Shenzhen Speed – Is Your Global Supply Chain All Rancid And Clotted?

In this piece, we will talk about Shenzhen Speed, and what it means for the rest of you outside of the other bay area.

As reported from the World Drone Congress UAV Expo 2018 – 

According to the Shenzhen UAV Industry Association, there are now more than 1,200 companies engaged in development and production of drones and related components.”

And guess what, they have software that works too! 

How many drone manufactures are there left in the US of A? 

Speaking to organizers for this year’s offering, they asked me to find experts to talk about the robust drone hardware ecosystem in the United States. Apparently, they are unaware that it is awaiting much-needed life support. Also, they appear to be unaware of the tenuous situation with DJI and the US federal government. Or, how DJI is spending beaucoup dollars lobbying to get their company name-dropped from draft ban legislation and replaced with the more generic “Chinese” drones.  

I was in China for the 2018 Expo, and it is awe-inspiring, it begs the question, how come the Chinese are our supply chain, and we’re not in theirs? Well, they have a few advantages, namely, a government-subsidized and nurtured ecosystem. That supported ecosystem means money for marketing, engineers, facilities, and access to the inner circle.  

Instead of resting on their laurels, the Chinese are ready to double or triple down on the China first program. 

China’s $1.4 trillion technology spend –

For some reason, bringing up the Chinese and their many tried initiatives raises people’s ire, but you will not find conspiracy theories here. There is no more discounting these realizations as bigotry or anti-Chinese sentiments or assuaging away all of the consternation by telling yourself that the Chinese only produce cheap, low-quality products. Forget about the notion that West is years ahead of the Chinese in software. 

In the pictures accompanying this article, you will see what is  called the Global Hardware Innovation Center. You can go there and have custom components or products, making deals directly with representatives of the various manufacturers. 

So what does that all mean to my aerospace manufacturing, R&D, funnel, and pipeline?  The punch line, you can go to China and with an idea, a little local help, some packaging artwork, and you can be shipping products to the US with half the money down. 

I know it’s not all doom and gloom as the government is stepping up to the plate with $100k to $500K SBIR contracts, and that’s good. Sure, if you were going to get a product manufactured in China, it might be enough, but nowhere near what is required to open a factory in a western country with high wages, crazy labor burdens, draconian environmental laws, and punitive taxing schemes. 

Another impediment to success is the VC investment community cloistered in their hardware resistant Patagonia vests. Years ago, they threw on the hardware breaks, and those skid marks are visible right through drones and into UAM/AAM and now ORBS. Some of us are starting to wonder if most of these investors are Canadian as they are always on about hockey sticks? Apparently, these Venture Capital investors (VC for the Best Buy flyers) don’t like hardware, esoteric certification schemes, and or a convoluted regulator process. Golly, are we to presume that the FAA’s thirty years of floundering on drone integration has got the people hung up on an ROI hedging their bets?  Nothing gets a pair of New Balance sneakers or Rockport loafers shuffling out the office door like a forecast for profitability in 80 to 120 quarters.

On a side note, startups looking for money should be cautious and exercise due diligence as there maybe Chinese money lurking below the surface in some of these investment funds. That could later limit some future opportunities as well as be a place for folks to poach IP. 

Concerns of a de facto public trustee – 

During my much-heralded as well celebrated tenure (ask around about the celebrating), I have witnessed a few boondoggles that had started with accolades and the best of intentions. A few of these more recent examples are, but not limited to; ACCES 5, UAS in the NAS, FAA NAS integration test sites, UAS IPP freely, and the other assorted and various DoD roadmaps, and programs, as well as the UTM, UAM and as of late, the AAM. 

NASA UTM heralded as a great success, but I don’t believe that the report was candid. The TCL 4 demonstrations had non-cooperative aircraft invade their traffic management system in both Reno, and Corpus Christi. We have to assume that both of the manned aircraft and their pilots were certificated and, in most instances, would make them safe in the FAA eyes.  However, in these two instances, the legacy system, as well as the proposed system, failed. 

The failure happened despite the local and national news coverage, NOTAMs, and months of planning, what happens to Slurpee delivery sans all of the hoopla? I can see maybe not mentioning one failure in the report, but two is an egregious misrepresentation of the facts. 

If we want to achieve success, we must be vigilant  –

Many of the previous examples of public, private partnerships have, in one form or another, only served to bleed private sector companies white with little or nothing to show the taxpayer for an ROI on their hefty investment. In the past, this game plan drove people out of business and hastened a Chinese drone hardware monopoly.  

“He is such a parade pisser!” 

Hey, man, I’m just one of the lucky people who got to suffer through twenty years of watching the FAA regulatory drone dying show unfold. The United States had at least an excellent twenty-year lead on the rest of the world in unmanned aircraft technology. However, after an arbitrary 10-year FAA imposed commercial prohibition, we no longer have any viable homegrown solutions or and ecosystem that can support a cellphone app. The Federal Aviation Administration’s forward regulatory thinking and actions have paid dividends in a bona fide national security risk. 

The last paragraph probably went right over the head of more than a few of the readers. By in large, the current crop of drone “experts” wholeheartedly believes they are early drone technology adopters. However, most of these hipsters were still wearing Batman and or Scooby-Doo Underoos when the actual early technology adopters were innovating the baby steps like transatlantic flights.  

I had my doubts about many of the moonshot efforts mentioned above, and the formidable endeavor of making the flying car concept work requires us to overcome some tall technology hurdles. Even in California, wishing and best intentions have here to fore not been enough to overcome the harsh as well as sometimes exciting realities of physics.  

My doubts are not with the engineering and manufacturing praxis that exists right here in the United States. However, many of these people working on possible solutions have unfortunately been self-funding and bootstrapping. Some of these folks are innovating on social security checks and credit cards or bouncing around from SBIR to grants plus or minus $100k, and investment from family members. 

Folks in the know believe the flying car industry timelines are way too aggressive. We can look to the Honda and Cirrus Jets as examples of how the FAA is exacting billions out of companies trying to satisfy a 1960’s style certification scheme.  Government employees with timeline misgivings usually change their tune to something more optimistic after securing a consulting contract. I believe that things are so absurd just beneath the surface that some participation opportunities border on a confidence game. And that isn’t good old-fashioned scruple talk.   

Personally, every time I hear cellphone app hero braggadocio as a solution for complicated engineering issues, I flinch. Historically the hubris immediately starts to undermine the credibility of the affiliated program.  Hopefully, the sideshow will be kept in check here as the snap chat fantasy only saps energy and resources that would otherwise be solving substantive technical issues. 

There is a distinct possibility of getting bogged down in the reoccurring pitfalls with these types of efforts, and we must remain vigilant to avoid them at all costs. We can see the shadows of the groundhog with software companies that have more VC funding than viable products. Those companies rely on regulations to sanction them up some paying customers, and that business plan friend is a surefire recipe for ecosystem failure.

Flying car Kool-Aid, the impediments to success, and drone industry flashbacks –

But I ask you, do I l sound all rancid and clotted? You look at me, Jack. Eh? Look, eh? And I drink a lot of Kool-Aid, you know. I’m what you might call a Kool-Aid man, Jack – that’s what I am. And I can swear to you, my boy, swear to you, that there’s nothing wrong with my bodily fluids. Not a thing, Jackie.  – Group Captain Lionel Mandrake 

Many continuing questions with this effort –

1.    How much money will it take to get the UAM/AAM/ Agility Prime effort off of the pad?

2.    How does Chinese capital fit in?

3.    Does the Air Force have an issue with a class A adversary being all up in their supply chain? 

4.    How many licks does it take to get to the center of Tootsie-pop? 

5.    Does anyone believe the FAA isn’t going to screw this flying car thing up like they did drones and GA? 

Unfortunately, the deck looks stacked against the American aerospace manufacturer. There is a lack of money, will, and the regulatory pathway for domestic companies to compete globally. Some of these are legacy issues like ITAR and a Federal Aviation Administration operating like it is still the 1960’s or 70’s. The reality is that there is a decade or so lag in government adoption and realization of capabilities in technology, and two or three decades and realistic amounts of adjusted for inflation money needed to get this project off the pad. 

These afflictions (almost as many as Jeff Lowe has T-shirts) are hardly limited to the regulating agencies and administrative lawmakers like the FAA.  In NASA’s case, it is multiple layers of bureaucracy and middle management fiefdoms. At this point, I’d be surprised if NASA would be capable of getting the paperwork done to go back to the Moon by 2024, or possibly even in this decade. 

For some historical perspective, I offer- 

In May of 1961 then President John F Kennedy gave a speech in which he stated, “Yet the vows of this nation can only be fulfilled if we in this nation are first, and, therefore, we intend to be first,” he said. “In short, our leadership in science and industry, our hopes for peace and security, our obligations to ourselves as well as others, all require us to make this effort, to solve these mysteries, to solve them for the good of all men, and to become the world’s leading space-faring nation.”

That is very inspirational and a testament to American exceptionalism and what this country is capable of achieving. That is why it is difficult to fathom or even vaguely comprehend that the FAA cannot manage the mandate of integrating a >250gram drone into the NAS in almost 30 years! Let’s do the math, fifty years ago, a man on Moon after less than 10-years of working on the solution. FAA nearly 30 years of working on a solution; they have 51 BVLOS waivers, and most of those (44) are EVLOS with VO’s gussied up to look like BVLOS waivers and a boatload of night waivers constitute progress. That does not equal success or anything that could scale outside of the UAS IPP’s.

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Patrick Egan
Editor in Field, sUAS News Americas Desk | Patrick Egan is the editor of the Americas Desk at sUAS News and host and Executive Producer of the sUAS News Podcast Series, Drone TV and the Small Unmanned Systems Business Exposition. Experience in the field includes assignments with the U.S. Army Space and Missile Defense Command Battle Lab investigating solutions on future warfare research projects. Instructor for LTA (Lighter Than Air) ISR systems deployment teams for an OSD, U.S. Special Operations Command, Special Surveillance Project. Built and operated commercial RPA prior to 2007 FAA policy clarification. On the airspace integration side, he serves as director of special programs for the RCAPA (Remote Control Aerial Photography Association).