Monthly Archives: February 2012

Memories On Your Refrigerator Door

Memories are elusive wisps of mental energy. I jumpstart mine with photos on my refrigerator and a ceiling length picture board, also in the kitchen.

The photo that I have been drawn to lately is one of my father Leonard and my son Ari.

Ari was 10 years old at the time and my Dad was 71. It was taken at Gulfstream Race Track, north of Miami Beach. Dad had the Daily Racing Form in his hand and he was trying to explain horse race betting to Ari.

I’ve been wondering why this picture has such a hold on me. What is it about that photo that connects me so powerfully that I stare at it every day?

I think it is my Dad’s intensity, his focus that captured Ari’s interest. It’s why I took the photo. Most pictures fail the refrigerator magnet test because they are poorly staged, but this one catches the realness of a beautiful moment tying the Graff generations together.

I have a few family photos in my iPhone but I never look at them. There is still something about a paper print that pulls me in like no digital image can.

Lately, the survivors of my high school class have started an online group and the reminiscences have been flying across the Web. People have been searching our yearbooks and yellowed photos in scrapbooks for glimpses into the past to connect with the emails of today. Memories are so gauzy without those paper pictures.

I’m so glad I can remember my Dad telling Ari, “let’s bet two bucks on Fat Cat in the 6th race to win,” and the three of us smiling at each other while we gripped our pink Daily Racing Forms.

Question: What picture do you look at every day on your refrigerator? Why?

Ari Graff (left) and Leonard Graff (right)

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Industry Scuttlebutt

Costa Rica is the hot spot these days for the medical machining business. With the free trade agreement with Central America, medical companies are ignoring Puerto Rico, which has become increasingly uncomfortable with crime, and heading to the beautiful little country with two ocean coasts. San Jose is an easy plane ride from Miami or Dallas and the political climate is benign. On medical or dental products the airfreight is tiny versus the value added.

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I’m such a sucker for underdog sports stories; I think I have a Rudy complex. But Jeremy Lin – you gotta love it.

Because I spend a lot of time in Palo Alto, California, the Lin story has special meaning. The kid went to Palo Alto High School, across from the Peet’s Coffee I often frequent when I’m visiting my daughter. I used to read about him in the local paper. I’ve become a Stanford fan over the years and the real Linsanity is that Stanford did not offer Lin a scholarship. They had a nice player in Landry Fields, who in a quirk of fate is starting for the New York Knicks alongside Lin. If Lin had gone to Stanford (he could have walked to school) there is a good chance the Cardinal would have been a Final Four team. They certainly would have been better than Butler on paper. But Stanford thought Lin wasn’t good enough for the Pac 10, so he took his only other offer – Harvard – and made All-Ivy League twice.

I think big time sports are a lot like online dating. People look for a profile, a set of qualifications, a scouting report like the old scouts in Moneyball. So a Steve Nash gets overlooked coming out of high school in Vancouver and goes to Santa Clara, because who wants a Canadian soccer player to play point guard? For the pro scouts, a Chinese kid who went to Harvard was so contrary to the profile of a typical NBA guard that they just couldn’t fathom the fact that Lin had game.

Will they ever learn?

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The Michigan Republican Primary has put the spotlight on the GM–Chrysler bailout. The Republican candidates have been amazingly tone deaf in denouncing the emergency measure to conform to Tea Party orthodoxy. C’mon guys. As unpalatable as it was to inject taxpayer money, the sad fact is that the infrastructure of suppliers that so many of us are part of could have crumbled if the bailout had not occurred. Banks were so shaky and paranoid at the time that few would have stepped up, and everybody including Ford would have been in jeopardy.

The rapid rebound of the Big Three should be applauded. The success of the Chevy Cruze and the Jeep Grand Cherokee is a wonderful thing, and the leadership of these companies has done a terrific job. And from what I hear from suppliers the relationship with the Big Three is more businesslike than it has been since the awful Ignacio Lopez era began.

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The new Charles Murray book The Great Divide is one of the most important works on American life in years. Jerry Levine will be reviewing the book for TMW shortly. It discusses how America has changed over the last 50 years with the rich getting richer and the poor and middle class losing ground. This is not an Occupy rant, but a clear-eyed look at how changing social more`s and educational choices have produced a chasm in the country. It should be the topic of debates in the coming election. Unfortunately, so far the Republicans are looking backward at auto bailouts, and Obama is sending outrageous budgets to Congress that he knows are dead on arrival. Let us hope we see and hear a realistic argument about issues in the real Presidential campaign.

Question: Three years after the auto bailout, do you think it was the right decision?

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The Road Not Taken

Morgan Freeman and Jack Nicholson face life and death together in "The Bucket List"

It was one of those “Oh no” moments. I received a call from a former employee saying a mutual friend, Al, who I had had a falling out with, had suffered a “major stroke.”

I had not spoken to Al for almost five years, but when I heard the news of the stroke I felt awful. “What if he dies or cannot speak?” I thought to myself. The annoyance about our past business disagreement evaporated in the anguish of the moment of realization that an old friend was suffering. I texted Al’s cell phone to tell him I cared about him and wished him well.

The next day Al called me to renew our connection. We talked for half an hour about health and business and lapsed friendship. The stroke was “minor” and Al was back at work doing what he loves most – working with his machinery. He does face a heart procedure next week because a congenital abnormality was diagnosed after exhaustive tests in the hospital.

I also learned that he had called to check on me when I was in the hospital three and a half years ago. I did not know that until yesterday.

The phone call from Al was an emotional one for both of us old warriors of the machining trade. I kept thinking as we were conversing, “What if he had died?” I think I would have gone to his funeral with the ashes of regret in my throat. But now I get another chance to be connected with a friend.

Lesson learned – again – I guess.

Question: Do you regret a road not taken?

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Pitney Bowes–Another Warner & Swasey?

Pitney Bowes, the postal management company, is a hated name at my office, and probably yours too, if like us you are stuck with a machine and a contract you no longer need. And trust me, you are stuck if you have signed a contract with this fat old company that has a mighty big problem. Their business, their wonderful cash cow of a business, is rapidly going down the drain.

They share the Eastman Kodak problem; the U.S. Postal Service problem. What do you do if the market for your core business is shrinking? We’ve seen this story in machine tools. Remember National Acme, Kearney and Trecker, Warner & Swasey and the not-to-be-forgotten, Rockford Shaper?

What we learned in the last few weeks while complaining about our contract with Pitney Bowes, is that we are bound for 3.5 years by a noose of a contract we signed without much thought in 2010. Our lawyer, Russell Ethridge, read the fine print of the legal document and lamented our plight. He said he’s never seen a more ironclad contract.

So this is what companies like Pitney Bowes do. They hire astute lawyers to draft airtight contracts and then they stonewall anybody who wants to wiggle out, because – well, how many stamps does one need today? We found out the same thing when we wanted to alter our Aramark contract for uniforms. They laughed at us. Made us feel like the suckers we were.

I ask myself, and you. Is it great policy for a Pitney Bowes to irritate and alienate its clientele? The clear signal Pitney Bowes is sending is that they no longer care about goodwill.

From an investment standpoint they have chosen to try to prop up their stock by paying a huge dividend – almost 8%. Some of the telephone landline firms have taken the same approach. They are saying that their best idea is to reward the people who are gutsy or dumb enough to hold the stock of a fading company. People who buy Pitney Bowes stock are hoping to get out before they run out of money or start to cut the dividend.

Some big firms can bring in leadership to deal with a change in core business. Corning Inc. is one that comes to mind. Eastman Kodak spun off its chemical business that has done well to focus on the photography and film business that has been a disaster. It appears that Pitney Bowes is going to ride stamps into the grave. And they won’t be nice about it.

Question: Is Pitney Bowes the next Warner & Swasey? What would you do if you ran Pitney Bowes?

Videos clips from the Seinfeld episode in which Kramer wants to cancel his mail

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How I Survived the Recession

Originally posted in April 2011.

Four companies that are thriving after the recession, and how they are doing it.

Miles Free is the Director of Technology and Industry Research for the Precision Machined Products Association (PMPA). He has 36 years of hands-on experience in the areas of manufacturing, quality and steelmaking.

How do you interpret the current situation for manufacturing?
MF:
Our industry is probably in the best position it’s been in 31 consecutive months. Our PMPA Business Trends Report is an index that reports on sales, and our last one with 80 shops reporting was at 111 that are up 20 points from December’s 91 and it’s the highest level we’ve had since 2008. (It had been as low as 64 in May 2009). So we’re very confident that we have a recovery, and that our kind of components are going to be in high demand in the coming couple of months.

What’s happening in the industry that gives you optimism?
MF:
One of the things I’ve seen is a number of members trying to find out if other members have open machine time. That tells me they have orders they can’t complete, so they’re trying to find who has capacity in order to provide the products that are critical on time.

What is happening to raw material supply?
MF
: The pipeline is kind of dry for raw materials, so lead times are really extending. For some items you can be out four to six months.

Read full article here

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Making Parts in Hoosier Land

 

OrthoVation Center at Micropulse

In mid-December I trekked 3 hours from Chicago to Northeast Indiana for a tour of manufacturing companies put on by the Northeast Indiana Regional Partnership and Indiana Michigan Power. On paper the trip didn’t exactly have the same allure as my last two traveling assignments for Today’s Machining World (to Japan and France), but the people and the companies I encountered on the trip may have been the most genuine, shrewd and successful out of the three destinations.

Turns out, when it comes to manufacturing Indiana is where it’s at. Over 40 percent of Indiana’s workforce is involved in manufacturing. A variety of industries have thrived there because of the state’s low taxes, its educational system which encourages young people to train in technical skills, and a culture which keeps manufacturing in vogue.

Many Indiana job shops such as C & A Tool in Churubusco invite students and teachers of a wide range of ages to come to their facilities to learn about factory equipment. C & A for instance shows teachers how to use comparators so they can demonstrate to their students practical applications for geometry. The Northeast Indiana region is also currently starting up what are known as New Tech Schools, which focus on teaching students creative problem solving and working in groups on practical technical projects.

I encountered another interesting spin on education when we visited Fort Wayne Metals, a thriving 500 employee company specializing in the production of wire for medical devices. The company’s CEO Scott Glaze offers to pay for a baccalaureate degree for every company employee. Employees are allowed to study any subject they choose, from history to the culinary arts. Glaze himself got a history degree many years after working in the family business and then felt it was important to have a well rounded educated workforce.

Micropulse was another impressive company we visited. President and CEO of the company, Brian Emerick, recounted the story of his company’s evolution from a small job shop in 1988 that produced for a variety of sectors to become a 200 employee operation which today produces parts almost exclusively for the medical industry. The company prefers to focus on producing medical implants because medical instruments are more of a commodity product, making them much less lucrative. Micropulse has also in recent years created incubator companies housed in its own facility, in an area it calls the “OrthoVation Center.” Micropulse provides resources for the startups such as administration, accounting, information technology, product design, testing, prototyping, distribution and inventory management. After the new companies have developed a specialized niche, Micropulse spins them off and then can become their exclusive supplier.

Custom License Plate Made at C & A Tool

Unlike Micropulse, C & A Tool prefers to serve a diverse group of sectors in addition to medical, such as aerospace, fuel systems and automotive. Our guide from the company, Rob Marr, told us that C & A never wants to turn down jobs because producing parts for a variety of sectors strengthens the skills of the company. The company believes that knowledge gleaned from running one type of job enriches its abilities to run other types. During the downturn, the company even cross trained its less busy employees in programming by teaching them to make custom license plates.

We also visited Steel Dynamics, the fifth largest steel company in the U.S. Kieth Busse, the CEO and founder of the company who just retired at the end of 2011, is one creative, shrewd Hoosier. According to Busse, the labor cost at Steel Dynamics is about .25 man hours (15 minutes) per ton of steel, while it takes around two man hours per ton at U.S. Steel. Busse came from working at Nucor and implemented a non-union, incentive based model for paying employees similar to Nucor’s. However, Busse told us that the incentive system of Steel Dynamics differs from that of Nucor because Nucor rewards employees mainly for how many tons of steel they produce, while Steel Dynamics uses a formula that figures in the actual cost effectiveness of the employees’ work. The employees are rewarded for increasing the company’s profits by reducing waste, rather than being paid just for steel they churn out. They also receive stock options and bonuses based on the company’s profit, which further instills a sense of ownership, unity and loyalty. Steel Dynamics is the only steel company that paints its own steel, an idea which one of its employees came up with.

Question: Do you like where you live?

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Lucas Oil Won the Super Bowl!

The New York Giants won the Super Bowl on Sunday and certainly enhanced the NFL brand and the Eli Manning brand. But the real marketing coup goes to Forrest Lucas, who owns the privately held Lucas Oil Products Inc., the name on the stadium where the game was held. The stadium also hosted the 2010 NCAA Basketball Tournament Finals.

In an advertising contest where huge companies spend tens of millions of dollars, a shrewd guy with a relatively small company – around $150 million in sales – got enormous name recognition by piggybacking on America’s high holiday of football – the Super Bowl. In 2006, Lucas bought the naming rights to Indianapolis’s covered stadium, paying $120 million for 20 years. At that point the city did not have the 2012 game contract, but he knew it was making a bid so he ponied up an additional $1 million to help the city make the pitch to the NFL. It was a smart bet because Indianapolis has a superb reputation as a sporting event host, and he knew the stadium would host the NCAA Final Four in 2010.

Lucas started a business in the 1960s, renting out his 14 moving vans. He learned how to be a truck mechanic in order to keep his trucks running and tinkered with additives to extend their usable lives. He began the oil business in 1989 with his wife Charlotte in Corona, California.

The firm has only two plants, one in Corona and the other in Indianapolis. He employs 400 people. I know machining job shops bigger than Lucas Oil. Forrest Lucas showed us Sunday how smarts can give you leverage. Hyundai, Anheuser-Busch, GM, Coke and Pepsi spent mega-millions on advertising, but little Lucas Oil that makes transmission fluids got amazing name recognition for pennies.

Question: There were more than 10,000 tweets per second during Sunday’s Super Bowl. Has your business benefited at all from Twitter?

 

 


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