How Contractors Can Prepare for New Opportunities in High-Tech Manufacturing

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Logo, Travelers. Text, Panel Discussion: Preparing for new opportunities in high-tech manufacturing.

New slide. Text, Constructing the Future: How Construction companies can prepare for new opportunities in high-tech manufacturing. Jennifer Lee's video feed appears in the upper right corner, with a Traveler's red umbrella logo.

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JENNIFER LEE: Hello, and welcome to today's webinar-- constructing the future-- preparing for new opportunities in high-tech manufacturing, presented by Travelers Insurance. 

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The next slide, titled Our Panel, has headshots of each speaker. Text, Moderator, Jennifer Lee: Vice President/National Practice Lead, Construction Loss Sensitive and Projects at Travelers. Panelist, Casey Banks: Construction Risk Control Manager, Northeast Region at Travelers. Panelist, Eileen Kauffman: Vice President/National Practice Lead, Renewable Energy at Travelers. Panelist, Don Naber: Executive Vice President of Gilbane Building Company.

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My name is Jennifer Lee, Vice President, Construction National Practice Lead. And I will be your moderator for today's discussion with Travelers experts Casey Banks, Construction Risk Control Manager for Northeast region, and Eileen Kaufman, Vice President and National Practice Lead for Renewable Energy. We are also joined by one of our Travelers customers, Don Naber, Executive Vice President of Gilbane Building Company.

We'll be exploring opportunities within the construction industry to capitalize on an increased demand to build manufacturing facilities for US-based high-tech companies. 

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New slide. Text, What Does the Future Hold? A photo shows a modern cityscape as viewed from a river with two tall sleek skyscrapers surrounded by shorter, older ones. A bridge across the river has a modern oval slanted ring around it with suspension cables.

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The fact is, computer and electronic manufacturing facilities now make up more than 50% of the total construction of manufacturing facilities. With a shift to onshoring and reshoring of high-tech manufacturing such as semiconductors and EV batteries, manufacturing companies and the contractors that build these facilities are poised for success.

How can contractors who hope to build these types of factories take advantage of those opportunities? Our industry experts will take a closer look at what contractors should think about if they are already in or want to enter this industry segment. Before we hear from our panelists, let's take a minute to go over three key drivers of this increased demand for construction in the high-tech arena.

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New slide. Text, What's driving demand? An illustration shows six wooden blocks scattered randomly, each with a red icon on it and connected to other blocks with white lines. The icons are a building facade with columns, a truck carrying boxes, a dollar sign, a globe, a microchip, and a document with a gavel on it.

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Over the last decade, government investment in infrastructure and public assets was at a rate well below the historical norms, which was leaving a critical gap in the ability to keep up with maintenance on existing facilities, and inhibiting construction funding of our country's own growth in high tech and renewables, like solar and semiconductors. As a result, Congress passed the Infrastructure Investment and Jobs Act in November of 2021, as well as the Inflation Reduction Act and CHIPS Act, both approved in 2022.

In all, more than $1 trillion in the form of tax rebates and grants for energy modernization, high tech manufacturing, and infrastructure improvements was approved for spending, and the pace of investments in the space continues to accelerate. For example, companies have more than tripled spending in domestic EV manufacturing, and committed over $700 million to support EV charging. This investment comes on the heels of the COVID pandemic that exposed supply chain issues in goods and materials being imported from overseas.

Additionally, a desire emerged to have more onshoring of manufacturing due to US export policies that changed in 2019, as well as foreign-based cybersecurity issues. To tell us more about how builders are looking at meeting this new influx of opportunity and the challenges that it brings, is Gilbane's Don Naber. So Don, what do owners expect to see from building contractors as they move into the high tech manufacturing space?

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New slide. Text, Long-Term Success, having the right parties at the table. A photo shows the metal beam structure of a large building being constructed. Don's video feed replaces Jennifer's. He is seated in front of a white background.

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DON NABER: Thank you, Jennifer. And Thank you to Travelers for including me on this panel. The subject matter is truly important in how best to support the high-tech industry in their need for advanced high tech facilities. My sense is that the ever changing and advancing high tech industry will receive a tremendous amount of interest in these large important projects.

But with interest comes a great deal of owner work and responsibility in making good contractor selections for its long-term success. As one can imagine, complex projects come with complex demands, and contractors will work to prepare for these demands. That said however, the top contractors will need to differentiate themselves to demonstrate they can deliver a quality project on time and on budget.

So what will a contractor need to do to show that they can deliver? The key component for contractor success is access to a vast technically proficient labor pool. A contractor needs an experienced project leadership team, as well as be able to show its relationship capital with key financially stable and safe contractors.

National relationships can be a benefit to leverage expertise, but local relationships are critical in managing the labor pool. An owner should also expect contractors to show how they manage and control risk. The contractor safety philosophy and program is number one. You want to know what is the contractor's quality program, what is the contractor's experience in ensuring large projects, what is the subcontractor selection process?

Owners should also expect the contractor to be collaborative. References of how a contractor partners and interacts with all project party team members is critical in expecting who you are going to add to your project leadership team. Construction projects are demanding, and a contractor should expect to clearly demonstrate how their firm communicates and interacts with all project stakeholders, including the owner.

JENNIFER LEE: OK. So let's take that a little bit further. What are the implications on contractors based on this increase in the projects for high-tech manufacturing?

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The next slide shows a stack of white, yellow and orange hard hats. Text, Labor Challenges.

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DON NABER: Great question, Jennifer. And as I mentioned in some of my previous comments, owners should expect contractors to have command of the labor pool and supply chain. These are two components-- there are two components of labor-- not enough labor is available, and more importantly the experience of labor continues to diminish through retirement and exodus from the industry. The baby boom generation is now 60 plus years old, and most have retired or are soon to retire.

The intellectual capital that is left the industry is hard to replace. Retirement, coupled with labor competition from other industries is severely impacting the quality and schedule of work that needs to be built. Securing, training, and keeping talent is an enormous investment, which requires aggressive compensation and benefits packages as well as first class training programs to allow workers to be at their best. Training is also critical to be up to speed with new technology. New technology does bring some relief, but advancing the understanding and the benefits of construction technology takes time.

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A new slide shows someone shaking hands with someone wearing an orange safety vest. Text, Experience and Relationships and the importance of subcontractors.

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Experience and technology are what owners want to see in the contractors they hire. They also want reassurance in contractors capacity, to have strong relationships with subcontractors, to assure labor availability for quality on time and on budget project delivery. While contractors want to be responsive to new tech opportunities, most are careful in spreading themselves too thin. The worst thing a contractor can do is put an inexperienced, ill-prepared team on a project. It is a recipe for disaster that can impact the owner, subcontractor, and design relationships, as well as negatively affect a firm's reputation. It is therefore critical to evaluate all key partners before selecting the contractor.

As I said, most contractors are careful, but some do overextend themselves. At Gilbane we prefer to work in geographies where we have experience and success. If we are going to undertake a project in a geography where we have limited project experience, and typically that may involve following a client to a geography that they want to participate in, we would engage suitable subcontract and contractor partners, usually in a JV arrangement who complement our skills such that we can deliver a successful project. This approach allows us to leverage experience, labor availability, and local relationships.

Occasionally we will engage overseas relationships, but the circumstances must fit our needs and expectations. We are cautious with overseas general contractors and subs as they tend to experience challenges under the American legal system and our overall culture. It's very different from many of the experiences they have in the countries in which they work and are from. We do however, work closely with foreign fabricators for various materials and equipment, but prefer to work with those firms who commit assets in the United States.

JENNIFER LEE: OK. So do you have a perspective on the implications of many of these projects being federally funded?

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A new slide shows a marble government building with a dome and a facade with columns. Text, Federal Funding Implications.

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DON NABER: I do. And overall, the federal funding is positive for a contractor. When there's federal funding involved, the project financing has a greater guarantee. The funding helps reduce financial risk in proceeding forward with the project. The federal funding however, is typically accompanied by certain conditions. Typical conditions include MBE and WBE participation and/or local hiring requirements, then can be as much as 35% to 40% of labor participation on a project.

This obviously creates job opportunities in geographies where projects are built, but it also creates some challenges. And those challenges, it is critical that all engaged parties participate in securing the labor that can deliver the quality work in a safe manner. Therefore it's very important that we have the proper training for those individuals in these MBE and WBE programs in securing the experienced workforce that's needed. If not properly managed, an inexperienced labor pool could severely impact the project quality and schedule.

JENNIFER LEE: OK. Thank you Don. Those are some great points and it leads us to our next set of questions for Casey Banks. So Casey, listening to Don's points, what would you focus on in terms of types of issues a contractor should prepare for if they plan to pursue these projects?

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New slide. Text, Contractor Risks. An icon shows a document with a magnifying glass over it looking at a person's headshot. Caption text, Labor and Workforce. A simple diagram shows four icons arranged in a circle connected by a dotted-line circle. Caption text, Supply Chain Issues and Delays. A triangle icon with an exclamation point inside and a magnifying glass over it. Caption text, Increased safety issues. Casey's video feed appears. His background shows a city square with a large metal sculpture of an upright bright red open umbrella.

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CASEY BANKS: Sure. So as Don mentioned, one area that can result in increased risks for the project, which we know is not just impacting these types of projects but construction as a whole, is labor shortages. These larger scale projects, they could have thousands of trade workers on site at any given time. So contractors should really try and understand the skilled labor capacity for the area they're working in. Are there enough workers in the region to support the job demands? And more importantly, what's the skill level of those workers? Do they have experience with facilities like clean rooms or the installation of specialized equipment?

The lack of skilled and specialized labor for these projects can ultimately present the risk of ongoing and completed operations losses from shoddy installation and construction defects. If a product fails because a clean room can't maintain required levels of cleanliness, the contractor could be at risk. Or let's say a bad foundation delays the project for a multi-billion dollar facility, that can result in significant damages and costs for the contractor.

Project delays from not only workforce issues but supply chain disruption can also be a risk for the contractor. Equipment and materials shipments for these facilities may be coming from overseas. And if they don't arrive in time, that can cause delays in installation. And in turn we see that having a trickle-down effect on project timelines and budgets. Or in some cases, you run the risk of multiple shipments showing up on-site requiring significant storage space and unpacking before installation. If this happens, you'll want to carefully plan out your laydown areas and facilities to avoid exposure to the elements. And also you may have to consider security measures where needed for any of the high value equipment and machinery left on-site or in remote storage locations off hours.

And then finally from a safety standpoint, a lot of these projects have a significant number of cranes and lifts on-site working at heights during multiple phases of the construction. When this is the case, it's critical that contractors put together detailed pre-task and fall protection plans for the site, to identify and address any of those high-risk tasks throughout each phase of the project. You may also have crews working six days a week with multiple shifts, so this can in turn create additional challenges for the contractor managing these trades.

JENNIFER LEE: OK. Thanks. So let's think about a shift. What are some of the other risks that the contractor should think about? Are there some environmental exposures for instance, you would point out for contractors to prepare for?

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New slide. Text, Environmental Exposures. A photo of a large generator at a construction site.

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CASEY BANKS: Yeah. So depending on the type of facility being constructed, there could be unique chemicals or metals used during the delivery and installation process that can both be a worker and an environmental risk. Now this may be especially relevant if a contractor is engaged with helping the manufacturer get started on a first run of production. We've also seen projects where getting power to the site has been a challenge. So relying on generators to supply that temp power may be part of the pre-planning and construction process. And this can in turn require the delivery, storage, and use of diesel and other fueling sources that can create environmental hazards if there were to be any kind of spill or leak onto the job site or surrounding areas.

JENNIFER LEE: Got it. So do you see any professional risks in this type of work?

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The next slide shows a large empty lobby of an office building lined with windows. Text, Professional Risks.

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CASEY BANKS: I would say the answer to that is yes. A lot of these facilities will have clean rooms, wet labs, high heat furnaces, and other industry and product-specific spaces. So if the contractor is involved in the design phase, they'll need to work closely with the owner to identify architects and engineers who have experience with these facility plans. This also means finding project teams with the high-level knowledge, as well as reputable and experienced installers who have the specialized skills in working in these areas. Oftentimes there's close collaboration with equipment manufacturers during the install and start up phases. So having the right manufacturers that partner well with the contractor is important to help mitigate the risk of any professional liability exposures.

JENNIFER LEE: OK. So to sum it up Casey, what can contractors do to mitigate these issues that you've talked about?

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New slide. Text, Mitigating Risks. A row of wooden dominoes with the first five already toppled over and leaning on each other, and the last six still standing upright. Someone has their finger on the first standing domino stabilizing it, as it has the previous domino leaning on it.

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CASEY BANKS: It's a great question. And I think there are a few strategies to execute on to help mitigate these issues. To the best of your ability you want to identify trades who have experience working with the products, equipment, and in these types of environments. You also want to try and leverage specialists who understand the risks associated with this work. And that could be third party consultants or even your insurance carrier to help ensure procedures are being implemented, and adequate control measures are in place to try and help prevent losses on the project. And then finally, make sure you develop and follow a strong QA/QC program that puts you at an advantage and avoids unnecessary delays, rework, and completed operations issues down the road.

JENNIFER LEE: OK. Thank you Casey. Very, very helpful points. So let's consider clean renewable energy manufacturing facilities. So I'm going to turn to Eileen. Can you tell us more about the incentives now in place for constructing manufacturing facilities related to renewable energy?

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The next slide shows a field of windmills at sunset. Text, Benefits of Renewable Energy. Eileen Kauffman's video feed appears. Her blue background has a white Travelers umbrella logo and in the corner it says, Construction Energy and Marine.

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EILEEN KAUFFMAN: Thank you Jennifer. I'd be happy to. The renewable energy sector is going to benefit from a recent infusion of federal funding. As you mentioned earlier, we have the Inflation Reduction Act, which earmarks approximately $37 billion of clean manufacturing incentives. And then you have the creative helpful incentives to produce semiconductors act otherwise known as the CHIPS Act, and that has about $39 million allocated for the development of high-tech manufacturing plants. And then the possibility of spending an estimated of about $67 billion or roughly a quarter of the total CHIPS funding towards accelerating the growth of zero carbon industries.

JENNIFER LEE: OK. So that's a lot of money. Do you have a perspective on why policy makers have made this such a focus?

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New slide. Text, Why Now? 60%: US electric grid currently relies on natural gas and coal for 60% of its electricity generation. Footnote 1. 80%: China holds at least 80% of the world's manufacturing capacity for most solar, wind and battery energy. Footnote 2. 6%: The United States produces only 6% of global solar module supply. Footnote 3. Footnotes: Text, 1, Environmental and Energy Study Institute. (2023, August 4). How the Inflation Reduction Act and Bipartisan Infrastructure Law Work Together to Advance Climate Action. 2, International Energy Agency. (2022, July). Solar PV Global Supply Chains: Executive Summary. 3, Snyder, L, and Munoz, JP. (2023, March 8). US Solar Industry Strategy. Center for Strategic and International Studies.

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EILEEN KAUFFMAN: Well, it's important to understand that the US electrical grid currently relies on natural gas and coal for about 60% of its electricity generation. And honestly, it's a number many in this country are no longer comfortable with. But when you even take into consideration the renewable energy sector, the US has developed an incredible dependence on overseas suppliers for renewable energy equipment, such as modules, inverters, and batteries, along with skilled labor, which has been a big component part of this discussion today, and component parts.

Take for instance, the fact that China holds at least 80% of the world's manufacturing capacity for most solar, wind, and battery energy. Compared to recent statistics that show the US produces only 6% of the global module supply. While the US has not made major investments until recently, policymakers across the globe have been using government funding for years to help spur economic growth from renewables, as well as addressing pollution, and then offering the ability for citizens to afford a shift from traditional energy methods to new energy. You know, now Americans are understanding the economic reality of foreign and fossil fuel dependence as an outgrowth of the pandemic and the exposed to supply chain issues that ensued.

JENNIFER LEE: OK. So let's bring this back to construction. What US-based energy-related manufacturing is likely to result from the funding and incentives that you just mentioned?

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New slide. Text, US Manufacturing. A view of a factory floor with a worker in coveralls and a shielded helmet works at a large table lined with rectangular metal panels with attached devices.

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EILEEN KAUFFMAN: Yeah, absolutely. So there's about $230 billion in manufacturing investments coming into the US today. We're talking about building facilities that make photovoltaic panels, component parts for solar application, for batteries, for equipment related to battery energy storage systems, as well as electrical vehicles and their batteries. But it's also about the power generating equipment for wind and hydropower industries here in the US too.

And when you think of foreign manufacturers coming into the US as Don mentioned earlier, they're going to find it complicated from the regulations and restrictions to the regionally limited labor force that they could endure. For instance, if you take a look at Georgia where a Korean solar manufacturer Qcell is building a $2.5 billion manufacturing plant. That build is going to affect and be impacted by the regional labor force or lack of skilled labor in that region.

JENNIFER LEE: OK. So thinking about that, how important is the shift in governmental investment?

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New slide. Text, Bringing High Tech Home. A man and woman wearing hard hats and safety vests stand together looking at a field of windmills. The woman is holding an open laptop and pointing at a windmill.

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EILEEN KAUFFMAN: Jennifer, it's a game changer for us. For the renewable energy sector to have manufacturing facilities here on US-based soil pits a turning point. The renewable energy sector has seen a significant growth over the past several decades with the help of subsidies and tax breaks, while depending on foreign supply chain. As more high-tech manufacturing facilities are built in the US, the renewable energy industry will have more reliable suppliers, control of quality, the availability of parts and fewer shipping delays from across the globe. In addition, they'll have more domestic-based resources to troubleshoot issues that they are currently dealing with here in the US.

However, the current concern I think the US-based suppliers will have is keeping the costs down. Our current reliance on foreign-based materials stem from cheap labor and the cost of goods. It's part of the reason why the US funded investments are so important. They level the playing field somewhat for new energy development here in the US.

JENNIFER LEE: OK. Thank you Eileen. Very, very helpful information. So let's turn back to you Don. What is your perspective on the implication all of this energy-related manufacturing will have on the construction industry?

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New slide. Three rows of well-used hard hats in different colors are hung on a wall. Text, All About the Labor.

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DON NABER: You know Jennifer, at the end of the day, I think if energy-related manufacturing is robust, this obviously is a great problem for local, state, and US economies. The construction backlogs will be strong and job opportunities could flourish in the manufacturing industries. But the problem is potentially stretching labor and supply chain beyond its capabilities at this time. And if it continues, it puts contractors and cost of overall construction and in some cases construction financing at risk.

There is a very important saying in the world of construction-- contractors do not go out of business from starving, they go out of business from overeating. So in other words, when contractors overcommit to workload or stretch their geographic capabilities, they greatly increase the risk to their businesses and its profits. And where those profits are no longer profits, they're losses.

Owners and contractors must properly underwrite the financial strength of the parties they're hiring. It is important to closely review contractors financials and understand their surety and banking relationships. Are these new relationships for them? Are they long term relationships? It's really critical to understand what a contractor has in their surety and in their banks.

And it's also critical to know their leadership and their project teams, and how they source and train their labor. Do they have in-house training? Are they working with union training programs? Are they supporting their trade schools? When you look at the ownership, is this a first generation run company that may be transitioning to a second generation, or is it a second generation transitioning to a third? Clearly, obviously, the longer a business is in play and you've transitioned from one generation to another, it clearly says something about that family, says something about that business, that they know how to make that transition.

So much of the construction industry success is based on those who build. The construction firms who continuously invest in their teams are the ones who are successful today. And will be successful tomorrow. So in looking from an experience standpoint, at Gilbane we invest in our employees and our subcontractor relationships. We are significantly engaged in the communities that we work in through inclusion with MBE and WBE mentorship programs that we conduct locally and nationally. It is the commitment where we and the industry recognize the greatest opportunity to drive and deliver successful rewarding projects for high tech energy-related manufacturing facilities.

JENNIFER LEE: OK. Thank you Don. We are actually coming to the conclusion of the prepared comments for this webinar. So now I'd like to offer the opportunity to share any additional final thoughts. So Don, I'm going to come back to you first. What would you like to leave the audience with about how contractors can best position themselves for this opportunity?

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New slide. Text, Final Thoughts. A view from the ground of a construction crane next to an incomplete skyscraper.

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DON NABER: It's a really important component, and obviously contractors can best position themselves by preparing its company leadership, its staff and its subcontractor relationships in the needs and expectations of these large complex projects. You need to do your research. You need to do your training. Set up realistic expectations of what you want to achieve within the core values, and the strengths, while knowing the weaknesses of your organization. As I mentioned before, stretching yourself too thin is not doing you or your clients or even your subcontractor relationships any favors. It's putting you and others at risk. So if contractors stay true to their vision, they can be successful in the many growing opportunities ahead.

JENNIFER LEE: OK. It's great. Great comment from a contractor perspective. So Eileen, I'm going to come to you next. Any final comments that you'd like to leave the audience with. And you're on mute.

EILEEN KAUFFMAN: Sorry about that Jennifer. To Don's point, it's going to be increasingly important for the construction companies in the US to perform their due diligence on their labor force. Looking at regional opportunities, reacting to what they find, either with providing additional training within that region or bringing in specialized contractors from elsewhere, from a regional footprint. So just the importance of they're doing their due diligence is going to be something critical.

JENNIFER LEE: OK. Great. And Casey, I'll turn it over to you.

CASEY BANKS: First thing I would stress Jennifer, is to identify a strong project team to have on-site to manage the work. Preferably team members who have experience with the type of facility being built. And then to build off what Eileen mentioned regarding labor, make sure to execute a thorough sub pre-qualification process. And then look at your onboarding program for the site and make sure that's just as strong.

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New slide. Text, Constructioninnovation.travelers.com. A laptop screen shows the Travelers Innovation Network Construction website. Text, To learn about this and other innovative capabilities for contractors who seek to compete for jobs building high tech manufacturing facilities, visit Travelers Innovation Network for Construction.

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Now for jobs as complex as building high tech manufacturing facilities, the use of project management software can help manage that total cost of risk. And what's great about this technology is that it allows those key stakeholders, so owners, general contractors, subs, and even architects and engineers to really collaborate across multiple locations and devices.

So because of all the proven benefits and ROI of this technology, Travelers has developed a partnership with Procore, who most leading provider of construction management software where we work with eligible contractors to allow discounted pricing. So to close it out, I would say, lean on the resources available to you, through vendors, through your contacts. And then finally from a safety standpoint, make sure you plan ahead. Build in an adequate safety budget. Pre-planning as early as the design phase can really help to address a lot of those higher risk activities that will take place throughout the project, and also identify problems before they surface.

JENNIFER LEE: All right. Great. So thank you to the panel for your valuable insights that you've shared today. We did cover a lot of information about the future opportunities for contractors involved in the high tech industry. 

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New slide. Text, Thank you.

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As you heard from the panelists, while the opportunities are available for the foreseeable future, the issues have been discussed here need to be contemplated and assessed in order for a contractor to be successful in this space. Specifically having the resources available to do the work is key-- materials, labor, and knowledge.

So this concludes our panel discussion, and certainly we have a little bit of time for Q&A.

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The slide presentation disappears and Jennifer's video becomes full screen.

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So I'm just going to go over to the questions that have been submitted. And let's see first question. So carrying a little bit on what you just talked about Casey, I'm going to turn this one to you. So the question is, what innovations can help contractors address some of the pain points associated with constructing high tech manufacturing facilities?

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Jennifer's video disappears and Casey’s video becomes full screen.

CASEY BANKS: Jennifer, I can try and answer this one. I just talked about the use of construction software technology, which I think has a lot of benefits outside just scheduling and documentation. We see these platforms helping contractors with overall site safety accountability, subcontractor management, and in a lot of cases even training on the job sites. Outside of this technology, a couple others come to mind. First one being drones, which a lot of people are hearing about and hopefully using out there. For these larger scale sites, they can really help contractors facilitate inspections in some of those hard-to-reach places. And also significantly improve data collection over the course of that project.

And now from an onboarding and subcontractor management standpoint, the use of mixed and augmented reality platforms are becoming more common on construction sites. This technology, which think of it as a hybrid between the digital and physical environment. That can be leveraged to help workers with everything from assembling components on the job site, to troubleshooting problems through what they call real-time instruction and then providing that feedback to the worker.

And then finally we can't talk about innovation without mentioning AI-- artificial intelligence. With these multi-year projects in sometimes very remote locations, it's critical to keep all the parties connected and track that ongoing progress. Which is where the capabilities of AI can provide real-time visibility and also future insights through various video and camera systems on the project. We're also seeing contractors use AI to monitor and identify unsafe conditions and worker behaviors on job sites to try and help them prevent injuries and accidents.

So some really great innovations out there on the market. And for our customers, we have the Travelers Construction Innovation Network, which you saw on the last slide. And what that is, that includes handpicked technology vendors that provide discounts to Travelers' customers, which we've seen a tremendous amount of interest in. 

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The slide with the website is shown again. Text, constructioninnovation.travelers.com. A laptop screen shows the Travelers Innovation Network Construction website. Text, To learn about this and other innovative capabilities for contractors who seek to compete for jobs building high tech manufacturing facilities, visit Travelers Innovation Network for Construction.

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And so I think it's really great to see this shift in the adoption of technology within the construction industry. And I think there's definitely a benefit to exploring the use of these innovations for contractors who may be involved in some of these high-tech manufacturing projects.

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Casey's video disappears and Jennifer’s video becomes full screen.

JENNIFER LEE: OK. Thank you Casey. And I know any client or agent or broker that is working with travelers can reach out to their local construction risk control representative or their underwriter to have a walkthrough of that technology platform. So thank you for mentioning that.

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Jennifer's video disappears and Don’s video becomes full screen.

DON NABER: Jennifer, could I just add a couple of thoughts to Casey. And I think Casey's points are spot on. We obviously within our organization, and I think a lot we get bombarded with all new types of technology, and there's always that new toy that everybody wants to play with and understand. It's critical that there is a vetting process in terms of understanding what those products will offer you at the end of the day.

And there's a lot of great ideas, but with some of those ideas comes administrative burden. And if you don't fully understand whether it's a wearable, whether it's a camera system, et cetera, if you don't fully understand the administrative burden and the obligations that are needed to be able to properly support the technology, you find out that at the end that the benefit that you're getting from it is not what you expected. And quite frankly you can create a tremendous amount of frustration within the project because you're putting a burden on them that they didn't necessarily plan for as they were preparing to build the job.

So there's a tremendous amount of technology that's available. And so much of it can be very, very good and very beneficial to a positive outcome of the project, but I know from experience that there are burdens that you wind up undertaking that you didn't necessarily fully understand when you made the commitment. And it creates challenges. So my suggestion is as you look at technology, make sure you understand the cradle to grave process with that commitment.

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Don's video disappears and Jennifer’s video becomes full screen.

JENNIFER LEE: Thank you Don. I think you're voicing some concerns and watch outs that a lot of our customers have recognized. So thank you for adding that into the conversation. We have another question here. Is Travelers going to be considering writing builder's risk on these new high-tech facilities being constructed? So without scaring our inland marine folks by me answering that question, what I will say is, we're going to underwrite these projects like we do anything else from a builder's risk perspective. And certainly it's going to depend on where it is and the criteria that our folks inland marine look at when they underwrite this. So I would strongly encourage you to reach out to your local team, your underwriter and talk that through if you know of a project that is out there.

I also see a question in here. Does any of the recent funding address monies for training of new workers in infrastructure builds? And I can address that one as well. The answer is yes. The White House says the infrastructure bill allocates more than $800 million to job training programs, and the Department of Labor will support registered apprenticeships and workforce programs at community colleges. So specifically the CHIPS Act, which Eileen mentioned earlier for America workforce and Education Fund has $200 million that's in that fund to kickstart training as well. So there's definitely funding out there to train workers in this area.

All right. So I am not seeing any other questions in the Q&A box. But Don, I would like to turn it over to you for a little more insight. Do you know of any additional projects that fall into this high tech manufacturing category?

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DON NABER: Sure. There's a great deal of work that's out there in the space already. And we see it growing. But just to give an example of some of the types of projects out there, and these projects because of the vast need for technology, they're not small projects. They are what we would refer to as mega projects. And some of those that are going on right now, Intel has a $20 billion chip factory that's under construction in Arizona that is on target to open sometime in 2024.

There is a Taiwanese chip manufacturing TSMC is building in Arizona as well. That project however, $40 billion is facing some delays because of shortages of workers, which kind of goes back to some of the points that I was making when it comes to the labor pool and supply chain, et cetera. And because of those shortages, some of the equipment installation that's needed for the factory is not ready to go yet, so that is now set to finish in 2025.

The Korean chip maker Samsung is expected to exceed initial outlays of a $17 billion chip factory in Texas. This is the second largest semiconductor factory in the world. So there's obviously some significant commitments. And then finally, in 2022, Apple completed $1 billion expansion of its North Nevada data center. So again, there's a great deal of the work that's out there. And based on some of the experiences that we have with some high-tech clients, we clearly see this as an area of growth within our organization.

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JENNIFER LEE: OK, great. That's a good perspective. And lucky for you Don, another question has come in specifically focused on you. So if you're comfortable answering this, the question is, from your experience when buying software, what are some of the major concerns that you have, and how do you assess ROI?

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DON NABER: So it's definitely a great question. And it's not something that while I'm engaged in it to an extent, it's really managed by Gilbane CDIO who oversees technology for us. But all that being said, because we were getting infiltrated from so many different directions, with sales people from manufacturers trying to make that connection with us, we established, as Casey had mentioned, there's an innovation team, and we've established an innovation team as well. And that innovation team involves a number of different people, from operations to legal to technology to finance, et cetera.

And depending on the type of technology that it is, certain individuals such as myself, if it's safety related or if it's risk management related, I may be asked to participate in the vetting of an opportunity. And what that is that the group has an application process rather than everybody just taking it in. We refer to this application process, the application comes in, it's initially vetted by the group. They determine whether or not it makes sense to kind of go forward and have further conversations. So it is a controlled process, much different than where we were five years ago.

And as I said, it really helps us alleviate redundancy of different types of-- or a very similar product from different manufacturers. And it also makes sure that when we're looking at the technology, we're looking at it and we're aligning it with our core values of what we want to do as a business. And we also underwrite the financial position of that particular organization. Is it somebody that's been in business for a long time? Is it a startup? Et cetera. So there's a whole lot that goes into the process in which a number of people-- it's not left in one person's hands to make decisions. It's a collective approach of how best to move forward with a given type of technology or software.

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JENNIFER LEE: OK. Thank you for answering that. So it looks like there are no more questions in the Q&A box. So I'm going to say this concludes our webinar today. I want to thank the panel for their insight on this topic, and also thanks to the audience for participating in today's webinar. Thank you, and have a great day.

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