LAEDC Manufacturing Matters Panel: The Good, The Bad & The Ugly

Joanne Golden: I will say to start off—this might win me some brownie points— I am from Michigan. You know, going into the importance of this session, I came out here in 2007 and I never left. And I think that says a lot about a lot of people who come out here from Michigan, who never leave. A lot of it has to do with the innovation, the creativity, the overall amazement of all the activity that happens in LA. It just doesn't happen like this anywhere else.

 And so when I look at the manufacturing industry—which every single industry is getting shaken up right now, it's almost like on a daily basis you turn on something and everything’s just flipped on its head—but when you specifically look at manufacturing, there's a call to action that's taking place right now to bring all this manufacturing breadth back, bring as much of it back as you possibly can. 

Now, this does not happen overnight, which we're going to get into a lot of these nuances, but we have an opportunity here. We also have some very significant barriers to overcome in order to achieve some of these opportunities. So, my hope in today's discussion is that it's not just going to be us complaining

 So, my hope in today's discussion is that it's not just going to be us complaining about how hard it is to do business in LA, because I think just about everyone who's in here recognizes that we’ve got some work to do, but also talk about why we're well positioned to do all of this great work within Los Angeles.

How can we make this happen? How can we make it happen to the best of our capabilities and maximize that impact? Last but not least, how can all of you in this room be a part of that challenge? How can we address some of these challenges and barriers together to really make this happen? And so, without further ado, I want to go ahead and call up my esteemed panel here.

Minal Mondkar: Hi everyone, I’m the founder and CEO of Aura Seating. We are a design manufacturer of office hospitality furniture. We make furniture out of sustainable and recycled products. We are located in Torrance and some of our manufacturing is in Wisconsin. You'll hear more about it. I lived in Michigan for 11 years, we have a lot of Michigan people that are here today. Love LA now, but you'll hear more about my business soon. We do business locally as well as globally. We import and export our products to many countries and from many countries.

Scott Newell: Good morning, everybody. I'm Scott Newell with Siemens, which I'm sure you've probably heard of. Siemens does a lot of different things, and first, I guess I'll introduce myself. What qualifies me to be here is I'm bringing over a decade of project management, engineering and product development experience in electronics and capital projects, and international business development. To introduce Siemens, we're a manufacturer internationally. We manufacture across the US and locally here in Pomona as well. I think we've put about $100 billion the last 20 years into investments in the US manufacturing, and that's not slowing down.

 George Kivork: Thank you and good morning. Just to prove my street credibility, I also lived in Michigan, but now currently working for Joby Aviation. What is Joby? A vertically integrated transportation company. What that means is we've essentially been spending the last decade designing, manufacturing, testing, and soon operating an electric vertical takeoff landing (EVTOL) aircraft. That's a fancy word for an electric plane, a small aircraft. We have about 2000 employees, predominantly in California, with the ultimate goal of bringing this into service, into key markets like Los Angeles, New York and other urban cores.

What is the aircraft? It is a four-seater passenger pilot aircraft. It ranges about 100-mile target range and goes up to 200 miles an hour. Ultimately, the ability to service going from hypothetically LAX to downtown in about 8-10 minutes, versus the current route you currently have to take. We've been working for about a decade.

The company went public in 2021 but we we’re working for about the last seven years with Delta, Uber, and the Air Force on a combination of things to bring this sort of electric propulsion technology. The aircraft is about as light as a Model 3 Tesla, takes about two Tesla superchargers, and ultimately will use existing infrastructure around the key markets. And we'll talk about manufacturing and Aircraft Operations. We’re currently building about one aircraft a month. So this will be a sort of Crawl, Walk, Run as you see these aircrafts come into market here and around the globe. And so that's the key element of what we bring to this panel.

Richard Sullivan: So, I will go out and say I have nothing to do with Michigan. I am from Honolulu, Hawaii, and so, a little over 30 years ago, I had the fork in the road that life always delivers to you and opportunities abound as an electrical engineer. Los Angeles ended up being at the top of the list for a lot of the things that you talked about when you mentioned why you came, and why you stayed. And so, I did. I started with the company TRW in Redondo Beach, and that got acquired in 2001 by the Northrop Grumman Corporation. And I've been able to start as a level 1 engineer and build myself up through engineering, program management, capture, and now strategy and business development, getting to taste a whole bunch of different things.

At Northrop Grumman, it's really interesting, because having been a university recruiter, not a lot of people know exactly what we what we do. In fact, a lot of people haven't heard of us, the other major firms like Boeing and Lockheed Martin. We have what we call silent swagger, and so one of the things we want to do is prove ourselves by delivering technology that just amazes everybody and a lot of times they say, “Whoa, I wonder who did that.”

Things like the James Webb Space Telescope were done here at Redondo Beach, the B2 bomber, the F-35 center fuselage, unmanned aircraft—a whole bunch of things.  We consider ourselves, like a lot of the folks here, as a technology company, first, that delivers game changing technology for our customers, and for our nation and our allies. 

Scale and size—we're about 100,000-person company worldwide. In California, we have about 30,000 people, and in Los Angeles, about 20,000 people, and our focus is manufacturing. We deliver stuff, and that stuff is based on significant investment in R&D infrastructure to do next generation technology. In fact, I love the video that we saw earlier about the augmented reality innovation and those types of things. It really resonated with me because those are things that we internally invest in—local universities, intern workforce development—so that people can come in to work jobs and become effective as quickly as possible. And so, with that theme of technology, manufacturing and workforce development, I end my introduction.

John Bwarie:Good morning everyone, good to see some familiar faces today. I'm John Bwarie in the role of Executive Director of the Made in LA Coalition. 

What is that? Some of you may know me from other things around Los Angeles but let me just explain by what I'm wearing. This shirt was made in Hawthorne by Michael Stars. These jeans—Gardena from AYR. These shoes—downtown Los Angeles, by COMMUNITYmade. These socks at Socks Net in La Puente. My belt was from Alfonso’s in Burbank. My underwear was made in Compton by BGREEN. So, everything I’m wearing was made in Los Angeles, and what we try to do through the Made in LA Coalition is remind people that so much is being made in their community that supports their neighbors and their community—that they should be supporting locally made products.

We're focused on consumer goods, so I would say food, fashion, fragrance and furniture, but it's fashion apparel, it's food and beverage, it's health and beauty, and home goods as that fourth category.

Los Angeles is a place where almost everything is made. If I was wearing women's clothing, I'd have a lot more options today, because a lot of women's fashion is made in Los Angeles, and more and more people are choosing to make products in Los Angeles. 

But there's two things I want to lead you with regarding what we're about. We're about promoting the idea that people understand what they eat, what they wear, what they put on their skin, or their hair, sometimes more than they do about an electric airplane, or some technology that you're innovating on.

So, we talk about manufacturing, the jobs that employ neighbors. People get what they eat. So, next time you have beef jerky, buy some beef jerky from downtown, or where there's a new potato chip manufacturer in South LA that's trying to expand in LA for a permanent facility, but it's being told by its suppliers that they shouldn't do business in LA.

We're trying to change that by working individually with companies and as a collective to raise the profile of consumer goods manufacturing in Los Angeles. So, I'm John, and I'm wearing LA.

JoAnne Golden: When we start talking about re-shoring and global supply chains, obviously, Siemens has a pretty significant presence that you've invested in specifically within the LA area. How about we start with Pomona, and really kind of getting into, what do you what do you make there? Why was the decision to do it in in Pomona?

Scott Newell: The factory has been in Pomona for about 75 years, and so we've been working in the community. We've recently tripled the size of that factory, and that factory is producing electrical panels, switch gear, batteries, and other equipment that goes into electrical utilities and into facilities for manufacturing. 

Why we think this is important is because we implement that same technology in our facility, and that alone has brought down the energy cost about 30% for the facility. We’re building the equipment there to ship it locally in the community, throughout California, and throughout the US. We have a massive market right here in LA and things we've heard from our customers is that they need more power. Sometimes they're frustrated by not having the resiliency in the power grid, or they'd like to basically spend less money on their utility bills. 

 Joanne Golden: I love it. So, there's a key thing that you said, which is, we have a massive market here. When we start talking about some of the advantages for why manufacturing might occur here, it’s because people buy a lot of things to use them here. To be able to have that local presence can be really huge. 

George, I'm actually going to go over to you next. Let's talk a little bit about your supply chain and what that looks like in terms of making that happen all within LA, or making it happen mostly in LA. Where do you see some bottlenecks? Are there areas of opportunity to get some of that here more locally? What does that look like for you?

George Kivork: What's interesting is Joby made a conscious decision to be a vertically integrated company, and it's non-traditional aviation. I mean it [traditional aviation] used to be that way, but that evolved and now you've got 800+ suppliers feeding into one company and one aircraft.

Part of the decision was the ability to have that streamlined accountability and safety, so you have a single operator, single manufacturer, single point of contact, from start all the way up to the operator. What's important about that is not just being able to be defensive against possible shifts and change in the wind. We comment that everything but our tires is actually made in California. Our battery packs, our actual motors, everything is made in California.

We have the largest 3D printer in the world that we purchased that helps us design these special components and special sort of machinery where you can't do the traditional CNC machines—the additive or reductive manufacturing that we need for aviation.

I think what the important thing for why LA and why the market? I'll start on a positive front. I think to your point, not just that the market is large. There's a lot of big places, right? But the talent is really here: the history, the knowledge and the infrastructure is here. When you talk about Jet Propulsion, Electric Propulsion, NASA, Pasadena, we’re a couple meters away from the most innovative aviation, transportation things that have happened.

In terms of talent pool, we've got more universities within the square mile radius than maybe some section of Northeast Massachusetts. So, the talent pool and the infrastructure—we forget that the first runway was built actually in Miracle Mile. Cecil DeMille and a partner of his created the first sort of aviation, started running a flight right off Fairfax and Wilshire. Now I think it's Fairfax High School. The history has been here, and I think that's the point. Growing up, my dad had a shop in Van Nuys Airport, next to GM Pacific. We've done this before. We can do this again. So, I'll speak with that positively. 

JoAnne Golden: Richard, you probably have the most diverse supply chain of anyone who's on this stage. Tell us a little bit about what this means for you. How have you been navigating some of the, let’s call it, interesting terrain as of late. 

Richard Sullivan: We've always had “buy American.” I'll just tell it as a story, When I started in the space side of TRW, one of the first things I did was jump in a car with one of our manufacturing leads, and we drove to a machine shop that's approximately at the corner of Inglewood Avenue and Manhattan Beach Boulevard to pick up some parts. Those parts—then, in terms of not being vertically integrated, but sort of sharing the wealth across a large lay of the land, California, as well as other states and in some cases countries—give us scale, right when we need to be able to build hundreds or 1000s of something. When we need to be able to build hundreds or thousands of something, the only way to really be successful in that is to scale with others. And so, that part ended up becoming a part that went directly into a satellite that is still flying in space today, and that just repeats itself. 

I spent many years up in Palmdale, which maybe not everybody knows is still in LA County, it's right on the edge there. But I spent a number of years driving from the South Bay up to Palmdale for my job, which was worth it for the things that I felt like I was doing. And it's sort of the same story. We have some capability in house. In fact, we use our own internal capability to surge if things are not coming on time and so on and so forth, but having our team drive to a variety of manufacturing capability across the Southland to support the systems that we build.

The global supply chain shortage did challenge our Tier 2 suppliers and our Tier 3 suppliers, and we did have to, as a company, kind of reach back inside our internal capacity to help bridge the gap. But it didn't affect us as much as you think, plus, we were still being funded, and we were able to fund others along the way, and I think it enabled us to continue to have a relatively vibrant business. It wasn't necessarily the case all across the board, and it was really an example of a resilient approach, that at least our aerospace defense company is pretty conservative and how to plan for those days.

 One of the things that I think is really interesting is we’re sort of custom order—it's all made to order.  We don't build aircraft or build systems ahead of the order. So, we have to have this ability to survive the peaks and valleys of business.

JoAnne Golden: All three of you who just spoke, you're in some advanced manufacturing, right? There's certain aspects of that that I can imagine are pretty hard to come by. I'm specifically thinking things like battery cells. How do you make sure that some of that can get re-shored? Are there opportunities? And John, I'm throwing this to you to kick off because the understanding is, with everything that you're doing to promote, how do we find those gap areas—the areas where we have the talent, we have the skills, how do we find those to be able to get over that bump?

John Bwarie: There’s more to it. To make a pair of shoes, you need someone who can operate a piece of equipment that's only made in Italy. And you buy that $300,000 machine, you bring it to the US, and then you don't have anyone who can fix it. It's a high-tech machine, it's computers and equipment, and because of the machine you're actually employing more people.

So, it's not replacing jobs, it's enhancing the ability to hire more people in other ways. And so, there's a shortage in apparel and fashion for high tech workers, because they go to these companies, because that's exciting and flashy, but there's really a need, and there's a gap.

 So, we've been talking to community colleges. We've been talking to universities about what's that training look like? We're actually looking at automotive training to take students in automotive training—because that's very high-tech now— How do they apply that to fashion apparel manufacturing?

That's one way we're looking at it, but more generally, if you look at gaps, there is a through-line of manufacturing. We've heard a lot about high-skilled innovations that we're talking about right here, but in all the other sectors that we're working with—fashion, food, fragrance, furniture—the way to identify gaps is talking. 

Here’s the other sad piece. I'm going to bring us down, but I'll bring us back up, I promise. George made a point, he said, “Joby made a choice to do something here.” Every manufacturer, especially small manufacturers,  makes the hard choice to locate here. They're being wooed by our neighbors to the east, Inland Empire.  Arizona, Nevada, and Texas send letters to companies with 40 or 50 employees saying, “Hey, it's easier here. Less taxes, we’ll permit you faster.” We’re not talking about 1000s employees that they're trying to poach. They're trying to take people with 40, 50, 60, employees, because it's easy.

So, the sad situation is these many manufacturers who are not on this stage sometimes feel like they're alone. What we're finding in just bringing them together and identifying issues is they have no idea the rules that our state legislature is passing that affect a manufacturer because they're busy running their business. While you might have a government affairs or public policy person that's on staff at one of these companies, the beef jerky manufacturer, or even companies like Michael Stars or Clare V., who are employing a couple hundred people in very large brands nationally, they don't know what's going on. The gaps are developed by having conversations—by understanding what they need.

 There's more than 45,000 garment workers in LA. We've got hundreds of thousands of people being employed here, tens of thousands of companies manufacturing, and probably about 5,000 companies in LA County alone that are doing consumer goods manufacturing. We have to listen more to what they need, because no one is asking those folks. We're asking these folks, which is really important. 

We need Northrop and we need Siemens, and we need Joby and all your peers, but we need to have more of a conversation about the nearly 300,000 small businesses in LA County. A lot of those are manufacturers, but we're not talking to them as a civic leadership. We have to have that conversation to realize that the gap is probably the same. The fixer for Richard and his company may also help the guy that's making spices in Torrance just alongside the aerospace piece.

Moderator Joanne Golden: This is an excellent segue. We had a prep call before all of us, and when each of us joined, we learned something interesting about Minal and her company, that they're headquartered in LA and they actually made a strategic decision to move some of the operations to another location. I don't want any boos from anyone in the audience, because I think this is an important example of a small business who made a strategic decision, and I think we need to understand why you might have made that decision. Where do you see some of the opportunity for LA going forward, and are there things we could be doing better?

Minal Mandkar There are 300,000 small businesses in LA and like John said, nobody brings that to the public’s attention. I'm glad LAEDC is doing this, so I get a voice to mention what's going on. Bringing manufacturing back to the U.S. is a romantic dream, and I would love to be part of that dream, but it's not always easy. 

I'll give you an example in Torrance, where our manufacturing facility was and is. We are still headquartered in Torrance but some of the manufacturing is moved to Wisconsin, where we already had some of the manufacturing going. We are just expanding that. We were paying $2-3 per square foot in Torrance, and when we moved some of it to Wisconsin, it's 50 cents per square foot. That's 75% savings. For the labor, we were paying $25 to $30 per hour. When we went to Wisconsin, it was $12 to $15 per hour. And that's 50% savings. 

So, now you can see why small businesses are thinking, “Hey, maybe I can go some place where I can actually make money at the end of the day.” It’s not just that, but there are more things, more than the labor cost. I have to say that unfortunately, it is true, California is a litigious state, like there are more attorneys than there are employees. If you go on the freeway, you see all these explosive billboards that make it really hard for the employers to stay in business. There are some lawsuits that are just so frivolous, but the employers are spending so much time, especially the small business employers who don't have the time to spend on these things but are spending exorbitant amounts of time solving these kinds of issues.

I would like to say, I have done business with a lot of countries, import and export, and there are good things to learn from other countries that we can incorporate here. When we had a factory in China, the government actually gives you land for free, building for free, the equipment for free, and the labor force is given to you at no cost for five years. After five years, you pay some portion of it, and that goes on for ten years. So, , you stay there. Of course, the condition is that you stay there. You can see medical schools doing that. They want the kids to come to their medical school, and they mandate the condition that, after graduating the medical school, you stay here for five years, and then we can fund your tuition.

We can incorporate that for manufacturing here, give that incentive to small businesses, create those zones. Wisconsin has an opportunity zone where they give high incentives to small businesses to start their company there. Do something like that in LA, have the tax-free zone for small businesses for certain years. I'm not saying forever, but for some years, we can do that and give that incentive, have those grants for low cost labor, and in return, the small businesses can invest that money into automation, which is extremely highly needed, and robotics, so that we can have more skilled workers. We can all benefit from it.

JoaAne Golden: What I like about the direction that you just took Minal, is you were combining a bit of the last question with the one right after that, which talks about, what can we do? I'm actually going to pose that to a few more of you. Let's talk a little bit about some of these barriers. More specifically, let's not just bring up a problem, let's talk about what we can possibly do to fix that problem. So George, I'm going to start with you.

George Kivork: I think you hear that time and time again. Cost, real estate, litigation, all those are definitely things that we need to tackle. And the challenges, those are things that are tough for us to control.

One thing I want to highlight is what John said, what we can do is what some of these other states are doing. Why it's easy to go to Wisconsin is they have 2-3 phone numbers you can contact within the city, the governor's office and the mayor's office to get things you need. There's not a 1-800 number. You actually have a personal contact.

To John's point, that is what other cities and states are doing. They are helping businesses feel a part of that community, whether it's having a liaison, whether it's having a point of contact, it's not just a 213 number that you call and just leave a message. So, I think that's a critical element of what, number one, we can do—figure out how we can help business have that liaison or have that contact. And it needs to be through folks at EDC and through these partnerships, but make that easy for businesses. Number one.

Number two, I think the challenge we have is we've made these rules for a reason. We believe in these rules because we value these principles, whether it's environmental regulations, litigation rules, employment rules, workplace health or even hiring, permitting, because we, as a community, value and put them in place. I think the challenge now is we do not see how we can operate outside of these boundaries. When the city needs to hire 20 new firefighters, or the city needs 15 more communication and  information officers so we can get information out, they have to go through a procurement list. They have to go through the hiring process.

We cannot think of ourselves outside of these regulation boundaries. And I replicate this to our aircraft. We call it an aircraft. It's a plane. It can take off the land like a helicopter. We can use helipads. It has taken four years to get the FAA to the point now where they are using one lingo, “take off”, “the landing,” whatever it is. We can all use helipads. These are all aircraft. We no longer have to have barriers to the facilities, and people understand what an aircraft is.

Similarly, how does that translate to the regulatory boundary within the cities and government. Whether you're hiring someone, whether you're firing someone, how do we make sure that we can think outside of those current limitations to help advance and implement some of the creative stuff? I bet Northup would love to do more creative things with cities and counties, but it's limited by its ability, because of the rules that we set in place to protect ourselves five or ten, years ago, and we haven't revisited.

 JoAnne Golden: So, since you already kicked it over to Richard, What's your wish list? What can LA do to help make this easier?

Richard Sullivan: It goes back to one of our biggest barriers, which is availability of the workforce. You may look at our companies, and yes, we do have a lot of really high skilled workforce, but we also have entry-level, blue-collar folks, and we have a capability, I kind of mentioned it in the intro, we call it the A-Star. I don't remember exactly the acronym, but it's something really cool I’m sure. 

It is essentially like what you see here, where we teach people that if you're going to work on this program, you're going to learn how to use augmented reality glasses so you can see the wiring inside the airplane. They get to practice that, and they get to show proficiency before we put them on the floor. We did that internally, because that capability didn't exist. Now I see what this school does, and in my head, I was thinking, “This is like what I would offer.”

It would be a great thing for Los Angeles to do, have these types of centers that enable people to learn the skills that can make them immediately capable, whether it's in the aerospace defense industry, in the fashion industry, using $300,000 shoe making machines, to understanding how to develop charging stations near helipads. If you break it all down, it starts off with just some fundamental skills that then can transcend a lot of labor force needs across multiple industries, and I think that is something that's achievable by a city and a county with as much capability as Los Angeles County.

George Kivork: I just wanted to jump in on that and I think you made a really good point. We look at this siloed because we're looking at it as we need aviation programs, or we need a mechanic program, or we need a vehicle program.

Joby's designer came from this college- Art Center College of Design, right? And he's designing plane interiors, it's a beautiful aircraft. One of my favorite stories at Joby is that we ended up hiring a group called medicine action, where we reached out to them because they're a community partner.

What we learned is these women make quinceañera dresses up in Marina, California, and they do it for free in farm communities and agriculture communities. We ended up hiring one or two of them because they applied for a sort of electric wire harnessing position. We then realized that the exact same skill-set for seamstresses ties to electrical wire harnessing for the entire aircraft. So, now we stood up a workforce program where we bring in seamstresses, put them through a training for three months with healthcare. I think they made $70,000 and then they get a full-time job through that program.

And so, this became a community based feeder program in Marina, southern West California, where we have never envisioned this, right? So how do we convince the FAA to invest in an agriculture or seamstress community as part of an aviation workforce? I think that's the point where we can be more creative—to John's point—and invest broadly into the workers.

Richard Sullivan: It is also the community colleges, right? It is really easy to have folks go and enter and take trade craft, and we do it already at Antelope Valley City College, as well as El Camino College in the Torrance area, to help develop skills that can be immediately available. How do we just parlay that across multiple industries? One of our things we say is the people who are currently on the shop floor before they were 21 were working at Starbucks not that long ago, and it's about changing from baristas to builders. We have that actively, just like your seamstresses.

JoAnne Golden: We’ve gotten the signal to close, but I want to do a quick 30 seconds for both you and Scott.

John Bwarie: Businesses like Minal’s are choosing to be in LA as best they can. Our role as civic leaders, as elected officials ourselves working in cities and corporations, is to choose Los Angeles—meaning that when you have soap in your dispensers in your large facility, that soap could be made in Sun Valley, but it probably is made somewhere else. So, making conscious decisions about the things that you're buying and spending money on. If anybody gives corporate gifts out and they're not being made in Los Angeles, I would wonder why you're on the Board of Governors of the LA Economic Development Corporation. I know it sometimes feels rough, but the reality is we have a number of people who say we are all about the future of LA and then we spend our money other places. We tell people to shop local all the time. Go shop at a coffee shop, at a restaurant. We should but imagine if we actually spent larger amounts of dollars in companies that are local and small in Los Angeles. Keeping that money here, that's the challenge for all of us. To fund incentives from the local government, that's the other piece.

Scott Newell: That's a tough one to follow. So, I will say that we are very committed to building in LA and we're not just selling stuff to consumers, but we're really building the key infrastructure that goes into data centers and everything else to enable the next great industrial automation. I think it starts becoming a chicken/egg conversation when you talk about cost of labor versus cost of automation, and you're looking at improving your capital inputs to buy it, putting it in over operating costs. It's kind of a rock and a hard place.

I really think that building sustainability into efforts from day one, whether it's a brownfield or greenfield development, making everything as efficient as possible is not only going to leave us better prepared with better air quality down the road in the future, but also drive down costs on utilities.

 JoAnne Golden: Love it. So a couple big themes associated with this panel that we can really work on and kind of harness this opportunity in front of us: more cross sector partnerships, recognizing that there's some great opportunities in adjacent industries; continue to invest in our workforce, that's clearly a big selling point for the LA area; have more discussions, talk with each other much more, and make sure that we can really start bridging some of these gaps; really make the environment more welcoming, and that doesn't necessarily mean we have to remove all the rules and regulations that make us who we are, but make sure that you have points of contact, friendly faces; make sure that these small businesses know that you are here and that we want them to stay here-that can make a huge difference.

Last but not least, to John's point, walk the talk. Everyone in this room, I think that's a huge call to action. We can all be doing more to promote the Los Angeles region.