Laoma, Do you have a position in ZBB at this point or still on sidelines? I can't say I'm beyond selling the news. We will see if today is equity day. It seems with this deal ZBB is entering the realm of having R&D as well as manufacturing done overseas. Sadly enough, they may not need that Wisconsin factory floor in the future. Incidentally, given your Chinese experience, what can you say about reducing manufacturing and engineering labor when in Asia? I have an S-corp in the States and hire up to 20 people in the summer and its surprising how much all those payroll taxes, workman's comp, etc inflate the payroll. Any such payroll surcharges in China? I guess if you paying someone $1/hour it wouldn't really have an impact even if there were such fees.
No, no position directly, just a bunch of wonky friends who rely on my thoughts to help guide them.
I definitely see a reduction in costs to manufacture in region - at least on the flow battery part, it makes sense to source and add the electrolyte locally. For the power electronics, it's hard to say. Korea would be lower cost in general, and this company specifically can offer some manufacturing scale efficiencies. But I don't know enough about the Wisconsin manufacturing facility - perhaps they have some sweet tax incentives or commitments there that mitigate some of the overseas advantages ? I do know that with a lot of the Federal, State, Military, GSA-type projects, there are requirements for USA manufacturing, and a lot of green/renewable projects in the US are meant to ween us from foreign dependancy, so I can't think that this news, will have a huge impact on where the ZBB stuff is made for it's biggest market - the USA. It will pay dividends in R&D for sure. Re: China - workers contracts and rights are radically different than over here - they are basically a mess and really hard to administer. Add in elements like FCPA compliance, and it's not a walk in the park to hire workers in China. I'm pretty anti-JV for a company as small as ZBB, so I hope this new Korean JV is the only new JV they have for awhile.
No position directly? HMMM...I've got to think you may know some of the folks at ZBB and are keeping the pulse of the retail crowd. I may be wrong, but do appreciate you opinions and expertise. I certainly know a lot more about the 5-9's and other related subjects from the dialog. Anyway, off to Coachella Music for the week. First big event of the year.
I think it is more of being in their infancy and not being experienced or established enough to get a foothold into Asia without a big, recognizable partner. This is about getting the name brand out there. Of course some manufacturing will be done overseas. Does it really make sense to use up the manufacturing capacity in the US to then have the expense of shipping it overseas when you're trying to give the customer the best ROI possible?
Yes, this gives them an established Asian sales channel but in the near term they will be shipping V3 prototypes to Korea where Korean engineers, at a lower cost, will evaluate. Once an optimum design is picked, you got to think the plastic molding is going to be done in Korea. Some V3's completed in Korea, and some assembled in the states for domestic projects.