Gina Raimondo, Secretary of Commerce, U.S. Department of Commerce
In conversation with: Alan Murray, FORTUNE

Fortune Global Forum 2021: Protecting American industry

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in addition to covid economic stress and civil unrest, 2020 also handed the US one of the most dramatic leadership changes we've seen in a while, a new administration in the White House with a very aggressive and very expensive agenda and set of ideas for stabilization and revitalization, including a nearly $2 trillion infrastructure plan and paid for in part by a massive corporate tax hike. Uh they also plan a deep dive into industrial policy headlined by a $50 billion US. and a big focus on training something this group of Ceos has talked about a lot to provide more people with the skills they need to survive the technology enriched future. So the big question right now is how much of that very ambitious agenda can they actually get enacted? And that's where I started the conversation with Secretary Raimondo yesterday. Secretary rimando, thanks thanks for being with us. We appreciate your time. It's my pleasure. It's great to be with you. Alan, I want to start with the news. Senator Manchin wrote over the weekend that he will not support the Democratic voting bill, but perhaps more significantly that he won't do anything to weaken the filibuster, How does that affect the administration's overall agenda? Well, uh you know, in some ways that was disappointing though, not entirely surprising. And President Biden has a long record of working in a bipartisan way and working with people who doesn't agree with on every issue. So how does it affect our agenda? We're going to continue to press the case for our agenda, working with Senator Manchin and frankly every other senator and trying to find common ground wherever that's possible. Are you confident you can get a bipartisan infrastructure bill? I am at this point, I am optimistic that it is possible and let the President's been so uh terrific and constructive. He has personally engaged with Democratic and Republican senators. We and his job cabinet have had dozens and dozens and dozens of meetings and phone calls with senators. The President's come down a trillion dollars from his initial proposal. He's expressed an openness to compromise. You know, we need the republicans to come up a bit, you know, he's come down, they need to come up. But uh, we're still at the table. Here's what I my confident, I don't, you know, we think it's possible and we're gonna do everything we can to make it possible. You know, the, the, the Ceos at this event, I know from talking them, talking to them from polls. We've done, there's a lot of support for aggressive action on infrastructure, there's a lot of support for aggressive action on training, which you've talked with this group about before, but there's also a feeling that you overreached on the corporate tax, uh, and, and they take some comfort from the bipartisan route because it's likely to uh force you to pull back on the corporate tax front. Do you think that's accurate? Uh, Well, I would say this, the president feels it's just a broken tax code that needs reform if you have so many highly profitable american businesses that pay nothing in corporate taxes last year. And also he's been clear that one of his red lines is we're not going to raise taxes on the middle class. Having said that, he has been crystal clear from the moment he put his plan forward that he was open to compromise. So I think that this, this president understands that it's important for businesses to be able to compete and that we have a tax structure that enables that. But he also understands that we need to raise revenue in order to make these broad investments. And uh, every ceo I've spoken with and I have spoken with very many has said yes, we want every american to have broadband and that costs money. Yes, we need to improve our roads, bridges, trains, airports and that costs money. Job training. So I think, you know, there's, we need the broad investments in order to compete. The president proposed a way to pay for it and we're open to compromise. So let's let's focus on the third of those three priorities. The training priority. I know this is important to you, you worked on it when you were in Rhode island. I think the question that people have is can we do something that's big enough and effective enough that actually connects the training to the jobs that are available. How are you feeling about that? Yes. Not only can we we must after. It's not an exaggeration for me to say that every ceo I speak with when I ask them, you know, what are your greatest challenges and how can we help list? Uh job training and the need for greater access to skilled workers in their top three. Everyone this week of course during select usa I have the opportunity to talk to many. Um Ceos and since I've been Commerce secretary, I have talked to many. So we have to I mean if we're going to improve american competitiveness and the ability of our companies big and small to grow and increase, increase their productivity, increase their innovation, they need the talent. Um By the way, alan this isn't rocket science, it really isn't. We just have to get to the business of doing it and in this regard I'm very optimistic. I have already started working closely with the secretary of labor and Secretary of education. Were all three committed coming together on the same team. So business is at the core from the very beginning which is the key. And you know, other countries do it this morning. I was on the phone with Ceo from uh company in Austria. You know, they have a great apprenticeship model. Certain companies are doing this. Community colleges are doing this, we just have to scale it as you say. And I believe that we will, what do you need from the CEOs in this group in order to succeed on this. What would be your top request of them first? They have to engage with us. They have to come to the table and put in the time and effort required to tell us in some detail uh what are the skills that they need and that does take time and it is a detail oriented exercise but it's necessary, secondly they need to be willing to hire differently. You know if you go and this also takes time. But so often um if you go to the hiring department, hR department of companies they are still um looking for people that check the boxes four year college degree, five years of relevant experience. Even though that's not technically necessary for somebody to do that job. And if you're going to stick to checking those boxes, we may not be able to find for your college degree graduates if that's what you're saying you need but you might not need that. And also I would say this is really in the weeds. So tell me to be quiet. But a lot of these big companies use the same software to screen resumes and they search on these keywords and they've been doing it the same way for a long time. You have to do it differently. Has been open to someone who has the competencies but maybe not a full four year degree. Yeah, really interesting. Those are big changes for business but uh scrub your job applications and take a second look at your uh screening technology. Really important. Let's talk about semiconductors because I think this is one of the most interesting and most dramatic things you were taking on in this job. You're essentially uh calling for taking manufacturing of semiconductors in the U. S. From somewhere near 0 to 30. 30% of capacity. It's a big big change. And of course everybody remembers the uh from the Obama administration, the experience of cylinder, you know, industrial policy creates a bad taste in people's mouths in this country. Why do you think you can do this this time again? It's necessary. Uh, right now in America We make zero of a leading edge or really cutting edge semiconductor chips. There's only one company in America microphone that makes memory chips. And as you say, we're down to producing 12% of our needed supply. Whereas we were up at 30 for closer to 30%. Our whole world runs on semiconductors. It's an issue of economic security, economic growth productivity, but quite frankly, also national security. It is a it is a national security risk that we are so dependent upon China and Taiwan and other places for this technology. So as you say, this won't be easy. Um, we have to be committed to transparency and accountability, Public private partnerships, private sector has to step up here and make large investments, but we've allowed ourselves to fall too far behind and as a result we're too vulnerable. And so as I believe necessary. Um, and I will say this, this isn't about, you know, the federal government putting up all the money to make these investments and providing quote unquote subsidies. If we do this right, we will be working in partnership with industry and using our money to unlock Private capital two or three times the level of the federal investment. Um, and I, you know, I just, I think it's critical for the reasons I met. And does it matter to you at the end of the day if the fabs in the United States are built by intel or Samsung or Taiwan, semi, as long as they're in the United States is the point to get them geographically located here. Or does the company that builds them matter as well? Um Well, certainly the company that builds them matters and we will have to be taking an economic analysis as well as a national security screen kind of evaluation before we, before we incentivize any business. Um, so it absolutely matters, but it really matters that were producing this stuff in America. So it will, this will be a complicated effort. It will be the, probably the biggest thing I work on a secretary and we have to get it right. Yeah, yeah. It is a big thing now. We've managed to have this conversation so far without saying the word china. But clearly a lot of this has to do with china. You have been very clear in calling it a threat. But as you know, as secretary of commerce, a lot of the businesses that are participating in this in this conference have large and growing china businesses. Uh we have kevin johnson from Starbucks. I mean huge, huge growth in china Procter and Gamble, uh second biggest market Otis elevator, what's your message to all those companies who are really uh to some degree dependent on china business for their growth? Uh We understand that we want to encourage that we want to help you do that. Um certainly in my case as a Secretary of Commerce, a lot of what I do, what my team does is export promotion and that includes exporting to china. Having said that china is not always our friend, they have engaged in anticompetitive practices, practices that potentially threaten our national security. So we're going to also protect americans and american interests in american national security. Uh You know, for example, in my area, uh we have the entities list, which we will use in order to make sure that certain technology that's proprietary to America doesn't get into the wrong hands um in china. So it is a balance. We understand you want to and should do business in china but it's also our job to protect America. And and finally probably the most important thing as it relates to china is America. We need to invest in America. You know it's about running faster in America. Being more innovative and productive and competitive in America. Which is which is what the president's calling for when he is saying Let's invest in research and development, let's make semiconductors in America, let's invest in broadband. So every American can have access to broadband so we can lead the world in five g. and 60. That's really I think ought to be our strategy as it relates to china. Yeah so uh changing it's just a little bit, a lot of companies out there feeling the pressure on their supply chains. I mean, we talked about semiconductors, but it's not just semiconductors. You see it in the extraordinary price movements in lumber to just pick one example. Uh And they're also feeling it in labor of. People have said to me, Ceos have said to me, this is the most competitive labour market they've seen in decades. Are you at all worried that there's an inflationary dynamic developing in the economy? Certainly something to be aware of and monitor and be careful about. Um, right now, if you look in the data, there isn't evidence of sustained inflation. In fact, most of what's driving price increases is uh, is explainable. For example, you mentioned lumber, you know, there's a disruption in that supply chain. The demand for houses has skyrocketed due to Covid and the supply chain hasn't caught up. Uh similarly, so for, you know, like, uh, used car prices are through the roof. Well, there's a lack of semiconductors, so new cars aren't being produced and you see that, so we're watching it closely and carefully. There certainly tools to deal with it inflation. But at the moment, let me say this, it's not our biggest concern. It isn't the biggest concern. Much, much, much greater concern is Our infrastructure, which is falling apart the fact that 30-plus% of Americans who live in rural areas don't have access to broadband. you know, etcetera, etcetera. All right, let me finally ask you there, as I said at the outset, I think in this group there's a lot of support for what you're trying to do on infrastructure, what you're trying to do on training, what you're trying to do on semiconductors. I wonder now that you're six months in what you need from them. What what's what's your message to the to the Ceos in this event? How they can help you achieve these goals? Stay engaged, stay engaged. Support our efforts to make these big gold investments um and let us know what you need, you know, as it relates to as we're talking about export promotion and job training. Um I learned in my time as governor. Great things do happen when the public sector and private sector work together and so we want to make sure to do that those those muscles have atrophied a bit. I mean you you did do that in Rhode island. You were probably an exception in that regard. Are you finding that you can get the muscles moving again and get the kind of cooperation you need. We are trying, you know, we need to and so we're going to stay at it. Well, thanks for your work. Thanks for joining us. Really appreciate it. Thank you Alan