Latest / The ReForge Podcast / The Reshoring Checklist Is Getting Checked Off (with Matt and Colin) | ReForge 012

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The Reshoring Checklist Is Getting Checked Off (with Matt and Colin) | ReForge 012 · The ReForge Podcast

• 0:00
  Matthew Chang: We need to get to a modular fast reaction, speed of shipbuilding.
• 0:04
  Matthew Chang: And we could sort out the larger vessels over time.
• 0:08
  Matthew Chang: But especially those small, quick response boats or autonomous, you know, boats, we could be moving a lot faster.
• 0:15
  Matthew Chang: Um,'cause you can just start from a new design, you know, it's like that's what we did in World War ii.
• 0:19
  Matthew Chang: They came out with new ship designs.
• 0:20
  Matthew Chang: You could build a ships faster,
• 0:27
  Welcome to the Reforge Podcast.
• 0:29
  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.
• 0:39
  Pivotal pressing.
• 0:41
  Thanks for joining us today.
• 0:43
  Let's get into the episode.
• 0:45
  Colin Russ: Welcome back everyone.
• 0:46
  Colin Russ: We are here for episode number 12 of the Reforge Podcast.
• 0:52
  Colin Russ: Joined with host Matt.
• 0:54
  Colin Russ: Matt, how are you doing today?
• 0:59
  Colin Russ: Oh, my audio might be playing games for me.
• 1:03
  Matthew Chang: Sorry.
• 1:04
  Matthew Chang: I'm awesome.
• 1:04
  Matthew Chang: How you doing, Colin?
• 1:06
  Colin Russ: Oh, I'm doing well.
• 1:07
  Colin Russ: Better.
• 1:07
  Colin Russ: Better now that we can hear.
• 1:08
  Colin Russ: Now that you've graced us,
• 1:09
  Matthew Chang: Yeah.
• 1:10
  Matthew Chang: Yeah.
• 1:10
  Matthew Chang: I'm the guy that comes into the conference call on mute and starts talking.
• 1:13
  Matthew Chang: So.
• 1:13
  Colin Russ: can can everybody hear me okay?
• 1:15
  Colin Russ: Can you see me?
• 1:17
  Colin Russ: Flashbacks to COVID.
• 1:19
  Matthew Chang: So we got no guests today because we have a lot of news, right?
• 1:22
  Colin Russ: Yeah, we've got a lot of big news.
• 1:24
  Colin Russ: We got ai.
• 1:26
  Colin Russ: I feel like everything inherently is ai, you know, pilled in one way or the other.
• 1:30
  Colin Russ: But we got drones, ai, medical, steel making, you name it, we, we got the full gamut.
• 1:38
  Colin Russ: So I thought we might just, we could hit on a few of those and, and kind of comment on them.
• 1:42
  Colin Russ: 'cause it's, you know, obviously great news for the Reindustrialization folks.
• 1:47
  Matthew Chang: Yeah, let's see what you got.
• 1:48
  Matthew Chang: Can't
• 1:48
  Colin Russ: All righty.
• 1:49
  Colin Russ: So first up we are going to get into, let me share my screen.
• 1:58
  Colin Russ: There we go.
• 2:00
  Colin Russ: We've got Cleveland Cliff's partners with Palantir Pal Palant.
• 2:07
  Colin Russ: I never pronounce that one.
• 2:09
  Colin Russ: Palantir.
• 2:09
  Colin Russ: I feel like I say it different ways in my head anyways, on AI driven steel making.
• 2:14
  Colin Russ: So one of the big topics, you know, I feel like that gets debated a lot is how does AI actually fit into a.
• 2:23
  Colin Russ: The operations and the production side of it.
• 2:25
  Colin Russ: I mean, I think a lot of people accept, yeah, back office kind of planning, coordination, ai clear, clear case there.
• 2:32
  Colin Russ: So seeing it go into a company, you know, a company as big as Cleveland Cliffs, one of the, preeminent steel producers in America.
• 2:40
  Colin Russ: that's a pretty big piece of news right there.
• 2:44
  Colin Russ: So they are.
• 2:46
  Colin Russ: Deploying it across their flat rolled steel manufacturing footprint as part of a three year partnership.
• 2:53
  Colin Russ: So looks like production planning, order entry, operational workflows, you know, that in my mind, that's back office.
• 3:02
  Colin Russ: I mean, or, or not, not back office, but administrative coordination.
• 3:06
  Colin Russ: So still not quite
• 3:08
  Matthew Chang: you know, actually
• 3:09
  Colin Russ: mean.
• 3:10
  Matthew Chang: it's a step in the right direction.
• 3:12
  Matthew Chang: Like you and I know, adding AI to an electric arc furnace.
• 3:16
  Matthew Chang: Does not make more steel.
• 3:18
  Matthew Chang: Right?
• 3:19
  Matthew Chang: the electric arc furnace makes more steel
• 3:22
  Colin Russ: Yeah, like you look at, you know, US steel's, plant down in Arkansas.
• 3:26
  Colin Russ: you know that they, or it was joint venture they bought out a few years ago, like, that's just pumping out, that's one we definitely need to dig into.
• 3:33
  Colin Russ: 'cause they're, I think, producing twice the capacity of basically a 10th of the workforce.
• 3:37
  Colin Russ: But this is one of those steps with, Cleveland Cliffs.
• 3:40
  Colin Russ: They've struggled for years with profitability.
• 3:43
  Colin Russ: I mean, their CEO loves to take a nice, nice government handout whenever he can get it.
• 3:49
  Colin Russ: and then claim they don't.
• 3:50
  Colin Russ: Not making money, but anything that gets us producing more and at a more competitive
• 3:58
  Matthew Chang: So, let me read this, lemme interpret how I read this because what Palantir and Cleveland Cliffs are doing is very similar to what I would do if I was, you know, asked to AI optimize Cleveland Cliffs.
• 4:10
  Matthew Chang: I do think if you have better production planning, then you're gonna, you're gonna positively impact OEE.
• 4:16
  Colin Russ: yeah.
• 4:17
  Matthew Chang: and so I'm gonna guess that some parts of the Cleveland Cliffs infrastructure look like they're from the 1960s,
• 4:24
  Colin Russ: Oh yeah.
• 4:25
  Colin Russ: I mean I've been to a couple of those mills and it's just, you think you stepped into a time machine?
• 4:30
  Matthew Chang: Yeah.
• 4:30
  Matthew Chang: So it's old tired equipment.
• 4:32
  Matthew Chang: It's a hardworking facility.
• 4:34
  Matthew Chang: probably the majority of the equipment in the building's fully depreciated, you know, is in a maintenance cycle, somewhat end of life, right?
• 4:42
  Matthew Chang: So when you think about a facility in that state, one of the challenges you have is you end up with kind of a perpetually declining OEE.
• 4:50
  Matthew Chang: and for the audience that's overall equipment effectiveness.
• 4:52
  Matthew Chang: It's like the number one measurement of how productive your equipment assets are.
• 4:58
  Matthew Chang: just to give you a couple benchmarks, if you're running a Budweiser or a Coca-Cola bottling line, we wanna see OEE in the low to mid nineties.
• 5:06
  Matthew Chang: So the equipment's like 92, 90 5% efficient.
• 5:09
  Matthew Chang: 'cause we're making a highly repeated product with relatively new modern equipment.
• 5:13
  Matthew Chang: When you get to more batch stuff like Cleveland Cliffs, I mean, they could have significant downtime in different units of equipment while they, the materials upstream getting worked or there is.
• 5:25
  Matthew Chang: Backlog downstream that prevents the, materials from flowing through the plant.
• 5:29
  Matthew Chang: So it's, these plants are probably not very linear, right?
• 5:32
  Matthew Chang: It's kind of a spaghetti diagram of things move from point A and then they go to a pile and they go to point B and there's a ton of material handling, and a ton of kind of whip inventory.
• 5:41
  Matthew Chang: This your work in progress inventory.
• 5:43
  Matthew Chang: So the way I see it is you add Palantir to Cleveland Cliffs, you should be able to positively affect OEE.
• 5:49
  Matthew Chang: That's more revenue
• 5:51
  Colin Russ: That.
• 5:51
  Colin Russ: I mean, I, if they can't do that, then I am, I mean, I'll be amazed.
• 5:55
  Colin Russ: I'm a big Theory of Constraints fan.
• 5:57
  Colin Russ: You know, the goal book, read it a bunch of times when you look at a company like Cleveland Cliffs or anything that's really process intensive, these big production, you've gotta get to addressing those constraints.
• 6:12
  Colin Russ: And one of the biggest challenges is if you don't have that visibility, if you can't plan properly in any operation, if your production planning is chaotic, you're not gonna be able to get to figuring out what your real constraints are and really maximizing utilization of your existing assets and max out your production capacity.
• 6:31
  Matthew Chang: Yeah, that's right.
• 6:32
  Matthew Chang: and that production planning piece.
• 6:34
  Matthew Chang: Is kind of a gap in the industry.
• 6:36
  Matthew Chang: There's not like necessarily a solution for it.
• 6:39
  Matthew Chang: Whenever we've built it for clients, we build a home brew solution, we leave them up with a piece of software that's custom to the production process they have and the raw material inputs they have.
• 6:49
  Matthew Chang: So the second thing I think is probably gonna happen is they should be able to lean up inventory that's gonna help Cleveland Cliffs financially because they're gonna have less inventory.
• 7:00
  Matthew Chang: Bogging down their facility there.
• 7:02
  Matthew Chang: That means it takes less space on the floor too.
• 7:04
  Matthew Chang: I'm sure they have stuff piled up everywhere there.
• 7:07
  Matthew Chang: leaving room for new equipment and then finally it's gonna, Cash flow because if you don't have all your cash tied up in inventory sitting around the plant, you actually have better cash flow in working capital.
• 7:17
  Matthew Chang: So if we get to see after this Palantir partnership, if somebody's bold enough to post some metrics, production went up by X percent because of good planning, and then
• 7:28
  Colin Russ: That's gonna be huge.
• 7:29
  Matthew Chang: inventory went down, which resulted in healthier working capital.
• 7:34
  Matthew Chang: That is a compelling case.
• 7:35
  Matthew Chang: Palantir's gonna do well in the space if they can post the numbers.
• 7:38
  Matthew Chang: So I'd say, let's see the numbers post it.
• 7:40
  Colin Russ: I'm excited for it.
• 7:41
  Colin Russ: I mean, at the end of the day, one of the biggest cost inputs for anyone in metal working is just your raw material costs.
• 7:47
  Colin Russ: You know, US' Steel making has been estimated for decades.
• 7:50
  Colin Russ: If they can increase their throughput doing so more efficiently, and in turn be able to bring down that output, the cost for, you know, the end run producers.
• 8:01
  Colin Russ: You know, that's the type of thing that makes the US more competitive because if we can re reduce the feed stock costs for job shops, for major producers, that's what's gonna make finished goods more economical, cheaper.
• 8:15
  Colin Russ: And you know, that's the type of thing we've gotta be moving forward.
• 8:17
  Colin Russ: So I'm excited for it.
• 8:19
  Colin Russ: Hoping, hoping we see some progress.
• 8:21
  Matthew Chang: How they have at Cleveland, let's.
• 8:25
  Colin Russ: I think we've got 39 sites or something like that.
• 8:28
  Matthew Chang: 39.
• 8:28
  Matthew Chang: I was way off.
• 8:29
  Matthew Chang: Okay.
• 8:30
  Matthew Chang: So 39, if you got 10% additional throughput,
• 8:35
  Colin Russ: 32.
• 8:35
  Colin Russ: Sorry.
• 8:35
  Colin Russ: 32.
• 8:36
  Matthew Chang: then that's the equivalent of three additional furnaces free of charge.
• 8:41
  Matthew Chang: Right?
• 8:41
  Matthew Chang: So that's the way you've gotta think of it.
• 8:42
  Matthew Chang: You gotta sweat those assets you do have and it helps you build up a reserve of CapEx to expand new and do like they're doing in Arkansas, at US Steel with that, with that productive plant.
• 8:54
  Colin Russ: You know, at the end of the day, us wins if we can increase that, increase that throughput.
• 8:59
  Colin Russ: Alrighty, moving on.
• 9:02
  Colin Russ: We're gonna go to Skydio.
• 9:05
  Colin Russ: Skydio, I'm just not pronouncing anything, you know, properly today.
• 9:08
  Colin Russ: I'm struggling on the reading, I guess.
• 9:10
  Colin Russ: they commit three and a half billion with a b to expand US manufacturing and secure American drone leadership.
• 9:18
  Colin Russ: This is gonna be huge.
• 9:20
  Colin Russ: This is, you know, massive new factory.
• 9:22
  Colin Russ: 3000, basically indirect jobs created in addition to 2000 direct new Skydio jobs.
• 9:30
  Colin Russ: you know, and they're saying a billion dollars to domestic suppliers.
• 9:34
  Colin Russ: So is huge.
• 9:39
  Colin Russ: let's see.
• 9:40
  Colin Russ: I'm not seeing it in their quick little blurb.
• 9:45
  Colin Russ: I suspect this is their, carrot that they're dangling out there to now see what economic development, money they can get.
• 9:52
  Colin Russ: I mean they, they're talking, if I read I think it was a roughly five times.
• 9:58
  Colin Russ: Yeah, five times larger than their current.
• 10:01
  Colin Russ: Facility, so
• 10:02
  Matthew Chang: Alright, well let's take bets.
• 10:04
  Matthew Chang: Where is this thing going?
• 10:08
  Matthew Chang: If it's in the article, then we'll feel stupid if we get it wrong.
• 10:10
  Matthew Chang: But let's take bets.
• 10:14
  Matthew Chang: I'm gonna lead off with, Georgia.
• 10:16
  Matthew Chang: Going to Georgia.
• 10:17
  Colin Russ: Yeah, that Georgia or Ohio, Ohio has just as much as I hate to admit it, being their neighbor, Ohio has one of the most incredible economic development, agencies, organization, jobs, Ohio just knocks it outta the
• 10:32
  Matthew Chang: two in the country, and this is for, if anybody on the, pod's been in a, site, select site location, top two destinations where the states actually go and get it.
• 10:43
  Matthew Chang: Like the state will come to you to get the business, is South Carolina and.
• 10:49
  Matthew Chang: South Carolina, it's small, it's focused, and you're like, well, how did you get Boeing?
• 10:53
  Matthew Chang: How'd you get BMW?
• 10:54
  Matthew Chang: How did, and look at all the wins these guys have stacked up.
• 10:58
  Matthew Chang: you know, we put the, Keurig Coffee Factory in South Carolina and it was a monster factory.
• 11:05
  Matthew Chang: Carolina just went and got it right.
• 11:06
  Matthew Chang: They're, and then Ohio is notorious, they're gonna come out with a fast incentive package.
• 11:12
  Matthew Chang: it's competitive.
• 11:14
  Matthew Chang: And the key to those, both those states that have the same infrastructure, have a very professional economic development intake team.
• 11:21
  Matthew Chang: These guys will calculate for you a base incentives package in a matter of 24 to 48 hours.
• 11:26
  Matthew Chang: And then they have an apparatus where they can run it straight up to the governor.
• 11:29
  Matthew Chang: That, and he does not have to go, in most cases, to legislature to issue an award.
• 11:34
  Matthew Chang: So it's a very streamlined process for all those other states that are on the sidelines looking in.
• 11:40
  Matthew Chang: I'm won.
• 11:40
  Matthew Chang: Florida loses a lot just over the border to Savannah.
• 11:44
  Matthew Chang: you know, it's not as fun.
• 11:46
  Matthew Chang: It's harder for us, you know, we gotta take a pause and go to legislature before a big award.
• 11:50
  Colin Russ: it's one of those, it's interesting because, I mean, I've been in multiple conversations, discussions with local economic development agencies from the state ones here in Pennsylvania, and it's one of those things where it's like, yeah, literally look at what Ohio's doing.
• 12:03
  Colin Russ: Why can't you just copy paste that here?
• 12:06
  Colin Russ: And it seems easy.
• 12:08
  Colin Russ: They.
• 12:09
  Colin Russ: Part of the Jobs Ohio thing.
• 12:11
  Colin Russ: I mean, and South Carolina's done the same thing.
• 12:14
  Colin Russ: Obviously they are just well-oiled machines and some of that is just, you can hire great people, but you don't.
• 12:22
  Colin Russ: it's the, Rumsfeld unknown unknowns.
• 12:25
  Matthew Chang: we recorded it live on the interwebs Collins saying Ohio.
• 12:30
  Matthew Chang: Fantastic.
• 12:30
  Matthew Chang: Guess I'm saying Georgia.
• 12:32
  Matthew Chang: The reason I think Georgia, they went hard after all those battery plants.
• 12:37
  Colin Russ: That was gonna be the comment I was about to make.
• 12:39
  Matthew Chang: And I don't think it really paid off.
• 12:41
  Matthew Chang: So they gotta do something with those batteries.
• 12:43
  Matthew Chang: they need to have a drone plant.
• 12:44
  Matthew Chang: I think the governor of Georgia is all over this one.
• 12:47
  Colin Russ: that was gonna be the reason I said for Georgia too is the battery piece of it.
• 12:50
  Colin Russ: I mean, you get, they've made great investments into production and just the r and d side of it, that's what you need for these to be, you know, commercially viable products.
• 13:00
  Colin Russ: And when you're putting, you know, three and a half billion in there, you want that supply chain to be nice and nearby so you don't have to worry about it.
• 13:07
  Matthew Chang: All right.
• 13:07
  Matthew Chang: Love it.
• 13:08
  Matthew Chang: What else you
• 13:09
  Colin Russ: All righty.
• 13:10
  Colin Russ: So moving on next, speaking of the Carolinas, but we are going to actually go to North Carolina.
• 13:18
  Colin Russ: we are gonna talk about AbbVie, selecting North Carolina for a new$1.4 billion manufacturing campus, their largest ever capital investment in a single campus since their inception.
• 13:34
  Colin Russ: so this is, I mean.
• 13:37
  Colin Russ: we'll have to spend an episode just on the medical, the, basically the chemical inputs, all of that nitro gloves, all the good things.
• 13:44
  Colin Russ: But we are, in my opinion, probably about 90 days, two months, 90 days out from having some major, Supply chain challenges with respect to medical because of the straight of, horez blockade, all of that, having domestic production capacity for, you know, the inputs, the key pharmaceutical inputs is going to be massive
• 14:09
  Matthew Chang: Did it say what they're making here?
• 14:12
  Colin Russ: let's see.
• 14:13
  Matthew Chang: sheet there.
• 14:14
  Matthew Chang: Well, lemme do the underwriting on this.
• 14:16
  Matthew Chang: just to kinda, again, this is maybe a teaching moment for the audience.
• 14:19
  Matthew Chang: Maybe a few folks in the audience know how to read this stuff.
• 14:22
  Matthew Chang: 185 acres.
• 14:24
  Matthew Chang: Okay.
• 14:26
  Colin Russ: 7 34.
• 14:27
  Matthew Chang: I'll do a quick translation for you.
• 14:30
  Matthew Chang: A hundred acres equals a million square foot manufacturing plant.
• 14:34
  Matthew Chang: Yes, you can make it more dense.
• 14:35
  Matthew Chang: Yes, you could put a parking lot on top of the pond.
• 14:37
  Matthew Chang: I get it.
• 14:38
  Matthew Chang: But like in general, if you just, you know, starting from the back of the napkin, a hundred acres equals a million square feet.
• 14:43
  Matthew Chang: So going 185 acres, they're probably starting off in the 1.4, 1.5 million square feet range.
• 14:50
  Matthew Chang: And, that's a big plant.
• 14:52
  Matthew Chang: That's actually, you can see it on the drawing there.
• 14:54
  Matthew Chang: It's mul, it's gonna have to be multiple buildings, right.
• 14:56
  Matthew Chang: to be, compliant with code and, big operation.
• 15:00
  Matthew Chang: It looks like they got room for infill.
• 15:03
  Matthew Chang: So I'm seeing a huge courtyard there where they have room for future products.
• 15:06
  Matthew Chang: So they probably have an additional 40 to 50% expansion space.
• 15:10
  Matthew Chang: But take that number.
• 15:12
  Matthew Chang: say it's 1.4 million square feet, and then it's, 734 jobs.
• 15:17
  Matthew Chang: That is a highly automated facility, right?
• 15:20
  Matthew Chang: A plant like this, if you are gonna staff it without a lot of robotics and material handling, automation, you know, production equipment, automation, that's easy, like a 1800 person site.
• 15:33
  Matthew Chang: So they're coming outta the gates, kind of like the US Steel example.
• 15:36
  Matthew Chang: They're highly automated here.
• 15:39
  Colin Russ: Yes, they're talking 440,000 square foot campus for small volume parent, was it parenteral drug product, manufacturing, and additional growth.
• 15:51
  Colin Russ: So that's, I think a lot of that is going into that underlying infrastructure for that future growth.
• 15:58
  Colin Russ: This is just that first phase there.
• 16:01
  Matthew Chang: Tell us,
• 16:02
  Colin Russ: It doesn't say specifically what
• 16:04
  Matthew Chang: Immunology, neuroscience and oncology medicine.
• 16:07
  Matthew Chang: So it's whatever the precursor is to the finished good.
• 16:10
  Matthew Chang: They're making raw materials here.
• 16:12
  Colin Russ: Yep.
• 16:13
  Colin Russ: That's what it looks like.
• 16:14
  Colin Russ: I mean, that's awesome.
• 16:16
  Colin Russ: that is, and I think it says something that you've got, you know, a Chicago based company in North Carolina.
• 16:27
  Colin Russ: I mean, Chicago is a difficult, Illinois is not necessarily the easiest state to do business in, especially when you are looking at building
• 16:34
  Matthew Chang: a lesson for states, man, you gotta get clean on your recruitment.
• 16:38
  Matthew Chang: That economic development piece has gotta be quick.
• 16:41
  Matthew Chang: If the next guy beats you to it by a month faster, you're not getting the work right?
• 16:46
  Matthew Chang: You gotta be ready to move when these companies call.
• 16:50
  Colin Russ: it's having, you know, shovel ready sites.
• 16:51
  Colin Russ: A lot of places don't have that.
• 16:53
  Colin Russ: They like the, some take the approach of if you build it, they will come.
• 16:57
  Colin Russ: Some of'em like to have shovel ready sites.
• 16:58
  Colin Russ: Some of'em just, you know, Hey, we have land.
• 17:01
  Colin Russ: That's not it.
• 17:02
  Colin Russ: And it's pretty clear who wins you.
• 17:04
  Colin Russ: You gotta be proactive in this game.
• 17:06
  Matthew Chang: and then you think about it, Durham Research Triangle.
• 17:09
  Matthew Chang: You're right next to Duke.
• 17:10
  Matthew Chang: Duke Medical.
• 17:11
  Matthew Chang: You're right next to UNC Chapel Hill.
• 17:14
  Matthew Chang: you know, easy peasy on this one.
• 17:16
  Matthew Chang: what a great announcement by AbbVie.
• 17:18
  Colin Russ: Yeah, that is very exciting.
• 17:20
  Colin Russ: I think that will be, I.
• 17:23
  Colin Russ: Good for America.
• 17:24
  Colin Russ: We've gotta get the medical, or the pharmaceutical manufacturing stuff addressed.
• 17:27
  Colin Russ: We, people just are not nearly, as aware of what a risk that is to supply chain and just daily life.
• 17:33
  Colin Russ: so one more.
• 17:35
  Colin Russ: I.
• 17:36
  Colin Russ: Piece of news that we will get into this is for the, defense tech folks who like it.
• 17:43
  Colin Russ: L three Harris announces billion dollar expansion to boost solid rocket motor production in Orange County, Virginia, so more than a billion dollars building on their an existing expansion at their Orange County site.
• 18:01
  Colin Russ: So 1.265 billion, 350 new jobs.
• 18:08
  Colin Russ: I'm a big fan of rockets.
• 18:09
  Colin Russ: They're just cool.
• 18:10
  Colin Russ: I don't know nearly enough about them.
• 18:12
  Colin Russ: I can blow stuff up when I was little, you know, doing those rocket kits.
• 18:15
  Colin Russ: But this is, heavy duty stuff that's pretty sweet.
• 18:19
  Matthew Chang: I am curious how there got to be in Orange County in Virginia.
• 18:24
  Matthew Chang: How exactly did that work?
• 18:26
  Colin Russ: I would love to know the proximity to DC basically.
• 18:31
  Colin Russ: How far away is it?
• 18:33
  Colin Russ: It's gotta be close enough that,
• 18:35
  Matthew Chang: Yeah, it's close.
• 18:36
  Matthew Chang: It's right in between Charlottesville and DC and if you made a triangle between Richmond, Charlottesville and DC it's in that triangle.
• 18:44
  Matthew Chang: So yeah, it's in the zone.
• 18:45
  Matthew Chang: It's got good connectivity to Washington.
• 18:48
  Matthew Chang: it's far enough away.
• 18:48
  Matthew Chang: It's in the country.
• 18:50
  Colin Russ: You got cheaper land, you got, you know, just a car ride away or for them, I'm sure maybe a little rocket trip.
• 18:56
  Matthew Chang: Yeah.
• 18:57
  Matthew Chang: Yep.
• 18:58
  Matthew Chang: Little tiny rocket trip.
• 18:59
  Matthew Chang: So
• 19:00
  Colin Russ: I mean, I.
• 19:01
  Matthew Chang: it looks like a good site select.
• 19:03
  Matthew Chang: they're expanding on their existing plan, it sounds like.
• 19:05
  Matthew Chang: So they've already, they're already anchored.
• 19:07
  Matthew Chang: They have the, you know, the front office staff and the, you know, all the infrastructure set up.
• 19:12
  Matthew Chang: So just adding on, I
• 19:14
  Colin Russ: Yeah, I've got a quarter million square feet of space currently that serves as their COE and their a research, propellant research, for small to medium sized solid rocket production.
• 19:28
  Matthew Chang: I wonder, are they reshoring this?
• 19:31
  Colin Russ: that's what it doesn't say,
• 19:34
  Matthew Chang: Yeah.
• 19:35
  Colin Russ: But I've gotta believe, yeah, I mean they mentioned, you know, DOW or Department of War, basically, you know, it's to support some of the Department of War programs.
• 19:46
  Colin Russ: I've gotta believe that.
• 19:47
  Colin Russ: That's obviously a heavy influence on it.
• 19:49
  Colin Russ: Um, just you looking, looking at stockpiles, what they are right now and the expected demand for increase in munition.
• 19:59
  Colin Russ: Stockpiles, I gotta believe that this is playing into.
• 20:02
  Colin Russ: Um, trying to get out in front of that.
• 20:05
  Matthew Chang: Yeah, it's gotta be, I don't know if I can find the site, if it's listed on Google Maps.
• 20:10
  Matthew Chang: I've got one pulled up here that I'm looking at if that is it.
• 20:14
  Matthew Chang: This reads like a reshore to me'cause.
• 20:17
  Matthew Chang: It's very rare to have a center of excellence where you're doing your RD that doesn't already have production attached to it.
• 20:24
  Colin Russ: Yeah.
• 20:24
  Matthew Chang: Yeah.
• 20:25
  Matthew Chang: unless that production was originally somewhere else and now they're bringing it back, or I guess it could be a new contract that they were worried by the Department of war.
• 20:33
  Colin Russ: and that's what I was looking for.
• 20:34
  Colin Russ: I didn't see anything specifically, but the Department of War just, I announced like$200 billion worth of awards to a bunch of different companies for a handful of.
• 20:46
  Colin Russ: Different projects, areas of focus, a whole kind of, you know, that lovely funding cycle, coming through for him.
• 20:53
  Colin Russ: So there's, I mean, lot of federal money going into it.
• 20:55
  Colin Russ: So I think we're gonna see some additional, some additional investment announcements coming out here soon.
• 21:02
  Colin Russ: I mean, you look at, you know, PMI numbers, you know, from the latest PMI numbers, all positive signs showing increased construction, manufacturing, construction of manufacturing in the us.
• 21:14
  Colin Russ: you know, we've seen for two, three years now, a lot of talk about some of these things, but just the speed of permitting, approvals, funding, all that.
• 21:26
  Colin Russ: You know, we're now starting to see some of that come to fruition and finally actually get some progress.
• 21:32
  Colin Russ: You know, 18, 24 months, we'll have that real production online, hopefully sooner than that.
• 21:37
  Matthew Chang: Yeah.
• 21:39
  Colin Russ: So one of the,
• 21:40
  Matthew Chang: announcements and what was the oldest one you shared?
• 21:43
  Matthew Chang: Are these all within the past week?
• 21:45
  Colin Russ: yeah, these were all within the last week.
• 21:49
  Colin Russ: Let me see which one gets the list for oldest.
• 21:53
  Colin Russ: So, not, not the last week.
• 21:56
  Colin Russ: So the LL three Harris was April 15th.
• 22:00
  Colin Russ: AbbVie was, April 22nd.
• 22:07
  Colin Russ: Skydio was April 24th.
• 22:12
  Colin Russ: And Cleveland Cliffs, was actually.
• 22:15
  Colin Russ: Just today, I believe, or may have been after hours yesterday, but, that was new.
• 22:21
  Colin Russ: So.
• 22:22
  Matthew Chang: I think that kind of sums it up, this re industrialized thing is cooking.
• 22:27
  Matthew Chang: And if our, you know, we, Colin and I are not insiders on these deals, but, if our instincts are correct, you see a little bit of reshoring.
• 22:36
  Matthew Chang: You see some highly automated facilities going in, building the precursors is definitely reshoring, right?
• 22:41
  Matthew Chang: That was, that's direct impact to tariffs, right?
• 22:44
  Matthew Chang: and, and then you just see some expansion from new, you know, new economy, the drone stuff, you know, that didn't exist before and now they're building it out.
• 22:51
  Matthew Chang: the, it's looking strong man.
• 22:54
  Matthew Chang: you know, and, and I've been on a riff about this on x.
• 22:58
  Matthew Chang: We don't have enough electrical equipment and we don't have enough electricians.
• 23:03
  Colin Russ: Oh, the grain oriented steel too.
• 23:06
  Colin Russ: That is what we talk about it.
• 23:09
  Colin Russ: That is gonna be one of the big bottlenecks too.
• 23:12
  Colin Russ: I mean, there's not a lot of production there.
• 23:13
  Colin Russ: You've got.
• 23:14
  Colin Russ: US Steel, that was one article I should have grabbed, but US Steel announced.
• 23:18
  Colin Russ: They're putting, they're, bringing back production at their Gary, Indiana, mill for tin production.
• 23:25
  Colin Russ: obviously not grain oriented steel, but hopefully we start to see some of these other furloughed or kind of closed plants.
• 23:32
  Colin Russ: But I mean, the, the lack of conversation around grain oriented steel.
• 23:39
  Colin Russ: Production in the us the lack of any real acknowledgement, that's gonna be huge bottleneck to as a input for transformers for all of that.
• 23:48
  Matthew Chang: Oh yeah.
• 23:49
  Matthew Chang: So for everybody to ha to have a modern efficient, transformer, that's the piece in the middle from the power lines to the building, you gotta have a transformer in the middle.
• 23:59
  Matthew Chang: you gotta have this.
• 24:00
  Matthew Chang: It's made, it's not made of regular steel.
• 24:02
  Matthew Chang: It's made of what Collins say, this grain oriented steel, and so, you know, we're just working down the list, right?
• 24:08
  Matthew Chang: So what are we working on as a nation right now?
• 24:11
  Matthew Chang: First it was chips, right?
• 24:13
  Matthew Chang: So we're putting on chip fab in Arizona, some new chip fab coming online in Texas.
• 24:17
  Matthew Chang: Okay.
• 24:18
  Matthew Chang: All right.
• 24:18
  Matthew Chang: Check.
• 24:19
  Matthew Chang: We're at least making progress.
• 24:21
  Matthew Chang: The next one it felt like was really magnets, right?
• 24:24
  Matthew Chang: So check, you know, magnets are coming back.
• 24:27
  Matthew Chang: We've seen a lot of announcements on both.
• 24:31
  Matthew Chang: mining and refining.
• 24:32
  Matthew Chang: So all the elements of that.
• 24:35
  Matthew Chang: You keep moving down the list.
• 24:37
  Matthew Chang: Ship building.
• 24:38
  Matthew Chang: I'm not sure what's happening.
• 24:39
  Matthew Chang: Like I've seen some small announcements, I've seen a lot of hype, but we, I think we realized like we can't actually build ships this
• 24:47
  Colin Russ: one I saw was the US is considering spending like$1.9 billion to explore having South Korea build us warships.
• 24:57
  Matthew Chang: In South Korea or move them over here.
• 25:00
  Colin Russ: And I admittedly could not even open the article.
• 25:03
  Colin Russ: I was banging my head against the wall.
• 25:06
  Colin Russ: too hard at just the headline.
• 25:08
  Colin Russ: if anything, I certainly hope it's here, but continue shipbuilding, we can't
• 25:11
  Matthew Chang: tell you what the hype I like.
• 25:13
  Matthew Chang: So when you look at these startup companies that are doing the, you know, modular ship building and automated ship building, I know it's a while for that materializes, but I really like the idea of us starting off similar to drones, right?
• 25:27
  Matthew Chang: So we just talked about the big drone announcement.
• 25:30
  Matthew Chang: We need to get to a modular fast reaction, speed of shipbuilding.
• 25:35
  Matthew Chang: And we could sort out the larger vessels over time.
• 25:38
  Matthew Chang: But especially those small, quick response boats or autonomous, you know, boats, we could be moving a lot faster.
• 25:45
  Matthew Chang: 'cause you can just start from a new design, you know, it's like that's what we did in World War ii.
• 25:49
  Matthew Chang: They came out with new ship designs.
• 25:50
  Matthew Chang: You could build a ships faster, in terms of the large vessels, you know, whether we partner with the Koreans or whether we try to recreate that skillset domestically, we need to talk to some experts.
• 26:00
  Matthew Chang: Something tells me.
• 26:02
  Matthew Chang: You're not building a ship without 20 or 30 years in the business.
• 26:06
  Matthew Chang: You
• 26:06
  Colin Russ: And we ju we, we've produced less than that in the last 20, 30 years, probably.
• 26:12
  Colin Russ: I think last year I was looking at the numbers, you know, last year it was one commercial bolt carrier US built The year before, that was a big year at three.
• 26:22
  Colin Russ: I mean, we don't have, that knowledge is hollowed out as an understatement
• 26:27
  Matthew Chang: And that's where I come from.
• 26:28
  Matthew Chang: I'm on the face of it.
• 26:30
  Matthew Chang: I'm not opposed to a partnership with the Koreans.
• 26:32
  Matthew Chang: I am opposed to us building the, you know, major merchant marine and naval vessels in Korea.
• 26:38
  Matthew Chang: Let's do it here.
• 26:39
  Matthew Chang: But if that
• 26:40
  Colin Russ: the knowledge here.
• 26:41
  Colin Russ: You gotta
• 26:41
  Matthew Chang: got car companies, you know, being very productive all over the US, as long as they put the investment here, we, it's gonna take time to incubate that tribal knowledge to give building.
• 26:52
  Matthew Chang: unless you can ask Todd right.
• 26:54
  Matthew Chang: Maybe can just tell you how to do
• 26:56
  Colin Russ: Claude, how do I, how do I build a ma, build a, commercial vessel?
• 27:00
  Colin Russ: Make no mistakes.
• 27:01
  Colin Russ: Be
• 27:01
  Matthew Chang: no mistakes.
• 27:03
  Matthew Chang: Alright.
• 27:03
  Matthew Chang: So, you know, I think we're just working down the list and, you know, we're really excited.
• 27:07
  Matthew Chang: you know, we're partnered with, with some textile innovators.
• 27:11
  Matthew Chang: We wanna see the textiles come back.
• 27:13
  Matthew Chang: That's another one of those kind of birthrights that we sold away.
• 27:16
  Matthew Chang: I'm strongly supportive of some of these chemical precursors coming back.
• 27:21
  Matthew Chang: And we've seen friends like Kaya Rhodes and AJ Cortez on X that are pursuing, you know, those channels.
• 27:27
  Matthew Chang: And it's, quite frankly, it's gonna be like 75 items we have to work through.
• 27:33
  Matthew Chang: You know, we didn't even get to aluminum, we didn't get to basic steel capacity.
• 27:38
  Matthew Chang: You know, there's so many other categories that it's, it is hard to focus as a country.
• 27:44
  Matthew Chang: To me it's how do you eat a element?
• 27:46
  Matthew Chang: One bite at a time, right?
• 27:47
  Matthew Chang: So we just have to start taking bites.
• 27:50
  Matthew Chang: And these announcements you shared, domestic drone production, drug precursors, you know, the, adding AI to try to Yeah.
• 27:58
  Matthew Chang: Squeeze a little bit more capacity out of your existing plants.
• 28:01
  Matthew Chang: Like that's all amazing progress.
• 28:04
  Colin Russ: You gotta start somewhere.
• 28:07
  Colin Russ: I mean, we, and we didn't even get into the fact, before we, wrap, I saw that there was a massive lithium deposit discovered in the us They say enough to basically supply a couple hundred years worth of our domestic demand for it.
• 28:23
  Colin Russ: So
• 28:24
  Matthew Chang: hard is it to get out?
• 28:25
  Matthew Chang: You gotta like cycle through mud or what?
• 28:27
  Colin Russ: it, again, it's not the extraction.
• 28:30
  Colin Russ: It comes down to refinement capacity.
• 28:32
  Colin Russ: So that's the next layer.
• 28:33
  Colin Russ: You know, as you're talking about, we, we got step by step, okay, we've got the raw material input.
• 28:37
  Colin Russ: Now how do we refine it and process it?
• 28:39
  Matthew Chang: Yeah, the next time we chop the news today was great on these, new manufacturing plants.
• 28:44
  Matthew Chang: the next time we chop the news, it might be worth it to do electrical.
• 28:48
  Matthew Chang: you know, there's some news out that they're cutting the permitting timeline for nuclear.
• 28:54
  Colin Russ: I saw that.
• 28:54
  Colin Russ: Yeah.
• 28:55
  Matthew Chang: infrastructure category, maybe we need to peel that back and talk about, because when you start at electrical generation, it ultimately leads you to storage, which is where the lithium comes in.
• 29:05
  Matthew Chang: And again, these things are complex supply chains.
• 29:08
  Matthew Chang: so we, we need to kind of look across the supply chain, what's happening in concert, so the whole industry comes up together.
• 29:14
  Colin Russ: I love it.
• 29:15
  Colin Russ: Ne next, next news episode is gonna be All Electric
• 29:19
  Matthew Chang: All right.
• 29:19
  Matthew Chang: Love it.
• 29:20
  Matthew Chang: Thanks
• 29:21
  Colin Russ: Alrightyy.
• 29:21
  Colin Russ: Well, Matt, thanks for a great episode.
• 29:23
  Colin Russ: to viewers, thank you so much for joining us.
• 29:25
  Matthew Chang: lemme, sorry.
• 29:26
  Matthew Chang: Lemme do unplug.
• 29:27
  Matthew Chang: I've got my bow tie bull shirt on here.
• 29:30
  Matthew Chang: So
• 29:31
  Colin Russ: Probably nothing.
• 29:32
  Matthew Chang: yeah, probably nothing.
• 29:33
  Matthew Chang: I wouldn't worry about it, but for those that are always wondering, what's the bow tie thing on X, you know, I've got, I've got my t-shirt here,
• 29:40
  Colin Russ: There you go.
• 29:42
  Colin Russ: Alright, well join us again next week, for another great episode.
• 29:46
  Colin Russ: I'm Colin, you could find me on X at that, Colin.
• 29:49
  Colin Russ: And we've got Matt Chang.
• 29:51
  Colin Russ: On X LinkedIn.
• 29:52
  Colin Russ: All right.
• 29:53
  Colin Russ: Thank you everyone.
• 29:53
  Colin Russ: See you next week.
• 29:58
  Thanks for tuning in to the Reforged podcast.
• 30:01
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• 30:06
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