Latest / The ReForge Podcast / Who Speaks for the Small Manufacturer? (with Patrick Wolf and Ethan Copple) | ReForge 017

Transcript

Who Speaks for the Small Manufacturer? (with Patrick Wolf and Ethan Copple) | ReForge 017 · 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.
• 0:21
  Let's get into the episode.
• 0:24
  Welcome back everyone, and welcome to episode 17 of the Reforge podcast.
• 0:29
  We have a double helping for you today.
• 0:32
  We've got two gentlemen joining us, Patrick Wolfe and Ethan Coppel from the Institute for American Manufacturing.
• 0:40
  Patrick is the executive director, and Ethan Coppel is the director of strategy for the institute.
• 0:47
  Their work at the institute is organized around three institutes.
• 0:50
  FORGE, which focuses on manufacturing and industrial capacity.
• 0:53
  ATLAS, which focuses on energy and infrastructure, and AEGIS?
• 0:57
  AEGIS.
• 0:58
  Pronunciation, maybe.
• 1:00
  AEGIS, there we go, uh, which focuses on artificial intelligence and strategic technologies.
• 1:05
  Together, uh, the three institutes examine the interconnected systems that are required for the United States to build power and govern its industrial future.
• 1:14
  Gentlemen, welcome.
• 1:16
  It's great to have you with us.
• 1:18
  Yes, thank you.
• 1:20
  So aside from, uh, butchering the names there, what did I miss?
• 1:24
  You know, give us a quick little, you know, backdown- background, you know, what, what's the play-by-play on what I missed about what you guys have done, what you're doing, you know, a little bit about the institute.
• 1:36
  Yeah, you want me to take that, Ethan?
• 1:37
  Yeah, I was gonna let you, I was gonna let you start, then I was gonna give my, my two cents.
• 1:41
  But yeah, please.
• 1:44
  Yeah.
• 1:44
  You know, I think, uh, when you look at the typical, you know, kinda research policy institute, uh, it's very one-dimensional, very focused.
• 1:51
  Um, and the difficulty of today is everything's so interconnected.
• 1:54
  Uh, when you look at these three institutes, right, with manufacturing, power energy, AI data, uh, it's got to this point where you really can't have one without the other.
• 2:03
  Everything's become so interdependent, and you need to have the ability where each one of these individual silos can communicate with each other and understand how they're fitting within that system as a whole.
• 2:12
  So when you talk about these things, it's like, you know, I, I always use this example'cause it's the hot button topic, right?
• 2:16
  AI, data centers, everything like that.
• 2:18
  Like, I'm a company, I have all this data, I wanna utilize it, and as such, they need to have a data center.
• 2:25
  So you wanna build out a data center.
• 2:26
  Well, you have to go to the location and make sure you have enough power, make sure you have the, the, the capability to actually build it and the technology requirements.
• 2:32
  So it goes back to manufacturing and power, right?
• 2:34
  Do we have the power capability?
• 2:35
  And the power center's are gonna tell you,"Well, we have to increase our capacity.
• 2:38
  You have to do committed for buys, and then you have to build that out," right?
• 2:41
  So the manufacturing takes hold, and you get this full cycle where the manufacturing company now says,"I need to increase my capacity.
• 2:47
  I need to use more AI and data with, uh, thus to be more automated, more efficient, our IRT, you know, decreased qualities and things like that," and just say to ourselves,"What are we actually doing?" And it's that full circle where all of a sudden you're back at square one.
• 2:58
  Now we need more AI and data, right?
• 3:00
  So it's this, kind of this full circular system, and each point along the way there's, there's a million different things that could be happening, uh, regulatory-wise, uh, policy-wise, things like that, that can kind of, uh, intersect it.
• 3:11
  So it became this natural playground of, of linking these three together and then giving this voice for the small to medium-sized players, right?
• 3:18
  So, um, it's been, been a fun, interesting time to kinda get this going and working with Ethan on developing out the, the institute.
• 3:24
  So that's my little bit of a spiel.
• 3:26
  I'll give it over to Ethan to say his piece for it.
• 3:28
  Yeah, but Patrick, before we move on, so the caption on your website is Restoring the Industrial Foundations of the United States.
• 3:36
  So certainly everything you described, right, Collins?
• 3:38
  Yeah.
• 3:40
  Everything you described in that circle is, is foundational.
• 3:44
  Yeah.
• 3:44
  Yeah.
• 3:45
  The po- the permitting, the infrastructure, the policy, the investment, the consu- the company demand, right?
• 3:51
  The marketplace for it.
• 3:53
  But what, what are some of the examples of where, where are you guys moving the needle right now in terms of, you know, increasing the foundation that we have to build more industry in the country?
• 4:03
  Yeah, you know, the, the big thing that comes to this is typically when you see some of these big policy institutes, they focus on, you know, the, the, the major players, right?
• 4:11
  And where we've kind of found our niche that fits into it is, is highlighting and promoting the, the small to medium size, right?
• 4:18
  This kind of backbone of the industrial states.
• 4:20
  We talk about like a, I wanna start a company, right?
• 4:22
  I wanna be a startup.
• 4:23
  I've got the 50-man machine shop that's a sub-supplier.
• 4:26
  Uh, when they hit a roadblock, that's the, the, you know, major to them, right?
• 4:30
  Major companies, they have their, their ability to have the lobbyists and lawyers and M&A teams to kind of battle through it.
• 4:35
  Uh, the smaller guys don't, they don't have a voice.
• 4:37
  So what we've been doing is we have this like kind of three phased almost approach.
• 4:41
  There's capture, synthesize, and place, right?
• 4:43
  So when you're capturing something, right, we wanna say what is, what is the grounded truth, right, for this producer?
• 4:48
  So how do we have this curated network?
• 4:49
  How do we get the people connected to, to who's doing what where?
• 4:52
  Answer those questions, build out that network, and the, and that play to that.
• 4:56
  As well as like structured field signals, right?
• 4:58
  Where is, where are things going, right?
• 4:59
  How do they actually measure those?
• 5:01
  Um, industrial briefings kind of giving the, the policy mindset to it and something like a foundational truth to it in a non-partisan approach, right?
• 5:08
  In a way that's just purely we wanna reindustrialize this baseline.
• 5:11
  Let's not make it a partisan issue.
• 5:12
  How do we actually have it where we're actually grounded in some type of, uh, you know, baseline to it?
• 5:17
  Uh, the second part of that is that synthesize, right?
• 5:19
  So taking and actually giving a voice, right?
• 5:21
  I'd say taking the, the voice of the average person of what the issues are and giving them some platform to actually highlight that, right?
• 5:27
  So- Creating and, and promoting, you know, rigorously citable output, right?
• 5:31
  These peer grade journals that we've have, uh, working on different policy briefs talking about, uh, some, some sub-niche i- industry issues that actually can be more educational.
• 5:40
  Uh, and then maintaining different, uh, data sets that eventually can go forward and be used in future decision making, right?
• 5:46
  I think, uh, anything today, a topic that you look up to, there's always very controversial sides to it, right?
• 5:51
  There's very polarized, right?
• 5:53
  Any industry, any aspect.
• 5:55
  Uh, and you sometimes have to stop and say,"What is the reality of the situation," uh, from a point that is devoid of some political reality, right?
• 6:02
  And just say,"What is the actual truth on it?
• 6:03
  How do we actually drive forward to that change?" Uh, the last one is place, right?
• 6:06
  So capture, synthesize, and place, and that's kind of where we kind of said, you know, where is this, right?
• 6:11
  We developed this analysis and this intellectual vigor.
• 6:14
  We have these brilliant people working on things, uh, and developing content assets, white papers.
• 6:20
  Uh, how do we actually get that in front of something that can make the change, right?
• 6:23
  How do we highlight this different policy issue and say,"This needs to change the direction it goes"?
• 6:27
  This is, you know, technical advisorship within people that are in these key decision-making.
• 6:31
  Uh, we kind of see that there's this appetite that's kind of grown now in different areas to actually move the needle and push things along and change stuff.
• 6:38
  Uh, previously, you know, a lot of these organizations, government and, uh, regulational, uh, kind of looked at itself as like, uh, you know, once this thing was created, you can never get rid of it.
• 6:48
  Uh, but now it's becoming more agile, uh, especially as you have this defense overlay so that, uh, has kind of blossomed into the pushing of reindustrialization, right?
• 6:56
  It's become a more recent- Yeah.
• 6:57
  It is.
• 6:58
  That is trending.
• 7:01
  Yeah.
• 7:01
  The defense industrial base is, is actually, I think, helping a lot, Colin.
• 7:03
  What's your opinion on that?
• 7:05
  Mm-hmm.
• 7:05
  I mean, it, it absolutely is doing a lot.
• 7:08
  I- I'm going to bite my tongue a little bit just because, I mean, I'm a huge fanboy obviously for the defense tech stuff.
• 7:14
  It's, you know, I just get a little frustrated sometimes that your, your job shops and mom and pop operations don't get the, uh, the same love necessarily as the, uh, cool flashy stuff.
• 7:25
  But, you know, at the same time, nobody is, you know, really...
• 7:30
  Nobody gets too excited about some little, you know, nut or bolt that you've machined for some edge case.
• 7:35
  It's the things that go boom and are shiny that, that everyone gets excited for.
• 7:39
  So I get it.
• 7:41
  Yeah.
• 7:41
  I- And Ethan, I jumped in before you can take it the rest of the way.
• 7:45
  Uh- Yeah, sure I'm sure you have thoughts on this.
• 7:47
  Yeah.
• 7:47
  I would say actually to, to Colin's point, that's actually kind of the main concentration, um, you know, that we're looking at, is kind of those mom and pop shops, those places, as Patrick mentioned, that don't necessarily have the government affairs office of 1,000 people.
• 8:00
  And, um, you know, both of us are, are kind of middle of the country guys.
• 8:04
  You know, I'm from Kansas, Nebraska, and Patrick's from a little bit more in the west.
• 8:08
  Um, but like, you know, kind of the mom and pop small manufacturers are, you know, where we're from, like where we're used to.
• 8:15
  You know, I've worked in- For the most part, smaller manufacturers now.
• 8:19
  My, my day job is actually at a, a defense prime, so I've joined, you know, the, the defense industrial base on that side.
• 8:24
  Um, but, uh, yeah, no, in that sense though, I don't...
• 8:28
  I have a, I would say I actually have a really easy time getting excited about the small shops.
• 8:32
  And, um, you know, as Patrick and I were talking about the institute and, and bringing me on, like, that was something that was very interesting to me, was, you know, kind of elevating those voices.
• 8:41
  And so now, you know, once a week, once every other week, I'm on the phone with, you know, a CNC shop or somebody, getting their thoughts on kind of what the, the feel on the ground is and what they need, what they, you kind of see as the vision moving forward for what would be helpful.
• 8:53
  Well, can you lay it out for us in like, you know, Colin and I have done a lot of talking about this, especially our probably favorite sector is talking about the workforce in general.
• 9:02
  Mm-hmm.
• 9:02
  How are we g- how are we getting younger- Mm Americans specifically, but all able-bodied Americans into these very, say, manufacturing- Important shops.
• 9:10
  Yeah.
• 9:11
  Yeah.
• 9:11
  Skilled trades.
• 9:13
  Um, but Ethan, I'm curious again, what are, what are, like, kind of the top three or four things you hear when you get on the phone with these business owners?
• 9:22
  I would say it's, like, pretty industry dependent.
• 9:25
  Um- You know, I think, uh, a lot of it goes back to, we'll say, like, tariff and tax policy in the very, like, I don't know, we'll say simplistic, what people think of with, with, um, policy.
• 9:37
  So you know, like, there's a CNC shop owner I was talking to the other week, and his big issue was he was getting hit over the head with inventory, like taxes on his inventory that he felt like he had to have because of all the tariff issues and uncertainty with that.
• 9:49
  And so he bought all this extra inventory, and now he's getting taxed on, hit over the head with money.
• 9:54
  And so, you know, it's like obviously we want, in times of instability, there to be kind of a bulking up of that inventory.
• 10:02
  At the same time, then we probably need to ease out, you know, like ultimately, right, the, the goal of good policy is to reward behaviors that we want and punish behaviors we don't.
• 10:10
  And you know, in times of instability- Small shops don't have the cashflow to, to handle that, like you're going at.
• 10:14
  I mean, it's, it's a, it can be a killer- Yeah if you're trying to, you know, skirt, or not skirt, but try and, you know, front run some of the forthcoming, you know, tariffs with your raw inputs, you know?
• 10:23
  Yeah.
• 10:24
  Cashflow, if you're dealing with, you know, 90-day terms, you know, as a supplier, that is expensive to sit on that, pay tariffs, and have to wait for, for that money to come through.
• 10:34
  So that's, I can't say I'm surprised, but I think it's interesting just to kind of hear that affirmed.
• 10:40
  Yeah.
• 10:40
  But yeah, so like looking at ways to, to ease that.
• 10:43
  Um, another example, I had a colleague who was running primarily commercially oriented, uh, manufacturing shop, and, um, kind of long story short, their tariffs were the, the same for the, you know, raw materials they were importing.
• 10:58
  They were doing it from, you know, aluminum block all the way to finished project, um, for this consumer good, and they had, you know, we'll say, uh, counterfeiters that were importing final goods directly from China and paying the exact same like tax percentage or the tariff percentage, and you can see where that then becomes kind of untenable from, you know, the monetary standpoint where, you know, the block of aluminum is costing almost more than the finished product.
• 11:22
  Um, all- I think I remember reading something similar with, I think I wanna say it was Guardian Bikes who was running into, you know, the same, same, uh, fundamental issue of- Mm you know, Chinese suppliers are getting tariffed on a, a finished bike frame or finished bike the same dollar amount as they were paying on the kind of raw steel input for it, and it's like, okay, their costs are just, you know, it, it, it's not a, a level playing field.
• 11:46
  And- Exactly at least in theory, you know, tariffs as a protectionary measure, your goal is to try and induce supply entrance into the markets to drive- Mm-hmm you know, more competition, more capacity locally.
• 11:59
  You know- Exactly it, it's a pretty big, uh, pretty big swing and a miss if you're, you're just making things more expensive and not able to induce supply there on that end.
• 12:07
  So that's- Yeah that's interesting.
• 12:09
  So I, I mean- You, you're hearing all this stuff.
• 12:12
  How are you, um...
• 12:15
  You know, I, y- y- you guys launched or are launching a new initiative to focus on really the policy needs for these smaller shops.
• 12:22
  Mm-hmm.
• 12:22
  Not necessarily mom-and-pop only, um, but not your$100 million operations, kind of the, the, what I would call the core backbone of- Sure what makes up a lot of American production capacity.
• 12:34
  So can you talk a little bit about what's that initiative or, or maybe what, what it, what can we, like what can we look forward to for that initiative?
• 12:41
  For sure.
• 12:42
  A lot of that, you know, we'll say has kind of been happening- Yeah informally, a lot of those conversations, kind of as I've been mentioning.
• 12:48
  The goal of this kind of new initiative where we're focusing in on those is, like, okay, now that we kind of have a general sense of, like, this is a, a really good niche that needs to be approached, nobody else is really talking about this or focusing on this, um, now we're gonna kind of formalize that process and start having those interviews and try to, I know as Patrick was alluding to, kind of create more so, like, research-oriented products.
• 13:11
  Um, you know, turn those conversations into things that, um, you know, kind of have the reputation that lawmakers wanna see with it as well.
• 13:19
  So, you know, I, I...
• 13:20
  We jumped a little bit ahead there, so I'm, I'm gonna shift back gears in a second.
• 13:25
  But, you know, when we talk about policy, like I'm, I'm a tot- total nerd when it comes to policy and kind of the, you get into the technical, you know, legislative stuff.
• 13:34
  Like, I geek out- Sure on that.
• 13:35
  It's a, a dark, dark secret.
• 13:37
  Um, but, but I love that stuff.
• 13:39
  Um- Yeah I'm an outlier in that space.
• 13:43
  A lot of, you know, these smaller operations, they don't have the bandwidth to, you know, do some bedtime reading on policy briefs, white papers.
• 13:51
  How, maybe, are you guys structuring that so that it is easier to consume, it gets them really what, what they need for that 10-shop operation who they're trying to keep the lights on, you know, they're battling tariffs, they've got all these factors against them.
• 14:06
  How are you making it so that they can consume and benefit from this information that you're putting together for them?
• 14:12
  Yeah, you know, and I think, um, it's always interesting when you look at the consumption side of the content, right?
• 14:17
  So the-- when we have these small mom-and-pop, these medium-sized shops, right, these, these people who have like 100-person machine shop, things like that, they, they're kinda like the source of, of what's happening, right?
• 14:28
  This gives the industry pulse, right?
• 14:29
  So you're able to get a lot of, uh, this, this good context information, things to dive into.
• 14:34
  And creating the, the article information, right, is, is, is maybe a couplefold, right?
• 14:39
  The easy digestible stuff is kind of the, the mainstream audience, right?
• 14:42
  I think we see this today all the time.
• 14:44
  There's a lot of this, like, catchy headlines, almost like you read a newspaper.
• 14:47
  Like, some catchy headline, there's some worry to it, some issue, and then when you read it, it's, you know, there's varying levels of depth.
• 14:54
  And we wanna have where, like, the, the detailed policy briefs that have this, this really meat and potatoes of the information and the dataset.
• 15:01
  That audience is mainly those people that are digging into those, that, that love that, right?
• 15:05
  And it's always gonna be small and niche, right?
• 15:07
  We're not gonna have, you know, 100,000 people reading a, a very detailed policy brief.
• 15:11
  But you can take those and then work that into what I would call, like, the, I don't know, the, the pop sugar type, the, the more clickbait-y article headlines where it garnishes attention.
• 15:21
  Where you say,"Look, this is, this is an issue," and it's gotta be very simple.
• 15:25
  It's,"This is the problem This is what's happening with the problem, right?
• 15:29
  This is maybe a story or antidote with the problem, right?
• 15:32
  'Cause we're very story-oriented people.
• 15:33
  And then it goes down to here's the solution.
• 15:35
  Like, here's a recommendation, right?
• 15:36
  Here's where we're seeing it.
• 15:37
  So instance with the, with the, the tariffs, right?
• 15:39
  This is such a new realm, right?
• 15:41
  Everyone became a tariff expert as soon as they started implementing it.
• 15:43
  We started looking back maybe 100 years when the last time we actually had major tariffs implemented.
• 15:48
  And, uh, the difficulty is, is you can't...
• 15:50
  Y- you can take history as a lesson, but today's age and the way things are applied is completely different, right?
• 15:56
  Uh, especially with people skirting the tariffs and figuring out ways to get around it.
• 16:00
  And you know, like you said, front-running the inventory, uh, hin- th- that this tariff hit, and then it's the classification.
• 16:05
  If you've ever ordered a package from, from China, right?
• 16:08
  Temu, AliExpress, uh, you get it and you'll be like, maybe you bought a camera, right?
• 16:11
  And you look at the box and the import label, it says something like, um, some- something that's not even related to what you bought.
• 16:17
  And it's just because it's a classification for their import.
• 16:20
  Yeah, it's a fashion accessory, right?
• 16:22
  Yeah, it's a fashion...
• 16:22
  It's a, oh, it's a piece of clothing.
• 16:24
  And then the same point is the protectionism, right?
• 16:26
  And so how do we actually change this?
• 16:27
  Like, these are small things where when you have people that are told,"Hey, go take the theory of tariffs," right?
• 16:32
  And we're talking about an administrative state and the government.
• 16:35
  Um, and then how do they actually enforce it, right?
• 16:36
  What is working?
• 16:37
  What's not?
• 16:38
  What needs to be changed?
• 16:39
  It needs to be dynamic.
• 16:40
  And that's kind of this understanding too, of it's ultimately tariffs is to not only bring in the tax revenue, but it's a protectionism, right?
• 16:46
  You wanna protect certain industries.
• 16:47
  And, um, how do you do it, right?
• 16:49
  How do you do it when they can get around the tariff restriction when they're importing something as a necklace, right?
• 16:54
  And it's actually like a, you know, a piece that's a high, you know, high caliber machined, you know, something, right?
• 16:59
  Whatever widget that's being produced, and they're just labeling it as like jewelry, right?
• 17:02
  It's some of the things like that that you kinda have to look at and, and determine like, well, how do you actually get around that, right?
• 17:07
  How do you prevent these things?
• 17:08
  Especially at the scale that things are occurring today.
• 17:10
  So I'd say that's kinda like the content, right?
• 17:12
  We want to have this very detailed information where if someone wants to go bite into it, they can bite into it, ask the questions, get the answers, seek the experts, and make these informal connections, which I think is critical, right?
• 17:22
  A lot of times the conversations are happening by someone seeing something, making connections.
• 17:26
  Ethan can, can talk about this.
• 17:28
  I...
• 17:28
  Phone calls every week of people being like,"I've got this I'm doing And when you try to connect them with people, and you open up to this network, and you start realizing that this informal network, right, in the age of AI, the thing that's the most durable is a network.
• 17:39
  Who do you know?
• 17:39
  How do you know them?
• 17:40
  How do you get connected?
• 17:42
  And that's the solving the problems.
• 17:43
  That's that, that gray zone delta.
• 17:44
  And then also the, the public awareness, right?
• 17:46
  It's easy to say,"We need more power," right?
• 17:49
  That's great.
• 17:49
  What does that mean?
• 17:50
  We need more power.
• 17:51
  Okay.
• 17:51
  Do we actually need more power, or is it, like, there's, there's just systems- Not in Florida and then, yeah.
• 17:55
  Not in- Colin, see our prices are going down.
• 17:57
  Yeah.
• 17:57
  I don't, I don't wanna talk about that.
• 17:59
  So- Might keep going.
• 18:00
  My, my, my rate, uh, it goes up this month, so we're not gonna get into that.
• 18:05
  Yeah.
• 18:05
  But Patrick, you were, you were talking about, you know, now everybody's a tariff expert.
• 18:10
  I don't have a PhD, both you gentlemen do.
• 18:13
  Um, but I do have an X account, so I'm now a, a virology expert.
• 18:17
  Yeah.
• 18:17
  You know, I'm really good at interest rates- Yeah and the effects of interest rates.
• 18:21
  Don't forget bro science.
• 18:22
  Yes.
• 18:23
  AJ would be upset if you forgot bro science, so- Yeah If it means anything to you, my, my PhD is not in anything I'd, I'd say like, uh, in the STEMs versus Ethan's, who's, uh, yeah, is.
• 18:33
  So, um- Ethan, what's your PhD in?
• 18:35
  I'm an industrial engineer through and through.
• 18:37
  Oh my gosh.
• 18:38
  Yeah.
• 18:41
  Colin, we gotta...
• 18:41
  That's it.
• 18:41
  We need- K- kindred spirits I, uh, I always joke that I, I only let people I dislike call me doctor.
• 18:46
  Um- and, like, you know, there, there's a piece of humility, but, like, within engineering, it's just, like, everybody has so many letters, and I'm never gonna refer to, like, my civil engineering friends as, like, Engineer Scott.
• 18:57
  You know?
• 18:58
  With his PE.
• 18:58
  You know?
• 18:59
  So it's just, like, I do like the fact that we don't, uh, we don't have to spend titles too much.
• 19:03
  Obviously in the policy space, they're a lot more meaningful than, um- W- let me get a sense from you guys on something- Yeah'cause, um, and before I do, I'll set the table.
• 19:12
  Yeah.
• 19:12
  Uh, so I had, I had the opportunity to write one of the tariffs, and- Mm I also, uh, was I believe the first person to pay Liberation Day tariffs.
• 19:22
  Now, in my cohort, it was probably 1,000 companies, but I had a truckload of robotics coming in from Canada g- headed towards the bridge, um, when the Liberation Day tariffs went into effect.
• 19:33
  So I did feel like if I wasn't the first, you know, on that first day, I was in the first day.
• 19:38
  Um, but what's your guys' view?
• 19:42
  Are the tariffs helpful?
• 19:44
  I understand there's a lot of process improvement, especially on collections and classification, some of the technicalities, um, the trans shipping of goods, and, and there's a lot of loopholes that Colin and I talk about quite frequently, but in terms of net-net on balance, long-term structural view, are the tariffs positive for the country?
• 20:05
  I would say yes, right?
• 20:06
  I don't know, Ethan, if you wanna give your, your opinion too on it, but, uh- Yeah, I, I would agree.
• 20:09
  I'll let you.
• 20:09
  I'll let you.
• 20:09
  I would say it, yes, but it's with a caveat.
• 20:11
  I- I think it, uh, at the core symbolism of it- I wanna hear a caveat'cause I've got a big one.
• 20:17
  Yeah, I think the caveat to all this stuff is we, uh, when we look at things, like anything with taxes, right?
• 20:22
  I think there's, you know, I have a lot of choice things to say about taxes, right?
• 20:26
  I think the, the aspect of that is we always wanna find some ways that we think there's gonna be a perfect way to protect an industry, collect tax revenue, and the whole, whole litany of it.
• 20:37
  And the difficulty is we're never gonna find that perfect system.
• 20:40
  It's always gonna be a system that has to adapt, and there's gonna be flaws to it, right?
• 20:43
  Same thing, property tax.
• 20:44
  It's like the three-legged stool.
• 20:45
  In Idaho, we have this example, you know, sales tax, property tax and income tax.
• 20:50
  They call it the three-legged stool of taxes, and they're like,"We can't ever cut any of them.
• 20:53
  We can't get rid of one of them because the stool will fall over," right?
• 20:55
  That's the example they use.
• 20:56
  Like, if we got rid of one of the legs, the stool becomes just wobbly and it falls over.
• 21:00
  Whatever they wanna use as, as some type of, you know, pictographic thing.
• 21:03
  With tariffs, I think what it comes down to is, um, like a lot of places, there needs to be some level of protectionism, and whether we call it a tariff or we rename it because the Supreme Court says something about tariffs not being constitutional, we just change the name and how it's labeled.
• 21:16
  There are benefits to it.
• 21:18
  The difficulty is we're at this point in our globalized economy that, uh, for like the past 20, maybe 30 years, uh, where you really have sold out a lot of our industry where these component, these manufacturers are reliant on a lot of foreign materials, right?
• 21:34
  Yeah.
• 21:34
  And it's this pain.
• 21:35
  We're in this growing zone pain.
• 21:37
  So my caveat is like, it's good, uh, but it, it's forcing ourselves to think about things in a way that's a little more strategic.
• 21:42
  Right now, the investment, and I'd say this is like mining for example.
• 21:45
  Um, Idaho, there's a lot of mines.
• 21:47
  There are mines that have been open, are opening up or regulations that are flying through where they're like cutting the red tape to say,"We need this," right?
• 21:53
  Why do we need it?
• 21:54
  Because we can't rely on rare earth minerals from China, and we're just gonna have to do it here.
• 21:59
  And that's things that have been propelling change, right?
• 22:02
  It's been pushing it to say we have this roadblock, right?
• 22:05
  Uh, coming from, uh, defense, I always go back to it's a strategic defense situation, and it's almost like a forced growing pain.
• 22:11
  It's like they're forcing the stream to go a certain route.
• 22:14
  They have to put up these blockers to force the route of capital investment flows to now make it more, uh, enjoyable to do, right?
• 22:20
  'Cause mining as an example, um, if I'm a tech VC guy, v- doing- Oh, yeah you know, a tech investment is very easy.
• 22:27
  It's high margin.
• 22:28
  I can flip it in a year or two, right?
• 22:30
  Depending, right?
• 22:31
  The valuations.
• 22:31
  A mine, what are you gonna do?
• 22:33
  I need to have$10 million, regulatory uncertainty, and you might, uh, be breaking even on just your, your run rate on like the first year.
• 22:41
  So, uh, and by the way, that's if the mine doesn't, you know, the explosion doesn't happen and kill half the people and then you're gonna be held liable, right?
• 22:47
  Or the EPA comes and shuts you down for two years.
• 22:49
  So I mean, it's, it's an, it's investment flow, right?
• 22:52
  I always go back to it goes to the, the flow of capital and this is an economic system kind of argument, but you need to make it where there's a invested interest for capital to flow to these areas and tariffs have kind of propelled a lot of that to kind of occur, and then cutting the red tape as well just as a strategic advantage as we kind of see as a nation.
• 23:07
  So that's my caveat to it.
• 23:09
  Um, I say it's good.
• 23:10
  Uh, it's a long-term durability to it.
• 23:13
  Maybe not after a certain point, but to that same point is China subsidized a lot of their producers, right?
• 23:18
  And- Totally when we talk about the mom and dad shop, they're just told to produce.
• 23:21
  They say they don't care if there's a buyer, just keep producing and throw it in a warehouse.
• 23:24
  Like, that's, that's kind of how they've been done their motif.
• 23:26
  So of course, they're always gonna out-compete us with the government sourcing of that.
• 23:29
  But that's my little bit of a tariff in a bubble or industrialization.
• 23:32
  And free electricity helps too.
• 23:34
  You know, I mean, you- Yeah, free electricity.
• 23:37
  Yeah, forced labor- Forced labor you know, things like that.
• 23:38
  Some of those, some of those tend to- You know tend to help, uh, move the needle a bit.
• 23:42
  I mean, I, I tend to agree with you, Patrick.
• 23:43
  I, I think net-net, you know, it, if you're willing to take a long-term view of it, you know, it's a necessary evil.
• 23:50
  Personally, my caveat is I'd like to see some accompanying policy that actually uses the proceeds of tariffs as a, you know, tax credit incentive type program to actually spur, you know, more of that production, provide some- Yeah greater certainty to those shops.
• 24:06
  Know, hey- Yeah I've got a 50%, you know, investment tax credit on machinery, whatever you have it.
• 24:13
  I'd like to see some of that type policy.
• 24:14
  Congress doesn't do anything, so, you know, I've accepted that, you know, not gonna see much come out from them.
• 24:21
  Um, but that's what I think, you know, personally is a huge kind of unlocks the, the other part of it,'cause you're right.
• 24:28
  If, if we don't- kind of create that mechanism to steer, you know, the, the capital.
• 24:35
  Nobody's gonna be looking for, you know, lithium deposits.
• 24:38
  Nobody's gonna be looking for those critical minerals- Yeah because, hey, we can get them cheap.
• 24:42
  So- Yeah you know, we don't, we don't have to.
• 24:44
  Looks like they recapture, right?
• 24:46
  There's, there's places- Yeah that they talk about mining rare earth.
• 24:49
  It, it's very toxic, right?
• 24:50
  I could, I could greet you people that are geniuses in this field, right?
• 24:53
  And, and they talk about, like, mining rare earth minerals is highly toxic to, to do the whole process, right?
• 25:00
  And what do we wanna do with it?
• 25:01
  You dump it in the river, right?
• 25:03
  And that's, like, the, the age-old kind of view of these.
• 25:05
  But this idea of now capital is now forced to say,"Okay, mining's becoming vogue again.
• 25:09
  We need this." Well, we have now, you know, closed loop systems that is using, you know, uh, I'm gonna butcher the process, but essentially it's using, like, a gaseous state to break down the elements and then separate them and then recapture them, right?
• 25:22
  So you don't have this, this offshore.
• 25:24
  It's, uh, it- it's creating a system where we're now wanting to think about that, you know, the whole reuse, recycle type situation where- Yeah there's a usability to every part.
• 25:32
  And the investment capital typically didn't go to these places'cause they didn't...
• 25:35
  there wasn't a demand, right?
• 25:36
  There wasn't a demand in the United States to do this type of, you know, refinement process here.
• 25:42
  Now there is, and there...
• 25:44
  we want it to be where it is clean, right?
• 25:45
  I don't wanna have it down the road from me and then all of a sudden, you know, my groundwater is absolutely polluted.
• 25:51
  And, and it creates a system where we're now forcing innovation, right?
• 25:54
  And that's where I think is, is very critical, is we're now f- pushing money to force innovation to create something that when it is built out, is actually the, probably the most optimal way to do it and gives us that competitive edge, right?
• 26:05
  It gives us the edge- Oh, huge that we can do it here and it- Huge national security in a million different ways.
• 26:10
  Yeah.
• 26:10
  You stumbled into my territory.
• 26:12
  So- Yeah I, I'm designing several of these critical mineral and metal factories right now.
• 26:18
  And your, your illustration is good, but when we shipped it offshore 50 years ago, 40 years ago- I muted.
• 26:27
  Oh, I hit the mute button with my hand wave.
• 26:28
  So when we shifted offshore 40, 50 years ago, it was dirty.
• 26:32
  Yeah.
• 26:33
  And then it was very manual as well.
• 26:35
  It took a lot of workers, and the workers, if that environmental hazard exists outside the factory, it certainly exists inside the factory, right?
• 26:41
  Yep.
• 26:42
  So it wasn't necessarily a great job.
• 26:45
  As it's coming back, the, the environmental on it is probably 98% improved, right?
• 26:50
  You never...
• 26:51
  Environmental's like safety, you never quite get to perfection.
• 26:55
  Yeah.
• 26:55
  Right?
• 26:55
  But you're chasing perfection.
• 26:57
  And so the plants that we're designing right now are incredibly clean from a both water standpoint, air standpoint, and worker exposure hazard standpoint.
• 27:05
  Um, and then the labor's completely different.
• 27:08
  Yeah.
• 27:09
  And the energy consumption is completely different.
• 27:11
  So we're...
• 27:11
  You know, it's, it's not uncommon for us to be able to drive down the energy consumption, um, by I'd say about half, about 50% from what they might be doing in current state China, if you have a brand-new equivalent factory in China versus what we're doing here.
• 27:24
  If you have free power, you have no incentive to improve the way things are done.
• 27:28
  Yeah.
• 27:29
  And then in terms of automation, I mean, you guys see all the robotics on the internet.
• 27:33
  Um, Colin and I have opinions on that, which may or may not have gotten us in trouble.
• 27:38
  But just in terms of automation and robotics, you can, you can basically take the labor rate that you'd see in a, in new factory in China, multiply it times about 0.2, and we could get it done with about 20% of the workforce here.
• 27:50
  So- Mm-hmm what is coming back is not the same thing we shipped away.
• 27:54
  Yeah.
• 27:54
  It's dramatically better for environment, for people, for efficiency, for energy.
• 27:59
  Uh, but back, Ethan, I wanted to get your take as the engineer, um- Yeah.
• 28:04
  Tariffs good or bad?
• 28:06
  I think overall, overall good.
• 28:08
  Um, you know, I kind of sin to sit in, like, the Ian Fletcher economics camp of, like, the neoliberal approach just has some, like, basic assumptions about how the world works that aren't right, and that requires kind of a rethinking of obviously then economic policy with the understanding of those assumptions being correct.
• 28:25
  Um, not to, like, dive too much into the, the economic theory, but to actually we'll say, like, wind, um, you know, over even to, like, workforce.
• 28:35
  I do think that, like, tariffs, if we, if we look at, like, how the economy was running with, you know, globalization and whatnot, I feel like offshore...
• 28:42
  Or the tariff situation almost threw a wrench into that system, and the chaos from it I think created a lot of chatter and a lot of interest in re-industrialization.
• 28:51
  Um, you know, so all of a sudden it went from like,"Yeah, of course we send these things overseas, and of course that's just how it works.
• 28:58
  Of course China's the place that makes it." And then all of a sudden people are like,"Oh," like, you know, now everybody's the tariff expert, everybody's interested, everybody's- looking into these things.
• 29:06
  Everybody's- Yeah you know, starting to think,"Oh, maybe it isn't a good idea that, you know, all of these critical materials are only made in China." You know, like, I think it's spurred so much interest that I think that was actually, like, very positive for the we'll say broader re-industrialized movement, broader, you know, we'll say cultural movement in that sense as well.
• 29:20
  So I would say it's very much, like, a byproduct of the tariffs.
• 29:23
  I just thought that was- Right something interesting, um, that the tariffs brought about.
• 29:27
  Yeah.
• 29:28
  So- I think, I think at a minimum it puts a focus on it for companies.
• 29:32
  Mm-hmm.
• 29:32
  When you're making sourcing decisions, you know, we, we tend to work directly with CFOs of large corporations that are building factories.
• 29:40
  You know, we got, in every meeting when we're talking about CapEx and, and where we're buying and sourcing equipment or materials from, we have to talk about tariffs, right?
• 29:48
  Yeah.
• 29:49
  So that's the first time that we worried about country of origin, I think in my career.
• 29:53
  Mm-hmm.
• 29:53
  Yes.
• 29:53
  It is.
• 29:53
  I agree with you, it's an awareness.
• 29:55
  Um, Colin?
• 29:57
  Well, so I was actually gonna tie two, uh, different kind of thoughts together.
• 30:01
  Matt, you had mentioned, you know, obviously these are not, you know, th- this is not the same work that we shipped abroad decades ago.
• 30:08
  Ethan, you had brought up, you know, kind of this new attention to it.
• 30:12
  So yeah, I mean re-industrialization, industry, whatever point O we're on now, you know, is a completely different ballgame than your grandfather working in the mill.
• 30:23
  How, you know, what, what is it that, Patrick, Ethan, this is for both of you guys, what is it that you're hearing, you know, when kind of that discussion comes up?
• 30:32
  Because the reality is a, a factory that needed 100 people, you know, 40 years ago, doesn't need those same 100 people because of robotics, because of technology, because of laundry list.
• 30:43
  How is that kind of discrepancy between the thought people have of,"Oh, we're gonna make things again in America," versus what it's actually gonna look like to make things?
• 30:53
  What's that discussion, what's that conversation look like from your end?
• 30:58
  Yeah, you know, briefly,'cause I think the labor aspect's important is, one, we do, you know, the, the demographic curve if we think about it, we're, we're hitting this point where there's drastically less people, and I would argue this is a whole different, different conversation.
• 31:10
  I'd argue that the demographic cliff is, is a lot worse, you know, than they actually project.
• 31:14
  Um, you know, you can go to any, any town, any city, right?
• 31:18
  And, uh, you go walk around, it's like there's a lot of that, what do they call it?
• 31:21
  DINKs, the dual income, no kids.
• 31:23
  And it feels like that movie, uh, what was it?
• 31:26
  Like some Of Mice and Men or something where they...
• 31:28
  No kids, right?
• 31:29
  People are unable to reproduce, and I think it's worse.
• 31:31
  But I think it's actually good when you have a factory- I thought you were going Idiocracy for a second.
• 31:35
  Yeah.
• 31:35
  Uh, it may be a blend of them, but, uh, you know, the, the, the pre- prelim of the culture.
• 31:39
  But I say it's good for the factory in the sense that if you're able to open up and you don't need the, you know, 100 people doing three shifts, and you can now have, you know, uh, 10 people doing those three shifts, it's just, it's fitting in line with where we are in terms of the actual population size.
• 31:50
  So, um, that's better.
• 31:52
  I think, uh, the...
• 31:53
  Also, the difficult thing we have is there's this idealized state of, you know, the most automated type factories.
• 31:58
  There's always a human capacity to it.
• 32:00
  There's a limitation factor to it, and when we think about these small and medium sized shops is they're still operating the same way they did 10 years ago, right, 15 years ago, right?
• 32:07
  You talk about AI and data, advanced m- machine learning capabilities within these manufacturing realms.
• 32:13
  Um, a lot of these things are not, like, new concepts within the manufacturing space, you know?
• 32:18
  It...
• 32:18
  I'm an industrial engineer.
• 32:19
  I'm only a bachelor's, so not like the, the PhD like Ethan, but- you know, you look at process improvement, right?
• 32:24
  I mean, it's interesting'cause I work in tech and there's this, this thing where they talk about, like, um, we should have this, this thing.
• 32:30
  They think of something in the conception.
• 32:31
  I'm like,"They've been doing that for 30 years," right?
• 32:33
  Predictive maintenance, things like that, like taking data and trying to analyze it.
• 32:37
  That's not the, the roadblock to it.
• 32:38
  It's the, it's the connecting all the systems, the manual processes, the stuff that you can't predict on and you can't automate to.
• 32:45
  And, and it goes down to capital, right?
• 32:46
  I think the population thing to it is if you take someone's factory and you wanna update it, um, friends of mine that, that own factories, family businesses, things like that, it's very expensive.
• 32:55
  Uh, the capital requirements to it is, is huge.
• 32:57
  And you take this big risk, um, you know, buying some giant machine or, or custom building one for your process, and realizing what is that realization to it.
• 33:06
  You know, and to your point, Colin, is, like, there needs to be some level of, of factor to that that helps promote these, right?
• 33:11
  These, these modernization solutions.
• 33:13
  And oftentimes it's not clear, you know, uh, that the, the payoff is gonna be there when you're talking about, like, a, you know, reducing of defects.
• 33:20
  Yeah.
• 33:21
  It's like, it's, it's all hypothetical, but at the end of the day it's like, is it gonna help you sell more, increase your margin, right, and, and make stuff where it's, it's gonna be better?
• 33:28
  And, um, it takes that dedication and time to kind of do that, and it's a risk.
• 33:32
  It's that risk factor where it, it- It, it's a huge cashflow crunch.
• 33:35
  I mean, it, it's- Yeah.
• 33:36
  You're, you're talking those smaller shops.
• 33:37
  I mean, I spent the last, you know, a little over 18 months looking at, you know, over a dozen shops in my region, and it was exactly that situation.
• 33:45
  Like, yeah, they make money, they produce stuff, but they've got, you know, 15, 20-year-old processes, procedures, machinery- You know, when you're doing 2 million in sales, it's not easy to say,"Hey, we've gotta invest another$2 million to be able to grow." Like, it's where, where's the certainty of that cash coming in?
• 34:03
  Where's, where's the certainty of growth customers, all of that?
• 34:06
  So it's, you know, it, it's a chicken and the egg situation, but a lot of people I don't think realize that that's a, the shops in that kind of ballpark range of how do I justify these major investments and expenses to evolve and adopt these technologies, that's, that's the vast majority of operations in, of, in the US production space.
• 34:27
  Mm-hmm.
• 34:28
  Yeah.
• 34:29
  So Colin, you wanna close us out?
• 34:30
  You, I'm sure you have some technology solutions in mind.
• 34:35
  How do we help these small or medium manufacturing companies bridge that gap?
• 34:41
  I, I do.
• 34:42
  I'm actually gonna punt it over to, you know, Patrick and Ethan to, to kind of give us some parting thoughts on if you are in this space, if you, if you're listening and you're, you know, in this mom and pop smaller operation, you know, A, how can they find you guys to get access to s- more of the resources that you have?
• 35:00
  How can they find you?
• 35:02
  Um, and then what would your kind of parting words of wisdom be?
• 35:06
  Suggestions, directions, inc- words of encouragement.
• 35:08
  What have you got for them?
• 35:11
  Yeah, it's a, reach out, right?
• 35:14
  Um, iamtpolicy.org, right?
• 35:16
  Find us on X, um, you know, find any of us, right, Ethan or myself on, on X.
• 35:21
  Just DM us, right?
• 35:21
  We keep it open.
• 35:22
  We have phone calls all the time, and that's where it kinda comes down to is, um, if you love something you're passionate about, and you're like,"Hey, this is my little niche," uh, we want you to write something, right?
• 35:30
  It's very easy to have and, and get that out there and connect you to the right people.
• 35:34
  So, I mean, just reach out, make the connection, uh, be a part of it.
• 35:37
  We're working on, like a, a network app that can actually be formated for this, this level of people, so you can get in there and kinda see who's doing what where and how to communicate.
• 35:45
  But reach out, get involved.
• 35:47
  You know, if you have a academic paper, right, and you wanna change it into, like, a journal article entry, right, we wanna look at it, review it, go through an editorial process, uh, help promote these ideas, right?
• 35:57
  Um, what's happening, right?
• 35:59
  So that's the, the biggest thing is the awareness, right?
• 36:01
  So reach out.
• 36:02
  We're, we're very open.
• 36:03
  Always take a phone call, um, even if it's just five minutes, but finding ways to help, so.
• 36:09
  I would say all that, and, and one of the...
• 36:11
  We'll say go back, going back to the reasons why, why Patrick and I, um, you know, wanted to start the institute was we noticed that there was just tons of conversations happening on X, and then, you know, we'd have these, like, really interesting Twitter threads, and maybe we'd bookmark them, but then they were kind of left to die.
• 36:28
  And one of the, like, kind of big rabbit tunnels with the institute is, you know, what if we capture some of that knowledge, you know, have those people write, um, you know, kind of summary articles, and then we kind of retain that, um, within the institution and keep that knowledge.
• 36:40
  And so we're very interested in, in connecting and, and learning from people, um, you know, especially with this kind of small manufacturing, um, initiative, we're very interested in, in hearing about experiences, problems, what are, you know, as we, or at least as, as said a lot, um, in places I've worked, you know, what's eating your lunch, um, you know, and, and trying to really build out that, we'll say, saturated understanding of how we can kind of best, um, you know, help small manufacturers from a policy and practical side.
• 37:09
  Awesome.
• 37:10
  Patrick, Ethan- Yeah thank you, guys.
• 37:12
  Um, I, you know, w- we'll, we'll, uh, definitely have to have you guys back some time.
• 37:17
  I think we can get into that workforce stuff a bit more.
• 37:19
  Yeah.
• 37:19
  I know, uh, Matt and I, like you said, have, have really dug into it.
• 37:22
  Um, but thank you both so much for joining us today, and to all of you listening, thank you for tuning in to the Reforge podcast, whether we're talking robotics on the factory floor, policy like today that actually moves the needle, or the next generation of American makers, our goal is always the same, to prove that reindustrializing America isn't just possible, it's happening right now, and it's pivotal.
• 37:42
  If you enjoyed this episode, make sure you subscribe and follow to the,@thereforgepod everywhere.
• 37:48
  Check out thereforgepodcast.com.
• 37:50
  Until next time, keep forging the future.
• 37:52
  I'm Colin- Yeah and this is the Reforge podcast.
• 37:56
  Thanks.
• 38:00
  Thanks for tuning in to The Reforged Podcast.
• 38:02
  Make sure to like, subscribe and follow us on all of our social media@thereforgedpod.
• 38:08
  We will see you next time