Monthly Archives: June 2019

Swarfcast Ep. 43: Bruno Schmitter on Bringing Hydromat to America

By Lloyd and Noah Graff

Today’s podcast is part one of a two part interview we did with Bruno Schmitter, CEO and COO of Hydromat USA.

In 1979 at the age of 25, Bruno came to St. Louis to sell and popularize the previously unknown transfer machine in North America. Bruno told us that at a young age growing up in Switzerland his father began encouraging him to go into the machine tool business. He also discussed his first years in the United States when he traveled the country convincing multi-spindle screw machine shops to use Hydromats.

Scroll down to listen to the podcast below.

Question: Did your father encourage you to go into the machining business?

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Trying To Be The Hero

We’ve all done it.  We’ve all done it and gotten away with it.  We’ve all done it and suffered the consequences.

Tuesday night in the potentially climactic game of the NBA Finals Kevin Durant, the seven-foot shooting star of the Golden State Warriors, played ball after sitting out 32 days with a calf injury.  After 10 minutes of playing beautiful and surprisingly fluid basketball his leg buckled on a seemingly inconsequential move, and Durant crashed, all 84”, to the floor in Toronto.

Some ignorant Raptors fans started cheering, but to their credit, Toronto players immediately shushed them to silence.  They knew what likely happened to Durant, and they took no joy from it.  Durant had done what they had probably all done at one time or another.  He wanted to show his greatness.  He desperately wanted to show the world his toughness.  He wanted to be a hero to the world, to his own teammates, and perhaps most of all to himself.  And he paid the price.

In a fascinating coincidence that sports is so great at highlighting, he was opposing the magnificent Kawhi Leonard who was playing the most incredible basketball of his very nice, but not LeBron James- or Michael Jordan-like, career.  Leonard had become a superstar in the playoffs, yet last year he languished at San Antonio, sitting out the season for physical and personal reasons.  He would be a free agent after the 2018-19 season, and he did not want to spend it with the Spurs.

Kevin Durant After Being Injured

Kevin Durant After Being Injured

Kevin Durant was also in his prelude to free-agency season at 30 years old.  He was on a five-time NBA championship team in the GoldenState Warriors.  Playing with Steph Curry, Klay Thompson, and Drayman Green, Durant made Golden State seemingly unbeatable.  For his choosing to sign there in 2016 Durant was criticized for taking the pebble-free path to titles.

But in sports, like real life, stuff happens.  Earlier in the playoffs DeMarcus Cousins, a former All Star, had hurt his quad.  This had put him out of the playoffs until the middle of the Finals, and he was a poor imitation of the outstanding player he had once been.

Klay Thompson hurt his hamstring and sat out Game Three.  With Golden State down 3-1 in a seven-game series going into Game 5 in Toronto, Durant was under huge social pressure to play and seemingly faced a moment of personal self-examination leading up to game time.  The doctors had cleared him to play.  His teammates certainly let him know that they needed him.  But only Kevin Durant really knew how his leg felt.  Money was also an issue for him.  He would be a free agent after the season.  He was already rich, but soon he could be mega-rich.

He was a defending NBA champion, but the team would always be seen as Steph Curry and Klay Thompson’s Golden State Warriors.  Unless – somehow – Kevin Durant keyed the team to three straight wins to steal back the NBA Championship for the Bay Area.  Then Kevin Durant, incredible all-around, 7-foot player that he was, would finally also be heroic.

Durant played.  And he played really well for 10 minutes.  Then his personal disaster struck.  His Achilles apparently popped—and he seemed to know it.  A ruptured Achilles tendon injury doesn’t hurt as bad as it sounds.  (I’ve done it twice.)  But it messes up your walking, much less your jumping, immediately.  It wrecks your athletic career for 10 months and, at almost 32-years-old before Durant can fully compete, it will dramatically affect his athletic future.  The career of a basketball prodigy, #2 draft pick in 2007, phenomenal scorer, great teammate, could be all but over.  Poof.

By all accounts Durant was emotionally crushed.  The Warriors’ General Manager was literally in tears when he tried to conduct a press conference after the game that the Warriors won by one point.

Steve Kerr, Golden State’s coach, chose not to talk about it.

Before writing this piece I thought about Kerr’s life.  He knows heroism and its price.

Steve Kerr spent a lot of his formative years in Beirut, Lebanon, where his father, Malcom Kerr, was teaching at the American University of Beirut.  Americans were always endangered there.  Two hundred and eighty-two American soldiers had died in one attack in Beirut.  Steve left as a teenager, went home to comfortable Los Angeles, and played guard at the University of Arizona, going to the NCAA Final Four in 1988.  His father went back to Beirut to become University President in 1982.  He was trying to bridge the gap between Christians and Muslims — to be a hero in his own way.  But 18 months after arriving, at the age of 52, he was gunned down by terrorists in the hall of the University.

Question: Have you ever gone out there when you knew you shouldn’t have?  What happened?

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Swarfcast Ep. 42 – John Habe IV on Valuing a Machining Business

By Lloyd and Noah Graff

Today’s podcast is part 2 of an interview we did with John Habe IV, President of Metal Seal Precision, a machining company based in Mentor, Ohio.

Listen to the podcast on the player below.

Over the last several years John has grown Metal Seal Precision both organically and through major acquisitions. According to John, growing through acquisitions can be financially rewarding but does not come easily. John discussed the difficulty in buying companies, which often have emotionally attached owners. He also talked about how he calculates the buy price of a company. He looks at cashflow, often called EBITDA in the acquisitions business, as well as criteria such as product sector, customer diversity, and management style of the current ownership.

Question: Is this a good time to go into the machining business? If so, what sector?

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Quandry, Gold or Dross?

The scary, little, chubby chess piece sat in the old Scottish antiques dealer’s desk for 50 years.  He bought it for a few pounds and stuck it in a drawer.  After his death his heirs were checking out his belongings and discovered the elaborate carving made from a walrus tusk.  One of them thought it might have some value.  They guessed correctly.

On July 2, it will be auctioned off by Sotheby’s. Its anticipated sale price is around $1 million.

It is a piece from the collection of Lewis Chessmen, carved in the 12th century in the form of Norse warriors.  In 1831, 93 pieces of the group were found on Scotland’s Isle of Lewis.  They now are on display in museums in London and Edinburgh, Scotland.

I read about the 3-1/2” high Lewis Chessman yesterday morning in The Wall Street Journal at my factory office.  Later that morning we had an inquiry from South America on a used threading attachment for a 2-5/8”-6 spindle Wickman screw machine.  I immediately started wondering if the attachment was a potential Lewis chess piece.  I haven’t sold a big Wickman machine for years.  I have stripped several of them for key parts, but we don’t sell much big Wickman stuff anymore.

Then came the pricing quandary.  What do you ask for a 50-year-old attachment for a machine few folks in the world use anymore?  I am blessed to have a complete one in stock and the components to almost complete another one.

I pulled a price out of my behind, $7,500.  Another member of the team objected.  He suggested that another party who was apt to also have a complete attachment available might be asking more money for theirs.  He argued that we probe the other dealer’s price before quoting our prospect in South America.  I pushed back.  To me $7,500 was a nice price for a probably useless antique that would very likely outlast me.  To me it was iron.  To him it was gold.  It’s what makes a market and attracts all those cars to estate sales.

I am fascinated by how things are valued by people.  It is also the apple pie of my business, guessing the value of stuff, believing in my judgment, but having a willingness to throw in the towel when the market proves me wrong.

If I had bought that Lewis Chessman and I didn’t know the ugly carving was 900 years old, I probably would have dished it off, made a few hundred quid, and celebrated with chocolate ice cream.  If you have a business with expensive employees, rent to pay, taxes, and health insurance bills you need a semblance of steady cash flow.  It is hard to wait for the market to discover your hidden brilliance.

I knew that the potential buyer for the seldom-coveted threading attachment might decide to run his other big Wickman longer hours, rather than schlep a heavy piece of metal 5000 miles, pay 40% duty, then find a technician to put it on his machine correctly.  Or maybe he could find a soon-to-be-scrapped machine in Sao Paolo for $1,000.  A collector can afford to wait, but a business person has tuition to pay.

I may have a few ugly ivories on my shelves – dusty, grimy die heads or screw machine manuals that Mr. Davenport may have signed.  I don’t know, and I don’t really care.  Very often less is more in business, and a visually impaired old dude like me is quite likely to trip over a vagrant ivory that falls on the shop floor.

Question:  Do you collect or throw out?  Why?

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