(bright synth music) - [Announcer] This is "Carolina Business Review."

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Summers and vacations in the Carolinas always provide a much needed respite from the worries of business and, of course, the daily grind.

But there is still this persistent unease.

Things like real estate, prices and values, angst about public and private debt.

And we may be over thinking, and I hate to say this, but we may be overthinking the impacts of tariffs, even.

Welcome again, and thank you for supporting the most widely watched and the longest running dialog on Carolina business policy and public affairs.

I'm Chris William in a moment.

We start this week's dialog about things that matter most right here in the Carolinas, and later on, a dialog about the implications about a big economic development win for the state of South Carolina.

Scott Motors President and CEO Scott Keough joins us.

Stay with us.

We start right now.

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And, Martin Marietta, a leading provider of natural resource-based building materials, providing the foundation on which our communities improve and grow.

On this edition of Carolina Business Review, David C Lockwood, III Of Colliers, South Carolina, Tony Mercier from The Charlotte Ledger, and special guest Scott Keough, President and CEO of Scout Motors.

(upbeat rock music) Hello.

Welcome to our program.

Thank you for joining us, gentlemen.

Welcome back.

Tony.

Nice to see you, David.

It's been two years, I think, since you hauled it up here from Columbia.

But we're glad to have you back on the program.

Very good to be here.

So you are president of s. S I score.

Zero.

Thank you.

I always get that wrong.

It's like it's like C.C.I.M., I can't get my acronyms right.

But my point is, you traveled internationally or on commercial real estate.

Yes.

And when you came back to the Carolinas and you came back to South Carolina, what point of view did you have after seeing the global commercial real estate market?

So the view, the view was always prior to that that the world evolved just like it did in the Carolinas.

And that's not true.

When you travel around, particularly the United States, you realize that we're in a sweet spot.

We've got really good things going on in the Carolinas.

And when you're in certain segments of the Midwest and when you're in Chicago, when you're on the West Coast, those markets are drastically different than the Carolinas.

And so what we have right now, we need to treasure.

It's a great real estate market, a great commercial real estate market.

But that's not happening across the country.

And there's still concerns in some of the major markets.

New York is starting to do very well from a repopulation of office and from a retail standpoint.

But there's some softness, really, in the Chicago market, Midwest market and huge overbuilding in the Texas market.

Yeah.

Okay.

Well, let's shift a little bit.

Tony in the center of the Carolinas, the biggest city and the biggest region is the Charlotte market, obviously.

And as David just described it, Charlotte's been the beneficiary of a lot of this momentum.

But there's also uncertainly.

There's also an insecurity about growth.

And these are the good old days.

But given the point that you see, what are the challenges for growth and development in all things?

Yeah, I just think, you know, there are a few headwinds obviously, that are facing, you know, the country facing the world right now.

The Carolinas are not immune from those.

I think to David's point.

I mean, one thing I hear a lot is around Charlotte is where else would you rather be?

I mean, we're in a good position.

We're in a growing area of, you know, North and South Carolina.

But, you know, there are certainly a lot of questions, I think, about interest rates.

I mean, we're seeing some of the momentum that we've traditionally seen in the Carolinas as far as building and new projects.

A lot of that has slowed.

I mean, it's slow in everywhere, but it still seems like it's a pretty good place.

Relatively slowed, right, as David said.

And then I want to say how great the region is, but it does have its issues.

David, back to you.

There's, you know, folks concerned about tariffs, folks concerned about a downgrade of U.S. debt by Moody's.

It was the last of three major rating agencies that downgraded the US debt.

But and not to diminish that or or sideline that.

But this is more of a story of uncertainty, isn't it?

It really is.

It's like being in a track meet and the gun goes off and there's a false start.

We've had false starts for the last 6 to 9 months.

We want to get things going.

We want to see interest rates lowered.

We want to see the debt markets open up.

But we keep having things that that prevent us from moving forward.

Tariffs are the most recent.

It was pencils down for all the industrial markets until they could really figure out what are the tariffs going to do to in the industrial markets in the U.S.. What is the center.

What is a big town like Charlotte look like?

When you talk about Class-A space, when you talk about a vibrant uptown, is it still vibrant or is it now spreading out to the ring communities?

Well, I think there is still a vibrancy, certainly to Charlotte.

You do.

Have you mentioned the office there?

There is still pretty high office vacancies.

What would that wish for?

You know, it's around, you know, in the low 20s and it's stayed there too.

And we haven't seen a lot of new construction of office.

Now the last few weeks there have been a few, a few nibbles, a few, new tenants taken, some of these new office towers.

There's.

I think that, people in commercial real estate find very encouraging.

So, you know, the worry is that in maybe a couple of years, if we're not building right now, what's that going to look like if we keep growing?

Last question about 60s stay, that is, are the traditional sources of money, big banks and also the non-bank lenders that look at at large commercial real estate products.

Is it slowed?

It has.

Slowed dramatically.

But there's a lot of private wealth out there that wants to put money into real estate.

And and they really look at it as how much can we accumulate?

Family offices, family offices, significant amount of money.

They'll come back in the future and they place debt on on investments as the debt structure is opened up and as those interest rates come down.

But there's a lot of cash out there chasing really good real estate projects right now.

Okay.

All right, guys, stay with us.

We're going to meet our guests in just a moment.

Also coming up on this program, she is the mayor of the largest city in the Carolinas.

VI Lyles will join us again on this program.

And then also coming up, as well is Tom Barkin, president of the Richmond Federal Reserve Bank.

Tom has been on this program before.

He knows something, a little something about finance and about policy and about growth.

Tom Barkin from Richmond Fed will also be a guest on this program.

Coming up, there are more than they are, more than just another entry in.

And the latest shiny thing in the EV market, Scout.

Remember that.

Or whether it was rather used to be known as international scout back in the 60s and 70s, was a real pioneer in that boxy looking, simple, off road, farm truck coolness, rugged vehicle that was developed over 50 years ago.

The question is, will that legacy brand, combined with the contemporary innovation and technology, be enough to crack and in fact win in that EV market?

Joining us now is Scout Motors president and chief executive officer Scott Keogh.

Scott, how often does Scout and Scott get get training.

More and more frequently seems to be the case.

But yeah, I'll have to change my name because we're not changing.

We're not changing.

Scout's name?

Not for.

Sure.

Well, welcome to the Carolinas.

Now, a couple of years late, but good to have you in your gang down here, because.

Quite a splash.

But, you know, going back to the beginning, you know, whenever, whenever you talk about scout motors, people look at you for a second and then you say, oh, yeah, I remember that.

So what was that moment?

When did the light go off in your head, or the team or the brain trust to say, you know, we could resurrect this, we could leverage it.

So yeah, you know, like a lot of things in life, a lot of different pieces came together simultaneously.

I think where it sort of started is the Volkswagen Group, as you know, is 670,000 employees, a gigantic global corporation.

They basically have 22 points of market share in China, 20 points of market share in Europe.

And they look to America with their brands.

And they said, we have five, six points of market share.

How could we do better?

America is a huge market.

It's a huge profit pool.

How can we do it?

And we looked at different ideas.

And America is relatively simple.

When you look at the market about 50% of the profit pools, total profits in the automotive business sits in two segments.

It sits in these SUVs, the more rugged, robust ones, and it sits in the pickup trucks.

So that's hovering out there.

And then at the same time, I think without a doubt you're seeing it more and more every day.

There's this powerful American moment right now, which is let's build things again.

Let's do things again.

Let's make it happen here again.

This rise of, you know, the greatness of American possibility at the same time, there was an acquisition.

So the Volkswagen Group acquired a truck company called Navistar.

Navistar, of course, is a holding company that makes heavy trucks.

They had the international brand.

They have school busses, heavy trucks under there.

Below that on probably page 50 of the contract, let's say, was of course the rights to the iconic Scout brand.

So then we said to ourselves, a light bulb went off.

That said, if we go after these powerful American profit pools, if we went after it with a clean slate opportunity, complete clean slate, business case of how we look at it.

And then of course, at the same time, restore an American icon for this American moment.

And so you put those three things together.

And that's how it came about.

And when I look at the Scout brand, I think you summed it up exactly right.

It basically is The Godfather.

It sort of invented the SUV segment.

At the time, the SUV segment was probably 1% of the U.S. market.

Now it's 70% of the U.S. market.

And I think you're right.

It's iconic.

It's farm, it's heritage.

It's go anywhere.

It's do anything.

And the reason, you know, it is the name itself.

If you take the Scout brand, almost every SUV, frankly ripped off its name Blazer Trailblazer, forerunner, Pathfinder, discovery.

They're all iterations of the original.

And the other reason we knew is the instant we hit this idea and we started brainstorming around, it always put a twinkle in someone's eye, and then it went from one to 2 to 5, and now it's a million.

So that's how it came about.

And that's why we're here.

So you see, I like the way you said that uniquely American moment.

Are you not afraid of the birthing pains of the same moment like tariffs for one.

Does that not that not scare you?

Look, I'm bad in the automotive business for 30 years, and, you know, everything can sort of scare you.

New automotive business.

Right.

It's it's it's in the middle of almost everything happening in the economy, from real estate to labor to technology to federal ambitions, to tariffs, to policy.

You're right in the middle of it.

And it's shifting all the time specifically to tariffs.

Let's make no mistake.

Tariffs, if you look at them, you know the automotive business is built sort of on the central nervous system that we have.

And then you're potentially putting some big, big big changes into that.

And of course that's going to cause anxiety.

It's going to cause apprehension.

It's going to cause a little bit of upheaval.

There's there's there's no two ways about it.

I think if you flip specifically to scout, we're in a good situation first and foremost.

Obviously we'll talk about the factory, but we make cars here.

I think, without a doubt, we always intended to have our supply chain as close to the plant as possible.

As I look at it right now, we'll probably but 50% of our parts within 200 miles.

That's a great opportunity for the Carolinas.

And then, of course, we're making decisions on an almost daily basis.

Okay.

Where does this part come from?

What's the math to localize it.

What's the math.

And and how do we navigate this.

And of course it is changing if we're honest with ourselves sometimes Usmca is included, sometimes it's not.

So it's a little bit of a hazy picture to navigate.

What I like about our position is our fundamental truth, if you will, was to be as Americanized as possible, which is what we're doing.

And then we'll make the calls as we learn more, as we get smarter and we're going to look at cost and also you're going to have to look at labor as well to enforce all of these things and ramp up all of these plants.

Labor is certainly an issue that needs to be looked at in the Carolinas and America.

Yeah.

Okay.

David.

So first of all, Scott, thank you for what Scout is doing in central South Carolina, Richland County, the city of Columbia, the whole region.

It it popped with that announcement and it has not let up.

So thank you very much for the investment.

That's great.

I hear all the bad news.

So come.

So it's good to hear some of the good news.

Let's go with subway.

And you got a really successful career of making things successful.

And I applaud that.

So we know that there are and I love what you say about the suppliers 200 mile radius.

That is great.

We know that there's a headquarters operation that it's in play looking at the U.S., looking at multiple markets.

But what can you say about the Carolinas and how we are positioned, maybe from a competitive standpoint to to win that?

And what can you tell us about the where that process is right now?

First, I don't know how you learned all of that, but but I guess word is getting around.

I think the first thing on the Carolinas, frankly, we do love it here.

I'm not from here.

Most of my team is not from here.

And we've come to welcome it.

As you can imagine, we've got a lot of executives that moved into Columbia.

They've never set foot in the South.

Some of them haven't set foot in America, and they couldn't be happier.

So we feel very welcomed.

And that's a great thing.

I think if I refer specifically to the plant and that I will get to the headquarters, I think the plant had a lot of advantages.

We looked at nearly 74 markets before landing on that location.

So we know well the real estate in America, the realities of America.

And as you know, there's one thing to say we have a piece of land.

There's another thing to say that we can build a factory on that land.

So the biggest thing, without a doubt, is the workforce.

We feel very confident we can hire, train, motivate, build a successful operation for the 4000 jobs that we have there.

The second thing that the Carolinas had was the infrastructure and the infrastructure on water, on power, on rail and building that, which was huge.

The third thing, which I think was great, is the government was ready to do business and do business quickly from Secretary Lighty to the governor.

And that was been a fantastic.

And you put that together really no state could really compare.

And we know well state by state.

And you'd walk into some states and say, here's a piece of land, but there's no power.

And this is not like a light switch.

You flick on your power up a plant.

So it's fantastic.

With regard to the headquarters, this is going to be a difficult challenge.

I think if you look at it, if you look at the automotive industry in general, it's been anchored from the headquarters and the engineering and the design and the development in the Midwest.

It's moved a little bit to California with the emergence of software and all of that.

We think there's an opportunity to do exactly this in the South.

And by that I mean get the engineering talent for software, get the engineering talent for safety, get the engineering talent for crash, get the engineering talent for everything that goes in designing and engineering a vehicle.

So the first thing we need is fantastic talent, particularly engineering talent.

The second thing we need is a great place to live and that's a big spectrum.

Can our employees afford it?

Do they get good health care?

Do they want to move here?

Because of course, we're going to have to convince an awful lot of people to say, this is going to be a great place to raise your family and build a home and all of that.

And the third thing, let's be honest, is the math has to work, right?

We're bringing a lot.

We're bringing upwards of a thousand high paying jobs, which is roughly what we're looking at when all scouts get fully ramped up at the headquarters.

And this is a big opportunity.

I think it's an iconic opportunity due to the brand.

I think it's a financial opportunity to do the 1000 jobs.

But the biggest, let's say, collective effort wherever we go is going to be the galvanizing of talent.

Because much of this talent does not exist.

We're we have to put it there.

So apologies for going on long.

No, no, no.

Let me do a quick follow up, Tony.

I'm going to give you a chance.

So when we think about the the big brands that have relocated to the south, Toyota, Mercedes-Benz, BMW in South Carolina very successfully and they seem to be foreign manufacturers and not the big ones from Detroit.

You have a big innovation gang up in Detroit.

Is that going to be hard to make a decision between, as you call the traditional Midwest and the New South?

If it is the New South.

Look at many of those places you named, rightly or wrongly, are manufacturing centers.

And a manufacturing center is a different thing than ground up innovation.

Designing, building the car early console.

Why can't you co-locate thing else?

What would keep you?

The goal would be, of course, and that's exactly what I was referencing.

The goal would be to put that in as close as possible to one place, and get the team and others.

It's all going to depend on if we can get the talent full stop, without a doubt, which is why geography is important.

We already know where a factory is.

Closer to the factory, I think is better for a whole host of reasons.

If we can check all those boxes, if.

Okay, Tony, go ahead.

It seems like, I mean, you're making a pretty good sized bet on EVs that seem like a lot of the big auto manufacturers maybe their projections were overly optimistic, but you've seen some pullback there, and maybe the growth isn't what was initially envisioned.

What does that do to your plans, and how are you thinking about the growth opportunities?

Look, first of all, you're 100% right on the, let's say, the uneasiness in the EV market.

I think a couple of things that I will directly answer the question.

I think the first thing, at the highest level, it's essential to have government policy, match industrial policy, match consumer demand.

And you'd really like to draw a straight line wherever possible on these fronts, to the extent that these things are schizophrenic, if you will not ideal.

So when we make an investment in Blythe Wood, this is not a coffee shop in downtown somewhere we have plants that have been around for 70, 80, 90 years.

This is a generational investment, which means we need more stability.

And so let's hope as we navigate some of the bumps around, we can get that stability.

The second thing I think is critical is I think America should never be in a position to say we're going backwards and backwards.

It's going to be great.

I think if you look at these core technologies, frankly, most of them were invented here in America.

Battery technology, semiconductors, all of the software that's navigating these cars.

So we have the strength, we have the power, we have the assets to go do these things.

Without a doubt.

The third thing, to directly answer your question, I think we were extremely smart at Scout.

When you're a startup in this phase, you have to listen to the market.

And I think the biggest thing we did to listen to the market is add the range extender to the, to the scout thing.

So what you, in essence, have in my mind and I think we're going to nail this.

The scout didn't change.

It's got the ground clearance.

It's got the capabilities, it's got all the scout ness.

It's got the things people do love about EVs, which is by the torque, the silence, the package, the software, the updates, all those cool things.

Except it takes away what I call the drama.

You can go to a gas station to keep this thing moving as opposed to okay, is the is the charging station operating?

Is it working on it?

So I think we've got slick, cool technology.

The other reason I like it is we're able to do both of them at the plant.

So let's say the plant goes 100% 1 or 100% the other 5050 or 7030.

We can make that happen with our planning.

So I think we're in a good position.

But make no debate.

You've had about 70 years of, I would say, stability in the automotive business about what's going to move the vehicle.

And now it's been turbulent to use a lack of a term.

But I do believe technology will win.

Technology always wins.

The American consumer always chooses the best technology at the best price.

Over time, batteries are going to get better, batteries are going to get smaller, batteries are going to get cheaper.

But we've got a slick I would call a range extender hybrid that's going to give America what it wants good price, good technology.

If I could just follow up okay.

Please go ahead.

I mentioned technology several times.

What are some of the technologies specifically that you're most excited about that can set you apart?

Oh, I think that one that's that's the one right there with without a doubt.

I think the second one is the software of the vehicle and the ability to do over-the-air updates in your driveway to update certain aspects and features of the car.

The other thing I'm excited about is the fact that we sort of blended.

I would say old tech and new tech.

I think what a lot of people say when they see a lot of the startups and see electric vehicles, as they say, sort of, you know, dude, where's my truck?

Or dude, where's my car?

It's sort of like, I don't even know how to open the thing.

And then when I finally get in it, it's a giant screen that everything is five layers down into software, and then AI is going to take over.

I think we want to keep some of the simplicity and robustness of the Scout sort of behind the curtain.

Introduced a cool technology and a good one as I think the solid rear axle we have an integrated e-motor into the rear axle.

So you have all the rugged, the durability of that capability.

Yeah.

Wow.

The power that's going to come from that e-motor integrated into the rear axle.

We've done that.

Well, we'll get more into that when we can start to talk about suppliers.

But that's a cool piece of tech.

And we've done that sort of all over the place.

You know.

Speaking of suppliers, Sean Suggs is the president of Toyota battery manufacturer.

And they're up in the triad of North Carolina.

And Sean sat right where you were.

And he said, we learned something.

We're not just going to do EV batteries, we're going to do hybrid.

We're retooling to do hybrid.

You seem to have answered that with this back on board generator.

Yeah.

Scott, could you pivot in this in just as quickly to do an internal combustion engine in that Scout.

If someone wanted that.

Theoretically you could you can do anything or engineers are capable and you can package anything to the thing.

I wouldn't go that route.

I think the future is either going to be some combination of, let's say hybrid, which is dual or some combination over time, a full EV sitting in the full, only ICC world fine place for some people.

Not the right space for us.

And if I look at the market, I think that's where the puck is heading.

And I think the glove companies and the goal of, of, of, of innovation is to go where the puck is going.

And so that's the world we're going to take.

And I think that's kind of certainly enough of the market.

Because the most important thing to me, yes, the technology is important.

Can you get the capabilities and the price point because that's what's going to drive the customer decision.

How are your pre-sales, by the way?

Pre-sales are awesome.

And that.

Yeah, yeah yeah.

Yeah.

No.

Not giving you a number because I think you get into a fool's game in terms of okay.

So and you've seen that where people say, oh, we got 2 million reservations and then no sales transact.

So I think that's a fool's game.

What I do know is, when we showed the vehicle on October 24th of last year, the response was through the roof.

And, it's exactly what America was looking for to say, you're going to bring back an icon.

You still kept the credibility and the coolness, but it's got innovation.

I'm all in, and I know it's all in, because everywhere you turn, there's excitement.

So, no, the reservation has been good.

I would say it's one of the best responded vehicles in the history of the Volkswagen Group.

In America's interests.

The reaction is huge.

And, we've clinic the car.

Obviously, the clinic doesn't matter.

The best thing is to show it and see the reaction.

And that's why we put the reservation thing up, because that's the best place to get a reaction.

Bang, $100.

And, and the way you go, we.

Have about a minute left.

And I do want to get this.

Just I just got.

Here, I know, please come back.

Okay.

All right.

So in about a minute, Congress reversed the California mandate about about the EV manufacturing in 2030.

Do those kind of changes in policy scare you or you think, you know, they're coming?

We're going to we're going to roll with it.

Or does that kind of mandate reversal is that is could that be a red flag?

Look, there's a lot of ways of looking at I think let's be optimistic.

Optimistic of course, is to have one standard across the country.

I think a lot of people can get behind to make that consistent and make that relatively stable on that front is a good thing.

The thing that's not so positive is to have a constant whipsaw, and the website being in five years, you better be here versus in five years you'd better be here.

That's a hard thing to be matching.

I think the other thing it does is it sends a mixed message to the consumer marketplace, which is why the critical alignment to me government policy, industrial investment, consumer alignment.

And you got to get those right.

That's got to be the last word on that.

Please come back.

And I'm not kidding.

I almost called you Scout.

But please Scott, we'd love to hear more about.

I'll change my name.

Yeah.

Thank you.

Good to see you.

Welcome again.

I was a pleasure.

Thanks for having me.

Thanks, Jim.

Tony, nice to see you as always.

David.

Good to have you back.

Thank you.

Back to the Carolinas.

Appreciate it.

Until next week.

I'm Chris, and we certainly hope that your summer is off to a great start.

Until next week.

Good night.

- [Announcer] Gratefully acknowledging support by, Martin Marietta, Truliant Federal Credit Union, Foundation for the Carolinas, Sonoco, Blue Cross Blue Shield of South Carolina, High Point University, and by viewers like you.

Thank you.

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