Latest / The ReForge Podcast / Raw Material Prices Are Up Eighty Percent (with Will Alverson) | ReForge 027

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Raw Material Prices Are Up Eighty Percent (with Will Alverson) | ReForge 027 · The ReForge Podcast

• 0:05
  Welcome to the Reforge podcast.
• 0:07
  I'm Matthew Chang, and we're here to explore all things AI, automation, and the American worker, proving that the American reindustrialization is possible, pivotal, and pressing.
• 0:19
  Thanks for joining us today.
• 0:21
  Let's get into the episode.
• 0:25
  Welcome back everyone, and welcome to episode 27 of The Reforged Podcast.
• 0:31
  The numbers keep growing, and today, not to disappoint you, we are joined by the apparently one of the top five funniest men on X, Will Alverson.
• 0:41
  Will is the managing partner at Accurate Metals, a second generation family business specializing in steel plate processing for the mining, defense, maritime, agriculture, energy, and medical sectors.
• 0:55
  But that's not enough, so he is also serving as a fellow at the Wisconsin Manufacturers Commerce with a focus on industrial policy.
• 1:04
  And'cause we're not done yet, he's worked closely with the MIT Initiative for New Manufacturing to expand trade education across the Midwest.
• 1:15
  Will, welcome.
• 1:16
  It is so great to have you on the show.
• 1:18
  I know I didn't do you nearly enough justice, and obviously we're gonna have to get into, uh, some of these jokes Matt talks about.
• 1:24
  But welcome.
• 1:26
  Thanks for having me, guys.
• 1:27
  Yeah, excited to, to be back.
• 1:27
  You, you guys are teaming up on me.
• 1:29
  Two on one Midwest guys.
• 1:31
  Oh, yeah.
• 1:31
  Just gonna fix the world's belt today.
• 1:34
  We're taking over.
• 1:34
  That's crazy.
• 1:35
  It's, you know, you, you still, you still win on the weather though, so you know, you got that.
• 1:39
  And, and there's not much surfing, uh, in, in Wisconsin or Pennsylvania, although I'm not ruling it out that it's possible.
• 1:46
  You can surf behind a boat.
• 1:48
  Yeah, in Lake Michigan- There you go I think nor- Lake surf like yeah, I think, I think there's people who do that Yeah.
• 1:54
  You, you, you still got the natural wave.
• 1:55
  So Will, what did I miss?
• 1:56
  Tell us, I know that was, you know, obviously a lot.
• 1:59
  You're obviously an incredibly busy guy doing a lot.
• 2:02
  Tell us a bit more, what did we miss?
• 2:05
  Give us...
• 2:05
  You know, who are you and what are you doing?
• 2:07
  Yeah, I mean, I think that's a pretty good summary.
• 2:09
  Um, second generation manufacturer and, uh, you know, you're from Pennsylvania, so you know it's just really ingrained into the culture in the Midwest, um, you know, especially in Wisconsin.
• 2:19
  Um, I mean, on, on any given year, Wisconsin usually has number- they're number one or number two state for manufacturing jobs per capita, so it's really just everywhere.
• 2:30
  It's unavoidable.
• 2:30
  It's part of the culture.
• 2:31
  Um, so you kind of grow up around that.
• 2:33
  Um, as you mentioned, family business.
• 2:35
  Um, which is funny, I didn't actually grow up in the family business.
• 2:40
  It was mostly working in, like, family friends' machine shops and things like that.
• 2:44
  So, um, you know, like ran manual lathes for a summer and whatnot.
• 2:48
  Um, so it's, you know, definitely, uh, it's something you sort of just think is normal everywhere until you go somewhere else and you realize, like, hey, this isn't how every state's economy is built.
• 3:01
  Um, so, um, did a little bit of time in fintech, went into venture capital, um, but the plan was always kind of coming back to this eventually.
• 3:13
  Um, and kind of about, I think, two and a half years ago did that full time.
• 3:17
  I'd, you know, had always kind of kept tabs on it and helped with certain little projects.
• 3:21
  You know, rebuild the website, deploy a CRM, things like that.
• 3:23
  Just simple stuff I could do remotely.
• 3:25
  But, um, you know, I think the, um, the draw to come back to Wisconsin to kind of jump into that was more just for, um, you know, kind of where I was personal life-wise.
• 3:38
  But, um, also the timing just couldn't have been better, where all of a sudden we're, you know, getting kind of this, uh- really good wind to our back for US manufacturing.
• 3:48
  So, um, you know, between just the macroeconomic conditions and all of the technological developments, um, it's been really exciting.
• 3:56
  So, um, yeah, I mean, I kind of just live and breathe this stuff, so it's fun.
• 4:01
  Um, that's, that's, that's the high-level summary.
• 4:05
  And like any good Wisconsinite, just big, big Packer fan and, um- Boo.
• 4:10
  Sorry you know?
• 4:11
  So- It's fine.
• 4:11
  Yeah, yeah, yeah.
• 4:14
  So Will, who, who built the company?
• 4:16
  Was that your dad that started it?
• 4:17
  Yeah.
• 4:18
  Yeah, yeah, 31 years ago now.
• 4:20
  Um, so he had- Yeah actually started, um, there's a company called Rite Hite here in Milwaukee and, um- Oh, yeah you know, ecosystems kind of build up.
• 4:29
  Like you see El Segundo is getting really big because you're getting people leaving SpaceX and going to Anduril and leaving, you know, both of those to go start their own companies.
• 4:38
  Um, the amount of manufacturing companies and contract manufacturers, service providers, job shops in Wisconsin that are started by Rite Hite alumni, um, there's quite a few of them.
• 4:50
  So, um, left Rite Hite and then, um, started a contract grinding shop with a bunch of partners, realized he didn't like having full control and then, uh, started this up That's cool.
• 5:05
  Rite Hite, for the audience, if you've never heard of it, it means you have not actually been to a factory or warehouse.
• 5:11
  Um, it's, it's the number one, it's the Cadillac name in dock door equipment.
• 5:17
  So when you see these huge buildings with, you know, 50 or 100 dock doors on the back, then good chance those are Rite Hite, and that's based out of Milwaukee, right?
• 5:25
  Yep.
• 5:26
  So- Right next to their headquarters, and, uh, one of the parts that we...
• 5:31
  I mean, we're doing several hundred of these a week.
• 5:33
  There's these hooks for, you know, sort of truck backs up to a dock, and it hooks it so it doesn't roll away.
• 5:38
  Um- The dock lock.
• 5:40
  Yep.
• 5:40
  Yes.
• 5:40
  Yeah, exactly, and we're, um, making hundreds of those hooks per week, which also gets you thinking, like, how many loading...
• 5:47
  Like, how fast can people be building loading docks?
• 5:49
  But a- apparently very fast.
• 5:51
  Um, so, um, it's kind of fun.
• 5:53
  If I- I'll go on walks, like after dinner, walking downtown into Milwaukee, and, um, you pass their corporate headquarters, and I can see a bunch of parts that we've made in the, in the windows in some of the conference rooms.
• 6:05
  That's cool.
• 6:05
  So Colin, my new metric for success of our economy is just how many dock lock hooks that Will is making.
• 6:13
  Are going forward.
• 6:13
  Honestly, still- Yeah, I, I love a good, you know, under the radar metric.
• 6:20
  Yeah, you could probably predict prices of, like, structural steel from that,'cause it's just how many buildings are going up, right?
• 6:27
  Or being refurbished.
• 6:28
  So that's probably like a...
• 6:31
  I feel like I could probably sell that data to a hedge fund or something.
• 6:35
  Oh, yeah.
• 6:36
  Yeah, there's some investment bank analyst right now who's like,"What, what are these hooks?
• 6:40
  How many?" Yeah, exactly.
• 6:41
  You know, you had the analysts that used to use, like, the satellite imagery to see how many deliveries for auto vehicles.
• 6:46
  Now they're getting to the point of looking at, you know, dock locks.
• 6:49
  So, you know, whatever it takes to get, get that edge.
• 6:52
  Yeah, yeah.
• 6:52
  So let...
• 6:53
  When did you jump back into the biz, Will?
• 6:56
  Um, full-time I wanna say two and a half years ago.
• 7:00
  It's- So since that time, we gotta ask, what's your dad think?
• 7:05
  He's got his know-it-all son in there with- Yeah his technology.
• 7:09
  Well, it's, you know, it's pretty fun.
• 7:11
  So there's, there's sort of two, two parts to that answer.
• 7:14
  Um, I mean, one is- You know, he's, he's a very good strategist.
• 7:21
  I like the way he does business.
• 7:22
  It's very, you know...
• 7:24
  It's, it's a very, like, conservative Midwest way of doing it, right?
• 7:26
  Where it's, um...
• 7:27
  You know, and I can talk a little bit more about our philosophy and our principles later, but, um, you know, it's very just sort of smooth sailing, risk mitigation, um, keeping employees, customers, vendors happy.
• 7:39
  Um, you know, just, just smooth sailing, right?
• 7:43
  Um, it's kind of interesting coming from especially, like, a tech and venture capital background where you're used to working with teams where you're w- you know, the, the norm is very much just try things really fast, build things, see if it works, adjust.
• 7:58
  Um, and you usually, um, you have quite a bit of buy-in where everybody sort of just knows directionally, okay, yes, this makes sense.
• 8:08
  Here's how this works.
• 8:09
  Um, it's a little bit different because, you know, I, I have the desire to move fast on things and to try things, but there's certainly a little bit of needing to remind myself, okay, I need to actually slow down and kind of explain the very basics of how this works and why from a P&L perspective, um, versus just trying something and assuming everyone immediately sees why this would be valuable.
• 8:31
  Um, so, you know, that's, that's been an adjustment, but I think also a good lesson where, um You know, it's sort of forced me to be a little bit more patient and that's, you know, I found that to be really beneficial in a lot of cases, right?
• 8:44
  Um, it's a marathon, not a sprint.
• 8:46
  So just, you know, it's a little bit of give and take on that which is, is possible and- We, you mentioned a P&L, so one of the things you're doing now, I'm gonna make a wild assumption here and assume that you're profitable.
• 8:59
  I know it's a crazy- Yeah, yeah assumption.
• 9:01
  Yeah, absolutely.
• 9:02
  So now, now you're managing a profitable P&L and I'm- Right most of the tech startups don't, don't even know what that sentence means.
• 9:10
  So what, what's kind of the switch to going from,"Hey, we're, we're burning investor capital so that we can grow" and, and really your only financial metric in a startup is revenue.
• 9:20
  That's the only- Right thing you can go by'cause there...
• 9:23
  Now you've got, you've got the EBITDA, you've got the net income, you've got your taxable income, you've got things you can do to mitigate tax.
• 9:31
  So now you're running a real company, basically.
• 9:34
  What's, what's the switch been?
• 9:35
  Yeah.
• 9:36
  I think, um, the way we think about it, so again, we, we tend not to, like, leverage.
• 9:41
  There's, um, we acquired one of our subcontractors in January.
• 9:46
  Um, it's actually where I am now.
• 9:47
  S- that's why the office- Congrats is so empty.
• 9:49
  We just, we just- Very big news still, still, still filling up the office here.
• 9:52
  But, um, you know, uh, a lot of lessons in that and I think the idea is, okay, let's really take this process as a sort of test run.
• 10:02
  Um, you know, figure out what worked, what didn't work.
• 10:04
  Um, there's already a lot of kind of very glaring lessons on here's what we would do different next time.
• 10:08
  Um, but you know, and then actually since then we've invested more in CapEx to improve the facility, improve the equipment, pay people more, um, you know, improve the safety of the- CapEx maxing, Matt.
• 10:21
  Yeah.
• 10:22
  That's it.
• 10:22
  But we've actually, we've actually spent more than the close price on the business just on improving the facility, improving the equipment.
• 10:28
  So, um, and, and we were able to do that all without any leverage.
• 10:31
  So, you know, I think what we- Good what we try to do is, um- You know, there's kind of a level of rainy day fund.
• 10:40
  Okay, what happens if everything that possibly could go wrong does go wrong?
• 10:43
  Because that happens in manufacturing, right?
• 10:46
  So there needs to be a certain level of safety net there.
• 10:49
  Um, but then the rest of that, it's just our philosophy is to constantly be putting it to work.
• 10:55
  Um, we always want to have the newest equipment.
• 10:59
  We always wanna have better equipment than our competitors.
• 11:02
  Um, things that allow us to do additional work, to do faster work, to do more precise work.
• 11:06
  Um, and we're, we're replacing a lot of our stuff way before it needs to be.
• 11:10
  I mean, um, the business we bought in January has some flame cutting machines that are 20 years old, and they're, they're good.
• 11:19
  They're workable.
• 11:20
  People, people use'em.
• 11:21
  But we actually, um, you know, our practice has always been when we purchase them from a company called Messer, um, and we get the newest ones and we replace them on seven-year cycles usually.
• 11:33
  Um, you know- Wow so it's way before it's ready to, but then we, you know, don't run into unplanned outages or maintenance issues or deteriorating quality.
• 11:42
  Um, you know, it's just being proactive with it.
• 11:45
  So we're, we're kind of thinking, um, CapEx is either, like I said, to fuel growth, to find new efficiencies, um, or just to kind of mitigate problems that might come in the future.
• 11:57
  Um, the other thing too then, I think, you know, this is, this steel in general is very sensitive to macroeconomic conditions.
• 12:06
  Um, we've got a good customer mix, so we don't, you know, it doesn't affect us quite as much.
• 12:10
  But, um, you know, if we're expecting deflationary times in, you know, I mean, no one's got a crystal ball, but, you know, the, the recipe for that if it compresses earnings a little bit would be to, um, spend more kind of on optimization and, you know, how do we, how do we get more out of what we have?
• 12:28
  How do we lean down a little bit, um, without, you know, totally downsizing, right?
• 12:32
  Um, whereas in bull markets like we're on right now, then it's a little bit more aggressive in terms of, okay, we can purchase one of our subcontractors and throw a bunch of money at improving the facility.
• 12:43
  So, um, that's, that's kind of been our philosophy.
• 12:46
  Let me jump back to the seven-year replacement on equipment.
• 12:50
  So, um, I'm gonna make a controversial statement here.
• 12:54
  I want to test it with profitable good customer mix Will Alverson.
• 12:59
  So I, I, I personally believe that when manufacturing companies buy their employees the best equipment, that leads to better employee morale, fewer injuries, and higher retention.
• 13:11
  What's your observation been on being able to keep your workforce engaged when you, they see you investing more than the purchase price of a company into buying them new things to do their job?
• 13:21
  Yeah, no, yeah.
• 13:21
  I mean, you're 100% right.
• 13:22
  I think, um, I think one of the really good testaments to That is, um, we have a lot of employees who are sons of longstanding employees where they, you know, and that's, that's a pretty good testament.
• 13:41
  If a, if a parent is telling their child like, Hey, this is, this is a good place to work.
• 13:44
  Um, you know, I'm trying to actually think of how many we have.
• 13:47
  I mean, there's, there's a number of that exact situation.
• 13:51
  Um, so, you know, I think that's, um, that's a good statement.
• 13:54
  Now, again, with this, uh, with this new facility we purchased again, it was, you know, it's not just equipment, it's not just safety, but you know, we, we put in a bunch of new air filtration, um, you know, which during the winter makes it obviously just better air to breathe, um, during the summer, pull some of the mist out of the air.
• 14:12
  So it's not as hot in the shop.
• 14:13
  Um, there's just like, it's, it's just a ton of little things that go a really long way.
• 14:18
  Um, you know, so it's, it's kind of gotta be constant.
• 14:21
  I mean, talent is such a huge constraint that we can't, we, we, we can't afford to not try and get every edge with attracting and retaining the best people.
• 14:34
  Um, we had one situation that was kind of funny, uh, a couple months ago where a machinist from a direct competitor had left their company, came here, um, and he told a few of his friends at the previous company, like, Hey, I'll check this out.
• 14:49
  And, you know, some of them kicked the, kicked the tires a little bit and the owner of that business emailed out and it's like, oh, like, do you want me to start poaching from you guys?
• 14:56
  And it's like, yeah, like here's, here's, here's the contact info.
• 14:58
  Go ahead.
• 14:58
  Like, like, just, just try it.
• 15:00
  See what happens.
• 15:01
  Like no one's, no one's gonna come work for you.
• 15:04
  Like, so, um, you know, but you just, you, you have to, right?
• 15:07
  Like, I mean, you, you saw, um A really good example actually during COVID, um, you know, had to kind of cut down workforce because of the rules on how many people can be, um, you know, in one building at a time.
• 15:20
  And we had compiled a bunch of cash for an acquisition, um, and, you know, then everything shuts down, and, uh, used that war chest to keep the furloughed employees salaried full time while everybody- Oh figured that out.
• 15:37
  Things open up again- Yeah and everybody's having problems finding talent, and guess who isn't and eats all that market share, you know?
• 15:43
  So that was like, that's, you know, another good example of just, you know, that's the, the way my dad ran the business.
• 15:47
  And I'm like, okay, like, you know, it's, it's, like sure it's the right thing to do.
• 15:51
  It's like all well, good, you know, feel good and stuff, but it's also just like, it's kind of a requirement if you want the business to be sustainable.
• 15:58
  That's incredible.
• 15:59
  I mean, I, I think that that's kind of...
• 16:01
  It, it sounds like almost a old school concept of, oh, you take care of your employees.
• 16:07
  But at, at the end of the day, you're talking about you give them the best, you know, machines to do their job.
• 16:12
  You, you're ultimately empowering them to not only be successful, but you are making that kind of commitment of,"Hey, we're going to have shared sacrifice, you know, in this.
• 16:24
  Things outside your control, but we're gonna invest in you to make sure that you are positioned for success." And to your point earlier, it is a just constant battle out there for talent.
• 16:35
  And I think to some extent it speaks to the quality of brand that, you know, you and your family have built, basically being able to say,"Yeah, go for it.
• 16:43
  Try and poach our people.
• 16:44
  W- there's a reason they came to us in the first place." Yeah.
• 16:47
  "We're not gonna stop doing that." And it's a testament to obviously the growth you guys have had too.
• 16:51
  So, you know, it's encouraging to see.
• 16:54
  You know, I, I, I think it wa- a, a previous guest of ours made a point of once you get past that first generation, when you get to, uh, kind of that second, third generation of ownership, organizations start to change, and that's where you get a lot of that unlock.
• 17:10
  And obviously, you know, you're another example of, yes, that's it, is if you could successfully transition organizations, focus on those things that build a strong brand, great place for employees, I mean, that, that is a tough, tough act to beat.
• 17:27
  Yeah, no.
• 17:28
  Yeah.
• 17:28
  Well, I wanna get into...
• 17:29
  I'm sorry to interrupt you, but I wanna get into these, this bull run.
• 17:33
  We gotta cover that.
• 17:34
  Uh, tell us what you're seeing.
• 17:36
  You serve at, I counted at least six market verticals when Colin introed you.
• 17:42
  What are you seeing?
• 17:43
  Is there one vertical that's hot?
• 17:45
  You know- Yeah, so, um what's the bull run look like?
• 17:47
  I think, um- And I'll expand on what I mean by this shortly.
• 17:53
  But, um, we actually from where we sit, we think about our macroeconomic signal than oil or, or comparable, I should say, not better.
• 18:02
  Like, you know, oil's probably the best signal on inflation and just everything.
• 18:07
  But, um, copper is a really good barometer.
• 18:09
  Um, and I'll kind of get into why that matters for us.
• 18:12
  Um, we, um...
• 18:14
  It was kind of funny.
• 18:14
  So I think it was last year, pr- not, not this most recent, but reindustrialized too.
• 18:20
  Um, somebody, you know, asked me like,"Oh, like, are you, you know, noticing all the momentum from this?" And it's like,"No, not really from this." Like, you know, it's, it's great that there's a lot of startups getting funded.
• 18:28
  Like, obviously, you know, if Ceronic was in our backyard, we'd probably try and sell them plate or something, right?
• 18:32
  But, but like, it's...
• 18:34
  W- we're not seeing it yet, right?
• 18:37
  Like, that's, that's, d- for, for successful industrial policy to, like, really be carried out, that's, you know, a minimum decade long project.
• 18:45
  Multiyear.
• 18:45
  Um, however, uh, I think the kind of tip of the spear of that is the data center demand.
• 18:51
  And, you know, while we're not doing structural and we're not doing, like, assemblies or anything for data centers directly, um, where you are seeing it is energy demand and copper.
• 19:01
  Um, and copper, uh, needs to be pulled out of the ground.
• 19:06
  And, um, probably our two biggest end customers, um, one of them makes rope shovels, so giant expensive mining equipment, um, and the other makes rope shovels and generators.
• 19:21
  So, you know, that's pretty, pretty big.
• 19:23
  Pretty good coverage there.
• 19:24
  Yeah, yeah, exactly.
• 19:25
  So, you know, the, the kind of mining equipment, energy equipment, um, you know, any- anything to do with just minerals, construction equipment, um, things like that, like, that's, that's all pretty red hot right now.
• 19:37
  Um, uh, interesting- Interesting interestingly enough, uh, in Wisconsin, the defense demand is in a little bit of a lull.
• 19:46
  We're...
• 19:48
  I think we're, like, seventh or something.
• 19:49
  I'm...
• 19:50
  We're top 10 in manufacturing output for the country, but we're 31st, I think.
• 19:56
  This, this might be stale data, but, uh, one of the candidates for governor, like, a year ago said this, so I'm just riffing off of that.
• 20:02
  Um, for a while, so there was the Fincantieri shipyards, which did the Constellation class cruisers and Arleigh Burke-class destroyers, which were both just horrific procurement failures.
• 20:14
  Um, you know, and then the, uh, the company Oshkosh Truck that, um, made mine-resistant, ambush-protected vehicles and won the contract to replace Humvees with the Joint Light Tactical Vehicle, which is great.
• 20:28
  Like, what a, what an awesome program.
• 20:29
  You're, you know, watching these things eating IEDs in Afghanistan, and Special Forces guys are just totally fine, right?
• 20:35
  Like, it's a great product, right?
• 20:36
  Well, they go to Ukraine, and they start getting shredded by drones, so, you know, not as much demand- Oh, no for those anymore, right?
• 20:41
  Like, um- They didn't factor in the work with drones.
• 20:43
  Y- yeah, yeah, ex- exactly.
• 20:45
  So, um, you know, I, I think there'll probably be some bounce back, um, in that, but- One of the things that we've always done well with is having enough of a customer mix where, like, when one thing's down, the other thing's not up.
• 20:58
  I mean, Ukraine actually also is another good example where agricultural equipment was a huge end customer for...
• 21:03
  Or Ukraine was a huge- Oh, yeah.
• 21:04
  The breadbasket end customer for big equipment.
• 21:07
  It's getting slaughtered right now.
• 21:08
  I mean, I, I really...
• 21:09
  We're not doing that much ag work right now.
• 21:12
  Um, during the Biden admin we would make a ton of parts for windmills.
• 21:15
  The second the inauguration happens, just no more windmill parts.
• 21:18
  But, you know, there's other stuff gets busier, right?
• 21:20
  So, um, you know, it's a, it's a give and take.
• 21:24
  But, um, mining, construction equipment, energy, uh, that's, that's all red hot right now.
• 21:30
  And, um, you know, that is really being driven by a lot of the AI CapEx.
• 21:36
  So your numbers guy will, like, break it down.
• 21:39
  Are we in a bull run from the, the hook and plate perspective?
• 21:43
  Are we in a bull run right now?
• 21:48
  I don't know.
• 21:49
  It's, it, um We, we get a little bit nervous about it, not because, you know, obviously we like seeing the sales go up.
• 22:02
  Um, but, you know, it's, it's just been doing nothing but going up for so long where, um, you know, I think what makes, what makes us nervous is, okay, if you look at...
• 22:15
  And not just unique to us, I mean the, the Most of the growth in the US economy in the last, what, like year and a half has just been AI CapEx.
• 22:26
  Um, so what happens if midterms roll around and we get a bunch of moratoriums, right?
• 22:33
  Um, what happens, uh...
• 22:36
  Like there's, there's just, there's...
• 22:38
  It, it feels we, we kind of have to balance the sense of, okay, well, of course, we've gotta capitalize on it.
• 22:45
  We have to, you know, be in position to capture all of the value we can, um, but also not totally expose ourselves if- Would, would you say it's, it's a fragile bull run at this point?
• 22:59
  Would, would that be?
• 23:00
  'Cause I, I- I don't- hear what you're saying, and I agree that, yes, we've got this momentum going, but it almost feels like the winds could shift if a number of cards kind of fall.
• 23:12
  But none of that is in any way, shape, or form a certainty.
• 23:17
  Yeah, I think, I think it's probably fragile because it feels like it's single point of failure, right?
• 23:21
  Um, if we have a bunch of data center moratoriums, right?
• 23:27
  Um, if...
• 23:30
  I mean, you know, we're, we're running out of PAC-3 interceptor missiles right now.
• 23:35
  Um, if China goes across the strait and all of a sudden we can't get silicon from TSMC, um, you know, there's, there's just a lot of things that could, um, you know, very rapidly change that, right?
• 23:49
  Um, so, you know, we, we kind of, we control what we control.
• 23:53
  Um, I think the, uh, the way we do that, um, like I said, obviously cash on hand, but also just controlling, um, you know, how, how far outbooked we are, being conservative with pricing, um, just trying to, uh- Again, it's, it's, it's sort of this delicate balance of, okay, we need to capture as much value as we can, but we also need to be sure that we're not, like, overexposing ourselves to risks if something random goes wrong, right?
• 24:25
  Like, it is, it is a business that is insanely sensitive to random geopolitical events, right?
• 24:32
  Like, I mean, you know- Yeah when, like Russia, Russia rolled tanks across the border in Ukraine and our pricing structure completely changed overnight, right?
• 24:40
  Like that's, that's...
• 24:42
  We're a business that operates in the Midwest, but it's, it's related.
• 24:45
  Um, so yeah, I, I guess, you know, that's a long-winded way of saying like, you know, yes, I think it's a bull market.
• 24:53
  I'm, um, personally a major AI optimist.
• 24:58
  I'm an American optimist.
• 24:59
  I think, um, you know, I think it's all gonna work out, but, um, I'm also not gonna, like, totally bet the farm on that, so.
• 25:10
  So- Yeah clearly- I'm curious, are you having trouble with raw materials?
• 25:14
  Like, do you get all the plate you need from the mills?
• 25:18
  Yes.
• 25:20
  Um, I guess there might be- Sounds like there might be well, yeah, another, another...
• 25:25
  Here's another good kind of principle where, um, and this is a good example.
• 25:30
  You know, we always, like the second we get an invoice, you just pay it.
• 25:34
  It's not like,"Oh, let's see if we can stretch this out like, you know, 60 days or negotiate 90." It's just like,"All right, like yeah, you know, it's invoice in, paid." Um, and what that's done over a 30-year period is that our suppliers really like us.
• 25:47
  Um, so you know, we tend to get, uh...
• 25:52
  So we, we work kind of, um, there are some mills that we order from, um, for, you know, specific usually more like exotic grades or sizes and things like that, and then there's a lot of sort of secondary distributors that we'll work with, um, pretty closely that just sort of help manage some of the supply chain complexity without having to bring in like train loads of steel.
• 26:10
  Um, but um, yeah, it is, it is really hard to get material right now.
• 26:16
  Um, but again, we've kind of built these relationships where if a supplier is sitting there saying,"Okay, I have 10 people asking for these plates.
• 26:23
  Who am I going to give it to?" It's gonna, you know, be the one who's referred the most customers and always pays them early, right?
• 26:29
  Like, um, so you know, that's, that's set us up nicely for that.
• 26:32
  Um, but yeah, I will say, um...
• 26:36
  God, I just did a report on this.
• 26:37
  Prices, so like base prices on what we were paying for basic material, um, in the last year Hang on, I gotta find it.
• 26:51
  It just, it's, it's up, like, 80-some percent.
• 26:54
  Oof.
• 26:55
  Um, yeah, yeah.
• 26:57
  So that's, that's...
• 26:58
  And that's where you kind of get the, the...
• 27:00
  That's where it's sort of tough, right?
• 27:01
  Because, again, capturing the value, right?
• 27:04
  Like, you know, we are effectively a material supplier, so we can, we can capitalize on that.
• 27:08
  But if it keeps rising, what we found was we actually weren't, um, we were keeping pace with the price raises, but as lead times got booked out, by the time we were fulfilling it, we were getting bitten on, um, like material- That- replenishment costs.
• 27:22
  That raw material price increase chewed up some of your margin- Right you're saying?
• 27:27
  However, on the flip side, if there is some giant deflationary crash, right?
• 27:32
  Um, you know- There's upside there for you, but- And we're booked out a month, now we're just, you know, printing on that.
• 27:39
  So, um, you know, it's, it's...
• 27:41
  If you get too greedy trying to predict where the market's going to go, that's how you get bit.
• 27:45
  But, like, I mean, everybody knew in, you know, by November of last year that, like, okay, like, prices are gonna be going way up, um, this next year.
• 27:56
  And, you know- What you're saying on steel tracks,'cause I've been...
• 28:00
  As a budgetary number, I said construction doubled.
• 28:04
  The, the price of construction, we think of a newly built building, is double what it was from, uh, February 2020.
• 28:11
  You know, your classic pre-COVID metric.
• 28:14
  So over the last six years it's gotten really expensive to build.
• 28:19
  I mean, anything.
• 28:20
  You know?
• 28:21
  And, and, uh, those old, those old kind of dollars per square foot numbers that people have in their minds from the last four or five projects they've done are out the window.
• 28:30
  Out the window, yep.
• 28:31
  And, uh, and that's one of the things I'm saying is, you know, we supply automation, right?
• 28:36
  I'm, I'm putting all the technology into the, the building that you help supply for.
• 28:42
  The, it used to be that the technology cost more than the building.
• 28:46
  Right.
• 28:47
  It is the opposite now.
• 28:48
  It is, you wanna build the smallest building that you can build and stuff it with automation,'cause the automation is more affordable than the building itself.
• 28:58
  So I, I, I just find that interesting.
• 29:00
  I'm gonna guess then that's shown up in your revenue figures since you joined the business.
• 29:04
  Your revenue's way up from when your dad brought you in.
• 29:08
  Yeah.
• 29:09
  You, you bring that up at, like, Thanksgiving?
• 29:12
  We're actually...
• 29:12
  So with this, it- it's kind of funny,'cause with this one we purchased, um, in January.
• 29:20
  It's just, you know, again, it's, like, not up to our operational standards yet.
• 29:23
  We're trying to, you know, get our software, all of our management systems, our scheduling systems just, you know, trying to get everything in place and it's, it's a lot all at once.
• 29:29
  But, um, I do have these moments where it's, like, if we step back, um- I think at the end of last month, we had surpassed like their second-best revenue year already.
• 29:46
  So it's like, all right, like it's- Wow something, something's working a little bit.
• 29:49
  So, um, you know, even if we're, we're still pissed off about how it's going, but, um, you know, so that's, that's good.
• 29:54
  And I, I can't take too much credit for that'cause again, that's a lot of that is just there's seemingly unlimited demand and we have more capacity, so of course we can fill it up.
• 30:01
  But, um- Yeah.
• 30:05
  It's been going well, so, um- Colin, you're dealing with a perfectionist here.
• 30:11
  Yeah, clear, clearly.
• 30:13
  That's, that's something I'm like, God, I mean, y- you're halfway through the year and you've killed their, you know, best, some of their best numbers and you're still unhappy?
• 30:20
  I mean, don't get me wrong, I get it.
• 30:22
  That's, that's not a bad- Yeah spot to be in, but you know, that is a, a signal for some good times ahead, some high performance there.
• 30:30
  But you know, I mean, first off, congrats.
• 30:32
  That's, that's huge.
• 30:33
  So you know, keep that up.
• 30:35
  But let's, you know, we got a few minutes left here.
• 30:37
  Let, let's talk a bit more, um, tell us about some of your work with, uh, MIT on the, on the workforce stuff.
• 30:43
  Yeah, so they are doing some really awesome stuff.
• 30:47
  Um, and I, I've told a few people kind of from the X community.
• 30:51
  I connected, uh, Zach Gladman with, with the team out there to kind of be, you know, see if, see if he wants to be their kind of, their person on the West Coast.
• 30:58
  'Cause, you know, it is, it is really kind of community driven right now.
• 31:01
  But basically, um, they were doing a bunch of research into, um...
• 31:09
  Well, actually I'll backtrack a little bit.
• 31:10
  So unsurprisingly, MIT has a really good industrial engineering, uh, and advanced manufacturing master's program.
• 31:16
  Um, and then another program called LGO, which is like a joint industrial engineering and MBA grad program.
• 31:25
  Um, so you get a lot of like really s- super impressive manufacturing leaders coming out of there.
• 31:30
  Um, and you know, that's all great, but what they were noticing was like, okay, you know, you drop them into a manufacturing environment and, um, just speaking completely different languages from the people working on the shop, right?
• 31:43
  Um, so what ended up happening was one of the students or one of the alumni, um, just during lunch breaks and stuff on the shop was kind of obviously sans the math, um, sort of teaching,"Okay, here's, here's what I'm talking about.
• 31:58
  Here's the concepts, and here's how to think about it," and it worked really well.
• 32:01
  So, um, MIT, the, uh, group is called the LEAF Group.
• 32:06
  It's learning and experience something.
• 32:09
  I'm missing the acronym.
• 32:10
  But um, Dr.
• 32:11
  John Liu, um, was the chief researcher on it.
• 32:14
  He's a mechanical engineering professor.
• 32:15
  Um, he, um- You know, started looking into that, but then also, okay, why do, um, like technician jobs kind of plateau a little bit, right?
• 32:26
  And, uh, essentially the way you can describe it is they have developed a curriculum, um, that basically teaches the principles of industrial engineering, um, sans the math.
• 32:36
  Like it's designed for people just, you know, out of high school with shop experience, right?
• 32:40
  Um, and um, you know, it's essentially...
• 32:45
  I think the two really good analogies for it are, one is they're kind of trying to create this technologist role where it, it's think about what a physician's assistant is between a nurse and a doctor, um, for manufacturing for a role that sits between technician and engineer.
• 32:59
  Um, the other really good analogy for this is like the, so they say, okay, you know, the, the teach a man to fish, feed him for a lifetime.
• 33:06
  But with advanced manufacturing, technologies are changing so rapidly.
• 33:11
  So, you know, maybe you're asking someone to fish this year, but they have to deer hunt next year, and then they have to, you know, trap shellfish the following year, right?
• 33:19
  So, you know, it is more valuable to start with kind of the Y skills, the, you know, really basic underlying factory behaviors, understanding the terminology, what needs attention, how should I think about this, and then applying it to specific skills, um, versus just education that's focused on the hard skills.
• 33:37
  Um, so they launched this program, um, with funding from the War Department, um, two years ago out east at six locations.
• 33:46
  And, um, the basic structure is hub and spoke models.
• 33:50
  So your hubs are your kind of four principles of manufacturing, so supply chains, management, um, statistical process control and manufacturing systems.
• 33:58
  And then you apply those two spokes, which are sort of your more applied skills for whatever area employers want.
• 34:05
  Um, so long story short, I just, you know, started gathering as many, you know, customers and technical college people and, you know, just community partners in Wisconsin as I could to try and get this going.
• 34:17
  Um, and uh, yeah, it's got some real momentum, so it's looking like, um, next year going to be launching that at I know five, maybe six sites in Wisconsin, um, at technical colleges here.
• 34:36
  So, um, yeah, really, really excited about that and I think it's, um, it's important work, and I think it's just a really good, um, like, research-based model of what the future of the American manufacturing worker can and should look like.
• 34:51
  Um, so if anyone's, if anyone listening wants more details on this, I'd love to put you in touch with the- the team from there who's kind of running this.
• 34:58
  They're happy to answer any questions,'cause I, you know, I think this should be, um, available in, like, every manufacturing hub eventually.
• 35:08
  So on that note- I think- you know, y- obviously one of the busiest guys out there.
• 35:13
  You are doing so many things, which is awesome.
• 35:15
  Um, but for those looking to get in touch with you, what's the best way, um, for somebody to reach out to chat with you, whether it's business or learning more about the LEEP programs?
• 35:24
  Uh, how- how would you like to be contacted?
• 35:27
  Just shoot- shoot me a- shoot me a message on X is fine.
• 35:27
  Um, that'll work.
• 35:30
  X- X works for you.
• 35:32
  Well, that is always, always helpful.
• 35:35
  It's everything app, so- It's the new web- we're trying to solve the internet What's your avatar?
• 35:38
  Will, what's your avatar?
• 35:40
  It's King- King Julian from Madagascar.
• 35:41
  It's King Julian.
• 35:42
  Come on, man.
• 35:43
  You've got kids.
• 35:43
  Yeah.
• 35:43
  How do you not know that?
• 35:45
  Madagascar.
• 35:48
  All right.
• 35:48
  I'll get better at that.
• 35:49
  Come on.
• 35:49
  That's it.
• 35:50
  We're gonna- we're gonna have to talk about this offline.
• 35:51
  Yeah, gotta have a m- movie night with the kids soon it sounds like.
• 35:54
  Yeah.
• 35:55
  There you go.
• 35:55
  Yeah.
• 35:55
  No, I got my homework.
• 35:56
  All right.
• 35:57
  Will, thanks man.
• 35:58
  Yeah, thank you guys.
• 35:59
  This has been absolutely awesome.
• 36:00
  Will, thank you so much, uh, for joining us.
• 36:03
  This has been great.
• 36:05
  We're gonna have to have you back more to talk, uh, about after your next, you know, 10 acquisitions.
• 36:09
  You guys are about 100 times as big I'm sure.
• 36:11
  And- and cheese curds.
• 36:12
  You guys forgot about that.
• 36:13
  Yes.
• 36:14
  We didn't forget.
• 36:14
  That's- I just realized we didn't have time.
• 36:16
  That's- that's the, uh, the- the- the pop quiz is for...
• 36:18
  I'm gonna- I'm gonna leave this open for people on X, but, um- actually, do either of you guys know how to tell if cheese curds are good?
• 36:24
  No.
• 36:25
  If I like them.
• 36:26
  I don't know.
• 36:26
  Yeah.
• 36:27
  If they're from Wisconsin.
• 36:29
  So it's the...
• 36:30
  Any- anyone you know from Wisconsin, ask and they will, they will know the answer.
• 36:34
  All right.
• 36:35
  Well, we have the- We- we got some trivia homework 15 year olds here.
• 36:38
  Okay.
• 36:38
  There you go.
• 36:39
  All right.
• 36:40
  All right.
• 36:41
  Well, f- for everyone joining us, thank you again for another episode of The Reforge podcast.
• 36:46
  Make sure you check us out and follow us on socials@thereforgepod, and you can find more at thereforgepodcast.com, along with our seven steps to re-industrializing.
• 36:58
  And f- as always, we're ta- here to talk about the things that prove re-industrialization is not just possible, it's pivotal, and it is happening right now.
• 37:08
  Until next time, I'm Colin, and thank you for joining us.
• 37:12
  Thanks, guys.
• 37:17
  Thanks for tuning in to The Reforged Podcast.
• 37:20
  Make sure to like, subscribe and follow us on all of our social media@TheReforgedPod.
• 37:25
  We will see you next time