Business Elevated Podcast (Episode 17)

This podcast series features business and government leaders discussing what it’s like to live and work in the great state of Utah.

This episode includes a conversation between Chanel Flores, the Aerospace and IT cluster director for the Governor’s Office of Economic Development, Nathan Millecam, the CEO of Electric Power Systems and Michael Armstrong, the CTO of Electric Power Systems.

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The Business Elevated Podcast is also available in iTunes.

Audio

Transcript

Introduction

Welcome to the Business Elevated Podcast, where we discuss what it’s like to live and work in the great state of Utah. Did you know Utah is frequently ranked the best state for business by Forbes? This podcast is a production of the Utah Governor’s Office of Economic Development. Thanks for joining the conversation.

Nathan Millecam
Michael Armstrong

Conversation

Chanel Flores (0:21): My name is Chanel Flores, and I am the Aerospace and IT cluster director for the Governor’s Office of Economic Development. Today, it is a pleasure to be here with Nathan Millecam, the CEO of Electric Power Systems, and Michael Armstrong, the CTO of Electric Power Systems. Thank you guys for having us up here in Logan, Utah today.

Nathan Millecam (0:44): Yeah, thanks for having us.

Chanel Flores (0:45): I tell people all the time, Electric Power Systems, the company as a whole, they really are a game-changer when it comes to propulsion systems, and it’s something that we should be really excited about, and the future moving forward in the aerospace industry.

Nathan Millecam (1:04): Well, thank you. We’re excited about it. Now, we’re aerospace nerds, so we love this stuff. We love what aerospace does for our economies, and what it does to keep our nation safe. So we just feel honored to work in it.

But, it’s really exciting being where aerospace is now. We call it a renaissance for aviation. Because, when I had started my career in the mid-2000s, it was a mature industry. It moved very, very slow. If there was going to be any new technology that was adopted, it just happened in small, small increments. Where now, with kind of the infusion of technology, the infusion of capital, it’s really started to unleash the capabilities of aerospace.

And what electrification really does for aerospace, is it opens the design space where we can think of vehicles that we never thought of before and provide capabilities and missions and benefits to our economies, to our cities, to people who just want their goods faster. That equates to economic growth that really it’s at an unprecedented scale in the history of humanity. And just to feel like we get to play a part in that as far as a propulsion system supplier, it’s exciting, it’s very engaging and we just feel honored to be part of it.

Chanel Flores (2:32): I was going to say, talking about the future and looking forward to the future, the governor oftentimes brings up how The Jetsons used to be a long shot, as far as the future of urban air mobility and what kind of aircrafts were being developed. Talk a little bit about some of the projects you’re working on and the future of urban air mobility.

Michael Armstrong (3:02): Yeah. When we look at today’s landscape of aviation, it’s called the third major revolution in aerospace. So, if we think about the birth of aviation with the Wright brothers back in the early 20th century, and then major revolutions in propulsion technologies in the mid-century, and every large advancement in the way we interface with aircraft on a day to day basis, or through traveling across the country was proceeded with the advancement in propulsion technology.

So, with the Wright brothers, to say very high power piston engines that drove a lot of development in the ’30s and ’40s, in the early days of aviation. Then things like the turbofan engine really made aircraft accessible to the common man, where you could get on an aircraft, you could be across the country, and you could do it at a cost that was affordable. So the way that aviation brought people together was incredible. And it really changed the way we interfaced, as we communicated as a country and as a world.

Now we’re in a situation where new propulsion technologies are coming about, where batteries are coming to the point that they can safely and elegantly provide propulsion to different types of vehicles. And those vehicles, as you mentioned, they’re urban air mobility or eVTOL vehicles as they’re called. They have the opportunity to give us a new way of traveling within our cities, and to avoid some of the congestion, and actually reach out to the outlying communities in a much more accessible way than we have in the past.

Nathan Millecam (4:38): To piggy-back on Mike’s comment, I think what’s truly exciting about doing this, is if you look at a personal air vehicle, we think of personal air vehicles typically as business jets.

Chanel Flores (4:52): Right.

Nathan Millecam (4:53): And those types of productivity tools are generally only accessible to people with a lot of wealth or very senior organizations. The interesting thing, and the exciting thing about an electric propulsion power train is, it starts to open up personal air vehicles as a productivity tool for everybody. And when you start to think of the economic benefit of everybody having access to getting to where they want to go very fast and very efficiently, it’s exciting to think about where the world can go in the future.

Michael Armstrong (5:27): We have the opportunity, and we have the privilege, to be supporting the community with some of the fundamental underpinnings of the technology that makes this happen.

The ability to provide batteries, that can be certified to the level of standards of safety that the FDA requires, is critical to making this thing happen. So when we look at these opportunities, that we have partnered with very large entities and some startups as well that, are doing very exciting things in a very non-traditional way, the energy storage system is the critical technology. And as the energy storage system goes, so will the industry in this new area of transportation.

Chanel Flores (6:15): Yeah, it’s super exciting to kind of see how this industry is changing, and how Electric Power Systems is actually really making such a difference. I was with Nathan at CES for the announcement when Bell announced the Nexus, and EP systems being part of that program with them. Can you talk a little bit about what opportunities you’ve seen, and kind of working with some of these larger aerospace companies when it comes to electric propulsion systems?

Nathan Millecam (6:52): Certainly. We’ve seen quite a few opportunities. And what’s interesting is very few of them are in the public domain. Bell is one we can talk to. They have been a fantastic customer, fantastic partner to work with. But, what’s exciting, and I think what we represent when you look at the partners, every single one of them, the six that were announced besides us, they’re large aerospace conglomerates. There’s only one small, scrappy startup company, if you will. And that’s Electric Power Systems.

So, what I think we bring to a lot of those partnerships is not only the technology, but the thought process around of, well, how do we quickly deploy, utilize, and make the technology safe? And where traditionally large companies have a very high burden of proof that they have to meet to their internal constituents in order to bring a new product to market, we don’t necessarily have those constraints.

Now, we certainly have constraints around what we think [is] safe, what we think will actually be acceptable to the flying public, as well as to ourselves. We intend to use these products as they get certified. But we are unable to do that at a speed, and really focus our time and energy on what we think is truly value added to the process, and making the technology and making the aircraft a reality.

Michael Armstrong (8:21): One of the unique aspects of working with say Bell and other partners is you’re really seeing this larger amount of urgency in the aerospace community. We’ve talked frequently that this kind of feels like the space race where everyone is trying to be the first one to have a viable product that can complete these missions.

So while, as Nate said earlier, the aerospace industry is generally very conservative and very, very slow-moving in terms of adopting new technology, and rightfully so because the burden of safety is so high. We’ve seen a new urgency among our partners to really push the envelope of technologies in a way that enables these new markets, but do it in a responsible way so that we can meet all the mission requirements, and do it in a way which fulfills that same burden of safety that the aerospace industry is known, for and has to remain known for as we go forward.

Chanel Flores (9:25): Switching gears, I kind of want to talk about why Utah. So you guys have now been in Utah for two years. You guys decided to relocate your headquarters to Logan, Utah. Kind of tell us what made that decision about why you chose Utah as your home base.

Nathan Millecam (9:43): Certainly. I think if you would have asked us three or four years ago where we would end up, I don’t think Logan, Utah would have been at the top of our list. But when we started the process of looking at a new site, we were originally located in southern California, working out of a traditional aerospace site that was geared more for small lots of production, that’s commensurate with where really aerospace is at. You build 20 to 50 or a couple hundred if you’re fortunate enough to get on a really large volume airplane.

When we started to look at what urban air mobility, or some of these logistics, or even all-electric trainer markets could be, it was very clear that the infrastructure needed to completely be rethought of how we did aerospace.

So, when we started that process, we determined that we were going to be academically honest. We were going to go where it made sense. And so when you looked at what our selection criteria, cost is a very big thing, but more importantly than cost is what’s the value you get out of an area.

And we looked at everything from tax incentives to what the cost of labor was, what the cost it was to ship goods in and out of our site, both internationally and nationally. We liked the Mountain West because it was in a very good position to serve customers on the East Coast, in the south, or on the West Coast.

But what really attracted us to Logan, in particular, is access to talent. The university system in Utah is fantastic. It’s highly affordable. It graduates very, very quali[fied] candidates. There’s a culture here in Utah where people are just productive. And they’re happy while they’re productive. They like coming to work, they like working hard and they like being a part of something bigger.

So, when we looked at what the universities were doing, we saw that Utah State University had some very interesting capabilities in electric vehicles. And system capabilities is mostly what we were interested in. There’s a lot of universities who tend to go very deep in the technology. They want to know how a device works very, very well, or what are the chemical backgrounds to making that device happen, or they’re very theoretical as well.

What we found here were universities that were pragmatic and training people, but doing real systems-level engineering, and really pioneering some technology. So what that enabled us to do is some of the most difficult technical hires that we have in our long-term staffing plan, we could find readily available in Utah.

We also saw this as a place that we could recruit talent. The Bay Area is typically where a lot of people think of in terms of startups, or Los Angeles. There’s great things about that area. There’s also a lot of great things about moving out of that area to a much more affordable place where you can be in the mountains, or the outdoors, and you can really have a lifestyle accompanied with a great work opportunity. That is what we thought that Utah would offer. So that was a lot of what ultimately led us here.

Chanel Flores (13:08): Yeah, it’s really exciting to see you guys choosing Logan as your site, and creating that partnership with Utah State University. How has hiring been? Have you guys had a good pool of candidates? I know, right now, we have a three percent unemployment rate. There is definitely a workforce demand.

Nathan Millecam (13:31): Well, that’s a great question. Hiring in a booming economy is challenging, no matter where you are in the United States. Now, we’ve had a lot of success working with the universities in finding new or emerging talent that’s just hungry to be in this type of industry, that wants to contribute and that wants to do something in their career that’s meaningful. So we’ve been able to find those types of people very well.

I think generally we’ve been very successful in finding talent. Now, we’ll always have our struggles. We want to hire faster than maybe we can find the right person, but generally, we’ve been very pleased with the people we found here.

Michael Armstrong (14:13): I think on that note, there’s two parts about that, attracting talent, is obviously the work that you’re doing has to be compelling. And I would say in aviation this is as compelling as it gets. Right? And the other part of that is having just the community itself, right? It’s a great place to raise your family. It’s a great place to have outdoor recreational opportunities. And it’s a beautiful place to live. Coming from the Midwest where the winter you hunker down the whole winter. And here it’s an active and vibrant community that is engaging and comes together throughout the whole year. And that’s a little bit different than some of the other areas in the country.

I think what’s unique is that we have had a very high percentage of our leadership, and some of our senior leadership, especially in engineering, coming from out of state. We’ve had people come from the Bay Area, from Southern California, from Texas, from Arizona, from Indiana, all the way out to the East Coast, Pennsylvania. And so it’s really a very, it’s a hub for electric propulsion. And our intention is to make Logan a spot in the map so that if anyone thinks about urban air mobility or electric airplanes, they think of Logan, Utah. That’s really our goal. And I think that there’s no reason why it can’t be that way.

Chanel Flores (15:40): I love that, and I love hearing that you guys are actually able to recruit out of state, especially for your executives. I want to kind of end with what is the future of EP systems? What do you see happening in the next year to five years? What are some of the challenges? What are some things that you guys are going to be working on to really move this industry forward?

Michael Armstrong (16:05): That is a really good question, and it’s hard to answer not because of [a] lack of growth. It’s really how fast will we grow and how fast for some of these markets emerge. Right now, we do a lot of advanced technology and we’re looking at key places where we have certified products that actually provide that game-changing capability for certain aerospace markets. And what we’ve seen over the last two years is that that growth is faster than we even predicted.

So as we get those certified products into the market, and into specific markets where it makes sense right now, today, or next year, that growth will accelerate even quicker. So it’s hard to say because it’s a different world in aerospace right now, and people are operating under a different urgency. They’re trying to get products out faster. They’re trying to find unique applications for new technologies that people haven’t thought of before. And so I think the future is bright. The runway is set for us right now to go and become the household name in aerospace.

Chanel Flores (17:20): Definitely. And do you think there’s any regulatory constraints that you guys are going to have to overcome? Is there a way for the state to help move this industry forward?

Nathan Millecam (17:32): Regulation is a big part of any new technology in aviation. And right now there’s a lot of committees, and a lot of discussion and debate on what those new regulations should be. Our general approach has greatly exceeded what we think the regulators might even ask us for. And we think that’s good from a risk mitigation standpoint, as well as a public acceptance perspective.

So, if we can show that not only do we meet what historical aviation standards have been around lithium-ion battery technology, but that we exceed them, and we can actually pioneer what some of those standards, and really find where the risks are, or where the concerns are before the regulator even knows whether to ask the question or not. We really see that we can start to put a very, very high benchmark for anybody who might be thinking about doing this, but might not be thinking about the safety aspects or the regulatory aspects. But just to make sure that the standard has been set, that the public is being protected and that people feel very safe when they get into these future electric vertical takeoff and landing, that these will perform every bit as well, if not better than traditional airplanes that we fly on every day.

So regulation is a big part. As far as what the state can do, I think maybe just to one of your earlier questions, that’s another reason why we came here. We felt like there was a government here that was very collaborative, that was very open and that seemed to balance business needs as well as the individual citizens’ needs to try and do what’s best for everyone.

Where I think Utah can potentially lead is you look at just the environment we are in, and you look at how limited we are to continue to build infrastructure by nature of the mountain. So this is a technology that can greatly help us grow. But [a] more exciting, or more interesting point is, you look at one of Utah’s greatest economic drivers is, in fact, the outdoors, and coming here and clean blue skies, clean air, fresh water, or things like that.

What I think this technology can contribute to, and what we’d like to see the state do, is really drive and lead amongst other states of adopting these clean technologies. Because not only will it provide clean, safe transportation, but it can also really drive our economy to continually grow at an unprecedented rate compared to other states in the nation.

Chanel Flores (20:17): Well, I think that point is perfect to end with. I think being able to really connect some of our rural communities to the urban Wasatch corridor I think is key. And like you said, it really could be a game-changer for the state of Utah.

It’s such an honor to have you guys here and have your home Logan, Utah here in the state. You guys are leading the way when it comes to electric propulsion systems, and we’re excited to see what the future holds for you guys. We’re also excited to see the new building that’s going to be broken ground in or actually ribbon cutting this December.

Nathan Millecam (20:55): We are also looking forward to this building because we are out of room with our current footprint here. So thank you for your kind words. We’re grateful to be here. We’re glad to be a part of the community. We’re very much looking forward to further helping build all our stories, to be a very, very bright future for the state of Utah and for Cache County and Logan, Utah.

Chanel Flores (21:17): Well, it’s a pleasure as always. Thank you, Nathan, and thank you, Michael.

Conclusion

Thanks for listening to the Business Elevated podcast, a production of the Utah Governor’s Office of Economic Development. Listen to other episodes where you get your podcasts or at business.utah.gov.