Monthly Archives: March 2011

Housing Stinks, Hooray!

Housing prices supposedly dropped in February 3.1%, prompting the doomers to predict the dreaded double dip recession. Yahoo! and the New York Times trumpeted the news like it was Armageddon. But I see it as good news for the economy and for America.

The losses that are being taken now on housing mean that sellers are starting to accept the drop in values, which actually took place two years ago. The market is begging for the inventory of unsold homes to reprice to the level that will unlock the wallets of real buyers, be they speculators, renters, or buyer-occupants.

I believe many people would sell their homes if they could land in a better or comparable housing situation. Instead they languish with underwater mortgages, hoping for a miracle in the market that will lift their value vis-a`-vis other homes they might covet.

The drop in selling prices is a signal that lenders and occupants are getting realistic about the housing market. When housing prices drop to their fair return rental value—the price people will accept to lease their house to make a reasonable return on investment—houses will sell.

For many years Americans have paid way too much for housing in relation to their incomes compared to the rest of the world. In China people pay more for tutoring their children outside of school than they do on average for housing. The same is true in Korea.

The housing industry has convinced Americans that their home is the best investment they can make. Historically homes have been awful investments, falling in value as often as rising.

The drop in February home selling prices means we are finally coming to grips with an inflated asset class which was overdue for a sustained fall.

Question: Are you happy to see housing prices fall?

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The Man with the Golden Arm

Eric Golden With x-Ar Exoskeletal Arm

I just interviewed Eric Golden, CEO of Equipois Inc. Equipois, whose slogan is “Defy Gravity,” just introduced the x-Ar, an exoskeletal arm that attaches to a human arm providing it dynamic support throughout its natural range of motion.

A person puts his arm inside the x-Ar, which looks like a long mechanical arm attached to a chair or wall. The mechanism is entirely powered by springs (no motors, hydraulics or pneumatics). Inside the mechanical arm one has the ability to easily hold an arm up steady in one place for long periods of time, or hold and move objects up to 13 lb, as if there were zero gravity. The device was invented by Garret Brown, the man who invented the steady cam for shooting movies, a mechanism that accomplishes many functions similar to the x-Ar.

Golden says Equipois sees tons of applications for the x-Ar in manufacturing, which is the first field in which they are pushing the product. Tasks for which workers must manipulate and hold heavy objects steady for long periods take their toll on workers’ health over time, and cause fatigue that can degrade the quality of work. Conventional wisdom today may be that robots are the appropriate method for tiring tasks that require high precision. But some jobs are still just meant to be “a man’s job” (or “a woman’s job”) because they require sophisticated judgment, analysis and movement which unfortunately (or fortunately) machines don’t offer yet.

I haven’t used  x-Ar yet, so I can’t personally vouch for whether or not it fulfills Equipois’ claims. But the company has put out some interesting demonstration videos which can help you better understand how it works.

Question: If the x-Ar works as well as Golden says, what applications do you see for it in your operation?

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America’s Favorite Pickup Line

A recent article on discussed a study, done by TrueCar, of retail car buying behavior in the U.S. 50 states in 2010. The study shows some intriguing trends that shed light on cultural/political differences and commonalities throughout America.

The study found that America truly does have a national vehicle. Ford’s F-Series truck was the No. 1 selling vehicle in 35 of 50 states, while the Chevrolet Silverado was No. 2 to the F-Series in 20 states. It ranked first in Arkansas, Iowa, Maine and North Dakota.

Twelve states had all five top selling vehicles made up of either pickup trucks or SUVs (no sedans). Eight out of 12 of those states voted for John McCain in the 2008 election. Hmmmm, many Today’s Machining World readers driving pickups or SUVs?

There were seven states in which all top five cars were Japanese. All of those states voted for Obama in the 2008 election.

Highly populated states bought a lot of imports. Imports make up the top five vehicles in three of the four most populated states: California, where Honda Civic is No. 1; New York, where Accord is No. 1; and Florida, where Corolla is No. 1.

In Michigan, not surprisingly, the top five retail vehicles were from the Detroit Big Three—ranked from first to fifth were the Ford Fusion, Chevy Malibu, F-Series, Chrysler Town & Country minivan (not among top five in any other state), and Ford Escape. Analysts attribute the inclusion of Chrysler on the list to the fact that it’s the only Detroit car company to make a minivan.

Question: Would you feel good about buying an imported car from Japan if you thought it could help the Japanese rebuild their country?

George W. Bush and Vladimir Putin in Bush's F-250 Pickup,

George W. Bush and Vladimir Putin in Bush's F-250 Pickup,

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A Nuclear Overreaction?

Wednesday, NPR interviewed Dr. Robert J. Baker, biology professor at Texas Tech University. In 1994, Dr. Baker began a research study on the effects of the 1986 Chernobyl nuclear disaster on the wildlife surrounding the nuclear plant. His team studied the genetic effects of radiation exposure on small mammals specifically.

They discovered that the 30-km zone, since being evacuated by all humans after the disaster, has become a wildlife preserve. Baker reported that mammalian populations were vibrant and species diversity did not appear to be reduced, in even the most radioactive environments. Baker also reported that during his visits large mammals appeared to be thriving such as wolves, moose, dear, wild boor and otters. He also said that diversity of flowers and other plants in the highly radioactive regions were impressive and equal to that observed in protected habitats outside the zone. Even the endangered black stork were more abundant in the 30-km zone than outside the area.

In studies of genetic effects on voles, small rodents from the area, he detected no birth defects or physical deformities from mutations.

In the NPR interview, Baker said the World Health Organization reports that 150,000 women who were pregnant at the time of the Chernobyl meltdown had elective abortions. However, the data for the children born to the women who did not have elective abortions who were pregnant during the same time period and in the same space did not show an elevated birth-defect rate.

Question: Do you feel the environment is more at risk from offshore drilling and burning fossil fuels, or running nuclear power plants?

Click to listen to the NPR Story

Blinky the Three Eyed Nuclear Fish from the Simpsons

Blinky the Three Eyed Nuclear Fish from the Simpsons

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Letters From Japan

The tragedy in Japan is horrific from a human standpoint, but as a parochial businessman in the machining realm I’m also interested in how it affects my operation.

It appears that most Japanese machine tool builders suffered minimal damage because they are located far from the epicenter of the earthquake.

Citizen, Mori and Tsugami say they did not incur significant damage. Mazak has a facility in Sendai that was damaged, but it is not a big production plant. One builder that did incur damage is Citizen-owned Miyano, which has a plant closer to the site of the quake. Though nobody was killed or hurt, delays can be expected in shipments of parts and machines according to Miyano’s Web site.

Our machine tool dealership Graff-Pinkert & Co. is making a contribution to the Red Cross for Japanese relief. We received heartfelt emails yesterday from two dealers in Japan we have done business with in the past and machine tool builder Mitsui Seiki.

The following are excerpts from the notes sent by Makoto Torazawa of San-Ei Trading in Nagoya, Y. Sato of STI Products in Nagoya, and Mitsui Seiki’s Scott Walker and Koichi “Ken” Iwakura.

From Mr. Terazawa,

Thank you for your wonderful support for the disaster which occurred in Japan last Friday.

The northern pacific coast area of Japan is in a critical situation. Also, the leak of radioactivity from a nuclear power station is another big problem. Fortunately, our place in Nagoya had very little damage and all of our family, colleagues and friends had no problem since we are quite far from the epicenter.

For the time being, Japan is facing very difficult situation. However, we believe we will see the light with the help of friends all over the world.

From Mr. Sato,

Nagoya is far away from the focus of this earthquake. My team and family are okay.

Personally this earthquake scared me very much with the devastating tsunami. According to yesterday’s newspaper, 2000 corpses were found and we may have a nuclear disaster. It is a tragedy.

But we Japanese are trying to rebuild Japan soon with help from all over the world, including you.

From Scott Walker and Koichi “Ken” Iwakura

Thank you for your heartfelt inquiries about us after the major earthquake and tsunami events in Japan. We are very fortunate. Our employees and their families are all accounted for and safe. Our factory only experienced very minor damage that has been inspected and addressed already. There are challenges, of course, particularly with the country-wide energy conservation strategies; however we are working around those temporary tactics effectively. We are continuing to support our customers, and our deliveries remain on schedule. We value our business relationship with you, and on behalf of the entire Mitsui Seiki staff, we have been touched deeply by your concern, encouraging words, and gestures of support.

Question: Is it a bad idea to build new nuclear power plants in the United States?

A collapsed factory of precision work in Sukagawa, Fukushima, northern Japan

A collapsed factory of precision work in Sukagawa, Fukushima, northern Japan

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The Fiction of Money

The New York Mets ownership group is trying to sell 25 percent of the team because they are being sued by the attack-dog lawyer representing the victims of Bernie Madoff. The lawyer, Irving Picard, claims that the hedge fund operators who own the Mets realized huge “profits” from Madoff and should have known he was running a Ponzi scheme.

This brings up an idea I have been thinking about for a long time, the “fiction of money.”

In our Graff-Pinkert & Co. machinery business we are often asked to do appraisals of machinery, usually for financial institutions or consultants. We had a call recently from a consulting firm who wanted prices on a group of National Acmes. “Make the prices on the high end,” he requested. We said we would give him information for a fee. “Oh, I didn’t plan to pay for information,” he said. Real pulp fiction writer.

But so much of what masquerades as fact is bogus when it comes to money.

What happened to the trillions of dollars lost in the real estate meltdown of the past few years? The value of the mortgages and bricks were a fiction that evaporated in a few months.

Read full article here

Citi Field, Home of New York Mets

Citi Field, Home of New York Mets

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White Men Can Jump

Ryan and Adam Goldston are 5’11” 23 year-old basketball lovers who dreamed of dunking, but their legs said, “Sorry.” Their longing to jam took them down the entrepreneur path, and they developed a dunking shoe for guys with no hops.

Their company, Athletic Propulsion Labs, has designed and built shoes with tiny internal springs that they claim can add 3.5 inches to an average jumper’s elevation and as much as 8 inches to the leap of a top athlete.

They sent their shoes to the NBA office to ask for permission to solicit the endorsement of players in the League but were turned down. Their rejection was their beautiful “please don’t throw me in the briar patch” opportunity. They trumpeted the NBA denial as the ultimate endorsement of the bounce in the shoe. If the shoe would give a player an “unfair” advantage, every playground jumper would have to have it. When the NBA stated its decision, they sold out their entire stock overnight.

It was a little reminiscent of the Michael Jordan marketing coup with Nike’s Air Jordan shoe back in 1985. NBA commissioner David Stern vetoed the shoe because it was not made for the Chicago Bulls uniform. Nike then used the rejection to make the shoe a footwear franchise bonanza.

It sounds similar to grooved irons in golf, aluminum bats in baseball, and the recently outlawed leg tights popularized by Kobe Bryant.

The story makes me think of the inventive guys in the machining business who are always searching for their “unfair advantage.”

With my gimpy knees I’m going to buy me a pair of those new high-tech jumpers.

Question: Should the NBA ban these innovative shoes?

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Power to the People

I went to the PMPA Management update in Orlando the last week of February, and one of the speakers was an expert demographer named Ken Gronbach. The lecture made me feel quite grateful to be an American, and bullish about America’s position as a future global economic power.

Gronbach says that the labor force of United States has a bright future because we have a positive birthrate and a steady influx of Latinos coming into the country which keeps the U.S. population growing. Latinos have a strong work ethic, and assimilate relatively well into American culture. Spanish and English languages tend to accommodate each other, and Hispanics come from a culture with Judeo-Christian values.

On the other end of the spectrum, Gronbach says that China really screwed itself with its one child policy. The proliferation of sex selective abortions has limited the female population of the country to an alarming degree. According to the Web site for Discovery News more than 24 million Chinese men of marrying age could find themselves without spouses in 2020. The last year a study was conducted in 2005, there were 119 males per 100 females as reported by the newspaper Global Times. The total fertility rate in China is 1.54 (avg. births per woman in childbearing years). According to the 2000 census the TFR was 1.85 (0.86 for cities, 1.08 for towns and 1.43 for villages/outposts). The U.S. fertility rate on the other hand is 2.06.

Western European countries are also very frightened about population decline and have had to open up their borders to immigrants from the Middle East and North Africa whose culture often does not mesh smoothly with that of the native population. Italy and Germany have TFRs of 1.49 (2009) and 1.42 (2010) respectively.

In Eastern Europe, Russia has a GDP less than 1/12 of the U.S. and an average male life expectancy of 63. Not to mention the former Soviet countries have highest abortion rate in the world.

Question: Has legalized abortion affected the U.S. economy?

Power to the People

Power to the People

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The Great Masthead Debate

Dan, Pels our publishing guru for Screw Machine World magazine, thought he was asking a simple question yesterday, “What title should we put on the masthead under your name, Lloyd?”

He set off a day of heavy wrestling with the issue because, for me, it was crucial to the magazine and how I define myself.

“Would you call yourself an editor, a publisher or a writer?” he asked innocently. I stared blankly at the whiteboard on the wall looking for a clue. None of those titles felt right. They were too generic. They were too white bread, too Chevrolet. I thought for a while, and then announced a proposed title for myself. “Call me ‘Chief Space Filler,’” I said.

Dan looked at me with anguish and annoyance. He sees his role as shepherding an idea for a trade publication from the initial musing stages and turning it into a professional, moneymaking, ink-and-paper entity in weeks.

“Lloyd, if you do this, they’d use it against you. Your competitors will tell advertisers, ‘Look at their masthead, they aren’t serious people. This is just Lloyd Graff playing around and asking you to support his indulgences.’”

This hurt, because Dan is correct in a way.

Read full article here

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Dear Michael Bloomberg

Dear Michael Bloomberg (Mayor of New York City),

Just wanted to alert you that I am available, if the hours are right, to join the stable of writers of your new “Bloomberg View” enterprise. Our views on free trade (pro), taxes (don’t like ‘em) and tobacco (tax it like hell) are congruent. The $500 grand a year you are offering to prominent journalists is a nice round number I could live with.

I could add knowledge about the manufacturing world, which your provincial New York Wall Street-focused crowd could certainly use.

As a fellow magazine publisher I can relate to your comment recounted in the March 1st New York Times concerning your purchase of Business Week. When a bevy of consultants recommended that you pass on buying the money hemorrhaging publication because they said in a good year it would lose $25 million you said, “Do I look like a guy worried about losing $25 million?”

With your net worth pushing $20 billion, according to Forbes, and your age (late 60s) we have at least one thing in common. I was hoping you would run for President in 2012 but it is looking more like you are leaving the Iowa Primary to Palin, Huckabee and other assorted losers. Allegedly you have looked at the Ross Perot approach and figured it was a waste of time for 2012.

Mike, I think I understand where you are coming from. Better to be King than President. Considered it myself.

I’ll FedEx my resume`. Keep reading my blog. You are one of the few billionaires who know what Swarf is.

Lloyd Graff
Today’s Machining World

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