Lots More on America's Electrical Components Crisis

SPEAKER_1 (0:03)

Bloomberg Audio Studios, podcasts, radio, news.

Joe Weisenthal (0:10)

What's up, Chris? It's Joe.

Chris Hatch (0:11)

Hi, how are you today?

Tracy Alloway (0:13)

Hey, Chris, how's it going?

Chris Hatch (0:14)

Hi, Tracy, how are you today?

Tracy Alloway (0:15)

I'm good, thank you. I'm sorry we kept you waiting. I saw your tweet.

Chris Hatch (0:20)

No problem whatsoever. I was just giving you guys a hard time, so.

Joe Weisenthal (0:23)

So Tracy, we're back with our favorite Dutch bros, bro.

Tracy Alloway (0:29)

The bro of Dutch bros.

Joe Weisenthal (0:30)

The bro of Dutch bros.

I did a deadlift. One, two, three.

Tracy Alloway (0:37)

Hegemony. Hegemony, barges.

Joe Weisenthal (0:42)

This is an after school special, except.

Tracy Alloway (0:43)

I've decided I'm gonna base my entire personality going forward on campaigning for a strategic pork reserve in the US.

Joe Weisenthal (0:49)

Where's the best squid ink pasta?

Tracy Alloway (0:51)

These are the important questions. Is it robots taking over the world?

Joe Weisenthal (0:54)

No, I think that like in a couple of years, the AI will do a really good job of making the Odd Lots podcast.

And people will think, I don't really need to listen to Joe and Tracy anymore. We do have.

Tracy Alloway (1:06)

Cha-ching.

Joe Weisenthal (1:09)

Welcome to Lots More, where we catch up with friends about what's going on right now.

Tracy Alloway (1:14)

Because even when Odd Lots is over, there's always lots more.

Joe Weisenthal (1:18)

And we really do have the perfect guest. Chris Hatch, we talked to him several weeks ago about opening up drive-throughs, but Chris, what are you up to these days?

Chris Hatch (1:30)

Yeah, just continue to try and build buildings and figure out how to get some of this stuff out of the ground and get these projects built and constructed.

It seems like it just grows harder every day, more and more challenges. So, yeah.

Joe Weisenthal (1:44)

You see, Tracy, we've talked about almost every supply chain crisis under the sun over the last three years, but there's one thing that's been in shortage for 42 straight months, according to the ISM, and that is electrical transformers and parts. We've never talked about that.

Tracy Alloway (1:59)

You finally get to do your Transformers episode.

Joe Weisenthal (2:02)

Chris, what's a transformer?

Chris Hatch (2:04)

In the electrical, sorry, I guess I have a six-year-old son, and we talk about Optimus Prime.

Tracy Alloway (2:10)

Yeah.

Chris Hatch (2:11)

Megatron basically nonstop in my household.

Tracy Alloway (2:13)

The Lou Reed album.

Joe Weisenthal (2:16)

But what does it mean when you're trying to build a new Starbucks or Dutch Bros location off the side of a highway in Texas?

Chris Hatch (2:23)

Let's use Utah if that's okay. And mostly just because it's easier, there's less power companies in Utah. So starting with Rocky Mountain Power, who supplies the power for probably 80% of the state of Utah. There are a few cities that have a power company. There's a different power company, Southern Utah. You have kind of the main grid. So think of that as like, you know, basically the main power supply that's going into a huge city.

And so once you come off of the grid, the first place the electric comes to is a transformer that sits on your site. And the easiest way to think of it is this is kind of, it's a green typically, or blue, or some kind of darker landscape colored cabinet that sits in the landscaping area somewhere. It's usually two or three feet tall, maybe sometimes four or five feet tall, about three or four feet square. And that's where the power comes in from the power grid to your site.

So that is a transformer.

Tracy Alloway (3:17)

So Joe finally gets his transformer episode. I think he's been tweeting like religiously every time the ISM survey comes out where they're talking about the shortage.

But is it at all common for transformers to go through periods of scarcity or has what we've seen over the past couple years now been unusual?

Chris Hatch (3:39)

Yeah, that's a great question. Definitely during the kind of over the last four years, let's just call it kind of the post COVID world. We definitely seen some real strains on the supply of transformers into the world. At the moment, with at least the type of buildings that I'm building, the transformers actually aren't the longest lead supply item. So that's the first step of where the power comes off of the line.

And it's actually the switch gear. That's the problem right now today is that there's these massive delays with switch gear that are going in the United States right now.