The stats from the PMPA (Precision Machined Parts Association) for August confirmed what I’ve been feeling for the past year. Business is really strong for machined parts manufacturers.
It goes pretty much across the board. Automotive, aerospace, medical, even oil and gas and appliance are doing nicely. So is my machinery business that sells to the folks in this section of the manufacturing arena.
This presents a new challenge for me. For almost the last 15 years I have been pushing uphill with only a few respites mixed in. The business trend has been mostly negative for American metalworking companies. The migration of work to China has been a devastating trend. Low-cost Chinese manufacturers have pulled in the generic work and gained competitive advantage with big American firms which are building most of their product in China.
China has not been the only killer for my business. Demographic trends have hurt. The workforce has aged and manufacturers have been unable to replenish a skilled group of baby boomers who are retiring or dying off. For some, the path of least resistance has been to sell or liquidate their businesses. Others have transitioned to CNC Swiss, CNC lathes and CNC mills, leaving long run work to the Chinese. My long successful family business of selling multi-spindle cam operated machines, refurbished to add value, suffered. Market forces killed me. It got bad enough that I even began to think of quitting the game.
In 2015 and 2016, Graff-Pinkert was forced to make the changes that led to a dramatic shift in business. We trimmed people and got more efficient. Noah and Rex Magagnotti, my longtime associate, started traveling more – a lot more – all over the world. We looked for more opportunities in brokering the sale of entire machining companies and buying CNC multi-spindles. We also made new alliances with European dealers.
Then there was the election of Donald Trump in 2016. I’m not a big Trump fan, but almost immediately after the election our machinery business changed for the better. Though Trump has done nothing radical to help business, the signals of shifts in EPA policy and a more aggressive trade stance toward China and Mexico seem to have changed the mood in our customer base. Auto and aerospace had been doing well going into 2017 and have continued to prosper, though the firearms business has faltered because people now don’t have to fear Obama or Clinton abolishing the Second Amendment.
This preamble brings me to my current happy problem. I am so used to doing business in a period of pain and strain that I am at a loss to figure out how to play things in a period of prosperity. Should it be full speed ahead to take advantage of the upswing in business or consolidate, pay off debt, cash in, and count the chips because bad times will come again.
This is not idle speculation on my part. The strength of business is pushing me to expand my workforce, when for many years I have been reducing it.
Should I gamble on buying more inventory or turn inventory (machinery and accessories) into cash when prices are firm? Should I sell off the crap, take losses for tax reasons, or hold on to sell it for higher future value?
At 72 years old should I grow the business or hunker down for the next crisis that hits?
My Uncle Aaron Pinkert used to say to me that his father told him “the dollar is round. Sometimes you are up, sometimes down, but it is always moving along.” I have often remembered that saying, especially when things have been bad. Sometimes it is harder to accept when business is good. Are we still rolling up?
Question: Is the current economic upturn in manufacturing here for a while or a mirage?