Monthly Archives: June 2010

Love and Dread of IMTS

By Lloyd Graff

It’s almost fourth of July, the corn is high, and everybody in machine toolville is getting stressed out because IMTS is getting close.

If you are showing in Chicago the tension is building. Are you spending too much? Will enough people show to justify the Benjamins? Will you get ripped off more than you planned to get ripped off?

On the flip side, IMTS holds the promise of giving business a big bump for the end of 2010 going into 2011. It will connect you with the foot soldiers who can make a difference for your product. It can give you a lead to drink from for a long winter. It will provide precious emails and cell phone numbers to bang away at.

IMTS is still important for showing off new machines and strutting your stuff. It establishes a pecking order in the key areas of metalworking. It’s part of playing in the Big Leagues, but still, I always agonize about whether IMTS is worth the sacrifice of tripping through the maze of McCormick Place blues. I have lived with this schizoid view of America’s machining festival for many years. When the holiday lasted 10 days it was an excruciating, foot killing, back cracking opportunity to press the flesh of the oil stained cognoscenti against Machinedom.

When there used to be tigers, contortionists (see video below), and sexy German and Japanese models in the exhibits, IMTS was live theater. In 2010, the froth will be gone. It will be all “bidness” compressed into six days of hard sell.

God willing, I’ll be there, peddling and schmoozing and wearing a tie. Oh what fun—I hope .

Question: Do you expect IMTS will be worth it this year?

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Swarf: The Money Gravitates West

By Lloyd Graff

Today’s Machining World Archives June 2010 Volume 06 Issue 05

Let’s connect a few dots. The head of the Russian government, Dmitry Medvedev, is coming to visit Silicon Valley because he wants to build a competitive science center in his country. He hopes to learn something about what makes the Bay area so attractive to the Apples, Googles and Genentechs of the world. Toyota is putting a sizeable investment into electric carmaker, Tesla Motors, and is providing the closed Nummi factory in Fremont, Cal., to make Tesla cars. The DMG/Mori Seiki collaboration is probably going to manufacture machine tools in Davis, Cal., near Sacramento.

While the California government may have to pay people with IOUs, the state is still a magnet for investment and young people looking for opportunity. With Wall Street’s reputation muddied up by financial scandal, the best and brightest are turning to the left coast again for opportunity. This is a good thing. In the mid 2000s it seemed like every smart kid wanted to trade derivatives on the Street. A lot of young people actually wanted to be the next Gordon Gekko.

Apple Inc. headquarters in Silicon Valley, Cal.

The pendulum has swung the other way today. Apple, Google and Genentech are hiring tons of people now. Soon Tesla and DMG/Mori Seiki will be in full swing. The momentum is moving west again. The economy is turning toward making things in the highest labor market in the country. Money gravitates to energy and creativity. The magnetism of northern California is strong right now.

After the Memorial Day weekend I posed the question, “Should we be economic patriots”?

When I wrote the car buying stories for the April and May issues, I took heat from readers who felt I was derelict in not coercing my sons to buy American cars rather than Hyundai Sonatas.

It turns out that the Sonatas are made in Montgomery, Alabama, and have more than 50 percent American content. Hyundai spent $1 billion to build a factory, and the workforce is almost entirely Alabaman, but ultimately my sons’ buying decisions were based entirely on the products and price. Economic patriotism had nothing to do with it.

Do you buy a Haas vertical machining center because it is American or because it is the best machine for the money? Do you pass on bananas because they come from Honduras? Do you shun an iPhone because it was made in China at a FoxComm plant that has had 10 suicides among its workers this year? Where does your economic patriotism start or end?

Personally, I am not an economic agnostic. I have never bought a German Mercedes or BMW because of the Nazi atrocities of 70 years ago. But considering most of the taxis in Israel are Mercedes, I know that particular economic discrimination is now ridiculous.

Many of my long time screw machine customers have shops in China now. Are they economic Benedict Arnolds?

I recently talked with Joe Arvin who owns a big aircraft gear company near Chicago. He considers himself an economic patriot because he will not put up a plant in China, even though his clients are pushing him to do it. Do you think our soldiers died for Ford or for the economic and political freedom to buy oil from Saudi Arabia to drive a BMW to the sushi restaurant?

Here’s the good news and bad news. Bad news—75 percent of Americans are overweight. We’re French frying ourselves to death. Good news—it’s going to be great for the precision machining business.

Dr. Uli Sutor, key account manager at DMG, gave an illuminating talk at the first day of DMG/Mori Seiki’s Innovation Days, May 24, at its national headquarters in Hoffman Estates, Illinois. The event was a combination sales and networking event for the collaboration between two of the biggest players in the world machine tool business.

Sutor’s presentation discussed the opportunities in the medical machining business. As he sees it, orthopedics, primarily knee hip and spine, are the biggest growth segment. The passage of Obama’s health care plan in the U.S. will expand the area even faster. According to the literature it takes 40 minutes to do a knee replacement—20 if there’s no insurance.

A person who is at least 30 pounds overweight is three times more likely to need a knee or hip replacement than a trim person. It’s easy to see that the obesity trend is the friend of orthopedic surgeons and hospitals.

Sutor mentioned the number of bone screws and plates produced in the world. His number astounded me—200 million orthopedic screws and plates last year.

Last year 1.1 million knees and hips were replaced in the U.S. The expectation is 4.6 million per year by 2030, partly because a joint replacement lasts 10-12 years, so many people will need redos if the obesity trend continues.

Dr. Sutor gave the presentation from the DMG point of view. He employed a lot of data from the European perspective. One piece of information I found valuable was that “turbo whirling” is now being made by DMG for bone screw threads. The process employs linear technology, which uses no gears or belts and provides a superior surface finish. This is particularly valuable if a doctor will eventually remove the screw from the repaired joint.

The $64 billion dollar question for the economy is, what will happen to employment? What happens to unemployment is related, but the two numbers do not always shift in tandem.

We are seeing a strengthening in manufacturing now and the overtime strategy seems to be waning. Productivity stats are still impressively bullish but they are starting to level off. You can only squeeze so much juice out of the lemon. The Labor Department acknowledges that people are being hired in manufacturing and my anecdotal evidence confirms this.

New construction is still pathetically soft in most markets, but we are seeing a weird anomaly in the most devastated markets of Nevada, Arizona and Florida. Builders are starting to build houses. According to a recent article in the New York Times, the most devastated housing markets are starting to get hot. It appears that some buyers just want a new home and hungry builders with low cost lots are providing value. Buying out of foreclosure or employing a short sale is such a hassle it is pushing buyers to new. According to the article, individual buyers are losing out to out of state buying syndicates who are picking up large collections of foreclosures at cheap prices and
paying cash. Perhaps the dreaded foreclosure overhang will prove to be similar to a mild flu season, which bodes well for employment—but not necessarily unemployment.

Juan Williams, the astute Fox and NPR commentator, recently did an interesting piece on the composition of today’s long term unemployed. The stubborn unemployment is in older, white, blue-collar workers. He compares this demographic slice with black factory workers laid off in the early 1980s downturn. That group was very slow to get new work, saw families dissolve and higher levels of drug abuse and births out of wedlock. According to Williams, we are seeing similar trends now from the bluecollar, white, male demographic.

When I talk to people in the machining world I often hear confirmation of this employment issue. Company owners do not necessarily want to retrace their steps on new hiring. They may be looking for different skills and younger workers who are willing to start at a cheaper wage and be less insistent on health insurance. Immigrant workers with a strong work ethic may look more appealing than a 50-year-old former union guy who has been out of work for nine months.

I think the recovery of 2010 will be a little different than past rebounds. Companies will be hiring, but not necessarily rehiring. Unemployment will be sticky, but millions of people will be finding jobs.

The hot movie at the Cannes Film festival was Wall Street: Money Never Sleeps, the sequel to Oliver Stone’s Wall Street (1987). Michael Douglas plays Gordon Gekko again, who returns to the Street after spending eight years in prison. Art imitates reality. Reality imitates art.

I just finished Michael Lewis’ brilliant new book, The Big Short: Inside the Doomsday Machine, about the appalling fraud among the big shooters on the Street during the subprime fiasco. He could have used the same title he used for his last best seller, The Blind Side: Evolution of a Game, because of the duplicity and stupidity of the bond packagers and the rating agencies who blind-sided the government regulators and most investors.

In my callow youth I thought Wall Street banks were conservative stewards of investor money. The Big Short exposed them as crooked, dumb, cynical casino operators who lacked the scrutiny of Las Vegas.

I think the civil suit against Goldman Sachs was a preliminary probe by the SEC. Goldman’s management probably saw it as a political stunt to help the Obama 2010 Congressional election effort. But Lloyd Blankfein’s poor showing in Washington seems to have emboldened the Feds and New York’s Attorney General, Andrew Cuomo, to keep the pressure on. I’m sure Obama and Cuomo have read Lewis’ book, which lays out the derivative conspiracy with dramatic clarity. The big players—Morgan Stanley, Bank of America (Merrill Lynch), Bear Stearns, UBS, Goldman, AIG—are the names under scrutiny.

I really think we are going to see criminal indictments and “show trials” down the road. Lewis’ number one bestseller lays out the trail like dropped breadcrumbs. There will be a few Gordon Gekko’s headed to the penitentiary this time around, but unless we shut down the taxpayer funded Wall Street casino, it will all happen again in a few years.

Industry Scuttlebutt

  • I understand that some Japanese machine tool builders are running painfully short of inventory in the United States. Sales in Japan are up 260 percent year to year. The American distributors under-ordered last year and the Japanese factories slowed production, while huge Chinese orders flooded in several months ago. Six hundred CNC Swiss lathes were sold by one builder and 285 machining centers went to another for cell phone dies, swamping the companies. Now American demand is perking up, and the cupboards are bare. It will be interesting to see if ¥92 to the dollar will justify higher prices at IMTS.
  • The liquidation of Fadal machines in California has surprised the doubters. The liquidator, Machinery Network Auctions, has sold over 100 machines and has about a dozen left.
  • We hear that companies like Caterpillar, Deere and Case are still starving for inventory. They are pressing their vendors hard and their projections for next year are even more bullish.
  • On June 28 Cy Zvonar of Industrial Machinery Corporation of Milwaukee turned 99 years old. He still comes to work every day wearing a suit and tie like he has since 1939. It’s an incredible coincidence that three generations of Zvonars, Joseph, Cy and Jim, were all born on the same day of the year.
  • The authorities that operate McCormick Place in Chicago, where IMTS will be held Sept. 13-18, have awakened to the threat posed to its convention business by Orlando and Las Vegas. Millions of dollars will soon be flowing into marketing, but unless the total expense of exhibiting and attending is addressed, I can see the day when IMTS leaves the Windy City.

Elena Kagan has impressive credentials to become a Supreme Court Justice, but her nomination brings up some interesting questions about the composition of the Court. If she is confirmed there’ll be three Jews and six Catholics on the High Court—no Protestants, Buddhists, Muslims or evangelical Christians.

Four of nine Justices will be from New York city if Kagan gets in, one from each borough except Staten Island.

With Kagan’s appointment all nine Justices will have gone to either Harvard or Yale Law School. There will then be three women on the High Court, which would be a record number.

Kagan has written about the confirmation process, criticizing the charade of candidates for the bench who dance around their beliefs about crucial cases which the Court will hear. Now that she’s the one in the hot seat we will see if she’s as candid herself.

Ms. Kagan clerked for Abner Mikva who was one of Barack Obama’s early mentors. She was brought to Harvard by Larry Summers, who is head of Obama’s National Economic Council. She also worked in Bill Clinton’s White House with Rahm Emanual. This woman has great connections.

The only drama I anticipate is that a senator will ask her about her sexual orientation. If Ms. Kagan is gay, as has been speculated, it may come up in testimony about cases of special interest to gays. Personally, I hope she addresses the whispers. I would like to see a gay woman on the Court—especially a Court that begs for diversity.

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World Cup of Machining

By Lloyd Graff

I’m starting to see why the world loves the World Cup, thanks to the ESPN coverage. Fabulous athletes, monstrous egos and nutty coaches abound. Referees are inept, the ball is booed, the British hate their goalie, and rugby renown New Zealand has tied two of the supposed world powers. France hates its team, whose coach won’t play certain top players because he thinks they have the wrong astrological sign.

The connection between the machining world and soccer has been clear to me since visiting PGI International in Houston several years ago. Spence Nimberger and his associate Jose Garza have built the company into a big player in oil and gas industry hardware. They have a “futbol” field adjacent to their factory, where their largely Mexican workforce plays the “world’s game” during lunch and breaks. According to Spence, the soccer field is a major plus in the competition for skilled workers in Houston.

Dave Knuepfer, whose firm, DuPage Machine Products, lies west of Chicago, also says the soccer field is a way to connect with his Hispanic workforce, the backbone of the shop floor team.

Illegal immigration is warming up again as a political hot button, but in the real world of machinist recruitment, the symbol of Anglo-American friendship on the soccer field is a shrewd way to send out a welcome message.

Question: Is soccer becoming the new baseball in the U.S.?

Cover, June 2006 Today's Machining World "Futbol for Lunch"

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A Mother’s/Father’s Day Story

By Lloyd Graff

Greek Easter Bread (Lambropsomo) -

I’ve always looked at the Hallmark holidays of Mother’s Day and Father’s Day with apprehension. It comes from my Dad’s anxious attitude toward his mother, who used the occasion to employ emotional extortion to exact the tribute she expected from our family.

My father lived in fear of her neurotic twists and occasional psychotic breaks. For my own mother, Mother’s Day was her day to nurture my Dad as he tiptoed through the rituals of motherly appeasement.

As a child I observed my parents’ management of Grandma Graff with a combination of amusement and studiousness. It was a lesson in the art of maintaining family peace without admitting the weirdness of our group dance.

I grew up with the dark presence of Ethel Graff at our house every Friday night and Sunday where she would routinely attempt to sow jealously and discontent. She dripped contempt for my mother, who unflappably played three cornered emotional poker with her and my father. One of my grandmother’s more transparent gambits was to ask me and my siblings, “Who do you like more, your mother or your father?”

We would play along, saying we liked them just the same, but in retrospect I wish I would have said, “I’m never going to give you a straight answer to such a ridiculously transparent and stupid question.” But that kind of honesty was forbidden toward dangerous Grandma Graff.

My father occasionally referred to a past Mother’s Day nightmare. His mother was offended one year because she felt her sister-in-law, Ida Pinkert, received better treatment on Mother’s Day than she had (which was quite possible because Ida was clearly a more beloved mother). My grandmother went into a long vituperative tantrum, which eventually led to her hospitalization in a psychiatric ward.

My dad was traumatized by this Mother’s Day spectacular. The holiday became a black mark on his calendar—a day to be navigated around, not embraced.

As a kid I got the scary message without having it explicitly stated. For me Mother’s Day and its cloned cousin Father’s Day, were like Greek Easter to me—holidays other people celebrated.

Question: What comes to mind when you think of Mother’s Day and Father’s Day?

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Lunatic Express

Today’s Machining World interviewed Carl Hoffman, author of The Lunatic Express, a book which chronicles his travels throughout Asia, Africa, South America and the U.S., where he attempted to travel by modes of transportation commonly used by the natives, notorious for discomfort, tardiness and poor safety.

How did you get the idea for the book?
Carl Hoffman: I’d been traveling a lot for work over the last decade in places like the Congo, Sudan and South America. I saw minivans and trains just packed with people, and people riding on the roofs of trains. My journalist sensibility was asking me, “who are these people, where are they going and why are they moving around?”

How did these people look at you, as they were traveling out of necessity for work and you were this American traveling alone to document an adventure?
CH: They looked at me with incredible curiosity and openness. Most of these people don’t travel alone. They travel with family members. Most people spend very little time in their whole lives alone. They sleep in big piles in a one-room apartment or a shack somewhere, and then they have this incredibly long commute in a crowded minivan or matatu or train, and they have a job that’s full of people. They kept asking me, “Are you alone? Why are you alone? Where’s your family? Why are you here? Why aren’t you traveling in first class, or why aren’t you flying?”

Did you see much manufacturing going on during your travels?
Well, one really cool thing throughout the Third World is the amount of small scale manufacturing and small scale human enterprise. In Bangladesh, you can walk down the street and there’s nothing but bicycle rickshaw shops, and guys are welding and banging and doing it in bare feet without shirts. It’s hot, and they’re building things. I had a bicycle messenger bag and its zipper was broken. One day I was just sitting around having tea in the park with some shoe shiners and an ear cleaner that had I buddied up with. One of them suddenly pointed at my zipper and he grabbed my bag and went at it with a little wax from his kit and a razor blade. And with incredible care, he fixed my zipper. It’s the sort of thing that only a poor Indian in a park would do. We don’t fix a zipper. We take it in and send it away, and maybe they send back a new one or they rip the whole zipper out and sew a new one in. This guy fixed it. They have a whole mentality and culture of fixing things and building things, and it’s kind of been lost here.

Read the full interview

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So Bored with Boards

By Lloyd Graff

Why should somebody work as a volunteer in an organization? My wife Risa and I discussed this topic last night as she was considering her last President’s message to the membership of the Association of Educational Therapists, a national professional organization she heads.

Risa has put her heart and soul into volunteering for this organization. She wants other people to follow in her footsteps. My basic orientation on other hand, has always been, “why should I spend my good time on some dumb organization?”

I have no tolerance for group meetings. They put me to sleep. I’ve never been part of an organization that interested me enough to get me to endure the endless prattle of group discussion. I know this sounds hopelessly arrogant, but I’ll admit to being a lousy member. And if you are a lousy member of a group, you will certainly be a terrible leader.

For me, one of the ugliest words in the English language is “committee.” To serve on a committee is to be sentenced to boredom. I may have a little ADD (Attention Deficit Disorder), which educational therapists address in their work, because when somebody inquires if I’ll work on a committee for a charity or professional group, I run for the closest foxhole. To me a board meeting is a bored meeting.

Yet I realize that organizations like the Association of Educational Therapists, the Precision Machined Products Association (PMPA) and the National Tooling and Machining Association (NTMA) do good work and rely on the members input. That means groups, subgroups, and committees. As a member of these organizations I freeload on their efforts. I pay my dues and tune out when members laud other members for the many hours they put in.

I believe the world is divided between the people who like meetings and process and chitchat and sociableness, and the aliens who prefer to be alone or go one-on-one.

If I have the choice of a meeting or Siena vs. Towson State in basketball on ESPN, I’ll choose the engagement with the TV.

Question: If you do boards and committees, what do you get out of it?

Photo from Aransa

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An Expensive and Messy Road

By Noah Graff

The BP disaster in the Gulf of Mexico is a tragic fiasco. Everyone can agree on that, but now that it’s happened, the U.S. government is confronted with the decision of how to go forward.

It has imposed a six-month moratorium on drilling in more than 500 feet of water in the Gulf. President Obama has also put on hold plans to expand drilling off the coast of Alaska.

This decision is based on the claim by environmental groups that we still don’t have a good understanding of why the disaster occurred and what other safety negligence is occurring in other similar wells.

On the other hand, halting offshore drilling salts the wounds of the people in the Gulf region, whose lives are already a mess from the destruction from the spill and recent natural disasters. Many of the people living around the Gulf have jobs in the off-shore drilling industry. The region’s tourism has been crushed, houses destroyed, the livelihood of fishermen stripped, and now drilling for oil, one of the few resources still sustaining the people of the region is being taken away too. Many people are more angry at the government than they are at BP.

One of BP’s main competitors in the gulf, Chevron, has distanced itself from BP and says that a six-month moratorium on drilling is an overreaction because it has much better safeguards for its wells. While this may be true, Chevron recently was involved in an onshore drilling accident involving a Chevron pipeline in Utah that leaked what officials estimated was hundreds of barrels of crude oil into a Salt Lake City creek and threatened to contaminate the Great Salt Lake.

The moral of all this—drilling for oil is a dangerous, dirty game that the government should have been monitoring much more closely. To fix the disaster and attempt to prevent it from happening again will be expensive and messy—kind of like mending the economic debacle of 2009.

Source: Wall Street Journal

Photo from Seattle Times

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Governed by the Rich

By Lloyd Graff

Meg Whitman, former eBay CEO, won the Republican primary for governor in resounding fashion on Tuesday. The same day, Rod Blagojevich, former governor of Illinois, watched while his lawyers grilled jurors in his corruption trial.

Blogo’s father ran a numbers game in Chicago. Young Rod grew up in a world of payoffs and married the daughter of a rough local Democratic politician on his way up the political ladder.

Whitman used $71 million of her own dot-com fortune to pave her campaign, while Rod Blagojevich shook down the paving contractors to get his political seed money.

Is Whitman more pure than the driven snow because she was recruited by venture capitalists to run the fledgling eBay after the founder realized he didn’t want to run the business?

Do we prefer the Rockefellers, Heinzes and Whitmans, and maybe celebrities like Arnold and Ronald Reagan, to run our country because the earthy the Rod Blagojeviches are too untrustworthy? Do we only want the elite who go to Harvard and Yale Law on the Supreme Court, which we now will have?

Maybe we want a House of Lords because the raunchy Rods and the slick Willies get too dirtied up climbing to the top.

Question: Do you prefer to be governed by the rich?

Rod Blagojevich and Meg Whitman (Photo from San Francisco Sentinel and Fox News)

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What is your life’s second act?

I love the “Second Act” column which appears on Tuesdays in the Wall Street Journal. It recounts the stories of people who forsake their original career for one that promises more excitement, opportunity, fun, or satisfaction than the career path they originally pursued.

On June 8, the Journal writer, Dennis Nishi, told John Putnam’s story. Putnam was a successful bankruptcy lawyer in Boston with a firm representing failed airlines and steel mills. While taking a deposition he had an epiphany. “Everyone there was very senior and making serious bucks. That’s when I looked around and [realized] I didn’t want to spend the best part of my life getting to where they are,” the Journal quoted him.

The rest of the story is about Putnam buying a farm in Vermont, taking a job with a Vermont law firm while developing the farm, and then chucking the law to make specialty cheese for a living.

He studied cheese making for four years and bought a custom made copper cheese vat to give his Alpine cheeses a unique flavor. A French student taught him some tricks of the trade in a work-study exchange to use for his graduate thesis.

Putnam started making cheese in 2002 and his business was profitable in 2003. Today his Thistle Hill Farm sells eight tons of cheese a year and is making decent if not great money.

Doing Today’s Machining World is the second act for this used screw machine dealer.

I would like to hear from you about second acts you are now involved in, would like to be involved in, or have tried and given up.

Question: What is your second act?

Jim Block John Putnam (right) and his wife, Janine. (article)

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Apple Makes Precision Machining Cool

By Noah Graff

Machining of iPhone Body

I’m what people would call an “Apple guy.” I only buy mac computers, own Apple stock, and my iPhone and I are inseparable. The fourth generation iPhone was introduced yesterday, and I have to say, I covet it.

In addition to its products being superior in technology and quality, Apple takes pride in its products’ aesthetics, striving to portray them as glamour symbols. Apple’s designers shape their products with the care and sexiness of an Italian car designer. Fittingly, in his key note speech Monday, Apple CEO Steve Jobs even characterized the iPhone as the BMW or Mercedes of phones and its rivals as common sedans. Apple’s marketing team is quite deliberate in its choice of words to describe the company’s products. They say they strive to “produce technology as art form.”

In Apple’s description and video of the new iPhone it boasts that the body of the phone is “CNC machined,” which the company also boasted a few years ago when its aluminum MacBooks debuted.

One of the most successful, coolest companies of our time has just glorified the importance of precision machining. Who knows, maybe the next time I explain to average person what Today’s Machining World is about, I won’t get such a perplexed look.

Question: Do you care that Apple has drawn attention the importance of precision machining?

(Skip to the 5:00 minute mark to watch the CNC machining process)

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