Zeihan-One of the Biggest Challenges to US Reindustrialization

Investment Analysis Clubs Macro Economic Trends and Risks
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The US needs to (roughly) 20x its processing capacity to support the industrial buildout; however, the tariffs from the Trump administration have complicated things a bit. Importing already processed materials has become harder and the buildout of domestic processing capacity still needs years to ramp up.

Sure, we’ve been content getting all this stuff from China for decades since it was cheap and easy, but all that is changing as the Chinese system collapses. If the US doesn’t have the processing infrastructure ready, we’ll be in for a rude awakening.

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Ziehan is only seeing the problem at the end product.

My work has me working at the front end of every building project.

Imagine you want to build a Giga factory.

The Austin gigafactory is 2100 acres. Has 20,000 employees. This factory before it can be built must have, water sewer, drainage, roads, electrical power, gas lines, and telecommunications lines.

Before you even start this factory, the government must start building sewer plants, water plants, holding pond for storm water run off, and the power company must add both generation and distribution capacity.

Roads must be widened and built. To widen a road, you have move the existing utilities, dig holding ponds, (for every so many square foot of hard surface you have to add storm water run off holding ponds) and install storm water drainage.

What I am saying is it takes an army of ditch diggers to be at work long before the first machine with its neat-o-wowie blinky blinky lights ever shows up.

Worse. It takes 20,000 people to man a giga factory. So you need housing for 20,000 households.(Probably twice that really) So you need water, sewer, reclaimed water (for irrigation) electric and a couple maybe more telecommunications systems and roads. You need this to be well on its way to being built before you pour the first foundation. More ditch diggers needed.

The problem is. . . ditch digging is a lousy job. It is intermittent work, In the north the work shuts down so a starving time is built in. In the south the work goes on year around but crews tend to travel more and commute longer distances. Worse, most days are either hot are cold with about 3 days a year being just right. Of course you get all those extra days off, you know the ones where it is either raining or snowing.

Also, those 3 perfect weather days, you generally need to start your day at 5 am and end it at 9 pm.

Here is a little tidbit I have picked up on. THERE IS NO AFFORDABLE HOUSING. You can go to Po Dunk Iowa and get a house for a low price, but it isn’t Inexpensive. Once you get neighborhood built with modern homes the lowest cost you will see is about 200 dollars a square foot. Add in premiums for fast growth and the most backward run down town in Ohio will run a laborer 300 dollars a square foot.

When I add it up, the task really seems impossible.

Cheers
Qazulight

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And yet in the US each year hundreds of millions of square feet of industrial construction is completed. Some kind of miracle.
https://www.cushmanwakefield.com/en/united-states/insights/industrial-construction-update

DB2

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Zeihan realizes that. It just he believes it will require a 20 times industrial buildout.

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I followed the rabbit on over to YT n down the hole.

Here are a couple things I found interesting:

He mentions the Tim Cook comment that getting engineers in the US for a job, might maybe fill a room, but in China would fill a couple football stadiums.

The lack of educated USians, n lack of “vocational training/ skills” is a frequent topic here on METAR.
The above YT says is “numbers of workers with those skills”.
The US just does NOT have the population to provide the needed numbers of workers, even if we had the vocational training.

This is a wide ranging interview by Jan Jekielek n Mike Rowe who’s names are dog whistles to some folks.
I put it on 1.25x speed.

Jan n Mike discuss workers in China vs in US.
They describe factory work as “vocational”.
Mike comments about *“Obama introduced shovel ready jobs, when apparently USians didn’t want to pick up shovels”.
They also discuss Falun Gong, organ harvesting, Uyghurs, Chinese hegemony n vassal states.

*(Paraphrased).

Jan n Mike said that the CCP controls Chinese people living abroad with threats against family members who remain in China.
Other YTers add that CCP often monetarily supports students and demands “spying n IT theft”.

Jan n Mike said there are 60m CCP (political party) members. Assume there are 1.4B Chinese.
Ie ~4% of population is in control.
I hopped over to Gemini n asked which are the largest political parties.

India is represented! Multiple political parties; 20%+ of total population having some say in how things are run?
Bharatiya Janata Party (BJP), Modi, is largest political party in the world. *2

CCP is second largest. 1 party 7% of total population. (Close enough to Jan Mike’s 4%?)

The US has 2 (two) parties and 77% of total population having some say?

Within a country, the ruling party determines how the macroeconomy functions.
Today, we are seeing that Globally, the “ruling” country strongly affects the global macroeconomy.

:crown:
ralph

*2 Bharat is the ancient, traditional name for “India”. “India” comes from Hindus River region, the peoples of that region were/are Hindus, and the term was Anglicized by English/western countries as “Indians”.
I expect that, in the future, India will change its name back to Bharat.

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When I add it up, the task really seems impossible.
[/quote]

And yet the Texas plant was built in a relatively short time.

"Tesla began considering locations across eight states in the central United States during 2019‒2020.[11] Community groups and government officials in several areas of the US expressed interest in hosting what was expected to be a very large Tesla Gigafactory manufacturing facility.[

Gigafactory Texas (also known as Giga Texas , Giga Austin , or Gigafactory 5 ) is a Tesla, Inc. automotive manufacturing facility in unincorporated Travis County, Texas, just outside of Austin. Construction began in July 2020,[2] limited production of Model Y began before the end of 2021,[3][4] and initial deliveries of vehicles built at the factory took place at an opening party called “Cyber Rodeo” on April 7, 2022.[5]

Gigafactory Texas - Wikipedia

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Thing is, we are not talking about building a Giga Factory. We are talking about building many of them maybe the equivalent of 4 gigafactories in every state in ten years.

I also note that living in or around Austin is just about impossible.

Finally. We are running the underground construction crews at capacity now. These crews tend to be mobil. As in we have crews from south Florida, Georgia and Alabama supplementing the indigenous crews here i the Florida panhandle. If those crews were tied up at home, the construction here would stop until the crews here could be furnished with equipment and new crew hired and trained. This would be multi year project in its self.

So yes Giga Texas was built in two years. That was an amazing feat. But it was not built with native excess construction capacity. It was built with capacity brought in from other areas. When that capacity is used up at home, there are no reserves left for surge projects. Then new construction capacity must be spun up. You don’t just empty prisons and hand out shovels. You need horizontal boring machines, ground penetrating radar. air lances, hydro vac machines, water tankers, track hoes both large and small. And you need people trained to operate the equipment and people trained to maintain the equipment.

I see old people like myself sitting in white trucks managing crews. They have retired and someone made them an offer they could not refuse. I half expect that someone will offer a superintendant job to me when I retire. I might even consider it. But it will not be cheap, and I will not be good at it.

Cheers
Qazulight

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The JCs, L&Ss etc chose China due to lack of environmental regulations, little enforcement of the few regulations, ability to bribe local officials, authoritarian rule, etc.

The move to MX maquilas faced opposition due to the effects on USian air n water quality.

The giga Berlin plant started before giga Texas. GigaTX was supposedly “held back” so that giga Berlin could claim “1st place”?

We USians are criticized for “privatizing the gains” (cheap goods) while “socializing the costs” (pollution, environmental degradation, labor violations, convict/slave/child labor, not to mention labor practices that are illegal in the US/West, +, +, etc).

:united_states:
ralph

It can’t happen here:

Describes TX coastal pollution in the 1980s.
Bribery, lax enforcement of EPA rules.
Foreign “employer” (privatizing the gains) offshoring (socializing) the costs to TX n Texans.

CA said “no Elon, you can’t destroy CA coastal environment”.
TX said “Boca Chica? Sure. It’s a pestilent public eyesore n economic black hole. Please turn it into a TX treasure.”

The areas along I-35 north of Austin (all the way to South Dallas; East along hwys 79, 290, 71, 21, are seeing massive, square buildings EVERYWHERE.
I’m told they are “speculation built” for the data center, factory, etc that’s coming - and are supposedly EMPTY.

They are completed in less than 6 months, first soil disturbed to landscaped parking, finished shell.

That’s what I see from the highways n by-ways.
:oncoming_automobile:
ralph

BTW. 30 years ago, these same communities along I-35 n around Austin surged their city “foot print”, incorporating as much surrounding area as possible, and designating “industrial zones”.
Then US federal n local match funding began installing the “pre-construction” infrastructure that @qazulight describes.
So … much of the pre development has already been done.
“If you build it, they will come”.

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That is good news. We can build quickly then. At least somebody thought ahead.

Cheers
Qazulight

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I have heard that comparison made, specifically, for tool and die makers. May not require a lot of “book learning”, but that trade is an art form. Eons ago, one of my college classes was in “production tooling”.

Steve

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That could for Tim but Elon has no problem getting engineers.

The Captain

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Elon, and TIG, both sing the praises of H-1B visas, so that “JCs” can hire people who had been educated on someone else’s dime to do the “knowledge work” they need done.

Some months ago, I proposed concierge services, where, for a subscription fee, a “JC” can obtain access to a private cadre of highly trained specialists: doctors, dentists, mechanics, on H-1B vistas, to serve their needs. Then the USian education system can be further defunded, to cover another “JC” tax cut. The Proles who cannot afford to subscribe to the service, will get a lecture on “personal responsibility”, when they are unable to access the skilled people they need.

Steve

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Way old school. Manufacturing bah.
Smart students head for financial engineering on Wall Street. That’s where the bucks are.

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That is what the tax code incentivizes too. And more benefits: no big CAPEX in plant and equipment. No Proles that are such a nuisance, wanting to be paid. Just profit from playing with data that represents money.

Steve

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Yep avoiding the goober class is a big plus.The professional class can remain in their upper class neighborhoods and dream they don’t exist…until election time. :laughing:

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Maybe the US should abolish JCs.

The Captain

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lol…the stated objective of government policy, for over 40 years, has been the care and feeding of the “JCs”, above all else.

Steve

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Maybe the US should abolish the government. Maybe vote in someone different. Which countries have no JCs? They could be your model.

The Captain

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I realize that I’m the stupid one in the group, but I have to say I never for a moment considered “where the bucks are” when going to college. I did what interested me, and assumed it would pay enough to give me a reasonable lifestyle.

My Dad was an engineer, and that’s where I started. I became clear to me (and to my professors) that my heart wasn’t really in it, and I changed majors. Twice. Eventually I ended up in broadcasting which paid very well indeed.

Not for the first 10 years, when I barely made minimum wage, but a lucky shift into corporate media and I was on the way.

My advice to my nephew, who went into sales and hated it (but was well compensated), do something you love doing. Then it’s not “work”. What he was doing was “work”: trading his life for money. I see people standing behind the counter, mowing lawns, digging ditches doing that - trading their time for money. They’d be so much happier if they found something they liked to do - and in many cases they’d probably wind up making more money too, but perhaps not tomorrow.

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That is what the vast majority of people do. Maybe a few find something that both sings to them, and pays a living wage. But most “work to live”. Of course, in the “JC’s” mind, Proles “live to work”.

Steve

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