Monthly Archives: April 2016

The Best We Can Get?

By Lloyd Graff

Gillette Fusion Razor

Gillette Fusion Razor

I recently discovered that I was out of cartridges for my Gillette 5-blade razor (the Fusion). I hopped over to the local Walgreens to buy a new package.

It was an ugly experience. The Gillette cartridges were locked up, requiring a buyer to hunt for a salesperson to come over to unlock the booty. Then I had to figure out which razor blade model I owned and whether I wanted to fork over $25 for four precious 5-blade cartridges in one over-wrapped package.

Gillette, now a division of Proctor & Gamble, has been developing high-tech razors and blades over the last decade which last longer but make shaving more expensive. Its advertising has flogged the high-tech blades, mercilessly extolling the wonderful experience of shaving while dulling one of the great American brands by being greedy and dumb as the market for their products was starting to shift.

As men and women get older they tend to shave less often. Younger men and women are hairier these days with the disheveled look in vogue.

One indicator is how few Major League Baseball players are clean shaven. Beards are in. Just look at Jake Arrietta and Clayton Kershaw, the best pitchers in the game, and Bryce Harper, the top position player.

The other wild card that Gillette did not expect is the dollar shave club phenomenon. Many men are choosing mail order low tech blades that offer a less expensive monthly bill and fresh blades daily. They have eliminated the distasteful trip to Walgreens or Target to unlock the precious cartridges from the store safe. You would think they were illicit goods like original Sudafed.

Gillette razor blades are one of many iconic products that got too fat as cash cows of obese conglomerates like P&G. I doubt the old independent entrepreneurial Gillette of Boston would have locked themselves into overpriced high-tech blades that shavers are starting to reject in droves.

Gillette is not the only once revered label that consumers are starting to hate. The mattress market is also shifting quickly.

A few years ago beds and mattresses were mostly sold in department stores and furniture emporiums. Brands like Sealy, Simmons and Beautyrest dominated. The big names gradually merged together looking to monopolize the market and keep the price high for traditional spring products.

But they were blindsided by memory foam mattresses which were cheaper to make and better to sleep on. Independent chains popped up almost overnight to sell the new foam products and accessories. Then Internet sales, boosted by media campaigns challenged brick and mortar. Today the mattress market is fragmented and competitive.

The beer and booze market have also seen both consolidation and a challenge from independents. The behemoths still dominate with enormous advertising budgets and control of the vital distribution, but craft beers have a growing audience for young buyers and independent vodka and whiskey makers are proliferating.

The latest challenge to a regulated monopoly is in the hearing aid business. Audiologists and doctors have pretty much sewn up the high end market for hearing devices. The average hearing aid costs $2,000 to $3000 including visits to the professionals. A company called Etymotic Research has developed an in-ear amplifier to be sold over the counter, which they call the Bean. The cheapest model retails for $299. So far the FDA has protected the incumbents like Siemens and Sonova which control 95% of the $5 billion world wide market. The Bean can currently be sold only for “recreational” use (hunting and birding). But the White House is now pressuring the FDA to give Etymotic’s products a hard look. I foresee this tightly controlled business as a prime target for entrepreneurial attack. The over-the-counter hearing aid will be in Walgreens and Target soon—I predict 2016 or 2017.

Fat monopolies are still vulnerable to humble entrepreneurs in America. May it always be so.

Questions: Do you have a mattress that you love?

Have you tried the Bean?

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A Reminder of Life Without Freedom

Noah Graff

 

You don’t know what freedom is unless you don’t have it.

Life in Havana, Cuba

Tonight Passover begins! It’s the Jewish holiday that commemorates the Jews’ exodus from Egypt. I love the holiday for its distinct rituals, reflection about the story of the Jewish people and the meanings of the words “slavery” and “freedom.”

What does it mean to be a slave?

Are we slaves to our jobs, to our phones, to addictions, to depression? Or is that just Passover seder table froth?

What does slavery in 2016 look like? A few images come to mind such as human trafficking of prostitutes and women abducted by Boko Haram. But perhaps it is better to ask what a lack of freedom looks like in 2016.

I have a friend in Cuba who I met when I was there on vacation. We have been emailing every few weeks for over two years. We compare notes about what is happening in each other’s country according to our respective media. She has told me about her employment journey over the course of that period. She was working at a bank when I met her, then she was a waitress, and now she works in a flea market.

Don’t let the special guests at baseball games and the new cruise stops fool you. Cuban people feel desperate, probably more desperate than they have felt in a long time.

Salaries in Cuba still average $20 per month. People still do not have the freedom to say what they want nor travel where they want. They have very little freedom to start businesses. Police lurk on every other street corner, reminding people that their dictatorship government still makes the rules. Because of modern communication technology Cuban people in 2016 know about the freedoms enjoyed in other countries, which makes them extra pissed off about their situation.

When my friend tells me about her problems I try to console her. I say that it sounds horrible and that I can’t even fathom how hard it must be to live in her shoes. I tell her that she is a survivor and that when the communist government finally falls she will be able to do great things because making it through the misery will have made her a strong person.

I suggest to her that she appreciate the good things that she has—beautiful weather, good friends, relatively good health and the fact that bombs aren’t going off around her. I think she does appreciate those things, but they are not enough for her to feel satisfied. She wants what everybody in trouble longs for—hope. She wants to feel that a life of freedom will be possible for her one day, because when there is freedom there is hope.

Question: Are you hopeful about the future?

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Time to move to Mars?

By Lloyd Graff

Elon Musk with the SpaceX lander module and Falcon 9 rocket

It has been a while since I wrote about business, which may be a commentary in itself about what I think life is like in the machining business in 2016.

My sense of the action, or inaction, today is widespread caution. I would not call it dread or pervasive fear, but a mood of “wait and see” for more clarity of where the economy and the country is headed.

Politically, there is considerable nausea about a Donald Trump versus Hillary Clinton matchup. People confront me frequently with the rhetorical question, “what kind of country gives us The Donald and Hillary to choose from?” I shake my head and silently cringe. It isn’t a choice that inspires the confidence to invest heavily in people or equipment.

In my hopeful heart of hearts I think the political system will push whoever is elected to the center, but 2016 is a clear notice of a broken political system on the national level which begs for a third or fourth party to replace the two parties that provide an untrustworthy Clinton and a screwy Trump to choose from. It’s enough to make me think about moving to Mars.

On a personal level, our machinery business lost a big deal recently when our client’s investors pulled out, supposedly out of fear of a Clinton presidency. It could just as easily have been out of fear of a Trump presidency. Both are poison to so many people.

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The numbers that are coming these days generally reflect the country’s malaise. Housing starts have finally risen past the significant one million per year mark. March was supposed to show 1.1 million starts, but slipped under that pace, giving us two straight months of slowing. The 2016 housing starts pace is the best since 2008. Mortgage rates are hovering at 4%, give or take, which is historically attractive, but income stagnation is sapping confidence. The result is fewer holes in the ground, less toilets and faucets for the plumbing brass folks to sell, and sinking sales of cutting tools and rod.

Automotive is seeing a similar softening with sales slipping under the 18 million units per year gold standard. Cheap financing has helped fuel the car boom in recent years. Lengthening the payment terms to as long as 72 months on car loans is a smart tactic for car sellers and finance companies because the vehicles are made so much better today than in the bad ole days. A 6-year-old car is a better investment now than a 3-year-old car or truck 15 years ago.

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Tesla’s $35,000 electric car picked up 131,000 reservations from people willing to put down $1000 for the privilege of getting an early one.

Elon Musk keeps proving folks wrong on the demise of his company. As long as he continues getting payments from governments for zero pollution vehicles he can keep his ship afloat. Musk is incredibly resourceful and gutsy. I hope he makes it with Tesla.

I am utterly fascinated by Elon Musk. He thinks big and long term, which he can do because he controls his companies himself. His SpaceX private rocket company has finally succeeded in the soft landing of a space vehicle. In the short run, this means reusable rockets for supplying the International Space Station and the beginning of space tourism. Musk’s real goal is space travel and colonization of Mars. This used to be science fiction, but no longer. People are volunteering already to be pioneers on Mars, even though it is a one way ticket in today’s world. In Musk’s biography he stated that his lifelong goal is to be one of the early colonizers of Mars. Then he plans to spend the rest of his life on the Red Planet.

When I read this I was dubious, but now I believe him. He probably envisions being King of Mars, because I can’t see him easily accepting orders from other folks. Hopefully he likes potatoes because they appear to be the perfect crop for the first Martian farmers. NASA is experimenting with all sort of varieties, looking for the best options. Musk is probably already making French fries with his spuds of choice.

Question: Would you rather colonize Mars or take a Viking River Cruise?

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My Kitchen Table

By Lloyd Graff

Lloyd Graff at his kitchen table.

I am writing this piece at the kitchen table in my house. It’s where I write most of my blogs. It’s the one place where I can concentrate most easily, despite various newspapers, salt and pepper shakers, and reading glasses laying askew.

The table usually is covered with a tablecloth that has been washed a hundred times. I like colorful tablecloths on my formica covered table to add interest while I eat or write or just look out the window.

For a house or apartment to be a real home you need a place, like my kitchen table, where you can instantly unfold a tired, stressed and obstinate body when you stumble in from work.

When I’m on a trip, or unfortunately languishing in a hospital room, I long to sit down at my kitchen table with my wife, Risa, toast an English muffin, sip some coffee, and breathe. Our window overlooks the backyard, a currently moribund vegetable garden, flowering trees soon to bloom and a basketball court where I used to shoot free throws and layups by the thousands.

I always sit at the table with our unfettered 4’ x 8’ bay window on my left and the toaster and refrigerator on my right. There is pleasure in routine and habit. It frees my mind to not have to make choices about trivial stuff, like where am I going to sit and what shoulder I need to look over to take in God’s colors. I have enough decisions each day. Some things should be simple.

On my right, magnetized on the big GE refrigerator-freezer is a mélange of photos. We change them from time to time, but some stay frozen for a decade. They are all family. Several pictures are of my three granddaughters. The most prominent one shows them in Cubs tee-shirts. There is a shot of my Dad in a long tan tailor-made wool overcoat donated by several husky sheep, a 20-year-old photo of Risa with her three brothers and one photo of her in a Taekwondo uniform kicking her leg in the air at a totally absurd angle. The refrigerator is always our visible album of a lifetime lived quite happily. Displaying pictures of the people who have contributed so much to our joy just six feet away from the kitchen table warms the room. Refrigerator magnets are one of the great inventions of our time. The magnetic picture frame is a brilliant refinement of the original genius.

Looking straight ahead, about the distance of a high school 3-point basketball shot, is my 60” flat screen Samsung TV. The remote control, which I often leave on the kitchen table, can ignite the Korean beauty without me lifting my ample behind off the chair—another of the gifts of modern technology that I am grateful for. It is my vital link to baseball, basketball, golf and all those wonderful sports that a creaky body and lousy eyesight have deprived me of playing. Some folks decry the time wasted in front of screens, but I am not one of them. My enormous television is a companion. I believe my time at the kitchen table imbibing sports is a perfect respite from a life of work and stress.

I hope each of you has a place like my kitchen table, where you feel safe and nourished. I think it is why we have houses. It is why the DIY Network is so popular. Everybody wants that welcoming nest or den that turns a residence into a home.

I hope you will share your welcoming comfortable spots with us and tell us why they are so special to you.

Question: What is your favorite spot in your house?

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Detroit Has Life

By Russell Ethridge

After 50 stunningly disastrous years, Detroit is seeing the spark of revival that comes when things get so bad that only the truly visionary can see through the rubble.

I’m not talking about autos. Making cars comes and goes. At the moment, auto is back with a vengeance; maybe 18,000,000 sleds this year! This is no surprise to anyone selling parts, turning metal, or molding polymers. That revival has been going on since two of the “big three” dumped their debt (and shareholders) in bankruptcy to improve their balance sheets, and the third hired a manager who actually understood that it was about “the product, stupid.” Hopes for Detroit always rise with auto sales, but auto sales are only a small piece of what is driving the current revival in what locals call “The D.”

What’s really behind Detroit’s revival are an influx of educated young people and change agents like Quicken Loans founder Dan Gilbert and insurance entrepreneur David Cotton, an obstetrician who bailed out of medicine into finance when he saw the change that was coming to health care funding.

Detroit at night

Cotton saw the pathetic way health care is administered and established insurance and management systems that employ many people in low and mid-level administrative jobs in downtown venues. Gilbert, a non-practicing lawyer with a history of bookmaking in college, bought every building he could in Detroit (and Cleveland before that) for pennies on the dollar. Gilbert is taking some of the world’s best architecture (this WAS the Paris of the Midwest), and reformatting it into hip spaces where young people move data, market stuff, including cars and mortgages, and live. Gilbert is making things happen. Many others sat on these properties for years, waiting for…well, someone like Gilbert. Although he is currently under attack by government regulators unhappy with some of his employment practices, Gilbert is generally considered a good employer, and he’s sparked a ton of small businesses that occupy his properties. Gilbert, Cotton, and the others had the benefit of a path forged by real risk takers like Little Caesars founders Mike and Marian llitch whose years of investment in Detroit sports and entertainment kept the city on the map and relevant. Detroit recently elected a mayor who is known for being a turnaround guy. That he is white and elected by a mostly black constituency speaks volumes about how much Detroiters wanted change from the years of corruption and incompetence that preceded him. Other developers are also investing now that you don’t need to bribe a city official to get a meeting. Two big hospital systems and a thriving university add to the mix.

There are many others who are embracing this moment like the restaurateurs who’ve made Detroit a foodie haven. I dined recently at a new hipster joint located in a burned out area across from the city’s wholesale food markets. The proprietor moved from Brooklyn and bought the Detroit property for the cost of a month’s rent in New York. There are countless others providing great food in stunning venues resurrected from the dead, a fact that reminds me that we should cherish our architectural history like Europeans do. I have dined far and wide, but it is hard to find more interesting and pleasurable food than that which I’ve had recently in the “D.”

Detroit’s population outflow has stopped, mostly. This is a city of over 140 square miles that had roughly 1.8 million people in 1950. Starting with the nation’s first urban freeway, Detroit paved the way for its then predominantly white residents to flee to the wide open spaces of suburbia in the cars they made. Jobs and factories followed thereafter. They rolled up the windows, locked the doors, and hit the gas after the riots in 1968. Now, there are about 700,000 souls over the same acreage. If you do the math, that’s a ton of vacant land. The delivery of services is inherently inefficient when there is one house still standing on five blocks of otherwise vacant land. People left behind are over 80% black, and 50% are functionally illiterate. Only half the properties generate property tax, a fact that goes a long way to explaining the need a couple of years ago for the largest municipal bankruptcy in history. Some of this land is being used for forestry and agriculture, but most of the development by Gilbert and others has been in a few square miles in and around downtown.

The abandonment of the city by whites fleeing to the suburbs is part of what crushed city government and a source of some resentment by those who were left in the decay for three generations. Unfortunately, their lot has not improved much since most of the development seems to be for and about educated and mostly white people who do clean work in light filled spaces before heading out for exotic small plate offerings at prices that almost seem embarrassing.

That is not to say that the development has been all white. Detroit is, perhaps, one of the most ethnically diverse cities anywhere. We have more Middle-Easterners than anywhere outside the Middle-East, in addition to many Asians, Indians, and Hispanics, which creates a wonderful diversity that just makes the city cool. But that drop of diversity still has not provided much of a lift for the mostly back residents of the other 130 square miles whose school system is almost a billion dollars in debt and whose children are killing each other in numbers that are unfathomable in a civilized society. When I questioned one of my developer buddies about this contrast, he noted, correctly, that Detroit’s revival is no different from many other cities, including Chicago, where the affluent and educated live one life, and the poor and uneducated live quite another. A rising tide may lift all boats, but if you don’t have a boat, then it doesn’t matter. You tread water or drown.

Question: What do you think of when you think of Detroit?

Russell Ethridge is a prominent attorney in the Detroit area and longtime contributor to Today’s Machining World.

 

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Double Parked in Bangkok

By Noah Graff

Chatuchak Weekend Market, Bangkok, Thailand

Someone asked me the other day why I like to travel. Of course, there are a lot of reasons. Vacations are nice to get away from the office and chill out, but I didn’t need to fly 20 hours to Thailand like I did this March just to find entertainment and relaxation.

Traveling to new places refreshes me. It’s not always easy, but it energizes me to arrive in a country with a different language, different money, different looking people and a different way of life. I’m excited to explore places, get lost and ask myself, “Where the heck am I? How did I end up here?”

My journey to Thailand consisted of a 14-hour flight to Japan and then another 6 hours to Bangkok. On the way I sat next to an Israeli to my left who had traveled to Thailand many times, including a vacation with his family in which they spent 21 days there—I wish Americans could take long vacations like that. On my right was a middle-aged Indian man living in Taiwan, who also happened to be a machinery dealer. Both men chuckled as they mused about the plethora of opportunities for mischief in Bangkok. They advised me to stay in Sukhumvit, the modern cosmopolitan district of the city with the best hotels.

Booking.com steered me to Hotel Parinda, a four-star hotel with an impressive user rating of 8.6, where I paid $50 a night for a huge, beautiful room. The catch to the great deal, I soon realized, was that although the hotel was centrally located for public transit, shopping and entertainment, I was forced to walk 10 minutes down the infamous street, Nana Thai Alley, to get to the main drag. Nana is one of the most well-known red light areas of Bangkok, lined with seedy bars, massage parlors and working girls hanging out on the sidewalk trying to pull you into their respective establishments. Making things more interesting was that at least 50 percent of the “working girls” on Nana were transexuals, which in Bangkok they call “ladyboys.” I now have a window into how it must feel to be a sexually-harassed woman as sometimes it was impossible for me to avert the arm of eager ladyboys while I walked down the narrow sidewalk.

Bangkok’s famous Sleeping Buddha

But after I traversed the sleazy hoopla of Nana, Bangkok beamed with a wonderful energy. It has a big city feel with tons of skyscrapers, people and traffic. However, at the same time it has a much more chill vibe then other big cities I’ve spent time in like New York or Tokyo. Almost everyone I spoke with was friendly, and it felt a lot safer than other big cities I’ve traveled to. I heard virtually no talk about violent crime or pickpockets. People freely walk the streets late into the night and unabashedly show off their iPhones. Most of the time in Bangkok people seemed to be moving around at a slow or medium pace, rather than rushing frantically. All over the place people are contentedly eating some great inexpensive food or beautiful fruit served on the street late into the night. However, once one enters the tourist sites like the Grand Palace and the Buddhist temples the mellowness is thwarted by the throngs of foreigners.

Another wonderful thing about visiting Thailand is how cheap things are—at least for foreigners. One can buy a 20 ounce bottle of water at 7-11 for about 7 cents and get a nice meal on the street for about $2 or $3. A one-hour foot massage or Thai massage (with no happy ending) is generally about $12. I bought two pairs of shorts at the weekend market for $3 each. Things have to have to be cheap there of course, otherwise nobody could afford anything. So I had to marvel at all the Thai people walking around with brand new iPhones. Massage therapists, people working at the markets, and taxi drivers had iPhone 6 Pluses which must have cost them at least $1,000. I would not be surprised if that accounted for a tenth of their yearly income.

Despite their poverty the Bangkokians are serious about shopping. I visited a farmers market that stayed open 24 hours a day. I also attended the famous Chatuchak market both Saturday and Sunday, which is the largest market of its kind in the world. It contains 27 different sections, over 27 acres containing over 15,000 booths filled with art, antiques, clothes, and crafts from all over Thailand. In two days I was only able to cover two out of the 27 sections. Each day over 200,000 people (30% tourists) visit the market. I bought a crocodile belt for $45, a crocodile wallet for $70—easier to get crocodile over there—an original painting, a wallet, t-shirts, shorts, a table cloth for my mom, among many other goodies. It’s possible to bargain for everything, though when I bought shorts for $3 I didn’t challenge the retail price.

Double parked car at the market

After the market ended on Saturday I watched one of the store owners go to her car. A van was double-parked perpendicularly in the lot, blocking her car. Instead of panicking or calling the police, she and her assistant simply pushed the van a few feet out of the way. The van’s driver had kept it in neutral so anyone could move it when they wanted to get out of the lot. Genius!

Why haven’t I ever seen someone do that in the United States? Are we too dishonest or greedy to trust each other in that way? Why in a place with so much poverty did I often feel safer than in my hometown of Chicago?

Question: What’s the best bargain you ever got?

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