As tech summits go, the only thing like last week’s Reindustrialize conference — the name speaks for itself — is last year’s Reindustrialize conference. It debuted in Detroit, a symbolic statement so powerful the event doubled down and returned to Motor City for its second run. With strategic, technological, and business interests flowing with speed and urgency toward hard tech and heavy industry, Reindustrialize — co-founded by the New American Industrial Alliance — is a most well-timed beast.
I got NAIA CEO Austin Bishop and Board Chairman Julius Krein on the phone to chat about the origins of Reindustrialize, the moment for action, and the possibilities of the future. (Our interview below has been edited for length and clarity.)
James Poulos: Why reindustrialize now? Some say it’s too late!
Austin Bishop: It’s definitely not too late. We should have done something like this many years ago, but I think only now is it possible to have a coalition of companies, institutional investors, builders, policy and government leaders who actually care about this stuff because things have gotten to the point where you can’t really ignore the realities of the decisions that we made over the last few decades.
I’m from Cleveland, Ohio. The impacts of some of the trade and industrial policy decisions that were made were obvious to anyone in Cleveland. But I don’t think the broader country has really felt the real costs of moving our production overseas. A lot of places have done great as we’ve moved into a peer services economy — look at Silicon Valley; look at Wall Street.
Photo courtesy Reindustrialize
COVID really accelerated what was going to be an inevitability. COVID hit, and everyone in America felt the supply chain crisis for the first time. There’s been plenty of white papers battling in the marketplace of ideas, but for the first time people actually felt it in the literal marketplace where moms in the Midwest couldn’t get baby formula because the Suez Canal was blocked. No white paper is going to be nearly as persuasive as when people feel it in their pocketbooks.
Folks where I’m from felt this trend long ago when, for example, LTV Steel laid off tons of people back in the late 90s. Those people felt it, for sure. But I don’t think the country as a whole was acutely impacted by these decisions. It’s been slow.
On our end, we think this is the best time, and I think both sides of the aisle are seeing this too. This is the time for us to really push for a change in our posture on the world stage and how we think about our economy and the downstream civic effects of offshoring our jobs.
Julius Krein: Is it too late? It would have been great if we could have done this earlier, but I think things happen because it’s the right time.
I’ve noticed a real shift in the investor world over the last several months of, you know, “this is the most interesting game in town,” and a lot of these deficiencies that Austin mentioned are hitting in other ways. The AI boom is very interesting for a number of reasons, but one reason is that all these companies are more capital-intensive now, whether it’s energy or other industries. I think if you want to make AI more than just making dumb videos on the internet, you’ve got to think about AI-enabled, advanced manufacturing in the physical space.
So, for all those reasons, it is the right time, and I think the opportunities look bigger than they have in my lifetime. But there are also big challenges out there.
JP: You talk about timing, and the iron logic here is that you can’t reindustrialize unless you first deindustrialize. So let’s talk a little bit about deindustrializing. The blame game can be lame, but do you see some real villains here? Who is responsible for getting us into this situation? At a macro level, why is it that the U.S. was put on the path of seeing deindustrialization as the future?
AB: I’ll give the Trump answer. The Chinese are, with a lot of their industrial policy, forcibly deindustrializing us, but I don’t blame them. This is the game theory of it. It’s smart, and I wish we had leaders who were that smart. Not to the point where we’re going to forcibly deindustrialize other countries. Our group does not exist to deindustrialize any other country.
I just want our country to not be deindustrialized anymore. Our pushing for policies that incentivize or allow offshoring implicitly created the situation that we’re in now, and I don’t want to point too many fingers, but I was in hedge funds for a long time. Look at the valuations of these businesses. And really the multiples that you see on them only make sense when you’re in the world that we’re in now, where so much of the labor costs, for example, are overseas.
JK: There are certain individuals, organizations, companies one could name that were perhaps more enthusiastic about deindustrialization than would ever be warranted, but I think it’s probably less about villains per se than just the mindset that originated after the Cold War or even the second half of the 20th century.
I don’t think U.S. policymakers ever really imagined that a country could pursue economic development with the goal not to make individual consumers or individual stock market investors wealthy, but to actually build industrial and technological capacity and skills with the goal of geopolitical dominance and not merely financial enrichment.
On a related note, there’s been this view that free markets are when the U.S. government does nothing, but maybe what’s happening is that the absence of U.S. involvement just meant greater Chinese Communist Party intervention in the shaping of our markets. I think a lot of the free-market stuff obscured what was a pretty coordinated, almost unprecedented campaign of market manipulation in the U.S. by the Chinese Communist Party. So a lot of people, particularly on the right, perhaps dropped the ball.
AB: These are not McKinley respecters. Even with what happened around China joining the WTO, no one was saying that we need to lose these jobs to China because, on net, it’s going to be better for the economy. Most people explicitly said they would not lose jobs due to China’s permanent normalized trade relations and China joining the WTO, and we then went on to lose 10 million jobs over the next decade and a half.
Photo courtesy Reindustrialize
JP: Well, heading into the 70s — and you’ve got this from some of the right as well as parts of the left, was industry is bad for human beings. It destroys the environment, it makes life uglier, it wears people down, it’s dehumanizing — the Christopher Lasch broadside against industrialization.
So, when you look at technology, you look at how tech was built up as a savior or an alternative to industry. And now you have a lot of guys thinking, “Well, wait a minute. We definitely don’t want to get rid of tech, but we don’t want to get rid of industry either.” Yet if we surrender, if we sacrifice humanity at the altar of industry and technology, that’s also bad.
So, how do you identify that middle zone of harmony, and how do you implement that in the world?
JK: First, the environmental movement. Certainly, there was something real there when the rivers were on fire. It wasn’t like nothing needed to be done. But it went off in and, to some extent always contained within it, some very strange directions.
Initially, the environmental movement was the coal guys against nuclear. But what’s interesting now is that the environmentalists realize that they went too far and are now pushing for permitting reform. They can’t build renewable energy because of the systems they themselves created. So I think we’re seeing a healthy correction, perhaps. But on a deeper level, what’s interesting is that we think of tech now as software separated from hardware, and I think that that’s a step back.
Designing and building a steam engine is very high tech, or was at the time. Even today, you have to have your hardware somewhere, or else the software will be worthless, like with your iPhone, for example. It’s only as a financial matter that these things can truly be separated.
The most interesting people in Silicon Valley, the most ambitious and talented people, as far as I can tell, don’t want to build SaaS anymore. It’s boring, it’s flattening, it’s uninteresting.
The idea of coming up with a way to build a ship or aerospace stuff better than anyone’s done it — that’s where I think the excitement is, not just from a national security or business perspective, but from an intellectual and human perspective as well.
AB: On the last point Julius made, the types of businesses, especially at the earlier stage that we’re talking about that are making physical things, rockets, supply chain logistics businesses, tooling, aerospace parts, even all the way to agriculture and food production — these are just way more charismatic businesses to build in the first place, and at the risk of being unserious, I do think that in America, at least in the 20th century going forward, tooling always wins.
Everyone’s getting really excited about these businesses that we’re talking about here, whether it’s in aerospace, defense, manufacturing, all the above, energy. You have 20-year-olds going out and starting nuclear businesses, nuclear power plant businesses. That person will have a way easier time recruiting talent, and we already see it. These people have been massively charismatic and massively successful in building out early teams.
Now, that again is at the very early stage. We have to say not that those guys aren’t serious, but that we have problems we must solve right now.
I’m not completely convinced that most of the problems we face right now are tech problems. China is not ahead of us in manufacturing because they have some space-age technology that we don’t have. In fact, most of the tech they have was stolen from us. Most of the problems we face both on an industrial level and downstream of that are simply just because we can’t make stuff and therefore, we move stuff overseas. But the bigger problem is the policies that we created that have led to the situation where some of these jobs go overseas.
JP: Coming out of a substantial, although not total, swing of support in and around tech toward Trump and the potential of a fundamental effort at reform, it’s always a risk to bite off more than you can chew, but there does seem to be a collective sense that this is the time to take the big swing. Bearing that in mind, where do you want to be in a year from now? What can we expect across the organization in terms of your agenda and ambitions for the new year?
Photo courtesy Reindustrialize
JK: Longer term, we’re focused on everything from deregulation and permitting reform, both for energy and industry, as well as on the investment side. There’s been a bipartisan proposal kicking around for a new development bank that we think could be especially useful in addressing some of these issues across industry sectors. The Biden administration pioneered some models to get more private capital into certain sectors and key areas, but they were not as successful as they could have been.
The new administration can do that much bigger and better. Especially, we have an investment banker at the Department of Commerce and an investor at Treasury. I think they get this very intuitively and could really hit it out of the park. The White House could easily invest in these physical sectors as well, and I think that that could be a huge win.
AB: We’re growing very quickly. We have all these great companies joining, from old industry, new industry, high tech, low tech … all these great folks from the investor world.
A real measure for success a year from now is continuous growth in this coalition that we’ve built. Being able to point to the meaningful impact we had on the regulatory front on policies that incentivize more companies to be more competitive, both on the procurement side as well as incentivizing more investment in this space, is crucial.
On the summit side, we were blessed to have four different states bidding on the summit. We’re building the summit into the premier forum for senior leaders across capital companies and government. We want to have senior people from both sides of the aisle. We have a lot of folks from the admin we’re very friendly with, and then there’s people in the company and investor world as well.
JK: One more thing I’ve noticed in doing this is there’s a divide in mindset or even “branding” across the U.S. hard tech and manufacturing landscape right now where we don’t think of companies in Ohio — your legacy manufacturing — as tech, but they are, or they could be, or they need to be.
Likewise, we have a lot of Silicon Valley stuff that thinks of itself as tech. But now they need to scale up. They need to build those factories in Ohio, Michigan, West Virginia, and elsewhere. They’ve got the technology, they’ve got the IP. Now it’s time to actually build that physical infrastructure, which is the hard part to fundraise for. We need to bring these two sides together.
AB: The main takeaway is there’s something bigger than any of us individually happening, and when you ask that question again, “Why now?” we’re not really asserting this is the right time. There’s a massive wave. It just demonstrably is.
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