Monthly Archives: June 2011

Advice Please – Should I Get a New Knee?

I went to my longtime family physical therapist, Doug Conroy, Monday, and after spending an hour talking, feeling and observing my body I could see he was measuring his words—not a good sign.

His conclusion, pending doctor verification, was that if I want the ability to get the exercise I need to have a good quality of life, I’m probably going to need knee replacement surgery. It was not necessarily the news I wanted, but it was no huge surprise with the chronic knee pain I feel.

I’ve written about orthopedic implants, visited Zimmer and DePuy in Warsaw, Indiana, and have gone to the medical engineering shows. So even though I know what the hardware looks like, it’s different when it’s your own body.

I am sure that many of you good folks who read the blog and magazine have undergone joint replacement procedures. I would like to know your results. Did it significantly reduce your pain? Have you been able to up your exercise regimen? Can you play tennis or basketball? I have completely lost my jump shot because of knee arthritis. Will I be able to regain it?

Tell me about your recovery. I’ve heard some bad stories about rehab, but mostly positive ones. What has your experience been?

Artificial joints wear out just like human ones. How long has your joint replacement lasted? If you have replaced a replacement, what has that experience been like?

I am not expecting to begin a career in mountain climbing or to do a triathlon, but if I’m going to go through more surgery, will I be able to walk the factory and navigate stairs without rushing to pop three Advil?

Please respond to the blog, because with millions of joint replacements being done each year, with or without Obamacare, I am not the only person reading this who could learn from your experience.

Question: What has your experience with joint replacement surgery been like?

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Industry Scuttlebutt

The yellow flag was waved in April and it feels like business has been in neutral for three months. Personally, I’m tired of it. This was supposed to be the big rebound year, but the earthquake and the oil speculators stole it from us for at least a quarter.

I like the spigot from the Strategic Petroleum Reserve being turned on. It alerts the oil hoarders that they can’t always play games with commodities like oil and win. What is the “real” value of a barrel of oil? Nobody knows. But $3 gas would be a welcome sight and with horizontal drilling for both oil and gas hitting its stride in North America it is quite possible pump prices could fall under that magic $3 mark. We always underestimate the possibility of change. Who predicted the fall of Communism, the Arab Spring, the rise of Apple and fall of Microsoft, the Facebook challenge to Google, a black President, the near collapse of Wall Street, dropping home prices, 3% ten-year bonds, and Boston winning the World Series? What are the odds of an alien attack? I don’t think I want to know. Hopefully they’ll come as tourists to Disney World.

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Why are Americans so fascinated by the topic of aliens from space attacking “us?” I haven’t seen any movies or TV shows about them landing in Peru or the Congo. What’s so bad about the jungle? Aliens don’t dig parrots, I guess.

And aliens seem to have no interest in music. Rock, jazz, opera, sitar—seems like it’s all just white noise to them.

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I have yet to write about Lebron and the “collapse” of the Heat in the NBA Finals. I know you’ve been waiting with baited breath.

I buy into the Bill Parcells theory of winning and losing. There is a moment in most close games when both teams have pummeled each other for two hours and one of them finally gives in, while the other pushes through. One team believes in itself just a little bit more than the other. The Heat’s Lebron, Dwayne, and Chris needed more “heat treating” to withstand the remarkable Dallas comebacks throughout the series.

Most championship teams need to lose before they can win. The heat treating of sports team takes place when a coach can help the players believe that winning is built on learning from defeat. Lebron will win championships. He needs a little more of a supporting cast—and the core belief in his ability to win the big game. It will come—eventually—and yes, we will applaud him for his perseverance when it finally happens.

Question: Do you believe in aliens from outer space?


From the movie "Alien"

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Do You Share or Hide Ideas

Randy Lusk is the extremely bright owner of Lusk Quality Machine Products in Palmdale, California, near Los Angeles. We often exchange ideas on the phone about machine values, but Randy is so canny that he usually buys machines for less than I can find them.

A few days ago he posed a technical question about machining a long piece of stainless steel on the Precision Machined Products Association (PMPA) list serve.

He received 10 well thought out suggestions from other members of the group, but he also receive a kick in the butt from Slavko Grguric, an iconoclast in the PMPA who delights in presenting contrary positions. Slavko chastised Lusk for sponging hard won proprietary information from naïve members who could end up being Lusk’s competitors down the line. Slavko’s view was, to paraphrase; “be a big boy” and experiment yourself because I’m not going to give away my competitive advantage.

At first I was taken aback by Slavko’s abrasive candor, but after some consideration I think the collegial vs. competitive approach is a worthy topic of debate. Should one assiduously amass specialized knowledge through every available means and then lock it up in the hands of a few trusted company members, or trade knowledge freely to enhance the group acumen, thus opening up more pathways to attain more advancement in the future?

As a machinery dealer specializing in an esoteric smidgen of the market I am often asked about the values of 40-year-old screw machines with assorted attachments and attributes. Lending institutions, faced with a crapshoot projecting the future value of a machine tool after a lease expires, want to pick our brains.

I am asked every week for best guesses that are based on a career’s worth of gambles and observations. I do myself and my company a disservice if I fritter away the information in a casual, cavalier way.

On the other hand, information is organic and if you do not nourish it continually with nutrients provided from outside your own walls it becomes stale and useless. If you only suck stuff in and never spit it out you get to be a fat blob of stupidity.

The Quad/Graphics model is an interesting study. Quad/Graphics is one of the largest printers in America. You see their semitrailers all over. Under Henry Quadracci they built the company on innovation. Remarkably they shared their current technology with their competitors, welcoming them into their plants. Henry’s view was that showing today’s best methods forced your company to reach for something better. Your competitor could see what you were doing now, but he would not know how you got there and would not have the cumulative knowledge to get further.

Quad/Graphics was enormously successful under Henry using this model, but that does not make it valid for a job shop in L.A.

I asked Randy Lusk what he believed his own competitive advantage was and he said it was not his technical expertise, but his service and relationships with clients. He draws on the machining expertise of longtime employees and other people at the firm who can draw on their expertise derived elsewhere. He uses the technical talent of vendors and his peers in the PMPA. And knowing Randy, he is quite willing to offer his knowledge to these same folks.

There is no perfect formula in the “hide it or share it” yin and yang of business.

In my role as commentator it is easy to side with openness, but I must admit that when I am asked to give up the hard earned ingredients of my own “secret sauce,” my mouth is sealed like a clam.

Question: Should you share or hide ideas?

McDonald’s Big Mac, famous for its secret sauce.

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Best Job Shop In America?

While many companies lament the latest business burp to rationalize their cautious inertia, Dick Conrow and Rob Marr of C & A Tool Engineering, Inc. in Churubusco, Indiana, just keep on building.

Today’s Machining World did a cover story on the firm five years ago, showing a picture of their chalet-style office on the cover. I reached Rob a couple days ago and he caught me up on business.

C & A Tool is a big contract shop near Fort Wayne. They bought a 300,000 square foot building last year for expansion and are beginning to fill it up with production equipment.

They employ over 500 people in the area around Churubusco and Auburn. One of the hallmarks of their success is a highly diversified customer base. They are heavily into medical, particularly the implant market centered around Warsaw, Indiana, and they have recruited talent coming out of that area. They compliment the medical work with heavy truck, seemingly a long stretch from spinal implants, but the skills that a Cummins needs for diesel fuel systems parts requires a sophistication, going from prototyping to large scale on-time production like in medical manufacturing.

Today’s big push by C & A is in aerospace. The firm has ordered $8 million in large bore equipment from DMG/Mori Seiki USA. Marr says aerospace is a wonderful new opportunity because once you master the parts you can expect to stay in the production loop for a decade. The ramp up is laborious, but the consistency of orders is a cushion once they have mastered the component.

C & A held onto all of its people during the 2008-2009 recession and has established itself as a magnet for manufacturing talent. Marr says there are plenty of good people out there if you are willing to develop them, reward them, and keep them interested.

Much of the product produced at their northeast Indiana plants will end up in emerging markets, driving on the highways, and landing on the runways. Some of its medical products are exported because they have not yet been FDA approved here.

American manufacturing, using the best machine tools of Germany and Japan, is thriving in the cornfields of Indiana at C & A Tool.

Question: Is Sarah Palin smart enough to be President?

C & A Tool Engineering, Inc. in Churubusco, IN

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Lloyd Graff’s New “Afterthought”

Judge Vaughn Walker is back in the news even though he retired from the Federal Bench in February. Judge Walker ruled that California’s Proposition 8 was unconstitutional, which meant that gay marriage was allowed in California because the language of the earlier Proposition 22 had made it legal in the state. An anti-gay rights group had recently argued that Walker should have recused himself from the case because he was in a gay relationship.

I had speculated that his would ultimately bubble up because I knew Vaughn was gay. Vaughn and I were close friends during out freshman and sophomore years at the University of Michigan. We both loved to talk politics and business. I visited him at his home in Watseka, Illinois, and met his parents, and he visited my home in Chicago.

After our first two years in Ann Arbor we went our separate ways. Vaughn was a dedicated student while I became Sports Editor of the Michigan Daily newspaper. Vaughn knew he was headed for a career in law and politics. I knew I loved writing and sports and women, so we moved in different circles.

I went back to Chicago after college while Vaughn headed for the Bay Area and Stanford Law. We connected sporadically by letter and phone and occasionally got together when I went to San Francisco on business.

About a dozen years ago Vaughn was in Chicago and called me to ask if we could have dinner—just the two of us. I happily agreed. We hadn’t seen each other in a decade. We met at a nice restaurant near the Lincoln Park Zoo.

We talked for a little while over drinks and then Vaughn told me that he was gay and had a huge crush on me when we were at the U of M. I almost fell out of my chair. It was no shock that he was gay, but learning about how he had felt about me during those first two years of college absolutely floored me. I felt incredibly naïve about my own naiveté. He told me he knew I was straight and his attraction toward me would never go anywhere.

We finished our dinner and I went home to my wife, Risa. I didn’t know how to process the news from Vaughn Walker, my old friend, but I decided to tell Risa about the conversation. We had a good talk and filed it away until last year when Vaughn got the case over Proposition 8.

I felt that I could not write about it at the time because Vaughn had chosen not to recuse himself. Could Judge Walker separate himself from the sexual politics of California to make the biggest judicial decision of his career? Knowing my brilliant incisive friend Vaughn as a student of law, I thought he could, but Vaughn had lived on the sexual political divide of politics and daily life for so long, how could he be impartial about an issue that cut to the quick of gay life in America?

Vaughn Walker, Federal Judge, ruled Prop 8 was unconstitutional, which I knew he would.

On June 13, his decision to not recuse himself was vindicated by his successor to the bench. Another big day in my friend’s career.

But for me personally, the memory of that dinner in Chicago is what lingers. Gays and straights, at least in my generation, still have a hard time being straight with one another.

Question: Is it possible to be impartial on an issue that hits home for you?

Judge Vaughn Walker's August 2010 ruling that California's Proposition 8 was unconstitutional was upheld by Judge James Ware on June 13, 2011.

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What is Your Body Worth?

I have long been intrigued and perplexed by the ethical question of organ trading.

In America buying and selling an organ or tissue from another person is illegal—but we know it’s done. Cadaver bone is bought and sold, cleansed, sliced and diced and machined for orthopedic implants. Steve Jobs of Apple received a liver transplant at a private hospital in Tennessee. Was it donated? We’ll never know. Blood is bought and sold daily.

The argument against a legitimate organ market is that rich people will take advantage of poor people because the prime organs will be sold to the high bidder. This do-gooder egalitarian thesis is elitist claptrap. I think a person should have the rights to his own body—philosophically and tangibly. If somebody chooses to donate a kidney, I love them for their generosity. But if a girl wants to sell her eggs to an infertile couple to pay for college or just survive grinding poverty, who am I to say this is unethical?

If a destitute man in India or Peru or Denver wants to sell a kidney, blood, stem cells, or bone marrow to an organ bank or God forbid, a used organ and tissue dealer, why should a rich person in Washington decree that he cannot or should not?

In a culture that butchers thousands of cows everyday to supply McDonald’s and sells every fiber and sinew for profit without consulting the animals, we refuse to allow human animals the choice of trading tissue for money. To me this feels like the elitist, do-gooder mentality trumping the legitimate practicality of a functioning market for the buying and selling of the components of life.

Question: Should you be able to sell your body parts?

Indian men who have sold a kidney show their scars. Photo courtesy of NewsPick

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Why the Owner of Groupon Turned Down $6 Billion

The Eric Lefkofsky story absolutely fascinates me. Oh, you’ve never heard of him? You will. When Groupon, the Web coupon business, goes public this summer, this 41-year-old will be worth a cool $4 billion.

The remarkable thing about his story is that his success is built on a string of business failures.

Eric started his business career after his girlfriend dumped him during his freshman year at the University of Michigan. He was looking to vent his energy and started buying used carpet from trade shows and selling it to college students moving into the dorms. The business took off and he expanded it to five campuses. He claims he made a hundred grand one year and thought he was “the richest person on planet Earth.”

He parlayed that coup into buying an apparel company in Madison, Wisconsin, doing $2 million in sales, which he quickly grew into $20 million by expanding wildly. That company collapsed under its massive debt.

Eric tried another foray into licensed branded kids apparel in Columbus, Ohio. Another flop. He went to law school at the U of M through all this and got his law degree in 1994.

What he was learning was to weave stories about his magic touch in business and attract investors in his business ventures. He pivoted out of apparel into the Internet in the 1990s, starting Starbelly, a roll-up company that rode the bubble by buying another ill-fated Chicago roll-up firm specializing in personalized coffee cups and pens for business named Ha-Lo.

Eric had learned that it is always smart to cash out in case things fall apart, which is exactly what happened to Ha-Lo when the Internet bubble burst. Ha-Lo crashed and burned, but Eric had his stash and kept rolling.

He invested in a printing outsourcing firm called InnerWorkings, which he took public. It appears to be a viable, profit making business. He also has a trucking services outsourcing company.

The Groupon opportunity came when Andrew Mason, an ambitious techie in Chicago, asked him for money to fund a site to attract people to political meetings in 2006. Lefkofsky says he soon realized the idea would never make money, but he felt it could be tweaked into a vehicle to help customers save money and for businesses to attract new clients. And he saw in Mason the kind of driven visionary who could pilot the company with him and his partner, Brad Keywell, adding the financial piece.

Lefkofsky put up $1 million to bootstrap Groupon. At 36 years old he had made the connections and learned the lessons of how to go all out when you have a hot idea. The last five years he has played an unbelievably hot hand, attracting respected venture capitalists to back up his bet without trading away too much equity. He gambled by supposedly turning down $2 billion from Yahoo! and $6 billion from Google. He gambled that the public market would pay more, and what the heck, he’s playing with house money. The LinkedIn IPO validated his timing. The underwriters on Wall Street are valuing Groupon at $20 billion, even though the company will show a monstrous loss.

Is Lefkofsky a “fraud,” a “huckster,” a ponzi artist? No. He’s not a crook and he’s not hiding his failures. He’s teaching a course at the University of Chicago’s Booth School of Business and lecturing at Northwestern’s Kellogg School of Management.

He’s a restless guy. He’s messed up a lot and knows what that feels like. He’s an amazing storyteller. He can attract the dreamers and take their money. Guys like Lefkofsky change the world. At 41 years old he will take his Groupon stake and look for the next big fish, because that’s what he does. There is a lot to learn from him.

But, frankly, I wouldn’t touch the stock.

Question: What stocks would you buy right now if you had an extra $10,000 to gamble?

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Industry Scuttlebutt

The disappointing numbers coming out of the economic stat providers on unemployment and purchasing manager sentiment confirm what we’ve been seeing since the gasoline run-up and the Japan earthquake—business in the second quarter is decidedly weaker than the first.

The Precision Machined Products Association noted the slowdown in their recent survey of members. Graff-Pinkert has seen several orders evaporate because clients in auto-related businesses are waiting for production schedules to stabilize. The recent financial results of AutoNation, the huge dealership consortium out of Fort Lauderdale, indicated that their Japanese car sales fell apart last quarter with Lexus off 60%. Domestics are holding their own, but pickup truck sales are off significantly and car buyers are making a rapid shift to 4-cylinder engines.

Anecdotally, I have been surprised how hooked in our machinery customer base is to Japanese carmakers. It used to be when Detroit sneezed the vendors caught cold. Today that comment can be expanded to Tokyo and soon Seoul with Hyundai gobbling market share. The slowdown in China caused by higher bank interest rates is also affecting the machining business.

The weak dollar has pushed up the price of oil and fear of flooding at refineries supposedly held up the wholesale price of gasoline, but the speculators cannot hold the price up forever with dwindling demand even as we nudge into the summer driving season.

Consumer confidence has plummeted as the press plays up weak home selling prices. The banks are not taking advantage of the Fed’s loose money policy to lend, although there is plenty of money for speculators to bounce the commodity markets. Mortgage rates tied to the 10-year bond (currently at 3%) have fallen steeply, but so few people are buying homes it hardly matters.

The economy can flourish without robust home sales, though employment will stagnate without new construction and deteriorating public sector jobs. But for the machining world to prosper today we can be happy with rising automotive production, thriving agriculture, terrific energy and mining markets, and growing medical products demand.

Put it all together and throw in the depreciation tax write-offs that may end this year and I see a lazy summer rolling into a rocking fourth quarter. Don’t get sucked into the chasm of pessimism.

Question: Have you noticed a second quarter slowdown?

A man rides a motorcycle through earthquake-ravaged Ishinomaki City, Japan.

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Putters to Ploughshares

I am always looking for events that shed light on trends that can make us some money, and I recently heard about a significant happening in the suburbs of Minnesota’s Twin Cities.

Silver Springs Golf Course in Monticello, Minnesota, shut down in 2009. Its two 18-hole courses and 18,000 square foot clubhouse that could hold a party for 400 were on the market for $11.9 million.

Over the last couple weeks huge woodchippers ate the trees and Caterpillars murdered the grass. Five-hundred-eighteen acres of fairways greens and sand traps were being prepared for corn and soybean cultivation. Welcome to the world of $7.50 corn and $13.75 soybeans—near record prices. It would not be surprising to see prices go up further with the floods in the Corn Belt and a drought in Russia.

For the machining world, the hot agriculture markets overlap the mining and energy booms, which are fueling a boom in hydraulics for tractors and earthmoving, and even woodchipping machinery.

If you’re looking for what’s hot, head for the Dakotas or rural Pennsylvania. Both are places with arable land and shale gas that can be reached economically with horizontal drilling. Even though natural gas is historically cheap at $4.70 per million BTU, the economics of drilling for gas are still extremely profitable. If gas becomes a viable transportation fuel, like it should, it will be a giant bonanza for the drillers who are tiring of the 90 percent take of confiscatory foreign governments.

If you’re interested in the stock market, I would short Calloway Golf and buy Cat.

Question: Is it possible to be a farmer and a fulltime machinist?

From the Film Caddy Shack

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Swarf: The La Brea Tar Pits of Machines

Today’s Machining World Archives June 2011 Volume 07 Issue 05

By Lloyd Graff

I haven’t gone to an old-fashioned open outcry auction at an automotive factory in quite awhile. For sheer drama and boredom the Hilco Industrial four day 7000 lot sale this week was a throwback to the days when men were men and spark plugs were made on screw machines.

Lloyd Graff with auctioneer Robert Levy

The sale was at GM’s old Willow Run transmission plant—6 million square feet under one roof—that used to be a farm owned by Henry Ford in Ypsilanti, Michigan, near Ann Arbor. Today the biggest non-government, non-university employer in the area is Domino’s Pizza, which is currently spending millions to advertise its fried chicken.

During World War II, Willow Run turned out a B-24 bomber every 45 minutes. GM used to employ six guys full-time to fix the roof, the electric bill was $500,000 a month, and the parking lot could fit a dozen U of M Big Houses. This joint was BIG. It took 10 minutes to travel end to end by electric golf cart. By the end of September when the last Knaack toolbox is gone, this mammoth structure will no longer bleed Lava Soap.

For me it was a kick to hear Robert Levy, the Alex Trebek of the auction stand, warble his “do I hear” doo-wap, selling everything from surface plates to Vidmar cabinets. Robert is 53 now with almost 30 years away from his jewelry making days in London when he indulged in his artistic side more than his deal making acumen. Robert is a virtuoso on the stand, which became apparent when the pretenders stumbled trying to sell grinders with a “privilege.” The “privilege” is a clever ploy to extract more money from the bidders by offering to sell the option to buy multiples of similar items to the high bidder—capitalizing on the fear that the successful bidder might take every piece.

I love the animal instinct that bubbles up in an open outcry sale. The silence of the Web gives way to the belligerence of testosterone bulging egotists who like to posture at sales. The auctioneer plays on the competitive juices, weighing the facial tells of each bidder, with the added excitement of Internet bidders who are waiting anxiously online.

An auction event like Willow Run has been a year in the making. It was actually the last of three sales to finally quiet the machines that once turned out the components of those Chevy Impala transmissions that used to fall apart after 40,000 miles. That was when cars were cars and Chevrolet was apple pie.

My brother Jim and I schlepped to Ypsilanti because it was sort of the La Brea Tar Pits of screw machines. GM had amassed almost 200 multi-spindle automatics, mostly Acmes, from 9/16” capacity to 6” RB6 and everything in the middle. Oh, the heavy metal music they must have made. The floor must have rocked when those spindles were turning.

On the two days Jim and I attended, there were more bidders online (about 300) than there were in the audience, though most of the items were bought by attendees. There were many attendees from what we used to call “Third World countries,” who now have more money to spend than Americans. A large number of Indians were present, but they seemed to be mostly chatting and playing cards amongst themselves. India is developing a serious automotive business these days with Tata Motors buying Jaguar for some unfathomable reason, self-flagellation I suppose.

Auctions like this bring out odd valuations, like a Ridged pipe threader selling for more than a 1-1/4” RA6 Acme screw machine, or an EA Cincinnati Centerless fetching $10,000 while the perennial stalwart 220-8 went for $6,000. A 1000-ton press didn’t get a bid because the rigging costs surpassed the value of the machine. Ultimately, the real “vulture” capitalists, the scrappies, will hack away at it and tote it in pieces to the furnaces.

I found the whole thing a scene. It was Schumpeter’s creative destruction in action. Old Detroit is dismantled. New Detroit rises in Saltillo and San Antonio. Detroit—it’s the home of Little Caesars and Domino’s. Add a little extra sauce.

On May 12th, an interesting auction took place at Smart Parts near Pittsburgh. Smart Parts used to make paintball guns, until the recession and a big miscalculation about a Wal-Mart order for its equipment put them on the road to bankruptcy. The management of Smart Parts had been on top of the world as paintball caught fire. Wal-Mart wanted to get in on the fun and Smart Parts ordered two (CNC) Hydromat Epic machines in 2007 to meet the forecast demand.

They paid well over $2 million for the two machines—then the bottom fell out and sayonara. At the sale the two machines brought $920,000 and $550,000, including buyer’s premium.

Hilco Industrial auctioned off the machinery. They sold seven Star Ecas 32mm machines, as new as 2006, for prices ranging from $255,000 for the newest to $145,000 for a 2003 machine. The one Star SR20II brought $140,000 including buyer’s premium.

The sale highlighted the rising cost and scarcity of 32mm Swiss-type lathes. An E32 Citizen from the ‘90s brought $80,000 and another brought $40,000, very high for older style machines. The Smart Parts sale was the right machinery at the right time. On the same day, multi-spindle screw machines were auctioned off at Whirlpool in Benton Harbor, Michigan. RAN6 and 2 RB6 Acmes fetched under $5000 each, and New Britain Model 62 machines in the 1980s with pickoff attachments sold for $15,000 each. Two Hydromat Inline machines, of which very few were ever made, sold for $120,000 each, and a 10-station Pro20 brought $50,000.

Answers to the seven questions I asked before PMTS
1. Is there a slowdown?
My impression is that business for the builders is generally good and getting better. High gas prices do not seem to be deterring the high level of buying. The Swiss lathe importers—Citizen, Star and Tsugami—are crazy busy. For equipment like Hydromats and multi-spindles, which are heavily focused on automotive, there is a bit of hesitancy.

2. Can the Japanese companies get inventory?
Not enough. Toyota is hurting along with the others. Hyundai is out to claim 10 points of market share. In machinery, the importers tend to order far ahead. Certain sizes are scarce, like 32mm machines. Tsugami claims to be unaffected. If it is a 1200 machine year for Swisses here, deliveries will be strung-out in some models.

3. Are high prices because of the weak dollar hurting sales?
Yes. I talked to the Tajariols, Andrea and Michi, who own ZPS. The $1.45 euro is hurting North American sales. The 32mm 8-spindle Euroturn, the crown prince of the mechanical screw machine line, used to sell for $450,000 in 2003. Today it’s $750,000 with bar loader and attachments. It causes sticker shock.

4. Does anybody go to shows except exhibitors and kids in flat brim hats?
Yes, the locals. PMTS this year was a Midwestern—especially Ohio—crowd. Most people drove from a 250-mile radius. But there are a lot of good buyers left in the Big Ten. The kids in flat brims were there and I regret the pejorative tone to the original question. The hats may look stupid to the old guys but the kids aren’t dumb. I think the tide is turning about “everybody needing to go to college.” College is starting to look like a bad economic buy for a lot of kids and parents now, so we may be getting a more serious group of flat brims into the machining community. Unfortunately, virtually no people of color or women showed up at the show.

5. Is the Swiss market headed more toward the fewer-frill machines like the “A” Citizen?
Yes. The price differential between an “A” model Citizen and an “L” model is $100k. Because of the weak dollar, an “A” costs what an “L” used to cost, and it is a very capable machine.

6. Will the Big Three Swiss companies dominate the Swiss market without a real challenge by an outlier?
Yes. There was not much buzz about the smaller brands. Tornos is now an afterthought here. Index wants medical, ZPS left the Manurhin in France, Hanwha needs to spend more money on marketing. Eurotech has an entry but they are using stealth marketing. Nomura no mas.

7. Are the automotive suppliers starting to buy?
Yes, but hesitantly. Business is good now, but 2010 was the year to repair the finances and 2011 is the year to begin buying. Hydromat, Schutte, Index and the Swisses are starting to see the serious inquiries, so the orders should come. But the earthquake and $4 gas seem to be slowing the actual POs.

A brilliant quarter for Ford. The company is coining money. Mike Jackson CEO of AutoNation, predicts the firm will sell 100,000 cars this year. Domestic car production is running at 13 million units. But autoland is still running scared.

Jackson says the mix he is selling is shifting gradually away from SUVs and minivans to cars.

Toyota, Honda and Nissan say they will not be back to normal production until November, though the situation is worst in Japan.

Suppliers are busy but skittish about buying more equipment because of the earthquake/gasoline combination reducing production. The fear is that by the time the earthquake issues stabilize, $5 gas could be biting.

Personally, I expect gas prices to go the other way. Jackson sees us ramping up to 16 million units. Let’s hope he’s right. Pickup trucks for business are still selling despite the continuing construction depression. Meanwhile, Buick sold 3 million units since 1999 in China.

It strikes me that Americans are still trying to recover from Post Traumatic Stress Disorder from the 2008-2009 deep recession. Banks are still looking backward at the housing shock and are afraid to loan to good risks, even based on 2001 values. A large percentage of buyers today are cash buyers, often from foreign countries, or first-time buyers who don’t have to sell a house to buy one. Banks are also being closely scrutinized by examiners who have the usual government employee bias—avoid mistakes so everybody covers their behind twice, thus gumming up the lending process.

The press has a strong negative bias. I monitor the editorial choices of several newspapers and Yahoo! Finance almost daily, and the choice of material disseminated is stridently negative. I’m in the news business and I know the choices of articles printed vary enormously. By emphasizing construction’s misery or commodity speculation or Wall Street corruption every day, the press confirms lingering post traumatic stress.

The negative effects of the Japan earthquake will continue from a worldwide economic perspective for much of 2011, but the macro effect of disasters flip over to the positive of rebuilding at some point. Yet I am beginning to see automotive suppliers flinch because assembly is momentarily curtailed by parts shortages. Demand continues to be robust, but some people still get stuck in the nine million-car syndrome of 2009 instead of the probable 14-16 million unit domestic demand likely by 2013. Call it the Michigan strain of PTSD.

I am no stranger to the phenomenon of Post Traumatic Stress Disorder—I still suffer déjà vu every time I go to the doctor. But the people who always profit from shifting market conditions are those who can be comfortable with being uncomfortable from bad memories.

Reflections on my time at TMW
By Noah Graff

I started at Today’s Machining World back in 2005 when Lloyd Graff, dad/editor/owner, offered me a job as the magazine’s videographer. I was a film major in college and it seemed like a cool idea—make videos that correlated with the magazine’s editorial content and stream them online. Unfortunately, the TMW Web site at the time had the look and functionality of something out of 1997, and the broadband Web video craze was still about two years away.

I needed to find more to do with my time at work so I started several new features in the magazine; “One on One,” “Shop Doc,” and “Next.” I also started copyediting, even though I had grown up with a mild language learning disability and from first grade though college I had been scared to turn in a composition unless someone else proofread it. But to my pleasant surprise, I was pretty good at ripping apart the work of other people. During the last three or four years I helped overhaul the TMW Web site twice, and started blogging and doing email blasts. In 2009, when the magazine got lean and let our entire sales staff go, I got involved in sales.

My job has become more interesting and fulfilling over the years, and I have become indispensable to the magazine’s survival. But sitting at a desk and staring at a screen all-day has taken its toll, and although the job has plenty of perks, the pay at an unprofitable magazine is just so-so.

Circumstances seem to be working out well lately, as my desire for a big change in my professional life has coincided with my boss’s urge to stop publishing TMW. Soon I’ll be selling used machine tools in the other family business, which until recently I never thought I’d do. I’m getting more and more psyched for the new job every day. I’ll get to make deals, travel, meet lots of people, and just do something different with my time. And, I still get to self-indulgently share my thoughts with thousands of people on todaysmachiningworld.com and work with my dad, one of the most likable and interesting people I know. Since I started at TMW I’ve been very self-conscious, even embarrassed about working for my dad. It took years, but eventually I stopped working for my dad and started working with my dad.

It’s the beginning of a new chapter in my life and in the life of Today’s Machining World. We plan on our articles getting even better, and if you have an iPad, you can still read our stuff in the bathroom. So keep reading my friends.

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