Manufacturing Britain's Future: Inside Isembard's Industrial Revolution

Rule now has anything to say about the de-industrialization of this country. Children, townhouses on the moon, the highest GDP per capita in the Milky Way. Small, motillary actors under every village green, this is our new futurism. Hello, and welcome to the King Charles III Space Station. I'm Tom O, and I'm Callum Dryersdale. Listeners, we are ashamed to tell you that the station is not in a good way. Over the last fortnight, we've been barrage by micro meteors and orbital debris. The station is a mess. The facade is cracked. One of the upstairs mullions windows got broken, and the sign was so badly burned that now reads "Carly". Despite his amount of action persona, Callum's attempts at repairs only managed to increase the damage. PAL's help was no use. I just made things worse. And tragically, supply chains on earth are clogged up, and no one can get us high performance Cotswold Stone in under six months. That is why we have called an emergency help. When all looks lost, Alex Fitzgerald heard our SOS and has come up on Thunderbird 3. Alex, who is building a constellation of high performance, high precision factories, you are our only help. Thank you for coming so quickly. I'm here to help. Welcome to the King Charles III Space Station. Well, let's set the scene. You are helping restore our pub, but in the interim, we've popped down to your factory in northwest London on Eldenway. It's only 20-25 minutes or so by car from Hyde Park. It's very central, and listeners can't see it, but we're in this big warehouse with a unit in the middle under a flag. Alex, what is the unit? So this unit is where the future of British manufacturing will be generated from. The real problem that the West faces right now is that you've the supply chains for kind of large industrial businesses. But you know the names of aerospace and defense and energy. They don't actually do the manufacturing. They actually rely on a long tail of small, small family owned businesses, which are the actual manufacturing base. So take a specific manufacturing process like CNC machining, 95% of all CNC machines are owned and operated by a small business. So the existential threat we face in the UK, but also in Europe and North America is that all of those small businesses are retiring now, and we're losing that capacity just as demand is increasing. And what does CNC stand for? Well, my brother thinks it stands for something else, but there's some other initials. But it means computer numerical control, so think about, I don't know, take it back to a sculptor carving, carving out of stone. That's effectively what we're doing. But instead of a hand holding the tool, it's a robotic arm holding the tool very steadily and very accurately, and you carve really complex shapes out of blocks of metal. Now that started as just obviously a hand, then it went on to a motor driving that engine, then it went up to not just having being able to do it at one specific angle, multiple different angles. And that's what we have here. We have five axis milling machines where you can essentially come machine complex parts all within one operation and really efficiently. And you opened in, well, you got the lease on Christmas day last year, and you opened the factory in January. Yes, exactly. And so our core thesis is the old model of building large centralized factories, just takes too long, takes too much like spending from one single business. Also, it's just really hard to hire, really great talent. So what we're building is a network of much smaller factories, not just here in London, but eventually across the UK as well. And so, I mean, there's this great, there's a good movie about the founding of McDonald's, and it talks about every American town has a church, a courthouse, an American flag, and then the pitch for this McDonald's guy. Ray Crock was that McDonald's sign was the fourth sign of an American town for Britain, it will be in his embodied machine shop and is a machine shop with one of these things. And I just want to describe the unit a bit more. It's about the size of a van sort of back section. There's a window and I was here on the launch and you can sort of see the machinery moving around. And Alex was telling us before we started recording that this is a second-hand unit from Rose Royce, is that right? Yeah, exactly. The problem often when you've got the businesses we think actually do manufacturing. Most of the time they don't actually do huge amounts of the actual manufacturing. They may do some of the assembly of a product, but actually if you take a factory line that you see, people you see all these parts moving in and being assembled. Those parts have to come from somewhere and it's that like hidden supply chain, which is actually a manufacturing base. And it's actually where if you get any announcement for any large factory announcement, the impact on the supply chain is ten times the amount that that specific factory impacts. So this is what because there is this sort of tree or sort of root in the system of you say these are small producers. And what you effectively aim to scoop these up and say, right, we're going to do this faster, higher efficiency, quicker, and get parts to Formula One teams, defense companies, rocket companies faster. Yeah, exactly. So manufacturing, I think the problem with manufacturing technology or manufacturing startups previously has been, people have been obsessed over method as opposed to output. They might have invented a new way of laser-arch additive or a new type of manufacturing method and they try to apply that method to every single process. It doesn't work that way. Fundamentally, there are hundreds, if not thousands of ways to manufacture, but there are some principle ones and those are machining. So where you take a block of metal and shape it down, there's additive or 3D printing, where you build it up, there's injection molding, where you spray a mold into a cast. There is wire harnesses, where you create wires, where there's the actual assembly itself. So there's a huge smorgasbord and each of those different manufacturing methods has a supply chain. And so what we're saying is actually if you build a network of much smaller factories, but crucially for us build software across those factories to make them run efficiently, that's how you can actually solve the problem of not just our supply chain, but then eventually building much bigger products as well. And I think the decline or even death of British industry has been announced multiple times. It's like that, what's that multi-python, since it's the night two never gives up. What the black night, it's merely a flesh wound. And potentially you are the re-growing, the sort of lizard's tail, which is growing back the limbs of British industries. Is that how you see it? Do you see this as like stopping the descent, or do you think we're actually at the beginning of a new, you know, to use a French word, Renaissance? I think it's both. I think the descent is a psychological problem. We actually, the UK, who knows that the UK has the second largest aerospace manufacturing market in the world behind the US. And that's a largely because it's companies like Rolls Royce or B.A. Systems, et cetera. But it's actually then there's a tier two, tier one, tier three, tier four supply chain. So I think it's more the problem with Europe and the UK so far has been a lack of ambition and risks taking fundamentally. There's a British way of going about it. You don't have to be more American about it and start selling over selling. But actually there's a British third way where you can actually have really huge ambition. And really the reason why we were at the businesses called Ismbard is because the industrial revolution started here. We've got huge amounts of heritage. We've got huge amounts of talent coming through universities. We've got huge amounts of software and AI talent. And like there's a, you've probably seen it in some of your listeners, but there's a sea change going on in terms of where the best engineers want to spend their time. They don't want to go work for a hedge fund pricing dollar, dollar pound, dollar pound or working in a consultancy or a bit a traditional business. They actually want to work on really important things, whether that's for defense, whether that's green energy or anything else. But this is true for you, right? You founded a broadband challenger, Kuku, and you sold it to Giganets in 2022. Maybe you could have had a comfortable life, you could have stayed in telecoms. And yet we're in this warehouse of yours with a camp bed on the floor where you've been sleeping over Easter weekend. What pushed you to swap fiber optic lines for chips and lathes? It's a good question. I think everything that you have context, and there are so many like bubbles or like communities in the world you don't know about. So I didn't know anything much about manufacturing when I, I mean, I did science university and biochemistry, but then a very good choice. So yeah, I started the broadband business and that was my first business learnt a huge amount and thankfully managed that we kind of had a great partner on the acquisition. It was Giganet, but that was part of the wider Octopus family. And they're doing, they're putting a lot of money and time and effort behind scaling, scaling the business. But I'd say after the acquisition, it was in that idea's maze about kind of what to do next. I am still, I'm still, I'm still ready for young, and how old are you? 32, I forgot. But I noticed, I noticed listeners, he's kept his hat on though too. I am holding that. This is a recent invention. It's a sign of very high testosterone. You say you're, you're a young man, you're a scrap of a thing, running a factory in a world where the average owner is average factory owner, I should say 65. Do you feel like a generational insuloper or the vanguard of a bigger wave? There is a wave happening right now. But equally, the funny thing is you think that as a new business with kind of average age in our business of around probably in the late 20s. You'd think that the traditional industry when we go and meet them would be kind of putting up, putting up guards and putting up walls, but actually like they know that it's almost, they recognize the problems themselves. They see the other machine shop down the road that they've worked with for a while or subcontracted some work out too, which is shutting down. They also want to solve the problem because the problem with most of these subcontract shops is they're really good businesses, but they're stuck in a localized area and no one knows about them and they find it really hard to actually like attract the best talent as well. So why would you go to Joe's precision engineering, limited in like a methodidville versus apply to Mercedes or Rolls Royce? It's kind of, it's like a brand problem as well, which I think that people in Europe underestimate and which is why the power of storytelling is so important and how it attracts not just talent, but also capital as well. The early stages of business is less about, as one whyser than me once said, there's like two types of like fundraise for a business. There's a vibes round or an Excel round and as you get bigger and bigger you have to transition from one to the other. But yeah, you just got seven million pounds of funding. And that was definitely Excel. We actually know some people who invested in it isn't bad. Do listen to this. What was that front of the show, Harriet Green? Oh, yeah, Harriet. Yeah, exactly. Yeah, so Harriet. Close your ears now. It was an Excel. And you before we press on, listen, you might notice the skull of whatever machine is in the next warehouse. So our apologies for that. Alex, as you were saying, there's a generation of machine top do. Sorry, there's a generation of machine shop guys who are retiring, dying out and mace no S, which is your proprietary operating system that operates the unit. How does it capture tacit know how before those veterans hang out their overalls? Are you literally recording their tool pods or hiring them as digital sensei or what? I like the term digital sensei. Fundamentally, it's not about replacing. It's about like augmenting. And so where you have maybe one machinist having to operate one machine actually ten times in that. So you can actually have one machine is operating multiple machines because the real problem with this. Those small businesses is loads of the software and technology built is not really built for them. And it's built software that's been built in the 70s or 80s. And often you'll go into a shop and they'll be excited about the fact that they've paid 50,000 pounds for a software consultancy to build them something. When you're actually looking under the scratch on the surface is just an Excel sheet, which they pull together to enable them to quote better to customers. So it's like a really broken industry in that sense, but also it's not just software for to run our factories, but also the interface with our customers as well. Because another thing, that's the problem in building products. And what you're seeing, like if you take, if you look in what's happening in Ukraine at the moment, it's software and hardware development needs to have a fast iteration cycle. The actual product needs to then be fed back into the design of the performance needs to be fed back into the design of manufacturing manufacturing the product as well. And that's what we're spending a lot of time also in building technology to integrate with our customers so that we can then give feedback for design to manufacturing. So that maybe if you made the little shape of the internal radio or of a pocket in a kind of a part of a part we make a bit different, then that would halve the cost and halve the time it takes to manufacture that part. So essentially it's trying to be that turn hardware development into what is what how wise what software development is like. And I suppose actually, as you say about these small shops, what you're doing is you're bringing software to these shops, right? So almost you are a software business in that you're taking what has been done for a while and rather than outsourcing that to that £50,000 software consultant, you were saying, right, we'll just do the whole thing. Yeah, exactly. We are a software first business that rebuilt. That's why we have more software engineers than machines in our business and 90% 95% of our team are engineers at the moment. So yeah, exactly, but I wouldn't discount the fact that this is I think there's also a failure mode in most manufacturing businesses where people obsess over automation, but automation is actually should be the fifth stage of an algorithm where you come to at the end. You actually need to make the requirements less dumb. You need to simplify and optimize accelerate cycle time. Automation at this point looks like you sleep on the camp bed and swapping out. I am a robot. And on a on a recent episode of this podcast, Douglas Carzwell slams diversity hires and performative ministers. So we'd like to know what your your hiring litmus test is for a micro factory engineer. Is it welding certs, get commits. All of those plus. So the way we think about it is just having an insanely high bar for the engineering talent we bring in and never letting up that bar and actually increasing that bar every time we bring some a new in. So the first thing we do when someone starts or even went after they signed their employment agreement is who are the one to three engineers operators you've worked within your entire life that you would be a dream for you to work with again. And then we go and incentivize people to go and find those people to then join is mud and that's when all of the team has been hired through network. We haven't spent one one penny on any recruiter. So that's the bar and I think day one of starting an isn't bad is you make your own desk. I was going to ask about any amateur engineering products talking through the desk. Well, yes, you just arrive on day one you your laptops there, but you've also got an unassembled desk and unassembled chairman that's your first job. Well, I did see up in the office there a few bean bags is that for the people who don't who don't manage it. Yes, that's when you collapse because you miss machine to many parts and you break. I think a lot of people talk about like what the difficulties of running a factory in Britain and doing doing with this kind of heavy industry. I suppose it is heavy industry right and the thing that they often bring up are industrial energy prices. As someone who is actually doing the work and is not just on Twitter, malding off about it, what's your experience of the challenge of energy prices. And if it's not that, what are the constraints like the real limiting forces on more businesses or you, sorry, that the cent of isn't bad. What are the things slowing you down? So if you ask a traditional machine, what are your biggest pain points, the two biggest things are revenue predictability and hiring talent. Energy costs come somewhere low down. So I think it is a internet meme as opposed to actually kind of context now that depends on the type of manufacturing you're doing. So if you're doing forging or castings where you need to have a huge amount of energy to actually heat up material, then it becomes a different story. Most manufacturing processes, if you distribute it in the right way, there's there any requirements, but it's just you price that into your cost to give your supplier. What actually needs to be solved is finding customers and finding talents. Those are the two most important things and the problem with the most small subcontract shops is that they may have one or two large big businesses as their main customers. But if one drops or for some reason they can't supply them, then kind of businesses is at real risk. So energy cost is one I think, but I think again I get the comeback to it. Like everything is it's a mental problem at the moment that we need to overcome and it's a mental problem of of a pining and analysis as opposed to action. I think it's the kind of thing feedback beats plan any day of the week, like actually going out and the things that we've learned from actually setting up a factory that like for example air compresses that takes a lot of time to get an air compressor into a factory. There's not something you would have like learned about on building a ganchor and spending months putting together an access especially. Which you have done. So it's it's a mental model that needs framing and it's a mental model of about doing stuff in the real world and reacting based on the data you actually collect. Thanks Alex, I will hand over to Callum to ask about Western industrial decline. I mean obviously obviously at the moment you say that a lot of these people who would be machining are retiring. There's actually this is maybe less of a problem, but it's been said that in robots destroy jobs in countries where people don't use robots right. Is your is your model that actually by having this be highly automated you're allowing people to be more effective and then be able to have more people working in this area. Yeah, exactly. I think take the model of let's say business like McDonald's the way to make McDonald's is actually a manufacturing business. It's all of the McDonald's restaurants are fundamentally process generation assembly plus performing heat treatment on supply chain parts. And yet you still see a huge amounts of people in a McDonald's and their revenue generating machines proper generating machines yet. There is automation often on the customer end in terms of the point of service point of service like ordering there's automation on some of the production end. But actually like there are still a path for humans and we're in no way near a world in which you've got fully lights out factories producing high mix high volume of parts and assembling of products for customers. So it's definitely like technology to the superpower and as with anything it's not the kind of strongest it's the most that I'm able to change which which will which will be the ones and we've got to just be flexible to the future. And I suppose part of that you talked about that sort of virtuous cycle of feedback but I suppose there's also a virtuous cycle as you say that machine shops need are not confident about their revenue and part of that is because companies like the systems roles Royce are not ordering in large enough orders that you can sort of predict forward and be able to say right well I've got this order the next year or two years and that's going to guarantee revenue for that long is that is that is that part of the problem and actually do you think that by lowering the cost of the parts that you're producing. And actually you can allow these companies these bigger companies the one that people have heard of to kind of be more productive and then offer goods at a lower price. Yeah so it's it's we're effectively the sub we sub with a sub contract manufacturer for not just fast growing startups but the larger primes as well as government as well eventually now each of them have their own problems but actually those are customers you to work with now actually they are producing large amounts of product in over time and often you find shops where they financed six machines because one large customer has put in that you've done some prototyping of parts for that customer and then they want to move that into production into the house. So it was what you've done. And those and that order volume of let's say a thousand or tens of thousands of parts over the next six to 12 months is enough for you to finance a new machine. So again it's a problem of who does what in a machine shop often these machine shops are really isolated and they'll employ about 10 to 20 people but employ no one tried to manage relationships with customers that will just be the person running the business. But also the pain points for a larger primer there as well they have to not just sell into if this is on the defense side sell into government you need to be building IP and products they need to manage their own supply chain which is if you look at the if BE stopped. Stop doing work today and did no no more sales they still have an order book of about about 60 billion or a large number of billions and a depth of a supply chain of about 30,000 businesses across all different parts. So it's a real challenge for them as well but we think we can be that like solve for not just newer businesses but some of the bigger ones as well. And I think it's interesting as you say that is a huge supply chain lot of it being in Britain. Why do you think we don't recognize ourselves as clearly the engineering and manufacturing I mean I think it may be somewhat coming in cheek but super power that we are right. We have F one around Milton Keynes we have the a systems we do aerospace you said it was Royce amazing company what is this the like British reluctance to boast and is it as you say it's these small shops who are not willing to sort of put themselves out there and do the. I think they don't have a voice is one and we want to be that voice for them as well and I think there's there's the natural part of British character be understated. There is I mean if you there has been like pop mark history of British industry you had I mean if you go back to the history of park royal we had park royal was and it still is a huge manufacturing is the last great manufacturing set area in London lots of lot in food manufacturing but all in others as well. But you had just one example the world's largest toy factory in London and during the saccharine war and then during the war transition to making stand machine guns. I do not get the orders mixed up. I don't know I think is a seven year old I would be delighted with the stand up. So yeah I think it's a it's a cultural thing but it's also there's a really good article by one I think it's got Mac Clifford who was the founder of entrepreneur first and it's like I think it was about the history of ambition. And so if you go back in history if you were really ambitious as a young person you'd go into the clergy because that's where you could learn to read and write and reason and logic. Then it transitioned to the military during the Naponia like was because that's where you could send faster the social hierarchy. Then it became finance and law and the professions during post like 60s etc. Then maybe after the internet boom it became startups. But I think then everything goes and cycles and everything changes and I think now as I said before the. Most ambitious engineers investors journalists everyone actually sees like there is diminishing capacity of just like pushing pixels on a screen and building software to make. But making HR software or payroll software 10 basis points more efficient is that really a use of your good use of your time there are like massive problems to solve in the world and you have the agency to solve those problems and I suppose it's like that's what that's what I'll be calling for for the next kind of. Many many years you have an agency to solve those problems just go up and do it. The most interesting phenomenon politics the moment I think is the coming together of Silicon Valley and at least the Republican side of politics in the US and perhaps this is partly prompted just by hard geopolitical reality. Do you see any concomitant effects in the UK? I think as we don't think change is good and I think the cycle of new politicians are MPs coming into kind of parliament is a good thing and like lowering the average age like a couple of weeks ago I got a calendar link from an MP which I thought was cool. So I think there is an appreciation that like people see what actual technology businesses can produce and can build whether it's I think it's simple to think I think you haven't had like for a while. Before CHAT GPT like that technological change which was so powerful that you can have noticed it. The last great change was the internet and so like I think that's a good wake up call for people that like technology is changing and the next one is what isn't by the saying is actually manufacturing is there to be solved. And I mean on that topic you mean if you are talking to MPs and the dark world of lobbying has already caught you. Is buying British then a sort of useful thing would would you think that it would be good. I mean you've got a big union flag up on the on the wall here in sort of larger than me I think. Hampshire flag company if you want to know well there you go there you go you ever want a flag large enough to I don't know cover your whole house then go there. But would would you say that it be a good thing to say right but let's buy British or actually do you think that sort of. Do you think it be a good thing to say buy British or do you think that obscures the need sort of pursue productivity like let's win on our own terms or do you think there's a need or company say right we're going to do our patriotic duty. Yes, you need to do the patriotic duty in critical industries because that's where you're building kind of defensible products where if that IP is in any in another country that's that's a vector of attack. So for example all our machines can't be connected to the internet because if often these machines are using quite our data software when they're delivered to you to run them. And so that's a vector of attack for like a foreign foreign government or kind of other organization. Well that's why I'm with Stux now right that the Iranians got done because they're using old Siemens software. Exactly so often software can be a real like a vector of attacks. So but I think like the reason why we are focusing specifically on critical industries first is that's a place to that's where you actually had domestic manufacturing protected in some ways because of those problems. That in itself has created the problem of almost like an ossified industry which needs changing but actually like if you can start and solve critical industry manufacturing then everything else like if you look at the supply chain for an Apple iPhone or a laptop. I think Apple has the largest amount of CNC machines in its supply chain of any other business in the world. The machining the mold for your AirPods. That's that's that's machined and then injection molded the actual machining of your of your kind of laptop right here that's machined that's machine parts right there. So it's about building a niche as with anything what's that like there's a famous and yes investors like how you build a big businesses find a niche with really low NPS vertically integrate to build a simplified product and that's how you can. You can solve big industries Alex you twist your skirts at the listeners by saying that you make things for critical industries. What are you making come on tell us yeah and yeah and if you stopped if your factory stopped what what parts of UK defense would collapse. This is a wide run this is a roundabout way of asking who are our customers isn't it and what are you making and how many people could the weapons kill in one moment. So we make a subcontract manufacturer for critical industries and that's defense aerospace energy if you look and we're especially focused on defense but we're also doing some energy businesses as well. If you look at the trend of where defense is going you're moving away from these traditional kind of 10 year programs with two years of design and then five years of planning and then actually elongating timelines what you're actually moving towards is. There's a military loves acronyms so there's an acronym for it's called sums H about where the future of defense technology is going and that's a small and cheap unmaned many smart and heterogeneous so. There's going to be lots of them and they're going to be smaller and cheaper and then like billion pound aircraft carriers that you're still need aircraft carriers. They'll be many of them there'll be unmanned they'll be smart but also crucially there'll be lots of different types do not just going to have like one type of drone and then that's going to be millions of them. It's going to be a zoo of different things if that's where the future is going our supply chains are built for that and what you need is a much more flexible supply chain where you have a faster iteration cycle. But yeah so we're working with defense customers in the UK and Europe and yeah that's a long way of saying I didn't answer the question. Look long way of saying close your mouth you none of your beeswax although I did I have to say I will say that upstairs in the office I did see upstairs in the office when I was in the factory on earth. I did see the part of a robot arm that was going to go on to protect it so that's maybe a flavor if I'm allowed to say that a flavor of the sort of a high precision manufacturing that. We've also been told by the previous guest on this pod that technocratic quangos veto growth and listeners can guess which guest said that. Have any regulators tried to OBR your factory plans yet and how did you push back? Actually I've got a hilarious one on this one so there's a as we were setting up the factory obviously it's a lot of packaging and then you get a lot of like rubbish which again didn't really think about but actually you got a lot of rubbish whether it's plastic packaging card ball etc. So loaded that ball in my car there's a local skip I was like okay just dumping out the skip. Drive to the skip and then they then they asked are you a resident in the area or your business and I said oh business and it's like have you got your waste carriage license. And am I what? A waste carriage license or maybe you've got your waste carriage license it's a you need to carry cardboard and plastic so yeah so that was just put it in your car you needed this license. To put it in the in the dump like it was I was five meters away did I circle around the block come back with a yes I am a resident. No comment but yeah so but outside of that we've like and there's obviously important stuff to do with health health the safety and factory which we're doing and getting support on that front. But again I think it's again a tyranny of of planning as opposed to action in that if you go and read up all the requirements and plan to agree there'll be no end to it what you've actually got to do is start start moving and start actually getting set up and then as you're doing that start going through all the process and being but like so far again there's the beauty of a smaller smaller model and smaller smaller multiple models is that there isn't quite that like regulatory burden once you if you're in that smaller size. Yeah I imagine in a Gantt chart it's hard to put allegedly or hypothetically lie to a council official as a former treasury civil servant I know yeah I know you know how to talk to officials yes official speak. All right listen we will go for a break now if you're enjoying the show please share it on social media we'll be back very shortly. Welcome back in the first half we talked about the decline of Western manufacturing and the closing of the machine shops and hopefully in the second half we will cover its rebirth. Alex was through a customer journey from uploading their CAD file to shipping a flight critical part where does Mason OS create the biggest time delta. That's a really good question that's like an investor question have you been prepared that's actually from our producer Aaron that that's not from yeah who is it who is actually a founding engineer who so so knows how these things work unlike unlike Tom who's a journalist and me who's a PhD. It was like the first question was like whoa. I'm a Potemkin village. Yeah so simple answer is across the whole of the flow but we don't just stop at someone sending us a design for a part that actually starts off in much earlier where even before a design for a part or a product is actually done we can then feed back the learnings from the factory to actually make those designs fit for manufacturing because if you're if you're a product business let's say you're building. A new type of direct air capture making synthetic fuels or if you're building a new drone for example there'll be a lot of requirements when you build those requirements are I don't know size weight and power duration time etc etc but then also manufacturing will need to be key because if you're building a few prototypes you want to be certain that you can scale up those prototypes into the large production volumes. So that's where we come in so we can feedback it early on in the design for manufacturing so you're actually designing the parts so they can be manufactured faster and cheaply and then goes through the process of estimating time and cost to actually manufacture the process manufacture and then it goes through the time cost of actually manufacture the part and then we program the machines to actually make those parts and at the moment we've got a high mix high volume so that's where we're not doing lots of the same type but we're doing lots of different types. And then if we're doing some of the assembly as well so we're not just doing some subcontract machining we're also doing assembly of products as well for customers we can then do that all within a time frame that is predicted and hit the time that we said we would because the problem with most factories is like you've had a lot of digital twins or industry 4.0 but actually most factories aren't anywhere connected in terms of the way they need to be to actually be able to protect production speeds volumes and output because everything is connected with each other to be able to quote a price and speed estimate you need to know the utilization rate or your machines you need to know your own supply sharing how fast they deliver and what's the frequency of the delays in their delivery you need to be able to plan out your personnel and where they can work and what times they can work you need to then actually program the parts and actually one part can be made in many different ways and there are iterations he's doing all of that so it's like a living breathing organism and like ultimately the factory is the product for us and that's why we're spending so much so much time on an effort building kind of the S.A.P.s and this first factory. And I'm interested you say that you work with customers as they send you the part and you help them iterate on it and make it suitable for manufacturing. Definitely from my field where you know if you have a cell that you want to scale up its production people work with with CMOs and there's a real issue there with like tech transfer right where you send them your strain and then they maybe scale it up and then it's very hard if you want to bring it in house. Do you ever see companies as ever wanting to bring their own it there at manufacturing back in house or do you think that they will always keep working with you so there's no risk of that like problem of tech transfer. Yeah, we see an exponential increase in the amount of product and parts that each business wants to work with us on. I'd say the best analogy for it is back in the early 2000s every business would have to be running their own service to run their websites but then it became much more efficient to centralize that and high utilization because if you go back the pain of in housing manufacturing it's really painful it's not just the capital expenditure to do it but also the hiring burden to actually do it properly but also you can't. There is no end to the amount of in-housing you can do because each of those in-house manufacturing steps has a supply chain in and all of itself and so it's like that that tree of things you need to solve. Most businesses should focus on things that like make their their their their taste better which is designing designing better parts and then selling designing better products and selling those products to customers. The actual manufacturing can be done by us and at the moment you're I mean this your factory is is in an industrial state as you said it's the largest and last remaining industrial state in London. You we you here. Did you set it set up here because it was in London so you get advantage of talent or is it because of the sort of clustering effects with other similar businesses. For example, why did you not go out to say Jefffield or awards Milton Keynes for the F1 and things like that? Why did you choose London? There must be so much cheaper here. Yeah exactly. There must be so much more expensive here. We will eventually go out to everywhere. The reason why we started is that in London you have huge amounts of software and AI talent which is a key part of kind of what we're building and the other is just being close to customers as well and just that. Why do kind of network. But like our model is we haven't built a massive hundred thousand hundred thousand square of factory what we do is we find existing industrial space that you can actually get for relatively good price price as well. And I mean as you say these are small factories and then your plan to have them dotted across the country. Do you raise $7 million from investors sort of across the UK and Germany and from NSSIF. How do you convince them that sort of how do you convince national security money that like these distributed distributed factories and this model was the one that you wanted to sort of use and that the one that they should back. I think fundamentally traction matters the most and so with a relatively efficient use of capital we were able to stand up a factory and start producing for customers. But I think the more important thing is actually like what are the macro trends and it's the same thing was talking about with where where talent where the best talent actually wants to go work. It's at the kind of the bleeding age of problems that are actually matter to people whether it's national security or energy security or anything or manufacturing and ultimately everything is downstream where the most talented individuals go and spend their time. And so if that is the case then if you're an investor looking to for a return you need to put your capital to work in places where the most talented individuals are going. And so what you're seeing in Europe but you're also seeing it in the US is a focus on whether it's European resilience American dynamism like the actual refocusing things that really matter. That's the way from the almost about 2000 year of dating apps or kind of payroll software. What it's not that haven't got anything against payroll software mentioned that twice now but. Thanks for sterile doesn't like having his employees paid on time. You've had it here but. So what really matters is building really important products for not just defending the first and foremost defending the country but also actually projecting power and influence as well. You mentioned talent because you've got what 12 employees here and what do you sort of what's your attitude on things that you have to bring in house versus what you'll just outsource and do effectively like. As you say you you target only the best people is that is 12 people minimal are you is this still a small team that is still doing a lot beyond what sort of it it could be at a different firm with that number of people. I think you can do a lot more now with a much smaller amount of people like the best size of a team is that we can share a pizza around or share a pie maybe and actually with some of the kind of the tools you have available now today like there's a tool called cursor which is the I'm sure you've heard it's like how you can build software much faster now. I built a website over the weekend just like when I'd never built a website before using it. So the speed at which you can build and almost like the best time now is to hit reset and start from scratch because there is so much legacy in not just like even just businesses which were started three four years ago and that legacy is like opportunity. Speaking of in another recent episode we went to see Joseph Chen who I think you know at his kai kai kai restaurant well the restaurant is common room the businesses is kai kai kai and in the back room. They have a kind of little shop of their their own and they iterate hardware which they then used to kind of chop salads robotically multiple times a day with their downstairs 3d printer. So how tight is your cat's to chip loop are you iterating that often yeah every every day if not every hour or every minute fundamentally like how you build great product is having like engineers ingest pain and then output product. How much pain do your engineers ingest. It's fundamental like in my last business and the problem is this the best learnings were when engineers had to go on to the customer phones and then answer customer queries. I did that every week and it's how you actually like it's all well and good having kind of sitting in every tower and having kind of a grand plan to how you build X or Y product. If it's much more efficient to move a button 20 clicks it's much more so you can send something to a customer much faster that then increases the relationship and the better output for the end customer so yeah it's about having that that's critical and that's how you build. I suppose the you know you talk about the top talent the top talent doesn't necessarily want to be answering the phones right so this is. I think that's wrong I think yeah I think that's again a cultural problem everyone in the business has made parts here whether you're a software engineer whether you're not doing whether you're doing finding customers so like I think how you it's a cultural problem of the business. I think yeah that was what I was going to say right maybe you want to find the people who actually really care about it and not just thinking about like or do the easy thing and deliver the talent is the ones who care about. And then you also don't like picking up the phone like we see this in journalism where like younger younger staff don't want to pick at the phone and like make a difficult call but once you've done your first few calls to you know beread relics was that kind of thing becomes much easier. In just pain output products that's what we say that's what we say and we've spoken in the past about like the lack of large manufacturing companies that like in in South Korea we have these chibals that are able to. To draw in talent and be the place that that all the young and vicious young people want to go do you see that as the future of I suppose yes I see us as. We're already bringing some of the best talents from university so we have someone starting in July who is probably one of the top engineers at one of the UK one of the UK's universities like built. Rovers for space formula cars and would have been snapped up by Red Bull or gone into. An equivalent role but he's coming to work like there's a funny he um we had an interview with him on the Wednesday and the second and second or third into you on the Friday we offered in the role then I think late Friday evening we gave him a call so okay. Happy flying to Germany on Monday to help us deliver some stuff to customers. Yeah and he flew and it was probably a great experience for him so like. There's huge amounts of demand out there for talented engineers and if you are a talented engineer listen to this email me and I think it's interesting when we talk about it becoming this vertically scaled and highly effective organization in Britain. Because what these companies tend to do is they take over like a sector right things like what uh Samsung for example incredibly good at semiconductors and has basically cornered an area of the market where if you want to do semiconductors you go to them and they and they are the people do you think that. Isonbud can be that kind of comparative advantage for Britain yeah exactly we are going to be the subcontract manufacturer for critical industries so if you are a startup in defense or aerospace or energy if you are in established prime or even if your government you will come to us there is no business that's doing that right now and that's what we will be Alex the UK's production sector shrank 1.7% in 2024 given your ambitious plans how much of that could you. All trillion dollar businesses in the world based on the west coast of the US apart from one which is a TSMC or a TSMC which in Taiwan Europe has yet to build a trillion dollar business so Isonbud is going to have a GDP level impact on not just UK GDP but global GDP as well on global GDP. What are you going to do with all that money and power invested into product. Yeah and still not answer the questions maybe we'll get a run out of western defense clients satellites space space companies yeah no so how I see it is we're starting in critical industries defense aerospace energy the global manufacturing sector is like trillions and trillions but like there is no subcontract manufacturer like the best way to think about what we're doing is like the Fox condo apple is one way of thinking about it but rather than just to our bullets to all the critical industries and with that you can build a very very big business and then maybe even eventually we start building our own IP and products. This is because your OS is just so much better than anyone else's that's the sell and you're more nimble because you can operate. What are we effectively building is the world's most efficient factory but it's a distributed factory. I'd like to follow up what you say about these defense primes and you're right about how a lot of companies and countries are waking up to the need to have this sort of resilience. That's what we're looking for with British steel the risk that come when you're critical industries are foreign owned are you factoring in that there will be an increase in conflict and war over the next kind of decade and do you think that that's is that is the creation of isn't bar day a response to that. The first page of our invested egg the headline is we event we are we have entered a multipolar world. And then the knock on effects of that are increased spending and critical industry spend reassuring of supply chains but also. Crucially said before that makes a change on where the most talented individual engineers especially in Europe want to spend their time. We'll street or thread need of street has has traditionally viewed production or business as a purely a function of performance and has just has not included like geopolitics in the equation and that needs to be and that's what's changing right now. But do I think there's there is going to be more conflict in the world and it'll be in areas we don't yet know about or predict. It's just a fundamental nature of human this is a fundamental part of human nature. And you need strong you need an industrial base like the reason it came back to me like early on when we started isn't bad is that. Everything does fundamentally come down to production. You're seeing it in Ukraine at the moment there's I think they're producing about two three four million drones a year. It's now over taken at the start of the conflict 80% of deaths were because of artillery now it's flipped the other way 80% are through kind of uncrewed systems. So in the same way that when we transitioned from like coal to oil in our ships from kind of wooden ships to metal ships like technological changes happening and if we're not. If we don't move fast enough with that change will be left behind. So we have to be agile right because we don't know exactly what form that technology will take drones to a lot of people by surprise we don't know what the next or the next step change will be. But still fundamental to all of it is production and the ability to produce large amounts and going to crucial now varying amounts of product across a wide area. And not just being risked in one single space like there's a great if you go back to the history of second world war there's the scheme of like the shadow factories really shadow factories where. You had fact kind of traditional big factories but actually the rest they were actually then copied and spread out with much smaller factories across the whole country to add resilience. You had similar is a great book from the splendid in the vile goes into a bit of the history of like Churchill and the kind of cabinet but also a lot into Lord beaver book and when he took over the ministry of aircraft production. And actually what you had then was the centralized factories which were then split up to hundreds of much smaller factories across the country and you had they were called beaver book boys they would. You'd park your car at night go to sleep wake up in the morning and then your hub caps were gone because they'd taken the metal to put into their spitfires or like a down mesh Schmidt would then be within 30 minutes after it hit the deck fully stripped of all its wireings and metals and re put back into the supply chains. So it's like that is a high throughput of is we that that drive and ambition used to be there and that's what we're that's what and it's like how you know the building of a mosquito right we were able to build this all wood plane because we had the base of piano makers and luthiers who could then work with wood and produce this aircraft that was going so much faster than the. Yeah so one act then it there's a business which makes parts for a. I can say it. Once again the NDA foils us almost for a consumer goods appliance which is it's it's probably the most sold pieces of consumer goods and there's a part in that which is also quite critical for a uncradarial system and they produce them at huge unit volumes in the UK and then now potentially can be repurposed for multiple use as well. I want to ask about I mean we already touched on British steel but obviously the your your business is the milling of metal into these precision parts are you concerned about the lack of ability to produce steel in Britain or do you think that actually we're likely going to be able to produce steel you know get steel from our from our allies. If you look at those when I was the stock of steel in a country kind of asymptotes away and so you get like there's a level of steel which gets to a certain amount which kind of just circulates because steel can be recycled really easily you get a club a circulation of once you get enough steel in a country you can keep them circulated because anything that's not buried in the ground can then be recycled. So that's where like obviously electric art bonuses and the recycling comes in and I think from an episode my perspective will not we're not just. We're we're a subcontract machining and subcontract assembly business at the moment eventually we'll be getting into more manufacturing processes and that's forging that's casting that's like primary production as well eventually. So but yes like I think we need industry in this country and but anything that supports that is needed as well. And do you think we talked about Mace no S do you think that you will keep this proprietary or do you think that at some point you might open source it and it becomes something like Android you know the sort of middleware layer of manufacturing that allows other people to work on your systems and you sort of become a maintainer of this. Yeah eventually but that might that's definitely an opportunity but we're what we're laser focus now is actually delivering it for our own factories and then. As with anything when how you build a big businesses by you don't just have one product line doing everything you can expand but expand at the right time. And now that we've talked about the defense related output of factories like these I'd also be interested to know what kind of domestic consumer tech could be made. What kind of domestic and consumer tech could be manufactured at scale in a way that would improve the lives of Brits beyond simply defending them. Yeah so I mean another great one is just electronics more generally if you look at electronics it's especially for consumer great electronics really small highly precision parts where you've got huge amounts of complexity and design and intent gone into the design of the products but you need it in a really small form factor. Again if you if you look at the supply chain I think I mentioned before but the supply chain of Apple there's about a hundred thousand CNC machines in that supply chain and that's something that can again repurposed and it's crucial as well. And what if some sort of high precision engineering just became half as costly in this country what would life look like. Well it isn't bad factory in every in every town but the small multi reactor exactly yes and then on the spaceships eventually as well but I think fundamentally it means. This thing that kind of pisses me off is seeing the most talented individuals wasting their lives in worthless pursuits. And once we've and you see it here like actually action if you build the culture where action is is rewarded and incentivized and actually the joy of action in and of itself creates the drive to get more stuff done. That's quite a powerful thing and it means that I mean ultimately I see in the same way if you look at there's a website called SpaceX alumni which is all the all the businesses that were founded from people who've worked at SpaceX and everything moves in cycles. And the people who then joined the business and are there from that this founding to the first five years then go and take those learnings and find their own businesses which then create even more like jobs and then they create more jobs and you're seeing you're seeing a bit of that in Europe at the moment because a lot of that has been maybe on the I don't know. So if you can find these new businesses which are actually really successful with the first and foremost thing is to like I just disagree with the organizations or especially like crown goes or any government thing. And so what you need is really highly ambitious businesses to actually be successful and not be just like not just raise a bunch of capital but actually deliver product customers get those customers to really love that product and spend more money and drive the drive drive the flow of work to then generate huge equity in businesses to then that budding off people who've gone through those businesses. So I mean basically what you're saying is government needs to get out of the way what would you like to see in terms of policy that could just that could remove barriers would make life easy for you is that like an end carbon tax. No specific. It's financing of machine tools. So the real barrier. I have my policy recommendations for treasury in my pocket and I'm out of it. How about you? So the barrier to entry for production is fundamentally the capital expenditure to have by expensive machine tools. So the more you can incentivize that the better. So whether that's those there's actually some schemes out there and actually this first machine is part finance but the UK government. So there are schemes out there but we need to double down on that and if you actually look at the history of like why did the Chinese manufacturing sector take off yes wages were part of it yes the supply chain was part of it but fundamentally the biggest impact was government financing of machine tools. And it's actually like in the same way instead of QE we should do any manufacturing easing that sounds a bit right there's a better way of describing it but like we should pump billions into financing of machine tools and not and that should be like there's clever ways you can work it but essentially reducing the capital expenditure and the operational expenditure of owning and operating these machine tools. This is more important than making energy cheaper 100% well I was going to say do you think this is specifically something that should be focused on machine tools or do you think this is a fact that because our banks are sort of more tightly regulated than those in America so they have to keep larger. If you create incentives banks will move if you if the government takes back stops or finances more machine tool let's say a machine tools half a million pounds like again the reason why these machine shops are dying is because maybe they've lost a customer but the debt financing on their machine tools doesn't change and so they have to sell up and they just sell their sell their shop literally for parts. The barrier to entry is machine tools because if you got the capacity that we've solved it we we you see it there's demand is not a problem people need manufacturing people want manufacturing especially close to them. The barrier is actually manufacturing capacity and how you do that and the machine tools are critical because that's how you manufacture anything it's like people again there's this like brain brain fog of people because they don't experience manufacturing because we all live in our own bubbles but they're like they think of it as just they look outside a factory which is pared well and they see a big building they think that's manufacturing manufacturing is not those buildings manufacturing is in the supply chain it's an assembly but everything that's required to do that is you can assemble we can assemble a tank in the shop that we're not. Yes but we with a machine tool and to welding what you need is like really what you need to support is those machine tools. And you say that when there's the incentives people will follow the moment well in the past kind of talent has gone to software because it's easy to make money and it's easy to you know with a few some lines on a laptop lot of lines on a laptop you can generate businesses that make billions trillions. Do you think that now with the has there been a sort of change in technology that has made means that manufacturing businesses could do that or do you think it's just like because these factors are closing this just an opportunity. I think there's on both levels on the software side fundamentally the barrier the cost and speed of building software has collapsed. And so there is no real barrier to entry and so what you're seeing is traditional in on the investor side people who've only ever invested in software businesses actually saying okay I don't we don't see any barrier to entry we need to now invest in software actually impacting the real world. Do you think so software hardware is becoming a marginal barrier now that yeah it's going to attract. It's also where again eat pain output product where there's the biggest pain is also the same similar pain for everyone else. And so if you can find the biggest pain solve the product build product to solve that pain then like building factories is hard running factories efficiently is hard doing that with software is hard doing that with. And they're the track can attract people time etc hard but like we're eating that pain and we're out putting products and your vision as you said is for thousands of these shops millions to to carpet the world. I'm just this world not as this world but other well you you anticipate my my question what is the kind of world that you would like to see that you're contributing to building is it like a powerful Britain is it a humanity that. Terraforms Mars what are your wildest industrial dreams. I would like to see a global like space fairing civilization where we're not just in in in one single small little blue planet. And I think that's within our grasp. I think first and foremost like I think the UK has this unique opportunity where. Where others have gone down various routes we have an opportunity to collect coalesce the best talent in Europe and actually in the US as well. I think there's just a level of ambition like if you look at the history of the industrial revolution we were 0.1% of global population and like land mass. And yet by the end of the 19th century over 50% of all coal production over 50% of all steel and iron textiles. And this was that point once said to the population wasn't even in where most of the population was in the in Britain most of the population was in East Anglia and London but the actual industrial revolution happened in the north of England north of England where you had kind of this unique convergence of culture resources timing religion. But there's some ingenuity drive no one's got the answer if you look at there's a great series of lectures on a website in the kind of about us pages scroll down. But there's a great history of this you said a professor going into like the history of it and why did it happen still no real answer but what I'm trying to say here is that like. The ambition will drive low output it's it's about being ambitious and to grabbing the stars and you really care about Britain's future you're a patriotic man you talk about Britain's history as you have done this morning how unusual I mean you're your reservist as well if you don't mind are saying that how unusual does this outlook make you among your peers who are CEOs in the tech sector. Again I think it's like this almost it's like a it was an it's an unwritten thing that you don't hear about but that they it is there like the amount of there's a software business cybersecurity business CEO which has raised a lot of money and they just he's just he's just exited and he's like you wouldn't think of him as a like a blue by this already what red white and blue blooded kind of kind of patriot but he's that's what he is for his next thing he wants to go solve a problem which will help the UK national UK national prosperity or security. So I think it is there it's just been understated and I think as with anything reactions like changes one country have their reactions abroad so whether it's the new administration then actually giving a wake up wake up call is like the best thing it's almost like it's like a secret weapon of for the UK and that it's awakening the lion. Well I'd like to ask because you have been a reservist and you worked in the Treasury and now you you're running with these groups of engineers what could if you have a lot a young listener a young engineer who's listening what can they do to sort of build the skills to be the person who could either be in your position as CEO or one of your engineers who is know in a small team setting up a business that can potentially change the world. It's a really good question. I think just experience stuff it sounds quite like trite but there's so much I don't know but there's also so much I didn't know beforehand and it's only by just being curious about everything. I think curiosity is the most important thing and it's not a specific action or thing to go out and subscribe to this newsletter but it's just curiosity, curiosity about everything, curiosity about how the world works, curiosity about businesses, curiosity about people, about sectors, about products, about just like let your curiosity run wild and that will and then if you've got a few neurons in your head you'll find opportunity. And more about your engineers do you have examples of like some of the incredible things that they've done that has kind of has been the path that has got them to being able to set up a factory from scratch. So we hire from some of the kind of most like talented like businesses in the world. So for example, Tom from our team he worked at a company called Palantir in the UK and did some really important work there. I think he's also kind of a similar position to me the whole like not talking about various stuff so I'll leave it there. In terms of and then Rory he kind of did his work did undergrad at Oxford, then it was a period where he started his PhD but then worked at a company called Alloid. And so he started off as just doing a material was a materials engineer started out and then worked at this spin out spin out from University of Oxford which did like 3D metal print 3D metal printing and metallurgy started off as an engineer but was so good that they're naturally transition to leading business development for them in Japan instead of the whole Japanese business and now they've raised a serious B or C from some big Japanese investors. And then Jack started off as a manufacturing engineer and design engineer with 3M and eventually like machined medical products. So for like Spurkskulliosis and like actually stuff which has to be obviously even more so than aerospace, even more stringent in its quality management and then actually is lost job for coming to us within the kind of supply chain for ASMR in the kind of semiconductor production space. So as with all of those those are kind of fairly unique experiences but what's driven each of them is the curiosity and like plus just working really hard. Yeah, it's really there's nothing more important than that as well. Do you see these traits in any other businesses like your own in the UK start up sector which do you most admire? UK start up sector so yeah, there's a company called Arondite which is a new kind of defense technology business based in London. So Will and Rob co-founders there are great, they're building essentially autonomy products for connecting robotic systems. What else in the UK there's an interesting business which is not public yet but it's like based around the Cambridge area and they're building some really cool products. Oh, come on, Cambridge area cool products, throw some bonus, they've, I literally can't say anymore. They'll go, they told me they'll be going public in the next couple of months but it's, yeah, you should get them on pod. Who else? Is this a unique way of finding out our customers? No, no, no, no, no, no, no, no, no, no. Okay, given that we've been foiled on that avenue of attack, I suppose, you know, but the safer territory is actually an empty area. M-I-5 should actually be quite, could be quite pleased actually because, you know, we don't, we know, we think Russian spies haven't really got anything on our. What are you totally listening to? Alex, we all dream of a world where young Brits no longer want to be influencers and YouTubers. They want to do something sexy, like industrial manufacturing. How do we make that a reality? I think it's about shouting about the successes more and doing podcasts like this. I think, again, people's, people only know what they know and you need to get them to know about other things other than what's in their feeds. But I think there's a general appreciation of, like, I think fear is actually a good thing. And why do I talk about fear? Fear of, like, job insecurity from technology. And specifically on the traditional ambitious roles where people can work on. The speed at which you can produce a legal agreement now is ten times what it used to be. The speed at which you can produce a financial model is ten times now. The speed at which you can pull a presentation together and make it, like, look pretty to a client is ten times and much better done actually with software. So the fear of, like, a traditional ambitious or professional role being lost will then drive people into actually re-evaluating what do we want to do in my life. Is there more important stuff? And if there are businesses there, the reason why we start is because there were but no businesses there. But if there are businesses there, we can find that best talent and collect them into a group which actually gives them huge amounts of responsibility and ownership to go and execute. Then those businesses will do really well and that success will then drive more eyeballs onto those businesses to then spawn a load of other businesses onto them. What you need is a couple of massive successes. I mean, Alex, the young teenagers are on their phones a lot so maybe I should invest in some more tick-tocks of you dancing in front of your machine. Maybe that's the way to pull them in. What am I doing? Well, you know, I do charge a consultancy fee. So if you do take that on, my invoice will be in the post. I think we will wrap up there. Thank you very much, Alex, for speaking to us. Ken, is there anything that you think people should read, what they can read some of your work, or what Ismbard is putting out? Yes, so we have a manufacturing manifesto on our website. So www.Ismbard.com. So that's Ismbard with an E-I-S-E-M-B-A-R-D. And it goes into the history of like just essentially my thesis on the history of the UK and the industrial revolution where we've gone wrong and where there's opportunity for the future. Well, young budding lawyers, consultants and doctors, watch everything, go grab that dusty toolbox from the seller, because otherwise, you know, you'll be out of a job. There's a new business in town. Alex the chair, thank you very much for coming on. For the manufacturer, thanks for coming on the show. Thank you very much. I'll use that line. [Music]