Monthly Archives: November 2013

A Christmas Question

By Lloyd Graff

Evil Santa in “A Christmas Story”

I know I am an outsider. As a Jew, I do not experience Christmas as a religious holiday, but I will ask the following question anyway. Why is Christmas seemingly all about shopping and presents to so many people?

I can understand giving to charity at the end of the year as an appropriate expression of giving thanks for the birth of Jesus, but do we need to buy an Xbox to make Christmas a happy day?

As a Christmas observer, but not a celebrant, it seems like the most miserable time of year. Besides putting up with awful weather, you have to worry about picking out the right sweater for Joey and the perfect color makeup for JoAnne. And no matter what gift you give, it will probably be returned, or ought to be.

There is something wrong with that picture. And what about all the poor people who cannot afford presents? They must feel worthless, as the ads admonish folks to buy, buy, buy.

I have worked at homeless shelters on Christmas and found it to be worthwhile for the workers. The recipients always seemed so sad while they received the largesse of strangers, though the hot meal was clearly appreciated.

My issue is the American obsession with material gifts. The holiday has become “the ultimate Amazon event” or “Best Buy’s best chance at survival.” Or the big question, “will Target hit its sales target this year?”

As an outsider to Christmas, I feel my Christian friends’ angst, not their joy. I think it comes from the tension of not fulfilling expectations that can never fully be met, because material gifts almost always fail to excite. I also find the canned, saccharin Christmas card so dismal.

To my friends who do celebrate Christmas, I hope your feelings of joy aren’t overshadowed by the superficial and stressful pressures which unfortunately have also become part of the holiday.

Question: Do you look forward to Christmas?

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Need More Stuff?

By Lloyd Graff

Double Stuffed Oreo

I have made a career out of accurately figuring the value of things — particularly machine tools — and placing bets on my guesses.

For a long time the prevailing wind was behind appreciating prices. If I bet on inflation, scarcity would usually bail me out. But now I believe that paradigm is played out.

I think Ben Bernanke, student of the Great Depression, sensed the end of scarcity when he became head of the Federal Reserve, but he could not announce it at his confirmation hearing for fear of being hanged for economic heresy. The Fed Blubberers (excuse me, Governors) still babble about the threat of inflation, but have so far shown the fortitude to keep interest rates low, enabling banking sharks to cover their losses and frauds.

Let’s look at a few interesting data points. Gold prices are plummeting. Copper is soft. Corn is half of what it sold for a few years ago.

Wages are stagnant. Unemployment stubborn. Home prices at levels of 2005. Most prices of tangible things are flat or falling.

The “stuff economy” is so yesterday. We are in the idea, experience, and time economy.

What does this mean in the world of making things?

I believe prices will continue to trend down, especially if you factor in quality improvement. To win in this milieu you will have to produce more with less, because you will receive less money for what you make. Your employees must be smarter and your bosses shrewder. This means paying for knowledge, training, creativity, cleverness, and connectedness. A few days ago, I wrote about utilizing Section 179 to buy equipment with the tax code’s assistance. Longer term, the answer to the need for productivity growth is both machinery and ideas. You can buy a new Index multi-spindle for over $1 million bucks, but if you do not spend the money to retrain your people to run the machine you won’t recoup the cost.

As I look at my used machinery business going into the new year, I ask myself, do I want to go to the bank to buy more stuff, or should I spend my cash on stuff like advertising, exhibiting at shows, visiting clients, joining associations and making new connections? Do I want to focus primarily on enhancing my brand in every way?

I have come to understand that my customers do not buy iron. They pay for our expertise, reliability and making their business lives simpler and safer.

Our challenge in this period of non-inflation and non-scarcity is to provide what is always scarce — belief in us, our products and our reputation.

Question: Do you worry about inflation?

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An Interview: Winfried Benz of Licon mt

Winfried Benz, Managing Director of Licon mt, has observed that the implementation time required in the industry is constantly decreasing. The company is responding to this with optimized processes and an expanded range of products.

Q: Mr Benz, Licon mt has announced that it intends to focus on new markets and target groups. What are the motivations for this shift?

A: This goes hand-in-hand with our product development. In terms of the size of workpieces to be machined, we have moved from large to smaller parts in the area of twin-spindle machining centers. With our latest development, the twin spindle machining center LiFLEX II 444, the machine is optimum for parts with dimensions less than 450 mm per side. We discovered that there was also interest in the non-automotive sectors for 5-axis machining on five sides. The automotive segment, in which we currently generate 95% of our business, continues to be the main pillar of our portfolio.

How did this develop?

In the 1990s, we predominantly built special machines. We initially focused on adapting the single-purpose dial machines, which have evolved into the fully-flexible 5-axis rotary transfer machines of today. These were the mainstay of our business for quite some time, until machining centers were added. In comparison to our competitors, we were relatively late in joining this market, but we did so by introducing very large applications immediately: B-axis with 1,000 mm rotation diameters, A-axis of  1,700 mm swing diameters, as well as 900 kg load per palette. Our twin-spindle machining centers are available with X travels of up to 1,000 mm. The heavy duty HSK 100 machines used for great cutting forces came first, the medium platform with 700 mm spindle distance came next, and now we have the 450 mm machine.

It was clearly a decisive step to introduce lower volume machines into the portfolio. Do you agree?

Yes, that is correct. Rotary transfer machines are optimal for highly precise, complex workpieces with six-figure annual production volumes. Machining centers however complemented our product portfolio and also allow us to be a supplier to our existing customers if they required lower production volumes.

Is the overall trend headed towards machining centers?

That is not necessarily the case for us. In general, machines that  incorporate the ability to adapt to workpiece modifications are of course required, which is why our flexible rotary transfer machines continue to be in demand, but then we also need machines for lower production volumes.

Of your customers, 95% are from the automotive sector. Has this always been a positive?

Yes, but at the same time it has also been hard work, above all with respect to the continuous optimization of processes. Working as closely and directly with automotive manufacturers in the OEM business as we do, the benefit is that you are always immediately involved in new product lines. We can produce the latest components and encounter trends from the very start, which allows us to adapt accordingly. The effects of general economic cycles are not as strongly evident because new products always have to be manufactured.

The automotive sector is constantly evolving. Which changes have a particular impact on you?

The demands on quality and precision have been increasing significantly, particularly in Germany and especially by the high volume manufacturers. This of course drives us to strive for even greater perfection. And not only do we need to account for the constant evolution you speak of but development times are also decreasing further. We are a mid-sized company of 200 employees and although we feel that we have taken the appropriate steps, we need to continually strive for more. But we have to be careful that the pace does not increase too dramatically. Optimizing our processes is an ongoing course of action so that we can manage the impact of market changes on the company, which can be quite sudden at times.

What does this increase in pace entail exactly?

Allow me to give a specific example. A machine was ready to deliver to our customer, who then informed us that their raw materials supplier had become insolvent and a new one had not yet been found, but that they would like us to adapt the machine to the new raw work-piece. Despite this change, the original delivery date was to remain the same.

Surely this is an exceptional case?

Actually, that is almost the norm today, particularly when work-piece prototypes are required for vehicle tests. For our turnkey processes we not only supply the machine, but also fixtures and tools. We guarantee our customers will receive machines that  produce within dimensional specifications and reliable cycle times, and consequently the net output. This means we are actually involved in the process of optimizing the work-piece.

How do you manage to supply quality at competitive prices?

The strength of our development means we are able to do a great deal ourselves. We therefore constantly optimize our processes. To ensure all the final parts, such as fixtures, spindles and rotary axes, are of top quality, they are developed and manufactured in house. As a result, we have control over the technical and technological relationship between all parts of the machine tool. This means, for example, that we can optimize the required specific harmonic frequencies according to the purpose for which they are being used in every single machine. To achieve this, comprehensive machine-specific calculations and simulations are necessary, which we are now skilled in and able to verify with calculations appropriate to the actual machine. Theoretical and practical knowledge, combined with the courage to tread new paths, allows us to deliver optimal solutions to our customers on competitive terms. This also applies to the Chinese market, where it is an uphill battle at times, but we are certain this serves to strengthen our market position in the long term.

What role does the modular construction of the machines play?

This is extremely important to us in the development of our machines, but we are also very much aware of its limitations. Modules cannot be exchanged randomly and at will. The knowledge we procure from the further development of individual modules subsequently advances our entire machine tool kit. In a technological sense, this knowledge is a common thread in our module development and it is above all our customers who benefit.

Aside from the automotive sector, which other industries do you have your sights set on?

Although we are not yet actively entered in other markets, interest has been coming mainly from the construction industry and to some extent the aerospace sector. We are particularly seeing demand for twin-spindle 5-axis machines with small X strokes and high load cutting capacity. This is a niche market. For our larger twin-spindle machines, we can supply independent X, Y and Z axes, which are absolutely essential for narrow tolerances on large work-pieces.

Are you also considering production outside Germany?

Not at the moment. Our customers choose us because they trust that we will complete the entire order as a turnkey solution. In recent years, our machines have become more cost-effective through ongoing performance improvements, while Chinese machines have in fact become considerably more expensive at the same time. We will almost certainly never be able to supply a machine to China if a work-piece tolerance is the only consideration. For this reason, we will only operate in the high-end sector in the future.

How do you structure the company in such a turbulent environment?

Lean management has been implemented throughout the entire company. We have been operating under this management principle for many years and have further intensified it over the last two years. This year we want to expand our service capabilities.

How do lean management and improved service fit together?

One example is the topic of speed of response. It is not easy to have the proper worldwide service in terms of expertise required as well as quick response, because providing the right global service whilst also being fast is not always easy.

What exactly does lean management consist of at Licon mt?

A key element is that we operate according to clearly defined standard processes, even when designing customer-specific solutions. We set great store in regular communications as well as visualizing processes and process results. Our employees therefore have the opportunity to learn about workflows and processes in a general context, whether in the development or production of our products. This is an advantage when compared with larger companies where this is only possible to a limited extent given their overall size.

Is it difficult to find skilled personnel here in the region?

If very specific qualifications are required, then yes it is. Highly specialist employees have to be trained by the company itself, which we do. Aside from this, we have not had any problems finding employees with the right commercial and academic skills. I personally think that inexpensive is not an option in Germany anymore. Being capable is the way forward. Given the required response speed I mentioned, we need our employees to also be highly flexible and driven. There is a price to pay for that.

What is next for Licon mt?

We intend to offer a wide range of spin-offs from our small LiFLEX 444 twin-spindle machine featuring different spindle distances and different configurations, in both HSK 63 and HSK 100.

Are these product variations not encroaching on the territory of special machines?

Yes, they are. In the machine tool market, everyone talks about their standard machines, but for project business, which is what our forte is, it is always necessary to address and respond to customer needs.

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A Robot for Dummies

By Lloyd Graff

See video below: Universal Robots brings manufacturing back to United States

I normally do not write about products or technical stuff because, frankly, squirting mustard on a hot dog is a big mechanical challenge for me.

But I am excited enough about a new product today to write a piece about it, because it is on the verge of significantly changing my neighborhood — the machining world.

A little robot made by a small Danish company, Universal Robot, is showing this week at FabTech in Chicago. Their product, the UR5, is cheap, versatile and easy to program. I probably couldn’t do it, but I am pretty sure you can. It is a $30,000 weapon of mass production destruction. It can be put to work the same day you take it out of the box. It seems like a product that almost any job shop could use. By simply modeling the task you want the robot to accomplish, you get most of the way home on the setup. Also, in most cases you don’t need to add extra guarding which enhances its quick changeover. You can team it with a machining center, then stick it on a Citizen, schlep it over to a tube bender and let it finish its week on a Cincinnati Centerless. The simplicity of usage of this mini-robot is its value proposition. This exquisite little machine is the 3,000 square-foot job shop’s China killer.

It enables a tiny firm to compete with Johnson and Johnson on making titanium kneecaps. This machine turns a machine tender into a programmer and director. Potentially, a company can get a 6 month return on investment, putting it in almost any firm’s reach.

The fancy, rugged expensive robots from behemoths like Fanuc, ABB, and Kuka have their place at Ford or a foundry, but the job shop robot has finally arrived.

It means fewer people and less headaches. Unless you are one of those fewer people who is now going to have a major headache.

Question: Are you afraid or excited about robots?

Check out the video made about a shop in Southern California using the UR5.

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Section 179 Is Really Ending

By Lloyd Graff

Shameless Plug for Graff-Pinkert’s 8-32 Euroturn

Business owners, “the moving walkway is now ending.” The punch bowl is being pulled away. Section 179 of the United States Tax Code will essentially evaporate December 31 of this year. It is really going to end, and you are going to kick yourself if you blew big money by not taking advantage of the best goodie package the awful Feds have provided in decades.

This is really quite important for any small business that needs a truck, crane or parts cleaner. Even a screw machine or a hundred iPads. If you are making money or even if you are not, Section 179 allows you to deduct the expenditure of up to $500,000 with bonus depreciation on expenditures up to $2,000,000 of new or used capital equipment or software from your gross income in 2013.

Last year our Graff-Pinkert machine tool business bought long needed cleaning equipment for the shop from Graymills Corporation, which has easily paid for itself by speeding up output of cleaned machinery components. This year we will buy more cleaning and painting equipment. Section 179 does not differentiate between new and used equipment as past depreciation rules have done.

Graff-Pinkert is seeing a pickup in machinery buying at the moment. Section 179’s impending demise seems to be in play.

This blog is potentially self-serving if it stimulates machine sales for Graff-Pinkert and ad sales for Today’s Machining World. (Would that be so terrible?) The idiots in Washington have hammered small business so mercilessly for years, I feel fully justified in promoting the use of this finite tax benefit.

I would like to see Section 179 continue indefinitely, but with the political death squeeze going in Washington between the two parties it will not happen.

Business folks, you have 45 days to take advantage of this tax provision.

For more information check out www.section179.org/.

Question: Do you plan on purchasing anything because of Section 179?

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Thankful

By Lloyd Graff

America the beautiful

Thanksgiving comes in 15 days. I offer 15 things I’m thankful for.

1) Living. I don’t take it for granted. Five years ago, it would have ended if not for a great surgeon, luck, and God knows what else.

2) My wife Risa, love of my life, friend forever, always the most beautiful girl in the room.

3) My children, Noah, Ari and Sarah, all adults who try to keep me real and have surpassed being great kids, to become my friends and confidantes, too.

4). The freedom of owning my own business. Despite the stresses of trying to make it work month after month, year after year, I enjoy being the “go to person” for important decisions.

5) The good days. When I actually feel like I move the ball. When I feel like I’m still on top of my game, or at least that I’m still in the game.

6) The bad days. I get to have them.

7) My love of baseball and the Chicago Cubs. This is for real. It is a precious thing to have a lifelong affair with a team, a sport, a history of players and statistics and memories of games and the people I experienced them with. Hey, Hey!

8) My parents, sister and brother. My parents Leonard and Thais gave me life and the best they had to give. My sister Susan, 13 months younger than me, has always made me feel special. My brother Jim has been a constant, despite the competition of brothers.

9) Never being hungry or feeling in a state of want.

10) Breath. Every morning I recite a prayer of thanks. I always give thanks for breath — for still being able to breathe without thinking about it. When you’ve known the struggle for breath, you will fully understand.

11) Seeing and Hearing. For me, both of these senses have declined over the years, but I am grateful for what I can still summon.

12) Writing. I started writing little pieces for Reader’s Digest and Letters to the Editor for the Chicago Daily News, when I was 12. Still love it.

13). My ancestors who fled Russia a hundred years ago. I would have been a lousy Russian.

14). Television. I love to watch Sports, Friday Night Lights, Charlie Rose interviews and Seinfeld reruns. I’m such a boor.

15). America. What a country. What an idea. What a future.

Question: What are you thankful for?

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Machining and the NBA

By Lloyd Graff

Typical of the demographics at metalworking tradeshows

I was watching the Chicago Bears and the Green Bay Packers thug it out on Monday Night Football thinking this is all so Howard Cosell and Dandy Don Meredith. The National Football League is still raking in the bucks but it’s fan base is old and getting older. Kids don’t want NFL jerseys in Chicago, they want hockey and basketball. They want Rose and Toews on their backs.

If the NFL is yesterday, Major League Baseball is yesterday-er.

I love baseball and I always will, but kids aren’t playing it much anymore in America. Maybe a little in California and Texas but it is mostly Latin America and Japan where they still toss the horsehide. Few black kids in America know Jackie Robinson from Robinson Cano.

The world changes and I’d like to apply the sports analogy to manufacturing today.

In my world of machining the fresh capital is flowing into robots that take people off the machining floor. Companies are also buying peripheral equipment like washers and parts cleaners which simplify their lives and make the workplace cleaner.

Certainly people are also investing in Citizens and Eurotechs and Okumas but robots are going down dramatically in price and deliver enormous value. Replace a person and forget about health insurance and the absentee chart.

My screw machine and rotary transfer world is more viable these days, with automotive and ammo quite bouncy and America the place to be for turning metal. But the machines require massive investments and long term faith in a chronically cyclical industry.

The most interesting manufacturing technology I see is 3D printing. It’s getting better and better and revenues are doubling year over year. I think it it is still in its infancy. It will not replace machining for decades, but it will be a significant player. The stock market has been propelling 3D printing pioneer, Strataysys into the stratosphere.

My question to you folks on the front lines is simple. Is machining the NFL of manufacturing — hauling in the bucks today, but sloping downward? Can you make money with human machine tenders or will they vanish like African American ball players?

Question: Is machining the bastion of old white guys in an NBA or NHL kind of world?

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Can Obamacare Ever Work?

By Lloyd Graff

Over the last ten years I’ve had a dozen surgeries and dealt with heart disease, prostate cancer and detached or damaged retinas in both eyes.

I am a relatively wealthy guy in America, top one or per cent in savings and earnings, but without health insurance I would have been wiped out financially, and possibly dead or blind.

I understand the disappointment and anger everybody feels toward the early phases of the Affordable Healthcare Act. it’s totally mismanaged, people on the left and right of the political spectrum agree. But so was Medicare at the beginning and George W. Bush’s Medicare Part D was a fiasco at its inception.

Obamacare could end up as a long term failure. At its outset it will cost us millions of hires and cause a lot of firings. But must we business people, machinists or writers be rooting for it to flop? There should be a place in America for young people, waitresses, epileptics or hemophiliacs to find medical care without the inefficiency of sweating out the emergency room.

Call me names and hate on me, but I think America can afford to make healthcare available for its people. Maybe Obamacare will have to be scrapped, but I strongly doubt it will happen at this point. I believe it will evolve like Medicare has. Quite painfully, like a knee replacement or chemo.

We have a great country, with amazing wealth and resources. If we try as a country to make healthcare available to almost everybody, smart people, even those representing competing interests, can compromise and create something workable.

We can get something at least as good as Medicare. Do you know many people who want to scrap that expensive Federal program?

Question: Should we terminate Medicare?

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Your Tired, Your Poor, Your Smartest People

By Lloyd Graff

The Tea Party and its junior partner, the Republican Party, is determined to drive itself to irrelevance in National Elections. By dooming the Immigration Reform Bill, Republicans will be seen as immigrant haters. With 2000 Latinos turning 18 every day and an expanding Asian population, a shrewd Democratic candidate can again get almost 80% of the vote of those two groups. The Republican Party is also doing a good job of alienating potential donors in Silicon Valley, where businesses desperately need H-1B reform to fill their job openings. Not only is it wrong on its merits, this is the dumbest strategic political move I have ever seen.

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Jeff Bezos’ birth parents were a 17-year-old high school sophomore and a 19-year-old professional unicycle performer with the occasional circus gig. His father has never met his multi-billionaire son, the founder of Amazon who is now buying The Washington Post personally. Until a few months ago, he did not even know his son’s name. Jeff’s mother remarried in Albuquerque, New Mexico, then moved to Miami with her second husband, Miguel Bezos, a Cuban immigrant who became a successful Exxon executive. Jeff graduated valedictorian of his high school class and went on to Princeton. After a few years working on Wall Street he founded Amazon.com in 1994. A variation on the American Dream.

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Yeti Coolers, producer of one of the most mundane products I can think of, has been showing phenomenal growth by making a solid, premium product. Their cooler sales have jumped from zero to $100 million in a just few years. Bass Pro Shops can’t keep enough in stock to meet demand. Yeti has shown that a superior product, priced intelligently and marketed well can skyrocket in a “me too” market.

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Again, in 2013, we see a baseball team with mediocre talent, but players with great character and tenacity, win the World Series. Of course, you also need a hot bullpen, too. The Boston Red Sox, winner of 69 games last season when they had statistically better players, shows talent and money do not always (or even usually) prevail in baseball. The Detroit Tigers had significantly more talent with four superstars and lost. Same for the Los Angeles Dodgers.

Kudos also to Tim McCarver and Joe Buck, who did a wonderful job on the TV broadcast. McCarver, who played catcher in four different decades, was particularly good in making prescient comments that stayed ahead of the action. At the age of 72, doing his twentyfourth World Series, McCarver was never better. I’ll miss him in retirement.

Question: Should the United States be more immigrant friendly?

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

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