Examining The Supply Chain, Labor, And Alternative Energy

stuff on the shelves to buy. But I know a lot of people are concerned about the supply chain as we head into this all important holiday season. Let's get a sense of kind of where we are there. Lisa Chai, senior analysts at Robo Global. Uh, Lisa, thanks so much for joining us here a gave we have some good numbers out of Home Depot and Walmart this morning. UM, but a lot of people continue to be very concerned about the supply chain challenges out there on a global scale.

What's your take on kind of where we are with that issue. Yes, definitely, UM, supply chain disruptions that we're hearing about, it's really nothing new, and unfortunately things may worsen before they really improve UM as consumer demand overall really seems really unstoppable heading into the holiday season, and obviously the pandemic highlighted that we have major bottlenecks within the supply chain. And keep in mind that we have

really bigger problems than just overall the holiday season. We have obviously great innovations and technologies that can keep up with all this change and help with some major issues, but improving the supply chain is a really complicated one. You have to consider, uh, explore import supply chain network within the manufacturing process, to online and instore merchandise management, and also the logistics and then transportation issue throughout this

entire process. So and you also have to consider reverse logistics. Yeah, there's a lot. There's a lot to deal with. How long until we've out with it? Right? I mean it seems like if you want to return an item, your retailers is just struggling with that. The shipping cost is high. I think Home Depot Walmart had great results because they

prepared UM probably most of this year. They learned a lot from the last twelve eighteen months, and they came into UM this important holiday season with enough people that they hired UM laborers and as well as merchandise, they're fully stopped. That's which the moret Walmart CEO the set right for the most retailers are still struggling. We're obviously not having enough merchandisees that consumers want, and then shipping costs and transportation cost is really eating up the margin.

Do you think that the supply chain processes it's not broken, but it's definitely a bigger problem than just the holiday season. So how about the the other issue that we're hearing a lot about, Lisa, not just from the retailers, but just you know, uh, corporate America in general, which is kind of the labor shortage. I mean, you know, to what extent is that going to be a continuing issue for you know, some of the retailers in general, but

just kind of corporate America. I mean it, this seems to be, uh, you know, one of the really fascinating outcomes of this pandemic. And I noticed it everywhere, by the way. So I was in a um Dick Sporting Goods the other day and there were lines all the way down the aisle because they only had a few people to check out. Then I went into a yardhouse which was delicious, um, but the weight was very long and there were a lot of empty tables. I asked the manager why and he said, I don't have enough

staff to bust these tables. And that's just keeping that's keeping revenue down, that's hurting their business. Is that a long term issue. It's definitely a long term issue, and it's it's hitting I think it's it's near term term, long term issues. And I think that assis from the fact that these job sure are really brutal right, it can be very dirty, it's very manual labor process working in some of the warehouses or being a truck driver today, um,

and also working in restaurants. I think it's it's definitely the wage problems. So the wage growth is going up obviously, and each other is trying to manage and navigate through this, and we are it's going to hit the consumer so obviously because we have to pass on some of the cost. So this is a big issue with some of the workers not wanting to do this. Turnover at places like

Amazon is super high. So we think that there are some solutions to this, right because we have some machine vision technologies and autonomous worklist and robotic arms for packing and unpacking. So they are solutions the technology could help. UM it's a matter of retailers really embracing it and using outsourcers and service providers that could really help them.

UM still the needs that they really need, whether it's near term or longer term, which which retailers, Lisa, which retailers are doing the best, and which ones are doing the worst. I don't need you to give me brands unless you want, but I'm just wondering, you know, in terms of UM UH classifications, Yeah, I think I think uh Waist there is one of the companies that have probably one of the better supply chain, eat Commerce, which is like an online home goods or a catalog home

goods business, and they're expanding um IKEA. Obviously, companies like Amazon has really embraced technology. Walmart is really getting there as well. UM I would say every retailer at this point has to increase their capex and spending around warehouse automation and improving their supply chain. They have to. There's

no choice, right because their margins are are declining. You have major UH secular headwinds coming at them, whether it's UH, the labor shortage or the wage growth or supply chain should then cost. So it's we need a real major probably up told the entire supply chain process, but we

have to start somewhere. UM So we do think that very bullish on robody companies and automation companies, and also if you could implement it with AI capabilities, we think we think some of the technology solutions could really help the process. Lisa, thank you so much for joining us. Really appreciate getting your thoughts in perspective here. Lisa Chai, she's a senior analyst at robo Global, getting some thoughts

on supply chain and retails. We get some of these pretty good retail numbers, you know, one of them, I think more interesting economic fallouts from this pandemic has been the Great resignation, as some people are talking about it. A lot of folks kind of left. They kind of they left the workforce. They haven't come back. Where did they go? I don't know. They're not on the trains with me in the morning. They're not on the subways

with him in the morning. But we'll have to see Tom Gimbell, he's a founder and CEO of Lasal Network. They do this kind of job stuff. Tom again, I don't know if it's four million, five million, six main folks that are not on the payrolls today that were pre print pandemic. Where are they? It's a great question. I'm number one. I'm glad to hear your taking the train again. So that's uh number one. I would say that Goldman Sachs just I don't know if you read

the article. They just released a study that showed the two and a half million people that have left the workforce were baby boomers that either retired or took early retirement during the pandemic and for a variety of reasons. And those people, they conclude are not coming back. So when you're looking at it, almost of the people that have retired that that is one example one excuse for

where they've gone. Secondarily, you look at it and you got COVID over still looming over the economy, meaning if kids get sick from in school or there's an outbreak that a parent needs to be home with them, and so you've still got parents that haven't re entered the workforce as a result of of making sure that their home for their kids and and doing those things. And then lastly, because of the hangover from COVID even as it as it uh dissipates that restaurants and the service

jobs still haven't come back. And if you combine those three things, I think that's a fairly good example of where the people have gone. It's so interesting, Um, First of all, I want to say, hangovers when you're older, they take a lot longer to recover from. I wouldn't. Um, it's so interesting that, uh, this labor shortage is hitting um, you know, retail numbers as well and hitting the bottom line of companies. How hard is it to get employees in now? What What do I'm lawyers have to do?

It's it's more than just raised wages, isn't it. Yeah, the wages are are really only an aspect what the rate. When companies are raising wages now it's really to fight off defection of people leaving their companies and going for more money. Where raises used to be given as a reward, as an a merit increase of saying job well done, we want to keep you happy, and we're gonna give

you more. Now it's the numbers are so staggering from competitors and other companies that you've got to do it in advanced to keep people, and I haven't seen numbers like that in a long long time, both hourly and salary levels of that happening. You know what what companies are realizing, though, is it's more than money. And you've

got two sides of the coin. I think companies are afraid that employees only want to work remotely, and thus they're letting the inmates run the asylum, so to speak, and bending over backwards to make everybody happy working from home, whether that may or may not be best for the company or quite frankly, for the individual's career path. And then the other side of the of the coin is that human beings, professional human beings, um they want to

be challenged and they want to achieve goals. They don't majority of who don't just want to do a job that Studies show that our our emotional satisfaction is tied to recognition and accomplishment. And the more people are are working remotely, not in a team environment, not being challenged with tasks because companies don't challenging tasks because companies don't want to lose people, you're seeing the disintegration of the

fabric of corporate culture. By the way, Tom, you know we talked to you always about these labor issues because the company you founded and run is one of the leading staffing companies in the country. What does this mean for your business? What's what what's it like operating Lessau right now? Well, knock on wood, it's been the best year of the company's histories. So we've grown for for

we grew for twenty two years in a row. Last year we dipped by eight percent with COVID, and this year we're up over over last year at over so this has been great for us. However, um, I think that with the infrastructure bill coming uh the that that's a good sign for the economy. My belief is that things are going to continue at this pace for the next couple of years. I'm very optimistic about the economy.

That there are people entering the workforce from college graduates and people realizing that the government subsidies aren't coming back. And then and then lastly, you're going to see with the delta and not erupting into what people were afraid it would that with COVID dissipating and life getting back to normal, everybody's going to return to the workforce. I think it's gonna be really good for the economy for the next thirties, sich months. Are people going to come

back to the office five days a week anymore? Or is that really a thing of the past. My belief in talking to the CEOs and vps of HR that we deal with every day, week, months, so to speak, is that I think my belief is that Fridays will become remote fridays the way casual Fridays became casual Fridays. That there'll always be some industries or companies that will be in the office five days a week, but that

the majority of companies will have remote fridays. And you'll see the majority of companies will be in the office four days a week, with a good percentage three days a week. By the way, Paul, did I tell you about flannel Friday? Friday? This Friday and crities in here too. I want everyone to wear flannel shirts. It's my last day, and then we are assuming we all own a flannel shirt. I know you own a flannel shirt. Dude. You gotta

be kidding. Well, that's not bad. Four days a week in the office, tom Um, I'm guessing that's better than probably Paul expected when he asked, I mean, I mean from the from the from the perspective of old conservative guys like Paul Sweeney. Um, he wants kids at their desks, you know, grinding it out, or on planes visiting clients. So and I know that a lot of people are thinking maybe it's gonna only be two or three days a week. But so four days a week, I think

for Paul is that's good enough. Well, all it takes is is the market to drop and inflation to go up, and people will be bad. You want people five days a week. Wait until interest rates or at five six seven percent, unemployments back to seven eight and the stock markets down by fifteen and then everything reverses and people be in the office five days a week. Tom still quickly. Immigration legal and illegal, how much is that impacting the

dearth of workers hugely? I think it's something that's not talked about quite a bit. But you've got to think back even before the Obama administration or the Trump administration, for the last year or two of the Obama administration,

and immigration was becoming a bigger and bigger deal. And when you stop it or stop it's an overstatement but when you when you make it such a spotlight on it, and it's become a bigger issue, and not allowing people into the country from the southern border as aggressively, and then the H one B vs a problem and not letting people in it becomes a huge issue, both on the H one B, on the I T side, and

on the service sector. Why we don't have enough people is directly tied to those problems, right, absolutely, all right, Tom, thank you so much for joining us. It was great thoughts and perspective on the labor market, Tom Gimbel. He's found there in CEO of La Sound Network. Less Sound network kind of places people with jobs. So Tom's got a great got his pulse finger on the pulse of the labor market again, trying to get folks back to work. Is it just higher pay? Alright? We had some good

consumer data points out this morning. Consumer spending for the month of October came in better than expected. Then, of course the big dogs Home Depot Walmart reporting some really strong numbers taking some guidance up. Uh, so the consumers seems to be in pretty good spot here. Let's check in with Jen Bartasha sees a senior analysts. She covers food, retail, mass merchants, packaged food, pretty much everything on the retail space for Bloomberg Intelligence. Uh, Jen, give us your takeaway.

It looks like when I'm looking at the home Depot when Walmart numbers pretty good stuff there. Yeah, good morning, Paul. It thinks actually, we're a very solid quarter for Walmart. Home Depot obviously had had good results as well. Um. And it really does underscore the fact that the consumer does have money and they are spending. They're just spending it selectively. Right now, what are the concerns at a for example, a company like Walmart. They beat earnings expectations

and the shares are down. Yeah, the stock is down today. Um. You know, and even though Walmart is very well positioned for the holiday. Um. You know, what we're really looking about and talking about here in comparison to the other retailers is it's a margin store. Um. You know, there's been long term concern about Walmart's uh well, it's erosion

of its margin over time. Um. And some of the comments on the call today, you know, and the fact that Walmart is the last company out there took to raise prices in an inflationary environment kind of inflames some concerns about margin overall over the next quarter and into next year. Yeah, Jen, that's kind of where I wanted to go looking at the margins here. I know, you know from reading your research, UM that you know top line is important, but you really got to focus, you know,

at the profit margin. You know, they're facing a lot of issues, whether it's supply chain, whether it's higher labor costs. What are those two big companies telling us about their margins going forward? Well, there's certainly some expectation that a lot of these pressures are going to continue through the fourth quarter, which is a huge holiday quarter for all

of retail, and into next year. UM. When you're looking at supply chain UM, there there are some structural issues that are going to take a little bit longer to overcome, So things like transportation costs UM, you know, those are things that are going to take time to work out

of the system. So we're anticipating seeing some of this pressure coming from the supply chain lingering well into next year UM and affecting these companies, and so it really comes down to strategy on how well they can manage other costs to help offset that pressure. What's the difference in terms of scale looking at a home depot and looking at a Walmart. I imagine I think of Walmart as this like supply chain Goliath that can just you know,

wield and tremendous power. And Doug McMillan did say, fighting inflation is in our d n A, but can they really do something about it? Well, it's it's a good question, Matt. And when you when you really look at Walmart scale, UM, they have been leveraging that scale to be able to increase their inventory, which is up almost twelve going into

fourth quarter. UM. They're able to force things through the system to a degree that some smaller players can't do UM, and we expect that that keep it ability will continue. But they are also investing and expanding their capacity and supply chain UM so that they have more flexibility going forward. And that's going to be an important part of their story as they try to do more in terms of third party fulfillment, sort of like Amazon does with some

of their marketplace customers. UM. So it's a story that's in progress, UM, and we're watching it unfold. Jen. Are people going back to the stores or have they just you know, since the pandemic said, I can do pretty much everything from my couch with a click of the mouse or just the app. People are actually going back to stores. UM. And if you looked and you broke down the same store sales numbers from Walmart today, for example,

UM traffic into stores is positive. It's up UM over almost six percent in the US for Walmart UM in the last quarter. And with all of the supply chain concerns and the news that you see about you know, potential delays for shipping, especially around the holiday period, we're expecting that in the fourth quarter that consumers will be going into stores a lot to do their holiday shopping, just so that they're sure that they have the goods that they want to be able to gift. Is Walmart

getting all the stuff? I mean, are there are they having real problems getting certain things in there? Well? I think that there are some hiccups a lung the supply chain for all retailers, and there are some products that are UM inherently a little less stable than others. So when you talk about especially on the grocery side, UM, things like fresh produce UM, you know, it's harder to make sure that everything gets to the stores as fresh

as possible in this current environment. Um. But what we're seeing is that there are generally things in stock. UM, it's just a question of how quickly they're going to be able to replenish as demands starts to rise. So, Jen, we have tomorrow, we have Lows, Target, we have t J Max or as it's known in Europe, t K Max. Really oddly, UM, we've got raw stores coming up. I mean, how does this earning season, how do you think it's

going to pan out? Given what we've seen today? Well, based on what we've seen so far, UM, you know, there's reason to be optimistic about how the results are going to play out over the next week or so. UM. You know, consumers are still very focused on value. And you talk about some of the names that you mentioned, whether it's t j X, UM, you know Target, UM, you know these companies you know play to that value segment in different ways, UM, and and people define value differently.

But but we see that that's resonating. So that should vote should vote pretty well for earning. Jen, thanks so much. I think we can remember all the way back to last week we had in Glasgow, Scotland COP twenty six talking about the future of energy. Quite frankly, I'm not sure what really came out of that, but I want to ask an expert here and we'll do that with Seth Great, President and chief executive officer of light Bridge Corporation. Seth,

thanks so much for joining us here. Again, we've got a little bit of benefit of some hindsight here. But if we look back to COP twenty six, what are the key takeaways that that you made? Was anything of substance achieved? You know, there was little of substance achieved in terms of a formal agreement which agreed to phase down call instead of the original goal of phase out coal.

That's a new phase by the way, phasing down. I used it at dinner last night and everybody, no one what I mean, sound like you're at Davos or something, And you know, so I think that what came out of it though, was a real search for what are the alternatives as we do phase down and phase out coal and other fossil fuels. What are we going to do? And you know we've seen in the news today the Germany announced suspension of certifying the nord Stream to pipeline

to bring in natural gas from Russia. What are they going to do? You mentioned before fueling up your four D F one fifty. It's almost like buying a new car every time you fuel it up now at these prices of gasoline, and you know, part of what we have to do. And I just got back from an Internet sational trip. Were heard a lot about this in several countries. Is grow nuclear power. That nuclear power is almost immune from these price bikes, from this inflation in

energy prices. But why why don't we you know? I was um really impressed when I watched the Bill Gates documentary on Netflix and they're they're one of those it's a three part series. I don't know if everyone's seen that. One of them is pretty focused on nuclear and um. He is making the case that we're at a stage of development now where you no longer have to worry

about something like Fukushima. It's incredibly safe and in fact, he can even use spent fuel UM to power new UH new facilities, so you don't need to worry as much about the waste either. What are what's stopping us UM SETH from building more? Is it just the initial costs? Are they so huge? Well, they used to be to

build these giant reactors. But what Bill Gates is talking about, what we at Lightbridge are talking about, are these new, smaller, cheaper reactors and you know, cost much much less to

to build. Uh don't you know, um have the financial risk to nearly the degree of the giant plants, and a light Bridge were also designing and with US government support, testing new fuel that will make the existing plants much more economical and much safer, run a thousand degrees celsius cooler in the reactors and produce zero c O two. So I think what Bill Gates is doing with new advanced kinds of reactors is great, but none of them

exist yet. We look forward to them existing, and we look forward to light Bridge helping to fuel some of the new reactors that will come out, but also companies like light Bridge that that will bring new fuels, new technology, these new safety advances to the existing reactors as well.

All right, so let me ask you this. Have you spoken with Angelo Miracle or all Off Schultz, Because in a country where the Green Party has gained a pretty exceptional amount of power, they're still burning like the dirtiest coal on the planet, and that they would rather pay um through the nose for dirty fuel than used nuclear reactors. Why is that, Well, there's a lot of politics there with the Green Party in Germany holding that coalition together

to stay in power, and they're totally wrong. You see this combination of three things. In Germany. They have some of the dirtiest energy production in the world, They have some of the most expensive energy production in the world, and they like to brag the most that they have the greatest energy plan in the world. And it's just not working. You can't shut down nuclear and avoid having energy prices spike and having c O two and pollution spike.

And Germany is just the perfect example of it. Sets where we in the United States as it relates to nuclear energy. Is there support? Is it an economic issue or is there just some fundamental that's just not the path we want to go. Yeah, you know, it's somewhere in the middle that most Americans do support having nuclear power in the country. It provides about twenty of the electricity but much more than half of all clean power of zero CEO two zero pollution power, and it is growing.

There are two large reactors under construction in in Georgia. There's a new small reactor, a little Star construction in in Idaho, and there's talk of adding some to coal plant sites in in Montana and in other parts of the West and Midwest, which I think makes a lot of sense putting these small reactors on sites that would have coal plants that shut down. Good for employment, good for keeping the connection to the electrical grid, trained workforce, etcetera.

And I think a lot of the growth in nuclear in this country will come from smaller reactors at former coal fights as the years go by. Thanks so much for joining us. Really appreciated getting your thoughts on the really interesting global energy nuclear It's a conversation, uh, you know, as we see energy prices fluctuate that continues to come to the four seveth grade, President and chief executive officer

of light Bridge Corporation. Looking at w T I crude oil right here, it's pretty steady today, but just under I will point out, Uh, the F one fifty that I'm driving is a thirty six gallon tank. That is why that will set you back, which why it cost me about two d bucks to fill it up. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at

Matt Miller nineteen seventy three. On ball Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio