Liz: You cannot turn to any piece of the Manufacturing agenda for this country and not see a direct line to our r and d capabilities. Yeah, in bioindustrial, in quantum in critical minerals, the way we win is we are gonna be innovating for the long term. Narrator: You are listening to Augmented ops where Manufacturing meets innovation. We highlight the transformative ideas and technologies shaping the front lines of operations, helping you stay ahead of the curve in the rapidly evolving world of industrial tech. Here's your host, Natan. CEO and co-founder of Tulip, the frontline operations platform Natan: Summer is here and we have a special Augmented off season five episode. Liz: Very exciting. Natan: We're back with Liz Reynolds. Hi Liz. Liz: Hi Natan. Great to see you. Natan: Yeah, it's great to see you again and you know what happens before summer. Liz: What? Natan: Spring — and spring was busy, and this is why we wanted to start this episode. Spent time at the Hill Valley Forum late April, and then when was ISA? Liz: Industry Studies Association was in June at MIT, but also MIT launched its initiative for new Manufacturing in May. Natan: Yeah. Which is pretty exciting. Liz: Very exciting new approach to understanding what Manufacturing needs to look like in the 21st century. Natan: And of course, last but not least, like just a few weeks ago, we were in Detroit at Reindustialize 2.0, second time round. Liz: Yeah. Reindustrialize, which is, we should mention, is put on by the New American Industrial Alliance, which is a new organization bringing. Advanced Manufacturing companies and investors together. I call it Silicon Valley meets Detroit. Natan: Yeah. Which is like a different take on Silicon Valley meets Capitol Hill. Of course. But you put it all together, it just feels there was a spring of. Momentum around, Hey, we have to change the American industrial base. And we thought that it, there's nothing better for the audience and for us to summarize our thoughts before we go on vacation so we can continue thinking about what do we need to do vacation to work on this really important problem. So what are the. Core themes, if you try and weave sort of a high level, across all those events and what we've seen, what, what's going on. It just feels news on more and more manufacturers coming back to the US building new factories. More programs are coming through. Of course, the demand around the aef base is ginormous. There's also a lot of concern. How can we even start to summarize this? What's your take? Liz: So I would say, I think there are a couple core themes that that were around last year, but really have hit their stride, have really come into the fore now. One of them, of course, is AI AI and operations. So as much as it might have been. Hype or a lot of talk and a year or two ago now, it feels like everybody's on board and they're figuring it out. Natan: Feels like people are doing things, Liz: feel like people are doing things and they're really able to talk about the how. How are we cleaning data, right? How are we analyzing what are we doing on that front? I think the other reality is that we are now in a place where the. Department of Defense's budget has been, has just been, tipped over $1 trillion for the 2026 budget. So the recent legislation passed in Washington. Is all about the defense industrial base and there is a lot of, bipartisan nonpartisan support for this re industrialized agenda. And the defense piece of that is an important piece of that. I think the other third piece, which you know, you dug into in both the panel at the Industry Studies Association and the panel you moderated at Reindustrialize is technology adoption. Yeah. That is the big hurdle for the us Yeah. And how are we gonna accelerate that at Natan: and the scale that we needed them . Liz: and at scale is another major theme throughout this. Natan: Yeah. Liz: When you hear that the US produced a hundred thousand drones last year and the Chinese produced a million. Speaker 4: Yeah. Liz: How that scale just Yeah. That scale. And there's a technology challenge. But it's a technology at scale challenge too, right? It's a how do we build that capacity here? So a lot of real time sensitive issues. And also I think and momentum. And then as you said, I think the headwinds of the tariffs is a, is very real too. And we're starting to see some signs of that. Natan: So for those of you who don't know. Liz, an is an expert about Americans workforce and has been doing work actively on Manufacturing research for many years. But with your perspective on policy, how do you see the recent sort of changes in tariff kind of play into what America should care about, which is getting the industrial base up to levels that is competitive as a, from a commercial standpoint? Also from national security perspective, both go hand in hand and it's not very clear. We heard a lot of different answers. Liz: I think on one level I would say there has been clarity around the issue of how important Manufacturing is for national and economic security. Yeah, I'd say that's in Natan: consensus. Liz: There's consent. We saw the Biden administration, we've seen the Trump administration, and we're investing in. Semiconductors. Were figure, were investing in critical middle mineral capabilities. Ship building, defense industrial base, a whole host of areas where there is a lot of agreement that we need to build capabilities for national security purposes. And the disagreement is in the how. In many ways is it, is it tax incentives? Is it tariffs? Yeah. If it's tariffs, which we, there's a place for tariffs again, for national security purposes, for, ensuring fair trade practices. But if it is tariffs, are they strategic and focused on, building industrial capacity in areas that are critical for the country, or are they. Scattershot, which I think is less productive, but the fact is there is momentum here. And what's happening, I think is a focus on the how, which is what, how are we gonna do this? We are short already 400,000 workers right now. Yeah. We need to build out that we, as you, you've said all along the technology adoption, particularly among the SMEs, which are 90% of the establishments in the country. How are we gonna do that scale up? How are we finding the capital for scale up? In the country. Another area where historically our capital providers have preferred asset light investments, but we're seeing a shift there, right? And so that's really interesting. Exciting. Natan: It just seems like you gotta invest. So you see a big companies announcing plans to come back. Most recently, I think last week, apple said it's bringing back more things, not all the things, Liz: which can we just be clear? We don't want all things. I don't think, also I'm Natan: clear that we can, even if we want to, and we can, Liz: right? If we can't, but we really need to be focused on the value added Yeah. Production of things that are gonna actually support good wages and quality jobs. We, I think we don't wanna be competing in, toy production with China. I don't think that's really a great use of US skills and technology, et cetera. Natan: So if we focus on, the industrial defense base, now we're seeing Lu Manufacturing and the Defense Innovation Unit. Talk about that a little bit. What is changing in that landscape? What are we seeing? What are we hearing there? How are they bringing in this kind of new waves of technology to answer the needs of the DODs industrial base, but beyond that as well? Liz: I've always said I think one of our strongest areas for workforce training and Manufacturing has actually come out of DOD. Yeah. They have been on top of this topic for over a decade because they've seen the shortage in their own, for their own needs in, in their own, in the industrial base. So I think there are a lot of interesting programs that we can scale and build from that DOD has supported over the years. I think one of the things we're seeing. In the training, and this is some work that MIT is doing supported by DOD, is that the skills needed going forward. We used to have this real division between. What? What do you learn on the shop floor? What are you learning in terms of hands-on skills in vocational training, maybe in community colleges? And then over here were the engineering skills that you'd learn in your four year college degree or your advanced graduate school. I think now what we're really pushing and what colleagues at MIT are pushing, led by John Liu is a melding of those two things. So let's bring the vocational hands-on training with the engineering principles together and train the next generation in those skills. Because the skills, obviously this is all removing toward, a wholly digital production system. And that skillset is, needs both of those things to fully work. And obviously the work you do at, with tulip's on that front line and brings all of that to bear for the worker. Yeah. So I think that's, to me, a really interesting area. I don't know what you, what your thoughts on that. Natan: Pre industrialize, I moderated the panel and the title was AI Automation and Productivity, which basically mean we could talk about whatever we want, this kind of thing. And broad topics and, but we had great people on it. We had Simon Faed who runs forec. It's new Robotic as a service company, and. Aiden Madigan Curtis, who is a general partner at Eclipse, but used to run production for large program like the Apple Watch for Apple, and spent a ton of time in China doing that. And Lucian Bald was the CEO of Honeywell, industrial automation behemoth. So it was like good set of people and I think the gist of it was really centered around the labor productivity equation at the end of the day. 'Cause the problem, I think a lot of people are confused that we may not have the technology. While it's true that we have lost some, and I'll refer to that in a second, it's really that the technology is here. We have a problem implementing it and where we implement it and how we implement it. And the China has more people with a very clear labor arbitrage that is in their favor. Right And coming up on four decades of experience that started from expat coming over to people who are now well-trained. And this is not in just in China. This is across the region. So more factories with more automation was built for a longer period of time. Now it's all coming to roost. And so to say we're modernizing America that, we have to realize that's the starting point. So it's like cheaper, more automated with more knowledge than we can pull and Liz: at a scale. At a scale that is, and at a scale that Natan: is, yeah, they even have more energy, Liz: right? Yeah. Natan: So there's a lot of themes in this panel. We were talking about the, how an ecosystem needs to increase the industrial capacity. And I was talk, the example I was giving is this is the first year that more iPhones are exported from. India from the factory in Chennai and Foxconn was able to do that 'cause they also brought in the entire supply chain with them. And there is this thing, the world I predict is gonna be talking about, which I I dunno if that's a good term, but nonetheless it's a term I'm gonna use. It's like kind of supply chain relocation because I don't believe that all the trade war, they're gonna have some impact, but they're not gonna undo unr like decades of supply chain that is intertwined in. It's kinda working, even if it's right, more expensive by X percent, 15 to 50, that is gonna roll on to different markets and different pieces of the value chain. But I think the ability to see, and I think it was fairly quickly, I think it's like a order of magnitude of five, six years. How is that possible? It's because Foxconn at that size has the supply chain. If you talk to the old Suzanne, who is Aiden's partner at Eclipse, he's talking about building an American foxcon. But what. What is that? We don't have the million people who works for Foxconn, right? I think there are about a million people now. In one company. Yeah. Liz: No, we have to do it differently, right? China has about a hundred million workers in Manufacturing. We have 13 million in the us Yeah, so that's seven x. We graduate 70,000 engineers a year. They graduate 600,000 a year. Yeah. So this, we've gotta be very strategic very focused. I personally think that we can through. Use of technology and innovation. We can leapfrog a lot of the existing technologies. We are gonna find ways to do this, that are increasing yields and increasing productivity and, doing it in a way that makes the US quite competitive. But it's not gonna be, across the board, let's put tariffs on everything and anything. I think that's, we're gonna see that really hurt our small, medium-sized worker. Firms. We talked about skill. Natan: You quoted like really important numbers and the Palantir CTO Sham, he was really talking about how we're in the Bush League, that actually us is the underdog now. Liz: Oh. I think you could argue that pretty forcefully in a lot of different ways. This is why there's a sense of urgency. I think people get it and people get it. Across the board and the place that we're leading, obviously right now on this is with defense with a national security lens. Yeah. Which we've done in the past. And so many of these technologies that were discussed at re industrialized, for example, are dual technologies, right? Both civilian and defense. So we saw electric aviation, we saw EVs, we saw a lot of autonomy, drones, et cetera. That placed again to the strengths of a demand signal. To these markets. And I think that's where we're seeing a lot of movement. I will say one of the things that I came out of the summit with, through a lot of the presentations and things, is part of what we have to do as a country is figure out how to get out of our own way. Natan: Yeah. Liz: We've got a lot of Byzantine processes. Defense department. Somebody quoted at some point said. There's 200 different entry points for an innovation agenda. At dod, there's, the contracting challenge, there's the fact that if you're a provider of, cloud-based technologies or something like that, it takes you, I think it's like a three year process to actually. Be authorized by the Defense Information Systems Agency to cost a couple million dollars. All of these things are very problematic for how we're going to actually revamp. Natan: So Agility is the name of the new game. It's if you don't return to agility, arsenal of democracy back in the day was, the president picks up the phone. Oversimplifying this says, Hey, we need to build whatever tanks and planes and whatnot, but the industrial base was ready for that, so it wouldn't matter otherwise. And you were talking about the time it takes like to, innovate within DOD, but one of the themes we were talking about in the panel, in general, in the events is the time it takes to get just a normal civilian grade type of factory. Zone built, commissioned hire the people, train them. And even if you can do that, retain and make sure that you keep and grow the workforce. And that's not easy. And to me it like goes back to agility because if that doesn't change, it's the same, it's the same phenomena. Only distributed if you compare it to the dod, centralized, Liz: yeah. But I, and I think states are taking steps on that front. Natan: Yeah. Liz: California, Michigan, yeah. Has taken some steps. Yeah. Try and figure out how we balance out, labor and environmental interests with national security interests and and build more. That's the theme. Natan: Yeah, it's a little bit concerning, but at the same time, extremely exciting because there's all this action that is happening and people are talking about it and putting pen to paper and starting to do real work. Knowing that I don't know. I think people have gotten used to disruption. So there've been like a sequence of black swan events and it's like something will happen, but they're still working and people started to work right on, on doing the new thing. And you see it with the neo primes the Andre and the Adrians, and you see it with so that's like. Encouraging 'cause you see like real hardcore tech coming through. You see it with the healthcare innovation. I know now a lot of the res core research has been hurt from budget perspective, but still great companies are doing amazing things in the private sector. Liz: And we have I think positive signs for example, the effort to rebuild semiconductor Manufacturing in the country, right? That is a major bipartisan effort. A few years ago, and now we see Tesla placing orders with Samsung in Texas. We see Apple placing orders with TSMC in Arizona. These are. Those are very positive steps. Like we set a goal Yeah. To build that capability. We're now building sort of frontier chips in the country. We're seeing demand, respond. Those are positive signs. It can be done. And I think we and the economy see that Natan: feels humming. Job report was not as bad. GDP, I know we're also very concerned about inflation and I'm out of my league here, but also some IPOs are back, God forbid. It's pretty interesting that all of this is still happening. While there's plenty of uncertainty to go on. Yeah. Liz: A lot of uncertainty. I do think we're seeing signs now of some faltering tariffs now on average are 18%. On US manufacturers. The small manufacturers have to pass this on to the customer and Yeah. We're seeing some price increases, but in general, yeah. That we're trending in the right direction. And let me just, you mentioned the r and d piece. You cannot turn to any piece of the Manufacturing agenda for this country and not see a direct line to our r and d capabil. Speaker 4: Yeah, Liz: right. In Bioindustrial, in quantum in Critical Minerals, the way we win is we are gonna be innovating for the long term. And so any cuts that are attacking that capability are really problematic for national security and for this particular agenda. Natan: Yeah, always when this topic comes around, I, I think about the Apollo program and that was not necessarily national security, but de facto, it really was. It wasn't really like dual use but de facto, it catalyzed so many civil industries and huge companies that became pillars of the economy. And I hope we gave the audience a lot of material to think through the summer because come September we gotta get back to work and Liz: absolutely, Natan: I think the name is great re industrializing, but. It's not started new, right? I don't think it ever stopped. I just think it took a different turn. So I hope that at least it's like material to think through, like what the community and what folks are gonna do to come together to take action. 'cause the spring is over and comes fall. There's a new term and we gotta go to work. Liz: Just to beat that theme to death. A lot of seeds have been planted Natan: Yeah. Liz: In that spring. Oh my God, that's a good one. Natan: A lot of seeds are planted in spring. Liz: And so they are, we're ready for those shoots. And I agree with you. I think it's all about looking forward. It's not about looking back. Yeah. And even this whole idea that we're, reshoring capabilities, we're actually de novo building capabilities. Yeah. For things we maybe had for a little while but haven't had for decades. So I really see this as, bringing the best of what the country can bring along with allies and partners. Let's be clear, right? We have a strong companies from other countries that are helping rebuild the semiconductor area. We're gonna be doing that in shipbuilding. That's part of the strategy. Natan: Yeah, I think that's a really good set of ideas to end on and I'll just add one of the themes I've been hearing, 'cause everybody's like China this and China that. I really think people forget that. There are other countries in APAC sometime that are really great and they're amazing partners. Think the Anzac, Australia, New Zealand, Japan, Korea and there's just a lot of power with those country working together and hopefully that will work. And also when we think about it, is if we look around our own neighborhood here in the us, if we think about Pan-American approach to operations in Manufacturing just look south. Central America and South America, if done well in, balancing environment and what operations need, there's just a lot of potential. So I think that, with a lot of potential, at least it's a hopeful kind of tone to end this episode. Liz, thanks for joining. Really appreciate it. Liz: Thank you, Natan. Natan: Have a great summer vacation. Liz: Will do. Natan: And we'll see everyone in the fall and the new season that is coming. Narrator: Thank you for listening to the Augmented ops podcast from Tulip Interfaces. We hope you found this week's episode informative and inspiring. You can find the show on LinkedIn and YouTube or at Tulip dot co slash podcast. If you enjoyed this episode, please leave us a rating or review on iTunes or wherever you listen to your podcasts. Until next time.