By Lloyd Graff

It was the kind of PR blurb that arrives 40 times a day, making some inane announcement that everybody ignores. It came on Friday after 5pm, which is the time PR firms send stuff that they don’t really want you to read. That’s why I read it.

It was a pretty juicy piece of news, if you could read between the lines.

The DMG/Mori Seiki combo, which was announced in 2012 around IMTS, is making some major changes. Mark Mohr, the President of the combined American operation, is being sent to Davis, California, to run the DMG MORI USA manufacturing plant. Mohr had replaced Thomas Dillon in 2012 to much fanfare, as head of the merged DMG MORI USA operation. Davis, California is not exactly Siberia. It is a nice college town in Middle-of-Nowhere, California. The company is dispatching Dr. Thorsten Schmidt from the corporate office in Germany to run the U.S. organization. They are going to dramatically expand the number of direct sales and service offices in the U.S. to 27.

What does this announcement really mean? Maybe it means that the DMG MORI people in Germany have awakened to the mess they have in America with the pseudo takeover of Mori Seiki here. The unannounced rationale for the deal three years ago was to improve the service and reputation of the German machine tool builder in the U.S. by building on Mori’s reputation.

DMG makes wonderful machines and they are strong all over the world, but in the U.S. they could not get traction before the merger. They sent a new general manager every couple of years to the Chicago office, but it didn’t help.

Meanwhile, Mori was looking for assistance in Europe, which was the genesis of the deal. But from what I hear on the street the merger has not worked well, at least not here. Thus we have Dr. Schmidt to the rescue, and Mark Mohr is headed to a cow town to run a factory.

I have met Dr. Schmidt a couple of times. He is a high powered young guy and may well be the next head of DMG MORI. But this is a clear signal that the Germans will be calling the shots now at DMG MORI USA, which though not surprising, probably makes the folks at Mazak, Doosan, Haas and Okuma feel pretty good, because service has been the Achilles heel of DMG in America, and weakening service for Mori Seiki has harmed its reputation recently. The announcement also must be scary for the distribution network of the company because it implies that they will be going direct, which means cutting out the dealers in many areas. This is a dicey proposition, too. Machine tool builders constantly fret about direct sales versus representation. It’s a frequent topic at every IMTS. It will be a huge task to expand direct sales rapidly, and improve service. There are just not enough skilled service people available. It will not be easy to recruit an army of them around the country. And it will be an expensive task.

Was this predictable in 2012? Yes, and putting Mark Mohr in the lead position seemed like a good first step. But following a guy with Mr. Dillon’s stature was tough. Trying to make a marriage with DMG work in the U.S. was apparently an insurmountable task for Mohr.

Now we have Schmidt coming to save the day. If he can pull this makeover off he will deserve to be called Superman, and win the CEO job. Meshing the three different cultures – American, Japanese and German, while changing distribution and beefing up service will be a brutal task. For a German to do this from suburban Chicago after exiling the incumbent – yikes.

Good luck, Dr. Schmidt.

Question: Do you prefer to work directly with a machine tool company, or with distributors?

By Lloyd Graff

The National Football League is two weeks into its season and New England and Green Bay look very strong because they have great quarterbacks in Tom Brady and Aaron Rogers. Who will win the Super Bowl? I have no idea, but the biggest winners may be the owners of the massive Fantasy Football sites that blanket ESPN and Fox with ads, FanDuel.com, and DraftKings.com. Those internet sites have taken in a ton of venture capital money and sold pieces to ESPN and Comcast to fund their enormous advertising campaigns. With approximately 35 million people playing and the sites taking a piece of the action for handling the data and transferring  money, it sounds like a lot better business than turning metal. Both sites are valued at more than $1 billion.

It is changing the way fans look at the games. No longer is the primary question, “did the Steelers or Lions win the game,” but “how many touchdowns did Roethlisberger pass for,” or “how many catches did Calvin Johnson make?” The stats are everything. Who won? Who cares …

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Hilary Clinton coming out against building the Keystone XL Pipeline now only makes her look weaker and phonier.  With oil at $45 a barrel building the pipeline into the U.S. for tar sands crude had become a non-issue. With fracking starting to go down but loads more oil to drill in the Dakotas, Texas, Pennsylvania etc., Keystone has long since left the front pages. If she had come out one way or the other three years ago on Keystone she could have been seen as a leader. Doing it today she looks like a total wimp. I did not think she could blow the Democratic nomination, but today it looks better than 50-50. Joe Biden or Bernie Sanders could beat her.

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Don Pellmann ran the 100 yard dash in 27 seconds. Sounds pretty slow. Not really. Pellmann is 100 years old. He just competed in the San Diego Senior Olympics. That time set a record for the 100-and-over age group. He also set records in the discus, shot put and high jump.

His disappointment was in not making height in the pole vault.

Pellmann retired from his job at a General Electric subsidiary in 1970. He was a gymnast in college and has stayed active. But he is not a health nut. He doesn’t take vitamins or supplements and prepared for the competition by eating macaroni and cheese the night before.

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Kudos to Janet Yellen and the Federal Reserve for not raising interest rates at the last Fed meeting.

China’s economic problems, the depression in virtually all commodities, and the spreading industrial malaise from $45 a barrel oil, is dragging down the U.S. economy more than most people think. An interest rate boost now could have greased the way into a recession. Good call, Ms. Yellen.

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What an amazing baseball season this has been for me. The Cubs rebuilding process has worked amazingly well. They were so bad for so long that they got top draft picks and used the picks wisely to get great young hitters. They traded for more talent, stealing Addison Russell from Oakland and Kyle Hendricks from Texas. The biggest coup was trading Scott Feldman to Baltimore for Pedro Strop and Jake Arrieta. Arrieta is taking his place as one of the great pitchers in the game and should win 20 games this year.

The final step was hiring Joe Madden as Manager. Madden had become a free agent through a clause in his contract. The Cubs had to act in three days to take advantage of the opening, which they did to the anger and dismay of Tampa Bay’s ownership. It was the best move of all.

Go Cubs Go.

Question: Do you play Fantasy Football? If so, how much time do you spend on it in a week?

By Lloyd Graff

My wife, Risa, has been an educational therapist for four decades. She pushes her students to develop a positive mindset about their ability to learn. She helps them to develop persistence. She helps them find a sense of joy in learning.

It is a really hard job. She does her work in an office in our home, working one on one with students, so I’ve had more than a peek at her work through the years. I’ve seen her agonize over kids who struggle with brains and bodies that do not want to allow them to conform with the rules of school. I’ve heard her talk about advocating for students in meeting after meeting with administrators, some of whom were rigid or were slaves to dumb rules not made for students who are wired differently from most other kids. I’ve seen kids who have been handicapped by well meaning parents who help them avoid tough challenges because the parents so desperately want their children to be successful.

Often, by the time parents bring their children to Risa, a lot of bad things have happened to them in school. Kids are often failing, ditching, depressed, mocked or feeling absolutely miserable about school.

She used to say that she was in the “make school easier business,” but she has given up that slogan because it makes her sound like a tutor, not an educational therapist who pays as much attention to the psyche as the algebra. Risa is not just somebody trying to boost a “C” to a “B”.

Dealing with kids one on one is intense work. Risa develops a unique plan for each student with an understanding of their learning styles and strengths. About 10 years ago she had a student who was highly dyslexic and despised organized school. He felt like a failure in the classroom but was a gifted mechanic in his part time job. The young man dropped out of high school, but with the help of his family and Risa began an aggressive program to develop the math and reading skills which would enable him to grow into a highly valued employee in the family’s auto repair business.

Another student that Risa had a few years ago was about to be asked to leave an elite Chicago private school because he was extremely disorganized and could never hand in his homework on time. She helped him with organizational problems and aided him in learning how to manage his medication. He not only got his act together to go to college, but is now finishing Med School with an attainable goal of being a researcher.

Not all of Risa’s students reached their potential. One student that Risa loved deeply died of a horrible genetic disease at 14. Her issues were not classic learning problems, but trying to have a semblance of normality in her school life when her body was so out of control. Risa is emotionally involved with most of her students but none more so than with that loving child.

Sometimes former students come back when facing a special challenge. One young man with learning issues that had dogged him throughout his school career decided to join the Marine Corps. To be accepted, he needed to pass a minimum reading and math competency test, which he accomplished with Risa’s special assistance.

Because she often sees students for many years, sometimes over a decade, Risa develops close personal relationships with the kids and their families. She is Facebook friends with many former students today, including one who earned a PhD in English and another who has pursued an acting career and performed on national TV.

The term educational therapist also applies to the therapeutic work she does with parents who are often confused and depressed about the academic and personal struggles of their children. Risa spends a significant amount of her time counseling parents.

She has colleagues around the country to consult with, but today one of her closest consultants is our son Ari Graff, who has indirectly gone into her field as a neuropsychologist, specializing in testing people with learning issues. Risa and Ari often refer to one another, though their practices are not formally connected. They often lapse into talking shop at family gatherings, similar to how Noah and I sometimes discuss the machinery business.

In recent years, the terms ADD and ADHD have slipped into the common speech of school parents. Parents often come to Risa with more knowledge of their children’s learning problems than they might have had 25 years ago. But parents rarely understand that such issues will be lifelong companions for their kids, and that it may take a long time to understand the problems and learn how to deal with them at different stages in their children’s lives.

Risa and I have been partners through her 40 years of practice, and I have been a sounding board for her like she has been for me on business issues. She is circumspect about individual cases, but with her office in our home, I have had a chance to see her students develop over the years.

Her career has turned out to be an education for me.

Question: Was school a bad experience for you? Why?

By Lloyd Graff

Golf, race and prejudice have had a long tortured connection in Chicago. Now it looks like we will see a new chapter near my old home on the South side of Chicago.

Golf course developers are eyeing the Chicago Park District’s 27 holes of pleasant, but pedestrian golf for a potential super course with Chicago lakefront views to accommodate a big time pro championship course. It could be a Pebble Beach of the Midwest.

This is also the area where the Barack Obama Library may be built. It is a pebble’s throw from Michelle Obama’s home when she was growing up. On a good day it is a 12 minute drive from downtown.

I lived across from the 6^th hole of the 18-hole Jackson Park course. I practiced my 6 iron shot between foursomes and shot in the 80s and 90s as a teenager. Mainly I played softball on the course in an open area between the 6^th hole and the highway exit golfers had to cross to continue their rounds.

When I was growing up, the 18-hole Jackson Park course was a comfortable $3 a round public course. White players, but a smattering of African Americans played. The neighborhood course stretched from Stony Island Avenue which had long been the Black-White boundary as I was growing up in the 1950s and 60s.

Further east, away from my house, but contiguous to Jackson Park, was the South Shore Country Club with a cozy 9-hole course bordering Lake Michigan. The Country Club was virtually all Irish Catholics. No Jews or Blacks need apply.

This kind of map was a microcosm of Chicago. Neighborhoods were Irish, Jewish, Black, German, Chinese etc. And many people were desperate to keep it that way. But the Black population was exploding on the South side of Chicago and eventually the white neighborhoods were breeched.

Those who stayed often sent their kids to private or parochial schools, but eventually almost all of the Whites fled the South side.

The restrictive South Shore Country Club engineered a deal to sell their lake front land to the Chicago park District in 1974.

Jackson Park remained a pleasant if not challenging muni course. South Shore remained a short little 9-holer.

And now as the sprawling suburban golf courses are emptying because young people live in the city and are indifferent to the burbs, developers are dreaming of a super course on the lakefront hosting a major tournament year after year – 12 minutes from State and Madison.

Chicago has changed a lot in my lifetime. The people who argue that racism is racism and Black people’s position in America has barely changed in the 50 years since the march on Selma and the Voting Rights Act’s passage are crazy. There is still a significant income disparity between Blacks and Whites, but we have an African American President and the possibility of a Black Republican Presidential candidate in Ben Carson for 2016. That would have been hard to imagine in 1965.

The overt discrimination of the restrictive South Shore Country Club that blatantly rejected Jews and Blacks is gone – happily. I remember as a kid wondering briefly why Jews could not belong there, but then dismissing the thought because – “that’s just the way it is” I realized.

America has changed so much in 50 years in acceptance of minorities. Is there still racism and prejudice? Of course. But neighborhoods are much more mixed today. The South Shore Country Club’s institutionalized hating is gone.

A Super Golf Course with special rates for locals and big money provided for caddie scholarships is in the works for a primarily African American area of Chicago.

Do White cops still terrorize young Black men in Chicago? Do young Black men still scare the hell out of cops? Yes, of course. But today if you go out to Jackson Park Golf Course by yourself you will likely play in an integrated foursome. Golf and life in Chicago have changed immensely for the better in my lifetime. I expect that positive change to continue.

Question: Do you feel better or worse about race relations than you used to?

By Lloyd Graff

In a deal that is supposed to close by the end of the third quarter, Watts Water Technologies is selling certain assets related to its brass fittings, brass & tubular and vinyl tubing product lines to Sioux Chief Mfg. Co. (“Sioux Chief”) of Kansas City, Missouri. The selling price approximates to $35.5 million.

My understanding is that Tribal Manufacturing, of Marshall, Michigan, will get the keys to the Chesnee, South Carolina, brass turning plant of Watts Water Technologies. This is a big deal in the screw machine world because the South Carolina plant did most of the turned parts work for Watts. It was a core asset of the $3 billion in sales of Watts’ operation, or at least I thought so. But the management team at the Watts home office in Massachusetts felt the company would be better served by selling the plant to Sioux Chief Mfg. Co., with Watts as the prime customer.

Tribal Manufacturing, of Marshall, Michigan, an affiliate of Sioux Chief Mfg. Co. will get the keys to the Chesnee, South Carolina, brass turning plant of Watts Water Technologies. This is a big deal in the screw machine world because the South Carolina plant did most of the turned parts work for Watts. It was a core asset of the $3 billion in sales of Watts’ operation, or at least I thought so. But the management team at the Watts home office in Massachusetts felt the company would be better served by selling the plant to Sioux Chief Mfg. Co., with Watts as the prime customer.

For Watts, the deal is interesting because they offload a plant full of old Acmes and Davenports that was not a profit center for them. They used the Chesnee plant as a captive supplier of turned parts and put very little fresh money into the plant for years. The goal for Chesnee was to break even and pour out quality brass goods at cheap prices for the various divisions of the water goods giant. It apparently worked quite well, as Watts has prospered and the stock has soared.

Watts has also shut down most of its Chinese manufacturing in recent years and proudly applauds itself for making most of its manufactured goods in America.

I believe they had a profile of the company in mind of whom they wanted to sell the Chesnee plant, an American firm that would keep it going for a significant length of time. Watts got a sharp operator who really knows the brass fittings business in Tribal.

For Tribal, the Watts deal means volume. Chesnee is a well run operation, but a new operator is going to bring in outside people and try to cut the overhead, one way or another. Watts is expecting good parts at fair prices. If they do not get both, volumes figure to drop over time. If Watts is happy long-term, sales from the parent company will go up and Tribal will win big.

My guess is that Watts did not want to sell to a competitor like Moen that has a plant in the Carolinas. Tribal is not a real competitor for Watts. Basically they are a job shop for the brass goods industry and now they are a lot bigger with many more multi-spindles to run.

The brass folks will all be watching closely to see how the chips will fall.

Question: Is it risky to buy a company with only one customer?

By Lloyd Graff

Where have all the souvenirs gone?

I find it ironic that we seemingly hacve a collectibles boom, with TV shows like Pickers and Antique Road Show, but if you go to a tool show like IMTS or the PMPA April extravaganza you leave with nary a keepsake that is worthy of a shelf in your office or a chest in the attic.

I was reminded of the value of a souvenir twice this past week. I went to a wedding in New Jersey and took a 20-year-old t-shirt to wear at the family lake house where the wedding took place. The shirt had been artfully designed for a Bar Mitzvah of twin brothers in the same extended family in 1995. It had a family tree on the back of the shirt.

It seemed like all the people at the wedding wanted to inspect the t-shirt and recollect the occasion 20 years earlier on Long Island. I love the shirt, and I wear it frequently to exercise in. It was a 50% polyester 50% cotton garment and it has easily withstood hundreds of washings without fading or tearing. This shirt passes many tests. It has family significance because of the family tree on the back and the celebration of the occasion on the front. It is useful, and it is remarkably durable. Very few keepsakes pass so many tests.

The second souvenir that popped into memory this week was the brass bell machined by a National Acme Screw Machine at the 1970 International Machine Tool Show.

Jeff Kovalenko of Elkhart, Indiana, sent me a photo of the Acme staff who worked that show, which included his father. The title of the email was Tintinnabulation, which referred to the brass bell, complete with the dinger. The word “tintinnabulation” was used in an Edgar Allen Poe poem, and means the sustained ring made by a bell.

I remember that show only because of the National Acme exhibit and the beautiful brass bell, with the National Acme inscription.

The bell was the perfect intersection of engineering, art and execution. It was also the perfect keepsake. The bells still come up on eBay from time to time. My brother Jim has a collection of them that he cherishes.

I ask you, where are the cool souvenirs these days? Is everybody so bottom line driven that they are afraid to give away anything of value at a show? It seems odd that a company will spend a million bucks at IMTS but not a nickel on a memorable reminder.

I think it is less about tight-fisted bean counters and more about creativity. It’s hard to come up with an idea like a bell with a brass dinger and then convince a bunch of engineers and sales people it is worth the effort to pull it off.

I’d like to hear about keepsakes that you value, like a home run ball you caught at Yankee Stadium or a beer mug you brought back from Vienna. Maybe it’s a cap from Army Basic Training, or a piece of shrapnel from Iraq. Why do you care about it so much? Is it in your will to go to someone else?

My son Ari has his comic books from childhood stashed away at our house. I know a guy who has kept a 2 5/8″ Conomatic, virtually unused, out of the Atchison caves. He hasn’t used it more than three months. That is one big old souvenir.

Question: What do you keep?