Monthly Archives: August 2013

Will you miss driving?

It’s not a car, it’s a way of life. Courtesy of Forbes.com.

By Lloyd Graff.

Could driver operated gasoline cars be the next Kodak film? With Tesla’s stock valued at $20 billion today, selling 20,000 cars at most, and Nissan valued at $42 billion, selling over 1 million vehicles, the market is telling us that Tesla is headed in the right direction and that traditional models could be toast in 10 to 15 years.

Google is investing heavily in the driverless auto, so it is not a stretch to imagine that the epicenter of the car business will move to Silicon Valley in a few years.

The big car companies have a Hummer of a dilemma. They need to show profits for the next decade with human driven, gas-propelled vehicles that 30- to 65-year-old buyers will spend money on, like SUVs and pickups. Young people moving to big cities are opting for public transportation and a rental car for a weekend jaunt. Driving is not necessarily their gig, and fumes are passé. Will today’s F-150 be tomorrow’s Kodak Instamatic?

Elon Musk thinks he knows the answer.

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Ina Pinkney is a tough Brooklyn born entrepreneur who runs Ina’s, one of Chicago’s best breakfast restaurants. She just announced that she is hanging up her spatula, and closing the restaurant at the end of the year. She chose not to sell the place or try to franchise it. It was her baby, and she was not going to let somebody else ruin what she had built. I love what she said to Chicago restaurant critic, Phil Vettel, in an interview announcing the shutdown.

“You know, a cake is raw for a long time, perfectly baked for a short time, and overcooked forever. I think I’m going out at the top of my game.”

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A rogue tomato plant growing in-between the planters

For many years, my brother Jim planted cherry tomatoes every summer in two 4 x 4 feet square steel parts containers on Graff-Pinkert’s property. This year, I decided to let the soil lay fallow. But in the 3-inch space between the two containers a strange thing happened, one tomato plant decided to grow out of the ground. Not a single tomato plant has appeared in the containers full of old dirt, and the tiny crack of space between the containers barely gets any sunlight, yet the single robust tomato plant is now four feet high and full of yellow blossoms rather late in the usual growing season. I find the confined plant an inspiration every day as I drive up to our factory. Nature is resilient.

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Finally, a comment about how I am thinking today, which is exactly five years after the day I probably should have died from a 100% blocked coronary artery. Lloyd Graff, a Jewish guy from the south side of Chicago, went to St. Francis Hospital, a Catholic institution, to see Chris Costas, my Greek Orthodox doctor, who wheeled me to the Emergency Room where African American and Filipino nurses worked on me until Dr.. Mohammed Akhbar, a Muslim doctor, saved my life with a stent and balloon pump that day. It was one day after the 45th anniversary of Martin Luther King’s famous Washington speech. It’s my AMERICAN dream.

Question: Will you miss driving?

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Is Your Quality Their Quality

By Lloyd Graff.

Seth Godin, my favorite blogger, recently wrote a provocative piece about the failure of Kodak and what it means to us as we try to figure out what works in our own businesses.

Kodak knew it was in trouble in its core film lines. Its response was to pour money into research on film to produce the absolute highest quality film. The strategy failed.

The consumers did not define quality the way the Kodak engineers defined it. Consumers wanted photographs they could instantly send to each other at a modest cost. The perfection of the image was not the crucial element to most people.

The definition of the word “quality” in business is relevant to the machining world. In machining today, quality means “precision,” infinitesimal tolerances and beautiful finishes. Could this change if 3D printing continues to get faster and more production worthy? Maybe the world of steel bars and near net castings will slide away like the domination of film in imaging.

We tend to think of machining metal like it is a constant. But look at what happened in the Haas versus Hardinge competition in the 1990s. Haas produced very nice inexpensive machine tools. The Hardinge folks scoffed at the upstart from California. Hardinge kept on trying to build super precision machines, but in no time, their target audience was buying Haas, and the Haas machines proved plenty good enough for most users. Haas built “good and reasonable,” and the machine tool audience redefined quality to include Haas.

In the screw machine world, a Davenport machine that might sell for $5,000-$10,000 on the used market may produce Swiss CNC quality work with the right setup and tooling.

In consumer products today, a generic aspirin may actually be of better “quality” than a Bayer, for a fraction of the price.

It is quite possible that the rules of television are being rewritten before our eyes. Bigger, more expensive cable packages may fade away because “bigger,” as far as the number of channels offered, is being replaced by the desire for an à la carte choice of stations for less money. Most people watch just a few cable networks and dislike paying for 300 stations they don’t watch.

This is a new definition of TV choice, with the viewer ultimately telling the cable company what they think “quality” programming is.

What do your current customers or future customers really want? Are you focusing solely on the quality of your “film”? Is your quality, their quality?

Question 1: Have changing expectations from your customers redefined what the word “quality” means in your business?

Question 2: If you could have only three TV channels, which ones would you choose?

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Inviting the Wolf to Dinner

“Wolf” by Tyler Garrison

By Lloyd Graff.

This is a story I love to recount to friends about how to look at a business. Harry Quadracci, founder of the immensely successful printing company, Quad/Graphics, allowed competitors to come in every year to see what it was doing, giving away best practices and the current secret sauce. He believed that by showing competitors the newest best stuff it was doing, the company would be forced to take the next steps to get better. In 40 years, the company has grown to 25,000 employees with printing facilities on three different continents.

I get both amused and angry when accountants and analysts make judgments about the health of a business by parsing the “numbers.” As if the numbers truly describe a company.

I’d like to point out some of the critical things the numbers do not necessarily illuminate.

1) The strength of the brand. And related to that, the company’s reputation. Do people refer clients to the company? Does it have name recognition in the industry? Is the company more than the work coming through the door? Is there an ongoing stream of work, or is every job a new bid?

2) The quality of the people. I’m talking knowledge, reliability and integrity. Do the employees not only know how to do their jobs, but also have the ability to cover for coworkers? Do they come in early and stay late to get the job done? Are they loyal, or constantly looking for a better offer?

3) Is the company creative? Is it trying new things, or is it satisfied with doing things the way they’ve always been done? Is the company willing to fail at something new? Does it have the courage to reach?

4) Is the company the standard that others are compared to? Is it one of those that people are referring to when they say, “Ok, they’re good, but they are not (fill in the blank).

5) Does the company believe in itself? Is it a company that continually invests in the future, or does it suck out the cash for other uses?

Question: Would you invite your competitors to an open house?

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Have we changed?

By Jerry Levine.

It’s been a month since George Zimmerman was acquitted of murdering Trayvon Martin. Some media commentators suggest that when it comes to race relations, little has changed in the past 50 years. “No white jury is going to convict a white person of murdering a black person in the South.” I disagree. To quote Charles Barkley, “When it comes to race, I don’t think the media has a pure heart.” Driving for high ratings, which enhances advertising dollars, the cable news stations ran the trial non-stop, knowing the racial animus they created would keep people glued to their sets. I always preferred Rodney King’s, “Why can’t we all just get along?”

To reflect on how things have changed since the “bad old days,” I reread Bruce Watson’s Freedom Summer, an account of the summer of 1964, when several hundred American college students descended on segregated, reactionary Mississippi to register black voters and educate black children.

On their first night there, three volunteers — Goodman, Chaney and Schwerner — disappeared and were later found murdered in Philadelphia, Mississippi. A few years later, the perpetrators, who turned out to be the local police and Klansmen, were acquitted. It was not until 2005 (41 years later) that the ringleader was convicted, but the others involved still remain free.

Watson quotes a volunteer about what sent her to the South. She remarked on a scene from the movie Judgment at Nuremberg, when a judge asked a German housekeeper what she had done under Hitler. The volunteer asked herself how she would feel 30 years later if someone had asked her what she had done during the civil rights movement and could only say, “nothing.”

I was reminded of my own short-lived “Freedom Ride,” a lunch counter sit-in with black and white friends in Montgomery, Alabama, in the spring of 1962. We naively believed that Gandhian pacifism could defeat knee-jerk hatred and brutality. Thank God no one paid much attention to us or beat on us. We stayed for three days at my black friend’s house and then went off to spring break in Florida. My friend however, stayed home in Montgomery with his wife and 3-year-old daughter. I was terribly fearful for their safety. They were the real heroes.

The Federal Civil Rights Act passed in 1964 during the Freedom Summer, and the Voting Rights Act followed. Mississippi began to change, as did the rest of the country. By the end of 1965, 60% of Mississippi African Americans were registered to vote, compared to only 7% in 1960. But getting elected was another matter. Jim Crow gave up power slowly. Yet within a few years, Medgar Evers’ brother, Charles, was elected mayor of Fayette with the backing of a former Klan leader. By the late ’70s a black man from the Delta was elected to the U.S. Congress and a black woman was elected Miss Mississippi.

There is still a debate as to whether the Freedom Summer was a catalyst for change or an unnecessary provocation inducing a greater white backlash. Watson is uncertain, but does conclude “the summer changed the minds of blacks who came to look upon themselves as somebody.” Watson also believes that the volunteers were not the heroes of the story. That honor goes to the locals. The volunteers left a month or so later, returning to their northern middle class life. The locals were finally empowered at the ballot box, but they still faced poverty and discrimination.

With each passing generation, this country continues to make strides in racial tolerance. We are not yet perfect. But will mankind ever be perfect?

Question: Have your feelings on race changed?

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Hanging by a Thread

Family and friends in the waiting room at St. Francis hospital in 2008.

By Lloyd Graff.

Labor Day Weekend is coming up. As a kid it was a day for double headers on TV, barbecue and watermelon. It was the demarcation line between vacation and school.

When I joined the working world, it was the signal that the machining world was going to get serious about finishing the year strong. It meant IMTS every four years and selling machines.

But for the last five years, it has been the long weekend when my life teetered on the blade of life and death.

Labor Day 2008, is shrouded in fog for me. The doctors filled my veins with narcotics designed to eliminate memory after they diagnosed me with congestive heart failure caused by a lateral descending artery that was 99% blocked. The lateral descending artery is ominously nicknamed the “Widow Maker.” Three other arteries also had precious little flow as well.

Incredibly, I walked into St. Francis Hospital in Evanston, 50 miles from my house, under my own steam that Friday. I had thought I might have pneumonia because I was having trouble breathing, so I called my friend Dr. Chris Costas. Thankfully, he told me to come in that Friday morning before the holiday weekend. I waited while he treated a young boy for a minor issue. When Chris walked over to greet me in the waiting area he looked at me strangely. He immediately put a stethoscope on my chest and said, “Lloyd, I’m wheeling you to the emergency room myself. You’re in congestive heart failure.”

Within seconds the nurses were pulling my clothes off. The last thing I remember hearing is “can we cut his boxers?” My wife Risa yelled “of course!” And then I was out of it.

I can only imagine how horrible the next few hours and days were for Risa. Dr. Costas told her after an emergency angiogram that my odds were awful if they had to do an immediate bypass surgery, because I was in such bad shape.

My best chance of survival was to insert a balloon pump and stent in the lateral descending artery, a very dicey procedure in the best of cases. Fortunately, Dr. Mohammed Akbar was on call at the hospital that day and he volunteered to attempt the procedure. Even if it went perfectly, everything had to go well between Friday and the day after Labor Day for the surgeons to feel confident about doing a quadruple bypass and valve surgery.

Dr. Akbar maneuvered the stent in beautifully.

I had my shot at life.

Risa and my kids, Sarah, Ari and Noah, set up camp in the hospital. Friends brought in clothes and toothbrushes for the family. Word spread and more people descended on St. Francis Hospital to support them. I had to live through Labor Day and get strong enough for the bypass. Risa had to be strong – for me and everybody else.

The nights were excruciatingly long for them. I don’t know how I would have survived the waiting if it had been Risa teetering on the brink of death.

They hung on every word from the nurses and doctors.

I slept most of the time, I guess. My sister Susan got to the hospital from Washington DC by late Friday afternoon. My daughter Sarah flew in from San Francisco and reached the hospital by early evening. My brother came as well. I know there was some Jewish praying going on in that Catholic hospital that weekend.

Because it was Labor Day Weekend, there was virtually no elective surgery going on, so the Graff family and friends had the waiting room almost to themselves.

Risa says she got through those hard times because of the support. Sarah’s in-laws, the Roys, dropped everything and flew in from Florida on Saturday to take care of her children so she and her husband Scott could be at the hospital. Every close friend converged on St. Francis Hospital to comfort Risa and my children. It was a loving time, a hugging time, a sleeping on the couch time. That Labor Day was a labor of love for Risa.

And mostly, I slept. And got a little bit stronger.

There is a Jewish prayer recited on the holidays of Rosh Hoshana and Yom Kippur, which are celebrated right around Labor Day – the Unetanneh Tokef. The prayer asks, “Who will live, who will die?” in the coming year and hopefully states that prayer and good deeds can avert the worst events.

My daughter Sarah, a Rabbi in Palo Alto, wants me to speak on that topic this year. I think Risa probably is the one to talk about it.

I endured Labor Day 2008, lifted by the support of my family, friends, nurses and doctors. The Tuesday after Labor Day, the doctors felt I was ready for the bypass surgery.

Before I was to be wheeled to the operating room, a throng of people came to my bed and sang my favorite songs for 45 minutes. I have a fuzzy recollection of the finale, a rousing, Harry Careyesque rendition of “Take Me Out to the Ballgame.” Inspiring. Death defying. It was what I had lived for.

Now, Five years and counting. One day at a time.

Question: Has your life or a loved one’s life ever hung by a thread?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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Charge by the Hour?

Time Card Machine at Graff-Pinkert.

By Lloyd Graff.

A big topic of conversation these days is “What do you charge per hour?” The hourly rate, either as a wage or a basis to charge clients, has been baked into the economy for decades, but is it the wrong way to measure the value of time?

Adam Davidson, an economics writer for NPR, just published an excellent piece in last Sunday’s New York Times Magazine, entitled “What is an Hour of Your Time Worth?” The subtitle was “The hazards of measuring the economic value of an idea.” Davidson discusses Jason Blumer, an accountant who took over his father’s small accountancy practice in South Carolina and rebelled against the standard practice of billing by the hour. “He realized that the billable hour was undercutting his value — it was his profession’s commodity, suggesting to clients that he and his colleagues were interchangeable containers of finite, measurable units that could be traded for money,” writes Davidson. “Billing by the hour incentivized long boring projects rather than those that required valuable insight that couldn’t (and shouldn’t) be measured in time,” Davidson adds.

The manufacturing world has long been the bastion of the pay by the hour/bill by the hour approach, but it does not have to be that way. In Graff-Pinkert’s machine tool business, we are finding that some of our clients who have the available cash and willingness to risk it these days have leaped out of the hourly rate mentality. They have developed unique products or approaches for the medical or gun world (I know the irony of that) and do not compete for time and material rates.

If you work in a commoditized environment, somebody in China or Vietnam, or Alabama will eventually undercut you.

The stupidity of rote hourly billing was brought home to me this year after we switched our accounting business to a well known, highly respected national accounting firm. The bill tilted up as they tried to understand our business of buying and selling used machinery. I hated the charges, but I could accept that there was a learning curve. But after tax returns had been filed they decided that a mistake had been made on whether to account for a sale in 2012 or 2013. They demanded that we refile our returns. Big new bills ensued–more billable hours, because it had to be correct. The firm would not allow an incorrect return, and of course, we paid.

It infuriated me. Did they add value, or just billable hours?

This was the billable hour world gone mad. The employee who does a lousy job still gets paid.

Before I wrote this piece, I talked about the billable hour syndrome with my lawyer Russ Ethridge, who I gladly pay by the hour because he is client friendly and extremely efficient. He feels penalized by his integrity and efficiency. Billable hours cut both ways. If you have a lawyer like Russ it works for you. If you have an accountant who charges you for the firm’s rigidity you lose.

In the machining or machinery dealer world I live in, you need to find ways to provide value for your clients and yourself. For both parties, I think the hourly rate is becoming obsolete.

Question: Do you prefer to pay for services by the hour or pay a flat fee?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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