JPMorgan, Ford to Invest Billions in Michigan Manufacturing

I am here in Detroit, Michigan, at Michigan Central, joined, as you say, by the governor of the great state of Michigan, Gretchen Whitmer, as well as Jim Farley and Jamie Dimon of J.P. Morgan, for a big announcement here, actually. It's something called LIFT, Michigan LIFT, which is Launchpad for Industrial Innovation and Transformation. So, Jim, those are pretty good words, innovation, transformation, industrial. What does it all mean? What is it? We're trying to fix a problem, on-shoring things that were off-shored in the name of pennies on the dollar to make here in the U.S. where we need it to be independent, even defend ourselves. Ford's going to commit a billion dollars of purchasing for new companies that are going to be building advanced manufacturing, new capabilities, even magnets and rare earth that we used to buy overseas, and now we're going to buy here with the help of J.P. Morgan, as well as the state of Michigan. It's Michigan LIFT. Do they have to be Michigan companies? Yes. So, companies from Michigan. So, Jamie, I ask you, markets, we rely upon for an awful lot. Basically, it's served us a good stead for a lot of years in the United States. Why don't markets already take care of this? Why do we need this initiative? Yeah. I think, first, I applaud the initiative, and I also think it's really important that states, governments, business work together to fix things like Detroit, which they did. That's the number one thing, but we lost some of the muscle to do that. So, I think markets will take care of a lot of it, but if you're an innovative company and you invented something here, you need an order, he's got to order it. It's got to actually work. They may have to build a real plant, not just an experimental plant, and so it takes that whole group of us to do this kind of thing, and hopefully this will be replicated. This needs to be done everywhere in a lot of industries to make sure the United States can defend itself. So, Governor Whitman, why Michigan? Why is it so important for Michigan? Why is this the right place to start this? Well, we know how to build things. Michigan, that's who we are in our DNA. We were, you know, the arsenal of democracy. This is about homeland security, it's about advanced manufacturing, and that's who we are in Michigan. And so, when I saw J.P. Morgan was doing this resiliency initiative, I reached out and said, let's talk about what's possible here in Michigan, because I know what we are capable of, and I think government plays an important role with industry as we think about what the future looks like and how do we do advanced manufacturing and protect ourselves, and I think this is a combination of all of those great strengths, but we need to really have a concerted, collaborative effort here. This is ultimately about supply chain, as I understand it, resiliency of supply chain, which has been disrupted by geopolitics, actually, by trade and things like that. How does this fit, for example, Governor Whitman, with your near neighbor, Canada? As we know, there's a lot of back and forth in the auto industry for Canada. How does this industry fit with that? Well, I want to first and foremost say that Canadians have been tremendous allies and partners of ours here in Michigan for a long time. Autos go back and forth over that border. This is the busiest crossing in North America, is right here in Detroit, and so we're proud of that long heritage, but I think it's really important that we continue to onshore as much as we can to the United States from all around the world. But if a Canadian company came along and was innovative in the industrial space and had something, for example, Jim, that you could use, could they apply to this program? Yes, but we really want this to be a Michigan initiative, but there are so many things in Canada that we depend on. The whole aluminum, all of our trucks are made out of aluminum. All the ingots come from Canada across the border. We do all the finishing of aluminum here, it goes into all of our trucks and all of our plants, and so we are looking for innovative companies, even in the aluminum supply chain, with this initiative. So, Jamie, you have a piece actually in the Wall Street Journal just today about the need for economic policy that maintains the preeminence, you call it, of the U.S. economy. Part of that is what we're talking about right here, which is supply chain and what we've done in supply chain. How does this fit in your plans for a preeminent U.S. economy? What I'm talking about there is that if you want to be safe, have the best military in the world. It's predicated on having the best economy in the world, and that is what makes the dollar a reserve currency. Those two things, it's not some fantasy about something. We have the Atlantic, the Pacific, all the food, water, and energy we need, but on economic policies, you can put domestic, and this is really domestic now, but also foreign. We have extensive relationships, and foreign policy is industrial policy, regulatory policy, investment policy. Companies overseas, folks have $20 or $30 trillion invested in the United States. American companies have almost equal numbers invested overseas. To me, I want to keep the Western world together for trade. I think that's the way you protect yourself. 60% of the global GDP is Europe, U.K., Japan, Australia, Mexico, Canada, South Korea. Those are friends and allies. We have 40 military alliances, 20 free trade agreements. Obviously, if we're being treated unfairly, we should fix it, but my view is we should try to get these trade deals done. It's better for the U.S. It's better for those countries. I don't know all the complexities. I can't get into exactly why we're running into roadblocks, but I would like to see them completed. So, Jim, when it comes to the automotive industry, there are a lot of things that can and should be done. You've been working on it, actually, with the essential economy, and so what you've done with Accelerator here. Where are you in that process, and how does this fit into your Accelerator program? I think we're in the second inning. We have 1.7 million open skilled jobs, skilled trades jobs in the United States. It's a crisis, and we have to do something about it. Of course, you know, Ford, myself, we can solve our problems, but that's not what we're trying to do. We've always been a company who is more ambitious than just the four walls of our company, so we've been putting a focus on the facts. We're publishing our first report on the facts around skilled trade deficits in the U.S. Most college advisors or high school advisors recommend a four-year degree. Only 2% of them recommend a trade school. That's a problem. You know, a high-quality trade school graduates people almost 100%. So, for a company like Ford, but also for our country, the resilience of our country, we have to address the skilled trade deficit, and we can sit on the sideline or just fix the problems at Ford, but that's not what we're going to do in Detroit this week. We're trying to fix it for our country. So, Governor, that takes us, obviously, to education and training, which, as I understand, is a component of this Michigan Lift program. But what is Michigan doing specifically on the skilled trades and the training front? A great deal. You know, part of our DNA is tradespeople, right? And so we, I think, have put a lot of effort into making sure that anyone who wants to upskill can afford to do that. We've got free community college in Michigan now. We've got apprenticeships that are available and easy to get into. You can graduate from an apprenticeship, get a good-paying job, and not have any debt carried on. I mean, this is a good way to make a very good living in this country that won't be impacted by AI, but won't be replaced, and I think that that's something that gives people some confidence as well. Michigan is now ranked number four in the country by Site Selector Magazine for our workforce efforts, and I think that that's something that will continue. So, Jamie, you are the anchor capital provider to this, and that's obviously very helpful to either startups or, as I understand it, small companies. It's not just for startups that this program is designed. They're facing a lot of other issues, too, including higher interest costs right now, which really hits the small and medium-sized businesses disproportionately in the market. How does this fit with the pressures being put on some of these very companies right now as you see bond yields rise, interest rates rise? I think you have to separate this. We should be doing this regardless of bond yields and things like that, and that may make it harder for some people, but to me, the ultimate goal is to get inflation down, and so sometimes you have to have a little bit of pain in the short run to accomplish what you need in the long run, but this effort transcends what the market does today and transcends what the yield curve does today. We need to be doing this for the future safety of the United States of America, and we just need to get our mojo back, and I think when you talk about it, when you travel this country like I do, I'm sure you guys do, too, it's happening. I mean, I don't know if the people here know that the Ford GM plants and all their vendors stopped building cars in 1942, did not build a car for the next three years, but 144 aircraft carriers, 100,000 fighter jets and bombers, 100,000 tanks, so if you go anywhere around the country now, you have a huge amount of stuff taking place. It is working. We just have to put some more elbow grease into it. This is part of a larger initiative you announced a while ago, the Security and Resiliency Initiative, basically, $1.5 trillion. This is part of that. Where does that stand? And by the way, insofar as this goes beyond the state of Michigan, which, as I understand, you'd like other people to copy you in what you're doing, are you willing to be an anchor capital provider in other places as well? Totally. The initiative is real. We went through what we really need in drones and nuclear and rare earths and semiconductors. We have a lot of people, a lot of policy around what we need to do to make it work. It's coming up to the one-year anniversary, so we're going to be announcing, the numbers will be better, in my view, than $1.5 trillion. We've also invested $5 billion directly into companies that do security resiliency, not venture but pre-being a public company type of thing, and it is working. This thing is just, if it works, you just do more of it. It just should be replicated, and part of it is just working together. Once you start, if we all acknowledge your problem, and you start working on it, roll up your sleeves, it will be fixed. It's the denial of the problem that really puts us in trouble, so it was his idea. She called me, so I've got to give credit to these two to get us going, and like you said, this state is one of the great manufacturers of the world, not just the United States. Can it regain that, Governor? I mean, if you go back to the 20s and the 30s, I mean, it really was the engine behind a lot of the U.S. economy, and we're not going to go back to that. We have to go forward to the future, but can Michigan regain some of that prominence? Absolutely. I think investments like this showcase what we are capable of and uplift. I've mentioned our workforce, but I wanted to make sure to also include, we've got the highest concentration of engineers per capita in the country as well here in Michigan. We've got, I think, the talent to tackle the world's problems and to do it here. We just need the organization and the ability to make all of the connections for innovators who are, I think, resolving or coming up with the solutions to the problems that we're all confronting. Jim, in your auto business, as I noticed, there are a few competitors around the world, particularly like in China, and you've talked before about the ability of the Chinese automakers to move at light speed, and that we need to speed things up. How do you fit together moving at light speed, on the one hand, with a program to bring in new companies, whether they're startups or they're small companies expanding? That sounds like that takes time. Can you move at light speed with that level of innovation? Sure. I don't think we have a choice. You know, it's very humbling to see the competitiveness now around the globe, especially in China. But I have to say, I'm very optimistic. We developed a small group here in the U.S. in California. They out-innovated, I think, companies like the really good EV companies in China. We're coming out with a $30,000 vehicle built in Louisville, Kentucky, engineered in California, Michigan, and I think it'll be fully competitive with BYD if they were in Mexico. So we have to have innovation, but we also have to have these kind of programs, and we have to onshore things that we've offshored, like Jamie said. If we don't do all of that, you know, we're going to be in trouble. But there's an opportunity here that I don't think everyone sees yet that we see at Ford, which is, you know, Ford being a winning global company in this new competitive landscape. But we have to do it all. Can I just mention one quick thing about Michigan? Don't ask me which states, but there are some states that are doing a pretty good job at driving out small companies, venture capital, innovation, and manufacturing. This state wants it, and that is half the game. I'm not going to mention the good states, because then I'll get a lot of hate mail. Nobody's listening. You can tell us. Just keep it among us. But it does point in a direction. As we compete on the world stage with China and with everybody else, what advantage can we get from our capital markets, our ability to fund these things? I mean, compared, certainly with China, but compared with Europe, that's mentioned in your piece, actually. I think the American public doesn't understand the power of our capital markets. So we, you know, there's venture capital and the mosaic, private equity, small companies, middle market companies, large companies. But you can raise tons of capital in debt markets and preferred markets. There's a lot of research around it. So America's capital markets have been growing, growing, the size of the companies for decades. And if you go to certain parts of the world, like, you know, it's unfortunate, but Europe is stagnated. They have some great companies. I'm not insulting them, but they haven't kept up. They don't have as much R&D, as much venture capital, as much equity risk taping. They don't have our vibrant equity markets and debt markets, which I want them to have. I want them to fix that, and that'd be good for them, but actually ultimately be good for us, too, because the stronger they are, the more business you do, and the more they can defend themselves and pay for what they need for security and resiliency. So it is a huge deal. And you go to large parts of the world, they simply don't have it. It doesn't exist. We can't have a conversation these days without talking about AI at some point, right? And when you talk about capital availability, is there, Jamie, do you see any evidence of crowding out? Because there's so much demand for capital to go into AI right now. You know, I mean, the crowding out is coming from the government. So governments around the world are borrowing record sums of money, which is inflationary, by the way, including our government, which is huge. But no, I mean, if people are raising productive capital because they think it's going to pay out in all various ways, I think that's a good thing. It doesn't mean it's all going to pay. It doesn't mean you have to pay more for the capital. But generally, it's for productive future growth. So, Governor, it's your state. You should get the last word. Tell us about AI in Michigan and how it fits potentially into this new initiative. Well, as we think about the initiative, it's about connecting the innovators with the capital and with the customers. And that's really the role of state government in this, you know, in the Michigan lift. We're all navigating a world that is changing fast. And that's why I think collaborations like this are going to be important. We've got to be as nimble as we can. That's not generally what government is known for. But I think that when we when we tackle problems like this, whether it is something on the horizon or something we're dealing with that's changing every single day, that increases our odds of success.