Will the construction startup created by the founder of Airbnb become a “home version of Tesla”?

Hello. This is Yua Ishizumi, CEO of Palo Alto Insight. This time, I would like to use the example of the Norfolk Southern Railway freight train derailment that occurred in February in Ohio, USA, to discuss how we should rebuild the manufacturing industry in the United States as talented human resources flow into the software industry. I think.

Although not widely reported in Japan, a railroad derailment accident occurred on February 3, 2023 in East Palestine, Ohio, USA. As a result, 38 trains loaded with dangerous chemicals including vinyl chloride were derailed, and the negative impact on the environment is being viewed as a problem. On March 14, the state attorney general announced that Ohio had sued the railroad company. The state attorney general said the accident was “a completely avoidable problem.”

And, unexpectedly, this accident triggered voices from the software industry to lament the decline of the manufacturing industry. For example, former Coinbase CTO Balaji Srinivasan is one of them.

According to Mr. Balaji, in recent years in the United States, many excellent human resources have flowed to jobs such as finance, law, medicine, politics, or software engineering as “authoritative jobs”, and as a result, they have been working in infrastructure such as manufacturing, architecture, and electrical systems. He points out that there is a tendency for the number of people involved to decrease.

They conclude that this is the reason why the quality of maintenance of buildings and infrastructure is declining, and the infrastructure itself is deteriorating.

The problem caused by the shortage of talented human resources is not just the accelerated deterioration of infrastructure. It is also a serious problem that the quality of maintenance itself declines because excellent human resources do not flow to the manufacturing industry.

NBC News reports that major U.S. railroad companies are cutting staff even as they lengthen trains in pursuit of profits, and from 2011 to 2021, there will be more The number of workers in charge of maintenance has decreased by nearly 40%, and the number of train drivers by nearly 27%. For this reason, the derailment of the Norfolk Southern Railway, introduced at the beginning of this article, can also be considered to have been caused by human error caused by a shortage of personnel and insufficient maintenance.

Issues facing the manufacturing industry in the United States

The manufacturing industry in the United States faces a variety of challenges, but the most prominent ones are as follows.

1. Labor shortage

According to a study by the National Association of Manufacturers (NAM), the manufacturing industry could face 2.1 million labor shortages by 2030. This is said to be caused by an aging labor force, low interest in the manufacturing industry among the younger generation, and a decline in competitiveness with other industries.

2. Supply chain disruption

Supply chain issues caused by the pandemic are affecting manufacturing more than any other industry. According to NAM’s Q3 2022 survey, nearly eight in 10 (78.3%) manufacturers say supply chain disruption is a major challenge.

3. Inflation

Inflation is closely related to supply chain disruptions. This is because the price will inevitably rise as the products and raw materials become more difficult to obtain. In addition to rising raw material prices, manufacturers are facing rising freight and transportation costs (85.4%) and energy costs (54.4%). They are also finding it harder to secure and retain a workforce, and have to pay more for wages, health care and other benefits.

So how can these challenges be resolved? The key is the software approach.

Balaji, mentioned above, says manufacturing needs to reinvigorate by merging manufacturing and software approaches.

Tesla is using AI to automate car manufacturing. In this way, it is possible to apply the software technology itself to the manufacturing industry, and it is also possible to extract the know-how cultivated in software and apply it to the manufacturing industry.

For example, Mr. Balaji says that the approach to software maintenance can also be applied to the manufacturing industry.advocating.

Any software downtime or delay can cost company executives, engineers, and venture capitalists a lot. For this reason, the software industry spends a lot of effort on monitoring, devops (software development method in which developers and operations staff collaborate and cooperate to develop software quickly and flexibly), and dashboard construction. This will provide hints for future approaches in the manufacturing industry.

Specifically, it’s a good idea to apply the approach to software maintenance to physical maintenance. Even in the manufacturing industry, we think about reducing human injuries and involvement by automating dashboards, robots, and all kinds of processes.

Of course, there are aspects of the manufacturing industry that are difficult to fit into the software culture. For example, more rigorous coding practices are required when dealing with life-threatening cars and planes.

But IT specialists have actually built electric cars (such as Tesla) and now even supersonic planes (Boom Aero). There is a path here.

If IT specialists can develop Tesla and Supersonic aircraft, a software-hardware fusion approach is not impossible.

Why the Airbnb co-founder’s ‘construction venture’ is attracting attention

Startups that have introduced the tech industry’s approach to construction are now attracting attention as they embody Mr. Balaji’s ideas. Originally founded by Airbnb founder Joe Gebbia, Samara is a company that mainly focuses on prefabricated construction.

Samara offers a service that allows you to easily build a prefabricated house (ADU: accessory dwelling unit) in your garden. According to the official website, it seems that a house can be built in as little as seven months. The price starts from around 38 million yen. With solar panels installed as standard, it is aimed at a large market for homeowners who are looking for a new source of passive income.

The specific flow up to ADU installation by Samara is as follows.

In this way, Samara manages the entire process. When building a house, instead of building it from scratch, the trend is to transport a factory-built prefabricated house to a designated location and install it.

Samara’s ADU cannot create a custom-made floor plan, perhaps because they are also aiming to shorten the lead time in the design and production efficiency of the prefabricated house and the sales flow. However, it is possible to customize certain aspects of the ADU, such as the color of the exterior and roof, the placement of windows and doors, and the presence or absence of solar panels.

Joe Gebbia told the WSJ,

“Once upon a time, when I wanted to build an ADU on my property, I looked into it, but the options were overwhelmingly limited. It can also be said that

I answer.

In the ADU business, it is expected that the design strengths, user engagement, and data utilization know-how cultivated at Airbnb will be utilized in the construction industry. This type of new construction business will be one of the possibilities in the declining manufacturing industry.