Jet Midwest’s Post

Transcript

This is a continued discussion from the previous episode of Nose to Tail, a podcast where we explore the world of aviation, lifecycle solutions, insights, and more, presented by Jeff Midwest. No. Did you have any when in your, in your earlier career, did you have any work you guys did on the B2 or No, Didn't have any work on the B2. I, I really, you know, I was actually born and raised in Asia. So I'm an American, but I was born in Japan. I lived in Singapore a long time. So a lot of my friends were on the military bases over there. And I did in my early years when I was a Boy Scout. They took us out onto the USS Nimitz. Got this. Didn't have any B2 bombers. On that one, but but there were a lot of cool aircraft and I think those kind of experiences. Are really what sticks with you and then later on kind of manifests and you either join in an industry and and that's one of the things I appreciate about this kind of podcast is I bet you guys are also reaching out to people who maybe aren't even working in our interest to go to watch this and and they need to get excited that there's new things happening that we're using AI, that we're using blockchain. We're not just stuck here in the 1980s with like paper and you know doing things like the old way people people want to see that that there's energy, there's youth and. Excitement going on in our industry and I think that's that's super important because you know, a lot of what our biggest challenges are all around the hour and the lack of being able to transfer that knowledge on to the next generation. Is there anything else maybe you we haven't talked about or or some tangent that we maybe need to that would just be good for a dialogue? I mean, I think it's a little political, but the China is very topical right now is the tariffs. I think, you know, I think everybody in the industry and all industries is looking at these tariffs today. And what does that mean for the aviation industry? I mean, we're looking at numbers like 50 percent, 25% goes up every day now. And this is something that I expect, you know, this will settle down. Like there's going to be rocky times maybe in the coming months ahead, but. At the end of the day. I'm gonna talk specifically about China because I think that's the most attention grabbing one. You know that, that China has a position where they, they're, they have an advantage in terms of their labor costs and their industrial, their industrialization and their industrial capacity is, is very strong. If you think about it, for them, it would almost make more sense to just say, hey, we agree with this kind of reciprocal tariff and drop theirs down because they'll have a competitive advantage. So I think in a way that's a bit of a misstep, but I understand kind of why, you know, maybe it's also a bit of, hey, if you're not going to follow the existing, the existing WTO frameworks, then we're going to just do the same thing back to make the point. But what does that mean for the short term? I think it means that Chinese airlines are going to be buying a lot of USM in the coming year or years ahead. Think about it, if you have 50% and you can buy $100,000 USM part, you buy $400,000 new part, you know those tariffs suddenly become $50,000 and $200,000. So the economics will greatly I think favor that the tariff environment will favor used used materials and also favor near shore repairs, which will also mean that the repair capabilities in China locally will grow. There will be more local China capability to do. Component repairs, OI think, I think that will be the two things that we see. We see the increased uptake of um an we see an increase in demand in China, domestic component repair capability probably supported by the OEM's, maybe a little bit more of a pivot into Europe as well. Yeah, the CAC's the So the Chinese are airworthiness authority. I'll be curious how they respond because the challenges that they put in front of us, you know, they had chat, we had challenges at the MRO level. We were CAC approved and they sort of rescinded all of that and make you kind of go through a new process. And, and that would that's very disruptive to, to how to best service. Then we want to do this, but it's expensive and it's hard to find return investment sometimes in some of the challenges that they do put out there because the rest of the world's buying. Yes, the the rest of the parts world is booming right now yes, and I hope that that they can get aligned and again, maybe the alignment with block arrow, maybe that helps uncork some of that apprehension that they have about about the control over the source of all of those components. So and I have to say, you know, it's when you look at the way that a lot of these parts are marked and the condition they're in, I mean, it's kind of understandable for wanting to see better traceability and I've even fortunately been able to talk. In in some forums with other regulators from for example, FAA, YASSA, Canada and Brazil and they. They, they all acknowledge that actually this part around the tear downs, around the, the dismantling, there is a, a gap because these are not known entities from the aviation system perspective. They don't hold any certificate besides maybe some, you know, the SA. So it's, it's important to close that gap. And, and I think that's, I think that's what we're doing right now. It's definitely a big opportunity for us and, and it should unlock that, that China market as well. OI hope so. You know, and I, you know, I got asked yesterday about the we have an office in Turkey. And so it was actually sort of what was the origin of my thought process there. And I do think that, you know, I'm hopeful that the, the Ukraine Russia conflict ends soon enough. You know, I, I think it's. Some of those things that we don't really control in this world, but have a negative impact on a whole lot of people's lives. And I do think from the aviation sector standpoint, when that ends in the trade opens back up, that there's going to be a nice upward spike for the spare side of the world because there's obviously not been able to be. There's a lot of airplanes flying that aren't being supported in the way that they're being supported prior to that conflict starting. And so, you know, hopefully we can get back to those those avenues and open up those those pipes. And it kind of let the product start flowing back there because if it's necessary and again. Conflicts happen and all sitting and waiting and hoping that somebody goes in and with a comb head and negotiates the things to to stop. So again, I think there's probably a big boom coming there. Yeah. Once that happens, so and all the airspace too, that isn't like fully accessed at this point. You know, that's another big part of it I think is if you think about all the extra emissions just as a result of this, it's it's a lot. Yeah. I was on a flight back from Dubai to Chicago and when right when the conflict. Started and not where I was like the day, but early on in the conflict and that in flight had to reroute us because there was combat operations that they were worried about and they had reroute us, you know whatever another 40 minutes around to go around the the certain area that they were worried about. So it was it was interesting to to be in that scenario and be sitting in the airplane and they're telling us this over the copilots telling us hey don't worry about it but because of the you know there's some fighting going on we're going to go around this section over here and. I'm watching my flight map as we're going. I'm like, well, I could see what they're talking about. That would be a big nerve wracking. Yeah, it was interesting. I mean, actually. Yeah, that reminds me of something else. Yeah. So one of the other good things happening is they're going to start direct flights from the US to Thailand, which is where our that's actually where our main base of operations is it block Arrow, nice. A lot of people ask why, Why would you start? Why would you set up your company in Thailand? And, you know, I think Thailand is a very interesting country, has a special relationship with the US actually, in fact, they're, they're not the current king, but the former king was even born in the US. But they, you know, they tie everybody knows the Airways and likes to think of Thailand as a tourist destination, which it is. But it's also a relatively, I would say, liberal and open country in Asia compared to most of most of the other countries. So they're trying to do, you know, different. Different things to encourage aviation investment in the, in the country. So they have a lot of these like kind of 0% tax benefits that you could take out for like 8 to 8 years or more. And they also have a good, a good environment of recruiting talent from the region. So like I can, I can get engineers, software developers, designers and, and it's, it's, you know, of course the cost point is, is lower being in Asia than, than it would be in the US. But everybody speaks English and it's, it's been a very good environment for us to keep not just the labor or the head count costs low, but the just all the operational costs here are quite affordable there. So very good quality of life. The food is awesome. I can't recommend enough for anybody who is looking to go out to Asia. Thailand's probably the, the, the, the, the best, one of the best first countries to visit for that regard. And, and block arrows, you know, we've been, we've done pretty well over there. And now we're more actually kind of expanding our footprint in the US So we've been putting a couple of hires out here. We'll probably be setting up an office in, in Florida in the coming months. That's good. That's a great expansion. Yeah. No, you, you, you told me you grew up in Japan. I was born in Japan, were born in Japan, grew up in Hong Kong and Singapore. OK. So eight years. So I was, my father was working. As a kind of executive at a, at a multinational, they, they all, in fact, they were the OEM of the parts aviation parts distribution, one of the OEM's of the aviation parts distribution company that my brother, older brother eventually got involved in and also a bit of a family business here in a way too. My younger brother right there is the CTO Adam. So he worked at United Health Group as a, in their technology division. And I was like, look. The, the, the engines are kind of like patients, you know, they, they gotta go to the hospital and nobody knows what the heck happened to it, just like in the real hospital, you know, And it's, it's, it's kind of the same thing. And if you think about it, we need that. We need that in the medical world too, because, but, but in, and I said, hey, we need systems that are going to be secure. People in the aerospace industry really care about that. Obviously they do as well in the medical field due to all the, the privacy requirements, but umm, yeah, so, so. Brought. I brought, I brought him on. He was, he was. So he was also with me, obviously in Asia when we were growing up. And yeah, I mean that that experience definitely shaped my future in a way. It gave a perspective on on the world that I think when you live in America or you live in China, they're both really big countries. Like you almost can't it's hard to get the what it what how might other people from a different world see the same problem? Or maybe it's not a problem. And and so I think having that has always. Allowed me to have more of an open try to have an open mind on things and I think that's what's needed for our industry to rethink how we treat our assets and create digital assets for them. So so yeah, that's. It's also, yeah, you know it. I'm blessed in that I got to grow up in the aviation business in the same city I was born in. Yeah, they build to kind of stay there, you know, by running the operational side. That kind of kind of can't leave if you're running the operational side. But it also sheltered me, right? I've had to learn a lot of those lessons and I've done a lot of travel in my career and go to places and go like I, it's funny, I walk into all these places and everybody has unique problems. So we work with all these people on solutions. So now everywhere I go, I've got one more blade. My Swiss Army knife that I've worked, I've worked a project there in Canada. Well, I will take that and apply it with the guys that I'm working with in, in the UK. Yeah. And then what would they give away your solution for those guys? It's a little bit different. I'm going to put that in place for for this customer over here in Mexico. So it's been great to kind of go around the world and do those things. And you've been maybe fortunate enough to grow up in some places where you just kind of learn those things. Yeah. So that that's, that's fantastic. And the language is, is key too. That's the key to unlocking the the rest of the world. It's like how many languages can you do? And I know the Europeans are really good at that and the US to kind of focus on Spanish a lot. But I also think, you know, if we could, if we could get, you know, more language exposure in the US, that would also kind of give us a better view of like how, how we can interact in a, in a win win kind of way with, with, with people because, you know, we're all kind of like fighting with China right now and, and in Europe and. The end of the day, these aircraft, all of them have parts from China, from the US, from Europe, and they're not going to come out like we're not going to make a new 737 or 88350 or 787. We gotta find a way to work together and play nicely. I think blockchain is also a big part of the international collaboration, right? So if it is a standard, it becomes known language, it's just in the blockchain and everybody can share in that. That's awesome. Thank you everybody for listening. Todd, I appreciate you being here. It's been super insightful. I hope all of our listeners got a lot out of it. I know I did. And I'm, I'm excited for the future of Block Arrow. And for all of you out there, please like and subscribe, and we'll see you next week. Thank you for listening to our podcast, Nose to Tail. Please like and subscribe to our channel presented by Jeff Midwest.