U.S. Concrete CEO Sandbrook Expects Big Demand from Border Wall

on iTunes, SoundCloud and at Bloomberg dot com. Now, let's turn our attention to what's going on in the world of politics meeting reality and Lisa Brahmins, I think this is a fascinating topic because when people talk about the building of the wall and so on between the United States and Mexico, and no one really takes that next step, which says, all right, so what kinds of materials, what

kind of businesses? Billbrook does, he's the CEO of US Concrete and he is here on the phone talking with us and Bill, Uh, I want to get your take first of all. And President Trump has talked a lot about infrastructure spending. Do you have a sense, aside from the wall, what is he prioritizing to get done? Mr

Lee said, Uh, he's prioritizing There's two main approaches. One critical infrastructure to help in the movement of goods and people UH from the places they work to the places they live, from the places items are are manufactured to the places they're consumed. And a list of fifty priority projects was published earlier this this week from places around the country. A lot of it was rail based, a lot of it was bridge based, a lot of it

was highway based. But they were their projects that have not been completed that could help aid in UH growing our GDP. Actually speaking a little bit of detail, if you don't mind, Bill, just in terms of how you got into this business. He is in preparing for the interview, I had to learn a little bit about the history of of concrete and cement and composites and so on, and maybe just explain a little of your projects and and what expertise you have in this area. Well, sure,

and I'll keep it brief. My my father grew up he was employed in the cement industry in the Lehigh Valley of Pennsylvania, where cement was founded in the country. So I grew up around cement plants. Most of my former years went into the military within the Corps of Engineers.

Combat engineers worked on many construction projects. Left the military after thirteen years and ended up in a company just north of New York City in arrogates and asphalt and supplied significant amount of the arrogates used in the concrete and asphalt to build New York City in the in the nineteen nineties and early two thousand's and then moved on into a role at the US Concrete UH in two thousand and eleven and took over the CEO role at US Concrete and US Concrete UH where we operate

in California, Texas, New York City, Washington, d C, Northern New Jersey. And we really concentrate on difficult to perform and difficult specification in different difficult operating conditions, large infrastructure and building projects. For instance, we provided the concrete on the Oakland Bay Bridge, provided the concrete for the San Francisco forty Niners Stateium in Santa Clara, the Freedom Tower in New York, we're working on the Bay Own Bridge

right now. We're doing the reconstruction of Laguardi Airport. So we do high, high volume, very difficult to perform and produce concrete projects in the major metropolitan cities that I just mentioned. Bill, There's been some discussion that there is a labor shortage when it comes to some of the more ambitious infrastructure plan. What has been your experience or your expectation with respect to whether we have sufficient workers in this country to carry out some of the plans. Well,

I'll answer that in two ways. One, our primary workforce consists of ready mixed truck drivers who have to have a specialized license or commercial driver's license, and we do have have to work at obtaining a sufficient number of qualified drivers. The days are gone when you could just hang a sign outside and say driver position available and

people would walk in your door already qualified. We do have to do job fares and a lot of recruiting, and we've had some inflationary pressures in our non union uh labor rates as well in order to attract qualified drivers. As far as um shortages in the construction trades I hear about it, I imagine the construction trades face the same thing I do with skilled workers in my ready

mixed truck drivers. But the reality of the situation is where an historically low labor participation rate in the country basically sixty one of the population, which means there's thirty eight percent sitting at home some probably can't work. Uh, but there's a lot of able bodied men and women out there that we need to get back into the workforce by providing high paying jobs to make it more attractive for them to work than to actually subsist on

whatever means they're they're obtaining currently. Uh, Bill, I wanted to get your take on the wall the President Trump has proposed building on the border of US and Mexico. Uh. What is your sense of what this will actually end up looking like. Will it be a physical concrete wall running almost fift miles along the border, or will it look like something else. Well, it definitely will be a physical barrier, the Uh, materials that is going to be

built with are to be determined. And even if it would be a fence, there's still a significant amount of concrete needed for the footings and foundations and the roads that lead up to it and along our side of that fence, So that even under the scenario that would be a steel wall, we'd have a lot of concrete necessary. Now, depending on the specifications, it could be precast concrete panels as are in other walls in certain parts of the world. It could be poured in place concrete that we would

supply trucks and plants for. It is to be determined yet, or it can be a combination of all the above, depending on the topography of the terrain where that section of the wall is being built. Bill Sandbrook, thank you so much for joining us. Bill Sandbrook, CEO of US Concrete in Texas. We've gotten news earlier today that President Trump is willing to consider removing U S sanctions against Russia. We've heard a lot about Russia. We want to talk to somebody who has spent a lot of time there

and who has reported their extensively. H Bloomberg View columnist Leonid Burschitski, who has been writing extensively about Vladimir Putin and some of his consequences on the nation of Russia. So first, I actually just want to start off by getting your take on what the implications would be for

Russia if the US were to ease up on sanctions. Well, first of all, I don't really believe that the US or Trump um is going to drop the sanctions unilaterally, because that would contradict he has declared approach to dealing with Russia, which is negotiating, trying to make a deal you don't throw away your biggest trump card if you want to negotiate to deal. It doesn't really make sense

in terms of you know, bargaining technique. Um. But if that were to happen, it would not really have any particularly serious consequences for the Russian economy because the sanctions at most, by the most pessimistic estimates, take about point five of GDP a year ah, and that is not

really a huge hindrance to Russia economically. But if the sanctions were dropped, it would certainly increase Putting's legitimacy um and sort of and an attempt to isolate him as an international player, which is something that is really much more important to putting them under financial aspect. Why Why because basically bring him into the fold and major negotiations and sort of give him It would give him at the table, It would give him the respect that he

sort of craves from the West. Uh. It would immediately make him a power broker in the number of regions, and it would certainly make it easier for him to pursue his poses in Europe. Um. The you know, the the US immediate periphery, the Balkans, Eastern Europe, um, it would bring him back to the table as as as a you know, serious player on par with the West. You wrote a column about how President Trump is a

master of diversionary tactics. Can you explain, give us some color. Well, what I meant was the you know, the Trump teams, um a pension for throwing out all sorts of stupid bits of news like, uh, the idea that he was going to start and a big investigation into voter fraud in the election, or the entire debate about how many

people attended the inacuration. You know, unimportant stories that everybody is discussing, uh, and that get reposted and discussed on the social networks much more than the more serious issues like the Keystone pipeline, even the war that Trump is clearly intent on financing as he promised during the campaign. Uh, These serious issues get much less play on the social networks and much less discussion than the non serious bits

of news that they throw out. And actually, I think the rumor that they're gonna unilaterally canceled the Russia sanctions is part of these diversionary tactics. As the Trump administration actually starts serious work on implementing some of the wildest

election promises that Trump made during the campaign. Leon it speak a little bit if you can, about the attitudes or the experiences that you've had most recently in Germany, if you don't mind only in the context of the visit of UK Prime Minister Theresa May taking place today. Uh Angela Merkel doesn't seem to be anywhere in this picture,

at least not yet. Well, she's definitely not on that picture because you know, the USE stand, which aligns very closely with Germany's stand in this case, UM is actually rather punitive to the UK in terms of the you know, the terms of exit and in terms of what the UK is going to be allowed to keep from you know, the free trade UM status that it enjoys within the U. Uh if it doesn't allow you know, the basic EU freedoms,

including the freedom of movement. Uh So in Berlin, there's really not much that you know that May is going to get from mercle. Uh. With Trump, she can probably make more headway because he doesn't care about the U. He doesn't like bu uh he might even want to. He was. He openly celebrated when Brexit was allowed and announced. Uh So, um May can actually get something from him, just as a token of how he feels about Europe, about United Europe, about the u UM. You know that

this would be done to irk someone like Merkel. Well. I want to thank you very much. Leonid always insightful joining us now. Leonid Burschitsky. He is our Bloomberg View columnist in Berlin. I urge you to go to Bloomberg View dot com and read his and many other Bloomberg View columns. It's an interesting perspective on the world. I'm pim Fox along with Lisa Abramowitz. This is Bloomberg. We've heard a lot about President Trump and his worsening relationship

with the Mexican government. I want to bring in Eric Martin. He's a Mexico government and economy reporter at Bloomberg. He is in Mexico City, and Eric, I want to just start with getting a sense from you. What is the mood right now in Mexico Citylica's really amazing the Mexican people and even rival politicians are supporting President and kapinion at those decisions. You cancel his trip to Washington next week.

I had one analyst stating me that Donald Trump has succeeded in doing what no politician has done for decades in Mexico, which is really uniting all Mexicans in support of a single cause and a lot of outrage at the rhetoric that's being aimed at Mexico by the US, at the escalation of UH, this standoff. What are they united to do? What? What's sort of the objective of

the unity to stand up to the US. It's an economy sixteen times larger than that of Mexico, but Mexico is a country in which the politicians and the policy makers have a lot of pride about the role that Mexico plays in the world. UH. And we've seen also firms like A Price Waterhouse that say Mexico will be the sixth biggest economy in the world by twenty So this is a country that sees itself as ascendant, is on the horizon, is becoming increasingly more important and deserving

of respect on the world stage. Eric, can you put this into the context of Mexican history. I mean, I know it's you know, I don't want to do a history class all the way back to eighteen twenty. But having said that, you know, large parts of the United States were at that time part of Mexico. Is the Mexican perspective aware and and vocal about that that element

of the intertwined history of the two countries. Absolutely. I mean you have to look back decades, potentially to the administration of Talvin Coolidge to find a US administration has been so hostile to Mexico. Calvin Coolidge calling Mexico in those days Soviet Mexico if you can imagine, and an oil exploration in the late nineteen thirties. I mean, that's the last time that things have been this bad between

these two countries. They have cool operated so well on a number of issues, ranging from immigration and homeland security, you know, counter terrorism efforts, to the environment in recent years and anti drug effort. It's just really astounding that, uh, you know, in four working days in office, uh, Donald Trump has brought this relationship to the level where it currently sits. Well, and let's just talk about the relationship

and where it currently sits. I mean, we've heard a lot of pretty inflammatory rhetoric, and yet there is talk from some ambassadors and UH and others that perhaps there still is room to make some negotiation. This is not heading toward a full blown trade ward. Just yet, how serious is it? Well, the Mexican government last night and four Minister Louis Videgora in Washington expressed optimism that they can still reach a very good deal and very good

agreements for both Mexico and the US. Donald Trump has previously spoken highly of Videgaray, praising him as a wonderful man than someone which whom the US can make wonderful deals. But this is certainly not the first step in the start that either of these two sides probably would have envisioned when they arranged this ill fated presidential visit next week, which now will not take place. And you know they're going to continue working. No one's caught off the dialogue,

but certainly a very disappointing start to these talks. Eric. Our business executives making plans not only for their businesses

but themselves in terms of financial arrangements and future projects. Well, certainly the business chambers are very focused on this and on getting their allies in the business community in the US to lobby on Capitol Hill into lobby the Trump administration to continue NAFTA, to not impose tariffs, to not tear apart this relationship that's grown over more than two decades. Carlos Slim is going to be addressed in the press later today in Mexico City, and I'm sure that he

will be asked about this. Reporters are asking questions, and uh, you know, it's certainly something that the business community here is very concerned. Business can be really on both sides of the border about interruption of supply chains Virgin Mexico and trade negotiators to diversify tradelines to other countries, the TPP partners, for instance. But it's something you can't do overnight. And this is a relationship that's grown up, very focused

around the US. More than eight percent of Mexican exports got into the US. Well, thank you very much, Eric Martin, our Mexican Government and Economy reporter joining us from Mexico City. Now, I just imagine this one big company that would include Charter Communications, verizing Communications, Actillian Johnson and Johnson, Luxotica and are I guess there you have somebody where sunglasses, perhaps doing an ad for a cable network, uh and perhaps

getting a band aid from Johnson and Johnson. I'm talking mergers and acquisitions and here to help us is Nancy Haven's Hasty President, chief investment officer of Haven's Advisors. Nancy, thank you for being here. Um did I mangle all that correctly? Did I put that all into us? Do you put all the pairs together appropriately? All right? So tell us your give us your a little bit of your background so that people understand your perspective and mergers

and acquisitions. Describe what was like, and tell us what you believe this current environment is like. Okay. Um, I have been in engaged in merger arbitrage for uh thirty some years, and um, I find it incredibly fascinating and fun. Um I think two th sixteen was extremely interesting. Um it was. Can I just break in Haven's Advisors bear Stearns, just getting people, the professionals, so that we know where

we're standing. Sorry. I spent fifteen years at bear Stearns, and I started my own hedge fund twenty years ago called Haven's Advisors. UM at any rate? In two thousand and sixteen, UM, every by almost every measure, EM and A was down. Global m and A was down. Sev large deals that had a value in excess of a billion dollars were down. Nine North American deals were down.

Cross border deals which fared the best were down three. However, Chinese deals, those in which China Chinese company wasn't acquirer more than double. They were two to two point two times what they had been in two thousand and fifteen, and it was by far the highest level that we

had ever seen for Chinese acquirers. Nancy and I want to feedback on that is their concern among M and A professionals you speak to that the current administration stands towards China will dampen prospects for these types of cross border deals in the year or two ahead. Um, there is always more concern fundamentally, regardless of administration about Chinese deals. The information out of China on Chinese companies is much more opaque, so it makes it more difficult in general

to invest in deals that involve a Chinese company. On top of that, now, as you point out, we have a new administration and Trump. Trump has made it more than clear how he feels about Chinese acquirers, Chinese almost anything, and as a result, UM, he we are all worried about what he will do or will impose. Um, he

does have limitations, he has to follow the law. Companies that are not being treated fairly can go back and back to court or go to court if they are sued, and and they can make the transaction happen anyway, because unless laws are passed, which has not happened yet and could and takes an enormously long time. UM, we we won't have any framework that if in fact, totally prevents

Chinese companies from doing business in this country. I'm going to pull you down into the weeds just a little bit, Nancy, because I'm wondering if there are any of these combinations you'd like to potentially talk about in terms of investments. So I mentioned Charter Communications in Verizon, Actilian and Johnson and Johnson, the Luxotica and are deal. That means, you know, French and Italian interest coming together. What what what were you looking at right now? Well, Um, we're looking at

all of them. UM. With respect to UM the Charter deal, UM, that is in a potential potentially that is an extraordinarily preliminary stage, if it's in any stage at all. UM. There it's clear that they have had some sort of discussions over the last six months. But it's also clear that or one news source came out this morning that said there was nothing going on right now, and the stock is down as a result. Today. We don't tend to invest in any pre deal pretty much ever, because

they're very, very risky and UM. But in this particular case, Charter is a highly levered company that just did a big deal with Time Warner. It has major overlap with Verizon. Neither company has low leverage UM. I think generally analysts are not excited about the transaction. Analysts Verizon analysts that

is UM. They do admit that it will give the companies into additional growth, but they don't They do believe there are big challenges, and especially since Verizon has always had a strategy of rolling out five G and they're not sure they want investment going into Charter right now. When I talk with private equity UH executives or people in the industry, one concern about M and A volumes this year, it's just how high valuations are. There aren't

as many attractive targets given where stocks are. How much do you think is away on the total volume of eminate is here? Well, I actually am very optimistic about volume for this year. First of all, we have we it looks like we will have a much much better regulatory environment UM. Trump's initial appointees for the FCC chair and UM for the Attorney General. That's Mr pie right, so we would by the way pointed, he's on the FCC currently, so he will be able to assume the

chairman's role without any immediately exactly. And by the way, we'd also love him to come on the program anytime. So well, he is he is clearly a very pro business bent UM and he's been vocal in his opposition to net neutrality UM. And also Jeff Sessions made some real comments in his hearings about Attorney General Attorney General how h M and A should be handled from a regulatory standpoint, and he was a fairly strict UM statutory person, which is good news because it means that we'll be

using traditional measures for anti trust. But it's also clear that in general the Trump administration is very uh on pro regulation, so that will make it very good. We're going to have to leave it there, unfortunately. I can talk to you all afternoon. Nancy Haven's Hasty, President and Chief Investment Officer of Haven's Advisers on the outlook for merchants and acquisitions. Thank you so much. Thanks for listening

to the Bloomberg P and L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm Pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio