Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's exchanges and clearinghouses around the world. And now, welcome Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
It's funny how things kind of go around. When I first got to New York City back in 2010, my boss at the time, Joe Plumeri, who is the CEO of Willis Group Holdings, was being honored at the Salute to Freedom event was held every year during Fleet Week here in New York, aboard the Intrepid Sea Air and Space Museum. That year, the museum housed aboard the now retired USS Intrepid aircraft carrier, was tied up along Hudson River at Pier 86, near 46th Street, was trying to raise some extra money over what they could collect in admissions fees and donations, so they held a silent auction. This was the best silent auction I'd ever seen. Offered up were stunning four to six foot long models of naval vessels, which I suppose were part of someone's collection. Some of the ships were way out of my price range for a young executive, but one of the first American war to be named USS New York might have had the lowest opening bid.
And I took a look at my bank account and made the biggest bid I could afford. And today, it's the prized piece of my collection of Americana in upstate New York. Now, the real version of that particular vessel, ACR, or Armored Cruiser 2, was built by William Cramp and Sons in Philadelphia and in commission for the United States Navy between 1893 and 1938. The most recent naval vessel designated USS New York is LPD 21, LPD standing for landing platform dock, really a formidable war ship that can deploy a marine landing force of 700 trouble spots around the world, both through land and craft and, a fleet of helicopters and osprey operating from its deck. Now the unique element of the New York, which is built by Grumman ship systems, that's NYSE, ticker symbol NOC, is that a keel was laid on September 10th, 2004, three years after the attack on the World Trade Center, and that she's made with steel salvaged from the attacks to honor the victims and bring that steel to bear on future threats to US interests, which she has done with distinction.
Two of her sister ships, the USS Somerset LPD 25 and the USS Arlington LPD 24 were constructed by the Avondale Shipyard and Engels ship building respectively, and similarly contains steel from the crash site of United Flight 93 and the area of the Pentagon destroyed by American Airlines Flight 77. Now, the USS Arlington, under the command of Captain Eric Kellum, is here in Pier 88 Manhattan this week during our observance of Veterans Day. Among their honor guests is our guest today on the show, the Honorable Carlos Del Toro, the 78th secretary of the United States Navy. Now, Intercontinental Exchange has a number of recent connections to the Navy. The former Chief Financial Officer of ICE, Richard Spencer, was a former marine aviator and served as the 76th Navy secretary. And former US Senator Kelly Loeffler, who served at ICE for 17 years and really hired me into my role, served as the sponsor of the USNS Apalachicola Cola, that's EPF-13, which really embodies the New Navy as an expeditionary fast transport ship that will bring autonomous capabilities to respond to new types of threats.
In a minute, our conversation with Navy Secretary Carlos Del Toro, a Navy veteran himself on the meaning of Veterans Day, the challenges our Navy faces across its theater of operations around the world, and the Navy's future, including importantly, the need to recruit and retain an unbeatable force of sailors and marines for ships like the Arlington, the New York and the Apalachicola on below and above the sea surface for decades to come. As I said, it is funny how things go around. Our conversation with Secretary Carlos del Toro is coming up right after this.
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Josh King:
The honorable Carlos Del Toro is the 78th secretary of the United States Navy. In that job, he's responsible for over 900,000 sailors, Marines, reservists, and civilian personnel, and an annual budget exceeding a cool $210 billion. Born in Havana, Cuba, Secretary Del Toro earned his degree in electrical engineering from the United States Naval Academy at Annapolis and served in the Navy for 22 years before retiring at the rank of commander to enter the private sector founding SBG Technology Solutions in 2004. President Joe Biden nominated him as Naval secretary on July 11th, 2021. Secretary Del Toro, welcome aboard the USS New York Stock Exchange.
Carlos Del Toro:
It's wonderful to be here with you, Josh, and thank you so much for inviting me to the New York Stock Exchange. And it's obviously the greatest city in the face of the earth and my hometown, New York City.
Josh King:
What brings you here this week?
Carlos Del Toro:
Actually, it's the Veterans Day celebrations that actually bring us here this week.
Josh King:
How is the Arlington honoring the veterans and serving Veterans Day?
Carlos Del Toro:
I think it's very special to have the Arlington come to New York. And as you stated so clearly, it's we have pieces of the Pentagon built into the Arlington, and it serves as a testament to the many thousands of sailors and marines actually that serve in our nation's country, and the many thousands that actually joined up for service following 9/11.
Josh King:
Yesterday you were at Goldman Sachs with some of those veterans. How's that event?
Carlos Del Toro:
It was extraordinary. Veterans, obviously they serve in the military service, in the Navy, in the Marine Corps for a certain period of time. And whether you serve for a year or you serve for five years, it really transforms who you are. And as many of them sometimes transition into the private sector, whether after a couple of years or after a whole 20 years in the service, they continue to serve their countries in many other ways and the knowledge that they gain and the experience that they gain while they serve in the military is really invaluable to companies like Goldman Sachs and so many other private sector companies throughout our nation. They're just truly wonderful Americans who continue to thrive in so many different segments of our economy and society.
Josh King:
Speaking of that service, when you arrived here at the New York Stock Exchange came up our elevator to the sixth floor, ran into a couple World War II veterans. And I'm curious, as you looked at them in the eye, talked to them for a few minutes and thought about what they represent, what does a Veterans Day represent to you?
Carlos Del Toro:
It's all about service. It's the history of our nation from the days of the American Revolution all the way through operations in Iraq and Afghanistan. And you take a look at that greatest generation of Americans who served in World War II, the sacrifices that they made, we tend to forget about history, but many of those veterans actually went out and were away from their families for up to a year, sometimes two years away from their family, perhaps with a one week vacation back in the States or something if they were lucky. And those sacrifices continue throughout our nation's history. And so I think it's very important for all Americans to recognize the sacrifices that these young men and women make today in our services and in our Navy and Marine Corp, for example, and honor that celebration, that service. It really is a celebration of our veterans, our nation's veterans.
Josh King:
You are ringing our closing bell today, but it's not your first rodeo around here. Tell me about the first time you rang our bell on December 4th, 2001.
Carlos Del Toro:
It was a very different time, certainly economically, but we pulled in. Obviously, 9/11 had had just occurred several months before and we were the first naval ship to pull back into New York City. Ironically, I was in New York City on 9/11 and saw the tragedy that befell New York City and transform the world obviously and personally saw that. And so for me as the commanding officer, what was then the USS Bulkeley is still today, but then the nation's newest naval vessel. It was a tremendous honor to bring that ship back into New York Harbor and pay respects to the 2,977 lives that were lost at the World Trade Tower. And I remember, as we were passing the trade towers, we called our troops to attention on deck and we paid honors to those that were lost. And I reminded them that liberty, and democracy does not come cheap. It comes with a price and it comes with the sacrifice of all of our service members and the Navy and the Marine Corps, and we should never lose sight of that service.
Josh King:
I'm curious what your years were like between 2001, 2004 as you're headed out to sea with the newly commissioned ship into an uncertain conflict environment that you probably hadn't experienced before in the nineties as much, but you're headed into a different environment at the helm of the Bulkeley.
Carlos Del Toro:
Well, very much so. And as you know, President Bush committed to holding accountable those that we needed to hold accountable in Afghanistan. And so we became part of that mission. The meaning of our service became that much more significant, obviously given the serious occurrences of what took place on 9/11. And so for our sailors, and likely the Marines who were serving in the Marine Corps at the same time, they understood that they were going to go to war and combat and have to serve their country in a different way from times of peace. I think they rose to the occasion very bravely and have done so for the past 20 years.
Josh King:
Here is President Bush, October 7th, 2001.
Speaker 7:
Good afternoon. On my orders, the United States military has begun strikes against Al-Qaeda terrorist training camps and military installations of the Taliban regime in Afghanistan. These carefully targeted actions are designed to disrupt the use of Afghanistan as a terrorist base of operations and to attack the military capability of the Taliban regime. We are joined in this operation by our staunch friend, great Britain. Other close friends, including Canada, Australia, Germany, and France have pledged forces as the operation unfolds. More than 40 countries in the Middle East, Africa, Europe, and across Asia have granted air transit or landing rights. Many more have shared intelligence. We are supported by the collective will of the world.
Josh King:
Mr. Secretary, I went back and read some accounts from the time. In the year that followed President Bush's remarks, 181,510 Americans enlisted in the ranks of active duty services, and another 72,908 joined the enlisted reserves in 2002. It wasn't hard to find people to sign up back then, was it?
Carlos Del Toro:
No, it wasn't. Obviously, there was a higher calling, a sense of purpose, a sense of mission. Many young Americans, men and women, paid that call basically and joined the military ranks back then.
Josh King:
Last month, you joined with your fellow service secretaries, Christine Wormuth at the Army, Frank Kendall, the Air Force in an op-ed in the Wall Street Journal with the headline, Uncle Sam wants you for a military job that matters. And the subhead was, we need data scientists, coders, engineers as much as we need pilots, sub mariners and infantry. Secretary, the old advertising slogan of the Navy was it's not just a job, it's an adventure. It's still an adventure, but these days, it really is more about the job and the career that follows, isn't it?
Carlos Del Toro:
Well, it is very much so, and it's still about a higher calling to service as well too, but it's a combination of those things. And of course, it has become a little bit more difficult to recruit because we actually do have a very strong economy right now, despite the obvious challenge of inflation, but what we have a low unemployment rate, and that makes it more difficult sometimes to recruit sailors and marine into the Navy Marine Corine.
Josh King:
The three of you wrote that, I'm going to quote you here, "As the US refocuses on rising challenges from China and Russia, the armed forces are confronting a generational recruiting shortfall." And this moment doesn't bring with it images of fallen skyscrapers and the smoldering Pentagon that you and I have been talking about since you came to the New York stock exchange. But in the area of international threats, is it any less dire than Pearl Harbor or 9/11, what we're seeing today
Carlos Del Toro:
In ways, it is not actually, and we still have a responsibility to deter totalitarianism wherever it may arise, whether it's in the Pacific or whether it's on the continent of Europe, obviously with what President Putin is doing in Ukraine, or President Xi intentions perhaps in Taiwan. And it's important to have our young Americans join our military services to work together to try to deter conflict from occurring in Europe and deter conflict from occurring and the Pacific as well too. The military is an amazing thing. It's an amazing institution. Particularly the Navy and the Marine Corps, in my own mind, it made me who I am today. I grew up dirt poor here in Hell's Kitchen and later on grew up in Astoria in New York. The Navy offered me opportunities I just would not have been able to have had it not been for going on to Annapolis and joining the Navy and learning skills, and leadership skills in particular that probably would not been made available to me.
And it really transformed who I am and I credit it for my success in the private sector, and as well as my success as Secretary of the Navy.
Josh King:
It was reported earlier this year that as of late June, talking about a different service, the Army had recruited only 40% of the 57,000 soldiers that wanted to put in boots by September 30th, the end of its fiscal year. You, Christine, and Frank noted in the piece that there are nearly two open positions in the labor market for every person seeking work. So, how do you make the Navy's or the Army's jobs look as enticing as those jobs at IBM?
Carlos Del Toro:
Well, it offers experiences that are just unmatched. I mean, for one thing, we're very good in the Navy and the Marine Corps actually to teach you a very tailored skill set that becomes very important to success throughout your military service, and then as you transition into the private sector as well too. But you also at the same time get to see the world. And as a young 22 year old or a 23 year old, you might find yourself as a divisional officer on board, an aircraft carrier or one of our nation's newest submarines or in the Marine Corps working on technology. But more importantly that just working on the most advanced technology that our nation has to offer, it's leading people, leading other people. The leadership opportunities that you experience in the Navy and Marine Corps are unlike anything that you can experience in the private sector.
And that's nothing negative against the private sector. It's just different. So, as a 22 year old or a 23 year old, you have leadership opportunities leaving often large numbers of men and women in the service. That's just an extraordinary experience. And then you get to travel and see the world as well. You get to travel to foreign ports. For many Americans, they've never left their hometown, for example. They join the Navy to see the world, and that still applies today, or they join the Marine Corps to see the world. And those are just extraordinary experiences that I wouldn't compare to anything in the private sector.
Josh King:
Let's say I'm a high school senior. I believe you still have to graduate to sign up. What's the requirement to get in these days. And once I am in, what are the kinds of things that I could be doing within a year versus responding to a one ad and trying to get a job in my community?
Carlos Del Toro:
Oh, well that's exactly right. So, as a young enlisted person, you can come in. And yes, you do still have to be a high school graduate. But then you're entitled to bonuses and we're giving up bonuses up to $50,000 to enlist in the Navy and the Marine Corps as well too. And then you'll go through basic bootcamp, which is an amazing experience and teamwork and leadership building, and you'll get exposed to the best that the service has to offer. Afterwards, you'll proceed to what's referred to as an A school, which is sort of an entry level skill building vocational school that'll teach you different rates throughout the entire Navy and the range of skills that you can acquire is as broad as you can imagine. Anything that's covered in the private sector basically is covered as well too in the United States Navy and Marine Corps. And typically, you get your choice of what skill set you want to acquire in life.
And then of course as you grow older and more experienced in the service, you'll go to advanced schools as well too. The amount of training that the military offers and the sophistication of that training when you think about simulators. And of course all those game building skills and playing Game Boy and everything else that you did growing up, that has direct application to what we do in the military service as well. So, that dexterity, those spatial qualities that you acquired along the way and gaming and things of that nature will also prove useful in the military.
Josh King:
So, you and the other service secretaries wrote, I'm going to quote again here, "We are counting on policy makers, schools, religious institutions, and families to reinforce the importance of service and the opportunities it provides. Members of Congress, we ask you to support as we work on solutions to the recruiting challenge." Why did you write, as another part of that, that military communities are increasingly isolated? How do we fix that?
Carlos Del Toro:
Well, I hate to say that for the last four to five years or so, there's been a lot of bashing going on about government service in general and about military service in general, and that's really unforgivable. These are young men and women who swear an oath to the constitution of the United States. They come from all backgrounds in the United States, all regions, all religious backgrounds and cultural backgrounds, and they swear an oath to one constitution. And by doing so, they're willing to give up their lives, if necessary, in service to their country, in defense of freedom and democracy across the world, not just for Americans, but for people all around the world. We owe it to them, quite frankly, to pay tribute to them, to take care of them, to support them in ways that they deserve to be supported so they can thrive and continue to do that job effectively.
And we shouldn't be criticizing them in any way as well. We should be thanking them in every possible way. And it's an all hands on deck type of effort. It's going to require politicians and Americans from all backgrounds to continue to support us and help with this endeavor. So, if you're out there and you have children or grandchildren or nieces or nephews that want to join the Navy and Marine Corps, I particularly recommend the Navy and Marine Corps obviously, call your recruiters. Get in touch with us. This is an all hands on deck evolution and we needed everybody helping out.
Josh King:
You wrote, to finish off in that article, "To our veterans, we ask that you tell your stories of service to the greatest nation in the world." So, I'm interested if you'll tell us yours, Mr. Secretary. I open the show with that story of attending the salute service aboard the Intrepid. And it's not lost on me that the Intrepid is birthed a few blocks from where you grew up in Hell's Kitchen. How did an immigrant from Havana get out of Hell's Kitchen and find his way from the New York Public Schools to the US Naval Academy?
Carlos Del Toro:
Well, I attributed so much to my family, to my mom and dad. They both worked two jobs. And my mother worked in a purse factory and she worked as a cleaning lady for most of her adult life. My father did just about every type of job you could imagine. He was a taxi driver, he was a maintenance man. He just did every job possible basically to help make ends meet. They both had strong convictions that we should go to school, and so they fostered me going through public schools basically and into high school. I went to Thomas Alva Edison High School here in Jamaica, Queens, which taught me technical skills that were useful then for me to apply to the Naval Academy, be accepted into the Naval Academy, and then start that 22 year journey in the Navy that you spoke about. And my story is so similar to so many other American stories, immigrant stories.
Now, it may have been your story personally. It may have been that of your father or your grandfather, but that first generation that comes to this country, they make tremendous sacrifices so that their children can have a better life than they had growing up in whatever the country they came from or here in the United States. And we grew up up very, very poor obviously, but it was that inspiration to study and to persevere and to work hard, those core values that matter so much to success. And then later on, joining the military and it's those same core values that really persist in the military and make you successful in the military. Then later on in the private sector as well.
Josh King:
I listened to a podcast with you and a couple of Annapolis interns at the Pentagon in which you placed yourself as a midshipman behavior release somewhere in the middle of the spectrum between the bottom of the class miscreant, like John McCain and his roommate, the more buttoned up Admiral Chuck Larson. How was it for Cuban born Emigre to get through the academy?
Carlos Del Toro:
When I went to the Naval Academy, we had less than 40 Hispanics in a class, basically about 1,400 when we first came in, and we graduated over a thousand from that class. And they were different times. Today, approximately 25% of the Naval Academy is of Hispanic descent, and we've made tremendous progress with regards to women at the Service Academy as well too. So, I'm a big believer in incremental progress. Everybody has to do their part. I think it's important for every individual, whether you were a Hispanic, black, Italian, Irish, wherever you came from when you came to the Naval Academy, to do the very best that you could do. Often when people ask me, "What's your key to success?" it's really dedicating all your efforts to doing the best that you can do at whatever job that you have at that moment in time, proving yourself, becoming what's a true professional in your skill set, whatever that subject matter expertise might be, and then that's how you could actually be advanced and respected and a profession such as naval service.
Josh King:
I met Admiral Larson a couple times during the Clinton administration when he was commander of the Pacific Fleet and superintendent at Annapolis. Earlier in his career as a White House fellow, which you were under my old friend Sylvia Matthews and Jack Lou. How did that fellowship contribute to your development as an officer?
Carlos Del Toro:
It was an extraordinary opportunity that did transform my life in many different ways. You spend a year basically working as a special assistant to one of the president's cabinet members or sub cabinet members, and you learn everything there is to learn about government at the highest levels, the good, the bad, and the ugly. And of course, I was blessed to have both Sylvia and Jack Lou as mentors of mine. I worked at the Office of Management and Budget. In so many ways, money does make the world go round. And so for me, as a young naval officer, to learn the lessons of program management and proper budgeting were just invaluable. I'd never expected I'd be Secretary of the Navy when I was working at OMB, but here I am today applying many of the lessons that I learned from both Sylvia and Jack about balance and compromise. The budget is, in many ways, a core reflection of our nation's values, and I apply those same principles today as Secretary of the Navy.
Josh King:
Around the same time that you were serving as a White House fellow, or maybe a couple years earlier, I can't remember my old friend, John Richardson, who was then a lieutenant commander is President Clinton's naval aid. And John, of course, goes on to serve as the chief of naval operations. Here is CNO Richardson on this show back in 2018, reflecting on his job in the White House.
John Richardson:
I think the fundamentals of the job are, there's a lot more that is consistent than has changed. And so the technology in terms of executing things will always change. And we want to make sure that our sailors, no matter what job they're in, have the very best technology. We never want to send our teams into a fair fight. We want them to have the very best. But the fundamentals and the things that I... Particularly the time that we spent together at the White House, what you take away from that is clearly a deep sense of what the nation stands for. And here you are working for the president of the United States, the most powerful person in the world, and it's just a privilege to be able to support the president that directly.
Josh King:
So John said, "We never want to send our teams into a fair fight." And on that score, Mr. Secretary, you found yourself as the first commanding officer of the guided Missile destroyer in the Arleigh Burke class, the USS Bulkeley, named for the World War II Medal of Honor recipient John D. Bulkeley. I'm curious, what was it like helping to build and commission the Bulkeley? And when you got her out to the open ocean, how does her Mark 41 vertical launching system turn a confrontation on the high seas or offshore into an unfair fight like John was talking about?
Carlos Del Toro:
Well, Admiral Richardson is absolutely correct. And address the last part of your question first, the Mark 41 launcher with all the many different capabilities that can be launched from it is truly transformational and it brings real superior power to the fight at sea into deterring our adversaries from doing what they want to do. Som that's incredibly important. I think building the Bulkeley. And I'm perhaps the first secretary of the Navy, this might be a little bit more anecdotal, but who's actually ever directly overseeing the construction of a worship? I assume that early on in our nation's history, there were some that bought and sold ships as merchants, but I'm perhaps the first one to actually oversee the construction of worship. So, that experience that I gained over those two years, and then later during a year of sea trials, is invaluable to me today as secretary to have a far better understanding as we build our aircraft carriers, our two and three Arleigh Burke destroyers, our submarines, and every other platform that we have in the Navy.
Josh King:
The Bulkeley was the 15th ship of the Arleigh Burke class. The 51st is going to be under production through 2027, and that ship is going to serve probably until the 2060s. But earlier this year, it was announced that the DDGX will begin to replace the Arleigh Burke starting in 2028. How will this DDGX continue to make adversaries face an unfair fight beyond that?
Carlos Del Toro:
Well, as Admiral Richardson said, it's always important to bring the best technology to the fight. And so therefore, as we look at some of the power requirements that are associated with some of our high energy directed weapons, for example, we're going to need a bigger haul to accommodate for some of those higher energy weapon systems. And so that's why it's necessary to build a new DDGX that can support those increased power requirements. Of course, we'll take that advantage as well too, to build a new engine, a more fuel efficient engine, for example, that can propel longer and safe fuel across the board, and several other major technologies that we can advance as well as we build that new platform. But DDG3s are very capable ships. They have the ability to actually conduct ballistic missile defense, while at the same time conducting anti air defense mission as well too. And that has also been transformative. So, we're going to continue to build DDG Flight 3s for a good period of time.
Josh King:
So by 2004, after 22 years in uniform, it's time for you to hang up your shoulder boards and retire to found SBG technology solutions. I surfed through its website yesterday, IT modernizationm IT governance, professional engineering, cybersecurity. Tom Felton runs it now, but what was the business opportunity that you saw? And what was life like as an entrepreneur after so many years as part of this massive organization that is the Department of Defense?
Carlos Del Toro:
It was transformative. I mean, I had never had any "formal business skills." Started the company with my wife. Thank God she was an accountant and had some of the formal accounting skills that were necessary to run a small business. But we ran it very successfully for 17 years, and then sold it before I became Secretary of the Navy. But of course being an engineer, was also a space systems engineer, understood legislative affairs, understood the government. It was all very youth useful to me as we had tried to bring advanced technology to, not so much to the Department of Defense, but really the Department of Veterans Affairs and numerous other federal agencies that were trying to transform themselves. So, we got out into a lot of health IT projects, for example. And I think just having an enduring mindset in terms of building things and making sure that they're useful to our customers problem sets and solving our customers problems and trying to be responsive to our customers needs.
And I think as a small business owner, I also learned the value of a dollar, right? Hard earned dollar, by the way. And I didn't borrow any money actually over the course of those 17 years. I ran a very conservative business model and just grew the business very slowly. But every dollar that I earned, I had to think about whether I put it back into profit, whether I put it into my employees' pockets and the way of benefits. Did I grow my business development team? I do the same now as Secretary of the Navy, except it's the American taxpayers dollar. And I take that responsibility very, very seriously. So, I give a tremendous amount of thought and to how we actually expend the American taxpayers dollars to get the biggest return on investment on every single dollar possible so that we can actually bring as much capability to our war fighters as possible.
Josh King:
Talking about that responsibility you have when President Biden taps you on the shoulder to ask you to return to the Pentagon as Navy secretary coming, really full circle from your days working with Sylvia Matthews and Jack Lou trying to sort through the Navy's budget, was it a no-brainer? How did that question and session go down
Carlos Del Toro:
We had to pause and think about it a little bit, obviously, but I was very proud and thankful to the president for having the confidence in me to serve as Secretary of the Navy. But for me, and both my wife Betty as well too, it was about service to the nation. It was about serving those sailors and marines once again in this very unique manner to build our nation, to actually make it stronger, to take care of our sailors and marines, to better suit our national security interest. But of course, then again, I brought back all the lessons I learned over 17 years in the private sector to serve our national defense, and it was quite an honor. And that's what veterans do, very much so. They serve in the military, they go back into the private sector, they find other ways to continue to serve our nations. And that's what we're celebrating here in New York during this Veteran's Day weekend.
Josh King:
After the break, on this Veteran's Day weekend, the Secretary of the Navy, Carlos Del Toro and I talk about his first full year as the civilian leader of 900,000 sailors and Marines, the threats the Navy is working to counter around the world, and the conflicts it may face on below or above the seas in the decades ahead. That's all coming up right after this.
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Josh King:
Welcome back. Before the break, I was talking with the 78th Secretary of the Navy, the honorable Carlos Del Toro about his Navy journey, his career in the private sector, and the work the Service Secretary is to recruit and retain the next generation of men and women in uniform to help counter the threats that our nation's going to face in the years and decades to come. We're now going to pivot to some of those threats and how the Navy in particular is reshaping itself to counter them. So, Mr. Secretary, I mentioned in the intro that Senator Kelly Loeffler is the sponsor of USNS Apalachicola, the Navy's 13th spearhead class expeditionary fast transport that last month completed its acceptance trials, overseen by its builder, Austal USA. Here is Senator Loeffler at the ships commissioning earlier this year.
Kelly Loeffler:
The Apalachicola is intended to be used in crisis, meant to carry our people and heroes in and out of dangerous situations, and to prevail. She is strong and resilient just as we all are and will continue to be. She's moving forward, as ships almost never turned back. The ship represents new beginnings. And it's fitting that we chirsten Apalachicola on the week that we observe Veterans Day. I'm the daughter, the proud daughter and granddaughter of Air Force and Navy veterans.
Josh King:
So, what are the new beginnings that Center to Loeffler represented by the Apalachicola? How is a fast transport and autonomous operation critical to the mission of the Navy's future?
Carlos Del Toro:
So, they are essential to how we transform the Navy and the Marine Corps into the future. Without question, unmanned tech technology and the investment that we make in unmanned technology is substantial today and we'll continue to grow enormously in the days, weeks, months, and years ahead of us. And so the expeditionary fast transport trip, for example, we're running experiments on it right now to see how well it will run autonomously for the transportation of Marines, for the transportation of logistics, for example. We're actually converting to them into medical platforms as well too, that are smaller than our medical ships' comfort and mercy, so that we could actually advance them into the Pacific and other places, wherever needed by the Marine Corps, in smaller numbers and smaller ports and in a more fast and expedient way. They're also going to be critical to our relationships with our allies and partners and being able to interoperate with them a lot more and be interchangeable with them as well too.
These are the types of ships that can get into smaller ports and with smaller countries and operate with countries that have smaller ships than we have and be more interoperable together. So, it really is going to be transformative and contribute significantly to the unmanned strategy that we look for in the future.
Josh King:
I was listening to a podcast of Admiral Gilday a couple weeks ago. I think he was at the Heritage Institute, talking about interoperability, the idea that it's not just two Navys that can work together, but almost two sets of equipment and two fighting forces that almost seem like they are really one.
Carlos Del Toro:
Well, they can seamlessly fight together, right? Through our tactics, through our technology, they're able to interoperate. And we're doing this a lot more, right? It's our single most advantage, I would argue, in trying to deter Russia and China from doing what it wants to do. We talk about 355 ship Navy in the United States Navy, for example, but I talk about a 600 ship Navy made up of all the ships and platforms of our allies and partners working together in the Mediterranean and the Pacific all around the world and are operating together. And now when we deploy our carrier strike groups, for example, the USS Ford, which is operating in the Atlantic currently, for example, we have ships from four other nations that are working together seamlessly, as you suggested. That's substantial, and we can start making them interchangeable. Well, then it allows us to use our resources far more effectively across the entire spectrum of warfare.
Josh King:
One of the guests on this show last year was Admiral James Stavridis, the former NATO Supreme Allied Commander talking about our allies and partners, and he is also the author of 2034, A Novel of the Next World War. Here's a clip from that conversation I had with Admiral Stavridis.
James Stavridis:
We don't have the model that China does, for example, where there's state run directed energy that goes into particular systems. Everything in China is a moonshot in a sense. Everything that goes into defense here in the United States, it's a balance between those terrific defense companies you mentioned at the top of the show serving the customer of the government. So, you've got to find that balance between private and public. I think the role that investors play is to help encourage the search for the new technologies. And these are things we talk about a lot in 2034, cyber, space, hypersonics, unmanned vehicles, special forces. That's where the needle has to move.
Josh King:
So, tell us how the needle is moving in that direction.
Carlos Del Toro:
I couldn't agree more with Admiral Stavridis. And he's been a quite respectable naval strategist for a long, long time. He understands technology. And I couldn't agree with him more, but there's been a transformation from the days that I commanded the Bulkeley to now being Secretary of the Navy. And much of the innovation is actually happening in the private sector. Now, some may argue always been the case, but I would argue that a lot of the research and development investments have been really made and the private sector. And if you look at space as just one example of that, Charlie Bolton, when he was director of NASA, basically made the decision in President Obama. Then President Obama made the decision to not send man missions to space, and it transformed the entire space industry to the point where now it's the commercial marketplace that's leading it, coming up with tremendous proliferation of lower earth orbits, for example.
So, we in the military, also have to transform, and we have to embrace that innovation in the private sector and use it to our advantage in a asymmetric sort of way to take advantage of those things. And then I think that, obviously in the government, we need to then, or in the military, in the Navy, devote the resources that we have to better understanding the interconnectivity, the interoperability part, and the high risk areas where we should be making those investments, because for whatever reason, the private sector won't make them because of profitability or it's just too risky to do.
Josh King:
When you listen to Admiral Stravridis talk about China, and I read in the USNI news that in a six month period from April to September this year, Japanese fighters scrambled 446 times to intercept threatening aircraft from China and Russia. How are we going to confront a Chinese people's liberation Army, Navy that is the pacing threat that's planning to expand its fleet to 460 ships by 2030, eclipsing the size of own?
Carlos Del Toro:
Well, they are the pacing threat, and that's clearly stated in international security strategy, international defense strategy. Both President Biden, Secretary Austin had made it clear and it's embedded in our naval strategy as well. It is a challenge if you're just looking at a platform to platform capability comparison, for example. So, it's incumbent on us to modernize our Navy, to make it far more lethal, to make the type of investments in our platforms and in our technology that are going to have an asymmetric impact on deterring China from doing what it wants to do. So, part of our greatest investment, for example, is in our submarine force, in our advanced Virginia class attack submarines and in our Columbia class nuclear ballistic submarines as well too, that replace the Ohio class. Those investments need to continue, right? I think the relationships that we're building with our allies and partners is equally important.
So whether you're looking at the quad, for example, which is our relationship with Japan and India and Australia and the United States, or you're looking at AUKUS and our developing relationship with the Australians and trying to provide them the submarine capabilities that they will need to deter China well into the future as well too, this is how we need to innovate. When I was in the private sector, I always used to say that a company that's not innovating is basically dying on the grapevine. That's the same thing in government. We got to always be rethinking our strategy. We spent 20 years fighting land battles in the Middle East. Today, that conflict is in the Pacific. And in the Pacific, it's the Navy Marine Corps team that's leading that effort, working with the Air Force largely. And we got to work very innovatively within the joint war fighting construct to deter China from doing what it wants to do.
Ultimately, the goal really is to ensure that China fully understands that the cost of doing what they want to do to their own economy, to their own future presence is way too costly. It would disrupt not only the global economy, the US economy, but their own economy and lead to a disastrous result. So, President Xi really ought to take a look at that. I know that he's very smart and he looks at what's happening in Russia and Ukraine, for example, trying to learn those lessons. But boy, if it's hard for Putin to invade Ukraine and be successful in Ukraine, an amphibious landing of Taiwan would be disastrous for President Xi. And I hope he fully understands that.
Josh King:
Well, you are spending a lot of time on this pacing threat in the Pacific. But those old adversaries continue to challenge us as well. You just mentioned it. I mean, after Russia's invasion of Ukraine, you told Morgan Brennan on CNBC that you had the uss Harry S. Truman and its battle group on station and the Mediterranean to, and I'm going to quote you here, "Prevent the worst from happening." What did you mean by that? And how has the Navy's posture evolved with the prosecution of this war effort?
Carlos Del Toro:
So, Secretary of the Navy, I constantly have to think about three factors. One is readiness, which is my number one priority. What does that mean? That means that our fleet and our Marine Corps force has to be ready to address any conflict that might present itself tomorrow. Whether it's in a evacuation of Americans from a particular country or having a confront and conflict another nation, we have to be ready to perform that mission tomorrow. And then there's modernization, modernization to become as lethal as humanly possible. And then there's capacity. And my favorite two words are balance and compromise. I got to constantly be balancing all three of those factors, right? So, in the Mediterranean, it's about deterring Russia from doing anything else that it might want to do, anything nefarious that it might want to try to do, either in the Black Sea or in the Mediterranean as well.
And so we have our fleet, essentially, in the Eastern Mediterranean, doing what it needs to do there with forward presence to be able to ensure that Russia understands that they shouldn't try to expand this conflict beyond what they're already doing, which is horrible enough as it is. And again, going back to the collaboration between our allies and partners, we didn't just have the Harry S. Truman there. We had the French Charles de Gaulle was there. We had the Italian aircraft carrier Cavor. We had the Spanish aircraft carrier at our disposal as well too in the Mediterranean. And all those operationally essential tactics are necessary to deter our adversaries from doing what they want to do.
Josh King:
You read and watch coverage on the war in Ukraine, you make your own assessment of what appears to be lack of readiness, morale, logistical mismanagement among its ground forces. But you mentioned submarines earlier. Beneath the sea, you've warned that it's Navy, and especially, its submarine forces shouldn't be underestimated. Before you took office, the Navy published its strategic blueprint for a blue arctic. And in your strategic guidance written about a year ago, you wrote, "It is a national security and war fighting imperative for the Department of the Navy to address the impact of climate change on our readiness, operations and ability to fight and win. Climate change seriously increases the potential for greater conflicts on a global scale." So, Mr. Secretary, let's go north for a bit and how the Arctic is changing as a potential battlefield above and beneath the surface.
Carlos Del Toro:
Well, global warming is having a very negative impact, obviously on the entire world. Without any doubt, the droughts that are created are droughts that could lead to shortages of fresh water throughout the world, and that leads to added crises and conflicts between nations, whether it be in Africa, whether it be in South America. It has impacts secondary... Primary and secondary impacts that sometimes are not clearly well understood. Blocks, for example, in the Panama Canal are run by fresh water. And when there's a shortage of fresh water in the reservoirs, that creates problems that the Panama Canal and a national security issue for us as well too. And so all these things matter, and they are particularly having a negative impact in the Arctic as well too. As the ice continues to melt, creates new sea lanes of communications, sea lanes of travel, it's important to maintain safety and stability in a peaceful way across those sea lanes and new trade routes that may develop over the course of the next years.
Russia obviously has a tremendous presence in the north, as does Canada. The United States is an Arctic nation, it is a Pacific nation, and so therefore we have a responsibility to be paying a lot of attention to what's happening in the Arctic. You know that China also wants to have a presence in the Arctic. The illegal fishing that takes place, largely by the hands of China, around the globe has a significant impact as well too. So, there's the issue of illegal fishing that always has to be paid attention to as well.
Josh King:
So, there's this old military jargon of men and material. Material is one thing. We've been talking about it a lot in the last couple minutes. Men and women are another. Last May, the United States Naval Academy commissioned 798 Navy Ensigns and 274 Marines, second lieutenants. Here's President Biden speaking to the brigade of Midshipman.
Joe Biden:
Midshipman, above all, the academy has trained you to be leaders. Easy word to throw around, was hard to accomplish. You didn't take the easier route when you chose the academy, and again, when you sign your two for sevens. You chose a life of service and purpose. You chose trial and sacrifice. You chose to be part of a mission that's greater than any individual.
Josh King:
President Biden said, leaders, easy word to throw around, hard to accomplish. You graduated from the academy. Chuck Larson returned to the academy to get through a tough period. A few days ago, you retweeted the academy's tweet, "Train now, win later." What's the state of our leader factory today?
Carlos Del Toro:
I think it's extraordinary. I really do. I even reflect back on 20 years or so that I've been away from the military and coming back into this job, I was really pleasantly surprised by the investment that our Navy and Marine Corps continues to make with regards to developing our leaders, our young leaders, both in the illicit core and as well in the office of core, focusing on the fundamentals, but also through technology, better training them, and really showing them that you've got to train the way that you fight, for example. It's incredibly important. And today, the complexity of our operations significantly outpace is anything that I experienced when I was in the Navy 20 to 40 years ago, for example. So, I think we are challenging those bright young leaders, men and women who are graduating from the Naval Academy, ROTC units, OCS in a really unique way and presenting more difficult challenges than to them so that they can have to make the right decisions and training, as the president said,
I was very proud. I was with the president that day and I was very proud of the mentorship that he provided those graduates from the Naval Academy.
Josh King:
In that brigade of 1100 graduates, 233 of them women were commissioned as officers. In your strategic guidance that you issued a year ago, again, you wrote, the department will relentlessly pursue a force that keeps faith with all who serve, where no one ever has to feel unsafe. There will be zero tolerance whatsoever for sexual assault, sexual harassment, any other behaviors that constitute a betrayal of our sacred oath and solemn responsibility to our teammates and our nation. Now, reading your tweet thread from a couple weeks ago, you announced the Office of Force Resilience. What's the Navy's report card on this score? And what's your assessment of Navy culture today?
Carlos Del Toro:
Look, I think we're doing quite well. I think that there's lots of challenges. And since I've come in as Secretary of the Navy, I've tried my best working with my entire team who's equally devoted in the Navy and the Marine Corps and the leadership triad of the comment on the Marine Corps, the chief of Naval operations myself, along with the two senior enlisted leaders in both the Navy and Marine Corps are firmly behind this. It's really what professionals do. And I told you earlier in this podcast that young men and women swear an oath to the Constitution. It's our responsibility to treat them as professionals. And that's about trust. They're willing to give up their lives at the ages of 17, 18, 19, 20 years of age. We've got to treat them like adults and we've got to trust them. And so it's important to trust them. Whether it's two marines in a foxhole or two sailors on an aircraft carrier, a submarine or an aircraft, they've got to be able to trust each other if they're going to be able to become effective war fighters and rely upon each other in conflict.
And trust is... It's fundamental to everything that we do. In order to trust each other, you got to treat each other with dignity and respect. And that's why professionals don't discriminate. They don't use extremist behavior. They truly trust each other and treat each other as professionals. And that's why we don't tolerate any of that behavior. Sexual harassment, assault, discrimination, extremism, none of that has no place in our Navy Marine Corps team.
We had the chairman of the Joint Chiefs General Mark Milley here earlier today. One of his chiefs, of course, is your CNO, I mentioned earlier, Admiral Mike Gilday. Admiral Gilday did a podcast recently at the Heritage Foundation. Here's what he said about the navigation plan that the CNO published earlier this year.
Mike Gilday:
And so what I'd like to get with a surface ship building line, as an example, it gives some stability with respect to fleet size, I use the submarine ship building, a plan that we have as an exemplar. And so for about 20 years, we're in a cadence right now to deliver two attack boats and one ballistic missile submarine a year. That's a high degree of predictability for an industry that delivers those vessels. Likewise, and to your point on the repair side, it gives us a higher degree of fidelity on what repair requirements we're going to have during that same period.
Josh King:
So, CNOs, naval secretaries, even presidents, they come and go, Mr. Secretary. But shipyards, they need to plan and build and maintain ships with the labor force to get the job done. That stretches out decades past a presidential term. What's the state of private industry in support of the Navy today?
Carlos Del Toro:
Well, our relationship with the private industry is extremely important. And stability in that industrial base is also extremely important. The pipelines that exist throughout the private sector, whether it be a small business and medium sized business, a large business, but particularly our shipyards, is incredibly important for them to plan well in advance for the workforce that they need to be able to produce these ships and submarines in a timely fashion, for example. So, we in government sort of owe it to the best way possible to provide them that stability. And a lot of that comes along with what I believe is a wise investment, which is a multi ship procurement, basically over a set period of time so that they can plan properly for those workforce and capital investments that they have to make in the private sector.
Josh King:
So, as we wrap up then, if you were to find yourself up the street in Hell's Kitchen, or at Thomas Alpha Edison High School today, looking eye to eye with a high school senior PS 35 maybe, or for that matter, a kid in Portland, Omaha, or Norfolk, what would be your personal recruitment message about the opportunity at hand?
Carlos Del Toro:
One has many choices in life. I would share within the choice that I made at 17 to join the Navy, serve my country, learn what it was like to be an electrical engineer, a space systems engineer, an entrepreneur later on in life as well too. Our choices that they must consider, that they should consider. It's unlike any other experience that one can have in the private sector. And I would highly encourage them to consider serving in the Navy and Marine Corps. Certainly above service in the Army or Air Force in my dad, but I'm a little bit prejudicial on that. But it really has made me who I am today and it's been an amazing journey that I just simply don't think I could replicate in any other fashion. And so I would encourage them to swear the oath of office like I did at 17, join this amazing journey and make the most out of life.
Josh King:
Speaking of those other services that compete for the Commander in Chief's Trophy, I watched the Midshipman play Cincinnati over the weekend. Coach Niumatalolo. Squad is three and four. Notre Dame is coming up on Saturday. The Irish are always tough. But going into the big show on December 10th, Navy has a 62, 53 and seven record versus Army. As at MetLife Stadium last year when we squeaked by 17 to 13. What should we be looking for at Lincoln Financial Field?
Carlos Del Toro:
Well, I'm always the cup is always half full and not a half empty. And I have confidence that we're going to beat Notre Dame, and I'm of confidence that we're going to beat Army as well too. At the end of the day, these are great institutions made up of great young men and women who've sworn the oath, who serve our nation. And I'm very, very proud of them on the football field and off the football field. And as you watch those games from your living room, it really is something special to see those young men and women go on the field and display everything that's great about our country. Everything that's great about serving in the military. These will be the future veterans of our nation, and I'm very proud to be their Secretary of the Navy, despite any outcome of any football game.
Josh King:
I always think that no matter who wins or loses, the American people or the winner of that game.
Carlos Del Toro:
Well that's exactly right, although it is nice when Navy wins.
Josh King:
Go Navy, beat Army. Thanks so much, Secretary Del Toro for joining us Inside the ICE House.
Carlos Del Toro:
Well said, Josh. I appreciate you allowing me to be here with you.
Josh King:
That's our conversation for this week. Our guest was the Honorable Carlos Del Toro, 78th Secretary of the United States Navy. If you like what you heard, please rate us on iTunes or other platforms you get your podcast from. So other folks know where to find us. If you've got a comment or question you'd like one of our experts to tackle on a future show or guests like Secretary Del Toro, email us at [email protected] or tweet on us @icehousepodcast. Our show is produced by Pete Ash with production and engineering from Ian Wolff. The Director of Programming and production for ICE In the New York Stock Exchange is Marina Stanley. I'm Josh King, your host, signing off from the Library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
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