The Greenfield Report with Henry R. Greenfield
Welcome to "The Greenfield Reportwith Henry R. Greenfield," where 50+ years of world travels across 10 countries shape insightful takes on current geopolitical events. Join Robert for eye-opening global reports with practical local solutions, and enjoy guest appearances offering fresh perspectives. Embark on a journey of understanding and lively discussion.
The Greenfield Report with Henry R. Greenfield
Episode 20- Supply Chain Evolution: Past, Present, and Green Future
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
The global supply chain is undergoing a seismic shift, and few understand these changes better than Jean-François Rey, a veteran consultant who's advised the world's most prestigious firms including PricewaterhouseCooper and Arthur Anderson. Speaking from his home in southern France, Rey offers a masterclass in how international trade actually works—and why everything we thought we knew is changing.
Most people associate supply chains with simple logistics, but Rey reveals the extraordinary complexity beneath the surface: approximately 250 different job roles spanning sourcing, production, warehousing, transportation, and customer service. What began as a quest for cheaper labor has evolved into intricate networks where components cross multiple borders before reaching consumers. Today, these established patterns face unprecedented disruption from tariff policies, sustainability demands, and geopolitical tensions.
Trump's proposed tariffs represent more than just a political statement—they're fundamentally altering global trade flows. Drawing from his experience with major retailers like Decathlon, Rey explains why 10% tariffs might be manageable through optimization, but 50% tariffs force companies to abandon entire markets. As Chinese manufacturers pivot toward Europe, seeking alternatives to the American market, European businesses face new competitive pressures while developing strategies for greater self-sufficiency.
Perhaps most surprising is Rey's passionate case for "green supply chains." Contrary to the narrative that environmental considerations hurt competitiveness, slowing down supply chains can actually reduce costs while benefiting the planet. By optimizing transportation, relocating production closer to consumers, and embracing reasonable lead times, companies can minimize inventory costs and carbon emissions simultaneously. This approach aligns perfectly with changing consumer preferences, particularly among younger generations committed to sustainability.
Whether you're a business leader navigating today's challenging landscape or simply curious about how global trade affects everyday life, this episode provides invaluable insights into the hidden forces reshaping our world. Subscribe now to explore more geopolitical perspectives that go beyond the headlines.
Introduction to Jean-François Rey
Speaker 1Welcome to the Greenfield Report with Henri R Greenfield, your gateway to understanding today's geopolitical landscape. With 50 years of experience across 10 countries, henri shares expert insights on world affairs, offering practical solutions and engaging guest perspectives. Dive into the Greenfield Report for lively discussions on the issues that matter.
Speaker 2This is Henry R Greenfield reporting from France, where today we are meeting with Jean-Francois Rey, known to his friends as Jeff, on how Trump is changing the world of imports, supply chain and logistic, and Europe's response, and as Jeff wants to speak about today, what he calls the green revolution of supply chain. So, jean-francois, may I actually call you Jeff?
Speaker 3Yes, of course you can call me Jeff. My American name is friends, call me Jeff all the time.
Speaker 2That's outstanding. Now, jeff's career has focused on supply chain issues, where he has been a consultant for the world's largest and most prestigious consultancies, including PricewaterhouseCooper and Arthur Anderson, and he specialized in the ultra competitive I might add garment and sportswear industries, and Jeff earned his MBA along the way in finance. He's currently located in the south of France, where he maintains his ongoing consultancy work, as well as being involved in French politics, where he is the vice president of his local party, which is called Modemma, the Democratic Party Movement.
Speaker 2Can you tell us at least just a few seconds of what is that exactly?
Speaker 3It's a centrist party, a political party. So European democratic, liberal, social.
Speaker 2So let me ask you is that pro-EU or is that pro-Victor Orban European?
Speaker 3pro-EU, of course.
Speaker 2Not Victor Orban of Hungary, who's kind of against the EU. So what do you do actually in that role there? I think it's quite interesting. People may wish to know.
Speaker 3I used to be a treasurer in the north of France three years ago and I moved to the south. Now I have the honor to be the VP of my party in Ero, which is the south part of France where we live Montpellier and all the cities around. It's a big department.
Speaker 2Was this like a grassroots organization that gives advice to the party?
Speaker 3We have a national party which is based in Paris, and then we have local branches everywhere in France.
Speaker 2So is your party going to select the next presidential candidate?
Speaker 3Yeah, we will have our own candidate. We hope for the central party and then, of course, yeah, well, um, as uh, our producer, brian kruger and I are both centrists.
Speaker 2Uh, we are very pleased to hear more about center and not about the far left or the far right well, thank you, we are the government right now.
Speaker 3Just by the way we make francois is from the modem, is uh, is uh, okay, the founder of the modem well, we will be tracking that okay okay.
Speaker 2So, jeff, don't worry, we're not going to hit too much on the French political side today, but we did get a couple of questions in there, and now let's move on to what we can talk about, which is our subject here today the supply chain.
Speaker 2Okay, now, before you say anything, I want to just go back here and talk a little bit about the supply chain. As we all know, we were all dragged through during COVID the entire supply chain question. We heard about those containers sitting at the port of Los Angeles and all the ships backed up, and finally the supply chain was worked out and things became normal. Now we are once again back into the supply chain was worked out and things became normal. Now we are once again back into the supply chain and this is one of the reasons why we want to speak to you today which is the global supply chain seems to be very misunderstood by the average person. And if you could let's start off if you could give us your broad definition of how you view the supply chain, and then we'll break it down a little bit about why that is working or not working.
Speaker 3Basically, supply chain is not just logistics. It used to be logistics. It started with the military services 30, 40 years ago. It's not just transportation and warehousing, it's also sourcing, so very strategic. You know where do you buy your goods from, from which country. This is production, all the factories. So where are they located? Who do you work with? Big automated plants or just a flexible one, small ones? This is warehousing, this is transportation, inbound and outbound to the final customer, and this is customer service. So, in addition, all these activities together, it's about 200, 250 jobs within a company. So it's huge 250 different jobs.
Speaker 2Jobs exactly Between buyers, inventory controllers, service people, you know warehousing people, factory people, Now, that's both at the let's say at the source, meaning let's say China, all the way through to, let's say close to the customer service or in the store.
Speaker 3You know this is part of the supply chain.
Speaker 2Now, jean-francois, you're explaining to us all of these different levels of the supply chain, what we have heard, and let's just, if we could for a moment, discuss actually how that works. Let's say, internationally, starting with, our best example could be either Canada, usa, or it could be China and anywhere else. You can take either one of those, but please explain to us some of the key elements of that supply chain and how, let's say, some of these possible tariffs could impact that supply chain.
Speaker 3Okay, well, supply chain is complex. It's not just simple activities that you have around the world. The flows are international. They cross borders for finished goods, but not only finished goods, for semi-finished goods and also for raw materials. So you can have products that are made in China, where you source your raw materials from another country in Asia, and this is assembled in Asia, in China, and then shipped to Europe, stored in Europe and delivered to a customer in Europe, whatever country we are talking about. So the flows are very, very complex.
Speaker 3If you take the example of a plane or a car, you have hundreds thousands of elements within a car or a plane and this is sourced and shipped from different locations to other locations. If you take a simple garment you know T-shirt it's much more simple. You take some raw material the textile cotton and then you make it locally and then you ship it. So it more simple. You take some raw material the textile cotton and then you make it locally and then you ship it. So it's simple. But in that case you still have borders to cross and you still have many kilometers to transport and to travel to go to your final customer. So in any case, you have hundreds thousands of flows that are crossing each other and this is very difficult to plan in advance what and to match offer and demand all the time everywhere in the world. So that's all these activities that supply chain is doing, you know, matching, synchronizing, everything all the time.
Understanding Modern Supply Chains
Speaker 2So I do want to go back and talk a little bit about your early consultancies and how that works, but before we do, let's talk a little bit about how supply chains have become more complex over time. I think I'm just going to throw some elements out. You tell me I'm right or wrong. I think, as an example, wto, the opening of China, nafta in the United States for the between Mexico, canada and the United States In Europe, the Schengen zone were parts you mentioned, like airplanes, which obviously I think the best example is Airbus, airbus which is not far away from you, in Toulouse, which is just down the road, and everything comes from all over Europe. So I would like you, if you could tell us, our listeners, a little bit about the evolution of the supply chain, especially for these kind of complex materials Not necessarily instant fashion, but complex materials and how does tariffs, how is that going to make that work or make it impossible?
Speaker 3Yeah, well, originally the supply chain was pretty simple. I was talking about simple logistics, it was warehousing and transportation, because everything was made locally. You know, you were building a plant where you had energy, you had electricity, you had the raw material very close to your plant. That's where you were locating your plants and your factories, and to the coal extraction, to the, you know, gas extraction and that's where all the factories were. And could.
Speaker 2I interrupt and just say this by the way, our producer, brian Kruger, and I are both from Detroit, right, and you met Brian today, and we lived not far from the River Rouge plant. When you talk about raw materials, they would take iron ore from northern Michigan down through the Great Lakes to this big plant. They would start with iron ore on one end and out the other end would come a car. Now this is the absolute opposite of what we're talking about today, right?
Speaker 3So yeah, so I was talking about the beginning, but the origin. Origin, this was the way products were made like, really close to the customers and close to the energy source and to the raw material source. And then, after a while, people started to to to. They wanted more, more cost reduction and they wanted to to to, to have labor labor cost, cheaper labor cost, and they so. That's why they came to China and to these other countries. So the first element was cost efficiency. Exactly this was exactly why we left the local countries.
Speaker 2But the cost efficiency there. If I can get that from you, you're saying the breaking up of the supply chain into different pieces allows for greater cost efficiency. Is that?
Speaker 3correct, yeah, and mainly labor. Mainly labor, because in the democratic Western countries, I would say, labor costs were getting higher and higher year after year. So we started to look for other solutions. Where labor was cheap and China was opening its borders, like 40 years ago, in the 70s and 80s, let's say so, people started to think about having plants in China and making goods in China with labor costs, which was pretty much nothing at that time, even if you had some transportation, if, even if you had more complexity to manage all the flows and and so on, and even if you had some transportation, even if you had more complexity to manage all the flows and so on, and even if you had longer lead times, of course, so let's explore that from something that I think you know really well.
Speaker 2Maybe not NAFTA, but what about the Schengen zone Now that allows goods to go through, or semi-finished goods or unfinished goods, or even to bring in parts from, let's say, china or a lower-cost labor. How does that work? And maybe you could give us an example? It could be an Airbus or it could be a car. How does that?
Speaker 3work Today. You mean Today, because at that time it was something different, we didn't have the same duties and customs duties. But right now we have high custom duties for certain countries, not for others. So we use that. We optimize custom duties a lot in every industry in the supply chain. That's part of the responsibility of a supply chain manager. So so to optimize, to optimize the duties that, how do they do that?
Speaker 2You have experts Do you have like a series of rates, or how do you or is the? Are they constantly?
Speaker 3Each custom duty is based on one product, the content of one product, what it is made from. You know which component and each component from one location, let's say in China, to another location in Europe, in France. You have a duty to pay for this type of component and this type of product. So you simply optimize with experts based on all these product codes that you have in your offer, in your product offer, and you say this product with these components, this will not be sourced from China, but from Vietnam, because Vietnam has no duty on this specific component. So this is becoming an expertise that you need to have in your supply chain team.
Speaker 2Actually, what you're saying is there's already been a response to what you're calling customs duties to find alternatives to China. Correct, sure, of course, and it's been working through. These are for parts, mostly, and components.
Speaker 3Components and, depending on the complexity of the product, it can be for a garment, for example. There is not many parts, so it's a simple good. So this is almost a finished good.
Speaker 2So if Trump is doing this right now, let's say with the United States, and he's got, let's say I don't know 50% on Europe, or he puts another number on somewhere else, how are the supply chain people going to react in order to optimize and not change their pricing structure dramatically?
Impact of Tariffs on Global Trade
Speaker 3Well, this is a broad program because it's not just the making of the good, it's also the market, the US market that is becoming a problem for European market because we have to find other options to sell our products, because we will not sell products with 50% taxes in the States anymore.
Speaker 3The demand will reduce. So we have to find other markets and we need to use our strengths in Europe, with all the other countries in Europe, to sell this to other, new markets. So we change completely our demand market to new ones and we avoid the States because we cannot sell anymore in the States. So that's one aspect that is very important, and some others will be able, because they have the financial ability. They will be able to have plants in the States in order to avoid the custom duties that Trump is putting and they will produce locally in the States, but I will not be the majority of the French or European producers.
Speaker 2So you're saying I'm going to recap that one if you don't mind. So it seems to me that what you're saying is there's only so much that supply chain expertise can do workarounds with, let's say, blanket 50% type of tariffs. They cannot beat that one that easily. It's not like it's something where you can just source some other part from some other place in order to beat the tariff. Is that?
Speaker 3right, that's right, that's exactly right. What we can do is just switch from the US market, when we sell products today, to other markets, and that's on the demand side. But on the production side, offer side, what do you want to do? I mean, we already optimize our custom duties. You want to do? I mean, uh, we, we already optimize our custom duties. We, we buy already in the countries where we have low duties, like vietnam, like my mr, like laos, like cambodia, this kind of which are sometimes cheaper than china. So we do that job already. Supply chain experts do that optimization so this is an interesting question.
Speaker 2So what? This is a tough one. You may not be able to answer this, but what level of tariff can be applied without, let's say, and still being able to optimize the supply chain? And not, let's say, that Trump could get away with? Certainly not 50%, right? So what is your view on where will this kind of tariff end? Because not everybody wants to blow up the ship like Trump. What do you think?
Speaker 3Well, I have an example. I remember when I used to work for Decathlon, a sports retail company.
Speaker 2So for our listeners. Decathlon is the French sports maker Sports expert. It's sports expert. Every country has one. But Decathlon is a global corporation, yeah, sure, and they have items and they are everywhere, but please go ahead.
Speaker 3Yeah, just to set up the network, they have like 60 production countries basically the world about the same of distribution countries. So the flows physical flows of products are going from everywhere to everywhere and I remember we wanted to open stores in brazil, like 20 years ago, and we wanted to sell shoes to brazil. For the shoe, the, the, the taxes were like the you had to double your price because it was 100% tax rate or something. This was made by Brazil to avoid shipments from Europe and from other countries. It was to attract people and push them to produce locally and open plants in Brazil, and we just simply said, no, we cannot just sell shoes in Brazil. So we closed the market. We sold other products but not shoes, and we started to make some local production in order to avoid but this was a little part of the offer we were not able to do all the kind of shoes we were selling in other countries.
Speaker 2So back to the question, though what is the percentage that Donald Trump can put on?
Speaker 3This was doubling the price, like 100% of taxes. But I would say this is your margin, that you are eating, so 10%, I would say would be a maximum in my mind.
Speaker 2Okay, and in that 10%, this goes to the next part on the supply chain and in that 10% this goes to the next part on the supply chain Do you believe that the, as Trump would say, and he's pushing now for the manufacturers to absorb that or the retailers to absorb that Are they going to absorb that 10% or are they going to pass it on or split it, because certainly the manufacturers cannot absorb it all? Because my understanding is margins are tight.
Speaker 3Is that true? Yeah, it's true. Especially in retail, margins are very, very low. Sometimes it's based on volume the more volume you sell, the more margin you make in euros globally, but the level of margin rate is quite small. So, as I said before, the supply chain is including the buying part, sourcing part. That's part of the buyer job. To optimize this cost, this buying cost, purchasing cost, all the time so and the duties are inside that cost. So if you have higher duties, you need to reduce even your production, so you need to be more efficient in your production. Reduce even your production so you be more more efficient. To be more efficient in your production. So lower your production cost. So the supplier will have to make an effort and on the retail side, the distributor will also have to maybe reduce a bit his prior selling price or or increase a little bit. Is selling price without losing market share? Because without losing market share, because if you sell more with a higher price you may lose customers. So it will be a bargaining between the supplier and the retailer.
Speaker 2Would you say in the long run, is the customer, the ultimate consumer, going to pay that 10%? Or will it mostly be we're just talking 10, not 50,? Okay, Because 50 is unmanageable, we agree on that 10%. Or will it mostly be we're just talking 10, not 50. Okay, because 50 is unmanageable, we agree on that right. And 145% for China is absolutely. That stops trade, Would you agree? Okay, but let's say, on your theoretical 10%, which is what you know Trump has on everybody.
Speaker 3Acceptable, let's say Acceptable.
Speaker 2Most of that could be absorbed somewhere in the supply chain if it was moved around by a supply chain expert. Is that fair?
Speaker 3It will be tough, but that's fair. Yeah, that's fair. That's part of the negotiation. That's an ongoing negotiation.
Speaker 2So from a supply chain expert point of view, for our listeners, basically what we're saying is if Trump just wanted to make some money almost like a VAT or import tax or whatever you want to say he could get away with 10% and just collect the money without changing the manufacturing or supply chain.
Speaker 3If it remains reasonable, yes, okay.
Speaker 2Now, when he gets up into that 25, 30, 35%, which is what he's talking about China's currently at 30 plus it's 30, but it already had before that previous levels of duties, of tariffs on that You're saying then that will end up happening for the United States is people will have to find alternative markets. Is that fair? Yes, okay.
Speaker 2It's fair Now. So, if that's true, here's what some of a lot of and this goes back to now your European expertise, and this is important for our listeners. Is China looking for an alternative market from the US, and is Europe that choice, or is it Africa? Or where is that choice? Or is it Africa, or where is that choice the number one choice for China to try to I don't want to call it dump product, but get product into it in order to keep their export market going, because they are an export-driven market. Wouldn't you say that yes?
China's Market Shifts and European Competition
Speaker 3if I take the example of the textile industry, I was uh, lastly, in, uh, like a kiabi, for example. Uh, we, we are facing the chinese competition higher and higher since a few, a few months, when trump arrived at the, at the power in in the states, and uh, we, uh, we are facing lots of low value items shipped from China because they can't sell in the States anymore. So they are looking for new markets and they ship a lot, and especially low-value items, because they have new duties on it. Below 150 euros you don't pay any tax, or very low tax, if you ship a product from China to Europe. So they use that advantage in order to ship to Europe, and they do probably the same with Africa. They are also building new market, I would say community, within Asia, with other countries in Asia and also with Russia. So it's a new equilibrium that is happening in the world, I will say, and a new economic world that is pushed by Trump outside of the States and outside Europe as well.
Speaker 2Well, in the United States they're calling this the decoupling with China. Do you think that decoupling can be successful and enough product can go to Europe, or is China still going to be somewhat dependent upon the United States from a supply chain and logistics point of view?
Speaker 3I mean the States is still the biggest market in the world, so it's difficult to replace. But yes, the more in the long term. That's what they will try to do to avoid the US market. And we will do probably the same in Europe, because if we sell with so much duties we will sell less. So we have to have our factories running, our employment running as well. So we have to find other options, market options.
Speaker 2Now you have switching gears here slightly. You have a great interest, as you told me beforehand, about green supply chain.
Speaker 3Yes.
Speaker 2And it is one of your passions. And you mentioned the 150 euros below that it's duty free in Europe. Any item in the United States they have an 800 US dollar, I'm not sure exactly the world Damaris or some word like that, where instant fashion meaning items such as coming from Sheen or Shine and Timu have been able to be flown into the United States and made overnight. In fact, the way that it's been reported is people often buy the item off of, let's say, after a TikTok video and they order it and has not even yet been produced. And this incredible supply chain in China, my understanding is, where one in three garments in the world come from China, especially South China, where I used to live. These supply chains are able to react instantly, but how does that impact your idea of what you want to call the green supply chain, because it seems to me Gen Z is in conflict with what you would like to see and a lot of other people who would like to have a greener supply chain.
Speaker 3Yeah, you're right, fast fashion has been a dramatic change for the textile industry. In fact, coming back on the history of supply chain, why we moved to China and so on, at the same time, we wanted to have lower lead times. All the time, we wanted to have a better service to our customers and we reduced the lead times of delivery more and more so that that was that's why fast fashion became very important, because you wanted a product the next day. You could have the product at your home, ordering on internet.
Green Supply Chain Revolution
Speaker 3So right now, we believe that is a wrong system, a wrong system and we have been too far on cost reduction. We've been too fast far on a lead time reduction. We need to pay attention to the carbon and to the co2 we emit in the system, because our new generation are pushing for that and they're right, and because we've got a climate issue, a warming, warming effect, that is. That is real. So supply chain managers now have to find solutions not only to optimize their cost and their efficiency, not only to deliver fast. They also need not to pollute the planet. So finding electric transportation solutions, relocating production closer to customers, slowing down supply chain, which is one key item I work on and I help companies to work on that how to slow down and optimize better your transportation loads like your trucks, your containers. You save money, in fact. In fact, by slowing down you can save money and you can offer a lower price to your customers too.
Speaker 3So it's an incentive not to pollute and to save money at the end.
Speaker 2So actually the customer, as the end user, is not going to pay more.
Speaker 3No no.
Speaker 2With a green supply chain.
Speaker 3Maybe less, maybe less. Maybe less with a cleaner supply chain.
Speaker 2yes, but they're not going to get it as fast clearly no.
Speaker 3And I ask you the question if you, if you can have a solution and an option to order a product and be delivered in 10 days, well, if you buy a sweatshirt or I don't know a bike or whatever, whatever you need, you can wait 10 days. And if you get a lower price and for if you have to wait, maybe you will choose that option. Or, if you want to pay more and have a quicker delivery, you will pay an extra price. But you can choose, and you can choose not to produce and you can choose to be delivered slower.
Speaker 2So let's explore that just a moment here for our global listeners, because what we've heard from JD Vance and even Elon Musk is that Europe is now having what they call self-inflicted damage by having too many green policies. Ok, and what you're saying? Because there's more costs. They say more costs and less efficient. Actually, what you're saying is it is a actually less cost it can be less cost.
Speaker 3Maybe at the beginning it's more cost. When you change from a traditional truck to an electric truck it will cost you more that short term. But at the end, over and over, if you take the duration of your truck life, lifetime and and if you optimize better your truck, if you have drivers that are trained to be eco drivers, to slow down their trucks, drive a little bit less fast, you save energy, you save a lot of. If you add all the savings, it's amazing what you can save. It's a lot.
Speaker 2So not to oversimplify it and not to make myself look too foolish, but this is more than just say buying that a an integrated uh, end-to-end supply chain will actually is can become much more eco-friendly. Is that fair to say?
Speaker 3and even even by cost, also reduce costs. And even by relocating production closer to consumers, because that's what we have done in the past 30 years ago, is move the plants to China, to India, to Bangladesh and so on we can relocate some type of products, maybe not all, not the basic items with high volumes and so on, but with higher value, premium value, we can move back some production in Europe. So be more independent, be more autonomous, not depend on China or Asia countries with the same cost at the end, because you will optimize your production loads, you will optimize your transportation loads, you will have maybe less stock, because if you have lower lead times, more of a JIP, you have less stock, so more cash at the end.
Speaker 2So more just in time type of thing, just in time, and you produce with shorter lead times because you are closer Less stock, so more cash at the end.
Speaker 3So more just-in-time type of thing Just-in-time and you produce with shorter lead times because you are closer, so you stick more to demand and you are closer to demand, so you need less cash.
Speaker 2So wouldn't that just to break this down a little bit. So you're going to be sending fewer finished goods and actually you're going to have more parts because you're going to have to be doing local, uh, assembly to give people more variety, yes, and still meet your so-called climate change goals. Is that fair to say?
Speaker 3it's fair to say, and it will take uh, some time, because you cannot do that in all sectors very fast. There are factories, people working today around the world, so you cannot close these factories right away. So it will take some time, but it's already, the move is already started, it's ongoing.
Speaker 2So let's just take as a, for instance, a laptop. Okay, Not a garment, but a laptop. A laptop has all these components. Those components are going to come from a lot of different places. There's going to have different models. Are you saying that we would see more electronics possibly being assembled, let's say in France that type of thing, and then being able, of course not having you know, instantly done, but, let's say, with reasonable lead times? Maybe a laptop's not the best example, but could you give me an example of what you would give to your customers to say what would be an eco-friendly approach to using logistics and also to keep prices low?
Speaker 3Well, electronics is okay, a computer is okay. I mean, why not imagine new factories in france to assemble these electronic parts? You still have components coming from taiwan, from china, from everywhere in the world, but you will have less value transported from china to europe, so it will cost you less in terms of taxes, duties less, less in transportation. You will have smaller shipments, so the volumes will decrease and more products will be made. The final goods will be made and the computer will be made in Europe. If it's not in France because labor is still a problem in France, we have high charges, social charges and so on it might be in Romania, it might be in Poland.
Speaker 2In the.
Speaker 3European Schengen zone and we have lots of advantages. We have many expertise in Europe.
Speaker 2Besides Jean-Francois thinking about this, is anybody else in Europe thinking about this? I?
Speaker 3think so? Yeah, a lot of people. I think what we try to do with defense, for example, it's exactly that we want to be autonomous, we want to be independent and have our own defense industry in Europe, which was not the case because we were supported by the states for so many years. Now we realize and all the governments right now are working on that how to be autonomous, to become autonomous.
Speaker 2Actually, you're saying that if I don't want to interrupt here, but this is a big point. You're saying that if I don't want to interrupt here, but this is a big point You're saying that Europe becoming self-sufficient in its defense capabilities is a supply chain question.
Speaker 3It becomes a supply chain question.
Speaker 2Because someone's going to be good at something, but not everyone Because you depend on other countries.
Speaker 3So if you build everything or if you source everything from internal Europe, you eliminate a lot of dependencies and you'll be Is Airbus a good example of that.
Speaker 2Like on the high end.
European Autonomy and Defense Capabilities
Speaker 3And Airbus is already as well integrated European facilities in Europe since years and years. You know, they do the wings in Germany, they do other parts in Spain, other parts in the UK, they assemble in France.
Speaker 2So they have a complete logistic network that is built within Europe and they also have, of course, Well, let's just hit that one again, because this was not on my list of questions, but it's a great question. So let's just say here that Europe wants to go, let's say, more high tech on its defense capabilities and not just making guns and bullets Right, yeah, to be, not to be flippant, but say that's kind of, let's say, the low tech or, you know, basic supplies. Can Europe switch and use that type of supply chain approach in order to meet those goals, and how long would that take in your opinion?
Speaker 3Yeah, I think we have all the capabilities in Europe. We have the very good universities, we've got the talents, we've got the resources, we've got the expertise, the industries in UK, in Germany, in Spain, in Italy, in France. We have a lot of assets and I don't see why we should depend on somebody else. No, no, it's completely feasible. It will take some time to build the defense industry, of course, but we have aircraft. If we take the aircraft, the French aircraft are not as bad as the US aircraft. They have also strong capabilities and sometimes better. The famous Mirage, exactly. In Sweden we also have good aircraft, and in the UK, of course. So we have the capabilities. So we have to trust in ourselves, work together, put our means together, and there is no reason why we should.
Speaker 2So let's put on your. That's why I'm in Europe. Let's put on your politician's hat for a moment. All right, will it happen or will it not happen? Or must it happen?
Speaker 3I think right now, all the presidents are working on it, because we have no choice Because of this Ukraine war and the Trump effect, I will say, with all his duties. So we realize that we have to be standalone, basically, and be able to have our own defense, our own. It's the same for the drug industry, it's the same for many, many different sectors, and they work on it. We are building a plan to do that and, in addition, the green value of this is that it will be greener because we will make everything locally in Europe, with less borders to cross, with less distance to travel and so on, plus employment effect, because we will have new employment coming back to Europe instead of in China or in other countries. So I think there are a lot of positive aspects in becoming more and more autonomous.
Speaker 2So I'd like to have for our listeners. I think that's fascinating, by the way, for our listeners, this is not all about fast fashion or things like that. Um, I'd like to talk about for our listeners. If anybody's ever traveled in europe, you will see an endless uh line of large, what we call the united states semi trackers, uh, large cameos, okay, which are throughout europe. They're they're flooding the highways every day, except with some restrictions, of course, as only throughout Europe. They're flooding the highways every day, except with some restrictions, of course, as only Europe would have. They're not allowed to be there on every day.
Speaker 2I think Sunday is a. You know. You can't do it on Sunday. The Europeans are very strict about that. But let's just take for a moment. How does that work in a place of 445 million people? And primarily and I want you to talk about the port now, which is the port of Rotterdam, how does Rotterdam, which is often rated still the number one port in the world in terms of volume? Why is Rotterdam so important? How does that work with the Schengen zone? How does that work with all these trucks going all over the place? Or rail, or rail, ok. Or and why not? Older ports such as Trieste, which was famous during the Austro-Hungarian time, or Marseille, which is only an hour or so away from where you live. What happened to make Rotterdam so efficient, where even Joe Biden got them to do the LNG conversion terminals? So what's going on in Europe with Rotterdam, and how does that work with the Schengen zone from a supply chain point of view?
Speaker 3Good question too, henry Rotterdam. The Dutch were very smart. You know, a long, long time ago it started, you know, in the old ages, like when you had all the textile shipments from Asia, from Africa, from everywhere.
Speaker 2We know the stories about Bruges. You know it was the richest the longest. Yeah, yeah, yeah.
Speaker 3But Bruges is the same. Zeebrugge is a port close to Bruges. It used to be. It is a big port too, it's not just Rotterdam, and so they built that expertise, the capabilities, the port capabilities, and that's why it's the biggest port right now. And why is it bigger and bigger? Because they have the equipment, they have the expertise, they are capable to have the bigger boats in the world and all the main lines from Asia, from Africa, from, and all the main lines from Asia, from Africa, from South America, from North America, are going to Rotterdam.
Speaker 3So you have more boats, you have bigger boats, so it's cheaper to transport your goods and you have more lines, more frequent travel. So you use Rotterdam. We use Rotterdam as a decathlon because we had warehouses in Rotterdam, we had warehouses in Anverpen, which is another big port, and we had warehouses in every port, not just Rotterdam, but in Le Havre, in Marseille, in Genoa, in Italy, in Valencia, in Barcelona, in Spain. Because the bigger you become as a company and you need to distribute your product everywhere, you need backups and you need to average your volumes, not just in one location but in many locations. So the main shipments were made in Rotterdam, maybe, but a lot of different lines were shipped to different ports in Europe.
Speaker 2So Europe, especially with this Schengen zone, sounds like a giant United States where you've got one or two Well, rotterdam is the biggest, right, but then you've got all these secondary ports, like a Baltimore versus, let's say, la is the largest. So it's very similar, is what you're saying. You've got to have your backups as well, and again, this is a supply chain expert's expertise to make sure that the ships are going in the right size, the right place. But Rotterdam is ultimately the winner on this because of that 800-year history of the Dutch, and they're being highly efficient and highly, highly credible. So, in your opinion, can Europe move to this more eco-friendly, and are they moving to a more eco-friendly, and can that be as you propose? Will it be cost effective, but will it happen? I guess is the real question.
Rotterdam's Logistics Dominance
Speaker 3Yeah, we already talked about that, the green supply chain, the relocation part and, uh, more green transportation. So an electric, electric boats and trucks and so on. So, yeah, it will happen. It will happen. We are on the way to to do it again, by relocating first and by slowing down our supply chains, optimizing our shipments, our trucks, our boats, our containers. That's on the way, but it is starting. We have to change consumers' minds, especially European consumers, by accepting to receive product with less speed but with a greener impact on the planet, and that will be at the same cost or maybe at a lower cost or lower price. So I think it will be accepted, because the young generation, gen Z, is really concerned about it right now. They want to have materials that you can recycle, they want to have some bio components, they are paying attention to second-hand products and so on. So it is coming. We have no choice. We have to accept it.
Speaker 2So is it fair to say and I think this is important especially for Americans who are listening to this, or Australians or anybody outside of Europe or even inside of Europe say that the EU and its member countries actually do put time and effort into educating the public, that these type of efforts are worthwhile? And does the public accept it? Or is the public moving, let's say more of an individualistic as opposed to let's say something for the common good? Can you at least make a comment on that?
Speaker 3In Europe. I don't know if you're aware of it, but we have now a regulation it's compulsory to have CSR or sustainability reports, not just financial reports, but also green reports. I will say it's compulsory since the 1st of January this year in every company below 150 million euros of turnover on human rights based on component types on carbon that you emit on certain transportation means and so on. You have different types of KPIs and you need to report that every year to the European Commission and it's compulsory. Otherwise you have fees.
Speaker 2So JD Vance might say that would make Europe less competitive. What do you think?
Speaker 3I think he's wrong. I think he's completely wrong and in the long term at least in the long term he's wrong. We will gain market share in the world with this strategy because we will have greener products and at affordable cost, with an affordable lead time for the customers, and that will be accepted more and more by the population and even more it will be requested. If you don't do all this reporting and if you are not able to prove that you do not pollute and you have too much carbon emissions at one point, consumers won't buy your products. It will be as simple as that. It's becoming a strategic factor in your business, and the US are completely out of scope. I would say they are wrong, completely wrong, and they will pay for that one day unfortunately for them and I, like my American friends, Well, thank you for liking us, even though we may be wrong.
Speaker 2So, jean-francois, let's end this by allowing you to give President Emmanuel Macron a little bit of advice on how you believe that he could look at this entire supply chain in the future, for the benefit of France. Of course, you've covered most of these points. I understand already, but is there anything you'd like to say to him to include that would be beneficial for the people of France to include?
Future of Eco-Friendly Supply Chains
Speaker 3that would be beneficial for the people of France. I think the presidents and Macron and the others understand the power of supply chain and all this complexity that we need to solve together, and the green aspect as well, but I think they do what they have to do. They're already working together. It's working together making sure that Europeans are not against each other, but everybody has an asset. In Spain, in Italy, in Germany, in France. We are strong, so we need to work together, and that's exactly what I believe Macron is doing. People complain about him most of the time, but you can't see the results in a short term. You have to look in the long term. I think the plan is okay, the direction is okay and they understand completely these issues and I'm confident for the future.
Speaker 2Well, today we have been speaking with Jean-Francois Rey, also known as Jeff, among his American fans and friends and colleagues.
Speaker 2We are here in the south of France, where Jeff has been explaining to us not just supply chain, not just the typical logistics ideas, but also how a green supply chain could work and, most importantly, how it can be efficient, cost efficient as well as efficient in terms of values. He's also explained to us that well, we may have to. It's not like Trump says that we need to have less. It's actually we just need to have a little bit of patience in our system and allow us to not have everything be instant. So we want to thank Jeff as our special guest and, by the way, just to note the international nature, not only for Jeff. As well as the French, he's been speaking today in English, which is definitely his second language, and that also speaks to Europe, which is a language 27 languages throughout the EU. English seems to be one that a lot of people use for international commerce, but we would like to thank our good friend, jean-francois for being here today.
Speaker 3And thank you to you too, for this interview. Thank you.
Speaker 2This is Henri R Greenfield for the Greenfield Report, signing off from the south of France, where we have learned about supply chain, how it can be green and can be good for the rest of the world.
Speaker 1Thank you for joining us on the Greenfield Report with Henry R Greenfield. We hope today's insights into the ever-shifting geopolitical landscape have sparked your curiosity and broadened your perspective. Stay connected with us for more in-depth discussions and expert solutions. Until next time, keep exploring the world beyond the headlines.