Latest / The ReForge Podcast / What It Actually Takes to Build a Factory (with Matt and Colin) | ReForge 020

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What It Actually Takes to Build a Factory (with Matt and Colin) | ReForge 020 · 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 re-industrialization is possible, pivotal, and pressing.
• 0:19
  Thanks for joining us today.
• 0:20
  Let's get into the episode.
• 0:25
  Welcome back everyone to episode number 20 of the Reforged Podcast.
• 0:31
  Wow, we have made it all the way to 20.
• 0:33
  We've managed to be perma-banned by YouTube.
• 0:36
  I mean, I think we are on a roll here.
• 0:39
  Cooking with gas, man, or nuclear- As they say.
• 0:41
  Yeah because we're all pro-nuclear now.
• 0:43
  I know.
• 0:44
  I saw, uh, one of them e- m- even just made it under the wire at, like, 12:20 AM on July 4th.
• 0:50
  So I think- Really?
• 0:51
  three or four of th- those companies actually made it, which is pretty cool.
• 0:54
  Yeah.
• 0:55
  But, uh- They got f- four by July 4th.
• 0:57
  That was the slogan, and they made it.
• 1:01
  That is- I mean- We're, we're gonna have to dig into that on one of these episodes'cause that stuff is just wild.
• 1:05
  But today I thought, you know, let's get into what it actually takes to build your factory out.
• 1:12
  A lot of people hear the announcements, you know, and those are exciting.
• 1:16
  Those are always great to see.
• 1:18
  But the time an announcement is made that a new factory capacity is expanding, w- whatever, and the time that you actually see that first production run go, that is a pretty big gap.
• 1:32
  I mean, just on the land development side, you know, best case scenario in, like, a Texas or something, you're, you know, maybe 12, 12 months, you know, on just the d- the development and construction side, depending on the scope.
• 1:45
  But after that, you've got, you know, tons.
• 1:47
  You've got the build-out, like, where your bread and butter of, you know, getting machines, robotics, all of that.
• 1:53
  And so there's this disconnect out there that when we hear an announcement that that means immediate capacity, and unfortunately, that's just not the case.
• 2:02
  So I thought it might be good, you know, maybe we talk through a bit of what it really takes.
• 2:06
  What, what does that process look like, um, for building out facilities?
• 2:11
  You know, what does it take to actually get your factory up and running if you're starting from scratch?
• 2:19
  How's that sound?
• 2:20
  Yeah All right.
• 2:22
  Sounds good.
• 2:22
  So- Yeah, and I think we also have a handy dandy Reforge guide to reindustrialization that we can release today and get it up on the website.
• 2:32
  So fortunately, you know, you and I are solution bringers.
• 2:35
  We're not just pontificators- It's like we planned this almost That's amazing.
• 2:39
  It's amazing.
• 2:40
  Um, yeah, so let me start off with the lay of the land.
• 2:44
  So what, what you have right now is you still have relatively high interest rates, and the majority of this type of CapEx is used funded, is used funded partially by debt.
• 2:58
  And so that is still weighing in.
• 3:00
  Your cost of debt service is higher than it normally would be.
• 3:04
  Now, that doesn't mean that you're necessarily mortgaging the property.
• 3:07
  You could be signing a build to suit lease, you could be leasing an existing space, um, or you could also be using corporate debt, uh, you know, which a lot of Fortune 500s do to kind of supplement their available CapEx.
• 3:21
  But that is, um, that is putting a little stress on the development of new factories because the, the ongoing debt service is higher.
• 3:30
  The- A- and on that point, on, on, on that point, when you look at it, when some of these, you know, smaller operations that don't have access to public markets quite like a Fortune 500, if you go that construction loan route, even if it's interest only, every month that goes by, you know, on that big, big chunk, that's money out your pocket.
• 3:49
  I mean, and you're not paying prime rates.
• 3:51
  You're paying, you know, almost hard money rates on, you know, your, your actual construction financing.
• 3:58
  So it's, it...
• 4:00
  Even though factories may not be running day one, you know, those higher interest rates are, are killer right off the bat.
• 4:07
  Yeah.
• 4:08
  And, and I guess while we're talking about how to fund your factory, there's also some challenges right now with getting access to capital for the, let's call it the medium size operators.
• 4:20
  For the small operators, maybe you can use an SBA product.
• 4:23
  Those go up to, I think the peak one now is 10 million.
• 4:27
  Yep.
• 4:27
  So if, if whatever you're doing to add capacity fits within 10 million, you probably have, you know, some SBA b- backed products that are available.
• 4:34
  Those come with personal guarantees.
• 4:36
  So a lot of the folks that we see online, they want all investor equity.
• 4:41
  The right type of equity here is bank equity, bank or bank capital, and in the form of debt.
• 4:47
  And, um, yeah, so you, there's this huge gap though between basically I call it 10 and 100 million, where there really is not a suitable product.
• 4:57
  If you have- Yeah a deep relationship with your bank, you can do a construction finance like you mentioned.
• 5:02
  Um, but that's gonna be a really heavy lift for small operators.
• 5:06
  Once you're over 100 million, now you're more into the Fortune 500 type of, uh, investment.
• 5:13
  You've, you've got access to more of those capital products out there.
• 5:15
  Yeah.
• 5:16
  You, you have, if, especially if you're publicly traded- Or you have a strong balance sheet like a Koch Industries or Cargill, then you can just make the decision, right?
• 5:25
  But there is this, the valley of death is 10 to 100 million.
• 5:28
  It's really hard to get your hands on that capital Um, but yeah, so let, so that's, that's the finance piece.
• 5:36
  Um, what we are seeing, and we've been talking about this, it's an arms race right now.
• 5:41
  So you still have the AI data center, uh, space that's burning hot.
• 5:46
  You know, the conventional cloud center space is still burning hot.
• 5:49
  Yeah.
• 5:50
  Um, that does put stress on trades, materials, you know, land availability.
• 5:57
  And then where, um, what I'd say is new is this factory boom where we're seeing every factor, every manufacturing, uh, vertical is taking off at, at the same time.
• 6:08
  You know, from pharmaceutical to metal machining, um, critical materials, you know, plastics, uh- You, you name it, there's, uh- CPUs there's growth.
• 6:20
  It's all on.
• 6:21
  So, you know, that has led to, and I, I love this'cause this happened to me in the, the early 2000s.
• 6:28
  You can't get steel.
• 6:31
  So we've talked, we've talked about transformers.
• 6:33
  We've beat the brakes off that one.
• 6:35
  We've talked about switchgear.
• 6:36
  And that capacity is sold.
• 6:38
  Yes.
• 6:39
  You cannot get steel right now, and we're back to the point, I don't think we're pinched on the fabricator side.
• 6:46
  For the audience, fabrication is where you take, you know, big steel shapes, like an I-beam, which is called a W shape, but you take big steel shapes in and then you cut them and, and you're gonna drill some holes and weld some flanges and paint them, that sort of activity.
• 7:01
  So the fabricators I think still have capacity, but the mills do not have capacity.
• 7:07
  The next mill run, this is about one-week-old data, the next mill run available in America is December.
• 7:15
  So if you need I-beams, if you need tube steel, if you need, um, y- you know, square columns or circular columns, anything that it takes to actually stand the building up, you're out till December for the mill run.
• 7:28
  It still has to get shipped to the fabricator, and then it still has to be shipped to site for steel erection.
• 7:34
  Well, and I think that's one of those things, uh, not too long ago, I believe I was reading that US Steel, uh, and I think Cl- Cleveland-Cliffs as well, they are to varying degrees working to add more of that capacity.
• 7:48
  I know US Steel is expanding upon their capacity at Mon Valley with a bunch of upgrades, that sort of thing.
• 7:54
  A- and the, the fact of the matter is, I mean, th- they've made investments.
• 7:58
  Those are, uh, you know, different levels of capabilities those, at, at those actual, you know, foundries and, and the, that's not a small decision.
• 8:10
  They have to see sustained demand for them to make those investments.
• 8:14
  Oh, yeah.
• 8:14
  And to be willing to put the production behind it'cause it's, I mean, the short, short of it being Yes, we've got this crunch now, but they're not seeing that get a- alleviated any time soon at current capacity levels.
• 8:28
  So the boom, the 10-year bull run that we keep talking about, it is alive and well.
• 8:33
  That's right, and I would, just as, to give it a dimension, I'd say for, for mill runs, and again, that's where you, you generate the primary shape of steel before it gets, um, you know, shaped for the building that you're building Man, I think we probably need 50% extra capacity in the country.
• 8:51
  It's probably about the right number.
• 8:52
  Um, and that's just so that we get back down to reasonable lead times.
• 8:56
  You don't wanna start a construction project and you find out the steel is holding you up, right?
• 9:01
  That should be available, uh- You're sitting on your hands.
• 9:03
  Yeah, that's right.
• 9:04
  It should be in stock and ready for the projects as they get announced.
• 9:08
  Um, so, you know, what we've seen so far as critical delays is, is, uh, the, the transformers and the switch gear and now the steel, and those are...
• 9:19
  That's real-time feedback, you know, that people like my company are dealing with as they're trying to manage a client schedule, and you're getting feedback from the industry.
• 9:27
  Uh, it does trickle down into the equipment.
• 9:30
  So the equipment lead times are really stretching out.
• 9:33
  We just helped a customer with a very large equipment order from Europe for a specialty item, and the delivery date is 2028.
• 9:42
  Hmm.
• 9:43
  So they're having- I mean, y- y- you look, you know, CNC mills, ah, gosh, I was looking probably two months ago and for some of the higher end sp- full spec models, I, I mean, you don't have three or$400,000 machines just sitting in a warehouse very often.
• 10:00
  It doesn't make sense for the, you know, m- big, big manufacturers to just hold those around waiting for somebody to buy them.
• 10:06
  They've got, you know, some of them I've heard as much as, you know, six to eight month lead times on those, and I'm sure since, you know, I, I had those conversations, it's gone up.
• 10:15
  But so when you can't even get the, the machines that make the parts, things, it, it's 100% that trickle down you mentioned.
• 10:22
  Yep.
• 10:23
  So, so that gets us into if you're starting a project now, you've got to be really focused on the multiple critical paths.
• 10:33
  Um, obviously electrical is gonna be a big one.
• 10:36
  You better get that electrical design locked in early, get your manufacturing slot ordered from one of the major electrical OEMs.
• 10:43
  Um, Josh McSteinman on X would say call for startup, but- Yeah we're being pragmatic.
• 10:50
  No startup is fixing this in time to, to matter for re-industrialization.
• 10:54
  This is gonna come from the big experienced operators.
• 10:57
  They've gotta put in the extra capacity.
• 10:59
  We talked about steel.
• 11:01
  Where do I see it going next?
• 11:02
  I think you're very likely to see it in your plastic products.
• 11:06
  So things like roofing insulation for a factory is most commonly what we call polyiso, and that's just the foam, the kind of semi-rigid foam that goes on top of the steel deck and underneath the roofing.
• 11:19
  I think the roofing, which is very, um, very commonly plastic, like a PVC flat roof- Or a TPO flat roof, I think you're gonna see those start to stretch out because- Well, the, the, I, I, I agree.
• 11:34
  I was about to say the same thing around the PVC side of it.
• 11:36
  I mean, when you've got anything wi- with the basically your, your oil inputs, you know, your polyethylenes, that sort of stuff that you're relying on for fabrication, we've been dealing with a bit of a price spike in oil the last few months.
• 11:50
  Yes, it's come back down, which is great, but that only goes...
• 11:54
  That's feedstock.
• 11:55
  You're not getting that stuff cheaper, and trying to, people have been trying to hold out on it.
• 11:59
  That's just gonna crash demand right there.
• 12:01
  Yeah.
• 12:01
  The next...
• 12:02
  Let me just talk about construction in general.
• 12:04
  So construction has doubled.
• 12:08
  So I don't, I don't care what inflation reports have been published, I don't care what somebody in the government says, it's a 20% inflation.
• 12:15
  No, it's not.
• 12:16
  Construction per square foot has doubled In the 20 teens, late 20 teens, a very generous number we'd give to clients to budget their construction was about$300 a square foot.
• 12:29
  The starting point for the large design builders right now is in the$600 a square foot range.
• 12:35
  So what is very important for clients to wrap their head around is gonna be space utilization.
• 12:42
  You wanna overbuy the land, and you wanna have room to expand, but you wanna minimize that upfront construction package because it's so expensive, it takes so long, and there is no ROI on the building, right?
• 12:55
  And that's...
• 12:56
  I have a lot of, uh, professional engineer and general contractor friends, so they'll be mad at me for saying this, but the, the building makes no money.
• 13:03
  It's shade and shelter.
• 13:04
  That's all it does.
• 13:05
  It provides a, a dry space and a hu- uh, conditioned space for the equipment to live in.
• 13:10
  The equipment and the operators are what make you money.
• 13:13
  Yeah.
• 13:13
  So, um, so really thinking through that critical path and then also doing a, a solid analysis on how you can right size your construction space, and I think this applies whether you lease or whether you build new.
• 13:27
  Um, what we like to do with clients that have existing operations is we like to help them renovate a plant first because when you go greenfield and you're going all new high-end technology, robotics and IoT and all the, the cutting edge stuff, um, it's a, it's a learning experience for the company and they have a ton of backend integration they have to do to make it work with their ERP to, uh, to have the right training to, to cultivate the right vendor relationships.
• 13:55
  So we like to see a brownfield first where you can unlock some capacity inside of 12 months from an existing plant, and the, the typical brownfield renovation schedules we're putting out there right now are 12 to 14 months to get that first new capacity online.
• 14:11
  That kind of fits with an annual budget cycle.
• 14:13
  It's like, hey, I'll start spending this year, then I'll have new capacity next year.
• 14:17
  That kind of makes sense.
• 14:18
  Construction is three plus years out.
• 14:21
  So there's a lot of people that wanna tell me,"Hey, it's 18 months, it's 12 months." If you're building a serious factory, it's a three-year process minimum And that's, that's one of the things that I, I think a lot of people don't quite seem to grasp.
• 14:36
  I mean, y- the, there's the labor shortage piece of it.
• 14:39
  We've got material shortage pieces of it.
• 14:41
  But even before you get there, when you get into permitting, environmental reviews, interconnection, all of these pieces, that's stuff that's happening, you know, before y- you get off the paper.
• 14:56
  I mean, when you're trying to get, all right, you've gotta get three wet stamps from engineers on all filed permits, you've now got to comply with, make sure you're complying with local, state, federal, you know, guidelines.
• 15:07
  I mean, permitting is an absolute disaster in this country.
• 15:11
  I mean, the, the land development, uh, process is, uh, y- you can see a direct correlation between where factories are getting built and who has the right zoning and right land development approach.
• 15:24
  Totally.
• 15:25
  Yep.
• 15:25
  There's a reason your Sun Belt is doing great, is because they aren't, you know, cumbersome.
• 15:29
  You're not seeing a lot of this outside of, you know, your southeast Sun Belt because historically, northeast, midwest have very restrictive, very difficult zoning and land development processes, and that's only adding...
• 15:43
  That, that, you know, we mentioned earlier the time value piece of it.
• 15:46
  When you're trying to h- handle your construction costs, when you have carry costs that go on for months just to get your paper plans approved, you're, y- y- you're SOL.
• 15:56
  I mean, you, you are, it, it is underwriting, u- undermining any opportunity you have for that factory to really produce greater value down the line.
• 16:04
  And so if you're adding six to eight months just before you even get to the fun stuff of building, you know, your community's written itself o- you know, out, out of the opportunity there.
• 16:15
  You're, you're not getting anything.
• 16:16
  Yeah.
• 16:17
  So, you know, we're doing a couple of greenfield new starts right now, so these would be the one, the headlines.
• 16:22
  Uh, we did about a month ago, you did a great job of taking us through some of the big announcements.
• 16:27
  Um, a handful of those types we're involved in.
• 16:30
  So with permitting, now that we got the cap- materials and the critical path out of the way, right size the building so you buy less physical construction and optimize the cube inside, make more use of the space you have.
• 16:44
  Um, the next place that we look is permitting, and you're gonna end up with a couple permits for any major factory.
• 16:52
  A- and for the audience, this may be surprising to them, that- it takes this much work.
• 16:56
  Uh, this is why engineers are not going away with AI, because these processes are not going away.
• 17:02
  So number one, you have to get a DOT permit And most people say,"Well, why do you need a DOT permit?
• 17:09
  Don't we already have roads?" And the answer is you do have roads, but your road wasn't designed for the additional truck traffic that you're putting on it, and you're certainly gonna have to do things like modify curbs, maybe add a turn lane into your factory, or modify the signal, the, the traffic intersection nearby.
• 17:25
  So you've got- God forbid there be any bridges, too.
• 17:27
  That's right.
• 17:27
  So you've gotta get a state DOT permit to get started, and then that permit also has to be reviewed by the local jurisdiction, which has a Department of Public Works, and the two are gonna go hand in hand to say,"We're allowed to add this new trucking capacity." Now, that might seem onerous, unless you live in a subdivision next to the factory and you'd like to know that they're getting the trucks in their own appropriate turn lane or something so that it's a safer road for you and your family.
• 17:52
  So all of these regulations feel onerous if your goal is to get the factory built, but if you put it in perspective of living in a community, they actually, in my opinion, make a lot of sense.
• 18:03
  Um- Huge quality of life impact.
• 18:05
  That's right.
• 18:05
  The next, the next is gonna be deciding if you require an EPA permit.
• 18:10
  So where's the A- EPA come in?
• 18:12
  Air and water.
• 18:13
  Um, what emits a lot of air particulates that require an EPA permit?
• 18:18
  Anything critical material.
• 18:20
  Okay.
• 18:20
  Like, if it's a critical material at all, whether it's plastics or metallics are back in vogue, um, paper making.
• 18:27
  If it's any material, you're gonna have an EPA permit once you hit a certain size of the factory.
• 18:33
  So really having a solid understanding of that, as well as potentially arming yourself with environmental data in advance.
• 18:41
  So this is where we like the renovations.
• 18:43
  If you have an existing factory network, say you have 15 factories, you're planning one or two more.
• 18:50
  We can go put in a high-end environmental system on one of your other plants, you know, a, a high-end air scrubbing system or a high-end wastewater treatment system, and you can demonstrate for your EPA application that you actually have better than industry standard air and water performance, right?
• 19:06
  That would be a critical thing to speed up the permitting on your new greenfield plant because you can demonstrate how much better you're gonna perform and what the actual data looks like.
• 19:16
  So that EPA permitting piece is huge.
• 19:19
  Um, I would predict by year-end if you don't already have a e- a federal permitting company, which would be typically a civil engineer, geotechnical engineer, environmental engineer, if you don't already have one, you're gonna be working...
• 19:34
  I would say the phone book, we don't do that anymore, but you're gonna be working your AI search list on calling the top 10 companies you'd like to work with just to find one.
• 19:43
  Good luck.
• 19:43
  Yeah.
• 19:44
  Just to find one.
• 19:44
  The ca- the capacity's not there.
• 19:46
  Yep.
• 19:47
  That is a very inelastic skill set to do that type of permitting.
• 19:51
  Uh, the next of course is understanding a permitting strategy.
• 19:56
  So every, every site is gonna have to go through what we call the AHJ, the authority having jurisdiction.
• 20:03
  That could be a city, county, s- in some cases a state.
• 20:06
  It just depends on what it is.
• 20:08
  Um, having a solid understanding of that state's permitting laws and then that city or county, what building codes they've adopted and what version of the building code they're on,'cause it's different everywhere you go.
• 20:21
  They just approved, was it 2024's electrical permit, I think National had back in December.
• 20:27
  Where is that?
• 20:27
  It's 2026 now.
• 20:29
  In, uh, in your area where- In, in Pennsylvania.
• 20:32
  They, they just adopted the 2024 one, I believe it was I mean, we're still de- They, they run behind, yeah we're still designing the codes from the 20-teens.
• 20:42
  I mean, that's, that's still a thing because typically a city won't update codes about once every 10 years.
• 20:49
  Uh-huh.
• 20:50
  So there's a pretty good chance you could be 10 years behind in the code.
• 20:53
  Um, and to, also to your point, they're not all the same.
• 20:56
  So you have the mechanical code, you have the electrical code, you have the structural code, the seismic code.
• 21:02
  I mean, there's so many different ones that, um, you really have to pay attention.
• 21:07
  But- Plus when you fold in l- geographically, Florida has some of the, you know, highest, you know, standards for building'cause of hurricanes, you know.
• 21:15
  Whereas Texas, you know, certain parts of it, yeah, you've got the hurricanes, but they don't necessarily have the snow load piece of it like you might get in the Midwest.
• 21:22
  And so- Well, what we do- it's, it's a whole mix is, is we start a building before there's a site.
• 21:28
  Usually there's about three states in competition when I've started design on the factory.
• 21:32
  So we already know what factory it's gonna look like.
• 21:34
  We need to find a piece of land that can make it work, the right workforce.
• 21:37
  You need to find the right logistics.
• 21:39
  It's the right power connection.
• 21:41
  But when you, when you take that approach where you just design it in white space, then there's a simple hack, I'm gonna give this away free to any competing engineers.
• 21:51
  Just- Ding, ding, ding just design it to the Factory Mutual standard.
• 21:56
  So the largest insurance company in this space is called FM, Factory Mutual or FM Global, you hear it called.
• 22:02
  Just design the building to FM Global standards because that's gonna automatically improve the quality of design to where you don't hear your engineers saying things like code minimum, right?
• 22:13
  If we're designing to code minimum, then it matters where we put the factory because the code is different everywhere.
• 22:19
  Yep.
• 22:19
  Um, and I don't think for most of my clients, minimum standard is the goal, right?
• 22:24
  That's not what they wanna offer their clients.
• 22:26
  Their, their, you know, new Taj Mahal of a factory they're building doesn't necessarily wanna be minimum on a- When, when you're, when the check you're writing has that many zeros on it, you, you'd like it to be, you know, maybe a little bit nicer.
• 22:39
  Yeah.
• 22:39
  Yeah.
• 22:40
  Exactly.
• 22:41
  So, so that would be the part there is now if you're designing FM Global, you have very few modifications to make based on local code.
• 22:50
  Um, once you go to local codes, you really have to understand where you can advise your client on taking a risk.
• 22:58
  So if you're the manufacturer, uh, state law, this is generic, most states would say this, you can't pour foundations without your EPA air permit.
• 23:08
  Okay, well that sounds like a delay because the EPA permit is like 12 months if you need the full permit.
• 23:15
  Can you get by on a EPA waiver?
• 23:18
  If you listen to some people in the federal government, you'll say there's no waivers.
• 23:22
  We're getting waivers, we're getting waivers for our clients, right?
• 23:23
  Uh, because we have data that shows that we can, you know, we don't have to be in total compliance, right?
• 23:31
  Uh, and it's not, it's not that we're delivering worse air, it's just that we're proving that we don't need to go full through the full rigor.
• 23:37
  You've got the data to back it up.
• 23:39
  Exactly.
• 23:40
  So, so where can you take a risk?
• 23:43
  Now, I said you can't do concrete without the EPA permit.
• 23:45
  That's not totally true.
• 23:47
  You can do concrete if the owner of the building signs off and says,"I will go at risk to start the whole factory construction while the EPA is doing their review." So that is now a, a quality of the team decision.
• 23:59
  Do I trust that my, you know, civil and environmental engineers did a good enough job that this permit is gonna go through and it won't end up biting me to where I have to redo this factory?
• 24:10
  'Cause no one can afford a redo, right?
• 24:12
  Once again, it's a risk decision, and as an owner of a building, you need to have a team that can advise you well enough that you thoroughly understand it to say,"Yeah, let's cut 10 months off the schedule and go at risk on the construction," right?
• 24:26
  Um, so that would be a simple example.
• 24:28
  Uh, we typically chunk our permits.
• 24:32
  So we will turn in a series of sequential permit packages to the local, um, county, if you will.
• 24:39
  And so what that does is it gives them less to review, which speeds up the review time, and it lets us start trade work such as earth work, geotechnical, you know, foundations, that type of stuff, while we're developing the next package that could be for structural or architectural, for mechanical, electrical and so on.
• 24:57
  So that's another strategy that we use is to instead of do one huge permit submission, we'll break it down into, say, you know, three to five smaller packages, which makes it easier and faster for everybody involved.
• 25:09
  Um, I will personally, this is one of my favorite things to do, I'll usually go see the building code officials in wherever we're building, and I'll, I'll hear from them directly how they'd like it done.
• 25:22
  So we don't, we don't go in, like, blind or, like, arrogantly.
• 25:25
  I'll, I'll literally go sit across from them, and if I'm allowed to buy them a coffee, I will, uh, and find out, how do you prefer to work so that I can map my work process to be most efficient for you?
• 25:36
  'Cause at the end of the day, they have the decision rights.
• 25:39
  And that's, you know, I, I, I serve on the local planning commission, so I, you know, I see plenty of these developments come through whatever, and you get, you know, a chunk of them where you're,"Hey, this is the first time hearing about it." And you get those other ones that they've met with engineers, they've, they've had the pre-conference meetings, they've done all that.
• 25:59
  And I can tell you firsthand, the ones that go a lot smoother are the ones that check every box, have every question answered, and are the ones where they take that collaborative apo- approach.
• 26:07
  So it's, I mean, th- there's a reason why Chang Robotics is doing what it's doing and doing so great.
• 26:15
  So since we have made everybody nervous'cause we talked about permits and material shortages, we haven't ev- even really gotten to trade shortages in a while, but we've, you know, we've done full podcasts on that before.
• 26:26
  I'm gonna share Uh, this is a, a guide that we'll be putting on the website, if it's not already there, on the, the Reforge website.
• 26:37
  Seven steps to re-industrialization.
• 26:39
  Um, important thing, your town, your state, your industry, right?
• 26:44
  Because this, it is incredibly local and there's, yes, there's state requirements and federal, but it's incredibly local.
• 26:50
  And we won't go through the whole thing here.
• 26:52
  We'll, we'll put it up on the website.
• 26:54
  But just number one, this is so critical.
• 26:58
  Before you engage large professional engineering teams, before you start looking for land, before you do any of that- Don't get out over your skis as quickly as you can, perform a feasibility study, right?
• 27:11
  And that's where you're gonna check, is the power available?
• 27:15
  You know, is the workforce available?
• 27:17
  What do, what does the workforce wage rate say about my business case?
• 27:23
  Um, how hard is it logistically to get my raw goods, and how close am I in proximity to my, my, uh, customers for distribution?
• 27:31
  Though that's all gonna happen here, and what I think most clients will see is the, the formula's changed.
• 27:38
  It used to be you build more and you automate less,'cause construction was cheaper than equipment.
• 27:42
  Well, based on what I said about inflation, that's reversed.
• 27:46
  Yeah.
• 27:46
  Now you wanna have the smallest building possible with the maximum automation in it.
• 27:50
  You know, you- You gotta go for that density and efficiency in that per square foot.
• 27:54
  Yeah, you really need to look at, like, production per square foot, right?
• 27:57
  Would be a great way to analyze your value for money in getting into a new factory.
• 28:02
  Um, the next one, this is kind of where we spent today, unify the design and build.
• 28:07
  You know, we, we need to understand, um, the answers to primary basic questions before we get into a construction process.
• 28:16
  Construction is very expensive.
• 28:18
  It's very time intense.
• 28:19
  Once you hire that engineering firm and that general contractor, your money is going out the door.
• 28:25
  So you need to have some really solid alignment on a strategy so that you can do two things.
• 28:29
  Number one, save time and money, but number two, also be a good, good client for your general contractor.
• 28:34
  General contractors like it when their clients are informed and can tell them exactly what they want and how they want it done.
• 28:40
  Um, it, getting down here to the, uh, the post-commissioning, we won't spend time on that today.
• 28:46
  The, the validation of the factory, uh, is oh so critical.
• 28:50
  You know, you wanna make sure that you're exercising that warranty period, which industry standard is, is sadly, is only 12 months.
• 28:58
  During the 12 months, you're not even making product the whole time because you're ramping.
• 29:02
  Nope.
• 29:03
  Right?
• 29:03
  So you wanna make sure that you have a clear plan to hold all your supply chain accountable.
• 29:08
  That's that validation phase.
• 29:10
  And then, um, build a workforce, right?
• 29:14
  This starts on the very front- We, we've talked about that a little bit yeah, we, that one will get you banned from YouTube.
• 29:19
  Um, and then the final one, and you, you'll be so proud of me, as I know you're deeply passionate on ERPs.
• 29:25
  We're going through an ERP upgrade right now, and so it hit my desk of what do you want measured?
• 29:31
  I only had a sim- one simple request.
• 29:34
  I wanna know country of origin on every spend we have.
• 29:37
  I know intuitively, because I, I know our financials, we spend most of our money in America, but we do o- order from overseas.
• 29:45
  We have a, we have a shipment of robotics coming from Taiwan right now that's on the ocean as we speak.
• 29:51
  Uh, we've got a, a shipment coming up later this year from Poland, right?
• 29:55
  So we do still live in a global economy, but I'm very curious to know what is our buy American percentage as a company, and then are there things we can do to steer that higher, especially for our customers, as they might want more local components with more local support, um, American made.
• 30:15
  So that's something by the y- end of the year we'll be tracking that fully.
• 30:19
  We'll know it for every single country that we buy from, right?
• 30:22
  And then- I love it I in- my intent is I'll just publish it, right?
• 30:26
  And that, that's an accountability metric that I'd like to see more businesses do, is- Absolutely tell me how much of your spend was spent in America Do you...
• 30:35
  Yeah.
• 30:35
  A- and that, that's one of those, you know, some people might dismiss them, but I think it is a metric that should become far more important and sh- like you said, sharing it is a, uh, I mean, a badge of honor, but also, you know, a, a level of accountability it provides.
• 30:52
  Yeah.
• 30:52
  So I'm, I'm doing the power scroll here so people can just get a preview of the document.
• 30:56
  Um, but it's- It will be available on the website, folks.
• 31:00
  That's right, but you've got stuff in here like, like, uh, digital twins, you know, when do those matter, you know, and just kind of the, the how-to guide.
• 31:08
  This would be, I would call it mandatory airplane reading, you know, for anybody that is thinking about, you know, getting into their next factory investment.
• 31:18
  Uh, read this on the airplane and at least get your head on straight before you start.
• 31:22
  Mm-hmm.
• 31:23
  Absolutely.
• 31:24
  Absolutely.
• 31:25
  Well, Matt, another great episode.
• 31:28
  Thank you for, uh, for sharing your wisdom and insight as always, and to all of you listening, thank you for tuning into The Reforge Podcast for episode number 20.
• 31:40
  Whether we're talking robotics on the factory floor, policy that actually moves the needle, or the next generation of American makers, our goal is always the same, to prove that reindustrialization in America isn't just possible, it's happening right now and it's pivotal.
• 31:54
  If you enjoyed the episode, make sure you subscribe and follow@thereforgepod everywhere, and check out The Reforge Podcast for more, including our Seven Steps to Reindustrialization, which will be coming out soon.
• 32:07
  Until next time, keep forging the future.
• 32:09
  I'm Colin, and we've got Matt.
• 32:13
  This has been The Reforge for you.
• 32:14
  Thanks.
• 32:20
  Thanks for tuning in to the Reforged podcast.
• 32:23
  Make sure to like, subscribe and follow us on all of our social media@thereforgedpod.
• 32:29
  We will see you next time