E231: Inside the Acquisition Process: How Reg Zeller Scaled CaneKast to a Multi-Foundry Empire

Ronald Skelton: [00:00:00] Hello and welcome to the How2Exit Podcast. Today I'm here with Reg Zeller and he is the CEO and founder of Cane, is it CaneKast? Is that right? 

Reg Zeller: Yep, CaneKast. YuP.

Ronald Skelton: This is a re-visit here. You, you, I, getting to the stage in the podcast where I get to bring people back and go, how's it going? You've been on here once before, you'd acquired a one, two, maybe a three at that point,cast companies or whatever you pre, I'm gonna call 'em, I guess you'll explain what it is, but where you, you cast metal objects, right? 

Factory manufacturers. Now we're at a different stage. You've been, you've had another year at it, or maybe a year and a half since the last time you've been on here and you're cooking it. But to hear the new number, we're going to get to that in a second, but to hear the new number, people have to understand how busy you are, right?

Cause if they know the name of the game, you have to talk to dozens of people to get a good one. So, uh,we're kind of give people a recap of who you are, what the industry you're in is. Cause some of the people haven't heard the first show. And then we'll get into kind of where are you looking at right now?

Reg Zeller: Yeah, so we own [00:01:00] non ferrous foundries. Non ferrous, the easiest way to say that is aluminum, brass, bronze, zinc. Pretty much what it is. Mainly aluminum though. What a foundry is, is we melt metal. Typically, if it's aluminum, you're talking 13, 1400 degrees. You pour it into some sort of a form that would be a negative more or less.

So what, so just the opposite shape. It's a hollow shape. You pour it in there. You let it cool. It solidifies and you have a product. It's pretty much that simple. In the last 6000 years, the industry has gone through some levels of changes, but they've got things back. Literally Mesopotamia and a frog that, uh, is the first one they've seen that more or less made a form and figured out how to melt some metal and that's what they got.

And nothing's really changed all that much. I mean, there's different automated techniques and there's obviously much higher quality and controls, but, all kind of the same. So, we started totally 7 years ago, but the first 2. 5 years, we only owned our [00:02:00] first one and then started a very slow roll up order. Second one just because it was something local that we could put in.

And yeah, so to your reference point, it was 2 or 3 years ago when we started buying quickly. So now we have 7. We've got 5, yeah, three to five active deals that always depends on how it counts. I don't get to choose when the sellers sell. Most of our deals are off market. We rarely do on market deals at this point in time because we had in this market probably 5, 000 of these foundries. 80 percent of which have gone out of business in the last 50 years.

Probably another 200 plus of those have gone out of business since the beginning of COVID. So we've gone through quite a change. I think right now, I've talked to a few, you know, you mentioned having to talk to dozens. I've talked to probably a little more than 600 of these places, and we've got about 35 on the list of people that I'd be interested in actually acquiring of the probably call it 3 to 400 that really fit kind of perfectly in our [00:03:00] spot.

And, yeah, the next 3, 4, 5 years, our intention will be to buy, probably another 10, 15, 20 of those. So ultimately, we've 10 X in about seven years. We should do about that level of growth over the next three, four. Just started, we're now at the point where individual acquisitions don't move the needle as much as some of our, like the blank slate that we have for the team.

And I don't, now, I only have time to do acquisitions and there's a few reasons for that. We can get into it later, but really, the game is my job is only to buy. And then I throw it over to my business partner, Josh. Josh runs all of the day to day. And so quite literally, we sign on a deal. Typically we'll sign a Thursday or Friday.

We have reasons for that, or we'll close. And then ultimately on Monday, by the time we get in and get to talk to the employees Josh is running the show. I pretty much don't say anything at all anymore. And he and the rest of his team are the ones that take it [00:04:00] over from day one.

Ronald Skelton: It's brilliant that you have a system that you've done enough already, this is what works for you. 

Reg Zeller: Just say we have a system, like we literally know exactly how we're going to do it. We know we won't tell employees after a Tuesday. It'll either, and we know we'll start Monday. Typically foundry start at five or 6 a. m. So we'll get them out there. They'll get to their first break, which typically is around eight 45 or nine.

So we'll make sure they're working. There's a reason specifically for that. Cause it means they'll have something to go back to after we shocked the hell out of them. And we say, Oh, Hey, we've sold. We let the, but we literally do it where the owner tells the employees. So he says, Hey, we've sold. Here's why we've sold.

We sold to these guys. Here's why we sold to these guys. And then we pretty much talk a little bit, tell them what's going on. And then we send them back. So that they can kind of get their heads wrapped back around everything at lunch. We bring in, we bring in pizza or whatever the local fair is that they want.

And then we answer questions that for the first two or three hours of shock starts to get through them. And then on Thursday, we bring everybody [00:05:00] back in. We kick the old owner out. So he's not around and we say, all right, it's been first 4 days. What's going on? You guys have, at that point in time, whoever the plant manager is, has probably talked to Josh and or whoever the plant manager is, has talked to all the employees about what's going on.

And then we do another thing in about a month from that. So, yeah, we've got, same thing where we have transition in an eight week transition. We know exactly how we're going to get the seller out. Like we've got, we're getting to the point now where because we've failed, because I made so many mistakes on the first seven that we're starting to actually get this dialed in on how we want to, to operate and run it.

But everything has to be kind of processed something like that.

Ronald Skelton: I was going to ask, was the lessons learned just by trying different things or the costly lessons? I just got the answer to that one already, right? You learn your lessons like, oh man, we're not doing that again.

Reg Zeller: I call it, I call it tuition. I paid a lot of tuition for me in the mistakes that I made. And now my team, I'm getting to pay tuition for them. So, you know it all, but we just get better and better every time. And Josh is building a great playbook of [00:06:00] how we're doing this. 

So, everything just gets better and better every time we touch it. And, that allows us to scale. That's why we're going to be able to go from buying, two in the first 30 months to in three and probably the first four years. Now all of a sudden we can buy, one to four a year if we want to.

Ronald Skelton: The uh, do you have much turnover after the, with this new process that people tend to stay? There's always going to be, before I say that, there's always going to be some set of people that were on the edge of leaving already. They already hated their job and they're just looking for a daggum excuse or they already had this idea or the side projects that's starting to take off and they had loyalty to the previous owner.

So they didn't leave quite yet. There's always going to be some of those but as far as like, you know abnormal turnover, is it pretty leveled out now you guys have this,

Reg Zeller: We, we see it both ways. It really depends on the quality of the employees. So we tend to have much higher outputs per employee. I mean, sales dollars per employee is substantially higher typically. Partly that's the systems and processes we [00:07:00] run. Partly that's the way that we compensate our employees.

So we'll see people that, and we've gone back now. We've, there's a lot of reasons or ways that we got here, but you know, we were able to put in all of our systems in such that we can see financials. Now we can close the books. We've actually closed the first day of the next month, but you know, we shoot for three or four days, so, by June 3rd, June 4th, maybe depending on how the weekends fall, we'll have our May books totally closed.

And so, really, we're able to offer cash bonuses for how the individual facility performed the prior month. So we get a really fast feedback and that's how we compensate employees. So we see that. And at the same time, they understand if they have good employees, they do well, everybody does better. 

And then the same side on the other side of that, if they know people when there's job openings, they'll go find their, their best friend that actually works. They're not going to bring in the bad [00:08:00] workers because that hurts their pocketbook as well. So, it's some of a self fulfilling, situation there where, we add it. So we'll see some turnover, but a lot of times people, when we buy these things, we tend to buy distressed, more turnaround type assets.

So it depends either we have to normally hire more people, get the right people in. But we don't, if people want a job and they want to work, they don't leave. Is the simple answer.

Ronald Skelton: Do any, do you guys use any of the off the shelf type of stuff? Like, lean process or,EOS or the great game of business or anything like that? 

Reg Zeller: We don't, so Josh and I, I spent 17 years in corporate and kind of saw everything. I mean, these are big fortune five hundreds. GE, Honeywell Schneider, Electric Rockwell. I mean, so I got all the training imaginable on that side. It was all in kind of the manufacturing space. Josh helped grow his family company and he's constantly interested.

So he's got a ton of this training on his own and or self done plus having hands on [00:09:00] experience in small family owned companies. So we've seen a lot and we've, and when I say we, it's really Josh. Josh and I talk a lot, but Josh owns everything. I mean, just to be clear, I have, I mentioned that I do acquisitions.

He does purely operations. It's 100 percent his decision, not mine. We chat about it, but he's developed a lot. I mentioned the playbook before. This is kind of the holy grail. So everything that we do is baked into our playbook. And it's using parts of all of those, but we have nothing really that we use this directly off the shelf.

Simply because, anything off the shelf is just not customized well enough to what we do, and especially the speed that we operate and the processes that we have. So,the, our operating system per se, if you want to think about it, we call it kind of the CaneKast way. And that's, I got all those pieces built into there, but it's literally down to how we train new employees as they come on board.

What our processes look like, what systems we use. So we use a [00:10:00] ERP like Acumatica. We use all brand new no code tools. I, I don't know anybody else in our industry that's using a lot of this stuff. And so we have a bunch of AI ML tools we're already starting to use and build in. And all of that has to get integrated.

So it's really hard to use something off the shelf because we go back to first principles is what we talk about all the time. That's how we were able to, we went from closing in 17 to 25 days. We got rid of three or four people. We are running currently our company without a controller or really anything. We just have bookkeepers and finance people and the systems really automate and take care of themselves. 

Ronald Skelton: Yeah, that one that, the one that came to my mind is cause they, they buy turnarounds, they bought 60 of themselves. The guys that wrote the book, The Great Game of Business. They have the bonus structure you're talking about. They buy turnarounds and they buy things in really tight margin spaces.

Like, they bought companies rebuild or remanufacture turbochargers for diesel tractors and stuff. And those things have like, 6 percent profit margin. And it's insane. So in order [00:11:00] to run them and get them going, the employees just have to really know that, you know, how they, how everything they do on a day to day basis impacts the bottom line.

And that's what they teach these guys. So it's cool. I think you've done it. If you've done it, you've built your thing. And I imagine if I looked at these systems side by side, you have all the best elements from all the ones that work for you. Through, through years of experience, you built this. 

Reg Zeller: Yeah. Yeah. And so we, Josh and I both, we love reading. At this point in time. Yeah, we're learning some new things, but the vast majority, especially for me, I part of my job is that I need to be able to see kind of the forest from the trees per se, but like it, we have different ways of explaining it, but there'll be 10, 000 different data points that I have in my head.

And I'm like, okay, that's the direction we're going right there. And I've asked, been asked this forever, like, essentially show my work. I'm like, I don't know how I do it. I just have the kind of concept, Josh is perfect in the other way. And he's like, I take this, then he figures it out and he processes and figures out how to make that operational and documents it [00:12:00] and solving those problems. Which is, it's a great partnership between the two of us because yeah, all those things.

So you mentioned this, I can't remember the exact company. Josh mentioned it to me, how we came up with this compensation was because we are reading one of these books and someone put a tire company together from whatever, 50 years ago or 30 years ago. Josh was like, Hey, I'm thinking about doing this and took us a little while to figure out exactly how to do it.

And that same thing happens, reading books on Andrew Carnegie, Rockefeller. It doesn't matter. We're grabbing things from all over the place. So I don't, I tend to think that history more repeats itself than we're building these brand new models. Whenever I don't understand something when it's this new fancy Oh, the paradigm has changed.

Everything is magic. I'm like, the tools have changed, but I don't really believe the basic fundamentals have changed. You just got to integrate the tools. The newest tools. That's fine but, these guys knew what they were doing back in the robber baron days and you know, a lot of things you can learn from back then that we try and figure out [00:13:00] now.

Ronald Skelton: I have a cousin who worked in a steel manufacturer. They poured steel, they have molten steel. And,he told me he ran the giant crane that carried the big pot of steel, right. And, he got, he told me when he, we got it, I got my bonus this time. And I was like, bonus? He was like, yeah. He was like, yeah, it was 30 grand.

He only made like probably 80 a year, but he got two huge bonuses. I got a 30 grand bonus on an $80, 000 salary. Yeah. I didn't kill anybody all quarter. And I'm like in, is it really that dangerous? Like if all, it's not just him. If all, if none of the crane operators drop molten steel on anybody then there's a giant bonus at the end of every quarter.

I don't know if steel melts at a higher temperature, I think, but 1500 degrees is still dangerous. Are you, I imagine you're pouring, pouring smaller, smaller objects and stuff, but, I can't imagine the reason I'm telling, even bringing up the whole story is when you said, that you tell them on their first break, they start working, they go on their project, and then they go back.

First thing that hit my mind was, do I really want these guys gears turning on something else when they're messing with molten steel or molten aluminum? 

Reg Zeller: Yeah, [00:14:00] that's,that's the best part, right? I mean, that, it gets them, that's what they know. These guys have done it forever a lot of times and, they have, it's always the, the problem with the bell curve, right? It's, at the very beginning, you're scared to death of all this molten metal because it literally looks like lava.

It's bubbling and we tell them, like, do not get near that for sure. Like that will do major, major damage, potentially death. They're very scared at the beginning and then after a while they've seen some stuff, they become experts. It's that middle part where you have somebody that's, got six months or 18 months or something of experience.

And then they, they think they know more than they do. But typically, there's only a few jobs that are really dangerous. And that's you have a lot of safety gear on for the most part. So that kind of takes care of itself. But no, it's, it's actually, we found by sending them back, it works much better.

They give a chance to kind of process and think through. It tends not to be emotional then. And honestly, once they kind of realize like, Hey, you're still doing the same job, nothing changes in that regard. It's [00:15:00] fine. You know, it's not, I don't think they get distracted by it. I actually think the work distracts them from the news.

It would be just because they have to focus when they're doing that. We've never had a problem doing it.

Ronald Skelton: People are, so resistant to change. If you think about it, there are entire sections of business, books stores, you know, they're dedicated to change. There's whole libraries. Pretty practical, Who Moved My Cheese comes to mind, right? People are just so resistant to change.

Just the fact that it changed ownership. They start telling a story in their own head of what's going to happen. 

Reg Zeller: Yeah, this is exactly why we'll only do it on Monday or Tuesday. And because if not, they'll catastrophize. And even though we'll tell them numerous times, If it's going to change, it'll change for the better. There's not going to be a problem. You don't have to worry about, all those things over and over and over again.

Our benefits are better. We'll give you 401k. We'll do this. We'll, you know, we're, we buy businesses to operate and run, and we're in here because we're going to physically, we need this site. It doesn't matter. You give them, if you don't have [00:16:00] multiple days in a row where they get to know you, see you, meet you, et cetera, they'll go home over the weekend, catastrophize.

And by Monday, they'll assume, the place is closing down, their salary is getting cut, their benefits are going away, and everything. And it just, it doesn't matter how many times you talk about it, but that's why we always are only willing to do this on Monday or Tuesday. And then on the other side of that, with change, our big thing is we talk about this all, we try not to fight human nature. 

So let's be honest. People want to come to work, do, you know, the people we want, honest days living, however you want to say it, but make a good living. The more you do, the more you get paid. We don't want to make things that we always talk about, sustainable profits from sustainable efforts.

So we want them to not have to do any Herculean tasks, but it's kind of right in front of them then. So we, if we want them, if we want them to do what we want, then, we need to align their interests with ours, which tends to be pay and work. So we just make sure we take care of the [00:17:00] pay and work such that it matches what they want. 

It is why, there's no reason to try and fight an uphill battle. It's already hard enough in a foundry as it is. So make it just easier as you go.

Ronald Skelton: You know, I could see in some industries like, there's software and other stuff. When you do a roll up and you've got seven locations. When you have innovations or, you come up with new ways to do things at one, then it can, really make a difference on, uh,you know, sharing the knowledge and innovations across the platform.

Is that true with the foundries? I mean, cause you've been doing, you're doing something that's been done the same way pretty much for all of history, all of educated history. But as you come up with innovations, you come up with a new thing. Hey, if we, I'm sure there's different, like I used to weld and stuff and I don't, so I don't know, a tiny, tiny microscopic thing about metals.

And there's probably some type of fluxes and stuff you guys use to put in the stuff to get the impurities out of the pedals and stuff. When you figure out something works better, right? When you put this in the metal, as opposed to that, you [00:18:00] get a better, cleaner cast. You get to share that across all the platforms.

Or if one manufacturer for one of your supplies is starting to look like, oh wait a second, I'm getting a lot of impurities in this and it's coming from this manufacturer. You have other locations and other stuff to lean on. Is that working in your favor already at seven? 

Reg Zeller: Oh yeah. 100%. So the easiest way to think about it, there's 2 parts of this. One, the way we run our shops, we give our plant managers, we think of them and we compensate them almost as if they are small business owners. Except they don't have the risk, obviously, of a personal guarantee or a loan. But, the more they build, the, the process, the more they build their plant, the more money they make. 

And that's an annuity that continues to pay just straight based on dollar one. It's not that each, it's not that they get a salary and, my corporate days were, every year you got a salary and each year you've got the same amount of bonus in total, but you had to outperform the prior year and again, and again, and again, and again, right.

That's [00:19:00] just not, we don't necessarily believe that's the right way to do it because once you build it, you should continue greatness is the way we think about it. But the other side of that then is we have those independent business owners. We put them in plant managers let's call them. They, they have their own threads.

They talk to each other. So back and forth, hey, we try this. We try that. We have weekly meetings where they all talk about what's going on. We have a monthly meeting, which is the only meeting I actually have. So I have 12 meetings a year on my calendar. That's it. It's literally those are 2 hour meetings.

So I've got 24 hours of meetings a year. And then the other side of that is, when we do that, we've got a corporate structure with folks. So there's a Chief Technology Officer that is going and he really helps out with the equipment, newest tech. What are the new processing systems, whatever we might need to use as well.

And then we have kind of a project manager. It's not the perfect term, but it's like a process improvement. [00:20:00] And he's able to go in, he finds something that works in one facility. They, he jumps in there, he'll be on site. He'll work with a plant manager, get something going. Figure out a better way to melt metal just making that up.

He'll then take that and he'll bounce. They'll talk about it, but then he'll ensure that he installs that at all the rest of our facilities. So they work independently inside of the four walls of their plant, but, we put the resources over top of them. So we've got shared resources that they could, they can all use so that they're only three jobs that they care about is they keep their employees healthy and safe.

They build a quality product and they deliver that product on time. That's all they have to worry about. Everything else, I mean, is pretty metric driven, but it's just those three things and that, that allows us then to optimize and share across all the facilities really quickly. And because again, they're compensated to do improvements.

The better they do, the more they make, we're not, it's not the [00:21:00] constant fight. And we actually screen for those types of employees that are willing to learn and be flexible and, especially as plant managers. So we put the right people in those roles and then we share across and then we make sure again, we're not fighting their human nature of not wanting to go change. Because they realize, hey, I make this change this work for my 2 buddies in these other plants and now they're making an extra couple thousand dollars a month or something.

Right? And like, yeah, I'm going to go do that too. Like, like, hey, Patrick, get on the plane and get up here to Minneapolis and install that new thing for me.

Ronald Skelton: What about like, a lot of the people think they're going to, when they buy multiple companies, okay, they're going to cross sell and upsell to you because they're all foundries that are all doing the same basic thing. Are there enough differences besides between them? That sounds like, somebody comes to foundry A, let's just say pick a state, Texas. And they want something, you go, Hey, we can't make that here because it's too big, but we can make it over here in this other facility we have.

Is that, does that already occurring or? 

Reg Zeller: Yep. Yeah. So we've got there's three, so let's start with our customers because that'll help get into this detail. [00:22:00] So we have 2 types of customers. This is what we figured out years ago. And part of the reason why we started this, this kind of project of building out. Our first type of customer is a big fortune 500 type.

They don't care. They buy 80 or 90 percent of their stuff overseas. And the last 5, 10, 20 percent they'll buy domestically. Well, typically, just risk management for them they'll go and spread that out across 2, 3, 4 facilities. Well, sorry, I should say 2 or 3 small companies. Well, now, because we have multiple facilities, we de risk all of that for them.

So they just give us all their domestic supply and say, Hey, keep us honest. We'll look at it once in a while. But, they know if we have a problem in our Minneapolis facility, we can grab something and ship it to the South Carolina facility. And that is a massive, de risk for them. And it makes it way easier.

So, they're buying, I'll make the number up, $800 million dollars for the castings overseas. They're buying 80 million or 40 million here in the U. S. Splitting that up across three or four facilities is a giant pain for them. [00:23:00] So the ability to just have one person and we deal with it and we take care of 100 percent of everything, we have modern systems, we communicate with them, they know we're growing, they know we're investing, they know we're getting better, then that's awesome for them.

The other type of customer is the small customer. And they want to, their mom had an idea, dad, grandpa, who knows who started the company, or maybe someone did themselves. But they want to get up, get their kids to school in the morning, drive in, see us, shake hands, watch their product get made, go have lunch and a couple of beers and be back home by dinner.

And also it allows us to deliver in one day to those folks as well. So that's the second type. And that's why our geographic spacing across the country is so important for both types of customers. And then, then your third part, that network benefit then allows us to put different equipment in different places.

So right now we're literally installing a piece of equipment in our South Carolina facility. We'll be the only small foundry in the Americas that has that piece of equipment. And that allows us to [00:24:00] be cost competitive with places like China. There's a certain size that's a much larger piece of equipment and automation than you'd ever be able to buy when you're small.

Typically, when you'll put $4 million into a capital piece of equipment, you can't obviously afford that if you're small. That might be the size of your whole facility. And if you're large, you don't want to go do the one off low volume stuff. You want to shift this and you want to go sell 10, 000.

We have no problem selling 10 of them. That's the market we're in and that's the space we play in. So to your exactly your point, a customer may be buying, 50 different castings from us, and it might be coming from four different facilities. There's typically a common base that each one of them do. A small part, low run, everybody can do that.

But, then if you have really high run parks, that might be in 1 of our facilities. You have really large parts that might be in a different one, that is in a different our facilities. Instead of this type of part, you need to geo, geometrically complex, really high quality part, that's a different facility that we have. 

So yeah, we can typically take this, move it [00:25:00] around and each place we've got. So it's the center of excellence model plus kind of the, the standard for everybody. 

Um, we're working with a company right now. We already talked about this one capital piece of equipment. The next one, our CTO is estimating probably $10 million in CapEx. But we would be the only player. They literally, like, we talked to a vendor about it, not even, there's not, there's no foundry period in the Americas. Like, to get it, they're like, we think we have one in Europe that we could show you. And I think there's a couple that we've probably sold somewhere in Asia, but they're like, if you guys do this, you're far and away the only game in town. Like, we, no one has had capabilities to do this in 30 years.

At least in the U. S. So that's the fun stuff. I mean, granted CapEx scares the hell out of most people, especially searchers. Which again, I didn't know what searchers were to a few years ago, but every time I talk to people, what they think is terrible, I'm like, well, it feels like a pretty good moat to me because I don't know who else is willing to go [00:26:00] put $10 million into a piece of equipment that is a one off.

So I don't know. Sounds fun to me.

Ronald Skelton: It's the, you just got to do your math on the return on investment, right? Okay. If I sell, if I buy this piece of equipment, this piece of equipment lasts 30 years, 50 years, whatever it lasts. How many widgets do I have to crank out of it? Right. And we'll, and then you got to add other stuff, right? If they bring me I'm just using widget,for the fun of it. But if they bring me this widget, what other business can I upsell and cross sell that they, they're ordering from other people because I can make this, but then I get to introduce them that I have seven other places that can make all the other stuff they need.

Reg Zeller: Without getting into too many details on this, this is exactly what you're talking about. We look at that and say, okay, this 1, they'd probably help us fund it as well. Because obviously they're multi billion dollar companies. And they're like, hey, no one's willing to work with us.

Even they don't want to mess with this. It's doesn't fit what they do. We'll figure, you want to help us figure it out? It's my personal checkbook at the end of the day. I own all of it. So, I don't care. but then, yeah, it allows you to go get a few other pieces. And then strategically, when we look at that, [00:27:00] like, wait, if we do this, there's all these other things.

And so, it's like this $4 million piece of equipment. People are like, that's insane. That thing will do on one shift, 20 to $30 million in sales. And if we fully maximize that out, the best guess is at $68 million in sales by spending $4 million. Now that takes a lot of don't get me wrong. There's a lot other costs. It's not, you don't just get to drop the phone and everything else is magical.

You're going to need to put, more people, more other machines to finish and all kinds of other things into that. But yeah, that's a bet I'll make every day. I'm like, all right guys, we just need to figure out how to pay that bill. And then in five years after the asset loan is done, that is magic right there.

And again, I mentioned this actually said this on Twitter the other day, give me a business. And so we're total seven years in. In my head I've always thought it was going to take us 10 before we actually meant anything, which I still think are probably in that ballpark. We probably need another two or three years. You know, you look back on it and say, okay, we've put an obscene amount of money into [00:28:00] this business, in capital and in people and processes and in systems and time, but, you know, we go build something at the end of that anyone else is going to look at that. 

No one's going to want that. You can't do it if an individual searcher. There's no private equity. You can make it. It's way easier to do a lot of things than do what we're doing. So return on investment is better. But again, now we've created a bunch of modes. I'll take that every single day.

Because we knew we wanted to be in small manufacturing. So I'm like, all right, great. Takes us 10 years. And then, by the end of 10 years, we have a giant moat because it'd be impossible to replicate and or people wouldn't want to. Great. I love it. I'll be the only game in town. That works perfectly fine for me.

Ronald Skelton: And I take it that a lot of these are in small towns, right? A lot of these, they, the either a town grew up around the foundry, right? Or the, casting company. Or they're just still kind of out in these outskirts of small towns. 

Reg Zeller: Yeah. So, you'd be surprised. They started in big, a lot of these places that stayed alive there certainly is a bunch of those. Don't get me wrong. [00:29:00] For us, partly the problem is when you're in real small towns, getting labor is so hard. Well part of it, most people think blue collar labor. And we actually talked about this, it might have been Clint the other day, posted something on, but he's just talking about smaller.

And he and I were talking about two different things, but for us in smaller towns, one is finding blue collar label. It's tough. The other part though, is finding white collar people. Because as we're getting more and more automated and we're trying to figure this out, you're a really specialized person.

The way that we've gotten around that so far and continue to was, that we figure out how to run our company 100 percent remote. So any of our specialized resources, so my team, I'm in Minneapolis. Josh is in Austin. The CTO is in, excuse me in Nashville. So, yeah, it's, you know, we run our, our group fully remote, but, the people that need to be on site, they need to get there.

And then that's a pain to fly in. And so a lot of times for us, being near bigger cities is [00:30:00] better. 

Reg Zeller: [00:00:00] If we get inside where those towns built up, the biggest thing we see, and this happens in manufacturing all the time, literally is the problem I'm dealing with right now with one of our deals.

The real estate is worth more than the entire company. And so, that is another way that we help. So, normally when we see that, we actually have to buy the assets and the business, let's say. Move it to one of our other facilities. And then they go and sell their business. I mean, we've seen it, especially good one where a developer came in and offered him $10 million for the real estate alone.

I mean, the business wasn't worth $2 million probably. So, somebody reached out and they're like, Hey, what can you do about this? And I was like, unfortunately, I don't have a place to land your business right now. We're full everywhere. So that's why we built out and that's why we're doing some of these other things where that's why it took us to requiring us to invest in somebody.

So tends to be, we can't be in really small towns. We can't be in the center of really big towns. You have to be kind of in between, outskirts typically. And then that's a place where we [00:01:00] really tend to do well. And also we tend to have a better, typically a better government to work with less nimby ism, et cetera, et cetera.

We get the center of towns with big manufacturing facilities. Unless you're in the center of an industrial park, it gets ugly quickly with the neighbors and the local government.

Ronald Skelton: Yeah, I get that. I bet it, when you do see one that's on, has room to expand and has, they're setting on some of these things are probably sitting in a decent sized facilities. You got, they're at 50, 60 percent utilization or something like that. And you have space that, does that perk you up a little bit more because, oh wait a second, now I've got one more place to put other stuff into? Or, that not come along very often?

Reg Zeller: No. Yeah. So, partly by answering this question, I'm going to give away a little bit, but that's all right. So typically what we see is that when we walk into a place, we know that we're going to get far more what I call sales density out of it. But yeah, if I find anything, and this is again, the exact same deal that I was just talking about, the [00:02:00] real estate is great.

The business is an absolute mess, but I'm able to take and consolidate and grow. So we're going to get, we're going to have to get really, really, really creative with the seller,to figure out how to make this work. But, the only reason that I'm able to do that is that I can move work in and expand and potentially, you know, that place I was just talking about, that $10 million CapEx, I might be able and that's why I literally was there this week. 

Mentioned before I had to delay our podcast because our CTO came in there and we might be able to land it inside of that facility. So yeah, that's absolutely great for us. It really, I still think about it though. The business we're buying has to support itself.

We've tried this before, or we've bought something thinking, oh, we're going to move more stuff in. And the only way, I mean, I kind of talked myself into that deal for lack of a better term. And then upon further review, now that I think about it more, I talk with owners and like, I get it. But I can't do this deal.

[00:03:00] I, this thing, if something happens, if I can't move it in, if whatever, I'm not sure what could possibly happen, but you know, this thing needs to stand on its own. And if it doesn't stand on its own, then we're not going to do it. It doesn't mean because again, we're, that's the value we bring because we have more things we do.

I'm not paying a seller for what we've built up in expertise and scale and everything else. So, it's great when we do it. As long as it can still do it on its own, but then, yeah, then it's just upside and, kind of the cherry on top.

Ronald Skelton: You're working with a lot of off market properties and stuff. People are coming to you. I'm still, occasionally talking to brokers. I was telling you before we hit the record button, I seen something that was kind of jokingly showed it to my friend and said, look what you could want, look what you could buy with that money you're about to put down on a house. 

The next thing I know I'm in an NDA and trying to get the stem from the, from the broker, cause it's one of the better deals I've seenlisted anywhere. But, it's one of those problems. It has that problem where you're talking where they're just pretty much selling it for the real estate value. And because they're doing that they hired a real estate broker to sell the real estate and the [00:04:00] business. And because they're doing that, the sim that came across is all about the real estate. Now I don't know it's not like having another call and a few more, you know, pokes at the broker. 

As uh, and the thing even afford the real estate it's sitting on right now because even, whether I buy the business and the real estate or I buy the business and sell the real estate or whatever I do, it either has to be able to pay a mortgage for the real estate or pay a mortgage, or pay a lease for the real estate. So it has to, that the real estate value has to come into play for the value of the company.

And it happens a lot here in California. Happens a lot, in a lot of big cities right now. Where the real estate has outpaced the business. I just walked away from it's been, been about a year, almost a year now. But I looked at what thought, what I thought was a really cool little business. You know doing two three million dollars a year.They made one of the brands of trailers. 

So when I say trailer, I'm talking about like a car, uh, they had dump bed trailers, they had,cattle trailers and stuff. They made, they had the license and the manufacturing to make one of the brands and they sold, their lot, sold a bunch of the [00:05:00] others too. So they had a big lot where you could go pull up and buy a cattle trailer or something. And the land underneath it is so valuable that when I was talking to him, I said, well, he's like, my buddy's been leasing me the land for a long time. You'll have to talk to him. He wanted so much for that lease. There's just no way that business will ever survive. 

And when I told the landlord he said, you know, I get that, but I don't care because I've been nice to him. But my buddy forever, he's retiring out. I'm ready for him to retire. And the condos next door, the guys that built that, offered me $12 million for the space and I can't turn that away. That's my retirement. So you're going to have to move it, you know, like. 

Reg Zeller: Yeah. And that's, obviously we don't have that location problem as much. I mean, there's a little bit of that, but not a ton. But, I tell, you just mentioned a few things. For anybody that's not bought businesses before, if you get something in the SIM or, anything, confidential information memo, I assume people know that.

But, when you see that and they say, you're going to need to go through this process and [00:06:00] pay escrow at LOI, just, you know that you're dealing with a real estate broker and not a business broker and buckle up because it's going to be a nightmare. It is boy, have I had some interesting times with those brokers.

But anyway, yeah, there's a few really pet peeves of mine.Someone takes a, someone takes something to market and they have me sign an NDA and then they tell me, Oh, the financials aren't quite ready. Or the SIM's not quite ready. Or the seller's not quite that, just like, yeah, nevermind. I'm good. I don't need this, I don't need this brain damage in my life. Same thing with it's, oh, provide a, this probably gonna, 

Ronald Skelton: Yeah, this one was, I thought it wasn't a broker at first. Cause this, the, when it was listed, it didn't have any broker's name. And then when they responded, it said, the response was from some CPA type, their financial book, you know, outsource bookkeeping type of company.

And then when he sent me the NDA, it said business broker underneath the same logo as that outsource CPA firm. So I guess a [00:07:00] couple of the people in the firm have broker's licenses, right. And then when I read the NDA is like, it's missing, it was a simple like half page NDA, like you won't tell anybody about the stuff we're about to share with you. And I thought, where's all the, there's like, it's, there's a lot of the normal clauses. Like non circumvent clauses and all the other stuff that's in most of everybody else's NDA. 

And I was like, okay, this thing's got a simple, simple page. I signed that, you signed that, driving down the road while my wife was talking to me, right? Usually I read them thoroughly because some of these brokers get creative with what they put in theirs, right? My wife is driving. I'm looking at this thing on an iPad and I just digitally signed it, you know, with my, with my finger and sent it back to him. 

When I get the SIM, half the language that should have been in the NDA come in on the SIM. Like, we won't, you can't circumvent us and all this other stuff. And I was like, I'm not, there's no, there's nothing to sign on this. Why did you put that crap in here? 

The numbers look great. The real estate looks great. I'm still going to continue moving forward despite the broker's best efforts. I bet you have to do that. I mean, [00:08:00] I bet that happens sometimes with owners too.

You're going to move forward despite the owner's best efforts because you see, you see the diamond in the rough that they just don't see anymore.

Reg Zeller: Yeah, and that's, that is our world to be honest. I mean it seems like you get one or the other. You either get somebody who thinks their business is worth far more than it is. Or someone who's just sick and tired of it and wants out. I rarely see kind of the in between anymore. 

But yeah, a great broker is worth their weight in gold but the number of them are very very small. You know, we've done enough of these deals that, like we just sign a deal. And the broker's like you can only communicate through us and you can't go directly to the seller I just cross it out and initialize it. And they're like, well, we can't send you the details if you do this. I'm like, all right.

Well, then don't send me the details. I got plenty of other deals to do. I don't care. I'm not, you get, this is a relationship. You guys are not going to be in between me and my seller. It's just not gonna happen. That's part of what we do and we can walk everybody through it. We talked to him like hey, listen the first time you see the purchase agreement or [00:09:00] whatever, you're going to get kind of pissed because there's going to be legalese in there you're not going to like.

It's not meant to be that way. Pick up the phone. We'll talk through it. We can change it. It's not, you know, whatever, like, but it's all the things we know where those pitfalls always are. And it's great if they have someone else to talk through on some of the stuff, but creating that firewall for us has never, it's always worked out worse than better.

And maybe we'll run into some perfect broker someday that'll help us and do that, which I know this happens. It's just, I've never run into it. I would rather be the one at my, Hey, listen, I'm a big boy. You're a bit, you've owned this business for 40 years. I've owned seven of these things. We can work through this.

We know, yeah, foundries are hot. They break a lot of stuff. There's, you know what, like, I get it. Like, we can work through all this stuff. It's not a problem. Like I know about problem employees. I know about problem customers. I know about the government. Like I got it all. We'll work through it and you know, that's just and I think right now you mentioned this.

I haven't seen it yet. I'm fully convinced though with these buyers [00:10:00] fees in real estate going away or being greatly minimized potentially. I have to believe you're going to start to see more and more of these brokers, real estate brokers, ending up trying to do small business deals. It's just, we saw it before when people stopped buying. I just gotta believe it's coming more.

Ronald Skelton: And it isn't helping any that it's becoming more and more popular. I, three, four years ago, when I got into this, it was unheard of. I had to hunt for somebody to teach me. 

Now I see a bunch of 20 something year old gurus who've done four deals and now have a course, right? Those guys, you know,there wasn't a single, one of them that didn't have a few gray hairs when I got into the space.

Cause I looked around for somebody to help teach me. I hire mentors and stuff just because in my mind it helps expedite the learning process. And I understand that not everything they're selling, half the stuff they're selling are marketing pitches. Like the zero down deals and that type of stuff.

Oh, that's pretty.That's what you use it to get the other people in the door. But I want to know how you really get stuff done. And I want to meet your networks, right? I want to meet the other people doing deals cause I'm digging that, joint venturing and [00:11:00] partnering up. I don't want to do much of this on my own anymore. I'm old enough to know that I flow better in teams and building teams.

You know, just above minimum wage people start talking about buying companies and they think it's doable and stuff, are we starting to get a little oversaturated in the conversation?

Reg Zeller: Yeah. Well there's stuff we talked before. Yeah. It's just, again, every space is slightly different. I'm sure there are easier businesses to, I know there are easier business to run. I'm sure there is uneasy business to run, but I've not seen it. But manufacturing is not that. You're not taking, there are some people, I've got a couple of buddies that, we're bankers, et cetera, that have come in and done a great job with manufacturing companies for sure.

But that is much more of the exception than the rule. And especially, we mentioned it before this whole Zerp environment in the bull market, et cetera, coming to an end. It's a different animal now. They're real operators. You're gonna see them coming out. And I know there's a lot of distressed assets coming that people, they bought 1, 2, 3, 4, 5, whatever, all of a sudden, their adjustable rate.

[00:12:00] SBA deals are 11, down 20 percent in sales. Commodities are up across the board, labor's up, and requesting more because of inflation, now all of a sudden insurance is up, like, it's tough. There's no doubt. This is not punching buttons on a keyboard anymore, this is serious work, in the current environment.

So, yeah, it's going to be real tough, but I think a lot of people are really going to get burned on some of these things, too, because it looks easy to buy a, $100, 000 EBITDA business, but good luck making money out of that once you have to go figure out what to do to grow that and everything else, so it'll be tough. 

Ronald Skelton: Somebody said, why are you so focused on like what a profit margin is in an industry before you even look at it? I was like, cause I don't subscribe to the ego that I can buy a company from somebody who's been running it for 20, 30, 40 years and do a better job than them. 

So I need companies that have a decent margin because I need room to screw up, right. I need something to, I need, I'm going to learn some lessons and I don't want them to impact the employees, right. 

I'll, you know, long, long term. I don't want any long term impact [00:13:00] from my inefficiencies of doing X, Y, and Z, because I ain't anybody that thinks they're going to walk into a company, you've got seven of them, now you have a different story to tell. But when you bought the first one, there's shit you learn right away. And there's stuff you didn't learn for the first 12 months, right. So, 

Reg Zeller: I still, I still learn things, so yeah, no doubt. 

Ronald Skelton: Yeah to walk in there and go, you've been running this third. I love these guys that are, these new acquisition entrepreneurs who said yeah, I'm gonna buy this. I'm gonna do x y and z to it. I was like, what's your recommendations?

I was like, I, my recommendations you don't change a damn thing for the first 60 to 90 days. You just watch what they're doing, right? Because i'm telling you, you don't, it's just there's something to that ego that I don't subscribe to. To think I can go in and change something you've been running for 30 years and do it better than you. 

Eventually I think I can, cause I still have the energy and it's new and fresh, but not in the first 60, 90 days. I don't even know what you're doing.

Reg Zeller: Yeah. There's, there, my buddy Rich and I joke about this all the time. If you're a great operator and you know what you're doing in an industry, that's one thing. If you're brand new, you don't know what you're doing. You've never done it. You've never been in a small business [00:14:00] and you're just going to go start ripping stuff out. Okay. 

I mean, it is, and it toughly was all the time, like, you don't know why. You, it might look really stupid. Believe me, there's some things we do in our shops that I walk through that drives me crazy every day, but having it be what looks suboptimal or bad, at times, is the best way to do it because there's these other things that you don't know and these other connected pieces or who knows what it is.

And so do you really get a feel for that and understand it? And then they also, the big part, especially when you have a lot of people involved. You're a new owner and you're not gonna come in there and get to, build up some political capital and put some chips in the bank with the employees and you start ripping things out.

And you're,that's a fight I wouldn't have, as a first time owner, normally. Again, unless it's a turnaround. Now it's a totally different animal. Now we walk in, Hey, listen, like, you know, you can go look at any of our facilities. Totally different. Here's how we do it. It's fine. I screwed so many things up my [00:15:00] first 18 to 24 months. It's unbelievable. 

Ronald Skelton: Um, there's always a guy like the other thing is, is sometimes the key person of influence in the company is somebody that you don't know, right? Like who is the guy everybody listens to? I went to look at a concrete plant a long time ago. I thought I was going to buy some concrete plants. They do preformed like storm shelters and stuff.

I talked to half a dozen of them and had LOIs on a couple. And, it didn't happen for some reason, you know, I've told the story a hundred times, but the, a couple of places, the most influential person, like who's the guy that everybody listens there? It's the maintenance guy that's been around for 35 years and fixes everything. 

He knew how that company worked inside and out. He knew that on certain days, if it's like, this is, one of them was in Oklahoma and it gets really hot and humid in the middle of the day, like if they don't, if they don't change the mix that they're precast, they're making concrete stuff, it won't set right. Cause it dries too fast inside of those big forms. 

The buildings are too hot, right? It's like, he's the one that we tell that, you know, Hey, it's, it's too hot in here. You guys shouldn't be pouring that they're gonna, they're gonna fail. [00:16:00] Why don't we shut down the plant and switch night shift for the next few weeks until it cools down, right.

Where it's cooler at night, but it was just different things. This guy was like, and here he was, you know, I'm thinking if you just went in there,if you went in there as a new acquisition and looked at the old equipment loan around, it's like, I'm going to buy two or three pieces of equipment. I can get rid of $80, 000 a year from the maintenance guy.

Cause, he's fixing a bunch of broken stuff that I'm about to replace. And turns out he is the glue that holds it all together cause he's been there for so long. He knows how the entire thing runs. And he's kind of the guys that, I found out later, he's also the kind of the guy that snaps people together when he sees, cause he's always walk around fixing things, he sees so many messing around in the break room and not working. He's like, Hey, get back to work. He's more of a foreman than anything. 

Reg Zeller: Seen that a lot. But yeah, I mean, that you just mentioned something that hits on an interesting. Yeah, obviously everybody talks about key man risk and how you get rid of it. But specifically to that, that's a very common. So precast concrete and foundries are not really all that, a typical. They're, they're pretty similar, I should say. 

And so we have a lot of that same stuff. We have [00:17:00] automated. And so, because it's really hard to rely on that, especially as you grow and try and manage remotely, we build in a lot of automation and controls so that we can automatically send stuff like, we know inside of our playbook and inside of our kind of, uh, company wiki.

That, hey, this is what happens when you start to see these changes, humidity, temperature, this, that, like, here's what the mix needs to change. And something alarms, and everybody knows, so they look at it ahead of time. It gets really humid and warm from really cold and dry in Minneapolis, so in February, March, sometime around then, the automatic reminders go out. Hey, everybody don't forget, here's the situation.

Here's what it is because the guy that knew it, who'd worked there for 40 years, Freddie is like, Oh, I had this. And all of a sudden it's no longer there. And somebody forgets and you miss, and you can't do that. You never know when that's going to happen. So we're building a lot of that. 

Those are a lot of actually the A. I. M. L. tools and data and whatnot that we're [00:18:00] building into our back end systems right now. So that we can start to see this very quickly in advance. And partly again, that kind of wraps back up and everything that we have where that probably would have been multiple days before, we would have caught that before.

Now we should be pre letting us know ahead of time, which I think is what is really important for all small business owners. And we build the feedback loop such that, that's going to fail, within a few hours or maybe a day. It's not going to run a week of production or something. You know, I mean, that's what.

So we really, really try and get proactive and really build those back end systems such that it can add a lot of value where it doesn't just have to be, the maintenance guy, who's running around and he knows it. Cause he's been there for 40 years. 

Ronald Skelton: And these days there's all kinds of, AI and electronics and sensors and, you could be sitting, in Austin and know that in Texas, or sorry, in, uh, Dallas, I guess, or in Chicago where what are your plants is. There's sensors inside of the building, there's [00:19:00] sensors on the equipment and you're like, why is the inside of the building at this temperature or why are you pouring molten steel at this temperature?

Because there's, there's, I have a, a connection, an old friend of mine who does cells and he sells these little devices that goes into manufacturing plants and they detect, it's got a little gyroscope, but, I'm probably butchering the technology a little bit. But it detects, detects a vibrations and looks for standard deviations. So, somebody's turning a lathe so often, there's a certain pattern that just normally does, like if you're running a machinery or whatever.

Or they put them on pipes, and when pipes start getting clogged, they vibrate at different, different vibrations, and just all kinds of stuff like that, right? And,they run the tool and write, they have software that it all feeds into the AI, and they alert the owners, like, hey, you got a problem at station so and so, but they sell all this. 

There's so much technology now that you can, I'm a previous,imagery guy. So I'm just thinking like, if you would, if I had a plant that required certain things at certain temperatures, you can almost do something with like a camera system inside of that, but it had flare. [00:20:00] Forward looking infrared, then you can just detect hotspots in the facilities.

The temperature of different things you'd be, you know, it would, you could automate a lot of this stuff.

Reg Zeller: Yep. And we are, I mean, that's the game right there. I mean, all that stuff you have to be, I mean, partly it's getting the knowledge of workers. It's really hard to find. And so everything that we can do that doesn't rely on manual intervention, we try and do assuming that it has a payback. And that's part of the other problem of, they build these systems and I don't know what your buddy sells, but yeah, temperature, temperature, vibration.

And sound are typically how you really start to know when machines or anything are, tend to be going bad, this, that. Yeah, imaging, whether it be thermal or, and or vision, all these different aspects, all those need to be used. And people think about, automation, which is great.

I mean, we have to have automated machines. We have to have robots, we have to have mold hand, all this things, but there's also this other piece of that. Butthat's part of why we're building and rolling up, we do it one place now we can roll it out numerous places [00:21:00] and as we get better and better, and that's technology that no one else has. But then on the other side of that, it's almost required over time for small business owners, especially in the manufacturing space.

They're going to have to do this. And it's not, and depending on how you want to look at it. You've been in the industry for 40 years, you've done it one way. It's really, really hard to switch gears in your head and say, okay, I need to double my output per person. And I also need to go install all of this stuff.

And that's going to be, I don't know, hundreds of thousands, millions, tens of millions. You don't have the people, you don't have the money. You don't have the knowledge. It's a really, really, I mean, but that is, as people get into it, that's what they really have to start to do. They got to be intellectually curious and or hire the right people to go run a lot of that stuff.

Ronald Skelton: Awesome. So the last time we were on here, I asked a question, what's the craziest thing you ever made? And you told me about these life size unicorns that were down in New York that basically sat on the spring that people could bounce on.

Is that still the craziest thing you guys have built out of seven plants? Or is there anything cool that's, what's the [00:22:00] coolest thing you've had to make? 

Reg Zeller: So, the, the unicorns are interesting and it's, it's funny. My buddy Chase, I'm not sure if you had Chase Murdock on or not, but he's running the thing on Salt Lake city. He's got a bunch of local businesses, but he actually just put that in his newsletter. He was talking about, he put a picture of the unicorns in, in Rockefeller Center that were there.

So that was, that was interesting that got revisited three years later or whatever, but, no, we're making some really interesting, there's some things that we're starting to make. I can't say a lot about it, but let's just say it's going to be infrastructure related that it allows us to bring stuff back. So it's, it would be a device that hasn't been made here in many, many years.

It's going to require a lot of technology and equipment. That is probably never been in the U. S. ever before. But it's going to be stuff that enables the transmission of high voltage. So you kind of think of the space around electric vehicles, renewables, us just redoing the grid and making [00:23:00] it redundant such that it's much more reliable.

And these things are going to be going everywhere. And so, it's still, it's still pretty interesting to me because you get to see the little stuff now. I see my deer stands, I see the golf ball washers, I see a bunch of different things out in the wild. But, these are going to be the things when I see one, they're going to be enabling the next generation of infrastructure in our country, which we're going to have, that, that one's going to be fun.

So the next time when we have this conversation, hopefully we'll be able to talk about what we're doing because we'll take the industry by storm once we get that stuff. So it'll be fun. 

Ronald Skelton: What's your threat, what are the threats in this industry? I mean, I see now they're doing 3D printing into metals and stuff like that. I can see that for one off prototypes, but not for mass production or even small line production. But what do you think is a threat to this industry at this stage? 

Reg Zeller: So metal printing, I mean, sand printing, metal printing is all there. That's just another technology. Okay. Maybe some customers are going to want to go invest in that asset and build it. But typically if you don't [00:24:00] want the asset of a foundry, why would you want the asset of a 3d metal printer? So I don't, it's just, to me, that's technology you need to integrate.

Obviously the biggest, the biggest threat to all of this is, it's not even a threat because I think we've moved it, moved so much work overseas that I think the pendulum has to swing back. To me, the biggest question, the threat, is more existential in that, will our government actually believe that we're really going to need to build things? You know, and that it's not just the federal government and grants.

It's, I think, during Covid people realized very quickly, like, oh, shit, we can't even produce simple products. And then we're looking at, I'm sure you've heard the problems with resupplying munitions and how far depleted we are. Or our ability to build ships. Airplanes, obviously doors falling off of these things. Like we just we've really lost that capability.

So part of that is obviously publicly owned companies. Part of [00:25:00] that is just the government and enabling some of that. Whereas, you know, I think other governments have believed that, Hey, we want this. And so even when we made some of these rules at the federal level or some of the things, and I mean, they, they just make everything really hard for small business. And it doesn't, again, you can roll away all that now, all the way down to the local level. In Minneapolis where I live, they banned all new, heavy industry.

You can no longer, you get grandfathered in, but you can no longer build it. The mayor belongs to the place that I do. And I literally taught him like, are you guys out of your minds? Like, what are you talking about right now? You, in there, you know, it's Nimbium is at its finest. They're like, Oh, well we need good paying jobs and we need to do these things.

And then they ban the best paying jobs for, the low to minimum education people. Or the people that can walk in with no education or people that have made mistakes in their life. I always joke about if, if we didn't hire ex-cons, I wouldn't have employees, or I wouldn't have businesses part of the time, but you know, those are hard workers and we, we take away those things.

I think the government just, [00:26:00] we just don't really understand what it is to be a manufacturing country anymore. Or a manufacturing city. It doesn't matter where it is. And I mean, not everybody can code. Not everybody can be a barista. Not everybody can do financial services. In my fundamentally believe we still have to build things in our country.

And I think we're seeing a lot of that. Josh and I are trying to push that a lot with what we're doing and finding other people that are interested, kind of re industrializing our company and country should say, and we're starting to build a lot of other tools around that to help enable other folks to do that.

And, some of the ways that we've pushed through the nimbyism and some of the governments are starting, are just part of some of the things that we're starting to push as well, to help other people as they get into other industries and, there's a lot of things we'll be doing in the future around that as well.

But to me, that's the biggest aspect. We really have to decide that we're, we're wanting and willing to do this.

Ronald Skelton: I believe I [00:27:00] probably live in the most regulated state. So I'm going to ask you a question, just to see your reaction. Do you own anything in California or would you buy a manufacturing company in California?

Reg Zeller: In a shocking turn of events, absolutely not. No, but like the West Coast is really hard. And I know a lot, a lot of foundries have gone out of business. There's certainly things that are there, especially in the aerospace and, I mean, I think the most famous one without getting into it is, I think is Rep Gonzales.

I think that was her name who pretty much told Elon to pound sand and he said, all right, accepted. I'll go to Texas. Yeah, and I know a lot, a lot of people that have been chased out because, you know, they're EPA and we don't hardly admit anything. We're a very low admitting, it's whatever the lowest EPA thing is in every one of our facilities.

But, you know, in California, there's even stricter regulations in Washington, Oregon are the same. So that's really hard for us. We're, I'm having a,a lot of conversations kind of with myself in my head of whether I want to cross the Rockies or not. I think, maybe we can serve it from Nevada or Arizona or [00:28:00] somebody that's business friendly and wants to do it.

But yeah, it's, California is a nightmare and unfortunately there's still a lot of firms there, but there won't be for long. 

Ronald Skelton: So it's like, I mean, how is the EPA on them right now? Is there like particles per million they can't release into the air? I don't know the space. So, there's some leeriness like, am I really going to look at this even California? Like if it was Texas, I'd be like, I'd be all on board. But you know, what does California add to the mix of my due diligence? It's kind of the question I have in my head right now.

Reg Zeller: Yeah, yeah, we, we've gotten to this argument whenever I say the government needs to help us, then, it is eventually escapes the small, comfortable confines of Small Business Twitter, Small Business X, and it gets out into the mass,into the, the mouth breathers as I like to refer to them as, and, oh, you want to not pay your workers as much.

You want to have your workers be unsafe. I might, first of all, we pay the best wages in the industry. And second of all, it's literally the number one thing that everybody in my company is forced to do, is [00:29:00] keep workers healthy and safe. That's not what I'm asking. I'm just asking them to get the hell out of our way.

Like, don't, don't create processes we don't need. It's already hard enough. We've not asked for handouts. We've not asked for anything. I mean, but just don't make, don't create extra hurdles for us to jump over when you say you really want to do it, but then you don't really understand what that means is, it's wild to me. 

Ronald Skelton: So I appreciate you being here today. What's the best way for people to reach out to you, man? 

Reg Zeller: Twitter, or X, whatever we're calling it, at Reg Zeller, R E G Z E L L E R. Nice and easy. Pretty, pretty transparent on there. Building in public, trying to help as many people as we possibly can. That's part of it. So I started jumping back into that platform two or three years ago or whatever it is now.

But yeah, it's, I mean, we're all about small us based manufacturing. I shouldn't even say US. Again, I don't think it needs to be everywhere. I don't think it just needs to be the U S. Can't just be China. Can't just be, there's a different reason to be in all those different places, but [00:30:00] we, our life's work is going to be to figure out how to make it successful and have small manufacturing available in the U. S. So everything we're doing is

Ronald Skelton: And for anybody that doesn't know, if you're listening to the podcast and you're just like Twitter or X, there's one hell of a small business community on there. You're an active member of it. I try to be, probably not as active as I should be on there. But we put all of our content on there, but there's a great small business,community on there.

A lot of small business acquisition attorneys and stuff. There's, there's guys like you buying manufacturing, but there's a good, probably, I want to say 150, 200 people on there that are really doing things that you could follow and learn a lot from. 

Reg Zeller: Uh, there's, and it's crazy because there's the active folks. And there's I wouldn't even venture to guess. But, I've got great friends out of there. Peers that have helped me grow. We've got a dozen of us that are part of this EBIT daddies group as our, kind of tongue in cheek name of, you know, a different, and [00:31:00] it's a great, great resource.

We're finding other people now that are getting in there and we're helping people. And then the thing that people don't realize is there's a lot of lurkers on that platform. So, we could probably off that platform. I shouldn't say probably, I know off that platform. If we wanted to go raise nine figures, we could easily do it.

And I think it would take, I mean, the paperwork would take longer, but I think the interest could be done in a few days or a week to do it just based on how transparent Josh and I have. And the number of people, there's a lot of, a lot of money kicking around there. So great advice, great people.

Ronald Skelton: I've seen a lot of people raise, five, 10, I think 10 is the biggest right on that platform. And, uh, they don't have, they haven't been as open about what they do than you, as you guys are. Yeah, they may have a podcast or they may have something else, but, it happens. And it's not uncommon to do a raise on that platform.

Reg Zeller: Yeah, that's it. It's amazing. I mean, it's great. It's a lot of value and the people are willing to help jump in DMS and do whatever. And I've known a lot of [00:32:00] different people that gotten a lot of value out of it. And I push everybody, but people start asking questions. We've got local meetup groups that we've started.

Just because, it's great to still be in person. I still think in real life is far better than anything, but you can get specialists across anything and then they can connect you to local groups. But you have all the folks that are out there and anyone that's interested in buying, I think you have to have a peer group and some mentors. People that are around your time.

Plus people that have been there for five years and 20 years. It's a, it's just such a shortcut. So anybody that even starts to talk to me like my buddies, personal friends, I'll talk to them a little bit, but I was like, Hey, go, follow these people, read through these resources, listen to these podcasts, whatever.

And after you've devoured that for 50 or a hundred hours, then it's worthwhile to come and talk to me. I mean, I can give you the shortcuts up front, but you know, the real detail, the stuff that I, that is not readily available out there, that's the stuff that I'm happy to help them with at that point in time.

But there's just so, you mentioned it before. Seven years ago, none of this existed. It's just a treasure trove of information [00:33:00] and people out there. 

Ronald Skelton: It is. And I appreciate it. All of it. I bring a lot of them on the show and share it with this audience. A lot of you guys, I'm not even sure if I met you there, I met you on LinkedIn or something, but it was because you're either, either on another podcast senior sharing openly about what you're buying on there.

And I was like, Hey, come over here and tell your story. I want to learn from it. So thank you again for being here and we'll wrap this up and call it a show. 

Reg Zeller: Awesome. Thanks, Ron. I appreciate it, brother. Thanks for having me on.