1 00:00:00,000 --> 00:00:06,760 Kevin Mako: Hello, product innovators. Today we learn from a two-time manufacturing author on bringing back manufacturing for hardware startups. 2 00:00:10,360 --> 00:00:19,380 Narrator: You're listening to the Product Startup Podcast, the show that helps bring your product idea to life by chatting with successful inventors, 3 00:00:19,780 --> 00:00:28,060 Narrator: product developers, and hardware industry professionals. Our goal here is to get to the bottom of what makes a product successful, from initial 4 00:00:28,060 --> 00:00:37,700 Narrator: idea to getting your product on store shelves. We're taking you step by step to build. a functional product and scale your product business hosted 5 00:00:37,700 --> 00:00:46,040 Narrator: by Kevin Mako, one of North America's leading experts on hardware development for small product businesses. Now, on to the show. 6 00:00:47,300 --> 00:00:53,060 Kevin Mako: Welcome back, everyone. Today, I'm very excited to introduce Nigel Southway to the show. Nigel is the author of two books. 7 00:00:53,240 --> 00:00:58,780 Kevin Mako: The most recent is called Take Back Manufacturing, and his original was called Lean Manufacturing back in 1992. 8 00:00:59,620 --> 00:01:09,280 Kevin Mako: He has spent 55 years in the manufacturing space. also the chair of the chapter of Society of Manufacturing Engineers, which I was also part of, starting over 10 years ago. 9 00:01:09,620 --> 00:01:16,960 Kevin Mako: Today, Nigel is going to share some valuable knowledge in how inventors, startups, and small manufacturers can decide between offshore and onshore manufacturing, what the 10 00:01:16,960 --> 00:01:25,800 Kevin Mako: pros and cons are for each choice, explain short-run manufacturing for new products, and how we can bring back manufacturing to local communities. Now, on to the episode. 11 00:01:26,960 --> 00:01:35,140 Kevin Mako: Hey, Nigel, welcome to the show. Great. Thanks for having me. Very excited to talk to you about local manufacturing for new invention ideas today. It's great to see you again. 12 00:01:35,400 --> 00:01:44,100 Kevin Mako: It's been over 10 years since I last saw you. You invited me into the Society of Manufacturing Engineers to give a talk. And I've seen you do talks there. Great work that you do. 13 00:01:44,320 --> 00:01:51,200 Kevin Mako: You've been in the industry for 55 years, starting in aerospace. Amazing. I may be all, but I'm still vital. 14 00:01:52,660 --> 00:01:58,020 Kevin Mako: Well, and of course, you're the author of the big book that just came out, Take Back Manufacturing, which is a great topic. 15 00:01:58,020 --> 00:02:03,220 Kevin Mako: but it's really key, I think, for startups, inventors, scale-ups, anybody in the hardware industry 16 00:02:03,220 --> 00:02:07,840 Kevin Mako: that's looking to develop product and sell it in North America, this is key because we're talking 17 00:02:07,840 --> 00:02:15,000 Kevin Mako: about actually starting to produce your product locally, possibly even continuing to produce your product locally and some of the pros and cons around that. 18 00:02:15,100 --> 00:02:20,860 Kevin Mako: So we'll dig into that today. First and foremost, give us a bit of your background from 55 years ago to today. How did you get to 19 00:02:20,860 --> 00:02:25,600 Nigel Southway: where you are now? Well, you can tell by my accident. I wasn't born in Canada. I grew up in Bristol, 20 00:02:25,600 --> 00:02:29,640 Nigel Southway: of England and I was an apprentice from the age of 16 at the British Aerospace Corporation. 21 00:02:30,120 --> 00:02:36,860 Nigel Southway: So I worked on Concord and communication satellites and I came to Canada actually to work in the aerospace industry in about the late 70s. 22 00:02:36,960 --> 00:02:44,580 Nigel Southway: As a senior engineer, I had already worked on various programs. And I worked on the Annex Sea satellites, communication satellites for Canada 23 00:02:44,580 --> 00:02:50,680 Nigel Southway: and then also the some components for the space shuttle arm, for the manipulator arm for the space shuttle. And then I moved to Motorola. 24 00:02:50,920 --> 00:02:59,200 Nigel Southway: And I think the most important part in the 1980s, I was at Motorola as a director of manufacturing engineering. So I'm a manufacturing engineer. 25 00:02:59,520 --> 00:03:07,620 Nigel Southway: We were doing a lot of stuff in electronics then that was different. This is the sort of decade where manufacturing changed from batch to just in time and one-offs 26 00:03:07,620 --> 00:03:15,680 Nigel Southway: and a lot of new technology and concepts. And I was in the room when Six Sigma was invented. It was exciting times in the 80s to be in corporation like that. 27 00:03:15,840 --> 00:03:22,660 Nigel Southway: And then I escaped as a consultant with two guys from Hewlett-Packard, and we started our consulting practice talking about what became lean manufacturing. 28 00:03:22,660 --> 00:03:28,580 Nigel Southway: and then I wrote a book in 92 on Lean Manufacturing, which is an old book that's out there. So this is my second book. 29 00:03:29,020 --> 00:03:36,760 Nigel Southway: But having had a very, very exciting career as a consultant, I was in China for actually five years moving product to China. 30 00:03:36,920 --> 00:03:41,540 Nigel Southway: I came back and was horrified, but I'd been part of to see the hollowing out of our manufacturing base. 31 00:03:41,700 --> 00:03:50,160 Nigel Southway: We got together in the Society of Manufacturing Engineering chapter and talked it up and decided that we should take it back. And so that was a genesis for Take Back Manufacturing. 32 00:03:50,160 --> 00:03:59,880 Nigel Southway: So this book is really a collection of thoughts and ideas from 2011 onwards. And that's where we met, Kevin, in that chapter meeting. Yeah, that's right. And so that's my history. 33 00:04:00,240 --> 00:04:07,880 Nigel Southway: I've had a great time in manufacturing. I've done a lot of new products. I've launched a lot of new technologies into manufacturing as a manufacturing engineer. 34 00:04:08,000 --> 00:04:15,860 Nigel Southway: It's disappointing that we've lost so much ground in manufacturing locally. And quite frankly, we need it back if we're going to be competitive in new products 35 00:04:15,860 --> 00:04:22,340 Nigel Southway: because you need a strong manufacturing base and all of the infrastructure that goes with. it if you're going to incubate new products properly. 36 00:04:22,680 --> 00:04:29,740 Nigel Southway: You can make anything work, but that's not really the best choice. Yeah, you can add new technology for rapid prototyping, but TBM is about 37 00:04:29,740 --> 00:04:34,160 Nigel Southway: putting back our manufacturing base and having the right to own products in 38 00:04:34,160 --> 00:04:39,680 Kevin Mako: our backyard. It's great to see that there's so much technology that is enabling some of this capabilities, 39 00:04:39,920 --> 00:04:45,340 Kevin Mako: not only of doing the design, engineering and prototyping, but getting into short batch manufacturing 40 00:04:45,340 --> 00:04:54,820 Nigel Southway: and then even beyond to actual sustainable, profitable manufacturing. Yeah, it's very mobile. I mean, manufacturing is mobile, services are mobile, new technology is mobile. 41 00:04:55,180 --> 00:05:03,560 Nigel Southway: It's a question of whether you want to continue to globalize your thoughts, whether you want to have a localized capability to produce your products. I mean, we've all done it. 42 00:05:03,580 --> 00:05:09,720 Nigel Southway: We've all gone offshore for manufacturing. It does work, but is there a better way and is there a better way for our economics? 43 00:05:10,080 --> 00:05:14,840 Nigel Southway: Is it better for the next generation to have an integrated economy of manufacturing 44 00:05:14,840 --> 00:05:21,720 Kevin Mako: resources and services. That's my take. And this is where it's critical, especially as a new hardware developer, somebody's 45 00:05:21,720 --> 00:05:25,680 Kevin Mako: about to take that leap from you finished all your engineering, you've gone through your 46 00:05:25,680 --> 00:05:32,360 Kevin Mako: prototyping rounds, you've got a great product you're ready to produce, to carefully consider what options are better for you. 47 00:05:32,580 --> 00:05:40,920 Kevin Mako: Is offshore the right option, is onshore the right option, or potentially a hybrid between those two? And one of the things that is quite common 48 00:05:40,920 --> 00:05:44,820 Kevin Mako: in this day and age is most people automatically assume that offshore is the de facto, 49 00:05:45,560 --> 00:05:50,480 Kevin Mako: methodology without even taking the time to look carefully at the numbers, which is something 50 00:05:50,480 --> 00:05:57,920 Nigel Southway: you're a big proponent of. In the book, I described the science of supply chains and why long supply chains are 51 00:05:57,920 --> 00:06:04,840 Nigel Southway: wasteful and non-lean and why short supply chains are better. Obviously, that's what the book's about. It's not just we need manufacturing back. 52 00:06:04,900 --> 00:06:11,500 Nigel Southway: I didn't call it welcome back manufacturing. I called it take back manufacturing for a reason. So what you've got to do is say, okay, we get it. 53 00:06:11,620 --> 00:06:18,740 Nigel Southway: We understand the long supply chains are more wasteful. how do we participate with that? You look at the technologies today. There is a lot of technology 54 00:06:18,740 --> 00:06:24,460 Nigel Southway: for rapid prototyping, 3D printing, computerization of the design process helps you with that. 55 00:06:24,620 --> 00:06:33,940 Nigel Southway: But after you got the product developed and made a prototype one-off somehow, how do you commercialize it? How do you get all the parts and supply together and become competitive? 56 00:06:34,120 --> 00:06:42,040 Nigel Southway: How do you make sure you can make the product work without into the market, without a lot of inventory, a lot of lead time, and with all the things that go wrong with a long 57 00:06:42,040 --> 00:06:50,160 Nigel Southway: supply chain? Wouldn't it be better if you run the numbers and prove to yourself, question yourself as to whether you should go offshore by running the numbers. 58 00:06:50,440 --> 00:06:58,300 Nigel Southway: There's plenty of tools out there to take a look at the supply chain. Plus, don't assume that the only supply chain available is offshore. In the next probably five 59 00:06:58,300 --> 00:07:05,000 Nigel Southway: years, there'll be a lot of capability in some sectors for localizing manufacturing. It's like don't assume offshore is the only answer. 60 00:07:05,180 --> 00:07:12,700 Nigel Southway: Don't assume that it's the cheapest way to go. Things are changing. The U.S. are aggressively pursuing reshoring. Canada slur at it, which are 61 00:07:12,720 --> 00:07:22,280 Nigel Southway: I'll talk about in the book, but the hope is that in the next generation of product, probably five years, you would be probably enjoying at least your first two years of production 62 00:07:22,280 --> 00:07:29,300 Nigel Southway: locally and only going offshore, not because you need cheaper manufacturing, but because your product's selling in that market. That's the point. 63 00:07:29,440 --> 00:07:34,040 Nigel Southway: You may go offshore for a different reason. You want to localize manufacturing in their country. 64 00:07:34,040 --> 00:07:36,860 Kevin Mako: That's a good reason for going offshore to be close to the customer. 65 00:07:37,600 --> 00:07:45,740 Kevin Mako: Well, let's talk about some of those pros and cons, particularly the cost, because a lot of people in they're looking at manufacturing, they focus so aggressively on unit cost. 66 00:07:46,140 --> 00:07:52,240 Kevin Mako: One dollar versus a dollar 50. Okay, I want the dollar unit offshore. But there's a lot of hidden costs, both direct and 67 00:07:52,240 --> 00:08:01,940 Kevin Mako: indirect, that aren't considered by a new manufacturer when doing this debate between offshore and onshore. What are some of those tactical indirect costs that 68 00:08:01,940 --> 00:08:07,480 Kevin Mako: you should really be factoring into your calculation? And we can then talk about some of the benefits down the road because there's 69 00:08:07,480 --> 00:08:11,420 Kevin Mako: also some not only direct but indirect benefits of localizing too. 70 00:08:11,440 --> 00:08:18,700 Nigel Southway: So let's start with the cost. then we'll move on to benefits. Okay, historically, the buyer would have looked at the price, the acquisition price from the supplier. 71 00:08:18,980 --> 00:08:24,360 Nigel Southway: But when you add up the transportation costs, the tariffs, the support costs, the inventory costs, 72 00:08:24,640 --> 00:08:34,040 Nigel Southway: just the general issues with adding more inventory because you've got to because of the long lead times. And also the confidence that our supply chain is secure and reliable. 73 00:08:34,040 --> 00:08:39,680 Nigel Southway: When you put that into a math model, which we've got, we've got balanced sourcing models that we mentioned in the book. 74 00:08:39,680 --> 00:08:48,720 Nigel Southway: I introduce you to some people that are good at this stuff by showing some examples. When you run those numbers, it doesn't make sense to go offshore for quite a few commodities. 75 00:08:49,280 --> 00:08:57,080 Nigel Southway: And so that's the message. You must run the numbers. You must embrace the options because if you've got a product with a low labor content, 76 00:08:57,320 --> 00:09:03,880 Nigel Southway: and by the way, if you do industry 4.0, if industry 4.0 is undertaken, the labor content will go down. 77 00:09:04,080 --> 00:09:12,740 Nigel Southway: Therefore, the interest in going to a low-cost labor country diminishes. there's no percentage anymore and going offshore because if you're chasing low labor cost 78 00:09:12,740 --> 00:09:21,020 Nigel Southway: and you've already eliminated it with automation, why would you do that? So when you run these numbers and factor in industry 4.0 into your calculations, as we have 79 00:09:21,020 --> 00:09:27,160 Nigel Southway: done, that's why TBM is going to make sense because the future holds no barrier for reshoring. 80 00:09:27,720 --> 00:09:33,560 Kevin Mako: And those are fairly direct costs. These are costs you probably have to put on your balance sheet. Yeah, absolutely. 81 00:09:33,860 --> 00:09:40,440 Kevin Mako: So then you also have to think there are some indirect costs as well. There are complexities with dealing with offshore in a number of different ways. 82 00:09:40,560 --> 00:09:48,100 Kevin Mako: Just even factor in, think of parts replacements. If something goes wrong with one element of your product, how long is it going to take you to 83 00:09:48,100 --> 00:09:51,900 Kevin Mako: fix that issue, to change those items, to modify that? 84 00:09:52,040 --> 00:09:59,160 Nigel Southway: What other issues are unforeseen things do you deal with? What legal issues do you deal with? We've gone offshore. I was at the other end of a long pipeline. 85 00:09:59,300 --> 00:10:01,580 Kevin Mako: I was in Shanghai for five years. I flew parts. 86 00:10:01,980 --> 00:10:07,040 Nigel Southway: It cost a fortune, but we got the parts to the customer. Yeah, we've done it many times too. We've all done it. 87 00:10:07,240 --> 00:10:14,020 Nigel Southway: We've had to work all kinds of hours and pay extra for a premium build offshore. The Chinese love that. They make money doing that stuff. 88 00:10:14,240 --> 00:10:20,760 Nigel Southway: So no problem with doing offshore. It can be done. But it's expensive and it will continue to get expensive. You have to fly people out. 89 00:10:20,920 --> 00:10:29,400 Kevin Mako: You have to talk in a different language. You're in a different time zone. It goes on and on. The other thing, too, is that those costs over time are also 90 00:10:29,400 --> 00:10:36,300 Kevin Mako: rising because as a global network gets tighter and as more is getting shipped, what is happening in China in particular 91 00:10:36,300 --> 00:10:45,440 Kevin Mako: is that the labor costs that used to be fairly inexpensive continue to creep up over and over. So what may start as advantageous by a few percent actually starts over 92 00:10:45,440 --> 00:10:49,860 Kevin Mako: time tilting the scale, but by then you're too heavily invested. You've already got that in place. 93 00:10:50,020 --> 00:10:54,940 Kevin Mako: So now it's actually becoming in a direct cost basis, more expensive, potentially overseas 94 00:10:54,940 --> 00:10:59,400 Kevin Mako: if those costs are rising continually, whereas local and onshore could have actually been a better 95 00:10:59,400 --> 00:11:05,500 Nigel Southway: option if you had planned out a five or a 10 year model as opposed to just looking at your next order that was coming through. 96 00:11:05,620 --> 00:11:12,940 Nigel Southway: I got to tell you that that's your direct opportunity costs, but you take a look at it from an economics point of view. You may not have an option as a 97 00:11:12,940 --> 00:11:17,580 Nigel Southway: manufacturing user because tariffs are going to go up. I mean, the government's got to employ people 98 00:11:17,580 --> 00:11:21,780 Nigel Southway: and it's got to stop this massive amounts of imports that they have to pay for. If you look at it 99 00:11:21,780 --> 00:11:26,220 Nigel Southway: in the macro level, the economists, the politicians will take care of it for you. You won't have 100 00:11:26,220 --> 00:11:31,240 Nigel Southway: a choice. You're going to have to come home because those tariffs are going to kill that math model I've just described. 101 00:11:31,660 --> 00:11:39,640 Nigel Southway: So not only does it make sense from a business point of view, it's beginning to make sense from an economics and a political, national point of view. 102 00:11:40,080 --> 00:11:47,280 Nigel Southway: You put those two components together. When you've got a choice on, when you don't, you've got to take a hard look and you've got to support your local suppliers. 103 00:11:47,520 --> 00:11:53,440 Nigel Southway: The other thing is that we all have a responsibility if we're serious about this to build a local community of manufacturing. 104 00:11:53,600 --> 00:11:59,840 Nigel Southway: I'm not saying you should lose your shirt on it, but it's a consideration. So there's going to be a lot of capacity added locally. 105 00:12:00,100 --> 00:12:07,340 Nigel Southway: For example, semiconductor industry is already biting a bullet. They're moving back, okay? Not just strategically, but practically as well. There's a lot of 106 00:12:07,340 --> 00:12:15,040 Nigel Southway: industries that are bringing and reshoring all the white products in GE are going back. They're not coming to Canada. They're probably going to the southern states in Mexico. 107 00:12:15,300 --> 00:12:23,700 Nigel Southway: But if you look at it from a USMCA point of view, it's going to be a reversal of offshoring. Talk about some of the opportunities with local, because there's quite a few. 108 00:12:24,040 --> 00:12:32,060 Nigel Southway: Big time. Anything where it's closer to the customer and its custom is going to to come back. After all, we like custom product. We like things that are tuned to our particular 109 00:12:32,060 --> 00:12:40,020 Nigel Southway: needs. Metal parts, furniture, kitchens. I mean, all the kitchens are made locally more and more than they were before. There are very few kitchen components. 110 00:12:40,340 --> 00:12:48,340 Nigel Southway: I mean, units are now made offshore. All the components come in as items as components and they're assembled. And I've just been through that with a very large supplier. 111 00:12:48,660 --> 00:12:57,560 Nigel Southway: So you're going to see a lot of what you would call custom product immediately be resured. Because if you put Kat into the picture and you put Industry 4 in the picture, your 112 00:12:57,560 --> 00:13:05,540 Nigel Southway: Relat times are going to be days, not weeks. Never mind about a month or two going offshore. So people want it now. They've got a short window of expectation. 113 00:13:06,100 --> 00:13:13,040 Kevin Mako: So anything that's custom, even in the automotive industry, it'll be some stuff, there's custom that you'll get locally. Well, I like that you mentioned time as well. 114 00:13:13,500 --> 00:13:20,720 Kevin Mako: Very quick to communicate. Same time zone. Easy to ship things or move things around. Easy to visit the factory or vice versa, if necessary. 115 00:13:20,940 --> 00:13:27,540 Kevin Mako: Easy to bring the engineering team in with the manufacturing engineering team, in with the inventor. So if you're a hardware startup out there, you've got to consider. 116 00:13:27,560 --> 00:13:33,820 Kevin Mako: these elements that come together to help you get off the ground. And one of the big things that I've 117 00:13:33,820 --> 00:13:42,280 Kevin Mako: talked about on the show, I'm a huge fan of, to me, it's one of the big major tips of the spears of taking back manufacturing, but it's short run production. 118 00:13:42,600 --> 00:13:50,380 Kevin Mako: And this is really a big emerging industry, especially for a hardware startup, because that's the link between a well-designed, well-engineered, 119 00:13:50,540 --> 00:13:55,840 Kevin Mako: well-prototype product and commercialization, short-run manufacturing. And there's a huge amount of 120 00:13:55,840 --> 00:14:00,540 Kevin Mako: benefits to that. First of all, you're starting with a small run, let's say 100 to 500 units 121 00:14:00,540 --> 00:14:08,920 Kevin Mako: of your gadget or invention or whatever else, which is great to get to market. It won't be overly profitable in the beginning because this is your first run. But it doesn't matter 122 00:14:08,920 --> 00:14:13,680 Kevin Mako: because what you're doing there is you're building your feedback loop. You're getting some product 123 00:14:13,680 --> 00:14:21,780 Kevin Mako: to market, testing a certain piece of the community, the market in a very, very small way, getting real people to buy the card and give you real feedback. 124 00:14:22,040 --> 00:14:23,240 Kevin Mako: This is where you start to actually 125 00:14:23,240 --> 00:14:30,500 Nigel Southway: bring it a bit of agile product development into hardware, which has traditionally been tool something up for 10 years and hope it works. 126 00:14:30,660 --> 00:14:37,740 Nigel Southway: And if you want to cycle the design, because you've learned some stuff from the market, you're more able to do that. And you've got a long supply chain 127 00:14:37,740 --> 00:14:47,040 Nigel Southway: full of parts that you probably would like to change. So yeah, flexibility. Obviously, here's the deal. It's flexibility, less inventory, shorter lead time intrinsically. 128 00:14:47,300 --> 00:14:53,060 Nigel Southway: The only thing is you have to work with local suppliers, run the numbers and make sure that you're not going to die too much on cost. 129 00:14:53,240 --> 00:15:00,480 Nigel Southway: But you won't as things go by because the economics is going to take care of that tariffs. And when you run the numbers, you'll be surprised. Let's be real clear. 130 00:15:00,700 --> 00:15:09,960 Nigel Southway: The difference between onshore and offshore in most technology is only about 10 points. When you add up all the costs, the only difference anyway is 10 points. 131 00:15:10,160 --> 00:15:17,540 Nigel Southway: It doesn't take long for that to swing the other way. You only need to do a bad job offshore and do a better job onshore. You've got to that tipping point. 132 00:15:17,740 --> 00:15:24,940 Nigel Southway: You're not double digits even. They can be less than double digits. So it's not hard to see, it's easy to make the decision once you understand the numbers. 133 00:15:25,380 --> 00:15:33,880 Nigel Southway: You may even say it's a little bit more expensive on paper offshore, but it feels better to do it locally. I get more from it. I've got more flexibility, which is hard to quantify. 134 00:15:34,280 --> 00:15:40,820 Kevin Mako: And I'm not investing in over a longer period of time. I've got more business flexibility, not just manufacturing flexibility. 135 00:15:41,160 --> 00:15:45,340 Kevin Mako: Well, and you're leading to the topic of marketing as well. You've got to factor that into your equation too. 136 00:15:45,480 --> 00:15:55,120 Nigel Southway: How does this feel good product weigh into the perceived brand value? the perceived brand equity that you have. Made in Canada, made in U.S. I mean, people are getting more 137 00:15:55,120 --> 00:15:59,280 Nigel Southway: sensitized to that. Obviously, if it's half the price to go offshore, they'll go there. But if it's a 138 00:15:59,280 --> 00:16:06,740 Nigel Southway: small differential and if it's now they can get it or hands on it, they will go, oh, look at the label. It's made here. That's going to be politically aware. 139 00:16:07,140 --> 00:16:12,940 Nigel Southway: There's a lot more political awareness about things like climate change, sustainability, safety, welfare. 140 00:16:13,200 --> 00:16:20,080 Kevin Mako: We're getting much more aware as consumers. And that label made here is going to help sell it to. There's so much 141 00:16:20,080 --> 00:16:27,900 Kevin Mako: power in at least starting production or at least doing parts of your production locally, not only for short run, but many of the things that we've talked about here. 142 00:16:28,520 --> 00:16:34,620 Kevin Mako: The point with this discussion isn't necessarily to say in a de facto scenario that local 143 00:16:34,620 --> 00:16:40,800 Kevin Mako: is for sure going to be the better choice than offshore, but I think the big picture here is that you've got to consider both options carefully. 144 00:16:41,180 --> 00:16:47,680 Kevin Mako: At a minimum, you should be spending the effort, not just automatically jumping to a certain conclusion, to look at both options and see what weighs in. 145 00:16:47,680 --> 00:16:56,500 Kevin Mako: And like I said in the original part of the call, it may end up being even a hybrid, whereas you realize, okay, certain pieces, there's no way it could be cost competitive onshore. 146 00:16:56,640 --> 00:17:01,580 Kevin Mako: Okay, let's get those. But let's do these other parts of the product onshore might be assembly, might be certain 147 00:17:01,580 --> 00:17:09,540 Kevin Mako: pieces of the project, whatever it might be, and have that kind of hybrid approach. But the key is, you might as well start local. You might as well start short run. 148 00:17:09,540 --> 00:17:17,660 Kevin Mako: You should not be focusing on profits as a startup in any case on the unit costs. You are trying to build equity in your product, trying to build technical. 149 00:17:17,680 --> 00:17:24,080 Kevin Mako: technology, equity, client base, and brand recognition. These things are absolutely critical in order to launch a new product. 150 00:17:24,540 --> 00:17:33,380 Kevin Mako: Profit margins on your first product run are probably the least or one of the lowest priorities. Of course, you want to eventually build a plan that yields that at the end of the 151 00:17:33,380 --> 00:17:41,180 Kevin Mako: day. But we take a lot of this from tech. Look at how many tech firms we know that were worth billions of dollars before they even started turning in profit. 152 00:17:41,300 --> 00:17:47,660 Kevin Mako: And many of those are still on the road to profitability. People want to invest in the technology, the infrastructure, the quality of the 153 00:17:47,680 --> 00:17:52,100 Kevin Mako: product, the intellectual property, all these sorts of things, to have the product where it needs 154 00:17:52,100 --> 00:18:00,700 Nigel Southway: to be as quickly as possible and as of a high quality as possible to the right market segment as opposed to worrying about nickel and diming every production run. 155 00:18:00,740 --> 00:18:09,020 Nigel Southway: You mentioned intellectual property. That's a consideration. You can factor it into the numbers too. But yeah, you raise all the points that take back manufacturing offers. 156 00:18:09,180 --> 00:18:16,000 Nigel Southway: The biggest thing is that if we look at the future, we look at our economy and we look at our businesses in the economy, we need more autonomy. 157 00:18:16,000 --> 00:18:25,580 Nigel Southway: me. We need to be more capable than we are. We're losing capability. We're destroying our ability to actually do these products. It's not just about optimizing what you do. 158 00:18:25,780 --> 00:18:28,340 Nigel Southway: It's about maybe being capable of what you're doing. 159 00:18:28,680 --> 00:18:37,280 Kevin Mako: And that's what concerns me. If you want the right to develop products, then you need the capability of being on a manufacturer as well. Let's talk big picture before I let you go, 160 00:18:37,320 --> 00:18:41,460 Kevin Mako: because I know you deal with this on a very macro level as well as a micro that we've talked about on 161 00:18:41,460 --> 00:18:45,920 Kevin Mako: this show. Talk about take back manufacturing and what you think we need to be focusing. 162 00:18:46,000 --> 00:18:54,640 Nigel Southway: on to really do a great job of getting the trend in the right direction over the next five to 10 years. Well, let's say this book is an advocacy book. 163 00:18:54,980 --> 00:19:00,940 Nigel Southway: It doesn't pull any punches. It talks about everything we've just talked about, but it also explains the things that everybody needs to do 164 00:19:00,940 --> 00:19:06,660 Nigel Southway: differently. So it talks about what we want our government to do differently, what kind of industrial policies we want to see. 165 00:19:06,900 --> 00:19:13,500 Nigel Southway: That's one. The second thing we've got to do is we've got to look at our educational system differently and make sure it's aligned with the needs of manufacturing. 166 00:19:13,500 --> 00:19:21,260 Nigel Southway: It's not right now. It's very siloed, very inefficient. I was enjoying an apprenticeship in the 60s, which we had that back, quite frankly. 167 00:19:21,540 --> 00:19:27,640 Nigel Southway: So there's a lot the educationists need to do. I was teaching for six years at Sheridan, the local college. I understand the issues. 168 00:19:27,940 --> 00:19:35,480 Nigel Southway: So manufacturing, educational system rather needs to be very, very organized for manufacturing and very integrated, and which government can also help with. 169 00:19:35,540 --> 00:19:42,020 Nigel Southway: And the third thing is manufacturing itself and the people to interface with manufacturing. You've got to get up there with running the numbers, 170 00:19:42,020 --> 00:19:51,240 Nigel Southway: making sure basically it's got to be a package of thought we got to run the numbers have the right culture and use the right technology whether it's lean and industry for and 171 00:19:51,240 --> 00:19:57,220 Nigel Southway: being able to run supply chain numbers that I've described so we need to build that environment government the educational 172 00:19:57,220 --> 00:20:02,200 Nigel Southway: system and manufacturing all working close together if you go to China and talk to the government 173 00:20:02,200 --> 00:20:07,060 Nigel Southway: there unfortunately they get it I've toured the plant with senior people from the Chinese government 174 00:20:07,060 --> 00:20:11,900 Nigel Southway: they get it they can talk manufacturing they understand what's going on and they put those three things 175 00:20:11,900 --> 00:20:18,480 Nigel Southway: together. Our government needs to wake up and understand manufacturing is part of this economy. And the manufacturers need to talk that up. 176 00:20:18,640 --> 00:20:25,400 Kevin Mako: That's the high level. Three things. Policy, education, manufacturing excellence. Those are three things that will bring it back. 177 00:20:26,160 --> 00:20:30,880 Kevin Mako: Well, Nigel, those are three great things. I appreciate you pushing hard on with your book 178 00:20:30,880 --> 00:20:35,840 Kevin Mako: and with all the things you're doing to try and enable the manufacturing sector, especially 179 00:20:36,340 --> 00:20:45,580 Kevin Mako: important for startups and small businesses that are developing those new products and need the capabilities locally to be able to very quickly execute on these ideas. 180 00:20:46,140 --> 00:20:51,220 Kevin Mako: A lot of the time, whether it's time or budget, these things are valuable when you can do it in your own backyard. 181 00:20:51,580 --> 00:20:55,480 Kevin Mako: And it's really great to see, I mean, I can tell you, I'm in multiple talks with multiple 182 00:20:55,480 --> 00:21:00,140 Kevin Mako: facilities through our design firm, we're working with all kinds of different local manufacturers for all kinds of different things. 183 00:21:00,420 --> 00:21:09,460 Kevin Mako: And there are multiple different $10 to $100 million plus facilities that are being built exclusively for the concept of either really quick efficient 184 00:21:09,460 --> 00:21:10,920 Kevin Mako: or very modern prototyping. 185 00:21:11,700 --> 00:21:20,680 Kevin Mako: methodologies or materials, et cetera, but even further pushing it into getting into production. How do we actually produce using a combination of technology and very advanced 186 00:21:20,680 --> 00:21:30,660 Kevin Mako: methodologies and processes over the many years of experience? How do we do that to reenable that ingenuity to be able to develop a lot of these things right in our backyard? 187 00:21:30,880 --> 00:21:37,700 Kevin Mako: So it's happening. I know the momentum is going that direction, but much appreciated for you to be working to accelerate that and to really 188 00:21:37,700 --> 00:21:45,800 Kevin Mako: bring it all home and bring it all together. So Nigel, thanks again for your time today. And I really appreciate it. Okay. Thank you. Thank you. Enjoy the book. Thanks. Take care. 189 00:21:46,020 --> 00:21:49,560 Kevin Mako: And oh, for anyone who's listening as well, of course, I'll put all the show notes 190 00:21:49,560 --> 00:21:56,140 Nigel Southway: into the actual episode notes of the episode. I'm going to put a link to Nigel's book as well, take back manufacturing so you can order your own copy 191 00:21:56,140 --> 00:21:59,720 Nigel Southway: and take a look at it there. Again, Nigel, thanks and take care. You're welcome. Thank you, sir. 192 00:22:00,120 --> 00:22:08,600 Narrator: Thanks for tuning in to this episode of the Product Startup Podcast, the show that teaches you what it really takes to bring your product to market 193 00:22:08,600 --> 00:22:15,480 Narrator: and turn it into a big success. This podcast series is brought to you by Mako Design + Invent, 194 00:22:15,660 --> 00:22:24,260 Narrator: the original and leading firm in North America to provide global caliber in -to-end physical consumer product development to startups, inventors, 195 00:22:24,640 --> 00:22:32,080 Narrator: and small product business clients. If you're looking for product development help on your invention, head over to Mako -design.com. 196 00:22:32,380 --> 00:22:41,020 Narrator: That's M-A-K-O Design dot com for a free consultation from one of Mako Design's Ford Design Studios from coast to coast. 197 00:22:41,220 --> 00:22:43,620 Narrator: Thanks for listening and see you next time.