Yearly Archives: 2009

Feeling Good Next Year

By Noah Graff

In order to make it professionally next year more people than ever in this world are going to have reeducate themselves, whether they’re learning CNC programming, switching professions after being laid off or starting their own businesses.

Lately I’ve been learning to administer a certain magazine’s Web site and taking salsa lessons. I’ve noticed that since I’ve gotten older (I’m almost 30) I’ve been listening to my teachers better. They say kids soak up knowledge much faster than adults. That may be true, but unlike when I was a kid, today I’m more aware of the learning process. I’m now able to observe myself doing it and I’m more excited about learning than I ever have been.

Maybe it’s because I’m learning these things from teachers that I’ve chosen and that I’m paying for their knowledge myself. School was always at least half about the game—passing the test, grinding through to get the piece of paper that would propel me to my next stage of growth. Maybe it’s just maturity—you never know. But I think I’ve become a better listener, at least to the people I respect.

So in my infinite wisdom as a 29-year-old (almost 30) journalist/auteur, I prescribe to all of you that learning should not only be important for getting from point A to B. I know it can be painful and expensive at times, but take a step back and try to watch yourself doing it sometime. It feels good, and you may then do it better than you would otherwise. I think it’s a key to feeling happy.

Take some inspiration from the martial arts training below.

Beatrix Kiddo (Uma Thurman) is trained by the great Pai Mei in Kill Bill Vol. 2

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Swarf – Oprah and The Acme

Oprah acme

Dear Oprah,

I am a fan of yours. I’ve been watching your show since before you were the Color Purple. You’ve had Nobel Prize winners, cancer doctors, dessert chefs and exercise mavens, but you’ve never had anybody remotely like me tell their story. Perhaps after you read my take you will invite me to be a guest.

My name is Arby Eight. I am a National Acme screw machine and damn proud of it—for the last 51 years!

My story is the story of North American industry and today I’m feeling !@$#%# unappreciated. I started my productive life in 1968 when I was shipped from my birthplace in Cleveland to an ammunition plant near Minneapolis. Without any training or initiation they heaved me into a line with 30 guys just like me and started shoving leaded steel bars through me making fuze parts for big artillery shells that were lobbed into the Vietnamese jungle to kill people in black pajamas. They called them “gooks” then—at least that’s what I discerned by listening to the operators, most of whom knew Americans in “Nam” and wanted no part in fighting the war themselves.

After that conflict settled down, I sat idle for a while. Business in the early 1970s was crappy, but then the
oil boom came along and I started making sucker rod fittings for an outfit in Texas, ‘til that bubble petered 1980 out. Them ol’ boys in Dallas didn’t know anything about multi spindles like me, but I did learn to like Mexican food while I was in that factory.

The sucker rod play went away in the 1980s when gas sold for $.70 a gallon. I was sold at auction like a big piece of meat to a fittings company doing work for the farmers. That gig was okay for a while, but then the farmers stopped buying because $2 per bushel corn did not buy many tractors.

From there I gravitated to a job shop in Detroit that did work for the Big Three automakers. What a miserable time. They ran me like a slave and poisoned me with sickening soluble oil that made a mess out of my innards. They even mixed the coolant and lube oils. We all knew they were milking the place, looking for a holding company to buy them out, roll it up and go public. They never found a buyer, so me and the rest of the machines got old and arthritic.

The guys in the shop talked among themselves about the lunacy of the management. The founder of the company had retired and the family kept bringing in “professional” managers and accountants who said, “forget about the machines—use the shop as a cash cow.” The floors were slick and air was misty. What a dump.

And they never diversified into non-automotive work, so when American cars stopped selling all they knew was to lay off people and skimp on maintenance.

Oprah, I’m writing to you for the Class of 1968 National Acme crew that hit the shop floor running. We ran quality then. Now we sit idle, not because we can’t still cut it, but because the world changed. The owners got old and their kids became doctors and chefs and dropouts. The accountants viewed what we did as “input” not craftsmanship and artistry. A very small handful of my compatriots moved to China and Mexico, but most of us are here rusting, and a few have even melted away.

I know of a few RB8s who are still running next to some sexy CNC Swiss machines, but most of us just sit and wait for the car companies to start making cars people can afford and want to buy.

Oprah, I’m not anything that special myself, but my story is the story of 50 years of American manufacturing and the contribution we still make to this country. Your audience may think I’m already dead, but my lifespan is limited only by the availability of spare parts, the creativity of rebuilders and the ingenuity of the people who enable me to do what I do well.

Question: Will Acmes make a comeback?

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Worth Your Salt

Bolivian Rose Salt

Bolivian Rose Salt

By Lloyd Graff

Salt is the ultimate commodity. Buy a canister of Morton’s off the very bottom shelf at the supermarket for a buck and a quarter and use it for six months, then buy another.

But for a seasoned cook, salt has a flavor that varies with the coarseness of the granule and where it comes from. Sea salt tastes different than mined salt, and rough kosher salt makes better brine than the fine stuff. When I think of salt I envision Tony Maglica, the man behind Mag Instrument, the greatest machining success story of the last 30 years. Tony grew up poor as dirt on a tiny island in the Adriatic. He and his mother survived on the pittance they gleaned by collecting sea salt during and after World War II. For Tony, salt afforded life—if just barely.

Nowadays, when I visit my daughter Sarah in Palo Alto, California, I always check out the Saturday morning farmers’ market. One of the newer sellers is a company called Spice Hound. They sell several different types of salt. I own a Bounds salt grinder and I was looking for the chance to buy something more interesting than Morton’s generic, but I didn’t know what I wanted.

The Spice Hound had 50 different containers of condiments. I certainly didn’t need to buy salt, but I saw a vial of tiny pink rocks labeled “Bolivian Salt.” The Bolivian thing, plus the quartzy pink cast of the crystals pulled me in. I asked the owner of the kiosk business to tell me her story and the story of the Bolivian salt.

As I tasted the salt, I imagined Paul Newman and Robert Redford in Bolivia in Butch Cassidy and the Sundance Kid. I thought of Tony Maglica harvesting salt. I thought of this young Asian girl, Tammy starting a spice business in the pit of a recession. The salt was no longer just salt. It was a sensual, exotic, fresh must-have with an interesting story for only $7.00. I bought it and every time I grind salt for my tomatoes or omelets I think—wow this Bolivian salt is such a delicious luxury.

The task we all face as sellers of products that masquerade as generic commodities, is to give them a living story that sticks. Bolivan salt—pink as the Andes Mountains. Is it really different than Andy’s Machined Products from burned-out Detroit. Maybe the story is about a job for an ex-offender in St. Louis or a chance for a blind machinist in Seattle. We all have a story to tell—if we are worth our salt.

Question: Would you consider buying Bolivian Salt?

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Industry Scuttlebutt

Fritz Henderson--Pitcher at University of Michigan 1980-84

Fritz Henderson--Pitcher at University of Michigan 1980-84

The purge of former college jocks at GM continues. Former pitcher at the University of Michigan, Fritz Henderson (Senior year ERA of 5.91), is out, following the ouster of Rick Wagoner who played basketball at Duke. The culture at the top is changing with the nasty old phone guy Ed Whitacre shaking things up like a juiced up blender. Will ex-Oakland Raider and Chevy spokesman, Howie Long, be the next to hit the road?

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I recently talked to a long time friend and client, Wes Skinner of Manth Brownell, Kirkville, New York. This year Wes has taken his available cash and invested in Citizen CNC Swiss lathes, diversifying his machining portfolio out of his core Davenport and Wickman multi-spindles. He has bought seven Swiss—all used—including his more recent buy of an M-32 for $160,000. His rationale is that this year affords him a window to buy at historically low prices and he wants to bring his percentage of sliding headstock work up to one third of his current volume. Currently his multi-spindle business is good and getting better, but he does not envision buying any traditional multis in the foreseeable future. Wes thinks the really great buys in machine tools are ending now.

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The stock market is showing us some interesting things now, which makes the gloom and doom scenario for 2010 less believable. The Real Estate Investment Trusts are hot. Even though vacancies are high in commercial, office and industrial, the strong REITs are beloved by forward looking investors. This would indicate that the well-funded publicly traded real estate guys are in a great position to pick off the plums that the weak ones will be unloading. It also indicates that insurance companies and pension funds still like to lend on good properties with U.S. Treasuries paying a pittance and the strong likelihood that rates will be higher in a couple years or sooner.

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Unemployment is over 10 percent with shadow unemployment at 16 or 17 percent, but it is a fine time to be in the temporary help business. With so much uncertainty in Washington over health care and unemployment insurance costs headed up. Both big and small businesses are skittish about hiring full time people with benefits, but they still need people to get work done. The agencies that provide the temps are thriving. Demand for their services is rising and they have a lot of candidates to offer.

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My condolences to the family of Ivan Doverspike, who died recently. Ivan was a machinery dealer in Detroit specializing in screw machines. I didn’t know Ivan that well, but I remember traveling with him to look at a deal and discussing mutual acquaintances from the used machinery wars. His favorite saying during that conversation was “he knows his apples,” meaning a guy who’s astute. When I heard he had passed away my first thought was that he was a man who definitely “knew his apples.”

Question: Do you think jocks make good executives?

President Barack Obama--Played on Punahou High School Champion basketball team in Honolulu

President Barack Obama--Played on Punahou High School Champion basketball team in Honolulu

Rick Wagoner--Duke freshman basketball team walk-on 1972

Rick Wagoner--Duke freshman basketball team walk-on 1972

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In the Mecca of Swiss Machining

The Swiss just voted overwhelmingly to bar the building of new minarets in Switzerland. No big deal in and of itself (only four of the country’s 150 mosques have them), but quite significant as a symbol of the discomfort level in the county over the “Islamification” of Europe. Minarets are tower-like structures built on top of mosques that are traditionally used for the call to prayer. None are used for that Switzerland however, because of strict noise pollution rules.

Muslims now comprise roughly five percent of the population of Switzerland, traditionally a conservative and insulated country. They have a much bigger presence in England, France and Holland.
If you visit the Haute-Savoie region of France, which borders Geneva, the machining hub of the region since clock making from wood was developed in the Jura Mountains, you will see thousands of satellite dishes aimed at Aljazeera transmitting towers. Arabia has been transplanted in Rolex-land. With the European machining community flattened by the recession a backlash at Muslims is not surprising.

Maybe it is a stretch, but I am going to connect the dots between the sudden resignation from CNN by the outspoken critic of Latino immigration, Lou Dobbs, and the vote in Switzerland. The rumor is that Dobbs wants to run against Robert Menendez of New Jersey, the only Latino in the U.S. Senate.

Is there a parallel between Islamic immigration to Europe and Latino immigration to the United States? Will Lou Dobbs ride an anti-minaret like backlash into the mainstream of American politics?

Question: If you discovered your best employee was an illegal, what would you do?

Minaret of Zurich’s Mahmud Mosque, 23 May 2007/Christian Hartmann

Minaret of Zurich’s Mahmud Mosque, 23 May 2007/Christian Hartmann

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The Next Automotive Boom

Nissan Electric Car BatteryThe default position for many in the machining world has been to flee the automotive business like it was an ominous cloud of swine flu.

I admit to lapsing into that mindset, but after reading a provocative article in Inc. Magazine by Bernard Avishai I am becoming a believer in a new golden age of car technology.

Avishai used to sell car parts in college in the 1960s and is now a part-time professor at Hebrew University Jerusalem. He is convinced the electric car (plug-in) is coming soon in a big way and will present fabulous opportunities for entrepreneurs, including people who make stuff.

The core of the new electric vehicles will be the battery. The first generation batteries may come from LG in Korea but the much maligned Obama stimulus package is tossing a ton of taxpayer money at jump starting American competitors.

The cynics mock the $40,000 Chevrolet Volt coming in 2010, but what if it’s the prototype for an important new class of vehicles?

GM does not have Delphi anymore, but may have something much more valuable for the next decade of car making—OnStar.

According to the Inc. piece, OnStar gives GM the first mover position in car connectivity. We will see the connectivity of all of the car’s systems—charging data, mechanical components, GPS—as well as responding to collisions and malfunctions. If OnStar becomes the defacto standard for car connectivity it becomes the Windows of the new smart electric vehicles.

I think I have been so focused on the question of whether we are going to have a 10 or 12 million car year in America that I have missed the forest for the trees. The next several years will probably transform this gigantic business. With major change will come huge opportunities for entrepreneurs who are not wedded to making gas guzzlers.

Question: Are you looking to do more or less automotive work in the next several years?

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Emergency Machining

I recently had a long conversation with Brad Ohlemacher of EMC Precision Machining, the new name and incarnation of an Acme screw machine shop in the Cleveland area, called Elyria Machine Corporation. Brad and his brother Jeff are two of the most studious and innovative job shop owners I know, constantly attending seminars, conferences and learning from proponents of the black art of plant productivity. These guys are always on a mission to make their company not just profitable but a group with an identity and team spirit.

Brad and Jeff utilize Verne Harnish’s Rockefeller habit of the morning huddle to stoke the production fire at the start of the day. Brad told me that they are intrigued by a peer rating approach to filter the chaff from their staff as they continue their relentless push for manufacturing brilliance.

I asked Brad if his desire to build a gem in the contract machining world would ultimately be thwarted by the ubiquitous bidding process which continually pushes prices lower and margins to zero. He says his firm’s answer is to position itself as the company you call in a crisis. By continually honing their skills in the just-in-time world and machining creativity Brad feels EMC has found a niche market where price is not the primary determinant. When a company is down because a supplier just went Chapter Seven, or they had a fire, or a dog ate their software, the Ohlemachers want to be Batman to the rescue. If their plan comes to fruition, the company name, EMC, would become synonymous with “emergency-manufacturing-capability.” It is an audacious effort but it plays to the strengths of flexibility and teamwork they have been working on for years.

Brad told me that the company was started by his grandfather, who began the business by repairing potato harvesters out in the fields to rescue farmers’ crops after a machinery breakdown.
EMC is returning to its roots.

Question: Can a job shop attain pricing power?

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Howie Long GM’s Hero

Call me crazy, but General Motors’ shift in advertising from the pathetic Chevrolet and Apple Pie image campaign to a frontal assault on Honda and Toyota, using specs like fuel economy and vehicle value protection, is giving the company real credibility. Howie Long, ex-football bully is a curious choice as the face of the Chevybrand, but no more weird than Mike Rowe of Dirty Jobs by Ford. The tribute film to Howie Long below proclaims that he was as brutal as caveman on the field. John Madden is quoted, lauding Long’s exceptional toughness, and another commentator is quoted saying, “Howie Long’s greatest asset was his insecurity. He always was trying to prove that he was [good].” GM is now trying to personify itself as a fighter with something to prove, and now it’s finally doing it smartly.

All of a sudden GM and Ford look like the aggressors—shrewd aggressors—while the Japanese brands are backpedaling into the pocket. I guess we just had to move the Federal bureaucrats to Detroit to push General Motors into fighting shape.

Question: Does Howie Long make you want to buy a GM Vehicle?

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Is Risk Averse Risky?

I had a long talk today with Miles Free of the Precision Machined Products Association (PMPA). Miles has heavy experience in understanding the technical problems machining companies have in the hostile world of perfect competition which relentlessly drives prices down for even the most proficient contract shops.

Quality and delivery are just the price of admission to the poker game of job shop survival.

In Miles’ view, the blood sport of contract machining makes the participants risk averse to a fault in venturing out of their area of expertise—making parts. The bidding process they live in everyday is unforgiving of even the smallest goof-up.

A missed tolerance, a botched UPS shipment, shoddy material and a dozen other possible missteps can kill a job and sabotage a relationship.

With this view of the business world it is completely understandable that metalworking folk do not want to try crazy new ideas or develop their own products. The world they live in is endlessly demanding, but at least it is the devil they know.

The sad fact is that with global competition and free flowing machining expertise it is an excruciatingly hard time to make money in contract work.

Everyday I observe brilliant metalworking technicians with millions of dollars invested, struggling to survive, and I wonder why they don’t spend more time and effort on products and brands.

To me, the biggest lesson from this awful recession is that most businesses need a distinctive presence in the marketplace to get some relief from the bludgeoning of one on one price competition.

Question: If you came up with a brilliant idea for a new product, would you have the guts to try to bring it to market?

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Today’s Swarf

It has been 25 years since folk singer/song writer Steve Goodman Died at 36, yet his popularity is still growing. “Go Cubs Go,” his ode to the Chicago Cubs is still sung at Wrigley Field after each Cubs victory. A 778 page biography of Goodman came out recently, and his albums and songs are popular on iTunes.

He wrote a song that feels like a perfect fit for these tough business days. When I saw the latest dreary statistic on the lack of growth of industrial production on the front page of Monday’s Wall Street Journal, it confirmed Steve Goodman’s classic, “The I Don’t Know Where I’m Going But I’m Going Nowhere in a Hurry Blues.” According to CPB, Netherlands Bureau for Economic Policy Analysis, industrial production grew by 67 percent in developing countries from the March lows through August. In advanced economies growth was 3.3 percent, but the big drag was the U.S., which grew industrial production by 0.1 percent during the period.

I expect the last four months to be somewhat better, but in the arena of machining I still see misery.

Many Machine tool builders have seen a 70 percent drop in sales in 2009. The rampant discounting off of the list price is indicative of a price war orchestrated to keep the factories open and the distributors solvent.

Steve Goodman’s song is funny and current as we try to navigate the swirling rapids. Should you look for the exits or get as much leverage as possible to take advantage of the bargains? Is this recession the first lap of a long slog or the dip to buy on?

Maybe the real insight comes from Steve Goodman’s Life. He was diagnosed with leukemia at 22 years old. According to his wife, he looked at every day as borrowed time and lived it as if it was a gift.

Enjoy the music!

Question: What is your song for the day?

“The I Don’t Know Where I’m Going But I’m Goin’ Nowhere in a Hurry Blues” by Steve Goodman

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