Monthly Archives: November 2019

I’ll Take What I Can Get

By Lloyd Graff

Lisa Goldman is living with a Stage 4 lung cancer diagnosis. She writes a blog called Every Breath I Take, aimed at people like herself.

In her latest piece she talks about surpassing five years on her medication, which she says has a “median effective time of 18 months.” She says she knows of less then six people in the world with her diagnosis who have been on her medication that long or longer. She writes, “It is oddly isolating, way, way, out here on this ever-narrowing branch with this ever-dwindling number of fellow-travelers. My doctors keep telling me the branch will break at some point, and the longer I’m here, the closer I am to that breaking point, prompting the doctors to be more and more vigilant with me, rather than less.”

Lisa Goldman knows she’s not cured, yet she writes, “The truth is, it is hard not to get a little comfortable out on this narrow limb. As I drift ever closer to a likely recurrence, I also log more and more days, weeks and months and years without one, strengthening my ability to paradoxically feel positive and hopeful for a miracle. I’m not naive, but I have tracked myself into an unlikely optimism. I’m locked in a positivity paradox. And, frankly? Like my husband often says: I’ll take what I can get.”

Me too. I’ll take it.

Happy Thanksgiving. It’s a great gift to be able to feel good and celebrate in America.

Question: What is one thing that makes you happy to be alive?

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Ep. 62. Small but Profitable Swiss Shop with Travis Erickson

By Noah Graff

Today’s podcast guest is Travis Erickson of Precision Components of Oxnard, California. Precision Components runs Tornos CNC Swiss lathes, specializing in producing custom mil-spec contacts primarily for the aerospace industry. Travis and his father handle all of the company’s machining and quality duties and employ only three people in their shop.

Scroll down to listen to the podcast.

Main points of the interview

(2:50) Travis explains the core of his company’s business, custom mil-spec electrical contacts that go into circular connectors for large OEM aerospace companies. The company produces parts ranging from 16mm all the way down to .0013mm.

(4:45) Travis talks about the Tornos Swiss machines at Precision Components. The company has nine DECO 10, a DECO 13a, an EvoDECO 16, and an old ENC 162 which Travis says is practically older than him. Travis says his father bought the first Tornos DECO sold in the United States in 1997 or 1998, a DECO 10 that is still running in the shop today. Travis says the company’s EvoDECO 16 cost around $400,000 new after freight and options. He says possibly other Swiss brands could do the company’s work, but he has no plans to switch because he knows Tornos machines produce the tolerances he needs.

Travis Erickson of Precision Components, Oxnard, CA

(7:24) Travis talks about the history of Precision Components. His father started the company in 1988. Travis says he is 34 years old and has been working at the company for 11 years since finishing college at U.C. Berkley. The company is literally right around the corner from the Haas Automation factory, but it has never had the need for any Haas machines.

(9:45) Travis says Precision Components doesn’t advertise with a website, despite his degree in marketing. He says the company has a core group of reliable customers, and right now he is not concerned with striving for huge growth.

(10:30) Travis says aside from he and his dad there are only three guys who work in their company’s shop. They handle tasks like parts cleaning, tumbling, deburring, light assembly and monitoring the machines. Travis’s Dad is the primary machine setup person and operator, while Travis handles quality and the company’s business responsibilities. Travis says the company at one point had 11 total people, including two setup guys, but it downsized in 2009-2010, and the setup people left to explore other opportunities. He and his father realized that the company could operate successfully with a much leaner but efficient workforce.

(15:05) Travis says he thinks the machining business will slow down next year because of the Presidential election. He says that the “big boys” like Boeing and Raytheon typically buy a lot of inventory leading up to an election and then wait to see what happens before they start funding new projects.

(17:10) Travis says he knows it will be important to grow more and invest in some employees in the near future now that he is starting a family.

(21:30) Travis talks about the challenges of running a machining company in California such as state taxes, hazardous waste permits and wild fires (which caused this podcast interview to be postponed a week).

Question: Do you wish your machine shop was larger or smaller?

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Haas Doubling Down on Vegas

By Lloyd Graff

I find California the most interesting state in America. It is not known as a machining mecca, but it is home to America’s most progressive and largest machine tool builder, Haas Automation of Oxnard, north of Los Angeles.

It appears we may not be saying that much longer as Haas prepares to build a gigantic manufacturing complex in Henderson, Nevada, just outside Las Vegas. Gene Haas, the owner of the company bearing his name, has bought a home in Henderson so he will be able to have his eyes and ears to the ground in the 2 million plus square foot project. He will also save a bundle on taxes in Nevada.

He is following the lead of Elon Musk, who is based in the San Francisco area and builds Teslas in Fremont but constructed his massive battery plant in the Reno, Nevada, area.

California is still a great place to live, go to school, start companies, vacation, and press olive oil, but for making stuff profitably it is Alcatraz. Skilled people find it hard to afford unless they commute from the boonies and start at 4:00 AM. The politicians are hostile to manufacturing because they think it pollutes everything. California’s regulations and taxes make those of Illinois look benign.

Rendering of new Haas Manufacturing facility in Nevada

Many people with homes they have held for decades are selling to move to Idaho, Utah, or Nevada because they are livable places that are still affordable by California standards.

I understand Haas is offering some great end-of-year sales these days, but that may not be because of preparations to move to Vegas. You don’t build 2 million square feet of manufacturing space overnight, even if you are Gene Haas. Likely the company will have two facilities for while, still using its original location in Oxnard, California.

* * * * *

Another interesting event in the L.A. area besides forest fires and power outages is the return of Harvinder Singh to the machining business.

Mr. Singh sold his interest in Ganesh Machinery to a private equity firm in 2018 and began a machine tool financing firm in nearby Moorpark, California. Running Ganesh Singh had built up the import of Taiwanese lathes and machining centers with aggressive pricing and attentive customer service. His company did not try to be the most sophisticated provider but gained market share by selling value.

Evidently the new people who bought the firm did not have a feel for the industry and were heavily leveraged. When Ganesh did not produce the returns they were hoping for they abruptly sold off the finished inventory to an auction firm and abdicated.

Harvinder says he did not know it was coming until it happened, but he happily came back to pick up the pieces. He says he reassembled the company within a few weeks, and it is now up and running under a new name, Expand Machinery LLC. He hopes to really hit his stride by the New Year. In the meantime, he has kept the financing business while he puts Ganesh back together.

In business nothing ever stays the same. In California that seems doubly true.

Question: Are you happy with the location of your business?

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Ep. 61 – Xometry’s Greg Paulsen on Facilitating a Manufacturing Network

By Noah Graff

Scroll down to listen to the podcast.

Today’s podcast centers around a company that provides capacity for machining firms that lack resources to meet clients’ needs.

Our guest is Greg Paulsen, Director of Application Engineering for Xometry. Xometry provides manufacturing on demand using an artificially intelligent quoting system and a manufacturing partner network of over 3,000 companies.

Main points of the interview

(3:00) Greg explains his background in product development working for firms in the additive manufacturing sector. He discusses the his dislike in his previous job of sending out lots of RFQs and then having to wait for responses. 

(3:40) Greg explains that Xometry’s purpose is to get rid of the RFQ process for most parts using AI technology. On Xometry’s website a person can submit a 3D CAD file and instantly receive an estimate for price and lead time on a job. 

Greg Paulsen of Xometry

(4:12) Greg says that Xometry has a network of manufacturing partners that can provide CNC machining, sheet metal processing, injection molding, as well as 7 different 3D printing processes for over 60 different materials.

(5:05) Greg characterizes Xometry as a storefront that connects work with those that are best able to produce it. It has over 3,000 manufacturing partners, mostly small manufacturers of diverse disciplines. Greg says that the large number of companies in Xometry’s network quoting work enables it to determine what price is “market fair” for a job.

(7:35) Greg says it is easier to quickly determine prices on low volume jobs (1 to 1,000 pieces). He says often large companies such as Bosch use Xometry so they don’t have to worry about producing very small volumes. He says that Xometry can also facilitate high volume jobs, but clients would have to have a more involved consultation with Xometry’s staff to set up the process, rather than using the online quoting system.

(9:30) Greg says Xometry is usually used by companies who are already working at full capacity and then receive unexpected work. He says shops also utilize Xometry when they need to do work that doesn’t fall into their normal areas of expertise. 

(11:30) Greg talks about how manufacturing firms can join Xometry’s partner network. He discusses a vetting process in which Xometry pays potential partner manufacturing companies to make a sample part.

(27:50) Greg talks about another service Xometry provides that he calls the Finishing Network. Xometry matches manufacturers with partners that can provide secondary operations, anodizing for example. In these matches the clients can communicate directly with each other, unlike Xometry’s anonymous manufacturing on demand service. 

(35:40) Greg talks about Xometry’s supply services. The company can provide manufacturers with raw materials as well as tooling.

(44:50) Greg talks about Xometry’s revenue model. He says it generally inserts around a 20% margin for transactions. Its system finds the delta between the market fair price for manufacturers’ take rates and the market fair price for the customers’ take rates.

Question: What have been your experiences with manufacturing networks like Xometry?

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Auctions and Late Entries

By Lloyd Graff

The last few days have been fascinating for me as an avid observer of business, politics and sports.

Last week two big auctions in the precision machining space took place, Triumph Manufacturing in Tempe, Arizona, and HN Precision in Rochester, New York. My focus was on Triumph, which Noah attended, but I also listened to HN Precision online.  A few observations and generalizations:

Late-model CNC equipment, even if it is slightly flawed, brings strong prices, but a middle-aged CNC loses value abruptly.  At Triumph, the marquee piece, a Nakamura WT250II new in 2016 with no Y-axis, brought $225,000 plus the 18% ($40,500) “Buyer’s Premium.”  A Studer ID grinder new 2014 brought $180,000 plus the $32,400 Buyer’s Premium. At HN, A51 and A61 Makino horizontal machining centers older than 2010 were well under $100,000 including BP.

Tornos Multi-Spindles at Triumph Precision Auction

The high-production machine tools at Triumph, Tornos and Schutte multi-spindles, brought considerably less than at similar auctions in Europe in recent years.  It appears that the weaker worldwide automotive market is affecting those prices. One interesting exception was an 8-spindle 1-5/8” National Acme hitting $70,000 with BP.  Acmes may be looked at as dinosaurs, but even dinosaurs have their day. Perhaps so do dinosaur politicians.

* * * * *  

Michael Bloomberg finally joined the fray for the Democratic nomination for president. Bloomberg had waited for Joe Biden to make up his mind to run for the office. He had offered huge money to Biden if he ran.  He supposedly hates Donald Trump and knows him pretty well as a fellow New Yorker.

Unfortunately, Hunter Biden happened and Joe Biden’s hunt for the presidency became very much in doubt.  Bloomberg, eyeing the polls and watching time running out to enter the primaries, decided to cautiously throw his hat in the ring.

Mike Bloomberg is rich enough to finance his own candidacy, but starting a year later than his competition, with Biden apparently staying in the race, is a huge disadvantage, no matter how much money he spends.  Bloomberg is a brilliant business guy, a self-made mega-billionaire, in a party that seems increasingly hostile to successful entrepreneurs. He’s big on climate change but does not buy into most of the hard-left agenda of Bernie Sanders or Elizabeth Warren.  He has a shadow organization ready to spring to life, but he lacks charisma and fire and Biden’s street smarts as a lifelong politician. If he had started when Joe did he would have a real shot at the nomination. At this date it seems like he is late for the party.  Perhaps we are seeing the beginning of a third party which could swing the election. But which way?

* * * * *  

The college football game of the year, at least so far, was Alabama vs. LSU last weekend.  LSU always loses to Alabama, particularly when the Crimson Tide is at home in Tuscaloosa, but this year Ed Orgeron, the coach of the Tigers, told his kids all week that they had the better team and the better players.  He believed it and so did the players because the boys from Baton Rouge finally had the quarterback they had always lacked, a grad student from Ohio State who could rarely get on the field for the Buckeyes.

Joe Burrow? I’ve barely even heard of this kid before, but he is now the leading candidate for the Heisman Trophy, playing for LSU.  Burrow was a great prospect coming out of high school in Athens, Ohio. He expected to understudy J.T. Barrett in Columbus and then take over.  He was redshirted as a freshman and then backed up Barrett for two years. But OSU also recruited another phenom, Dwayne Haskins, who beat him out in the spring game in 2017 and left Burrow with an interesting decision to make about his athletic career.  Burrow had evidently envisioned this possibility early on in his Buckeye career and crammed in enough credits to get a Bachelor’s degree in finance in three years. This made him eligible to transfer to another college team and play immediately like Russell Wilson had done after leaving North Carolina State for one fabulous year at Wisconsin and then an All-Pro career with Seattle in the NFL.

Burrow was bred and groomed for stardom.  His grandmother once scored 82 points in one high school basketball game in Mississippi. His dad played for Nebraska and in the NFL and then coached college football for 40 years.  Joe went to his first football game when he was five days old.  

Last Saturday, playing head to head against Alabama’s All-American quarterback, Tua Tagovailao, today’s version of “the Throwin’ Samoan,”  Burrow bested him in a 46-41 shootout. Tua was playing on a gimpy ankle, but played like last year’s Heisman winner, yet Burrow was even better.  What a game to watch.

* * * * *  

Question: At an auction sale do you prefer to bid online or in person?


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Ep. 60 – Alec Mandis, Machining in New Zealand Part 2

By Lloyd and Noah Graff

Scroll down to listen to the podcast.

Today’s podcast is part 2 of an interview we did with Alec Mandis, Chief Executive of Accord Precision, the largest machined component manufacturer in New Zealand. Over the years Accord has strived to set itself apart by developing a diverse group of niche products. One example is a stainless steel diving helmet made from an investment casting which took the company three years of R&D to produce successfully.

Main Points of the Interview

(2:30) Alec talks about the process to produce Accord’s stainless steel diving helmet from an investment casting. He says that five years ago the commercial diving industry needed a more durable helmet than the standard light weight fiberglass ones at the time. Accord spent three years of R&D to bring its helmet to market.

(7:15) Alec talks about why Accord spent so much time and money to develop its stainless steel diving helmet despite it being a low volume product. He says that creating a difficult product like the helmet elevated the company’s capabilities for process controls. Accord became better prepared to produce other difficult or high risk products such as those for the medical device industry. It also demonstrated the company’s abilities to potential customers.

Alec Mandis with diving helmet made by Accord Precision

(11:30) Alec says that Accord has put great emphasis on statistical process control and ISO registration for decades. The company has ISO 13485 medical device accreditation which enabled it to get FDA registration in the United States in six months, which Alec says normally takes companies four or five years to obtain.

(12:50) Alec says his best trait for running his business is his ability to manage people. He says it is essential to communicate with employees and create strong relationships with them. He says it is important to help them when they need it but push them when possible.

(13:50) Alec says the thing he would most like improve upon is a work-life balance in his personal life. He is trying to spend more personal time with family but says it is difficult while running a business. He thinks New Zealand has a pretty balanced work schedule. Accord’s employees work 40 hours a week over a four day work week, but Alec still works five days a week.

(16:55) Alec says that New Zealand’s geographically remote location has spurred the country’s innovation and self-sufficiency. He says the country has the best magnet manufacturer in the world and is a world leader in the production of MRI machines. The country also shines in the agricultural and dairy sectors.

(18:40) Alec explains that the nickname “Kiwi” for a New Zealander comes from the kiwi bird, which is native to the country.

Question: Can a small machining company afford to do extensive R&D?

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