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Absolutely Positive

Fred Smith of FedEx on hybrids, globalization, and John McCain

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As the world gets "flatter" due to globalization and FedEx builds new hubs in China and North America, the Memphis World Hub, aka the "Super Hub," still lives up to its name.

While the economy stumbles, the hub is getting even bigger. More shipments are being diverted to Memphis to minimize costs, and FedEx is taking over the Tennessee Air National Guard property adjacent to the hub in order to add more gates for the 150 aircraft that fly into Memphis each night.

The place where it all started in 1973 is a sprawling 500-acre complex of sorting facilities, customs clearing stations, runways, and terminals where 8,000 employees unload, sort, and reload 1.5 million shipments a night, making Memphis International Airport the number-one cargo airport in the world.

The man who started it all, FedEx founder Frederick W. Smith, was interviewed last week for the upcoming issue of our sister publication, MBQ magazine. Smith is co-chairman of the Energy Leadership Council, an alliance of CEOs and generals that has been working since 2007 to influence Congress on energy policy. He will also be a delegate to the Republican National Convention in September. A few excerpts from the interview, which will be published in the October magazine, follow:

On hub volume: "It hasn't declined at all. This is our only universal U.S. hub. We have big regional hubs in other parts of the country, but the only hub connected to every address in North America is the Memphis hub."

On oil dependence: "After weapons of mass destruction and terrorism, it is, in my opinion, the biggest economic risk and the biggest military risk the country has. In 35 years, we have gone from importing about 30 percent of our petroleum to about 70 percent, and it comes in the main from very unstable parts of the world ... . The recent events in Georgia proved the point better than anything. Europe is completely powerless to act because they are absolutely dependent on Russian gas and petroleum."

On the Energy Leadership Council: "In large measure because of the work that we did, the Congress passed new fuel efficiency standards. We didn't get the opening up of the outer continental shelf. Not that that would, quote, solve the problem, but it takes the pressure off of solving the problem."

On hybrid vehicles: "I personally believe the only way to significantly reduce the demand in this country for imported petroleum is, over time, to electrify the short-haul transport segment. You see that now with the new General Motors Volt and the hybrids coming out. A pick-up-and-delivery operation is perfectly suited to plug-in hybrids because they all start in the same place every day. Recharging them is a piece of cake."

On 2008 compared to other oil shocks: The country is a lot more vulnerable. It is the first time that the industrialized world doesn't have the ability to solve the problem in its hands. The increase in demand from China and India and emerging economies is replacing the demand in the industrialized countries. The good news is there is a solution on the demand side. And that is these new plug-in hybrid electric vehicles."

On Boone Pickens' ideas about wind power and natural gas-powered cars: "I like the wind power. Wind, why not? I don't agree with him on the natural gas for surface transportation. I think plug-in hybrid electrics are a lot better than natural gas."

On globalization: "Globalization, contrary to the demagoguery in the political process, has been the fundamental reason the United States has continued to grow over the past 25 years. The problem is that the benefits of global trade are very diffused and the pain is very localized."

On the Olympics and sponsorships: "We have been in China for 25 years. The reason we are not a sponsor is because we wanted to sponsor something that was more popular in China over a longer period of time, so we are the proud sponsor of the Chinese badminton team."

On John McCain: "I like him as a person and respect him enormously. I have nothing against Obama. In my view on the big issues — trade, taxes, oil, spending — McCain is right and his opponent is not right."

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