Monthly Archives: April 2009

Thank God for Guns and Ammo!

By Lloyd Graff   

With the machining community so riddled with woe at the moment, the guns and ammo boomlet is manna from heaven.
    It’s a great time to be in the gun business. The buzz on the Web is that Barack Obama is going to push for a ban on assault riffles, something households need more than refrigerators.
    Evidently, Obama’s campaign reference, that “bitter” small-town Americans “cling to guns or religion,” has fueled a tremendous surge in gun and ammo sales. People are buying AR-15s, the civilian version of the M-16 military rifle, like 42” HD televisions. At $1000 a pop (sorry) they are pumping out of the gun shops and gun shows. Wal-Mart is struggling to keep ammunition in stock because the NRA is implying that a big tax will soon be coming on each ammo box.
    The high profile mass murders in Binghamton, N.Y. and Pittsburg are reinforcing a sense of insecurity, even panic, while right wing commentators foment unease as the economy slides.
    But the gun run is a great boon to the Swiss CNC business as manufacturers rush to cash in on the gun bubble. While hunting rifles are currently dead, hand guns are the new Rolexes as folks look to show off their fancy shooting hardware.
    It is still quite doubtful that Obama is going to risk his political capital in a quixotic joust with the gun lobbies. But the power of fear, for the moment, trumps rationality.

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The Merit of Ridiculous Decisions

Today’s brutal economy is forcing people to do things they would have thought to be preposterous a year and half ago. In Japan, as unemployment grows to levels not seen since World War II, unemployed factory and office workers are going to the countryside to try to be farmers. Recently, I traveled to Japan and witnessed a place with high-tech, amenities I couldn’t imagine beforehand. Restaurants have computers to order from, taxies have doors that open automatically, public toilet seats are heated and ultra fast trains dominate transportation. People used to this world are attempting to learn to farm, in brutal conditions, hours away from metropolises such as Tokyo for a chance to make a living. Today only six percent of Japan’s population are farmers, verses 20 percent three decades ago, and two thirds of Japan’s farming population is 65 or older—this is sector in which there is demand for new labor. In response, the Japanese government is spending $10 million to send 900 people to job-training programs in farming, forestry and fishing. It’s a minuscule experiment, so why not try it.

There are parallels to this contrarianism in the in the U.S. Today artists from all over the world are attempting to establish a new community in a ghetto of Detroit (see the TMW blog “A Renaissance In Detroit from 25-03-09). Newspapers such as the Seattle Post-Intelligencer are scrapping their entire print addition to only publish online. Would that decision have been fathomable five years ago?

There is a wonderful Seinfeld episode in which George, the ultimate loser, for whom nothing ever works out, decides that any instinct he has for a decision he’s going to do the opposite. Some of his decisions appear to be utterly ridiculous, but somehow they lead to him to get a job interview to work for the Yankees. In the interview he decides to berate George Steinbrenner, but then he gets the job.

In today’s economy, one can’t be too quick to rule out new ideas, no matter how ridiculous they at first may seem.

Source Wall Street Journal

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GM's Elmer Fudd

By Lloyd Graff

The General Motors train is lumbering toward bankruptcy. Does it give you any comfort that Elmer Fudd in pinstripes, otherwise known as Fritz Henderson, is now running the show at GM? Henderson is another GM lifer who has been a successful bureaucrat politician at General Motors—not exactly a guy who looks like the next Lee Iacocca or Steve Jobs.
    What a mess the company has become. Alfred Sloan must be laughing or crying in his grave as he watches jokes like Rick Wagoner and Elmer Fudd, excuse me, Fritz Henderson, fumble toward bankruptcy.
    I felt like retching as I watched GM’s current TV advertising joke, “Put on your rally caps America. It’s time for a comeback.” The ad deftly admonishes the viewers. How incredibly corny and out of touch can you get? And then the announcer talks about the GM “total confidence” program. How can the people at GM and their ad agency think viewers are going to buy this kind of cynical condescending eyewash?
    But this is how GM got to where they are today. The company has become a joke, a Jay Leno one-liner, because the management continues to be laughable. The GM trucks and cars are not bad, but who wants “not bad” when you can buy Honda and Toyota for the same money and you know they’ll be around in five years?
    When GM guts the company, throws out the Elmer Fudds and talks to its customers as intelligent consumers, not stupid yahoos, I’ll consider buying a vehicle from them.

Also, don’t forget that today is your last chance to win the Gerstner toolbox and other prizes by posting on the TMW Shop Doc Forum! Join and post on the forum by going to www.shopdocforum.com.

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Is the economic tornado blowing over?

By Lloyd Graff,

At least three times per summer we hear the sirens blare, signaling the possibility of a tornado in our vicinity. We take cover in the basement or the safest corner and wait for it to pass over. We listen for the “all clear” signal and the absence of thunder.

For the machining industry, particularly in the Midwest, the tornado sirens keep shrieking and the all clear has yet to sound. Since September a lousy recession has become a depression worthy event for anybody who cuts or bends metal. The only hiding places have been in guns which are going nuts as people fret about an Obama weapons law, and medical which has held up partly because people shoot at each other occasionally. The big winner is still orthopedic implants which save the bodies of aging baby boomers.

The stock market has been signaling that the financial system is stabilizing. Houses are selling with the huge price drops and the inducements of low interest mortgages and assorted subsidies. The stimulus package, though diluted by transfer payment funding is going to kick in soon. The Fed has poured liquidity into the banking system and the corporate bond market has strengthened. Inventories are paltry in the bins and semiconductors, the guts of electronic tools are making a comeback.

It appears that the economy is beginning to get its legs back. Auction prices are in the toilet. Much of the equipment that goes to sale does not meet the reserves which ultimately depresses prices further. It seems like it cannot get worse and then it keeps getting worse in machining. We probably will get no clear bottoming signal. Some very sharp economists who know our world are predicting an uptown—next March.

Hang in there. Unfortunately I have no economic Doppler radar. It will get better, but we won’t hear any “all clear” horns go off.

Question: Do you think the tornado will ease up soon?

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Rick Wagoner Should Remain GM's President For Life

I had always seen GM head, Rick Wagoner, as a figure like Leonid Brezhnev, the Russian Premier who just seemed like he would rule forever. When Wagoner was finally ousted from GM on March 30th, I was compelled make a video blog to reflect upon the man’s contributions to his company. If Wagoner did remain GM’s ruler for life, what would be the arguments to justify his reign?

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