Power Of The Urban Wind: Mariah Power CEO Mike Hess (Part 7)

SM: Where are you doing your manufacturing?

MH: We are doing it in Michigan. We took over an old automobile parts plant. That helps drive market interest to us. We have sold more units in Michigan than anywhere else because we do manufacturing there.

SM: What is the story behind your company electing to establish manufacturing in Michigan?

MH: In September of last year, before Obama was elected, I was looking for places for our manufacturing. I was looking for non-dilutive equity to help me get to manufacturing. Manistee, a small town in Michigan, called me and said that they wanted to talk to me about manufacturing at their site.

I went and talked to them and met the plant manager. He had looked at our design and told me that he liked it but that he thought he could make it better. We spent three or four days together looking at drawings so that I could understand what he was trying to do. We came up with a plan which would allow us to manufacture.

First, we needed a couple of million dollars. We went to the State of Michigan to get the money and they turned us down. Then the city and county gave us a grant for $400,000 to help us buy the initial tooling. The company who was closing the plant went out and bought three giant mills for us at $1.5 million so that we could actually manufacture the plant there.

That $2 million of non-equity financing helped get us into volume manufacturing with a quality product. If we continued to try making them one or two at a time in Reno we never would have made it. To me it was a logical strategy back then. I needed to come to volume to have a viable product. We now do all manufacturing in Michigan.

We think we can get up to 300 units a month in that plant. We are doing roughly 65 a month there now. That workforce has great steel and aluminum skills and our product is 95% steel. Increasing capacity is simply a matter of hiring more people.

SM: Is your product more expensive because you are doing it in Michigan?

MH: No. We might save $400 in labor cost doing it elsewhere, but that is it. We would then have to ship 600 pounds of steel from China or India to the US. That costs a fortune. As we bid parts around the world we bring it to them and make sure they can make it for the same or lower cost. So far they have been able to do that for us.

SM: Will you manufacture in Europe for the EU or keep it here?

MH: The product is all metric so our plan is to ship out of Michigan as long as we have capacity. Only after we have enough order volume will we consider establishing another plant in Europe. If we are going into the Chinese market then I would be crazy to not put a plant in China. The more localized the product is the more viable it becomes.

SM: Place like India and China are not going to have your half-acre lot sizes.

MH: We have other designs. We have turbines on top of light posts. We are looking at doing them on buildings. Eventually we will get them on top of houses. That is more of a function of making sure the houses can handle the stress of a turbine on top of them. In places like India they may be better off with sun anyways.

SM: I assume you need more investment to scale. How does the investor community view you right now?

MH: We just finished a bridge round for the next round and we have done OK. We have surprised people with our approach and ability to get units in the field. They are going to look at margins, consistency of sales and distribution, and our warranty from here on out. A larger unit will help us a lot because it has a lot more margin and energy production in it.

SM: Thanks for your time and congratulations on your success to date.

This segment is part 7 in the series : Power Of The Urban Wind: Mariah Power CEO Mike Hess
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