is really low at the moment,
whereas females are entering industries where demand remigins quite high.
Speaker 1 (10:57):
Although a picture of AI's economic impact may be just
starting to come into focus, we can be sure that
the best and the worst are yet to come. Some
advice from the C suite to help the next generation prepare,
stay flexible, and develop the skills that remain so far
uniquely human.
Speaker 8 (11:16):
Broad based thinking, deep thinking.
Speaker 7 (11:19):
And there are just so many different fields and so
many different kinds of enterprises, big and small, that will
help you do that wide in the aperture of what
you think might be a fit. Taking a lot of
writing courses, a lot of humanities, learning how to think, critically,
learning the art of learning, curiosity, thinking about judgment, thinking
about coming out with an output and answer based on
(11:39):
facts that is contrary to what a model.
Speaker 8 (11:41):
May show you.
Speaker 7 (11:42):
This is what we need, because this is what I
think will never got a style.
Speaker 8 (11:46):
Judgment's not going out of style.
Speaker 1 (11:48):
The benefits of AI in the long run may well
dwarf the problems, but when you're in the middle of
that first job search, the long run may seem very
far off.
Speaker 4 (11:58):
You put in a lot of work starting from high school.
I get the right SAT score, go to the right college,
get internships, get experience. You come out with kind of
an uncertainty.
Speaker 3 (12:11):
It kind of makes me want to consider a master's
but I know that it's really expensive, and I just
don't know if it's worth all that money just to
get an entry level job.
Speaker 4 (12:25):
It's more so frustration towards the system and overall process,
but you also start questioning your underlying abilities.
Speaker 1 (12:35):
Jacob and Tiffany, it seems did everything right, and it's
not quite that they're falling behind, but that the entire
world is shifting under their feet. The rules have suddenly changed,
and what are those new rules for all of us?
That still remains to be seen. Coming up, we hear
(12:55):
more from Blair Ephron, this time not on what AI
means for corporate leaders, but on what those leaders are
doing to make sure that Trump tariffs don't disrupt their businesses.
(13:17):
This is a story about adapting. Charles Darwin taught us
that it is not the smartest or strongest that survive,
but those who are best able to adapt to the
changing environment. And when it comes to CEOs of major companies,
there's no question that President Trump's approach has changed their environment.
Blair Ephron, co founder of Centerview Partners, has watched them adapt.
(13:41):
President Trump came to office saying I'm going to change
the economy in fundamental ways. Has it changed the lives
of American.
Speaker 7 (13:48):
CEOs much less than you think. And the fact of the
matter is they're growing well under Biden. They're going well. Now,
what is that about for the most part the US economy?
In my world, the big company CEOs, big company senior executives,
they've learned to one operate quite apart from policy in Washington,
(14:09):
and two they have been operating a period of volatility
for so many years now they've just gotten much better
about how to remove uncertainty in their own businesses. However,
coos certainly talk about long term impacts of policy, and
what I hear about most more than anything is our
federal debt situation, which is clearly dramatic and clearly something
(14:31):
that at some point will create a problem.
Speaker 1 (14:35):
CEOs may have the tools to adapt to short term
changes in trade policy, but they may not have the
same ability to do anything about the US fiscal imbalance
over the long term.
Speaker 7 (14:45):
Twenty ten Simpson Bowls put together talk about the debt.
We had sixteen trillion dollars of debt. Thet we're heading
towards forty three times what we had. Then trillion dollars
of interest expense.
Speaker 8 (14:57):
Being spent by the government.
Speaker 7 (14:58):
That's almost twenty percent of what they do, more than
they do on defense. That is something that CEO's are
attuned to. They know that it wasn't this crowding out effect.
Speaker 8 (15:08):
You could have even more growth. They would benefit.
Speaker 1 (15:11):
President Trump's goal in imposing substantial tariffs on imports is
to move manufacturing back on shore, and so far EFRON
sees them as having mixed results.
Speaker 8 (15:21):
It goes two ways. I think you have to start
with what.
Speaker 7 (15:23):
Is the most secure way to help your supply chain,
and that certainly can be on shore. It certainly can
be to more friendly markets in Southeast Asia, can certainly
be to Mexico. It's been going both ways. I know
of a company that services Canada with its plants in Michigan.
It's thinking about putting capital in Canada because of what's
(15:44):
going on, so they can produce locally, so it actually
goes both ways. And the kind of manufacturing we're talking about,
for the most part, is a very advanced manufacturing, so
it's not labor intensive, it's not people in a plant,
it's the equipment. So I think that on balance, it's
hard to talk to any CEO who thinks that tariffs
are a good thing and that high tariffs more't heavy
(16:04):
dramatic negative impact.
Speaker 1 (16:06):
There's a good deal to talk about uncertainty, and the
uncertainty over everything from tariffs to who's going to be
the FED share the interest rates. Now, does that really
affect the real economy?
Speaker 7 (16:17):
The answer is clearly not, okay, And CEOs have gotten
so good about blocking all noise, all noise from all
political quarters. They focus on facts, substance, real policy. They
know that something said today by any elected official doesn't
mean much unless there's consisting to it and staying with it,
(16:39):
and they just block out the noise.
Speaker 8 (16:40):
That CEOs for the most part are really.
Speaker 7 (16:42):
Experienced, really talented, and have been through the volatility wars.
But the reason I have been, and we've talked about it,
more optimistic about the economy is because of that, and
I believe.
Speaker 8 (16:53):
I can make a case for dark clouds well down
the road.
Speaker 7 (16:56):
But barring some unforced error, which certainly we are prone
to make, I think the economy will continue to show
tailwind and resilience.
Speaker 1 (17:06):
That tailwind may look a bit different in New York City,
where New York State Assemblyman Zorian Mamdani is in a
strong position to become its next mayor and is running
on policies not generally seen as pro business.
Speaker 7 (17:19):
So let's first talk about New York trillion dollar economy,
sixty three million visitors, ten percent of every student graduating
college comes to the city.
Speaker 8 (17:28):
New York will be fine.
Speaker 7 (17:30):
That said, the mayor, whoever that person is, needs to
be mayor for eight and a half million people in
every borough. It has to be a mayor who appreciates
what it means to attract business formation, what attracts capital formation,
what it means to keep people in the city and thriving.
For example, Zoramndani, he's going to have to make the
choice whether he must be mayor or whether he must be.
Speaker 8 (17:51):
An effective mayor.
Speaker 7 (17:52):
And I believe to be an effective mayor, a talented
political official, and he's talented will have to be attuned
to that a lot of us met with him in
the business community the other.
Speaker 8 (18:03):
Day, and clearly one it was worthwhile meeting.
Speaker 7 (18:08):
He listened creatus for him to come to this group.
The questions were pointed, and my goal is that the
more he hears from the business community, and now the
business community helps drive the engine of New York along
with many other communities here, the more he is the
mayor will appreciate that he needs to be the mayor
for everyone.
Speaker 1 (18:26):
Having heard from him directly, do you have a sense
that he knows what he doesn't know? Because that may
be one of the most important things in life. To
really say there are things I don't know I need
to learn.
Speaker 8 (18:37):
I would say I don't know. However, I'm going to
make a judgment.
Speaker 7 (18:41):
He has said publicly, publicly informs where I've been just
that that he wants to get the best people in
every position, people who know more about that ptic area
than he does. He strikes me as someone who is
absolutely willing to learn, and I don't think you can
do as well as he's done as a candidate without
(19:02):
that ability. Whoever the mayor is, I hope, really appreciates
that the skill set of a mayor as opposed to
somebody in Congress, is less about policy and more about
making sure day to day the city is affordable and livable.
Speaker 1 (19:17):
It's hard to be against being affordable and livable. But
as far as I can tell, an essential work of
governance is unintended consequences. For example, we can say we're
going to freeze rents, which sounds good for people who
are renting, but it doesn't necessarily give incentive for building
a lot more units. We will bring prices down. Is
(19:37):
he learning? Can he learn those sort of understanded consequences that,
in fact, the best way to make things more affordable
may not be the most obvious way.
Speaker 8 (19:45):
It's going to be very clear.
Speaker 7 (19:46):
I don't know yet or does anyone what he's learning,
But make no mistake, rent control will reduce housing stock.
Speaker 8 (19:55):
Putting at grocery store in each borough.
Speaker 7 (19:59):
That's five relative to the twenty five hundred grocery stores
we have in the five boroughs doesn't do much. Let's
be clear, anyone here is already paying a lot of tax.
It's a privilege to live in New York. There is
a point where, and we sit in studies, it has
(20:19):
an impact if it gets out of line with other states.
So the point is we all need to focus on
a probability. I think he is spot on, But to
your point, there are many ways to attack it. I
think we need to be much more focused as a
city to do just that.
Speaker 1 (20:37):
You make a powerful case for why New York will
be just fine in terms of the economy overall. But
do we need in New York City to be more
concerned with competing with other centers around the country, around
the world, but particularly around the country than we have
it in the past. We've heard allowed to talk about
moving to Dallas, about moving to Miami. Is that a
real issue for New York City?
Speaker 8 (20:55):
Is it a real issue? Absolutely? Have you risen to
the challenge? You bet?
Speaker 7 (20:59):
New York is longer today than it was four years ago.
We have more people coming in than not. We have
the second biggest tech hub in New York City. We
have more drugs and healthcare coming out of here than
any other city.
Speaker 8 (21:10):
But for Boston, we're doing fine.
Speaker 1 (21:13):
Where is the Democratic Party right now and what do
you see as a forward path?
Speaker 8 (21:17):
Great question.
Speaker 7 (21:17):
I think the Democratic Party is a work in progress,
and the next test.
Speaker 8 (21:24):
Will obviously be in a few quarters. November twenty six.
Speaker 7 (21:28):
What I can tell you is as a party, Democrats
ought to have the base case that the economy will
have a tailwind. I ought to have his base case. Therefore,
it has to be much more about what the party's for,
not for the other guys for. And when I think
about that, the party has to do a much better
job diagnosing what the issues are, coming up with solutions
(21:49):
that meet the needs of all Americans. I don't think
we've done a very good job focusing on affordability in
a very practical way, understanding that policy should be driven
from people up, not from thinkers down, and has to
clearly be much more unified about how that's going to happen.
Speaker 8 (22:09):
I think that has been an issue for us. I
do find.
Speaker 7 (22:14):
Parties in general are pretty nimble about course correcting, whether
a Republican or Democrat. I assume by the time midterms
come around, Democrats, well, I figured out how Court's correct.
But it better be not just an agenda based on
fairness as opposed to fairness and growth.
Speaker 1 (22:31):
Who will help guide the Democrat Party away from a
very obvious alternative, which is to go to the other extreme.
I mean, some people think we're seeing that right now.
With you could name names aoc or Bernie Sanders, or
even Mamdani. There's a natural reaction to say, Okay, we've
got to compensate. If we've got right wing populism over here,
let's go left from podcism. How will the Democratic Party
(22:52):
avoid that? If in fact it should so.
Speaker 7 (22:54):
I'm quite confident that the Democratic Party has enough voices
across the spectrum that by the time.
Speaker 8 (23:03):
We get to.
Speaker 7 (23:05):
The election, we will have a strong group of candidates
will reflect the thinking of most Americans, which is less
about political ends of the spectrum, more about just getting
tomorrow put on the table, getting a good job, raising
your family the right way.
Speaker 8 (23:23):
And I believe that the party always should.
Speaker 7 (23:28):
Focus on all ends of the spectrum, but I do
believe it will end up unifying on what matters most,
solving people's issues.
Speaker 1 (23:37):
Next, we turn from the c suites of some of
America's largest companies to one specific, modest sized company that
depends on imports and exports for its textile business. We
go to Bend, Oregon and hear from Jeff Bowman, CEO
of Cocona Labs. This is a story about friendly fire.
(24:08):
President Trump has embraced tariffs as a way to protect
domestic US businesses from unfair foreign competition.
Speaker 9 (24:15):
I might go up with that tariff in the not
too distant future.
Speaker 7 (24:18):
The higher you go, the more likely it is they
build a plant here.
Speaker 1 (24:21):
Last week, we've brought you the story of a music
accessories company that is finding new ways of getting the
supplies it needs and maintaining its export business despite those tariffs.
But for some industries that's easier said than done.
Speaker 2 (24:37):
Already, it's impacted our business because it's reduced the amount
of volume of business that's out there.
Speaker 1 (24:44):
Jeff Bowman is the CEO of Cocona Labs, which makes
a compound used in fabric.
Speaker 2 (24:49):
We have a technology called thirty seven point five technology.
The purpose of it is to remove humidity from the
microclimate next to your skin. That helps you stay more
comfortab in both warm and cold weather conditions, and it
helps you operate at a peak performance. If you're an athlete,
you can operate in peak performance longer. And what we
(25:11):
do is we mine a mineral in the United States.
Essentially it's a volcanic sand. We convert that into what's
called master batch, which is a concentration of that mineral
that's then put into the spinning operations for things like
nylon and polypropylene and polyester. They make filaments and yarns
(25:32):
out of that. Those yarns and filaments are then made
into fabrics.
Speaker 6 (25:38):
Those fabrics are.
Speaker 2 (25:39):
Made into clothing or bedding or footwear, and we make
money by selling the master batch, which we make in
the United States. Primarily we export that because most yarn
spinners are outside of the United States. And then we
also license the technology to brands that use it. Sleep
Numbers for betting, the Men's Warehouse for clothing, Solomon for
(26:04):
technical clothing. If they're hunters, they know first light. So
there's well over one hundred brands that we license the
technology to.
Speaker 1 (26:13):
And that's a proprietary process.
Speaker 6 (26:16):
It is.
Speaker 2 (26:16):
It's very difficult to take a water loving mineral and
put it into manufacturing operations at hate water, So we
have patents on it and a ton of trade secrets.
You know, we're very cognizant of keeping those trade secrets secret.
Speaker 1 (26:33):
The United States is the world's second largest exporter of textiles.
It used to be first, employing one and a half
million workers, but now it employs only about four hundred
and seventy thousand. As China has risen to become the
number one producer, we.
Speaker 2 (26:48):
Do have customers in the United States. Generally, the spinners
outside of the United States are more competitive from a
price standpoint, and they've got more capacity, more infrastructure. Decades ago,
most of that did reside in the United States and
eventually moved outside of the United States. China at one
point in time decided that it was a strategic industry,
(27:09):
so they worked with their business people to develop that infrastructure,
and now that's primarily where.
Speaker 6 (27:15):
The most of it's done today.
Speaker 2 (27:17):
India is also a big export country for US as well.
Speaker 1 (27:21):
The tariffs being imposed by the Trump administration affect a
textile business like Cocona Labse both in the cost of
its raw products and ironically in its exports to places
like China.
Speaker 2 (27:32):
People are not placing orders because they're uncertain in terms
of what the ultimate pricing is going to be. I
spent this morning all morning talking to my team about
a business that we're working on right now with one
of the largest hotel chains in the United States. They're
looking to incorporate our technology in their bedding, and one
of the questions that we're getting from our Chinese partners
(27:55):
who would be spinning the yarn for that is, how
should they price the yarn based on the tariffs, And
of course that's a very difficult question for us to answer.
We did exports some product of China last week. We
ate the tariff ourself of about sixteen and a half percent.
Speaker 6 (28:14):
We actually ate ten percent of that.
Speaker 2 (28:16):
Previously there was six and a half percent tariff in
place already, So it's kind of a wait and see
right now. But in the short term, it is reducing
the amount of business that's out there, and it's reducing
the amount of investment that people are willing to make
in new products. Specific to us, because we're a small
company that exports as opposed to imports, you know, from
(28:38):
China and Indian those other places, the reciprocal tariffs also
impact us. And when Trump first announced, you know, the
large tariffs on China, China retaliated with one hundred and
forty five percent tariff. That would have been a killer
for us, It would have killed our business. We just
happened to have a bunch of our product in our
(28:58):
Shanghai warehouse the time, so within thirty six hours we
were able to sell that to our customers, move it
out of the warehouse, and that brought us a few
months traff free. We're waiting to see what's going to
happen with the tariffs. It impacts our business in several ways.
We're also trying to develop a domestic business in those countries.
(29:20):
So this shirt is an example. It's a shirt made
in China and it's sold to Chinese customers. And when
the price of the yarns increase, then it impacts the
price of the finished products, and it impacts our business.
Speaker 1 (29:34):
They charge us.
Speaker 6 (29:35):
We judge him.
Speaker 1 (29:36):
In pursuing his approach to tariffs, President Trump has said
again and again one of his main goals is to
bring manufacturing back on shore in the United States. Would
that work out that way in your business.
Speaker 6 (29:47):
No, definitely not.
Speaker 2 (29:49):
You'd have to cut and sew this garment or bedding
or any other garment. You'd have to make that garment
in the United States, and people just don't want those jobs.
Number one, and number two, the cost of labor here
is so much higher that the price of those goods
would dramatically increase if they're made in the United States.
(30:10):
So it would make everything much more expensive. You know,
even the deal with Vietnam is a case in point.
I don't think most people understand that those goods coming
into the United States already had a tariff on them,
And the case of clothing coming from Vietnam as an example,
there was a sixteen and.
Speaker 6 (30:27):
A half percent tariff before Trump.
Speaker 2 (30:29):
With the additional twenty percent that was just negotiated, that
means that there's a thirty six and a half percent
tariff on apparel now coming into the United States from Vietnam.
Some of that's going to get passed on, there's no
question about it. So the price of goods will go up.
With the increase in the price of goods, the amount
of business will go down. I mean, Trump and I
both went to the same business school, Wharton, and apparently
(30:52):
he didn't take the tariff class, because certainly the teachings
and the empirical history showed is that when you impose tariff,
the net effect is that you reduce the amount of
business that takes place, and we're seeing that happen.
Speaker 6 (31:07):
Already, costs go up.
Speaker 2 (31:09):
Consumers pay the price eventually, and there's just less business
being conducted.
Speaker 1 (31:15):
Whatever proves out from President Trump's tterarf at this point,
it appeers there are going to be tariffs. We already
see fifteen percent effective and think in some place it
could be higher than that. So assuming that happens, just
let's assume from it's fifteen to twenty percent effective tariff.
What do you do to change your business to make
sure it's still a good business, it's viable.
Speaker 6 (31:37):
Well, what we have.
Speaker 2 (31:37):
Been doing is number one, making sure that our customers
have options, So we ship master Match around the world.
We ship it to Turkey, we ship it to India, Taiwan, China, Korea,
et cetera. Making sure that they have options so that
there's so we can mitigate the tariffs hopefully in any
(31:58):
one country.
Speaker 6 (32:00):
That's the first thing that we're doing.
Speaker 2 (32:01):
And second is, you know, we're looking at in some
cases potentially moving some of our manufacturing out of the
United States into China, something that we're loath to do,
just to reduce the reciprocal tariffs that are being placed
on our goods. You know, ultimately it will help with
the cost of goods coming back to the United States.
(32:22):
It will certainly help even more with the goods that
are being sold into those countries we're worried about tariffs.
I mean, candidly, we shipped a master batch to China
two weeks ago. We paid sixteen and a half percent
tariff on it. We eight ten percent of that. That's
not sustainable for us long term. You know, we'd have
to raise our prices. When we raise our prices, it
(32:43):
will ultimately affect the amount of volume that's being sold.
So it's not good.
Speaker 1 (32:48):
How elastic or inelastic is that demand for your product?
I mean, how what pricing power do you have to
pass along some or all of those increases?
Speaker 2 (32:56):
You know, we have to pass on some otherwise we'll
go out of business. And there's trade off. And that's
the fact what I was talking about this morning. Our
Chinese partners are trying to figure out how to price
their yarn for this very large hotel chain opportunity, and
they want to know how to account for the tariffs,
and we don't have an answer form candidly, other than
(33:17):
to tell them that we're not going to eat that tariff.
Speaker 6 (33:21):
We may eat a portion of it.
Speaker 2 (33:23):
I think we're waiting to see what ultimately happens and
what the tariffs actually end up being, and then we'll adjust,
you know, accordingly as best we can there will be collaboration,
I'm sure throughout the supply chain. Ultimately you'll see higher
prices at the consumer level.
Speaker 1 (33:40):
And if in fact these tariffs continue, what's going to
happen to your employment situation in general?
Speaker 2 (33:45):
You know, we don't lay anybody off. We were actually
voted one of the top fifty small companies in the
United States to work for last year, so you know,
we value our employees greatly and try to hold on
to them. Definitely, during COVID, everybody took a pay cut
for a period of time. It's just so that we
can survive. So we'll do what we have to do
(34:05):
to survive. We'll do it we have to do to
hold on to our employees. Ideally, we'll do we have
to do to continue manufacturing in the United States.
Speaker 6 (34:14):
We're very adaptable.
Speaker 1 (34:15):
As difficult as the tariffs may be for kcona Lab's business,
Bowman does believe they deserve to have a role in
economic policy, just not quite as broad a role as
they are being given. If you got to sit down
with your fellow Wharton graduate in the White House and
give him a piece of your mind about what he
should be doing, what would you advise him.
Speaker 2 (34:36):
Well, I think tariffs are a strategic tool. I think
if they're used surgically, they can help. I think broadbrushed
tariffs don't work in my opinion, so I would encourage
him to be surgical about it. We're a small American
company trying to do business in China, where historically there
(34:57):
has been very little tariff of our goods go into China.
It's still very difficult to do business in China because
of the non tariff barriers to doing business, things like
the banking laws and the marketing laws and the administrative
issues that you have to deal with on a daily basis.
Speaker 6 (35:14):
And it's not.
Speaker 2 (35:15):
Clear to me that this tariff war that we're in
is going to impact any of that. All I see
happening is that we're going to increase the price of
goods coming into the United States. We're not going to
address the fundamental issues that are making it different difficult
for companies like mine to do business in places like China.
And that's those non tariff barriers to doing.
Speaker 1 (35:36):
Business, whether it's to break down barriers to US exports
or to discourage production abroad. One of President Trump's main
goals is increasing US manufacturing overall something special contributor to
Larry Summers of Harvard says, tariffs will not accomplish.
Speaker 10 (35:52):
This isn't a debate about whether manufacturing is important or not.
That's an important debate to have as we go forward.
But even if you take as given the central importance
of cutting edge manufacturing, taxing inputs, alienating partners, and enraging
(36:19):
those who control the external markets can't possibly be the
right strategy for rebuilding American manufacturers. Look, I take another
way of looking at this. We think of ourselves. We
think of automobiles as like a traditional industry that we're
(36:41):
trying to protect in a good way. But this is
slashing general motors profits. This is slash all the automobile
companies are complaining about our tariff policies because what they
mean for integrated production in North America. So even for
(37:08):
the people who were the traditional constituency for this kind
of policy, they're not seeing it as as a positive.
So this is not some debate between the coastal people
(37:29):
who like finance and movies as businesses and the people
in the middle of the country who are focused on
the heartland of manufacturing. Even if you just look at
what you're doing for the heartland of manufacturing higher priced inputs,
(37:50):
much more uncertainty for investors and alienating of customers can't
be the right strategy. There's a winner here. There really
is a winner here in the strategy that we are pursuing.
His name is she Jinping, and I hope we'll stop.
Speaker 1 (38:13):
Up next. Data centers may be the path to an
AI future. But what if a community isn't sure they
want more data centers? We go to Warrenton, Virginia to
find out. This is a story about needs and wants.
(38:36):
Sometimes what we need may not be what we want.
We need more productivity from AI, but we don't want
young college graduates going unemployed. And at least some of
us may not want our local communities transformed by the
building of all those data centers we need for AI.
Speaker 11 (39:00):
Warrenton is a tiny town ten thousand people. Picture Norman
Rockwell Pictures picture Mayberry and Andy Griffith.
Speaker 1 (39:10):
Cindy Burbank lives in Warrenton, Virginia. She took us to
what would have been a data center down This.
Speaker 11 (39:17):
We did pathway is the forty two acre site that
Amazon purchased to build a data center.
Speaker 1 (39:23):
On without data centers to process, store, and distribute information.
We don't have AI with everything from internet search.
Speaker 8 (39:32):
We are on an exponential curve and a relatively steep.
Speaker 1 (39:35):
One to drug discovery and approval.
Speaker 12 (39:37):
Is going to propel the biological research AI in unprecedented ways.
Speaker 1 (39:43):
To reap all the benefits AI has to offer. Global
data center capacity is expected to grow at a rate
of fifteen percent per year, and even that may not
be enough to keep up with demand. Christine Wood is
the data center practice lead at Burns and MacDonald and
consults with company building data centers.
Speaker 13 (40:01):
Power is becoming the long pole in the tent to
be able to find a data center site, and so
it really starts with that is the power puzzle that
we're seeing associated with the data center site.
Speaker 1 (40:14):
But supplying all that power can cause disruption to the
communities where data centers want to be located. Not everyone
wants a data center for a neighbor.
Speaker 9 (40:23):
We're situated about forty five miles to the west of Washington. D. C.
Speaker 1 (40:28):
Carter Neville is a native of Warrenton, Virginia. He has
been the mayor of the town since twenty nineteen.
Speaker 9 (40:34):
We are heavily depended upon our meal taxes, and our
largest meal sax provider is Chick fil A. We have
very fortunate to have as residents very low taxes in
terms of real estate taxes, and so pretty much our
largest employer is the school board, followed by the hospital
in Walmart.
Speaker 1 (40:53):
Warrenton's data center journey began in twenty twenty three when
the town council voted to consider an Amazon data center
on a forty two acre site.
Speaker 9 (41:01):
On the up side to provide a significant amount of revenue,
which we are desperately in need of. Our infrastructure is aging.
We're behind the eight ball and a lot of our
improvements needed to our water treatment and wastewater treatments especially.
You know, we have parts going back that can't even
be produced anymore, you know, parts of dating back to
the nineteen fifties, and we're desperate need of upgrading that
facility for the safety of our community.
Speaker 1 (41:22):
But even the economic benefit couldn't outweigh the town's concerns.
Speaker 11 (41:26):
Our frustration was the fact that we were being kept
in the dark. Then finally a year and a half later,
we learn about it because Dominion is proposing these massive
transmission lines, and that is what was like throwing a
match onto a powder keg. The citizens exploded and first
(41:48):
against the transmission lines and dominion, and then they learned
it was tied to the data center. Then we learned
from our neighboring jurisdictions what data centers were and the impacts.
They had a lot of noise, huge energy generation, monster
size to dominate your landscape and bringing transmission lines and
(42:11):
other problems. We did a Freedom of information Act for
the town records how many people spoke up or wrote
in support of the Amazon data center, how many opposed it?
And the result was, I'll show you this number, two thousand,
(42:33):
three hundred and eighty nine of our citizens, our residents,
took the time to oppose the data center. They came
to the town council meetings, they wrote emails to the
town council, and so forth. Eleven, only eleven people here
wanted that data center to happen, and yet we were
(42:55):
ignored because Amazon had cut a deal with our elected
officials before we even knew about it.
Speaker 9 (43:03):
As the opposition grew, it got very very heated, it
got very very emotional. I think that there was a
lot of information that was selectively put out to the
community and so by the time it came to a vote,
it was a very divided community, and I'm grateful for
the council members that had the courage to do what
they believe was right.
Speaker 1 (43:23):
Last month, Warrenton's City Council voted unanimously on a zoning
change that effectively bans data centers altogether. Among the citizens'
concerns is the amount of power a data center needs,
which would eat up their own access.
Speaker 12 (43:37):
Yeah.
Speaker 9 (43:37):
I think the biggest concern, and the one that the
industry itself really needs to address, is the energy usage.
That is just huge, and that is something as I've
pointed out to many people, the data centers are coming.
Whether one community says yes or no, does not ultimately
impact them to demand on energy. The industry and the
energy producers have got to figure that out. They've got
to find a better way of providing of that energy
(43:58):
without hitting the rate payers like you and me.
Speaker 13 (44:01):
Fifteen years ago, a twelve megawatt data center was a
huge data center. Now with AI, what we're seeing on
the development side is more than a gigawatt.
Speaker 6 (44:11):
On the campus.
Speaker 13 (44:12):
And to put that in real terms for you, I'm
sitting in Dallas Dallas takes about three gigawatts to five gigawats,
depending on the time of year, to power the entire city.
Speaker 1 (44:25):
One alternative to drawing the needed power from the grid
is small modular nuclear reactors, but even they may not
be enough to keep up.
Speaker 12 (44:33):
When it comes to AI data centers, they are an
order of magnitude more power hungry than the data centers
we are used to since the Internet age.
Speaker 1 (44:45):
Kr street Ar is the founder and CEO of Bloom Energy,
which just signed a deal to provide power to Oracle
for its infrastructure data centers in the United States. Is
there an overall approach to addressing that enormous demand.
Speaker 8 (45:01):
For power today?
Speaker 12 (45:03):
It is a scramble for that AI data centers. Collectively,
they're investing more than six hundred billion dollars just this year.
That's the publicly uttered commitments. That's mind boggling, right, almost
two billion dollars a day to feed this beast.
Speaker 1 (45:21):
Sweetheart's. Bloom Energy was created to do just that, provide
clean energy on site, eliminating the need for transmission lines
and traditional power generators.
Speaker 12 (45:31):
The world is completely digital dependent. Not having power even
for a millisecond is not an option because critical life
functions depend on it, like a surgery happening in a hospital,
for example.
Speaker 8 (45:48):
So we said.
Speaker 12 (45:49):
Power needs to be extremely reliable. You cannot get that
redundant reliability at very high nines unless you have on
site power. If you're going to have on site power,
because you're going to be breathing that air when you're
sitting in your office or when you're in your bedroom,
(46:10):
by definition, it needs to be clean, and it needs
to be very efficient, and it needs to be quiet.
So this is the principle on which we found a
bloom energy.
Speaker 1 (46:21):
For the citizens of Warrenton, Virginia. Finding that optimal solution
of providing data center power in ways the community can
tolerate has been elusive, but that has real fiscal consequences
for the town.
Speaker 9 (46:33):
We are so revenue strapped, but we're facing about ninety
one million dollars of investment in our waste water and
water treatment plants, and so you know that money is
just going to have to come out of debt unless
we find revenue streams. Our streets are cracked, you know,
we have things that are falling apart, and we're just
kind of keeping trying to keep the lights on.
Speaker 1 (46:49):
Amazon declined to comment on the status of the warrant
and data center. For now, the fate of the project
will have to be decided by the courts.
Speaker 9 (46:56):
There's a March hearing data on that. There's a citizen
group that challenged it in court, and so we are
waiting to see what that decision is in March. And
I believe that Amazon is probably moved on, but I
do expect that, you know, if they remain, if the
courts favor the town and Amazon, that they will eventually
build there. But as of now, I'm not sure where
(47:19):
it stands.
Speaker 1 (47:20):
The transformative power of AI means that we need to
have it, and that means we need to have data
centers even with their enormous power demands. The question now
is where they will go and whether we can find
ways to make them the good neighbors that people in
towns like Warranton, Virginia will welcome. That does it for
(47:42):
us Here at Wall Street Week, I'm David Weston. See
you next week for more stories of capitalism.
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