Episode Summary
In the first interview from the SCAC AIAG Supply Chain & Quality Conference in Charleston, South Carolina, Scott, Greg, and Beau Groover of The Effective Syndicate welcomed Birgit Matthiesen, Director, North American Manufacturing, for Arent Fox, to Supply Chain Now Radio.
Episode Transcript
[00:00:00] It’s time for Supply Chain Now Radio Broadcasting live from the Supply chain capital of the country. Atlanta, Georgia Supply chain. Now radio spotlights the best in all things supply chain the people, the technologies, the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good afternoon. Scott Luton here with you live on Supply Chain Now Radio. Welcome back to the show as we continue the coverage from the AIAG SCAC Supply chain and Quality Conference in North Charleston, South Carolina. AIG Automotive Industry Action Group SCA C, the South Carolina Automotive Council. This conference is dedicated to the world of automotive and we’ve been meeting with many of the leading industry thought leaders that are participating and that continues with this interview here today. Big thanks to our conference broadcast sponsor of the Effective syndicate for making our coverage possible. The EFFECTIVE SYNDICATE helps companies win by optimizing process and developing winning cultures. You can learn more at the effective syndicate dot com. Quick programming note. Like all of our series on Supply Chain Now Radio, you can find our replays on a variety of channels Apple podcasts, SoundCloud, Spotify, YouTube, wherever else you find your podcasts. As always, we’d love to have you subscribe to almost anything. All right. Let’s welcome in our co-hosts here today and Mr. Singh and Greg White co-host. Here at Supply Chain Now Radio Serial Supply chain tech entrepreneur and trusted advisor. Greg, how you doing? Great. I can’t believe you just gave me like that. Yes. Ariel sings serial singer, entrepreneur. Whenever we leader, we continue to expand your title. Thank you. We continue to uncover some of your your attributes and skills that we haven’t seen in previous months.
[00:01:54] So maybe you will or ever his car, you’ll you’ll sing us out this afternoon. It’s so hard to know a trifle. Just say your title. Someone once said the longer your title, the less important your job. That is a motto was a wise person. My title just continues to get longer.
[00:02:11] I don’t know what that says. Well, what is inarguable is we have had a series of outstanding interviews here today. Great conference. And he also heard Bo Gruber while other co-host, founder, president of the Effective syndicate and BO, of course Hope co-hosts are popular leadership matters series hero Supply Chain Now Radio. Bo, how you doing? I’m doing just right to be here. Absolutely. And so let’s welcome in our feature guests because I think this this interview is going to stand out from all the others where we’ve got a trade policy subject matter expert. And if anything, if you’re if we’re if we’re uncovering and trying to better understand things in the global business environment is certainly trade these days. So Bridget Mathison, director, North American Manufacturing for Errant Fox. How you doing, Birgit?
[00:02:54] I am fine and I am delighted to be here. Thank you very much. The right conference at the right time and the right subject matter. And you just barely made it. I just barely made it. Thank you.
[00:03:06] So thank you, Delta. And yeah, that’s outstanding airline. And I love some of commercials here lately. And of course, their marketing team has been good at it for a while. But you’ve been here. This is your least your second, if not your third conference Jerai Birgit. And we’re gonna we’re gonna get some of your insights on on what brings you here. But before we do all that, if you would, tell us about yourself and kind of your background.
[00:03:32] Sure. Some of your listeners, maybe many of your listeners, might be interested to know that I started my career way back when the ice what’s melting somewhere in Denmark as a customs inspector along the Canada U.S. border many years ago. And I eventually married my husband, who was my U.S. counterpart at that port of entry along the Quebec, Vermont border. I immigrated to Canada soil.
[00:04:04] My marriage is the bilateral relationship started international trade with your. I love that.
[00:04:13] So I was a customs inspector for a number of years. But anyways, in terms of trade policy, I worked at the Canadian Embassy in Washington, DC for a number of years, particularly post NAFTA. If anybody ever remembers those that acronym 1994. Yes. That giant sucking sound. That’s right. Ross and Perot, that trade. And I mentioned that because what we’re going to talk about later on in this podcast is, well, what the heck has happened to NAFTA and what’s happened since then and why does anybody care? And anyway, I joined Aaron Fox at a law firm in Washington, D.C. And we’re pretty unique in that we have a policy director just for. The automotive and the manufacturing sector and in today’s time we worked very closely with the automotive associations in Canada, the United States and Mexico on the ratification of the U.S., MCI and all that good stuff.
[00:05:15] So I guess a little bit about your organization and your role. Eric Fox will tell us more about that.
[00:05:21] I connect the dots. So trade policy and trade agreements are a legal pact. It’s good zillion pages long and the fine print is another gazillion pages. And it takes a, you know, a pretty special kind of person within a company to take ownership of what the heck a trade agreement means for that company. Yeah, but the world does not operate in a vacuum. Nothing does. And there’s lots of circles sort of flying around our global space called trade policy. There’s trade agreements or tariff policies there. Tweets from Washington. So what I do for our clients is I get to know who they are and what they do and what they want to do, where they make it, how they make it from, where do they make it. And I connect the dots in terms of this is your risk area and this is how you might want to mitigate that risk, because trade policy today is all about risk mitigation.
[00:06:23] Unfortunately, yeah, we know we have seen and we do a wide variety programming in person program. And what we’ve got coming up on September 20th in Atlanta, two webinars to a ton of podcast and other mediums. And it seems like to me there has been in recent years such a huge new re found corporate interest in risk mitigation. Is that what you’re seeing as well?
[00:06:43] You know, absolutely. You’ve you’ve actually nailed it. The reason why I mentioned NAFTA in 1994. I mean, a decade to go was that but for the last 25 years, especially in North America, but globally as well as trade, international trade has not risen to the fore. It’s sort of been on the backburner. We’ve all lived with our trade agreements, whether it be, you know, then after another trade agreement and tariffs, the duties, you know, zero single digits, two point three, five percent, nothing that’s going to scare a CEO out of his bed at night. And so things were ticking along pretty well. A lot of what we heard among the industry was all about price competition, industry trends like self-driving cars, all that really sexy and exciting. We all want to talk about and all of a sudden, bang. We are now 2019 and we’re talking tariffs and duties. And we’re talking duties not at 2.5 percent. We’re talking duties 15, 25 and 30 percent. That goes directly to the bottom line. And so, poof, we have a new risk factor in FCC filings.
[00:08:00] All of a sudden, exciting times. We live in how it is. So this event, though, switching gears, Lu more on a much more positive note. This event and we’ve been talking throughout the episodes here as we provide Lu coverage, is that in this era of digital information, where you have all of the information are fingertips on our pieces or our phones at home is still so important to get out and shake hands and sit down with folks and compare notes and in the interpersonal side is just still really important. Would you agree with that bridge?
[00:08:32] Yes. Every company is different. Every product is different. Every supply manager is different. And every CEO or CFO for that supply manager, it’s going to be different. Some companies are more comfortable with uncertainty. Some companies like uncertainty because they find competitive advantage, which is very true. And there’s chaos. There’s profit. Exactly. Exactly. So one of the things that I like to do because of the nature of my job, so I like to come to these kinds of events, talk to people, get to understand their companies. I always learn something new. And when I learn something new, it’s a best practice for someone else. Great.
[00:09:20] Well put. So what do you look most forward to at this event?
[00:09:29] I mean, clearly learning and learning something new. And then, Bill, what I heard you say there is be able to share that with your clients and prospective clients. I can appreciate that. What else what else are you going to leave here with?
[00:09:39] Yeah. One of the things that I hope to get out of my conversations, either with, you know, in the hallways or in the hotel lobby or a phone call to me after the conference is a couple of things. One, what’s your anxiety level? Is this something? Is this really a train wreck coming at you? Do you know if it’s a train wreck coming at you, right. And what are you doing about it? Number two, and this at number one and number two. Just generally speaking, what is the knowledge level of these companies? There is so much to take in. It is mind boggling. I do this, you know, seven days a week. And this morning on the flight, here was a tweet from the White House that changes something dramatically for everyone who’s going to be in this room tomorrow morning and for your reader, sorry for your listeners here today. And so things are very fast paced, but they are at those consequences. Everyone needs to know and make the right decisions accordingly.
[00:10:45] Absolutely. Great. All right. Well said.
[00:10:48] So your your background, bridges, is interesting and fascinating. And I imagine that it’s constantly changing. So what are some of the trends that you’re watching or are aware of or maybe even worried about over the foreseeable horizon?
[00:11:04] So I walked in this morning and I grab a cup of coffee at this conference on this beautiful site called the Technical Center.
[00:11:13] What’s the name of the Trident Technical Trident Technical College? I think of a Poseidon. Exactly. Exactly. How could I have forgotten that? And I grabbed a cup of coffee after my long flights and I sat down in the audience and bingo. The first speaker was from an OEM representative from an OEM. And what did he talk about? He talked about localization. He talked about versus globalization. He talked about supply chain and where his OEM is going to open up the next plant. That’s exactly the kind of the kind of conversation every CEO and CFO is having today. And my question to him, if I can find him in the audience later on this afternoon. And if you were my client, this is what I would have asked him. What you know is what decisions and what factors are you now taking into consideration to cite your next production plant? Usually it’s tax policy, real estate prices. Right. Help from your transportation access. Absolutely. All that good. Good stuff. Right. Are those factors the same factors today or are you adding to that list? And where do you. Oh, yeah. Because the tier ones are going to follow the. Oh yeah. That’s Lu. Maybe even the tier 2s. If you’re not in country A now, what’s going to make you change your decision? And specifically in terms of China putting the elephant in the room into this conversation. What are you doing about China? You’re buying from China. You’re selling to China.
[00:13:07] What are you doing about China or you are in a joint venture in China, right. What are those decision factors that are going to make you change? Until what I like to do fall is just help people ask the right questions of themselves. Okay, great.
[00:13:21] I like that. I really like that. Good question. Asking is is not often thought about in the business landscape these days when everyone’s moving so fast. But if you’re not asking the right questions, you certainly get the right answers. That’s right. Yeah. And so not in the room. Yeah. Yeah. Also, one other thing I picked up there and Greg and I you’ve got to. That’s an interesting question to ask, Bridget. But clearly you are passionate about finding the information to bring back to the businesses that where you are serving as a trusted adviser. And, you know, there’s a doggedness there tracking down the information you need. We kind of talked about this this last episode. And and but but to to keep and retain that title is trust adviser. You can’t sit on what you learn seven years ago or much less seven or seven months ago. Right. Right. And that’s really what I’m picking up from what you’re sharing with us.
[00:14:18] Yeah. And. Exactly. And the only thing that I would add to that is who else needs to know? So if I could just bear with me and I’ll give you an example. A client of ours is a major tier one and they’re headquartered in the Detroit area and it’s a brand name company. We all know who they are and their general counsel who usually is our first point of contact. It’s usually the general counsel who realizes, oh, we’re in murky waters. You know, my CEO and my board of directors are my shareholders are starting to ask questions about. Trade and I don’t know anything about trade.
[00:15:01] He asked us to come to their headquarters in the Detroit area and for an entire afternoon my colleague and I sat around a conference room with 20 people from that company and they were smart enough. They were so on the ball that they had at the table, not just the C suite that, you know, they had their sales department, they had their purchasing, their procurement, their transportation, their regional sales department, their sourcing, financing, accounting, etc. And for an afternoon, my colleague and I stopped there and we fielded questions from them. And those questions were all such started out with the two words. What if the kids were living in a situation now of what if? Right. It’s still uncertain. It was fascinating. It was fascinating for us. It was fascinating for them. And we ended that afternoon with a clear understanding. These are the uncertain things we do not know. We just don’t know yet. Right. Right. Rules haven’t been written a bunch of reasons. OK, here’s what we know that we don’t know. And here’s what we need to watch. And it was, I hope, a refreshing exercise well worth its time.
[00:16:21] Well, it sounds like good on them for having such a cross-functional team. Yes. Not just the C suite executives, but it’s a lot less functional slice of the organization in its Chris Barnes sums earned organizations. You named for them to be at the table for such a strategic discussion. That’s the bodes. Well, yeah. For that organization. That bodes. A very mature approach, right? Yeah. So. So you have your kind of finger on the pulse of what’s going on in trade. And I think it’s interesting what you’re seeing and what you’ve already seen here. Even though you’ve only been here for just a few hours. But I’m really interested to see, you know, one of the things we’re asking people today is give us your sort of crystal ball view into the future. Right.
[00:17:11] Well, it’s murky. It’s cloudy crystal ball. I wish I could. Yeah, I wish I could tell you this. That’s what’s gonna happen in two months and six months. And this is what’s going to. I don’t know. And, you know, anyone who tells you they do is doesn’t have their finger on the pulse. Washington, D.C. right now is a shifting in terms of trade policy, a shifting arena. So what I see in the next you know, in the next year and a half up to the 2020 election, they’ll just be quite obvious is whether or not the United States and Washington continues to use the blunt instrument of increased tariffs to enforce our trade agreements, et cetera, et cetera. I don’t see that changing. I don’t see much vigorous debate in Congress that counters it. There’s a lot of talk. There’s always a lot of talk in Washington. But I don’t see any great champion to counter it. And so that’s on tariffs. The other major development that the audience here and your listeners will be interested in, of course, is the USMC ratification. All right. I’ll talk quite a bit about that tomorrow morning in my presentation. But suffice here to say is Congress is back in session. They’ve been back this week. They had their summer August out work recess. They have not many days before this legislative session ends. There is already talk about tweaking the agreement between Canada, United States and Mexico, the new NAFTA. I wouldn’t I would not be surprised if the U.S. DMCA was ratified, i.e. approved by Congress, by the way, before the end of this year. And that starts the clock ticking on a whole new set of rules for any operation that’s in in North America. So I I was long in my answer. The short answer is uncertainty. But remember, uncertainty can bring opportunity. You don’t wait till that ball has fallen.
[00:19:34] Is there any considering the uncertainty, maybe even what you think the outcome is? Or you have been advised what the outcome could be? Whichever way policy goes is. Is there any guidance that you’re giving to companies that are asking you the what if questions today?
[00:19:55] So it depends on what the landscape is, who you’re doing business with. Yeah. Who are you buying to what who are you buying from? So all of that. So once we’ve you know. Because if you’re not doing business in China. Well, then I am I can talk to about 3 or 1 tariffs. But if you’re buying aluminum or steel components that originated in China and you are a Tier 2, all of a sudden your Tier 1 is really, really interested on what’s happening between Beijing and Washington, DC. Right. So, again, it you know, it’s after about a 10 minute conversation with a company that we kind of understand what the the scope of the interest is and the risk. So I think that USMC AA, I give it a pretty good chance of ratification. U.S. Beijing trade talks, you know, they’ve said they’re going to get back together again in the next week or so. That one, I will not tell you. I won’t lay odds. I just want the other thing that’s out on the the the the forecast and your poor listeners are going to want to be jumping out of their cars by now. I haven’t called Jim’s or chances are exactly is new terrorist brand brand new tariffs on the automotive industry. But particularly and 5 November next month or so, will, we’ll know what the White House thinking is on that. I’m trying to think desperately for some good news.
[00:21:26] Yes, we need more good news.
[00:21:28] Sure.
[00:21:28] Well, let me let me get back.
[00:21:31] I mean, I think on the trade. Look, I think on the trade front, it’s really hard to declare any news one way or the other because it is very murky. Yeah, right. Well, I think we’ll see more.
[00:21:42] Yeah. I think we owe it to our listeners to go back. So U.S. MCI is the United States, Mexico, Canada. Agreement. It’s Mexico’s only country to ratify it thus far. All three countries. Yep. And once it’s ratified, it stays in place 16 years. Well, then you have the opportunity renew again at that point in time. Yeah. So just just I know we hit we’d love our acronyms in Supply chain had to refresh my memory on exactly what that was. We call it the new nap. Yeah, the new net. That’s right. And I think a lot of our listeners might better, better, better connect with that term. Well, you know, I appreciate there is lots of uncertainty. And while there is some some good news, certainly, I mean, down here in North Charleston and when we plug in with a lot of what’s going on, the business community here in South Carolina, of course, we’re based in the Atlanta area. There’s good news. Georgia, Georgia and South Carolina, both both those states have really gotten their plan together and just are out there winning business, bringing it back. And while that’s great for the states, it’s also great regionally. Right. Especially as we know in automotive, you have the clustering effect, right? Much like aerospace.
[00:22:56] Yeah, exactly. And you’ve you’ve just sparked something. You’re in the.
[00:23:03] Haven’t heard that in 27 years. Have you made Monday.
[00:23:07] Welcome to Charleston in that new NAF to the local regional North American content level in the automotive sector is higher than in the new Napa. So what does that mean? Is that to gain the benefit of an zero duty to save lots and lots of billions of dollars every year in duty savings? The oh, yams are going to ask their tier ones, what is the percentage of your component part? Break your console, your chastity, your tire wheel that is made of North American content. That content level is now higher. That could be a further down the road. A North American competitive edge vs a V. Our trading partners around the globe.
[00:23:58] You’re saying that in the new NAFTA, the requirement is higher? Yes.
[00:24:03] So it was 70? No, no, no. It was, you know, depending on what the part. Why? What’s that? 30, 40 percent rate now? It’s 30 to 40 in the 60s. Oh yeah. Yeah. It’s quite. Yeah. Okay. Well that is that is good. And that’s to classify it as a North American or American or whatever. Canadian. Yeah. Right. Yeah. I think our North American. Right. The North American. Yeah, that’s right.
[00:24:30] You can source your your your aluminum from North America to make a tire rim and you add things to your tire rim. And if that tire rim is made up more than or higher than that North American content, you can claim a new NAFTA tariff preference which your OEM is going to be seeking because your OEM doesn’t want to pay because. You know, it’s a constant at the revenue savings. Now, the. Rules to get to that definition of a local content is a subject of another one hour podcast.
[00:25:05] So state that’s going to require more turnings. Thank you. Delta SOS frequent flyer miles come with best right to Birgit. I mean, you are a walking, living and breathing resource. I’m sure some of our listeners are going to want to reach back out and have some follow up questions for you. So how can folks get in touch with you? Birgit. Sure.
[00:25:29] The best way is to just Google me and Aaron Fox ARVN CFO x dot com and its Birgit to Matthiesen and make Titi HIV ESPN. And if you do that, not only do you get my contact information, but you can subscribe to our free trade alerts that we point out. Well, now we’re putting them out like once a week. Now we have a particular automotive practice focus. So while these tariff thing that we’ve been talking about and you can subscribe to them and hopefully learn from them. Absolutely right. Nice.
[00:26:06] Well, thanks so much for taking some time out. I’m looking forward to your breakout session, DeMar ATO 5. You’re you’re you’re the leadoff hitter. Bring it. Bring your coffee. Yeah. I have a feeling you will keep people away. I’m not confident to or. Sure. Federal Trade Policy Update with Bridget Matthiesen, director, North American Automotive with parent Fox. Looking forward to that. Thanks so much for your time today. And stick around this for men as we wrap up because we want to invite. Just like Birgit shared some resources you can tap into, Wolf. We’ll try to include any of those links into the dedicated show nuts. So I think we’ve already collected some information from you. And to make it easier for folks to find resources in this ever rapidly changing global business environment. OK. On that note, we want to touch on a couple of quick events that we are driving. And we’ll start with Beau Gruber on September 20th. What’s coming up around the corner?
[00:26:58] Yes. So we’re excited. We’re gonna be co hosting an event with an Emory professor named Robert Keith Engine. And it’s in Atlanta. And we’re going to be talking about the elements of a good strategy and the elements of good execution. So we believe that if you if you get both of those elements working together, you’re going to experience some pretty positive success. And if you’re interested, please reach out, connect.
[00:27:22] You can choose a note to connect at Supply Chain Now Radio dot com and Birgit. Maybe you may be familiar with the firm that’s hosting its September 20th event. Arnold Goldman, Gregory, which is based I think you have office in Washington, D.C. as well, but they’re based in Atlanta. Oh, I see one of the big firms there right off the connector.
[00:27:39] And then and then coming up next year.
[00:27:45] Hey, we’re we’re we’re rolling with the punches here today. We need Bridget would fit right in.
[00:27:51] Get her permanent chair. Yes.
[00:27:54] And so, Greg, coming up on October 9th, our friends at the Georgia manufacturing alliance has got a big event.
[00:27:59] Tell us about the Georgia manufacturing summit at the Cop Galleria in Atlanta, G.A.. Yep. So 1000 attendees representing about 10000 Georgia manufacturers and the companies that do business with them. So a number of great speakers, you two are both doing a panel session. I’m gonna do a live broadcast and we are going to have and you’ll love this Birgit. We’re gonna have a couple of foreign trade ministers all my head.
[00:28:29] I’ll have to tell you who off air, because it’s still a secret that hasn’t been unveiled yet. Yes. Top secret. Yeah.
[00:28:37] So, you know, Jason Moss and his group of put a put together a great, great set of discussions there. And we’re gonna give a big thanks to the facilitator of the of these relate these interviews we had coming up, Albert sorta big friend, the show he’s been on before. Formerly with the Georgia Hispanic Chamber Chamber of Commerce, which is an awesome organization, growing rapidly in Georgia. But looking forward to your interviews and our panel sessions, of course, event in general. October 9 and you can learn more at Georgia manufacturing alliance dot com plus more events to cover, including the 2013 Logistics Forum in Austin, Texas. November trade shows galore in 2020, but check out on our events tab at Supply Chain Now Radio dot com. You can learn more about any of these events or like we mentioned, she just note to connect at Supply Chain Now Radio. Com and we’ll do our best to connect you with the information resources you’re after. That’s what we do it connect. That’s right. All right. So thank you. Bridget Matthiesen, director, North American Manufacturing with Erin Fox. Bo Gruber R Conde, AIG SCAC Conference broadcast sponsoring partner. We’re gonna go.
[00:29:48] We’re gonna isn’t long speeches. He just gave you a long title. I think I’m right now. But laughing writing. Think this has been a great start to the.
[00:29:59] Two day conference here. These interviews like we’ve had with Brigitte here today. But thanks for your time. Greg, always a pleasure. We’ve got a couple more before we wrap up here today on day one to our listeners, check us out other upcoming events, replays of interviews, other resources at Supply Chain Now Radio dot com. He can find us again on Apple podcast, SoundCloud, YouTube. All Hollywood slide where pipe gas can be found. Be sure to subscribe. Say you don’t miss anything on behalf of the entire Supply Chain Now Radio team. This is Scott Luton wishing you a wonderful week ahead and we will see you next time on Supply Chain Now Radio. Thanks, everybody.
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Watch Scott, Greg, and Beau as they interview Birgit Matthiesen for SCNR Episode 165 in Charleston, South Carolina at the AIAG SCAC Supply Chain & Quality Conference.
Featured Guests
Birgit Matthiesen serves as Director, North America Manufacturing with Arent Fox. Birgit serves on the advisory board of Global Business Dialogue of Washington DC and has authored numerous articles on trade related policies for media publications. Along with her colleague, David Hamill, Birgit is often asked to provide her trade insight and analysis for industry webinars and executive-level presentations. A complete list of her recent publications and events can be viewed by clicking on the newsroom tab on the Arent Fox website. Birgit’s widely read “Travels in Canada” are designed to provide readers with both a timely but broader perspective of developing US trade policy. Birgit is a frequent speaker on the NAFTA renegotiations, and works with clients on how they can best position themselves to minimize risks and create competitive opportunities through compliance and understanding of the NAFTA. Birgit’s specialties reflect a career building a network of cross-border interests in North America. She previously served as the US Special Advisor to the President and CEO of Canadian Manufacturers & Exporters (CME) and prior to this role, she served on the Trade and Economic Policy staff at the Embassy of Canada in Washington, DC. At the Embassy, Birgit provided advice to companies in North America on the NAFTA implementing rules, interpretation of policy and enforcement targeting. Learn more about Arent Fox here: https://www.arentfox.com/
Beau Groover is Founder and President of The Effective Syndicate. He has been working with manufacturing and operations-focused organizations for over 20 years, primarily focused on developing bullet-proof processes and teams that are built to win. Beau has helped organizations save millions of dollars while also improving those companies’ customer experiences and building high-performing teams that continue to drive the business forward. He has developed his approach and strategy over years of working with some of the biggest companies in multiple levels within the organizations, including The Coca-Cola Company, Nordson Corporation, and Westrock (formerly RockTenn). Just prior to launching The Effective Syndicate in 2015, Beau served as the Director of Lean Supply Chain at Serta Simmons Bedding, LLC. Connect with Beau Groover on LinkedIn and learn more about The Effective Syndicate here: https://www.theeffectivesyndicate.com/
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