Monthly Archives: June 2009

Motivating Employees

Daniel Amos, the head of Aflac, the remarkably successful medical insurance firm, was interviewed in the New York Times on Sunday. His remarks on leadership and motivation are intriguing. He treats employees like voters and challenges his sales staff not with overt quotas but by telling his people he wants them to make a particular figure. For instance when he used to be a sales manager he would say to an employee, “I want you to make $60,000.” He recounts that employees couldn’t say, “No, I really don’t want to make that much.” He says they didn’t know how to argue with him when he said, “I want you to make more money.”

Link to full article: New York Times

Question: Do you think it’s advisable to treat employees as if they were voters?

Dan Amos

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Automatic Machining's Last Issue

By Lloyd Graff

My daughter Sarah does funerals virtually every week as a Rabbi in Palo Alto, California. She has a knack for capturing the essence of the person who just died. She talks to the family, selects stories, brings in her own remembrances and embroiders the eulogy with texture and empathy. I thought about her eulogies before I started to write this piece about the death of Automatic Machining Magazine because I hope to strike a truthful and empathetic tone. Automatic Machining started almost 70 years ago under the name Screw Machine Engineering in Rochester, N.Y. Don Wood, its founder, had a background in the screw machine industry and saw an opening for a publication that catered to the people who produced precision components.

The magazine found its niche in the heyday of National Acme, New Britain, Brown & Sharpe and Davenport. Used machinery dealers, like Graff Pinkert and Co. coveted space in the back of the publication. It became the primary advertising venue for the business. Everybody read the back of the book and the Automatic Machining staff bent over backwards to accommodate a tribe of dealers and tooling guys who knew nothing about print advertising.

Don Wood was a machining guy who filled his pages with the stuff of the industry. People liked it because it was authentic and didn’t try to be more than it could be.

Simplicity and Don Wood’s personal and heartfelt columns gave Automatic Machining its voice. Its niche was small, but Wood and his advertisers defined it clearly enough to fend off larger competitors in the machining realm. Wood was a smart business person in his prime, staying under the radar of magazines like American Machinist and Modern Machine Shop while developing a following in the screw machine crowd with his folksy and sometimes whimsical approach. The competition finally found him around the year 2000 but Don continued to keep a following into his 80s. Don’s son, Wayne, worked in the business, but refrained from developing his own visible presence in Automatic Machining. The industry changed rapidly to one dominated by European and Japanese builders focusing on CNC equipment. Automatic Machining was a CAM operated magazine; a Davenport in a CNC world. When the bottom fell out of the market in recent months the magazine’s resources were depleted.

As a longtime advertiser and recent competitor, I mourn the loss of the Don Wood Automatic Machining era. I feel a sense of loss for his rugged and durable creation.

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Johnny Cash's Ode to GM

By Lloyd Graff

I often talk to machining folks who like to reminisce about the good old days when General Motors owned 50 percent market share and when people actually believed “what’s good for General Motors is good for America.”

General Motors got sloppy in every way. They made ridiculous deals with the United Auto Workers Union, spawning the infamous “job bank” and health care and retirement benefits that gave the company a monstrous sled to pull. In those good old days a lot of leaks developed. So many carbide inserts seeped out to bars near big factories to be traded for drinks, and were probably then sold back to the company. For a wry laugh click on the video below to listen to Johnny Cash’s wonderful ode to that corruption—“One Piece at a Time.”

Question: What’s your favorite GM car of all time?

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A Heart to Heart with an Industry Veteran

By Lloyd Graff

Don called me yesterday to ask if I still remembered him. I said “sure, you are that fat Polack in Milwaukee with the Davenport shop.” I could say that because even though I haven’t seen Don in a decade, I always loved his good humor and sense of joy about doing business and making money.

“Remember me, I was that skinny kid who walked into your old plant in south Chicago with my Dad and bought my first two Davenports,” he said. I remembered the story even if I could never remember Don as skinny. Don bought a ton of Davenports and Acmes through the years from me, eventually selling that shop. But he couldn’t resist the clickety-clack of screw machines and started up another shop in the Beer City.

Don’s call was a sobering commentary on the times. His primary customer had dumped him for Asia and his foreman was retiring at 71. Sickness had caught up with Don. He had a quadruple bypass two years ago and is now breathing supplemental oxygen 24/7. He also battles to keep his diabetes at bay, among his other woes.

Don is a warrior and there was no “poor me” in his voice. He wanted the straight dope on what his five-year-old Davenports, three Brown & Sharpes and 18 years worth of collets, diehards and thread rollers were worth today. When I told him that an auction was probably a waste of time he took it with the stoicism of a beaten up knight.

My heart goes out to this good guy, especially to his heart, which I hope will ultimately come back, even if the Davenports never do.

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Government aid allows work sharing

While job losses keep mounting in today’s brutal economy, a growing number of companies are avoiding layoffs using a program known as work sharing.

Instead of laying off employees, companies are keeping them while reducing workers’ pay, often by 20 or 40 percent. The employees generally get to hold on to benefits as well. Then, state governments step in and make up part of the lost wages, usually about half. Seventeen states have adopted the program, and economists and executives are hailing the program as a way to keep workers employed and retain skilled labor. A similar work sharing program has been credited with saving thousands of jobs in Germany.

With savings from reduced income taxes and from commuting fewer days, some workers nearly break even. Unfortunately, only a small portion of eligible businesses and workers are presently benefiting from the program because most companies still don’t know it exists.

A story in the June 15 New York Times covered a Connecticut metal working plant utilizing the program. At Tri-Star Industries, the 29 nonmanagerial employees now work three- or four- day weeks. “The alternative would have been to lay off three to seven workers,” Andrew Nowakowski, president of Tri-Star Industries said, “but that would mean that when things become busier, I’d run the risk of not having the trained people I need.” The company’s employees have bought in to the program as well, even if it means less pay. “Without this, it would have been four or five guys out the door and one of them could have been me,” said John Drzata, who runs a five-spindle precision lathe.

Right now, business is all about staying in game; fighting to see another day. A shrewd combination of sacrifice and creativity such as work sharing is the way to survive.

Source: New York Times

Question: Would you be willing to try a work sharing program in your business?

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The Mineral Race

By Lloyd Graff

Over the last few years Chinese and Russian firms closely tied to their governments have bought up scarce mining and mineral resources. The Chinese have indicated that down the line they may make smaller purchases of U.S. Treasuries and spend more cultivating strategic materials. The Chinese are also developing their nuclear energy production almost as rapidly as they are building their dirty coal-fired electricity production.

A recent Atlantic Monthly piece, discusses the Chinese attempt to control the market for neodymium, the critical material needed for the industrial magnets in wind turbine engines and motors for priuses. Molycorp, bought the neodymium mine in Mountain Pass, California in 2000, which had been halted in 1998 because of environmental complications. They believe they can run a competitive operation mining the mineral despite the process being much more costly in the United States than in China due to environmental regulations. One expert in the article said if China is allowed to dominate the world’s neodymium supply “we could be trading a troubling dependence on Middle Eastern oil for a troubling dependence on Chinese neodymium.”

 

Source: Atlantic Monthly, “Clean Energy’s Little Secret”

Question: Is the United States in a long-term economic war with China?staff photographer

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Dealing with Pressure

By Lloyd Graff

Joey Votto is a great young hitter who plays first base for the Cincinnati Reds. Many students of baseball think he will eventually win a batting championship. He’s that good—left-handed, beautiful inside-out stroke to hit the ball to left center, and the snap to yank the ball out to right.

But it may not be this year, because Votto is sidelined indefinitely with an anxiety disorder that makes his life so miserable he has to take a time out from Major League Baseball, even though he’s killing the ball.

On the flip side, Zack Greinke of the Kansas City Royals is the favorite to win the Cy Young Award (best pitcher in the league designation). Greinke has great stuff, brilliant command and amazing moxie for a kid in his early twenties. This young pitcher looks like a faster Greg Maddux. Yet a couple of years ago Greinke had to leave the team for the 2006 season because he just could not deal with the pressure of the Big Leagues.

For many people there still is a sense of shame in looking for help with emotional pain. These are such tough economic times that more people than usual are suffering daily mental wounds on top of the emotional indigestion that most people endure every day.

My heart goes out to Joey Votto, and I share the joy of Zack Greinke. I hope the two guys will talk. It helps. I’ve been there myself.

Cincinnati Reds' Joey Votto (19) is congratulated by Edwin Encarnacion, right, and Adam Dunn, left, after Votto hit a three-run home run off Milwaukee Brewers pitcher Jeff Suppan in the second inning of a baseball game Saturday, Sept. 8, 2007, in Cincinnati. (AP Photo/David Kohl)

Cincinnati Reds' Joey Votto (19) is congratulated by Edwin Encarnacion, right, and Adam Dunn, left, after Votto hit a three-run home run off Milwaukee Brewers pitcher Jeff Suppan in the second inning of a baseball game Saturday, Sept. 8, 2007, in Cincinnati. (AP Photo/David Kohl)

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On the Way Up

By Lloyd Graff

June 3rd, and the world looks a lot different than just 30 days ago.
    GM finally did the dirty deed and filed, and the stock market reacted with relief. It appears suppliers are going to get paid from the Feds lending as the reorganization goes forward. BorgWarner stock is up 80 percent from its low and Johnson Controls has also bumped.
    All of the commodities are zooming with copper near $2.30 and ArcelorMittal stock more than double from its yearly low.
    Obviously, the markets are signaling a bottoming of the economy.
    One of the most encouraging aspects of what’s going on is the strength of the California home market. Sales have been improving for existing homes and the unsold overhang is shrinking. Home prices have actually been rising recently. California led us into the housing chaos and it appears to be leading us out. New homebuyers are appearing in Phoenix, Florida and Vegas where syndicates are coming in with speculative bids for cash on multiple units.
    In the real machining world we live in, the signs of a rebound are beginning to show. Hoff-Hilk’s Bystrom sale last week was a winner with Swiss CNC machines, and Gerry Mannion told me that his recent Bosch sale surprised big on the upside. On the other hand, Robert Levy of Hilco says that he remains very conservative after seeing the market for used twin grip Cincy centerless grinders grind to a halt. Presses and multi-spindle screw machines have no pulse right now, and gear equipment is languishing.
    Intrest rates are rising on 10 year U.S. government bonds, the dollar is weak, the big banks have floated $70 billion in stock and are begging to pay back the TARP. Huge money is leaving the sidelines for investments that appear to have upside. Put it all together and it smells like a recovery in the womb, if we can hang in there while inventories gradually rebuild.

Question: Do you feel more upbeat about business now that GM has finally filed?

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There is Life After Automotive

By Lloyd Graff   

    Over a dozen years ago I developed a wonderful business relationship with Ed LeClair, who used to be operations manager at Curtis Screw Company LLC., of Buffalo N.Y., one of the largest precision machining companies in the U.S.
    Among Ed’s many responsibilities at Curtis was buying used machinery, which put us on the opposite sides of the table, but we developed a great rapport even while we were negotiating like pit bulls on the price of Schüttes and Acmes.
    It came as a shock when Ed told me he was leaving Curtis in 2007 to buy a printing shop franchise in Raleigh, North Carolina, which he planned to run with his wife Carol.
    I knew that Ed had long had the dream of going into business for himself because he had queried me periodically about what job shops were on the market. But Ed and Carol were entrenched in Buffalo, and I doubted he would put it all on the nose to buy a screw shop in Detroit or L.A. But one day he and his wife, a long time teacher, found themselves rattling around in their big house, their youngest child now off at college, looking for one more big challenge before retirement. It was the right moment; the print shop opportunity popped out of the weeds and they grabbed it. Mild Raleigh winters sounded good, and the thought of absorbing the pressure of running an automotive supplier had lost some of its appeal. Ed regretted leaving his good friend and colleague Paul Hojnacki, the general manager of Curtis Screw, and the tremendous team of professionals he and Paul had shepherded in Buffalo, but as it turned out his timing was impeccable.
   The auto market tanked and the stock market imploded, but Ed managed to escape from both calamities with his move to Raleigh, a place where he found relative stability in job shop printing and a community heavy in colleges and drug companies.
    He and Carol have now been working together for more than 500 days, definitely an experiment, but Ed says they still love each other.
    Ed is a thorough and charismatic operations guy and he brought the rigor of automotive land to the AlphaGraphics franchise he bought. Business is prospering. He called me to ask if I knew of a good sales person in North Carolina he could hire. He told me he stays in touch with Paul Hojnacki at Curtis, but he is happy to have fled the misery of the car industry.
    Ed LeClair is living proof that there is life after automotive. He says he’s just a lucky guy. He bought Ford stock in February and it has tripled. Lucky, maybe, but smart enough to live out his dream before life runs away.

Ed LeClair, former operations manager of Curtis Screw Company LLC., Buffalo N.Y.

Ed LeClair, former operations manager of Curtis Screw Company LLC., Buffalo N.Y.

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