00:00Is this the first of many? Are we thinking about big contracts with the rest of the Pentagon?
00:04It is. I mean, the re-industrialization of America is a multi-hundred billion dollar issue.
00:08And a lot of our key production programs, like Virginia and Columbia class,
00:12are hundreds of millions of man or woman hours behind schedule.
00:17So we're very excited to part with the Navy on the first, what I would call,
00:19re-industrialized America deal, with the support of the President's doctrine
00:23on restoring maritime dominance as well as the Secretary of the Navy.
00:26But for Hadrian, this is how we launch our production-as-a-service advanced factories model
00:32in these massive efforts. And this will be the first of many that we announce this year.
00:35It is interesting because when you first started coming on Bloomberg Tech,
00:40the idea was there. And this is it coming to fruition.
00:43And you're laughing, but it is of quite large scale.
00:47I want to ask you the question that you've been over with us before,
00:50but I think it will help the audience understand Hadrian.
00:52What is Hadrian's core competence?
00:54Our core competency is taking legacy designs from other manufacturers,
00:59like the primes or startups, and building highly automated factories
01:03to just mass-produce whatever they need.
01:05Faster?
01:06Faster, more efficient, or frankly, at all.
01:08I think what we're really going to focus on here is anyone can build
01:11or capitalize a factory with dollars.
01:13But the American workforce has been on life support for four decades.
01:17So there just aren't that many skilled tradespeople left.
01:19So we have to get this productivity uplift for welding, machining, advanced automation methods
01:25with software and AI to give the American worker a productivity uplift.
01:29And that's the main story here.
01:30Well, there's a breath of fresh air.
01:31Are you saying that in this current state of technology and AI,
01:33we need more people, more humans working in lockstep?
01:36Yes.
01:37And in advanced manufacturing in the US, the average age of a skilled worker is 65.
01:41And the biggest shortage the Navy and other people have got is they could spend a billion dollars
01:45and try to hire a million welders, and they just don't exist in the country.
01:48So we need to up-level every possible manufacturing worker we've got with advanced technology
01:54to make them more productive, because we just don't have them on shore anymore.
01:57What about supply chain?
01:58We don't have that on shore, and at the moment we're even more worried about it
02:00because of the Strait of Hormuz.
02:02It's a terrible issue, and I think the Strait of Hormuz issue is,
02:05in things like critical munitions also, we're working out that this is a production fight.
02:10We have the most advanced defense systems in the world, but we just need a lot more of them.
02:14But we haven't really redone manufacturing since the end of the Cold War,
02:18and that's left us with an aging workforce that needs to be upgraded with technology
02:23in partnership with the workforce to make them more productive,
02:25because we just don't have enough Americans to get the job done.
02:28So we need the fusion of software and people to get it working.
02:30I think we should talk a little bit about Alabama.
02:33It's a very conscious, deliberate decision to locate there.
02:37It relates to the supply chain question, but how has that played out in reality?
02:43So if there is a deficit of skilled workers and supply chains are under pressure,
02:47did Alabama help to mitigate that, or it was equally as complex,
02:51irrespective of where you located?
02:54It's equally as complicated, but Hadrian's model is that through our software platform,
02:58Opus, we can train people in 30 to 40 days instead of a decade for this highly skilled version.
03:04We partnered with Alabama for a couple of reasons.
03:06There's so much history in that state in World War II.
03:08There were 60,000 Alabamians building ships.
03:11And it was a huge manufacturing hub that, through Chinese offshoring
03:15and the degradation of our industrial base, lost all those jobs.
03:17So one of the reasons we partnered with the state,
03:20apart from their amazing people to deal with,
03:22is just like for us it's a real spiritual return to Alabama's history
03:25of kicking absolute ass in World War II.
03:27And we need them to get back in the fight again.
03:30And Factory 4 is the first opening stanza of that.
03:33I appreciate that being here in Washington, D.C.,
03:36there is a focus on procurement,
03:39selling this stuff to the different arms of our military and government.
03:43But actually, would you take us through the production process, start to finish,
03:47just the simple terms of what it is that happens at the Alabama facility?
03:51Yeah, so we'll be making tons and tons of high-precision components
03:53with a variety of manufacturing methods,
03:55with an innovative manufacturing-as-a-service model
03:57where you're buying it as factory output instead of component-by-component,
04:00as well as what we call sequence-critical materials,
04:02which is like, hey, you're trying to build a bunch of cars,
04:04but no one can get the wheels in on time, so you make zero cars.
04:07Of, like, highly complex integrated products.
04:09I mean, a nuclear submarine is more complicated than Starship to build.
04:14It's the highest-precision product we've got.
04:17And from start to finish, raw material comes in,
04:19advanced AI powered with a new workforce of the future,
04:21a new end product comes out for submarine construction.
04:24And later, importantly, we're upsizing this facility pre-planned
04:28to be able to support repair and sustainment,
04:30as well as the President's Golden Fleet initiative.
04:32Because all that shipbuilding is going to have the same supply base
04:34and the same workforce that is just, you know,
04:36we don't have enough capacity.
04:37So we need to rapidly build capacity to enable the delivery of these programs.
04:41Chris, the elephant in the room is we sit here talking about the need for labor in the U.S.
04:45and you're an Australian by birth, I believe it is.
04:48We're British people.
04:48I mean, how much do you need immigration to be fixed?
04:51How much do you think about exporting what Hadrian does to other allies?
04:54Yeah.
04:54I think the big issue the U.S. faces is we have a very highly paid middle class,
04:59which makes manufacturing hard.
05:00So you need automation to create more and better jobs.
05:03But all of our allies like Australia, Japan and NATO are in the same position
05:07where they offshored everything to China.
05:10They need their own sovereign manufacturing.
05:11So we're working on this later this year with allied partners,
05:14especially in the AUKUS program where it's so tied into nuclear submarines.
05:17And without that technology and workforce link,
05:19you know, Australia, my home country,
05:21offshored the two car manufacturers in the mid-90s.
05:24So Australia doesn't have a skilled workforce either because we offshored everything.
05:27So everyone's in the same position of the allied countries
05:30where everyone's going to need advanced production technology
05:32to have their own sovereign capability
05:34or simply deliver the weapons systems that people are buying.
05:37You know, just because we're giving out, you know,
05:39hundreds of billions of dollars for new weapons systems,
05:42it doesn't mean their factories are actually going to be able to produce them on time.
05:44And that's why we're looking at the fundamental underpinnings
05:47of this factories-to-service model.
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