Latest / Industrial Advisors / Reindustrialization: A Game-Changer for the Next Decade

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Reindustrialization: A Game-Changer for the Next Decade · Industrial Advisors

• 0:00
  I think that Reindustrialization is happening.
• 0:03
  It started happening a few years ago, so I think that these are
• 0:06
  gonna be really heady, frothy times in the next five to 10 years as.
• 0:12
  Manufacturing starts to reassess its footprint around the world and
• 0:16
  adjust to the new reality, which is the theme of this conference, right?
• 0:20
  Yes.
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  Although I'm starting to worry, wonder what the new reality is.
• 0:22
  I don't, I don't know that we know yet.
• 0:24
  I know.
• 0:24
  That's why it's
• 0:25
  great to be at this conference.
• 0:26
  Yeah.
• 0:41
  Welcome to our Industrial Advisors podcast.
• 0:44
  We're live at IAMC in Sacramento.
• 0:46
  We have Didi Caldwell with us this morning.
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  Didi is the CEO at Global Location Strategies, which has
• 0:54
  caused reading your background.
• 0:55
  Your company's been named to the 5,000 fastest Growing Companies list twice.
• 1:00
  So tell us a little bit about your background and what your company
• 1:04
  does, and then we'll jump into some questions if that works.
• 1:06
  Sure.
• 1:07
  Well, thank you so much for having me.
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  Global Location Strategies originally started as a division of Floor Daniel,
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  which is now Floor Corporation.
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  They're headquartered in Dallas, but they were originally headquartered
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  in in Irvine, California, and they acquired a construction company called
• 1:21
  Daniel Construction in the 1980s.
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  They merged and Daniel had a division.
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  Of site selection.
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  And so that was one of the very first practices of site selection.
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  And my predecessor, the, the person that hired me into this business,
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  bill Dorsey, was one of the two main godfathers of site selection.
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  So I kind of stumbled upon it.
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  I was, um, doing an international MBA and I had an internship
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  with Flord Daniel in Argentina.
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  And Ed McCallum, who also worked in that group and is also sort of
• 1:52
  legendary in this business, was working on a, a feasibility study
• 1:55
  for a copper smelter in Argentina.
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  And I started asking him, what is it that you do?
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  And the more he told me, which is site selection mm-hmm.
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  And which is basically working with manufacturing companies primarily.
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  And helping them at the C level determine what their location strategy is, where
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  they are going to put plant technology and people around the globe in order
• 2:19
  to optimize their return on investment.
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  And when I was hearing about this, I was incredulous and I basically
• 2:25
  said, they pay you to do this.
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  And he said Yes, and I begged him for a job and.
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  Six months later, I was in Greenville, South Carolina, which
• 2:33
  is where they were headquartered, and I've been doing that ever since.
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  So I'm coming up on 28 years now.
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  Wow.
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  That's awesome.
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  So you've seen, I mean, site selection, the whole process has
• 2:43
  just developed so much over even the last five, 10 years, you know?
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  But to see it over that time period has to be really awesome.
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  It has changed and it hasn't changed.
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  Mm-hmm.
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  So the way that it's changed is that there are a lot more
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  people doing site selection.
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  Now, technology and the data that we have available has really transformed
• 3:03
  the way that we do the analysis and the richness of the analysis that we can get.
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  But what really hasn't changed is the way that you solve these problems.
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  So you have to first determine what are the major drivers for the project.
• 3:16
  And establish the search region based on where it's gonna be optimized,
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  based on logistics and power prices and real estate availability, and people
• 3:25
  and markets and all of these things.
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  And then identify the universe of alternatives, like what buildings or
• 3:30
  sites are gonna meet our requirements.
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  Eliminate anything that doesn't work.
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  And then you're just trying to figure out which locations offer the best
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  combination of high quality and low cost.
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  Mm-hmm.
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  And if you can find high quality, low cost, and low risk in one location,
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  then your decision is pretty easy.
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  But.
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  As we know in life as insight selection, sometimes things that are
• 3:55
  really low cost also have high risk or lower quality and vice versa.
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  So our job is to really help them triangulate on those things and select
• 4:03
  the location that's gonna be optimal.
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  And then through the process of due diligence and incentive negotiations
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  and real estate negotiations improve upon that business case.
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  So that really hasn't changed, right?
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  We're just getting a little bit more sophisticated, yet just better
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  technology, better technology and analytics surrounding those decisions.
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  Right.
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  Compared to 25 years ago.
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  Right?
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  Yeah.
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  Yes.
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  But I will say that it's frustrating to me that unlike some other industries, like
• 4:29
  say for example, home buying or vacation rentals, site selection, and, and to a
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  certain extent, corporate real estate really hasn't been transformed in the
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  same way that some other industries were.
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  So in 2018, I decided I'm tired of doing the same thing over and over.
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  I started looking for a technology solution off the shelf that I could
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  modify, couldn't find anything.
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  So we ended up developing a suite of platforms, software platforms that
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  would facilitate the entire process.
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  And I spun that off into a company called Strata Platforms last year.
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  And so I am a major shareholder, but I'm not involved in the day-to-day
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  and I'm a customer and they're power customer, if you will, but it's also
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  available in the market marketplace.
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  So when you say you're a customer, like are you selling licenses?
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  Is Yes.
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  Is that okay?
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  So you're a customer.
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  So
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  Global Location Strategies has a license.
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  Okay.
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  From strata platforms for both the database, the site database.
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  The RFI tool where we can go out and collect information in a systematic
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  way and allows for collaboration really built with site selectors
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  and economic developers and property representatives in mind.
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  Mm-hmm.
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  To make that so easy.
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  We collect that information, we combine it with data that we already have loaded
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  into our analytical tools and almost instantaneously, as long as the data is
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  right, which is, you know, a big if for
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  sure,
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  then it will give you a one of those, a snapshot of that comparison of which
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  ones of these are high quality and low cost, and then you still have to
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  go through the painstaking process of going through all of those and
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  looking for all the hidden issues.
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  But at least we can narrow down from, I mean, sometimes we get as many as
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  a hundred R responses to our RFIs.
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  Yeah.
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  So we can eliminate anything that doesn't work right off the bat, and then we can
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  narrow it down to say, the top third that really look like they're gonna be optimal.
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  You're saying
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  location,
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  locations, and sites or buildings that go along with that location.
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  Okay.
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  And then we can spend our time on the, the locations that are really gonna have
• 6:34
  the best opportunity to win the project.
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  Okay.
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  Talk to us a little bit about the data.
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  So our average listener, there's a lot of, you know, large occupiers of industrial
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  space, lot of brokers, and even landlords.
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  So.
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  I think a lot of people are confused exactly what a site selector does.
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  So, and I know that the data, it's all about the data.
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  So how do you get the data?
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  How do you know that it's quality data, and then how do you measure it?
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  Yes.
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  So there's a combination of source sources.
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  Some of them are available through Bureau of Labor Statistics or County
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  Business Patterns, but they're hard to gather and sometimes they're delayed
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  and sometimes there's holes in the data.
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  So we subscribe to Job Zq, which is a labor DA data platform, and it's not
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  that the data is a hundred percent accurate, it's just as accurate.
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  As human beings can, can get to it.
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  So that that's one big source for us.
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  We also have a very robust geographic information system, so
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  it has a lot of geospatial data.
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  So when we're looking at sites, it's things like con
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  connections to infrastructure.
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  What the site size is, what the topography, where are their wetlands?
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  Where's the floodplain?
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  What kind of soil types are we likely be, have close to here?
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  Are there other major source emitters which may impact impact our modeling
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  and our ability to get an air permits.
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  We develop some data in-house, so we have our own database
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  of industrial sites Primarily.
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  We buildings change so much we don't necessarily try to.
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  Track those all the time.
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  We use CoStar for that.
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  Okay?
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  And that's a great resource.
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  CoStar is not very good for industrial sites.
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  It's much better for buildings.
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  And then there's data that is really only available with site representatives
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  or providers of services to the site.
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  So for example, if you wanna know how a site or a building is served for water.
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  That's usually done by a municipal water service, and you may be able
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  to get some information about what their total capacity is, but you
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  don't know what their excess capacity or their available capacity is.
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  You don't know what size line, and you may not know exactly where the
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  line comes to at the site, what, what type of upgrades might be required to
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  get you the pressure that you need.
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  So that kind of data, that's why we have that RFI tool.
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  That kind of data can only be collected.
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  Directly from the source, and a lot of times it's project specific because
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  if I only need 10,000 gallons a day.
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  That's one set of questions.
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  Yeah.
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  If I need a million gallons a day, that's a completely different set of questions.
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  Sure.
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  One of the things when we talk to our clients that, that they all struggle
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  with right now is availability of labor.
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  Right.
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  And, and that is such a big part of making decisions on, on site selection.
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  Talk to us a little bit about your experience with, with availability
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  of labor and helping your clients navigate the right building
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  and finding the right labor.
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  Yeah, so labor is an issue almost everywhere, particularly in
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  the manufacturing space where you need some technical skills.
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  And we've seen so many baby boomers that had those skills have aged out millennials
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  and, and Gen Zs didn't really pursue those kinds of opportunities because
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  there weren't a lot of growing jobs.
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  And so we've got this vacuum just about everywhere.
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  Having said that, it really depends on what type of project it is.
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  So I use.
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  About $1 million per job created as sort of the threshold between
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  capital intensive and labor intensive.
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  So if you're gonna invest $40 million and create 300 jobs,
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  that's very labor intensive.
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  If you're gonna invest $300 million and create 40 jobs,
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  that's very capital intensive.
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  So if it's.
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  For labor intensive projects, we'll start with the workforce first.
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  So we will look for places, not just because of the availability,
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  but also because cost is likely to be a bigger driver.
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  So we will look for locations that best solves for the labor.
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  Question.
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  If it's capital intensive, a lot of times the requirements are very exotic.
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  It might be a large site, it might require rail, it might have big water, big power.
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  So we need to find the sites first, and then once we find
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  what works on a site basis.
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  Then we'll try to solve for the labor.
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  We use about 50 to one is our ideal candidate to opening ratio.
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  So if you've got, if you wanna hire, you know, 10 welders, you'd
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  like to have 50 times that amount available in the workforce.
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  They don't, they can be working, but just they're in the workforce.
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  It's almost impossible to find for some of those really specialized.
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  So I like to look at at least 20 to 25 and then we would lean heavily on
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  state and local training programs.
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  Community colleges, even career and technical high schools that are
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  developing a pipeline because it's not just about what workforce do you have
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  today, it's also what does the pipeline look like for the next 5, 10, 15 years.
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  These are generational investments and so we are not just solving for
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  today, we're solving for the future.
• 11:32
  Yeah.
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  Makes sense.
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  Talk to us a little bit specifically about strata platforms.
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  So a lot of every company's out there is claiming they have the best software.
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  Why?
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  So you created it because it was.
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  There was a gap in the market.
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  So what if you can say, what's the difference in your software?
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  What's it solving that the other ones don't?
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  What does it do better?
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  So there's two major customers, property searchers or location
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  searchers and location marketers.
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  I. So if you're a location marketer, which is generally a, an economic
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  development organization, be it state, local, regional rail utility, but it
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  could also be developers that have a lot of property or commercial brokers
• 12:11
  that want to showcase their properties, they can showcase their property on
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  location one, which is the database.
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  They can also have their own private viewer, which means that,
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  for example, if you go to the state of Missouri and you look at their
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  available sites and buildings.
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  Their database that is for public facing is actually our, IS Strata platforms.
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  It's just branded as Missouri Partnership.
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  Okay.
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  And then also states that are.
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  Acting as a site selection consultant can use the site selection platforms like
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  the RFI tool and the analytical tools to gather information about their own
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  sites to determine which ones they're actually gonna submit for the project.
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  On the other side, the property searchers.
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  Location one gives you one place that you can go and search for properties.
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  We obviously don't have all the properties in there currently.
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  Sure.
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  We would love to.
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  That's our goal is to be, you know, the Airbnb of corporate site selection
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  or the Zillow if you will, but you can search for properties and then whether
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  those properties are in the database or not, you can send out this RFI tool
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  to say, for example, the state of South Carolina and say, give the requirements.
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  Here's what I'd like to have.
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  There's a delegation process where they can send it to their communities.
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  They can have collaborators, third party contributors.
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  It's basically all the things that have been done previously, but honoring
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  the infrastructure that already exists instead of passing around.
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  You know, Excel spreadsheets or filling in an online database.
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  This is like an online database on steroids, and then that data
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  comes back and once you gather it, it just trans transfers directly
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  into your analytical models.
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  I don't really know of anything else like it in the marketplace.
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  There might be pieces of this and that.
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  There's certainly other online databases, but there's nothing that
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  really ties together the entire value proposition of site selection.
• 14:04
  Right.
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  Impressive.
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  One more follow up to that.
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  So site selectors are always focused, it seems like, on
• 14:10
  the large manufacturing deals.
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  Why isn't that software?
• 14:13
  I would think, and distribution obviously huge in the us So why not distribution?
• 14:18
  Oh, it could absolutely be distribution.
• 14:20
  It does.
• 14:20
  Okay.
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  It
• 14:21
  just doesn't have.
• 14:22
  In it currently, it doesn't have like a logistics network optimization analysis.
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  It doesn't do the logistics analysis for you.
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  You'd have to do that separately and then put the cost in
• 14:32
  Okay.
• 14:32
  For each one of those, uh, sites.
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  But it absolutely can be used for office.
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  I mean, we even use it for best places analysis.
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  So last year we did two best places analysis for.
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  Best places, which is all 384 MSAs across the country.
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  Best places for food manufacturing and best places for primary
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  metals manufacturing.
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  So it doesn't even have to be property specific.
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  You can use those analytical models to help you determine where
• 14:58
  should I even start my search.
• 15:00
  Where were the best places for food manufacturing?
• 15:02
  Oh, that is a great question.
• 15:04
  Um.
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  And, and we break it down by region.
• 15:07
  And so I can pull out a few places that come to mind.
• 15:11
  So, Chattanooga, Dallas, uh, I'm trying to think.
• 15:16
  One of the small MSAs that comes to mind is Tyler, Texas.
• 15:19
  That was quite good for food manufacturing.
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  So, you know, food tends to be very regional.
• 15:24
  Mm-hmm.
• 15:24
  You know, you don't typically make.
• 15:27
  Ice cream in one region of the country and ship it elsewhere.
• 15:30
  And then primary metals, it tends to be, you know, places like Tulsa, Oklahoma,
• 15:34
  because they've got really robust industrial infrastructure and that's
• 15:37
  very much driven by energy prices.
• 15:39
  Sure, sure.
• 15:40
  Yeah, it's always interesting to see what those results look like
• 15:43
  after you run an analysis like that.
• 15:44
  So you've seen a lot over the last, you know, 25 years
• 15:48
  or so in, in site selection.
• 15:50
  What, what do you think the future looks like in site selection?
• 15:53
  You mentioned technology.
• 15:55
  Maybe not being quite up to speed yet, but, but what does the future of
• 15:58
  site selection look like over the next five to 10 years, in your opinion?
• 16:02
  One of the things I, and, and this is kind of combining what you were
• 16:04
  asking about, site selectors tend to focus on manufacturing site
• 16:08
  selectors tend to focus on whatever projects are out there right now.
• 16:11
  Mm-hmm.
• 16:12
  So during covid there was a lot of warehouse and distribution.
• 16:16
  Prior to Covid, there was a lot of headquarters and office.
• 16:19
  We've just seen recently, manufacturing has been the most active sector,
• 16:23
  so that's one of the reasons why we're really focused there.
• 16:26
  So I think that that's going to continue.
• 16:29
  I mean, I do believe that there will continue to be projects in other sectors.
• 16:32
  Certainly data centers is huge.
• 16:34
  Right now.
• 16:35
  Data centers are everywhere.
• 16:37
  The other thing that's really big is power generation.
• 16:39
  Mm-hmm.
• 16:40
  So, because our expertise is really in heavy industrial capital intensive
• 16:44
  work, we have seen a big increase in new power generation facilities.
• 16:49
  So we're working on several combined cycle gas turbines across the us.
• 16:54
  Also, one of my clients is Kairos Nuclear.
• 16:56
  They make small modular reactors, so there's not being any cited
• 17:00
  currently, but I expect that that's going to happen pretty soon.
• 17:04
  Google's already signed a deal with them.
• 17:06
  I think that AI is going to have some influence.
• 17:09
  I. I think it's going to be a long time, and I won't say never because
• 17:13
  who knows where this is all gonna go, but you know, there's not a large
• 17:16
  language model out there that then can crawl the, you know, the databases of
• 17:20
  local municipal water systems to try to figure out what their capacities are.
• 17:24
  So I do think that there's some big limitations there.
• 17:26
  But we are definitely looking at ways that we can incorporate AI into
• 17:31
  my work as a consultant and also into the software to make things
• 17:34
  run more efficiently, run quickly.
• 17:36
  And particularly like on coding.
• 17:37
  You know, for us, coding is a, is a big deal.
• 17:40
  So I think that the US is a little bit uncertain right now, but I think
• 17:45
  that reindustrialization is happening.
• 17:48
  It started happening a few years ago.
• 17:50
  So I think that these are gonna be really heady, frothy times.
• 17:55
  In the next five to 10 years as manufacturing starts to reassess
• 18:00
  its footprint around the world and adjust to the new reality, which is
• 18:03
  the theme of this conference, right?
• 18:05
  Yes.
• 18:05
  Although I'm starting to worry, wonder what the new reality is.
• 18:08
  I don't, I don't know that we know yet.
• 18:09
  I know.
• 18:09
  That's why it's great to be at this conference,
• 18:11
  right?
• 18:11
  Yeah, that's right.
• 18:12
  Exactly.
• 18:12
  Last question, going back to power.
• 18:14
  It's been a common theme, I'd say for the last two years on our podcast,
• 18:18
  is the US really running outta power.
• 18:20
  And is that a challenge for you?
• 18:22
  So there's a few things that are constraining our ability to get the
• 18:25
  power that we need at the time that we needed, at the place that we needed.
• 18:29
  Mm-hmm.
• 18:29
  One of them is a lack of generation.
• 18:30
  You know, we were, we were closing down coal fired power plants.
• 18:33
  We are also closing down some nuclear plants because we've had really anemic
• 18:37
  growth over the last few decades.
• 18:40
  That really started to hockey stick recently due to electrification of
• 18:43
  vehicles and other devices, these large mega manufacturing projects.
• 18:48
  And then lastly, data centers.
• 18:50
  What we're seeing is the private sector is reacting, so in places where
• 18:54
  you can do behind the meter they're doing behind the meter or injecting
• 18:58
  directly into the grid, certainly the, the regulated utilities are also
• 19:02
  responding with additional generation.
• 19:04
  So I feel like.
• 19:05
  That may be the easiest one to solve.
• 19:07
  A harder one to solve is the transmission infrastructure.
• 19:11
  So Texas is looking at doing a 7 65 or a 7 35 KV backbone in order to beef up their
• 19:18
  transmission infrastructure and allow for a. Electrons to travel from places like
• 19:23
  the Permian Basin, where you've got all of this natural gas that's practically
• 19:28
  free, and being able to transmit it to the, the big energy centers, which
• 19:31
  are, you know, Dallas, Austin, Houston.
• 19:34
  So that's, the infrastructure is really big.
• 19:36
  And then we just still have supply and labor challenges.
• 19:38
  Like, I mean, how do you build these things, right?
• 19:41
  And we, we've got to really address that too.
• 19:43
  So.
• 19:44
  Currently we don't have enough power, but I do see a lot of focus and activity
• 19:49
  on trying to solve for that problem.
• 19:50
  Awesome.
• 19:52
  Well that's great.
• 19:52
  'cause we hear that all the time that Yes.
• 19:54
  You know, and, and, and, and, and we see it.
• 19:56
  Yes.
• 19:56
  It seems like it's longer delays.
• 19:59
  Uh, yes.
• 19:59
  Even getting the hardware is, you know, substantial delays, so Yes, absolutely.
• 20:04
  It's good to hear that it's, it's not the major concern of the future.
• 20:07
  I
• 20:07
  mean, you know, I started doing this a while back, and if you had
• 20:11
  a hundred million dollars project.
• 20:13
  That needed a hundred acres and five megawatts of power was
• 20:17
  huge.
• 20:18
  Yeah.
• 20:18
  And hiring a hundred people.
• 20:19
  Yes.
• 20:20
  That was a huge project.
• 20:21
  Now it's like, ah, you know, everybody's like, ah,
• 20:24
  right.
• 20:24
  No.
• 20:25
  You know, it's just a big yawn.
• 20:26
  Um,
• 20:27
  you know, we have projects that range in size now from a half a megawatt
• 20:31
  to a gigawatt, and our average is up.
• 20:34
  Our average of our projects is up around 192 megawatts.
• 20:38
  That's our average project size, which is just absolutely mind blowing.
• 20:42
  Yes.
• 20:43
  So that is something that is the new reality for sure, is
• 20:47
  definitely the, uh, the demands on the electricity have gone way up.
• 20:50
  Well, thank you very much.
• 20:52
  The, it was fascinating.
• 20:53
  Thank you for being on the show.
• 20:54
  Uh, for the listener, we're gonna put all your contact information in the
• 20:57
  footnotes, uh, so they can find you.
• 20:59
  Uh, greatly appreciate you being here and, and enjoy the conference.
• 21:03
  Great.
• 21:03
  Thank you so much.
• 21:04
  Thank you.
• 21:04
  Thank you.
• 21:05
  Pleasure being here.