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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.

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Speaker 3: I'm Tracy Alloway.

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Speaker 4: And I'm Joe. Wasn't all Joe?

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Speaker 3: You're a homeowner now right?

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Speaker 4: Yeah, it's very fun.

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Speaker 3: Tell me, tell me how fun it is.

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Speaker 2: I know you've had a few issues that cropped up

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Speaker 2: basically as soon as you brought your new place.

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Speaker 4: I don't want to talk.

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Speaker 5: Let's go, let's move on.

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Speaker 2: No, this is part of my carefully planned Yes, I know.

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Speaker 4: Yeah, it's annoying and you have to deal with stuff.

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Speaker 4: And I may have mentioned Alicia one time. Actually have

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Speaker 4: been lucky by and large, But yes, it was very funny.

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Speaker 4: You know. The I think literally the day or two

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Speaker 4: days after it closed on my apartment in the East Village.

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Speaker 4: You know, it's like whether there was something wrong before

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Speaker 4: you just there's the phone number of somebody, just call it. Yeah,

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Speaker 4: we still the building still is a super right, you know,

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Speaker 4: the landlord just deals with replacing something. And then I

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Speaker 4: think literally the day after we closed, there was like

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Speaker 4: a window leak and it's like, wait, is there no

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Speaker 4: longer a number? Do I have to pay for this myself?

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Speaker 3: So who did you find to fix the window.

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Speaker 4: Dad, I don't remember. There is still a super of

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Speaker 4: the building of the super, but we had to write

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Speaker 4: a check.

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Speaker 3: Okay.

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Speaker 2: One of the things that has surprised me about being

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Speaker 2: a homeowner is like how low tech a lot of

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Speaker 2: the housing construction and fix it actually is. Right, So,

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Speaker 2: if there's a leak in your ceiling, in your roof

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Speaker 2: or something, it's literally either you or some guy that

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Speaker 2: you hire going up on a ladder and like putting

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Speaker 2: down a few more shingles with a nail gun.

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Speaker 3: Right, it all seems very old.

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Speaker 5: What did you think was going to happen?

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Speaker 4: But is it gonna be like some like unit tree

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Speaker 4: like robots crawl up? Then?

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Speaker 2: No, Seriously, it's the year twenty twenty five and we're

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Speaker 2: still putting houses together with like, you know, the hammers.

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Speaker 4: And someone someone comes with the box and they look

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Speaker 4: through to the difference like, no, this doesn't fit this

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Speaker 4: does it?

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Speaker 1: Oh?

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Speaker 4: I got it? And then the one second I don't

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Speaker 4: have the right screw it, and they go around to

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Speaker 4: a construction store a little right back, I got this,

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Speaker 4: I got Yeah. Yeah, it's still pretty probably the way

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Speaker 4: it looked when we were kids.

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Speaker 2: Okay, well, anyway, I've been thinking about it because a

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Speaker 2: couple months ago the Richmond Fed put out this paper

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Speaker 2: and it was all about productivity in housing construction and

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Speaker 2: the fact that construction labor productivity in housing has fallen

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Speaker 2: by more than thirty percent from nineteen seventy to twenty twenty.

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Speaker 2: So you think about the arc of economic development. You know,

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Speaker 2: normally there are productivity improvements as we invent new efficiencies

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Speaker 2: and as we invent new technology and ways of making things.

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Speaker 2: That hasn't happened in housing. It's still the guy showing

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Speaker 2: up with a toolbox.

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Speaker 4: This strikes me as a really important element of the

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Speaker 4: housing affordability conversation that I don't think gets enough attention,

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Speaker 4: which is, it's easy to talk about zoning, and I'm

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Speaker 4: sure there are issues there that need reform. It's easy,

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Speaker 4: you know, permits and all that stuff. It's easy to

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Speaker 4: talk about financing, et cetera. However, housing is a product

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Speaker 4: and things get built at a cost and then sold

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Speaker 4: as some profit margin above that. And if that underlying

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Speaker 4: cost keeps going up, and it definitely has in say

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Speaker 4: New York City and other areas, if that underlying cost

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Speaker 4: keeps going up, then that is going to push up

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Speaker 4: the cost of housing regardless of what you do on

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Speaker 4: now again, like maybe zoning can make help with productivity gains,

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Speaker 4: et cetera. Nonetheless, it continues to get more expensive for

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Speaker 4: the actual construction of a home, unlike many other built goods. Right,

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Speaker 4: I mean, the issue is that we don't build homes

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Speaker 4: in China. Unfortunately, if we did, that would solve the problem.

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Speaker 4: We don't, and maybe we could talk a little bit

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Speaker 4: about why we don't, but maybe one day will but

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Speaker 4: that would help a lot.

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Speaker 5: Well.

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Speaker 2: On that note, I mean, there happen attempts through history

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Speaker 2: to have prefab houses, right, And some of the old

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Speaker 2: prefab houses that you order from, like the Sears catalog

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Speaker 2: in the nineteen twenties or nineteen thirties, those are gorgeous

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Speaker 2: and I would happily live in one of those today.

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Speaker 2: But we should talk about why it seems difficult to

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Speaker 2: build houses or at least more expensive than some other things,

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Speaker 2: and also why it seems that manufacturing other products seems

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Speaker 2: to get more efficient over time while housing seems to

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Speaker 2: kind of sect up all right, So we do, in

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Speaker 2: fact have the perfect guest, I'm very happy to say

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Speaker 2: we have Brian Potter, who is the author of the

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Speaker 2: Construction Physics newsletter on Substack. I subscribe to this and

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Speaker 2: it's fantastic.

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Speaker 3: He is also the.

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Speaker 2: Author of the new book The Origins of Efficiency, and

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Speaker 2: a senior infrastructure fellow at IFP. So really the perfect guest. Brian,

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Speaker 2: Thank you so much for coming on the show.

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Speaker 5: Thanks for having me.

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Speaker 2: Congrats on the book Origins of Efficiency. Are we right

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Speaker 2: in thinking that housing hasn't become that much more efficient

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Speaker 2: of a process?

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Speaker 6: You are correct, and you know the productivity metrics. Those

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Speaker 6: metrics are quite complicated and you can measure in different

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Speaker 6: ways and different things right, slightly different trends. Some of

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Speaker 6: them just show flat productivity rather than fall in productivity.

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Speaker 6: But the general point is yet, yes, it has not improved.

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Speaker 6: Unlike almost every sort of other like physical good has

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Speaker 6: gotten you know, cheaper and less expensive to make overtime.

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Speaker 6: Housing is not like that at all.

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Speaker 4: And you worked for several years for a prefab housing

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Speaker 4: company or something like that.

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Speaker 6: Yeah, my background is as an engineer. I worked as

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Speaker 6: a structural engineer for about fifteen years. That's what my

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Speaker 6: training is and just that is basically just designing buildings.

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Speaker 6: So I designed parking garages and water treatment plants and

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Speaker 6: apartment buildings and stuff like that. And I had, yeah,

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Speaker 6: worked at different facets of the industry, and as you say,

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Speaker 6: it seemed extremely inefficient to me. We're putting up these buildings.

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Speaker 6: We're putting up these houses, you know, on site by

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Speaker 6: hand with a guy with a hammer. You know, it

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Speaker 6: doesn't look that different than it did one hundred years ago.

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Speaker 5: You know.

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Speaker 6: On my side, it was like, we're designing these buildings

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Speaker 6: from scratch every single time, instead of designing at once

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Speaker 6: and then making you know, a million copies of it

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Speaker 6: like you do with a car or something like that. So, yeah,

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Speaker 6: it seemed when I was, you know, much younger, it

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Speaker 6: seemed like incredibly backward and inefficient to me. And then

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Speaker 6: in about twenty eighteen, I had a chance to join

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Speaker 6: an extremely well did constructions prefab startup called Kata that

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Speaker 6: promised like, oh, we're going to come in, we've raised

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Speaker 6: all this money, we're going to change all that. We're

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Speaker 6: going to build buildings and in factories and it's going

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Speaker 6: to be so much more efficient. We're going to be

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Speaker 6: the Henry Ford of housing, and we're just going to

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Speaker 6: sweep away these old methods of building and uh it,

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Speaker 6: long story short, they did not work out at all.

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Speaker 6: They had raised a very very large amount of venture capital,

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Speaker 6: about like two or three billion dollars in VC.

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Speaker 5: And they burned through it in a few years and.

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Speaker 6: Declared bankruptcy and then the Yeah, and in the aftermath

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Speaker 6: of that, I wanted to understand why had it all

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Speaker 6: gone so wrong? Beyond just you know, startups are hard, right,

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Speaker 6: startups to have a high, you know, a naturally high

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Speaker 6: failure rate, you know, and whatever operational missteps they may

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Speaker 6: have made. I kind of came to believe that there's

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Speaker 6: sort of fundamental thesis that if you build these things

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Speaker 6: and in factories like we build everything else, it will

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Speaker 6: get cheaper. I came to believe that was either sort

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Speaker 6: of not quite correct or at least missing a very

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Speaker 6: big piece such we didn't know specifically what we needed

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Speaker 6: to do in these in these factories to make the

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Speaker 6: cost fall.

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Speaker 2: So why are houses, I guess so customized and not

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Speaker 2: standardized to your point.

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Speaker 6: Yeah, So there's a lot of reasons. One is just

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Speaker 6: you know, to go back to your point about permitting,

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Speaker 6: there's a very very large number of permitting jurisdictions in

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Speaker 6: the US something like twenty thousand different jurisdictions, which each

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Speaker 6: might have their own slightly different versions of building codes

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Speaker 6: that sort of need to be enforced. There's just you know,

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Speaker 6: different building sites or different sizes and shapes and have

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Speaker 6: different you know, soils will which require different things, different

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Speaker 6: environmental design factors. You know, different wind speeds. If you're

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Speaker 6: in California, you need to design for earthquakes, if you

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Speaker 6: need in Florida, you need to design for hurricanes. So

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Speaker 6: there's all these factories that kind of conspire to make

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Speaker 6: these sort of housing market very kind of fragmented, and

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Speaker 6: it's hard to build a very very large number of

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Speaker 6: like a uniform product. The builders do try to do that,

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Speaker 6: they have somewhat standardized designs. It will punk down in

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Speaker 6: like different developments across the country, but it's quite difficult

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Speaker 6: to do in really really large numbers.

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Speaker 4: Talk to us a little bit more about prefab housing specifically,

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Speaker 4: or housing in a factory. There have been multiple attempts,

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Speaker 4: and as Tracy mentioned, you used to be able to

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Speaker 4: buy a home from seers. Talk a little bit about

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Speaker 4: the sort of recent trends in this area, because you

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Speaker 4: do over the last several years, you've heard a lot

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Speaker 4: of maybe the last decade you've heard a lot of

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Speaker 4: excitement about this idea. And as you mentioned, you worked

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Speaker 4: for a well funded startup. Why now, like what's the

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Speaker 4: general thinking and then maybe we could get into the

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Speaker 4: sort of the gap between the theory and then what

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Speaker 4: happened in practice.

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Speaker 6: Yeah, so prefab is like this perennially popular Yahni.

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Speaker 4: It's always it's always the next time.

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Speaker 6: Yeah, It's always the next big thing that's going to

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Speaker 6: come along. And so every you know, decade or two,

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Speaker 6: you will kind of see these trends, like some big

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Speaker 6: company will come along like, oh, I'm going to revolutionize

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Speaker 6: the building with the housing industry with prefab construction. So

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Speaker 6: and yeah, these these attempts stretch back a pretty long way,

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Speaker 6: you know, And I became something of a student of

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Speaker 6: these companies that have tried and failed. So right after

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Speaker 6: World War Two you have this company called the Lustron

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Speaker 6: Home Company, which made these very interesting homes, many of

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Speaker 6: which are still around.

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Speaker 5: You can actually go look at them.

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Speaker 6: But they're made these like steel panels covered in porcelain

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Speaker 6: that turned out to be quite well made and quite durable.

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Speaker 6: And they got government financing to sort of fund their operation.

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Speaker 6: They had set up shop in this big what was

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Speaker 6: once one time the biggest factory in the world. It

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Speaker 6: was three purpose to aircraft engine factory.

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Speaker 4: Well they looked pretty cool.

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Speaker 5: Yeah, they're very neat.

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Speaker 6: I live in Atlanta, and there's some in Atlanta that

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Speaker 6: you can go and look at. But they went bankrupt

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Speaker 6: after quite a few years. In the nineteen sixties, there

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Speaker 6: was this company called Sterling Homes that said, oh, we're

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Speaker 6: going to be the next you know, Henry Ford of construction.

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Speaker 6: They went bankrupt in a few years.

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Speaker 5: Yeah, they were.

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Speaker 6: Part of this government program called Operation Breakthrough, which was

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Speaker 6: trying to fund the development of like mass production housing techniques.

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Speaker 6: That program basically failed. None of their companies that they funded,

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Speaker 6: and there were quite a few of them ended up

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Speaker 6: sort of succeeding and breaking through and creating sort of

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Speaker 6: these mass produced housing products. So you kind of see

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Speaker 6: the same thing happening over and over and over again

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Speaker 6: where people are trying to use prefab to like dramatically

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Speaker 6: reduce the cost of construction. And there's ways that you

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Speaker 6: can do that in kind of like a very limited sense,

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Speaker 6: and you can also like build a successful business off

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Speaker 6: of prefab where you're not necessarily trying to compete on

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Speaker 6: low cost, but things like oh we can build much

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Speaker 6: faster or stuff like that, but nobody has managed to

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Speaker 6: do what everybody is trying to do, which is like,

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Speaker 6: you know, be the Henry Ford of housing.

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Speaker 3: Okay, what's the sticking point? Then?

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Speaker 2: I know you walk through some of the reasons that

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Speaker 2: houses tend to be customized, things like soil types and

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Speaker 2: zoning and regulation. But is that just the story of

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Speaker 2: why we can't have prefab houses that are like across America?

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Speaker 6: So there's yeah, I kind of look at this in

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Speaker 6: two ways. I think of it as terms of it's

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Speaker 6: very hard to introduce some of these like improvements, these

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Speaker 6: sort of strategies you have for improving efficiency into the

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Speaker 6: construction process without accumulating like more costs elsewhere in the process.

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Speaker 6: And then so at the same time that the gains

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Speaker 6: that we've found in terms of like these strategies for

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Speaker 6: efficiency improvement have historically been much more limited than you

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Speaker 6: see and like if you're producing you know, a car

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Speaker 6: or a light bulb.

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Speaker 5: Or something like that.

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Speaker 6: And at the same time we've continually added like more

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Speaker 6: regulations and more difficulty you know, more administrative overhead and

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Speaker 6: getting stuff built, which is slowly like driving up the

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Speaker 6: cost even as like a you know, we're not sort

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Speaker 6: of accumulating these productivity improvements.

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Speaker 4: What's an example of Okay, this on paper looks like

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Speaker 4: a productivity gain that we get in a factory, but

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Speaker 4: then you pay for it somewhere else.

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Speaker 6: Sure, so you know a very simple example. You know,

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Speaker 6: if you're building a car in a factory, you build

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Speaker 6: the entire car right, it rolls out of the factory

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Speaker 6: line and the car is complete. A building is too

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Speaker 6: big to come out of the factory all in one

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Speaker 6: piece and get sent to the job site or whatever.

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Speaker 6: So what happens is you have to sort of build

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Speaker 6: you're building in chunks.

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Speaker 2: You know.

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Speaker 6: That's why prefab construction is often called modular construction, because

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Speaker 6: you build it in these modules. And there's different strategies

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Speaker 6: for like how you break a building into modules, but

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Speaker 6: you're always like breaking it into these pieces. And what

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Speaker 6: happens when you break it into pieces is that you

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Speaker 6: have to add a bunch of extra stuff that you

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Speaker 6: wouldn't have had to add if you were just building

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Speaker 6: it on site. So transporting it down the road, you

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Speaker 6: have to sort of design that to be rigid enough

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Speaker 6: to like not collapse under like the load of like

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Speaker 6: being bounced along on a truck. I used to work

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Speaker 6: at a company that build concrete parking garages, which are

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Speaker 6: built from prefabricated you know materials. They build these like

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Speaker 6: big concrete pieces and then drive them down the road,

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Speaker 6: and that was like the controlling design factor is designing

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Speaker 6: to survive the loads that it would concur during transportation.

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Speaker 6: And then once you have those pieces driven down and

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Speaker 6: gotten to the job site, you have to like stitch

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Speaker 6: them together, and so you have all these extra connectors

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Speaker 6: and this extra complexity and attaching them together that again

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Speaker 6: doesn't exist in sort of the conventional construction process.

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Speaker 4: It's kind of crazy to think that, whether we're talking

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Speaker 4: about a house or a parking garage that's presumably designed

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Speaker 4: to last for decades, that a very significant factor in

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Speaker 4: engineering is that few hours that it goes down the road.

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Speaker 4: I mean, that's what sounds like, yeah, like that that's

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Speaker 4: like that's going to last forever, but it has to

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Speaker 4: be there just for that, like that short transport perer.

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Speaker 2: In the case of parking garages, for sure. I guess

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Speaker 2: that's why We do have some prefab houses in the US,

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Speaker 2: and they're called trailers because you can actually move them, right.

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Speaker 2: How much of this is also maybe a liability question

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Speaker 2: where if you were producing prefab houses, presumably it's not

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Speaker 2: the company that's putting them together on site. It's usually

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Speaker 2: contractors or someone you hire to do it. And I

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Speaker 2: imagine there's like a disconnect between the contractors on the

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Speaker 2: ground who are putting this stuff together and the company

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Speaker 2: that's building the parts.

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Speaker 6: There is to some extent, I think that specific liability

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Speaker 6: is not necessarily the biggest controlling factor. What is a

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Speaker 6: big controlling factor, and I've written an essay about this,

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Speaker 6: is that the construction cost, like the cost of developing

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Speaker 6: and putting up a new building, the sort of distribution

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Speaker 6: of that is extremely fat tailed and right skewed. Which

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Speaker 6: so basically what that means is that a construction project

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Speaker 6: that goes under budget, that goes really really really well,

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Speaker 6: maybe you're like ten percent over budget or under budget,

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Speaker 6: maybe you're fifteen percent under budget. You know, you can't

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Speaker 6: push down that cost very much. But a project that

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Speaker 6: goes over budget can be one hundred or two hundred

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Speaker 6: or three per hundred percent over budget. So what that

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Speaker 6: means is that the risk involved in like introducing some

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Speaker 6: new system that you're not sure really how it works,

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Speaker 6: it's just the payoff is so asymmetrical. It's so much

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Speaker 6: more likely to cause like a massive overrun than to

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Speaker 6: sort of save a relatively small amount that these sort

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Speaker 6: of builders are like rationally incentivized to not introduce some

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Speaker 6: radically new technology that's going to dramatically change how things

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Speaker 6: go because the potential costs are so extremely high.

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Speaker 4: Sort of maybe dovetailing with Tracy's question, you know, or

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Speaker 4: maybe in the case of Kata or some of these others,

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Speaker 4: it's like, Okay, they have some vision, but because they're

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Speaker 4: not doing the entire thing all around the country, including

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Speaker 4: presumably transport, et cetera, how much is the issue like

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Speaker 4: maybe scale on those ends experience with that, Like in theory,

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Speaker 4: if you had a really big experience on the ground

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Speaker 4: distribution and final assembly workforce or whatever, it is, like,

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Speaker 4: how much would that help? And how much is the

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Speaker 4: issue that people who work on the ground, etc. Just

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Speaker 4: aren't doing this full time?

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Speaker 6: Yeah, that's like a part of it is, like, you know,

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Speaker 6: this modular construction is kind of a somewhat niche aspect

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Speaker 6: of the construction industry. There are quite a few experts

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Speaker 6: in it that know how to do it, and they

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Speaker 6: do it fairly regularly, and you can usually find them

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Speaker 6: in like any given market. I would say a different

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Speaker 6: point that you kind of alluded to. Scale is like

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Speaker 6: another definitely big issue where it's like it's not like

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Speaker 6: a semiconductor where you can make a million of them

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Speaker 6: in a factory in Taiwan and ship them all over

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Speaker 6: the world. Right, That's another big aspect that makes it

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Speaker 6: hard to sort of gain efficiencies from factory production and

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Speaker 6: goes to what I was talking about where it's hard

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Speaker 6: to do that without introducing costs elsewhere in the system.

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Speaker 6: The cost of like moving these modules around is so

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Speaker 6: large that it's typically not economic to ship it like

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Speaker 6: more than a day's drive, because then the costs just

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Speaker 6: gets so high. And so what you have instead of

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Speaker 6: like one giant factory that can like produce really really

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Speaker 6: large scales, even sort of these modular companies that are

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Speaker 6: doing like large amounts of business, they all tend to

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Speaker 6: be like done in factories like that are spread across

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Speaker 6: the Yeah. So like so like you talked about, like

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Speaker 6: trailers like manufactured homes, which is one area that you

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Speaker 6: can actually see some pretty substantial loss reductions due to

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Speaker 6: various things. Partly, it's like they're targeting a lower end

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Speaker 6: of the market and stuff like that, so like the

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Speaker 6: finishes and stuff aren't quite as nice. But if you

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Speaker 6: look at like the way that their business is structured,

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Speaker 6: they have like more than a dozen factories spread all

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Speaker 6: across the US, and then each one is serving like

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Speaker 6: a day's drive catchment area. So they're not building like

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Speaker 6: fifty thousand houses or whatever in one factory. It's more

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Speaker 6: it's closer to like five hundred or a thousand or

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Speaker 6: something in one factory. And so the economies of scale

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Speaker 6: that you can capture in like a given operation are

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Speaker 6: just fairly limited.

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Speaker 2: Joe, I have to mention here, we didn't tell Brian

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Speaker 2: that we were going to be talking about housing construction

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Speaker 2: and trailers and all of that. This is all just

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Speaker 2: off the top of his head.

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Speaker 4: He said, down, We're like, by the way, can we

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Speaker 4: talk about this?

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Speaker 3: Yes?

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Speaker 2: Okay, you kind of alluded to it in your previous answer,

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Speaker 2: But if you were going to choose a manufacturing process

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Speaker 2: that was the polar opposite of housing.

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Speaker 6: What would it be, oh interesting, probably something like chemical manufacturing,

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Speaker 6: you know, or like you know, raw met real manufacturing,

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Speaker 6: something like steel or something like that. Because chemical manufacturing

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Speaker 6: it's you know, the sort of ultimate form of like

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Speaker 6: a manufacturing process, which I kind of talk about in

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Speaker 6: the book, is what's called like a continuous flow process

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Speaker 6: where it just like continuously transforms your group of inputs

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Speaker 6: into the output of what you're doing just one you know,

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Speaker 6: continuously without any sort of waiting, interrupting or batching or

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Speaker 6: anything like that is all flows and it's continuously transformed

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Speaker 6: during the process. And that's what like chemical manufacturing, you know,

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Speaker 6: very efficient chemical manufacturing is done, and most other like

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Speaker 6: really efficient manufacturing processes they ultimately tried to sort of

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Speaker 6: converge on something that looks like that. So like the

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Speaker 6: assembly line and like mass production is kind of a

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Speaker 6: way to like get something that approaches like a continuous

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Speaker 6: flow process in these like very complex manufactured goods with

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Speaker 6: like thousands of parts. That was why it was such

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Speaker 6: a huge transformative thing, is because now you could have

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Speaker 6: this continuous flow process which existed before for you know,

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Speaker 6: much simpler things, but now you could adapt that to

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Speaker 6: like these really really complex goods like cars, and that's

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Speaker 6: why it was such a transformative thing when it was

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Speaker 6: sort of invented in the early twentieth century.

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Speaker 4: I'm curious do the economics or the dis economics of

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Speaker 4: building houses in this way do they inform your perspective

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Speaker 4: at all on the prospect for small modular nuclear reactors.

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Speaker 4: I mean, there sounds like there are some similarities, especially

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Speaker 4: when it comes to like learning curves, et cetera.

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Speaker 3: The soil of.

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Speaker 4: Yeah, do you have any views on that? Yeah, having come,

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Speaker 4: do you think there's any parallels? So, yeah, because this

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Speaker 4: is also something that is always the next decade away,

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Speaker 4: right yeah, yeah.

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Speaker 5: Yeah, so yeah.

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Speaker 6: So I talk about economies of scale in the book,

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Speaker 6: and we're talking about like nuclear stuff. There's like kind

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Speaker 6: of two related economies of scale that in some ways

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Speaker 6: kind of pull in different directions.

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Speaker 5: One is called and.

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Speaker 6: You see this with like other sort of processing equipment,

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Speaker 6: which is I called geometric scaling, which is basically, as

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Speaker 6: you build a piece of equipment physically larger, it costs

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Speaker 6: less per unit of whatever it is that you're producing,

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Speaker 6: basically because of like area volume relationships. As you double

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Speaker 6: the volume of something, you less than double the amount

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Speaker 6: of like surface area required to enclose it and be

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Speaker 6: that like tanks or pipes or stuff like that. So,

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Speaker 6: like chemical process and equipment or like power plant equipment,

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Speaker 6: tends to get cheaper per unit of what you're producing

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Speaker 6: up to a certain point, and eventually you run it

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Speaker 6: gets you run into difficulties, and those scaling and loss

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Speaker 6: stop working. And this is one reason why power plants,

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Speaker 6: you know, in electricity, got cheaper over sort of most

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Speaker 6: of the course of the twentieth century, is because we're

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Speaker 6: building these power plants physically larger. But with nuclear you

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Speaker 6: run into these very nasty dis economies of scale around

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Speaker 6: the same thing was because as a nuclear plant gets bigger,

442
00:20:40,720 --> 00:20:43,560
Speaker 6: the accidents that could have get more dangerous. For like

443
00:20:43,600 --> 00:20:46,480
Speaker 6: a very small reactor, you can make it so you

444
00:20:46,520 --> 00:20:48,960
Speaker 6: basically can't have a melt down, there's just not enough

445
00:20:49,000 --> 00:20:52,320
Speaker 6: heat in there to like melt through your container or whatever.

446
00:20:52,720 --> 00:20:53,600
Speaker 5: But for a very.

447
00:20:53,520 --> 00:20:56,400
Speaker 6: Large one, the heat gets so large that the accidents

448
00:20:56,440 --> 00:20:58,960
Speaker 6: become the risk becomes much much larger, and so you

449
00:20:59,000 --> 00:21:02,359
Speaker 6: have to have these like very involved safety systems that

450
00:21:02,680 --> 00:21:05,400
Speaker 6: maybe you don't need to have on like a smaller reactor.

451
00:21:05,640 --> 00:21:07,880
Speaker 6: So that is something that maybe points to a reason

452
00:21:07,880 --> 00:21:09,000
Speaker 6: why these maybe small.

453
00:21:08,800 --> 00:21:10,040
Speaker 5: Modular reactors were better.

454
00:21:10,200 --> 00:21:12,040
Speaker 6: Plus, as you say, now you're getting it's sort of

455
00:21:12,080 --> 00:21:15,920
Speaker 6: the benefits of like getting yeah, series production and repeating

456
00:21:15,920 --> 00:21:18,199
Speaker 6: it over and over and over again. But there is

457
00:21:18,200 --> 00:21:20,399
Speaker 6: that trade off is that you're not getting those geometric

458
00:21:20,400 --> 00:21:23,639
Speaker 6: effects that traditionally, like a lot of this like processing

459
00:21:23,800 --> 00:21:26,119
Speaker 6: type equipment, has relied on to get cheaper.

460
00:21:26,680 --> 00:21:28,600
Speaker 2: This actually reminds me of something I wanted to ask,

461
00:21:28,680 --> 00:21:32,200
Speaker 2: not necessarily about nuclear but just manufacturing in general. When

462
00:21:32,200 --> 00:21:35,920
Speaker 2: I think about efficiencies, I think about stuff like reducing

463
00:21:35,960 --> 00:21:38,960
Speaker 2: costs as much as possible, maybe just in time, inventory

464
00:21:39,000 --> 00:21:42,560
Speaker 2: management and stuff like that. The problem is that if

465
00:21:42,560 --> 00:21:46,560
Speaker 2: something goes wrong, there's very very little cushion for protection.

466
00:21:46,880 --> 00:21:49,840
Speaker 2: And I'm curious, when it comes to efficiency, how do

467
00:21:49,920 --> 00:21:55,119
Speaker 2: people balance streamlining production with I guess building in redundancies

468
00:21:55,200 --> 00:21:56,520
Speaker 2: in case the worst happens.

469
00:21:56,840 --> 00:22:00,600
Speaker 6: Yeah, that's that's really interesting. And the Toyota producttion system

470
00:22:00,640 --> 00:22:03,080
Speaker 6: slash Lean, which is like a descendant of it, which

471
00:22:03,119 --> 00:22:05,720
Speaker 6: I talk a lot about in the book, is kind

472
00:22:05,760 --> 00:22:09,320
Speaker 6: of an interesting balance of these two things. Because everybody

473
00:22:09,320 --> 00:22:11,880
Speaker 6: thinks Lean or Turte production system, it's like, oh yeah,

474
00:22:12,040 --> 00:22:14,600
Speaker 6: just in time, get rid of inventories. You don't have

475
00:22:14,640 --> 00:22:16,520
Speaker 6: all the costs. You know, your factories can be smaller,

476
00:22:16,560 --> 00:22:19,280
Speaker 6: blah blah blah. But really what it is, it's sort

477
00:22:19,280 --> 00:22:21,399
Speaker 6: of a balance of like, for every factor that you

478
00:22:21,440 --> 00:22:24,240
Speaker 6: can control, try to like have like the flow be

479
00:22:24,320 --> 00:22:26,439
Speaker 6: like as smooth as possible and eliminate all this like

480
00:22:26,480 --> 00:22:28,639
Speaker 6: you know, slack and waste in the system. But for

481
00:22:28,720 --> 00:22:31,919
Speaker 6: the things that like you can't control, you should have

482
00:22:32,080 --> 00:22:35,800
Speaker 6: your system adaptable to sort of accommodate that and be

483
00:22:35,920 --> 00:22:37,719
Speaker 6: have sort of a flexibility built into it.

484
00:22:38,000 --> 00:22:38,879
Speaker 5: So like one.

485
00:22:38,680 --> 00:22:41,640
Speaker 6: Example is after the sort of you know, to bring

486
00:22:41,720 --> 00:22:44,520
Speaker 6: back to nuclear, after I believe the sort of Fukushima

487
00:22:44,640 --> 00:22:48,439
Speaker 6: nuclear accident in Japan, Toyota had a ran into like

488
00:22:48,480 --> 00:22:52,080
Speaker 6: a shortage of like automotive semiconductors for a while, and

489
00:22:52,160 --> 00:22:54,960
Speaker 6: they realized that this was like a big like potential

490
00:22:55,040 --> 00:22:58,400
Speaker 6: like just bottleneck in their process. So after that, even

491
00:22:58,440 --> 00:23:00,879
Speaker 6: though they're like so focused on you know, inatory minimization

492
00:23:01,240 --> 00:23:05,280
Speaker 6: and whatever, after that accident, they basically decided they were

493
00:23:05,280 --> 00:23:08,520
Speaker 6: going to like stockpile certain critical things that maybe had

494
00:23:08,560 --> 00:23:11,159
Speaker 6: difficult lead times or something like that, and so they

495
00:23:11,200 --> 00:23:15,640
Speaker 6: stockpiled like serio automotive semiconductors. And so during COVID, when

496
00:23:15,680 --> 00:23:17,199
Speaker 6: all of a sudden there was all of a sudden

497
00:23:17,200 --> 00:23:20,639
Speaker 6: a huge like shortage of like automotive semiconductors, Toyota for

498
00:23:20,680 --> 00:23:23,080
Speaker 6: a while was like much less affected by some of

499
00:23:23,080 --> 00:23:25,800
Speaker 6: these other than other car manufacturers because they had learned

500
00:23:25,840 --> 00:23:27,679
Speaker 6: the lesson that oh yeah, in sort of you know,

501
00:23:27,720 --> 00:23:31,240
Speaker 6: logistics crunches, these semiconductors can be quite difficult to get.

502
00:23:31,480 --> 00:23:34,800
Speaker 6: And so basically people were saying, Hey, I thought you

503
00:23:34,840 --> 00:23:38,360
Speaker 6: were all about like inventory minimization or whatever. But then somebody,

504
00:23:38,440 --> 00:23:40,960
Speaker 6: you know, some spokesman basically responds like, no, this is

505
00:23:41,000 --> 00:23:44,480
Speaker 6: basically a standard lean solution, where it's you try to

506
00:23:44,520 --> 00:23:47,040
Speaker 6: minimize the sort of waste in the sort of areas

507
00:23:47,040 --> 00:23:49,080
Speaker 6: that you can control, but in the stuff that you

508
00:23:49,160 --> 00:23:51,359
Speaker 6: can't control, you need to sort of adapt your system

509
00:23:51,400 --> 00:23:52,159
Speaker 6: to accommodate it.

510
00:23:52,720 --> 00:23:54,720
Speaker 4: I want to talk more about housing, but I want

511
00:23:54,760 --> 00:23:58,240
Speaker 4: to do a little detour. America seems to have gotten

512
00:23:58,680 --> 00:24:01,080
Speaker 4: because I'm trying to understand sort of big picture the

513
00:24:01,119 --> 00:24:03,359
Speaker 4: trajectory is in this country for various things. You know,

514
00:24:03,400 --> 00:24:05,399
Speaker 4: I joked in the beginning, the problem with housing is

515
00:24:05,440 --> 00:24:07,840
Speaker 4: that we haven't found a way to offshore to China.

516
00:24:08,040 --> 00:24:10,560
Speaker 4: If we did, then probably housing would have gotten cheaper

517
00:24:10,600 --> 00:24:13,440
Speaker 4: like everything else that we have manufactured there. But I'm

518
00:24:13,480 --> 00:24:16,720
Speaker 4: curious some do you have like a theory because I

519
00:24:16,760 --> 00:24:20,080
Speaker 4: have heard a satisfactory answer why the US seems to

520
00:24:20,080 --> 00:24:23,320
Speaker 4: have gone backwards in plane construction, Like why does Boeing

521
00:24:23,359 --> 00:24:26,119
Speaker 4: seem to be worse at the job of building an

522
00:24:26,119 --> 00:24:28,840
Speaker 4: airplane than it was, say twenty years ago.

523
00:24:29,000 --> 00:24:31,680
Speaker 6: Oh yeah, that's interesting. One point about your housing construction

524
00:24:31,760 --> 00:24:33,960
Speaker 6: in China. They're actually our companies that like try to

525
00:24:34,000 --> 00:24:37,240
Speaker 6: do this stuff in China. They were like manufacture these modules.

526
00:24:37,359 --> 00:24:39,800
Speaker 6: But again to my point about you know, you incur

527
00:24:39,840 --> 00:24:41,800
Speaker 6: all these shipping and all that, you know, they have

528
00:24:41,880 --> 00:24:43,320
Speaker 6: to they have to break them into modules and put

529
00:24:43,320 --> 00:24:45,120
Speaker 6: them on these boats and bring them over. So it's

530
00:24:45,160 --> 00:24:47,760
Speaker 6: you know, it's a very sort of niche business in

531
00:24:47,840 --> 00:24:50,680
Speaker 6: terms of bowing. I mean the standard you know story

532
00:24:50,720 --> 00:24:54,879
Speaker 6: there is that they went into this merger with McDonald douglas,

533
00:24:55,000 --> 00:24:56,119
Speaker 6: the finance people.

534
00:24:56,359 --> 00:24:58,879
Speaker 4: I don't like the standards. Yeah, and here's why, because

535
00:24:58,960 --> 00:25:01,680
Speaker 4: I love it so much, right, and so it's like, oh,

536
00:25:01,680 --> 00:25:04,120
Speaker 4: it's such a good story. Perfect, it's too perfect. They

537
00:25:04,160 --> 00:25:06,840
Speaker 4: brought in the finance people. They care about the shareholders

538
00:25:06,880 --> 00:25:08,960
Speaker 4: too much. Looking at the Boeing stock chart, you would

539
00:25:08,960 --> 00:25:10,399
Speaker 4: not think this is a company that cares a lot

540
00:25:10,440 --> 00:25:13,399
Speaker 4: about shareholders, right, They care about shareholders too much. And

541
00:25:13,480 --> 00:25:15,760
Speaker 4: if they had just stuck with the engineers. I love

542
00:25:15,800 --> 00:25:18,320
Speaker 4: that story, and because it feeds all of my biases,

543
00:25:18,680 --> 00:25:20,080
Speaker 4: I'm like skeptical.

544
00:25:19,840 --> 00:25:21,760
Speaker 6: Yeah, And I mean, you know, a big part of

545
00:25:21,800 --> 00:25:26,280
Speaker 6: it is just manufacturing commercial aircraft is like extremely hard.

546
00:25:26,480 --> 00:25:29,520
Speaker 6: There's like a reason that only like right now to

547
00:25:30,520 --> 00:25:33,360
Speaker 6: maybe three maybe four companies in the in the entire

548
00:25:33,400 --> 00:25:37,280
Speaker 6: world do it. Boeing Airbus, Embraer in Brazil of all places,

549
00:25:37,320 --> 00:25:39,679
Speaker 6: and then promac Is looks like it's going to be

550
00:25:39,720 --> 00:25:40,600
Speaker 6: the big fourth one.

551
00:25:40,800 --> 00:25:41,000
Speaker 5: You know.

552
00:25:41,080 --> 00:25:43,600
Speaker 6: Japan tried for many years to sort of break into

553
00:25:43,600 --> 00:25:46,679
Speaker 6: the commercial aircraft manufacturing market, and they were, you know,

554
00:25:46,720 --> 00:25:48,920
Speaker 6: after spending like billions of dollars, they were.

555
00:25:48,840 --> 00:25:51,840
Speaker 5: Basically gave up just because it was so difficult.

556
00:25:51,840 --> 00:25:53,919
Speaker 6: There used to be many more competitors in the nineteen

557
00:25:54,000 --> 00:25:57,680
Speaker 6: seventies and they sort of got winnowed down one by one.

558
00:25:58,240 --> 00:26:01,080
Speaker 6: One or two plane projects that don't pan out and

559
00:26:01,119 --> 00:26:04,440
Speaker 6: you're basically out of business. That's essentially what happened to Lockheed,

560
00:26:04,840 --> 00:26:07,960
Speaker 6: and so it's just a very very difficult business to

561
00:26:08,040 --> 00:26:10,000
Speaker 6: sort of be in. And so Boeing is having a

562
00:26:10,000 --> 00:26:12,960
Speaker 6: lot of struggles right now, but you know, earlier in

563
00:26:13,000 --> 00:26:15,159
Speaker 6: the twenty first century you have air Bus having a

564
00:26:15,200 --> 00:26:15,880
Speaker 6: lot of struggles.

565
00:26:15,920 --> 00:26:17,040
Speaker 5: They had all sorts of problems.

566
00:26:17,480 --> 00:26:19,639
Speaker 6: I think on their A three eighty that they were

567
00:26:19,720 --> 00:26:21,600
Speaker 6: rolling out, they're at like a lot of delays and

568
00:26:21,600 --> 00:26:23,479
Speaker 6: stuff they had to fix on it as well. So

569
00:26:23,560 --> 00:26:25,280
Speaker 6: a big part of it is just it's a very

570
00:26:25,320 --> 00:26:28,840
Speaker 6: difficult business to be in. There's very few people that

571
00:26:28,920 --> 00:26:31,560
Speaker 6: can kind of really do it effectively.

572
00:26:47,680 --> 00:26:50,199
Speaker 4: Here's a question that I've wondered about, and maybe it

573
00:26:50,240 --> 00:26:53,000
Speaker 4: relates to planes, and maybe it relates to housing, maybe

574
00:26:53,040 --> 00:26:55,960
Speaker 4: it relates to other things like when you see us

575
00:26:56,160 --> 00:26:59,640
Speaker 4: going backwards or stalling out, Like here's my question, could

576
00:26:59,640 --> 00:27:01,480
Speaker 4: we have some sort of I don't know if Dutch

577
00:27:01,520 --> 00:27:04,320
Speaker 4: disease is the right answer, where it's like maybe in

578
00:27:04,359 --> 00:27:07,240
Speaker 4: the middle of the twentieth century there were people who

579
00:27:07,280 --> 00:27:10,200
Speaker 4: were working on the floor or working in management at

580
00:27:10,240 --> 00:27:13,600
Speaker 4: Boeing in a plant somewhere in Washington who are really

581
00:27:13,640 --> 00:27:17,040
Speaker 4: on the ball and really whatever. And now in that

582
00:27:17,080 --> 00:27:20,720
Speaker 4: same person in twenty twenty five could make ten times

583
00:27:20,760 --> 00:27:23,200
Speaker 4: as much money working for a startup in Silicon Valley

584
00:27:23,280 --> 00:27:25,199
Speaker 4: or Wall Street, et cetera. That there's some sort of

585
00:27:25,240 --> 00:27:29,040
Speaker 4: like levels of you know, awareness or skill or agentickness

586
00:27:29,119 --> 00:27:31,480
Speaker 4: or whatever, et cetera, and that because we have these

587
00:27:31,560 --> 00:27:34,919
Speaker 4: other areas where there's so much money, that there's like

588
00:27:34,960 --> 00:27:37,760
Speaker 4: a type of individual who used to maybe work in

589
00:27:37,800 --> 00:27:40,720
Speaker 4: a sort of construction related field that left that and

590
00:27:40,760 --> 00:27:42,639
Speaker 4: then it's changed the talent distribution with you.

591
00:27:42,720 --> 00:27:44,880
Speaker 6: Yeah, I think that's definitely a part of it. There's

592
00:27:44,920 --> 00:27:47,600
Speaker 6: like a theory in certain circles that we've just we've

593
00:27:47,640 --> 00:27:50,760
Speaker 6: gotten like in a sense, too good at like allocating

594
00:27:50,840 --> 00:27:54,680
Speaker 6: talent efficiently or whatever. So like somebody extremely like talented

595
00:27:54,680 --> 00:27:56,199
Speaker 6: and smart, it's like, okay, we're going to send you

596
00:27:56,240 --> 00:27:58,920
Speaker 6: to be a software developer or an AI programmer or

597
00:27:59,000 --> 00:28:01,439
Speaker 6: work in finance or whatever, and your the value that

598
00:28:01,520 --> 00:28:04,160
Speaker 6: you can contribute there is going to be very highly rewarded.

599
00:28:04,359 --> 00:28:06,280
Speaker 6: What that means is like there's you know, there's fewer

600
00:28:06,320 --> 00:28:08,600
Speaker 6: people going into sort of these other sort of you know,

601
00:28:08,720 --> 00:28:12,080
Speaker 6: engineering disciplines. I worked as a structural engineer, which is

602
00:28:12,359 --> 00:28:14,800
Speaker 6: you know, it plays reasonably well but doesn't you know

603
00:28:14,840 --> 00:28:18,040
Speaker 6: not Silicon Valley software developer. And I used to sort

604
00:28:18,040 --> 00:28:21,159
Speaker 6: of tell very young engineers or engineers thinking about in

605
00:28:21,240 --> 00:28:23,800
Speaker 6: college or whatever, you say, you know, if you're smart

606
00:28:23,880 --> 00:28:26,240
Speaker 6: enough to be a structural engineer, you're smart enough to

607
00:28:26,440 --> 00:28:29,520
Speaker 6: you know, switch to like software development and make a

608
00:28:29,560 --> 00:28:31,600
Speaker 6: lot more money and have a much less stressful job.

609
00:28:31,960 --> 00:28:34,000
Speaker 5: Yere's there's like this is I.

610
00:28:33,920 --> 00:28:37,000
Speaker 6: Think one part of the reason why you know, Bell

611
00:28:37,119 --> 00:28:39,640
Speaker 6: Labs very famous at and D R and D Lab,

612
00:28:39,800 --> 00:28:42,600
Speaker 6: the US invention factory for most of the twentieth century,

613
00:28:42,840 --> 00:28:45,040
Speaker 6: Why it would be very hard to have a sort

614
00:28:45,040 --> 00:28:48,560
Speaker 6: of organization like that today is because the quality of

615
00:28:48,680 --> 00:28:52,240
Speaker 6: talent that you could a place like that demanded would

616
00:28:52,240 --> 00:28:53,600
Speaker 6: be so much more reward.

617
00:28:55,760 --> 00:28:57,800
Speaker 5: Somewhere else just quickly.

618
00:28:57,800 --> 00:28:59,920
Speaker 2: On aircraft, It's not like the US doesn't have a

619
00:29:00,160 --> 00:29:04,479
Speaker 2: history of producing like large scale amounts of planes. And

620
00:29:04,760 --> 00:29:06,880
Speaker 2: the example that everyone tends to turn to is in

621
00:29:06,920 --> 00:29:09,760
Speaker 2: World War Two, right, we produced I think hundreds and

622
00:29:09,800 --> 00:29:12,120
Speaker 2: thousands of aircraft very very quickly.

623
00:29:12,520 --> 00:29:13,000
Speaker 3: What were the.

624
00:29:12,960 --> 00:29:16,600
Speaker 2: Conditions that existed back then that allowed us to ramp

625
00:29:16,680 --> 00:29:18,560
Speaker 2: up that kind of production so fast?

626
00:29:19,040 --> 00:29:22,320
Speaker 6: Yeah, I've written about aircraft manufacturing during World War Two.

627
00:29:22,400 --> 00:29:25,160
Speaker 6: The US actually built more airplanes during World War Two

628
00:29:25,240 --> 00:29:29,000
Speaker 6: that have actually been built during for commercial purposes for

629
00:29:29,040 --> 00:29:30,600
Speaker 6: the entire history of aviation.

630
00:29:31,360 --> 00:29:33,480
Speaker 5: It's because we built, you know, so many of.

631
00:29:33,440 --> 00:29:36,520
Speaker 6: Them, and not that many commercial aircraft get built. I

632
00:29:36,520 --> 00:29:39,560
Speaker 6: think a big part of it is just the US

633
00:29:39,680 --> 00:29:42,719
Speaker 6: was just such a huge manufacturing power at like the

634
00:29:42,760 --> 00:29:46,400
Speaker 6: mid twentieth century. You know, we weren't building very large

635
00:29:46,400 --> 00:29:49,880
Speaker 6: amounts of airplanes, but we were building more cars than

636
00:29:49,880 --> 00:29:52,280
Speaker 6: anybody else. We're building more machine tools anybody else. We're

637
00:29:52,320 --> 00:29:55,000
Speaker 6: making more steel than the US was, like you know,

638
00:29:55,120 --> 00:29:57,360
Speaker 6: the China of today, it was like the by far

639
00:29:57,480 --> 00:30:01,040
Speaker 6: the largest manufacturing country in the world, and so we

640
00:30:01,160 --> 00:30:05,280
Speaker 6: just have the ability to sort of redirect this manufacturing

641
00:30:05,360 --> 00:30:09,160
Speaker 6: capability and talent into sort of these these new industries.

642
00:30:09,200 --> 00:30:11,040
Speaker 5: I think that was a very large part of it.

643
00:30:11,280 --> 00:30:14,080
Speaker 4: You know, people think about maybe since we're talking about war,

644
00:30:14,080 --> 00:30:16,000
Speaker 4: we're talking about the US as the China of the

645
00:30:16,040 --> 00:30:17,680
Speaker 4: twentieth century, which is kind of cuncary.

646
00:30:17,760 --> 00:30:21,680
Speaker 2: Eric Adams, Yeah, the China China.

647
00:30:22,160 --> 00:30:24,440
Speaker 4: I'm curious when you think about it, like could there

648
00:30:24,480 --> 00:30:27,040
Speaker 4: be more than one global manufacturing hub, because when you

649
00:30:27,120 --> 00:30:30,360
Speaker 4: think about economies of scale and you think about network effects.

650
00:30:30,400 --> 00:30:31,920
Speaker 4: You know, it's like, how many other cities in the

651
00:30:32,000 --> 00:30:34,120
Speaker 4: US have tried to be the San Francisco or the

652
00:30:34,120 --> 00:30:38,040
Speaker 4: Silicon Valley and they've never You've really never replicated when

653
00:30:38,080 --> 00:30:41,560
Speaker 4: you think about sort of agglomeration and network effects, et cetera,

654
00:30:41,680 --> 00:30:44,080
Speaker 4: and you think about what it takes for manufacturing, and

655
00:30:44,120 --> 00:30:46,240
Speaker 4: you think about, Okay, now in the twenty first century,

656
00:30:46,320 --> 00:30:49,400
Speaker 4: China is the China of the twenty first century, and

657
00:30:49,440 --> 00:30:52,680
Speaker 4: you think about the efforts at US sort of reindustrialization

658
00:30:52,800 --> 00:30:55,440
Speaker 4: because there's all this angst about whatever, we can't build

659
00:30:55,720 --> 00:30:58,000
Speaker 4: advanced things. It's like, glob can we have advanced things

660
00:30:58,040 --> 00:31:00,320
Speaker 4: if we don't also do the simple things like washing machines,

661
00:31:00,360 --> 00:31:03,080
Speaker 4: et cetera. Can there be more than one in the

662
00:31:03,120 --> 00:31:06,520
Speaker 4: world at any given time or does market logic sort

663
00:31:06,520 --> 00:31:09,160
Speaker 4: of dictate that one will be the powerhouse.

664
00:31:09,320 --> 00:31:12,480
Speaker 6: Yeah, that's a really interesting question. And so my first

665
00:31:12,520 --> 00:31:15,560
Speaker 6: answer is that I don't know. And the second answer

666
00:31:15,680 --> 00:31:19,280
Speaker 6: is I think historically kind of what you see is that,

667
00:31:19,360 --> 00:31:23,440
Speaker 6: like transportation costs have kind of been something of a

668
00:31:23,440 --> 00:31:27,800
Speaker 6: barrier to preventing one country from like just dominating production

669
00:31:27,840 --> 00:31:29,840
Speaker 6: of a certain thing. So even like when in the

670
00:31:29,960 --> 00:31:33,640
Speaker 6: eighties and nineties, when Japanese like chower manufacturers were like

671
00:31:33,800 --> 00:31:37,120
Speaker 6: trouncing the US, it was still so expensive to like

672
00:31:37,160 --> 00:31:39,400
Speaker 6: ship them from Japan or whatever that you you know,

673
00:31:39,520 --> 00:31:42,120
Speaker 6: they still it was still valuable to like set up

674
00:31:42,160 --> 00:31:45,760
Speaker 6: local manufacturing operations in the US. They still wanted to

675
00:31:45,760 --> 00:31:47,920
Speaker 6: build their plants in the US to sort of make

676
00:31:47,960 --> 00:31:50,400
Speaker 6: it not so expensive to sort of transport these things.

677
00:31:50,760 --> 00:31:54,680
Speaker 6: So I wonder if, like, as transportation has gotten more

678
00:31:54,720 --> 00:31:58,920
Speaker 6: and more inexpensive, I wonder if that has like shifted

679
00:31:58,920 --> 00:32:01,160
Speaker 6: the logic of this. You can have this sort of

680
00:32:01,240 --> 00:32:04,720
Speaker 6: like concentration of production in a way that maybe it

681
00:32:04,840 --> 00:32:08,400
Speaker 6: wasn't quite didn't quite make sense to do before when

682
00:32:08,440 --> 00:32:10,880
Speaker 6: like these transportation costs a bit a little bit harder.

683
00:32:10,880 --> 00:32:12,920
Speaker 6: I don't know, but it's an interesting way of your

684
00:32:12,960 --> 00:32:13,600
Speaker 6: interesting question.

685
00:32:14,440 --> 00:32:15,959
Speaker 3: Just going back to Boeing for a second.

686
00:32:16,000 --> 00:32:18,280
Speaker 2: So we talked about the classic story of what went

687
00:32:18,320 --> 00:32:21,480
Speaker 2: wrong at Boeing, and it's that tension between I guess

688
00:32:21,560 --> 00:32:24,360
Speaker 2: the manufacturers on the ground and the executives in the

689
00:32:24,360 --> 00:32:27,040
Speaker 2: boardroom who are trying to cut costs and boost the

690
00:32:27,080 --> 00:32:30,000
Speaker 2: share price and things like that. Is that like a

691
00:32:30,040 --> 00:32:32,240
Speaker 2: trend or a thing that you tend to see across

692
00:32:32,320 --> 00:32:36,280
Speaker 2: manufacturing where the manufacturers are constantly under pressure from the

693
00:32:36,400 --> 00:32:37,720
Speaker 2: finance execs.

694
00:32:37,400 --> 00:32:38,000
Speaker 3: On the top.

695
00:32:38,400 --> 00:32:41,200
Speaker 2: Or are there companies out there who have like cracked

696
00:32:41,440 --> 00:32:47,040
Speaker 2: that relationship where finance and manufacturers engineers kind of work together.

697
00:32:47,440 --> 00:32:50,680
Speaker 6: Yeah, I think, you know, the pressure definitely seems to

698
00:32:50,720 --> 00:32:55,040
Speaker 6: be constant pushing to find lower costs, and which is

699
00:32:55,200 --> 00:32:57,760
Speaker 6: one reason why, you know, the trend in the second

700
00:32:57,760 --> 00:32:59,920
Speaker 6: half of the twentieth century was like just outsourcing finding

701
00:33:00,080 --> 00:33:03,040
Speaker 6: new places to sort of make this stuff that is cheaper.

702
00:33:03,200 --> 00:33:05,040
Speaker 6: I talk about Nike in the book, and there's sort

703
00:33:05,040 --> 00:33:06,920
Speaker 6: of an interesting path that Nike takes where it's like

704
00:33:07,000 --> 00:33:10,400
Speaker 6: constantly hunting the cheapest sources of labor, where they start

705
00:33:10,400 --> 00:33:13,239
Speaker 6: out manufacturing somewhere cheap. Right, They start out manufacturing their

706
00:33:13,240 --> 00:33:15,680
Speaker 6: shoes in Japan because it's much cheaper to make them

707
00:33:15,680 --> 00:33:18,760
Speaker 6: there than in the US. But then as the Japanese

708
00:33:18,840 --> 00:33:22,640
Speaker 6: labor starts getting more expensive, they move their manufacturing too Taiwan,

709
00:33:22,680 --> 00:33:24,640
Speaker 6: and then from Taiwan to China, and I think now

710
00:33:24,680 --> 00:33:27,800
Speaker 6: it's almost all done in like a Vietnam and Indonesia.

711
00:33:27,920 --> 00:33:30,240
Speaker 6: So it's just constant hunt for the new sources of labor.

712
00:33:30,320 --> 00:33:34,400
Speaker 6: And you see that just broadly across industries, like where

713
00:33:34,480 --> 00:33:36,520
Speaker 6: New York which used to be sort of a garment

714
00:33:36,560 --> 00:33:39,440
Speaker 6: manufacturing center, but as New York labor got more and

715
00:33:39,440 --> 00:33:42,200
Speaker 6: more expensive, they moved you know, acroft first, you know,

716
00:33:42,400 --> 00:33:44,360
Speaker 6: out of state into New Jersey, and then to the

717
00:33:44,400 --> 00:33:48,120
Speaker 6: south and then overseas. So there's this constant pressure. But

718
00:33:48,160 --> 00:33:51,280
Speaker 6: then there's also companies that have like I think, bucked

719
00:33:51,320 --> 00:33:54,840
Speaker 6: that trend and been you know more like we think

720
00:33:54,880 --> 00:33:58,280
Speaker 6: the returns from like investing in our workforce and its

721
00:33:58,320 --> 00:34:02,320
Speaker 6: capabilities is going to be valuable enough that we're going

722
00:34:02,400 --> 00:34:04,360
Speaker 6: to do it. I think, you know, it's a company

723
00:34:04,440 --> 00:34:07,080
Speaker 6: like Newcore, which is a steel company in the US,

724
00:34:07,160 --> 00:34:10,440
Speaker 6: which is like very famous in terms of like how

725
00:34:10,440 --> 00:34:12,600
Speaker 6: it invests in its workforce and things like that, and

726
00:34:12,600 --> 00:34:15,280
Speaker 6: they've been extremely successful in doing that. They grew from

727
00:34:15,480 --> 00:34:18,440
Speaker 6: nothing to being the largest steel manufacturer in the US.

728
00:34:18,480 --> 00:34:21,239
Speaker 2: I believe that just reminded me something that I really

729
00:34:21,280 --> 00:34:23,319
Speaker 2: want an answer to, and you might actually have it.

730
00:34:23,360 --> 00:34:25,160
Speaker 2: Why are communists obsessed with steel?

731
00:34:25,680 --> 00:34:27,720
Speaker 5: Oh? Good question.

732
00:34:28,120 --> 00:34:29,719
Speaker 6: I just think in the you know, sort of the

733
00:34:29,719 --> 00:34:33,080
Speaker 6: early twentieth century, late nineteenth century, these were the things

734
00:34:33,120 --> 00:34:36,760
Speaker 6: that like represented like industrial might and like successful country

735
00:34:37,239 --> 00:34:40,280
Speaker 6: or whatever, and then they never kind of like got

736
00:34:40,320 --> 00:34:43,680
Speaker 6: out of that sort of framework or whatever. So like

737
00:34:43,719 --> 00:34:47,719
Speaker 6: one criticism of you know, the Soviet Union was that,

738
00:34:47,760 --> 00:34:49,279
Speaker 6: you know, they were really maybe good at sort of

739
00:34:49,280 --> 00:34:51,759
Speaker 6: building these like industrial things, but they never managed to

740
00:34:51,800 --> 00:34:54,160
Speaker 6: build like a successful computer or anything like that. They

741
00:34:54,200 --> 00:34:56,839
Speaker 6: couldn't get out of their sort of mindset. It's sort

742
00:34:56,880 --> 00:34:59,360
Speaker 6: of maybe easy to measure like success in terms of

743
00:34:59,360 --> 00:35:03,200
Speaker 6: like output or whatever. It's just like relatively relatively simple

744
00:35:03,239 --> 00:35:04,200
Speaker 6: commodity that you can.

745
00:35:04,400 --> 00:35:06,239
Speaker 3: Right, this physical thing, you can plaint so you can.

746
00:35:06,239 --> 00:35:09,240
Speaker 6: Point the more tons you have, the better you've done

747
00:35:09,480 --> 00:35:12,120
Speaker 6: with more complex things. Maybe it's not maybe so amenable

748
00:35:12,160 --> 00:35:14,600
Speaker 6: to sort of this like top down management style.

749
00:35:14,680 --> 00:35:16,720
Speaker 5: I don't know, but those are some of my theories.

750
00:35:16,880 --> 00:35:19,279
Speaker 4: Let's get back to housing, because when we started and

751
00:35:19,360 --> 00:35:22,440
Speaker 4: Tracy was talking about the fact that even setting aside

752
00:35:22,440 --> 00:35:25,600
Speaker 4: the prefab stuff, and you're talking about it the actual

753
00:35:25,719 --> 00:35:28,880
Speaker 4: on the ground one off et cetera, home building, it's

754
00:35:29,480 --> 00:35:33,239
Speaker 4: arguably by some measure of productivity has gone backwards, or

755
00:35:33,280 --> 00:35:38,920
Speaker 4: maybe it's flat setting aside like prefab. You mentioned zoning regulations,

756
00:35:38,920 --> 00:35:41,680
Speaker 4: et cetera. What is your view for why just the

757
00:35:41,719 --> 00:35:44,799
Speaker 4: normal sort of style of housing construction hasn't gotten any

758
00:35:44,840 --> 00:35:46,320
Speaker 4: more efficient over the years.

759
00:35:46,520 --> 00:35:48,640
Speaker 6: Yeah, and so I talk about the kind of this

760
00:35:48,719 --> 00:35:50,839
Speaker 6: in the book. This goes to sort of this main

761
00:35:50,880 --> 00:35:52,960
Speaker 6: thesis of the book where I sort of break down

762
00:35:53,000 --> 00:35:56,040
Speaker 6: there's a specific points of intervention that you can do

763
00:35:56,120 --> 00:35:57,960
Speaker 6: in any process to make it cheaper.

764
00:35:58,000 --> 00:35:59,920
Speaker 5: I've talked about these a little bit.

765
00:36:00,160 --> 00:36:01,960
Speaker 6: You know, economies of scale, You can make more of

766
00:36:02,480 --> 00:36:05,839
Speaker 6: what you're doing, you can introduce some fundamentally new technology.

767
00:36:05,920 --> 00:36:07,760
Speaker 6: You know, an example of this to talk about steel,

768
00:36:07,800 --> 00:36:09,799
Speaker 6: like the best of our process for making steel, which

769
00:36:09,840 --> 00:36:13,200
Speaker 6: like fundamentally was simpler and took less inputs than the

770
00:36:13,239 --> 00:36:15,879
Speaker 6: processes that came before it. So I kind of break

771
00:36:15,880 --> 00:36:18,040
Speaker 6: down these different factors in the book of like what

772
00:36:18,160 --> 00:36:21,560
Speaker 6: you need to do to make some process more efficient,

773
00:36:21,840 --> 00:36:23,440
Speaker 6: and if you can do those things, your process can

774
00:36:23,440 --> 00:36:25,160
Speaker 6: get cheaper and you can sell it for less. And

775
00:36:25,239 --> 00:36:27,520
Speaker 6: if you can't do those things, you're if you know,

776
00:36:27,840 --> 00:36:31,000
Speaker 6: you can't make the process any cheaper. And all those

777
00:36:31,160 --> 00:36:35,279
Speaker 6: basically paths to improvement are either like blocked or like

778
00:36:35,480 --> 00:36:38,799
Speaker 6: very difficult to do in construction. So, like we talked

779
00:36:38,800 --> 00:36:41,120
Speaker 6: about economies of scale, that's a big one. We talked

780
00:36:41,120 --> 00:36:43,359
Speaker 6: a little bit about risk aversion. It's hard to kind

781
00:36:43,360 --> 00:36:46,920
Speaker 6: of introduce like fundamentally new technology. The cost of your

782
00:36:46,920 --> 00:36:49,719
Speaker 6: inputs is like a big one. You know, the materials

783
00:36:49,760 --> 00:36:52,799
Speaker 6: and sort of energy and labor that you're using in

784
00:36:52,840 --> 00:36:55,520
Speaker 6: the process. Those costs are hard to sort of reduce

785
00:36:55,760 --> 00:36:59,160
Speaker 6: in construction sort of, It's very hard to make building

786
00:36:59,200 --> 00:37:02,080
Speaker 6: materials and cheaper than they already are, kind of like

787
00:37:02,280 --> 00:37:05,480
Speaker 6: you know, dollars per pound or dollars per like cubic

788
00:37:05,520 --> 00:37:09,640
Speaker 6: foot terms. They're basically as cheap as anything that civilization produces.

789
00:37:09,680 --> 00:37:12,640
Speaker 6: It's not easy to make those things cheaper than.

790
00:37:12,840 --> 00:37:13,480
Speaker 5: They already are.

791
00:37:13,520 --> 00:37:15,600
Speaker 6: It's also hard to use less of them in a

792
00:37:15,600 --> 00:37:18,279
Speaker 6: way that doesn't make the house worse. And so all

793
00:37:18,320 --> 00:37:20,920
Speaker 6: these paths are that you have, you know that a

794
00:37:20,960 --> 00:37:23,920
Speaker 6: process can take advantage of to sort of get less expensive.

795
00:37:24,320 --> 00:37:28,440
Speaker 6: They're all very difficult to do in construction.

796
00:37:29,120 --> 00:37:31,360
Speaker 2: I just remembered another question that I always want to

797
00:37:31,400 --> 00:37:33,600
Speaker 2: ask people, and I feel like you will also know

798
00:37:33,680 --> 00:37:36,120
Speaker 2: the answer to this one, which is why does America

799
00:37:36,239 --> 00:37:40,359
Speaker 2: build houses out of wood frames and timber versus the

800
00:37:40,400 --> 00:37:41,880
Speaker 2: rest of the world where they tend to use a

801
00:37:41,880 --> 00:37:43,400
Speaker 2: lot more cement and concrete.

802
00:37:43,719 --> 00:37:46,640
Speaker 6: Yeah, so the wood US has historically built a lot

803
00:37:46,680 --> 00:37:49,200
Speaker 6: of stuff out of wood because we had such huge

804
00:37:49,320 --> 00:37:52,440
Speaker 6: supplies of it. In places like Europe, a lot of

805
00:37:52,440 --> 00:37:55,080
Speaker 6: those you know, large forests got cut down way earlier

806
00:37:55,120 --> 00:37:57,520
Speaker 6: and so they just didn't have the huge, huge supplies

807
00:37:58,040 --> 00:38:00,279
Speaker 6: of wood that the US had, and so that kind of,

808
00:38:00,480 --> 00:38:03,440
Speaker 6: you know, shaped how the technology developed. Because what is

809
00:38:03,480 --> 00:38:05,839
Speaker 6: very very inexpensive, you can use it. It's a very

810
00:38:05,880 --> 00:38:09,000
Speaker 6: inexpensive way to sort of build a house. They do

811
00:38:09,040 --> 00:38:11,879
Speaker 6: actually do sort of still timber frame construction in other

812
00:38:11,920 --> 00:38:14,320
Speaker 6: parts of the world. It's maybe not quite so dominant,

813
00:38:14,320 --> 00:38:18,000
Speaker 6: but it's like used in the UK. Germany uses it.

814
00:38:18,040 --> 00:38:20,759
Speaker 6: Germany actually they have some like prefab construction startups that

815
00:38:20,800 --> 00:38:24,279
Speaker 6: are using like timber frame timber panel construction. It's using

816
00:38:24,280 --> 00:38:26,000
Speaker 6: a lot of the Nordic countries they don't have a

817
00:38:26,040 --> 00:38:27,880
Speaker 6: decent amount of supply of woods, so it's not like

818
00:38:27,960 --> 00:38:30,560
Speaker 6: unheard of. It's it's most dominant in like the US

819
00:38:30,600 --> 00:38:33,239
Speaker 6: and in Canada, but in other places that have a

820
00:38:33,320 --> 00:38:35,600
Speaker 6: decent amount of wood they tend to use it as well.

821
00:38:35,760 --> 00:38:40,520
Speaker 4: Should we completely give up on prefab or major efficiency

822
00:38:40,520 --> 00:38:43,359
Speaker 4: gains in housing in the us, or like, is it

823
00:38:43,440 --> 00:38:46,000
Speaker 4: just there's not a way to do this or is

824
00:38:46,040 --> 00:38:48,920
Speaker 4: there still out there some magic bullet that's waiting to

825
00:38:48,960 --> 00:38:49,400
Speaker 4: be found.

826
00:38:49,560 --> 00:38:51,279
Speaker 3: You should tell us what happened to the company you

827
00:38:51,280 --> 00:38:52,360
Speaker 3: were working for as well.

828
00:38:52,760 --> 00:38:55,000
Speaker 6: Yeah, so they, Yeah, they raised a huge amount of

829
00:38:55,000 --> 00:38:58,040
Speaker 6: money and they basically after raising like several billion dollars

830
00:38:58,080 --> 00:39:00,239
Speaker 6: and building all these factories to like fat you know,

831
00:39:00,280 --> 00:39:04,720
Speaker 6: mass produce housing, they basically ended up going bankrupt partly

832
00:39:04,760 --> 00:39:06,960
Speaker 6: because they were never able to you know, sell enough

833
00:39:06,960 --> 00:39:08,920
Speaker 6: of these buildings.

834
00:39:08,520 --> 00:39:09,640
Speaker 5: That they were trying to sell.

835
00:39:09,800 --> 00:39:12,279
Speaker 6: It's very hard to like pivot your operations when you're

836
00:39:12,320 --> 00:39:15,640
Speaker 6: like invested in all this like physical infrastructure. And then COVID,

837
00:39:15,760 --> 00:39:18,120
Speaker 6: you know, was kind of the final nail in the coffin.

838
00:39:18,440 --> 00:39:22,359
Speaker 6: I'm not completely pessimistic. I mostly just think if you're

839
00:39:22,360 --> 00:39:24,960
Speaker 6: going to sort of try to change the industry with PREFRAB,

840
00:39:25,200 --> 00:39:27,600
Speaker 6: you need to have a very strong thesis as to

841
00:39:27,680 --> 00:39:31,839
Speaker 6: what specifically this time is different and you know why

842
00:39:31,880 --> 00:39:34,719
Speaker 6: it didn't work previously and what is now has changed?

843
00:39:34,760 --> 00:39:38,480
Speaker 6: What constraints have been relaxed that will make it possible now?

844
00:39:38,480 --> 00:39:40,560
Speaker 6: And I don't have any number of things could change

845
00:39:40,560 --> 00:39:42,879
Speaker 6: that you know, certain materials get cheap enough, it gets

846
00:39:42,920 --> 00:39:45,040
Speaker 6: like inexpensive enough to build a factory, you know, any

847
00:39:45,080 --> 00:39:49,000
Speaker 6: number of things. I think that very very good automation

848
00:39:49,200 --> 00:39:52,400
Speaker 6: and robotics have a good chance of changing this, just

849
00:39:52,480 --> 00:39:54,759
Speaker 6: because even if nothing else toware you know, I'm not

850
00:39:55,239 --> 00:39:56,680
Speaker 6: the most creative person in the world, you know, I

851
00:39:56,719 --> 00:39:59,080
Speaker 6: can't necessarily come up with like some amazing new way

852
00:39:59,120 --> 00:40:01,439
Speaker 6: of putting a house together. But if even if nothing

853
00:40:01,480 --> 00:40:03,399
Speaker 6: else works, if you have like a robot that costs

854
00:40:03,440 --> 00:40:06,600
Speaker 6: five thousand dollars and like basically duplicate you know, ninety

855
00:40:06,719 --> 00:40:08,920
Speaker 6: ninety five percent of what a person can do, that

856
00:40:08,960 --> 00:40:12,120
Speaker 6: would effectively solve your problem. Right, you drop in these

857
00:40:12,200 --> 00:40:14,719
Speaker 6: robots and you build you know, whatever it is that

858
00:40:14,760 --> 00:40:17,640
Speaker 6: you're trying to build using this robotic much less expensive labor.

859
00:40:18,040 --> 00:40:19,880
Speaker 6: And I have a sort of like vignette in the

860
00:40:20,239 --> 00:40:22,080
Speaker 6: conclusion of the book as to what that might look

861
00:40:22,160 --> 00:40:22,920
Speaker 6: like in the future.

862
00:40:23,400 --> 00:40:25,799
Speaker 2: So we could get the drones that go up on

863
00:40:25,880 --> 00:40:28,319
Speaker 2: the roof and fix leaks and stuff like that.

864
00:40:28,840 --> 00:40:30,560
Speaker 5: Anything's possible, all right.

865
00:40:30,760 --> 00:40:33,520
Speaker 2: Brian Potter, thank you so much for coming on all thoughts.

866
00:40:33,560 --> 00:40:34,480
Speaker 2: Really appreciate it.

867
00:40:34,600 --> 00:40:43,800
Speaker 5: Thank you. It's great to be here.

868
00:40:48,760 --> 00:40:50,320
Speaker 3: Joe, that was a really fun conversation.

869
00:40:50,480 --> 00:40:53,239
Speaker 4: Yeah, that's really fun. I love Brian's stuff, and I

870
00:40:53,320 --> 00:40:55,480
Speaker 4: feel like one of those conversations where both of us

871
00:40:55,480 --> 00:40:57,600
Speaker 4: could just ask a bunch of questions we've been meaning

872
00:40:57,640 --> 00:40:58,960
Speaker 4: to ask for a long time.

873
00:40:59,080 --> 00:41:02,080
Speaker 2: I did read currently, his new book, The Origins of

874
00:41:02,120 --> 00:41:07,760
Speaker 2: Efficiency has a bibliography that's like six hundred items long. Amazing,

875
00:41:07,880 --> 00:41:11,920
Speaker 2: which is incredible to think about him pouring over like

876
00:41:11,960 --> 00:41:13,520
Speaker 2: six hundred different reference sources.

877
00:41:13,600 --> 00:41:15,680
Speaker 4: We didn't get into it in this conversation, but he's

878
00:41:15,719 --> 00:41:18,759
Speaker 4: written about his process before. Yeah, like, okay, I want

879
00:41:18,800 --> 00:41:21,680
Speaker 4: to learn about some new industry like fighter jets or

880
00:41:21,719 --> 00:41:25,440
Speaker 4: whatever it is, and how he goes about diving into it,

881
00:41:25,520 --> 00:41:28,719
Speaker 4: et cetera. And yes, it seems like we.

882
00:41:28,640 --> 00:41:30,319
Speaker 3: Talk about stuff. I should probably read that.

883
00:41:30,560 --> 00:41:31,520
Speaker 5: Yeah, totally.

884
00:41:31,600 --> 00:41:33,279
Speaker 2: Speaking of which, I am very proud of us for

885
00:41:33,360 --> 00:41:36,560
Speaker 2: not mentioning the word deflator at all in a conversation

886
00:41:36,600 --> 00:41:40,359
Speaker 2: about housing productivity, housing construction productivity. I should just mention

887
00:41:41,080 --> 00:41:44,160
Speaker 2: that Richmond fed paper that I talked about in the intro.

888
00:41:44,360 --> 00:41:48,440
Speaker 2: So their conclusion was sort of an amalgamation of all

889
00:41:48,480 --> 00:41:51,440
Speaker 2: the factors that we talked about in this conversation. So

890
00:41:51,520 --> 00:41:55,960
Speaker 2: they basically said they think that smaller construction firms have

891
00:41:56,120 --> 00:42:01,200
Speaker 2: reduced incentives to invest in technological innovation because you don't

892
00:42:01,239 --> 00:42:03,960
Speaker 2: get that economy of scale. And in fact, if you

893
00:42:04,120 --> 00:42:08,120
Speaker 2: look at areas with stricter zoning laws and things like that,

894
00:42:08,160 --> 00:42:11,400
Speaker 2: you can see that they actually have even less construction

895
00:42:11,480 --> 00:42:14,759
Speaker 2: productivity than other areas. Again because like the incentives and

896
00:42:14,800 --> 00:42:17,440
Speaker 2: the economies of scale just shrink and shrink and drinks.

897
00:42:17,480 --> 00:42:18,280
Speaker 2: That's kind of interesting.

898
00:42:18,360 --> 00:42:20,920
Speaker 4: It would be interesting. Something I was sort of curious

899
00:42:20,960 --> 00:42:23,520
Speaker 4: about during that is I wonder if if you just

900
00:42:23,560 --> 00:42:26,080
Speaker 4: look at one market where it's very flat and dry,

901
00:42:26,080 --> 00:42:28,120
Speaker 4: I just think about Arizona or anything like that, Like,

902
00:42:28,200 --> 00:42:31,000
Speaker 4: have they seen productivity gains there? Especially think about some

903
00:42:31,000 --> 00:42:34,400
Speaker 4: of our conversations with Chase Emerson where there's one master

904
00:42:34,520 --> 00:42:37,280
Speaker 4: plan and a bunch of houses we all have driven

905
00:42:37,360 --> 00:42:39,880
Speaker 4: by them that all look exactly the same. Do you

906
00:42:39,960 --> 00:42:43,480
Speaker 4: get those learning curves at least on some limited effect?

907
00:42:43,880 --> 00:42:44,920
Speaker 4: I would be curious about that.

908
00:42:45,160 --> 00:42:47,080
Speaker 2: I feel like to some extent that is the story

909
00:42:47,120 --> 00:42:49,760
Speaker 2: of the Sun Belt States, Right, you have cheaper houses

910
00:42:49,760 --> 00:42:51,840
Speaker 2: there because you can have these big development, but.

911
00:42:51,880 --> 00:42:53,799
Speaker 4: Its scale and scale all the way down, And so

912
00:42:53,880 --> 00:42:55,920
Speaker 4: I like that point that he made, which is that

913
00:42:56,320 --> 00:43:01,160
Speaker 4: you can identify the sources of efficiency gains. Scale is one,

914
00:43:01,560 --> 00:43:04,480
Speaker 4: a scientific breakthrough such as the best of our process

915
00:43:04,520 --> 00:43:08,440
Speaker 4: in steel is another one, et cetera. But they're not magic, right,

916
00:43:08,440 --> 00:43:10,360
Speaker 4: They're not just going to emerge. You know, you probably

917
00:43:10,360 --> 00:43:13,800
Speaker 4: get some efficiency gains just from you know, repeatable process

918
00:43:13,960 --> 00:43:17,879
Speaker 4: or sales as labor force that gets better over time,

919
00:43:18,080 --> 00:43:20,400
Speaker 4: but by and large, you're not just gonna the silver

920
00:43:20,440 --> 00:43:23,440
Speaker 4: bullet isn't gonna come out of nowhere. Yeah, and especially

921
00:43:23,480 --> 00:43:25,080
Speaker 4: the fact that there are all these sort of very

922
00:43:25,080 --> 00:43:28,480
Speaker 4: fundamental reasons why you can't have scale, or even in

923
00:43:28,520 --> 00:43:31,360
Speaker 4: the factories that build the prefab homes cannot be a

924
00:43:31,360 --> 00:43:35,080
Speaker 4: gigafactory due to distribution costs. You see why you run

925
00:43:35,120 --> 00:43:35,920
Speaker 4: into that constraint.

926
00:43:36,120 --> 00:43:37,120
Speaker 3: That's what I was thinking.

927
00:43:37,160 --> 00:43:41,480
Speaker 2: It's like the tyranny of physics. Basically, like, even though

928
00:43:41,520 --> 00:43:45,160
Speaker 2: we have all these technological breakthroughs, transportation has gotten cheaper

929
00:43:45,239 --> 00:43:49,319
Speaker 2: over time, you're still limited by geography and the realities

930
00:43:49,360 --> 00:43:52,359
Speaker 2: of you know, real world objects. And I guess that's

931
00:43:52,400 --> 00:43:55,439
Speaker 2: why you can have gigafactories for something like chips, yeah,

932
00:43:55,480 --> 00:43:57,680
Speaker 2: which are really easy to send abroad.

933
00:43:57,760 --> 00:44:00,000
Speaker 3: Their tiny but you can't do it for some.

934
00:44:00,280 --> 00:44:03,399
Speaker 4: Large and I really am curious about the sort of

935
00:44:03,480 --> 00:44:07,000
Speaker 4: the point about talent distribution and whether they're you know,

936
00:44:07,080 --> 00:44:11,360
Speaker 4: in the nineteen fifties, for a certain type of talent,

937
00:44:11,440 --> 00:44:14,080
Speaker 4: the Boeing factory was the best place they could have

938
00:44:14,120 --> 00:44:16,520
Speaker 4: gone and the cutting edge, and that was the cutting edge.

939
00:44:16,560 --> 00:44:19,040
Speaker 4: And now the Boeing factory still more or less resembles

940
00:44:19,080 --> 00:44:21,320
Speaker 4: the Boeing factory of the nineteen fifties, with maybe similar

941
00:44:21,320 --> 00:44:24,040
Speaker 4: pay scales and so forth. I'm sure the nominal pay

942
00:44:24,080 --> 00:44:25,920
Speaker 4: has gone up a lot, but there are just so

943
00:44:26,000 --> 00:44:28,640
Speaker 4: many great opportunities to make ten times or much more

944
00:44:28,680 --> 00:44:31,720
Speaker 4: money elsewhere, and so that there's sort of remaining talent,

945
00:44:32,160 --> 00:44:34,560
Speaker 4: whether that has an effect on how well it can operate.

946
00:44:34,600 --> 00:44:37,160
Speaker 3: I'm very interested in, you know, what Boing needs go on?

947
00:44:37,360 --> 00:44:41,480
Speaker 2: They need like a Madman style TV series that glamorizes

948
00:44:41,600 --> 00:44:45,520
Speaker 2: the aircraft manufacturing process and gets people interested in it again.

949
00:44:45,680 --> 00:44:46,960
Speaker 4: Yeah, no, that's a really good idea.

950
00:44:46,960 --> 00:44:49,319
Speaker 3: All right, that's a free idea for Boeing. All right,

951
00:44:49,360 --> 00:44:50,879
Speaker 3: shall we leave it there, Let's leave it there.

952
00:44:51,160 --> 00:44:53,520
Speaker 2: This has been another episode of the All Thoughts podcast.

953
00:44:53,640 --> 00:44:56,800
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.

954
00:44:56,480 --> 00:44:59,160
Speaker 4: And I'm Jill Isenthal. You can follow me at The Stalwart.

955
00:44:59,600 --> 00:45:02,680
Speaker 4: Follow our our guest Brian Potter, He's at Underscore Brian Potter.

956
00:45:02,800 --> 00:45:06,200
Speaker 4: Follow our producers Carmen Rodriguez at Kerman armand Dashel Bennett

957
00:45:06,200 --> 00:45:10,000
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958
00:45:10,080 --> 00:45:13,200
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959
00:45:13,320 --> 00:45:15,440
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960
00:45:15,520 --> 00:45:18,440
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961
00:45:18,480 --> 00:45:20,040
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962
00:45:20,160 --> 00:45:22,080
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963
00:45:22,120 --> 00:45:24,680
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964
00:45:24,760 --> 00:45:27,680
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965
00:45:27,960 --> 00:45:30,640
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00:45:30,680 --> 00:45:33,879
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969
00:46:04,680 --> 00:46:05,400
Speaker 2: in the e