Your Next Machine

The dilemma of the lonely machine tool dealer is the common denominator of most businesses and occupations. The clients want to buy something tailored to their needs. The seller wants to sell them what they have, at a premium price. The tug of war today is over the cost of the tailoring.

In an esoteric field like high production screw machines the value differential between the generic and the special is large because the hardware is expensive. But the expertise needed to choose and operate the unusual hardware is even scarcer, thus also very expensive.

In the last five to ten years, Chinese competition, fueled by extremely low labor costs and government subsidies, has made it very hard for American manufacturers to prosper in high production manufacturing. This has flipped recently because Chinese costs have risen significantly and Americans have raised their game. But Chinese companies often partnering with Americans or Europeans are playing their next move now. They are starting to buy machines once dismissed as archaic relics, such as screw machines and rotary transfer machines, to do the jobs that are inappropriate for CNC lathes and machining centers.

Two years ago, Graff-Pinkert rarely if ever received an RFQ for an old school cam machine. Today it is more common, but the Asian buyers want the machines set up for particular jobs. And they have the capital to pay for expensive “project” machines.

For a dealer it poses both an interesting opportunity and a big headache. How do you find the talent and the machine, which are now in demand worldwide? The supply of both has deteriorated due to the last 15 years of decline in European and North American manufacturing, and the retirement of the Baby Boomers who have been the linchpin of the workforce for 30 years.

I am observing this tension in the marketplace play out everyday. It is causing a lot of confusion because it confounds the prevailing narrative of a lot of managers and owners who had stopped investing in talent and equipment over the last decade.

With both the American and Asian markets interested in high production, and Latin America also waking up because of a commodities resurgence and a rising standard of living, around 50 million people per year are becoming customers for manufactured goods. This is why the leaders of Caterpillar and Cummins along with other superior world machinery producers are bullish despite the decline of Southern Europe. Over the next decade, demand will be present despite occasional blips caused by dysfunctional governments.

Taking this likely scenario down to the micro level of people like you and I, it becomes tricky to play. The tendency we all have is to look back on an awful decade of North American manufacturing decline and project continuing misery ahead. But if Caterpillar and Cummins and Bosch and Boeing are right, we are headed for good times.

For a little company the challenge is interesting and tough. Buying and retaining talent is expensive and a keen managerial test. The worldwide demand for the artists and craftsmen that can turn the generic into the special and precise has rarely been as clearly defined as it is today.

Question: What’s the next machine you’re going to buy?