Episode Transcript
[00:00:08] Speaker A: Welcome back to on the Fringe, brought to you by EPR Live. I'm your host, Ann Larson, and today I'm joined by Luke Kuhl, the executive chairman of Twin Cities Chapternika, which is the brand new, really Twin Cities Chapternika about to celebrate your first anniversary.
[00:00:22] Speaker B: Yep. New and improved.
[00:00:23] Speaker A: Yeah. Luke spends his time right at the intersection of technology, workforce development and leadership, which makes him the perfect person to talk with about where our industry is headed. We're going to talk about the impact of AI and data centers and what that demand really means for electrical contractors and why leadership, and not just technology, will determine who thrives in the next decade. So, Luke, welcome to the show. I'm glad you're here.
[00:00:48] Speaker B: Oh, it's an honor to be here.
[00:00:50] Speaker A: So, before we dig into AI and data centers, can you give the listeners a quick overview of your role at Nika and the kind of conversations you're having right now?
[00:00:59] Speaker B: Sure. So I'm the executive chairman of the Twin Cities chapter of neca. We are coming up here in a couple of weeks to be about a year old.
We are a chapter that was created from two other chapters. So until last year, we had the St. Paul chapter and the Minneapolis chapter. Minneapolis covered three different unions. So we covered basically now the southern half of the state of Minnesota. So everything that had been done by St. Paul and. And done by Minneapolis chapters is now done by the Twin Cities chapter.
[00:01:30] Speaker A: When I think about AI, well, I think about a lot of things. We use it a lot here and then. So I think about, like, how we use it. I think about the impact, the larger impact of AI on the world.
I also think about how the industry is affected by AI. And there's lots of layers there, too. There's so many layers with AI. And I think we want to dig in a little bit on the impact of data centers specifically, or maybe more generally beyond. So AI data centers versus other data centers. I think those are the big ones. And I'm curious, from your point of view, when we were talking about AI data centers, what are we missing? We kind of look at it as just these mega projects. Just a mega project. It's just a project. It does work. But what is important about it being an AI data center?
[00:02:20] Speaker B: Yeah, I think data centers are just fascinating. I think that AI is going to shape what we do as a society, what we do as individuals, what we do for work.
And really, the brain of what AI is, is data centers. And it puts our contractors right on the forefront of a new frontier.
And those data centers are going to drive the next five years worth of growth in our market.
We have a large metadata center that is finishing up right now. We have others coming in future years to the Twin Cities area.
And those data centers are driving the market to the point where if you're not in healthcare or on a data center as a contractor, you're not really partaking in the growth part of the market.
And so it's fundamentally changing how contractors are operating, and it's changing the workforce. It's changing everything about it. And so I think contractors sit right on the forefront of what's going to change in our culture. And it marries us up with some very interesting companies that have more money than anyone else on the planet, who have more opportunity to innovate than anyone else on the planet, have more opportunity to change the way that you and I do our jobs every day or enjoy our media every day. It's not just a business thing or just, you know, it's much like the Internet. It's going to change the way we do things. And so that's exciting. But how that impacts us and how it impacts our market and how we look at the future I think is really interesting.
[00:04:03] Speaker A: I heard changes in how we operate and changes in the workforce. Do you want to give some examples about how it's changing the way contractors operate their businesses?
[00:04:13] Speaker B: Sure. So when one of these hyperscale projects comes to town, like the data center that we are or our contractors are working on, it really starts to push the envelope of workforce. We become reliant on a lot of travelers coming in. It drives our organizing efforts. So we're organizing more people than we ever have.
It's driving our apprentice classes. We're bringing in more apprentices than we ever have. It drives all of those outputs, inputs and outputs for workforce. So that's number one. Number two, these huge projects are so giant that they drive up wages, they drive up the cost of being an electrical contractor and the cost per hour of an electrician. And I think this just makes economic sense from both management and the union's perspective, is that if one of these huge projects come in and they have have a lot of money to spend, whether they're doing per diems or other types of benefits, that, yeah, you're going to try and cash in. The flip side of that is that if you're not involved in the data center market as an electrical contractor, the cost of your labor, folks, is going up in a way that may not be sustainable for Luke Kuhl or an Larson, for Elon Musk and for Mark Zuckerberg, it's small change.
But for us, if we needed to do improvements to our home or to our small business, it starts to drive up costs. And that that in turn drives a whole separate issue that we deal with on the contractor side is that drives consolidation, it drives market consolidation. Those smaller contractors find it more challenging to be successful in the market. And so the large contractors that are involved in, you know, the economically advantageous parts of our market can swing in and purchase others. And we see that in the Twin Cities area. We've had several of contractors purchased by other contractors, several of our NECA contractors purchased by other Nika contractors.
[00:06:12] Speaker A: So with market consolidation, with electrical contractors consolidating to form bigger and bigger companies, what are some of the benefits and drawbacks of that?
[00:06:22] Speaker B: Yeah, I think there are several levels of positives and negatives from a chapter perspective.
Obviously having fewer members and larger contractors has an impact on the way we operate in our bottom line. So that's something that I keep a close eye on. But in terms of what it does for the industry is that I think it's driving just kind of a mass change of the way that we look at the electrical industry. I mean, I've been with nika for about 10 years and I enjoy working with a lot of these contractors. And a lot of these contractors are folks that have come out of the industry, have come out, they were electricians, came up and built their own businesses that they understand the union, they were part of the union, they that it made sense to them.
Now we're entering into an area where I think there's a lot of outside folks trying to invest in the markets. So you have large contractors that have been traditionally in the market trying to purchase smaller contractors. And then you have these large investment groups that see being electric, being in the electrical construction market is being positive so long as this AI boom continues. And so they're coming into the market in a different way as well. And that's happening on both the union and non union side. So it's very interesting. I think it's definitely shuffling up the market. I think it will drive innovation. I think it'll drive also some labor management conflict along with that.
It's just different folks trying to get in on what they see as a very stable market for as long as the AI and data center boom continue.
[00:08:05] Speaker A: So we talked a little bit about changes in the way that the contractors operate. What are some of the changes that you're seeing in the workforce?
[00:08:14] Speaker B: Yeah, so we are Working very hard with our labor partners. And our labor partners are doing a great job on the organizing and growing side. And so I think that that's necessary that if you're talking about the, you know, five alarm fire that's going on, that's what's happening right now is that we don't have the workforce to be able to manage these large scale projects to this, at least as many of them that we see are coming down the road. But the bigger question that I, that I see as we look at the data center workforce challenges is what's the workforce that we're going to need in 10 years down the road? Obviously we have an issue today, obviously we need to address that and that's workforce. But what does that workforce look like 10 years down the road? We have all these new people, all these new investors piling into the industry, seeing something different.
And we have companies that are building hyperscale projects that have more money to do whatever they want with. What are they going to demand of us and what changes are we seeing? And in Minnesota, we have started to contend with that. We have statewide licensing in the state of Minnesota. So with our limited energy group. So that's limited energies, vdv, low voltage. Different places call it different things.
But for Minnesota, we call it limited energy. We have a licensing regime for limited energy, we have permitting requirements for limited energy and we have a dedicated JTC for limited energy for the state of Minnesota. And so every single one of these data centers, for example, every new iteration requires more and more limited energy workers.
And in Minnesota we're trying to pump that up.
But throughout most of the country, there is no infrastructure, there is no licensing, there is no permitting, there is no dedicated JATC for the vast majority of the country to be able to move up those folks. And so then the question becomes, if you don't have those trained folks, can the inside people take care of it, the inside electricians?
And the answer is yes.
But are people willing to be going to be willing to pay the cost for that? Because there is a cost differential between those two workforces. There's a different training for those two workforces and there's just different expectations. And so I think about, we certainly need to solve the workforce issues that we have today. But I have a more burning concern about are we building the workforce that we need for the future. Because that's what we need to do. We need to cater to our customers today, but we need to build a bridge to the future which may not be as many, you know, Inside traditional, inside electricians. And so how do we deal with that? Maybe there's other technology that's going to happen as well that's going to change the way that our workforce is. I'm afraid. I'm afraid in some ways that we're building the workforce that would have satisfied us 20 years ago isn't going to satisfy us 20 years down the line.
[00:11:14] Speaker A: So when I think about JTCs and training, I think mostly about the local.
What is NECA's role in creating more space for limited energy workers or encouraging that work or that training?
[00:11:29] Speaker B: Sure. So every JATC is made up of a committee of 50% management and 50% labor. So the chapters are obviously very involved. I'd say historically maybe chapters haven't been involved as much as they should have, but I feel like in the last five, 10 years NECA has really made a push both nationally and locally to be more involved in the jatcs.
In our case, we had a long history in our jurisdiction of limited energy workers. We had agreements going back to the 1980s and 1990s.
We created our current statewide structure with multiple unions and a statewide JATC in 2000 or 2001.
So we're about 25 years into this experiment of creating a standalone JATC directed at training on these things. Directed at training on fault managed power. Just had a conversation recently with a vendor who wants to make our JTC even, you know, at the front of the line in terms of beginning the training to use things like fault managed power, which is the next generation of how electricity is going to be distributed in buildings.
[00:12:44] Speaker A: So we've got the JTC working on it. Nika maybe becoming, or encouraging Nika chapters to become more involved in how that's done.
Is there political movement? Do you need to lobby your state government if you don't have a limited energy situation in your state?
[00:13:03] Speaker B: I think it's really important for, I mean not every state's going to have the same answer. We certainly don't regulate inside electricians in a consistent manner across the country. Minnesota has a statewide licensing, but that's not typical of what you'll see across the country. So I think every state's going to have to deal with it differently. I think what's most important is that people are actually thinking about it because I feel as though right now people aren't thinking about it. There's going to be a real challenge. Talking about the political push. Yes, there's going to be a challenge, you know, at legislatures or licensing boards or whatever, whoever is doing the regulating departments of labor. But there's also going to be a push and pull amongst contractors because are you an inside contractor? Are you a limited energy contractor? Are you both?
And who gets to do what part of what jurisdiction? And as difficult as those conversations are on the union side, you also have these conversations where, you know, is this inside electrician work or is it limited energy work and who has more votes to elect the next business manager or the next, you know, president of the union? And so there, there's politics involved in that and we're going to have to figure out how to navigate that stuff together as partners. Because if we don't, I think we'll end up pricing ourself out of the market and we won't have the workforce that we need to really effectively and in an economically competitive way work in those markets.
[00:14:34] Speaker A: So essentially the risk is that the limited energy work goes non union could.
[00:14:38] Speaker B: Go non union, it could go to other building trades. And the.
There's a whole different approaches. I mean, it's just a different beast. It's a different form of construction, it's a different level of risk.
If people have a Voice, a voiceover IP, a VoIP phone on their desk, there's no electrical cord going to it. It has a ethernet cable. You plug that ethernet cable in and the whole thing goes. And then it talks to some central entity that probably was once a person is now AI and connects, connects you to the world. Right. You don't need an electrician for that. You might want an electrician if you're going to change your chandelier on a traditional electrical system.
But if all you need to do is to plug in an ethernet cord or something like that, then all of a sudden the market changes. And if we're not prepared as electrical contractors and as union members to be able to head off that change. I think even as simple as these examples are, you can only imagine how much more complex and how much more efficient it can get when those issues are being dealt with inside of a data center that's pulling a lot more energy and doing a lot more things.
[00:15:52] Speaker A: Yeah. When it comes to contractors that you talk to, what do you think they need to do first?
[00:15:58] Speaker B: The contractors in our jurisdiction? I mean, I think they'll know that we are all pushing them to start a limited energy division to at least look into it if they don't have it. We have in this part of the country several limited energy only contractors. So they only do limited energy work. We also have a lot of, or I shouldn't say a lot of. We have several mechanical contractors that are interested in the limited energy side that kind of corresponds to the work that they do. We're pushing them to do that. We're pushing them to make sure that they're involved in the growth spaces of the market. They're. Every contractor needs a space a little bit. I mean, as of right now, they need a little bit of healthcare and they need a little bit of data center work. Even if it's not a hyperscale data center, you need to start playing in those areas because if you're not and you want to grow, it becomes very difficult.
[00:16:51] Speaker A: So how does like a very small. There's a lot of very small electrical contractors out there. We know because they're in EPR live. We can see there's a lot of big ones, there's a lot of medium ones, there's a lot of small ones. And as we said, it is consolidating. But there's still going to be small contractors for a long time. What do they do if they're tiny?
[00:17:12] Speaker B: We've got a kind of a checklist of things that you can look at. I think Electree did some really good work in this space that we can share.
And if you're really small, you know, you may not be able to do it. The question is how many really small contractors are going to be able to compete 10 years down the road if these data centers keep coming and pushing up costs to the point where if you're a small contractor who bids against non union for a gas station or for a large home or for something like that, you're just not going to be able to compete at the wage rate that Mark Zuckerberg is paying at Meta or I'm picking on Mark Zuckerberg, but I mean, it's okay. Amazon, Google, you know, Meta, Microsoft, you name it all, it's going to pressure them. And we've seen locally a lot of, I shouldn't say a lot, but more small mom and pop contractors than I've seen ever in the last five years pushing to either just close their doors altogether or desert from the union and. Or trying to desert from the union because they find it to be difficult to compete within the union context. And so we're working with the union on a lot of these issues to try and figure out ways to deal with it. Certainly when a large customer comes to town, the contractor wants to make money, the union wants to make sure their members are making money.
And so when these large customers with unlimited dollars come into a jurisdiction. Of course it's going to push up costs.
But we need to figure out what happens when either the data center boom goes bust or their next microchip is a thousand times more efficient and we don't actually need all the electrical power or I mean there's, there's lots of ores when it comes to this new technology.
And we got to think about the future of our contractors because unlike other boom bust cycles, I think this one is fundamentally going to change us.
You know, we electricity. And you want to go back to 1901, when Nika was founded, electricity was a new technology. A bunch of people who was average age, I was just reading this. The average age of 19, 1901 for the first NIKA meeting was 34 years old. A bunch of young people coming together.
[00:19:36] Speaker A: What's the average now?
[00:19:38] Speaker B: It ain't that. It ain't that. You can go to any Nika meeting and it ain't that.
And I'm older, so I mean I'm, I'm older than that too.
[00:19:46] Speaker A: We're part of that.
[00:19:46] Speaker B: We're part of that. We're part of the problem. Part of the problem. And they saw it as a new technology and their goal was to standardize and create this new. Take this new technology and standardize it and make it so it was an actual thing. And I think they did a really good job of that. Our forefathers did a heck of a job making that happen. And then we took the ball and ran with it for the next hundred years, you know, after the first 25 years of standardization, and we made it into a building trade, which is cool, it's neat, but we're not a building trade anymore. We're going back to being a technology.
And I think that this data center boom is a high point in the cycle where we're thinking of ourselves as building trades folks. But the next 20 years is going to require us to think of us as technology merchants in a different way.
[00:20:34] Speaker A: I think about AI a lot and where, how it's going to change things, how it's pushing, what forces it's pushing onto different markets. And when I hear about pushback from communities on, you know, water and electrical, really like those seem to be the two. It's like it uses a lot of water, uses a lot of electricity, it's pushing people's rates up or it's using resources that, you know, maybe are scarce. There has to be innovation there. They kind of have to. If that's going to keep growing, they have to Innovate and use less water and be less of a burden on the electricity or the electrical grid, or we need to make massive improvements in generating electricity. And there is. I mean, I am kind of curious from you, like, what you think about the nuclear question, but also I. There's pressure on the other end to use less. What do you see, like, which one do you think is more likely or where do you think it's going to go?
[00:21:28] Speaker B: I mean, I think it's really hard to figure it out, but I would encourage. There's a great Planet Money podcast episode called what AI data centers are doing to your electric bill.
And it. I highly recommend everyone should listen to that because it helps you understand what's happening now isn't any different than any other big boom where you have these external costs that are being pushed on to other people. So you have these huge companies that, you know, have profit margins of like 60 to 70%.
My contractors are lucky to get 10% margin. These companies just print money and they're able to do what they want. And they're playing into an energy market that's a monopoly, basically.
And so the question is, who pays for all the extra energy?
Does all of the users of the electricity? Which means that you and I are subsidizing Mark Zuckerberg, since we're picking on him today. We're subsidizing Mark Zuckerberg. I don't think Mark Zuckerberg needs a subsidy is what I think most people would say. My metadata center just went up here and now it's, you know, next door. And now my electrical bills are double what they were five years ago. Why should that happen?
And so I think that the. I think those companies are going to start to look at it differently, which makes it a big wild card about what the future is, because let's be honest about what these companies have done. They've taken regular CPU microchips, and in the last 10 years, they're 300 times faster. The GPUs like the Nvidia chips, the graphics chips are a thousand times faster today than they were 10 years ago.
There's a podcast with the CEO of IBM. He hypothesizes that in the next five years, it'll be another thousand times more efficient. Now he's betting that quantum computing is going to hit.
But still, I mean, what kind of energy do we need in the future? I think a lot of people are just projecting out that we just need the same thing that we've had in the past. And I just don't think that's the case. The other element of this is that the energy cost of running one of these data centers is about 5 to 7% of the cost of the data center. When you take the whole data center for a lifetime, 5 to 7% of the cost, if energy costs go up, then these large customers are going to say, hey, how can we find efficiencies on the electrical side? And maybe that'll be, you know, we want modular nuclear construction on site or there's all sorts of other ways that they could go about it. And so it's just not clear to me like what they're going to decide to do. So if, if the cost of a data center, if the electrical cost of a data center goes from 5% to or 6% for 26%, then all of a sudden all that money that these companies were putting into increasing chip speeds are going to be now directed to decreasing energy costs. And what does that mean? I don't know.
I wish I had trillions of dollars to figure it out, but I think it's very difficult to know exactly how it's going to play out. But I do think there's going to be more efficiency there. And I think people are underestimating the amount of efficiency that they're going to find and they're just going to have to find more power, but that's what they do.
[00:24:44] Speaker A: Yeah, my first thought was definitely the efficiency. It's just going to have to, they're going to have to figure it out. That's, that's just like the way that the pressure is building on that. I don't know what that means, what the downstream ramifications of that are. I, as a consumer of AI, I'm like, that will make me feel better about it. So I don't feel so bad about using it for all of my projects.
[00:25:08] Speaker B: But I think that's key. I think that's key when you think about data centers in our society is do you feel bad about using it? Because nobody wants a data center across the street from them, but everybody wants AI so they don't have to read the 40 page article that they don't want to read. And you throw that on it. I mean, nobody wants to pay more electrical bills, but nobody wants China, for example, to have the edge on AI. And so what are we going to invest in? What are we telling ourselves as an American people or just people in general about what we're doing this for, what the risks and costs are? Because those are the questions. If nobody wants A data center next door. That's a problem.
[00:25:52] Speaker A: There's not that many places. I mean, there's a lot of. We have a lot of space, but we're lucky in that regard. Where there's a lot, there's a lot of places. But yeah, like what's the ideal place?
[00:26:03] Speaker B: Right.
[00:26:04] Speaker A: There's probably not that many that can provide all the water, all the energy, all the space, all, you know, neighbors who aren't going to complain. There's not really that many places, I imagine.
[00:26:14] Speaker B: Yep.
[00:26:15] Speaker A: Back to small contractors, I just wanted to follow up on that idea.
What are the consequences of a future industry, a future Nika and IBEW where they just don't have small contractors? Like, if that were to happen and the small ones go away, what do you see as the downstream consequences?
[00:26:36] Speaker B: I think, I mean, there'll always be a need for small contractors.
And the question is, can we compete economically with the non union contractors or can we compete? You know, if the new technology is such that other trades that get into the electrical market, are we able to compete with them?
And so if someone's going to do the work and there'll always be the need for the small contractor, whether those are non union contractors, I think that issues. One challenge for the unionized industry is that you're going to have small contractors building up and eventually small contractors become big contractors and big contractors then compete on larger jobs. So I think that's a consequence. If we start losing these small contractors, I do think that there'll be instances where, I mean already in other parts of the country where you have other trades doing electrical work that'll start to leak into it, especially if it's not as challenging and, or specialized as what we have historically considered to be inside electrical work.
[00:27:43] Speaker A: So I always told my son and daughter, neither of them are going to listen to me, unfortunately, or maybe fortunately, given what you're telling me about how the industry is going to change. But I said just be an electrician, be a union electrician and then start your own business, like just do that. But if what you're saying is true, I mean, of course, like there's always the small contractors, but if that pipeline that we talked about before where like you work for the, you're a union electrician and then you start your own company and you want to employ union electricians because you were an IBEW member, how do you see that path changing if it's not very viable within the union space, if that happens?
[00:28:24] Speaker B: I think it does happen. It is happening. It's Something we really fight hard to prevent against locally. But I think it's just incumbent among us as leaders in this industry, as contractors and as union leadership to be honest with ourselves about what's going on and try and make the change that we need to see.
And we need to make those changes in a timeline that isn't reactionary.
The time to try and change. This is now. The time when a lot of money is coming in and things are good. The time to change. This is now. The time to change. It isn't. After the data centers leave the Twin Cities market, our electricians are priced out of what have been our traditional customers and our market share plummets from roughly 50% that we have today to 10%. Then it's too late. That's too late. We need.
[00:29:17] Speaker A: So how do you invest in it now?
[00:29:19] Speaker B: Well, I think Minnesota's doing it. We're investing in the limited energy space. We're recruiting people into the limited energy realm. We're training them on cutting edge technology.
We are working with our, with the legislature and with our state licensing board to make sure that it's a regulated.
We're trying to push the edge of what's possible. We're trying to encourage our contractors to get into limited energy work. We're trying to work with our union partners to make sure that limited energy workers aren't considered second class citizens within the ibew. Those are the types of things and they need to be non second class citizens at our contractors businesses. I'm not trying to knock anybody here. I'm just trying to lay out the challenge of what that means. And I think we're doing a good job in the state of Minnesota. I think it's really difficult.
We do a good job here, but it doesn't create a moat around us. That means if other state in the country doesn't do something eventually it will harm us here and harm NECA contractors here. And that's what we're trying to avoid and we're trying to evangelize nationally about.
No state's going to do it the same way Minnesota is doing it and we're not going to do the same way California is doing it. But a lot of these other states need to start thinking about union jurisdictions or however you want to think about it, but you start thinking about how they're going to address it.
[00:30:38] Speaker A: Do you see anybody else out there outside of Minnesota who, who's doing something that you would like to adopt?
[00:30:45] Speaker B: Yeah, so I mean, I think we've had several people come into the state from all around the country to learn what we're doing. Basically, I think there's some really interesting things happening in, in Northern California particularly that we're keeping an eye on. I am biased, but I think Northern California and Minnesota probably have the most progressive approaches to limited energy. There are some interesting things happening in a whole bunch of other places. That's not going to rattle them off because I'll piss off other chapter managers. But there are interesting things happening everywhere. But I think in terms of industry leadership, we're kind of where it's at right now.
[00:31:24] Speaker A: So what's the first, as you mentioned, a bunch of things, a lot of them related to limited energy. But if there's a chapter manager out there or an IBEW business manager out there listening to this, what is the first thing you would ask them to look at or suggest that they do if they're kind of like their state's kind of a wild west of limited energy?
[00:31:46] Speaker B: Yeah, I mean I would definitely have them do some research on fault managed power and just start to understand. I mean I think a lot of folks understand power over Ethernet, but fault managed power, I don't know whether that's going to be the new electricity, but I mean, to me it's the closest thing in the marketplace to being the next thing.
In simple terms. I mean, people don't need electrical outlets anymore. All you need is usb.
And so is the USB the next electrical socket? I mean, probably, yeah. I mean is it USB or is it some other standardization? I don't know, the electrical socket you see in your wall that's partially a result of neca. NECA contractors were involved in the standardization of the electrical outlet.
[00:32:31] Speaker A: Are you involved in the standardization of usb? Because I did not install the USB A like outlets in my house when I redid my kitchen because they're all changing to USB C and I was like, oh, I'm not doing anything until this settles down. So who is going to stop changing things?
[00:32:50] Speaker B: I don't think that we've landed on a standardization yet, which makes it difficult for contractors to understand what to do. And for like even the electrical code folks, they're obviously having a very specific direction that they're trying to do to bring in fault managed power and other technologies like it in a new way through the, into the electrical code. But we don't know. I mean, will it be the Apple where Apple Phone where you have to get a new cord every five years or whatever? I don't know. But what I can tell you is that you Know, we created Nika in 1901. We didn't standardize the outlet until I think it was the mid-1920s. So it took about 25 years. I think that things move faster today. I think we'll probably see standardization in 10 years, but that's just. Who knows?
[00:33:36] Speaker A: I hope so. I just got rid of my last old Apple phone. Like the first one, the big wide one. First I found one.
I was still hanging out and I felt a little bad, honestly, about getting rid of it, but I was like, okay, we don't need this anymore.
[00:33:52] Speaker B: Yeah, I mean, I think that the standardization of alternative methods is huge. I mean, there are already hotels that have been built where there's only two electrical outlets in the entire room, one for the hairdryer and one just in the room. And everything else is USB or power over Ethernet.
They've been able to even run mini fridges and things like that using fall managed power and other new technologies. And Those hotels operate 30% more efficient than they did prior to their conversion to this new technology. So 30% is not nothing. And if you could get 30% off the efficiency of a data center, that takes a lot of pressure off of what we perceive to be a huge challenge going into the future. Now, doing that on a data center scale is a little bit different, but.
[00:34:43] Speaker A: These companies think different on a personal level. I mean, I. A couple years ago, I decided to go all electric.
So I have an old house, this is from the 30s, and I went, you know, heat pump and electric car and, you know, induction stove, and all of it just got. I was like, I don't need gas. I don't want it anymore. I don't want to have to deal with it. And I love it. Now I'm like, oh, I starting to think about solar panels or something because, like, this is hard on our neighborhood, is losing power more often now. You know, I've lived in this neighborhood for 17 years, and we didn't lose power before very often at all. And now I think it's been like three or four times this year. I'm like, oh, okay.
[00:35:28] Speaker B: Yep.
[00:35:28] Speaker A: I gotta think about backups and batteries. And I'm not quite ready for it because I think the technology is not quite there.
[00:35:34] Speaker B: Yep, that right there is the personification of, like, the challenge we face as electrical contractors is we know it's going to change, but the technology's not quite there. And so we need to figure out what that next thing is collectively with our. With our labor partners and start driving there. And it's Hard because you don't know when is it going to be there for you?
[00:35:56] Speaker A: And well, I think that's a massive leadership question. Like somebody's got to, like somebody's got to get out there and lead. I mean, I know you guys are doing that, but what do you think is changing? Like what do you want to ask contractors to do to lead some of this or other Nika chapters or the ibw?
What's like the top of mind for you, pushing people into leading into the future?
[00:36:18] Speaker B: Yeah, I mean, I would just challenge people to look at fault managed power and, and say if fault managed power takes, we'll say 30% of what is inside electricity stuff today, how do we capture that market and can we capture it utilizing our current workforce, I mean, other than Minnesota, because we have our own limited energy grouping, but in other parts of the country, you know, are we going to do that with inside electricians? And my answer to that is I don't think so.
I don't think that people will pay that rate for that type of work. But I could be wrong. I do think that people need to be pushed to look at this stuff. We've gone, like I said, we had went through 20 years from 1901 to 1925, we'll call it as innovators. And then we standardized and we just learned how to be the most efficient and good in the system that we had created.
And now it's time to go back to 1901 and say, hey, who's the young people that want to build the next level business in a limited energy space or whatever space we think it's going to be?
And let's start driving toward that because that's the type of leadership it'll require.
They didn't know in 1901 what the electrical market was or what an outlet was going to look like, or whether it was going to be standardized or whether, you know, a Westinghouse outlet is going to be different than a different type of producers, whether an Apple outlet's going to be different than a Android outlet or whatever. I mean, that's what they were facing. And we got to go back to thinking that way and pushing if we want to continue and to dominate this market, which is what I want to do is what my contractors want to do. Like, but we don't know what the answers are.
[00:38:08] Speaker A: No, we don't. But I, I like to think about it. I like to challenge my friends and family to think about what AI is going to create, what new things are going to come about because, not directly because of AI, not okay, people are using it to, for whatever purpose, but what are the secondary and tertiary jobs and opportunities and innovations that happen because of it? I think it's really going to be overall just an amazing, amazing tool.
Amazing, like change. I mean, like I, I think both of us probably saw the Internet come alive in our lifetimes, like as we were probably like, right. You know, becoming adults. The Internet was like being created. That was so fascinating and it has changed our lives in so many ways. And I think that AI will do the same. I absolutely love it. And I think that for our business, it's transformational.
It allows us to do things we never could do before.
I hope that the electrical industry also sees it as, you know, there's a challenge, there's a challenge, there's downsides to it. Well, I mean, I think mostly it's. It attacks that. That fear of change that we all have that I think is inherent in most humans and that fear of the unknown. But also like there's so many opportunities and really like to become, to be a leader for IBW and Nika, to be a leader in it and to be pushing the change and I mean, what an awesome place to be in.
[00:39:37] Speaker B: I think it's great. I think I'm excited to be like one of Those, you know, 34 year old electricians and who want to create a new industry, who sat together and got together in Buffalo, New York in 1901 and tried to figure this out. And to our union partners, they got together a few years before us, you know, down in St. Louis to try and figure this out. And we gotta get back to that.
[00:40:01] Speaker A: I mean, it didn't even exist before that. You know, like whalers were very upset about the invention of the electrical industry, I imagine. But I'm glad we're not using whale oil anymore.
[00:40:14] Speaker B: Yep. Yeah, I think it's tremendously exciting. The thing I want most in this world is for Nika contractors to be doing this work for years to come and to have a good and sustainable industry where we can be competitive and provide employees with a good living and those jurisdictions that have pensions, with pensions that are functional long into the future. Because if all of a sudden something happened, it's not just the people today that are going to suffer, it's the people that are in those pension plans and those legacy approaches that a lot of us have. So for everyone involved, I want us to do this work and dominate the market.
[00:40:57] Speaker A: I did want to ask you one more thing.
[00:40:59] Speaker B: Yeah.
[00:40:59] Speaker A: You were talking about Second class citizens, you know, not making sure that the limited energy workers aren't considered second class citizens. And I just wanted to see if you have anything else to say about that. Like, do you have ideas on how contractors and the local can be leaders in making sure that every worker is treated fairly and with respect?
[00:41:21] Speaker B: I don't have the answers. I mean, I do think that tends to be more on the union side of the house and I think it's politically driven because you have a whole generation of people that have come up in traditional electric as traditional electricians and now we have these new. I mean they're not really new. We've had limited energy since the year 2000 and some other form of it back to the 80s and 90s. But now we have these new folks that can do some of what an inside electrician can do, but not all of it. And if you're thinking about pipe and wire and that's your job, thinking about programming and cable trays is a different animal.
I think it's just going to require time and a cultural shift. I think the real challenge is on the union side because it becomes a political calculus for them more so than for us. I mean, the calculus for our contractors is obviously, can we make money doing limited energy work? Is this a growth area? Obviously, yes.
How much of that market can we actually capture on the union side? It's I need to get elected a business manager.
Protecting at all costs the jurisdiction of the inside workers is paramount to everything.
And honestly, even if it's not just a political concern, it just can be a practical concern because that's the way things have been for a long, long time. And so it's just going to require time and change and leadership. People need to understand what's going on. I don't think that this is not unique to the labor side. It's also on the contractor side that the vast majority of people are keeping up with the technology that I think is probably going to shape the future.
They got businesses to run.
[00:43:13] Speaker A: Yeah, well, I know you said that. You know, this is exciting for you. When you think about the future five or ten years down the line, like what's the thing that like gets you up in the morning? What's the part of it that's most exciting?
[00:43:24] Speaker B: I think that there are a whole bunch of contractors out there now that are trying a whole bunch of new things locally. For example, we've had gotten a couple of off site manufacturing prefab shops that have really kind of changed the game for some of our larger contractors.
And I think that we're going to see a lot of growth in that area, particularly amongst the large contractors that have the capacity to be able to do that. But I think that that's just one example of several larger changes that we're seeing. I think it's interesting with a lot of the money that's coming into the electrical industry today, because we now are having more of these outside investors come in to try and. And consolidation amongst the larger contractors that when they become larger, then, you know, they have enough diversity in their income streams and whatever to try and start investing in new things and trying new things. And I think we're starting to see that, particularly amongst the largest contractors. And I'm hopeful that places like Nika can be a great place where a large contractor can do a really cool new big thing and then we can bring our other smaller contractor members to see what they've done and to learn from what they're doing. They're not going to be able to replicate it, they're not going to be able to compete with the huge contractor, but they can start to learn and to start figuring out how to innovate in kind of in the smaller sandbox and what makes sense for them. And I think that that's exciting for me as a Nika person, because it allows us to take some of our great innovative large contractors and show other folks, you know, what's going on. This isn't just imaginary new technology. This is really cool stuff. And no, you're not going to replicate it at the same scale, but start thinking about it. How are you going to start doing a little bit of that stuff and making one step forward and that's exciting.
