Monthly Archives: December 2019

New Year, New Product

By Lloyd Graff

The Food and Drug Administration (FDA) makes it almost impossible for a small company to develop an effective drug and bring it to the marketplace.  It’s one of the main reasons drugs are so expensive in the United States and introduction of new drugs is so slow.

Yet once in a blue moon a relatively small pharma company, living on borrowed money and borrowed time, defies all the odds and slithers a potential blockbuster drug through the laborious regulation, testing, and lawsuits of fat pharma that wants to squash potential competition, and dashes to the finish line.

This happened a few weeks ago when Amerin Corporation’s Vascepa won expanded approval for heart patients, not only with elevated triglycerides but also for diabetics and millions of other Americans with elevated cardiac risk.

This is after Pfizer, which makes Lovaza, the current favorite artificial fish oil capsule (which I have taken for 10 years) has sued them, and the FDA has taken its sweet time to get the tests done to expand its recommended use for the majority of heart patients who currently take statins.

The first statins came out 30 years ago and have probably given heart patients worldwide hundreds of millions of extra years of life.  Fish oil and synthetic versions have also helped, but the reduction of cardiac events shown by this fish oil substitute with some kind of secret sauce developed out in left field called Vascepa has stunned and confused the complacent drug companies and probably the FDA, which may explain why it has taken so long to get it into the mainstream pharma world.

Yet this is typical of innovation. It almost always starts in a garage or workshop as an idea.

I think of Google boys, Larry Page and Sergey Brin, who had no money after leaving Stanford in 1996 but had some goofy ideas about how to make the internet more useful for people.  Sergey asked his future sister-in-law Susan Wojcicki, who had a home with a garage near the campus, if they could camp out in it and keep their computers there.  Susan, who is now in charge of YouTube, probably said, “Sure, but clean up when you’re done.”  Soon after Google was born.

Innovation is still coming from little people, tinkerers, creators who just hope they can solve a problem, make something better, or invent something cool.  Often they are doing it not to make a mint of money but because they get satisfaction, joy, maybe a sense of fulfillment.

YouTube started that way, so did WhatsApp and Instagram.  All were gobbled up by Google or Facebook long before they generated a profit because folks like Larry Page and Mark Zuckerberg know the value of a great idea even in its nascent state.  So did Tim Cook at Apple when he paid a billion dollars to Dr. Dre for his earbuds and fledgling music service, which were a great idea but a mediocre product before Apple put its name and technology behind them.

Big companies are generally lousy at innovating but good at improving manufacturing and marketing.

I was reminded of innovation when I read on the PMPA (Precision Machined Products Association) listserve a request by a reader of the Swarfblog, Randy Lusk.  Randy had a part he wanted to run on a Miyano BNE-51SY, and he wanted to shave the part.  His research indicated there was no tool sold that would do this so he was thinking of improvising with a 62H Slitters Shave he used on a 1-3/4” 6-spindle Wickman multi-spindle automatic.  He figured it would work if he could build a base to allow it to fit the Miyano.

If there isn’t a product on the market, “well, there ought to be, so I’ll make it,” is the mindset of a guy like Randy and a myriad of other folks in the precision machining community.

If you take the macro view, this is what the Chinese are not good at, and they know it.  Their approach has been, “If we don’t have it, steal it.”  This approach can be very useful in the short run, but it is a failure long term unless America continues to allow them to steal technology in exchange for access to their market.  An educational and political system which preaches conformity and orthodoxy at all costs ultimately collapses, I believe.

To Chairman Xi in China, trade issues can be negotiated, finessed, and circumvented.  For him, the existential problem facing China is the desire for freedom exhibited by the people of Hong Kong.  If he sends in the tanks and mows down the protesters, China will be seen as a hapless butcher that fears its citizens.  It will be another Tiananmen Square disaster.  And protest could spread to the mainland.  If he lets it continue to burn and gain strength in Hong Kong it could spread to Macau and then to the mainland.

He has a huge problem going into 2020, and the U.S. should do nothing to help him with it. They haven’t been trained in China to adapt old shave tools to modern equipment.

They also don’t know how to deal with dissent.

Question: What new thing have you created?

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Best of Swarfcast Ep. 39 – Machining Parts for the Amish

By Noah Graff

Happy Holidays! While much of the Swarfcast team is on vacation through the New Year, we’re sharing a few of our favorite podcasts from 2019. This week, we revisit Episode 39, in which Noah interviews Jay Sauder, owner of Sauder Machine in Plymouth, Ohio. This episode originally aired in May.

Noah writes, “One of Sauder’s specialties is making hydraulic wheel cylinders for Amish horse-drawn buggies using sophisticated CNC equipment. Sauder and his 10 employees are all members of the Mennonite church. Earlier in his life, Jay himself drove a horse and buggy, but today he chooses to drive a pickup truck. However, all of his employees ride bicycles to work.

Scroll down to listen to the podcast.

Jay told me that the company buys used equipment almost exclusively and seldom buys a machine for a specific job. He purchases equipment when he considers it a good value and fit for his company’s expertise. The company also is unafraid to use a variety of brands and controls, such as DMG, Traub, Haas, INDEX, Mazak, Matsuura, and Hurco because his workers are not bothered switching from one control to another. He enjoyed telling me about two 1988 CNC Traub TNA 480 Turn-Milling Centers that the company is currently refurbishing in-house.”

Question: What is the most unusual job you’ve had?

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Our Take on the Machining World of 2019

By Lloyd and Noah Graff

In today’s podcast Lloyd and Noah Graff reflect on their experiences in the machining world of 2019. What did we see this past year? What did we learn? How did it feel?

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Main Points

(2:07) Lloyd says when he thinks of 2019 he thinks of his “constant battle between despondency and hope.” He feels like one deal can make or break a year in the used machinery business. 

(3:45) Lloyd and Noah talk about the importance of journaling about their days. Lloyd tries to do it in the middle of the work day while Noah prefers to do it at night. Both agree that by journaling they realize they did indeed accomplish things, and have significant conversations and experiences on a given day. 

(6:00) Noah and Lloyd talk about the grim political news of 2019. Lloyd says everything is focused on conflict. Noah says in 2019 he found he was happier and more productive by minimizing his news intake.

(7:00) Lloyd says ironically one of the more fun parts of 2019 was watching the Chicago Cubs games and sharing the experience with family by texting and calling during the games. He also says one of his greatest pleasures is working with Noah, and that he would not work in the machinery business without having Noah question and push him. He says the day he can’t handle being questioned is the day he should retire.

(10:50) Noah talks about his personal growth with self-help books such as Dale Carnegie’s How to Make Friends and Influence People. Noah and Lloyd talk about their strategies on how to make others feel important and comfortable in conversations.

(15:50) Lloyd says one of the most significant experiences of 2019 was being conned by an international customer. It was a lesson in the importance of doing due-diligence and that it is impossible to know who to trust, even after meeting them in person.

Lloyd and Noah reflect on another year in machining

(23:13) Lloyd predicts what used machines Graff-Pinkert will focus on selling in 2020. He believes in focusing on the “unloved machines” such as multi-spindle screw machines rather than all late model CNC equipment because older equipment has potential for better margins. However, he still preaches caution because machines are “unloved” for a reason. 

(25:00) Lloyd says the European automotive industry seems to be betting on electric cars much more than that in America. The unchartered territory has made high production machining companies in Europe nervous and indecisive about what work to go after in the next few years. 

(28:30) Noah remarks that the values of multi-spindle screw machines seem to have fallen dramatically in the last year. High quality European screw machines sold for incredibly low prices in a few recent auctions. Lloyd says it demonstrates buyers are cautious, but he thinks people’s mindsets could change in the near future.

(36:00) Noah says he is grateful he gets to create Swarfcast. He thanks the show’s loyal listeners and proudly announces the podcast has its first paid advertiser, Firetrace. He gives his pitch for listeners to subscribe, share, and rate the podcast.

Question: What is one thing you will remember from 2019?

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Ep. 64 – Automating a Machining Business with David Wynn

By Noah Graff

Today’s podcast is part two of an interview we did with David Wynn, CFO of ABF Engineering and Machining, a third generation screw machine shop in South Fulton, Tennessee. Dave makes a lot of his profits on mechanical screw machines that are older than him, but he emphasizes using advanced technology to automate his business’s processes.

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Main Points of the Interview

(2:15) David says it is important that his employees be driven individuals. He wants people who can work independently in a loosely structured shop environment. His employees can divide their work amongst each other as they want and structure their time how they want as long as they meet production goals. Dave says the more power you give your people, the better they perform.

(3:55) Dave says his goal is to one day have someone else handle the day to day responsibilities of his company so he can focus on growing the business by improving customer relationships and automating business processes. He says he would like to be able to step off the face of the earth for 30 days and and then return seeing the company running smoothly as though he never left.

(8:20) Dave discusses his goal to automate every part of the business that takes his mind away from the key tasks at hand. He says his shop has one button that turns off the all the lights, regulates air conditioning, turns off exhaust fans and everything else necessary to leave the building.

(10:20) Dave talks about the parts he is making on his Brown and Sharpes. He says if he has a high production run he can often can get a closer tolerance on a Brown and Sharpe than a modern CNC machine because the machine is rigid like a tank. 

(13:35) Dave says he does not see his company as competing with China. He says his parts are not commodity parts because he often does short runs of 500 pieces or less. He jokes that “a Brown and Sharpe was a CNC before CNC was cool.”

(14:20) Dave says he feels the machining business in his blood. He thinks the machining bug has been passed down to his 5-year-old son who has been coming to the shop every day since he was born.

(18:20) Dave says he is glad he went to business school rather than going straight into the machining business out of high school because it taught him to determine the values of assets. He says his dad had actually forced him to go to college.

(20:35) Dave says he sees purpose in the machining business because every mechanism people use has parts that have been machined. He appreciates creating tangible products rather than merely creating liquidity in the finance industry.

Question: Is a college education important for running a machining business?

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Mobility is the Game

By Lloyd Graff

I’m in the mood for sports today.  In baseball, Washington won the World Series for the first time after losing Bryce Harper to the Phillies. And they won it in seven games, winning all four played at Houston’s ballpark. Never happened before. And the Nationals’ best pitcher, Matt Scherzer, got hurt in the Series.  Unpredictable game.

In football, the traditional drop-back quarterback, Tom Brady, Aaron Rodgers, Drew Brees, is being gradually surpassed by the mobile, elusive running quarterback.  The three most likely MVP quarterbacks this year are Russell Wilson, Lamar Jackson, and Patrick Mahomes.  All were misjudged coming out of college and fell in the draft because they didn’t look like Brady or Brees.  Wilson was a third-round pick for Seattle, Jackson was the last pick of the first round for Baltimore, and Mahomes was thought by many football savants to be a better pitcher than QB.

College football is also seeing change. The two top candidates for the Heisman Trophy this year are both transfer students who were not deemed to be good enough to start for the college teams they were recruited for out of high school.

Joe Burrow sat three years at Ohio State.  He did study enough to graduate from OSU which made him eligible to transfer to LSU and play football without the usual NCAA baloney that restricts the transfer of athletes.

He played well last year but has been amazing this season, throwing for 55 touchdowns and leading the Tigers to the top seeding in the national playoffs.

The Ohio State quarterback, Justin Fields, also had an undistinguished career at Georgia. He graduated but had a year of eligibility left. OSU’s All-American from last year, Dwayne Haskins, was the first-round pick of Washington after his junior year which left an opening for Fields with the Buckeyes. This year he threw for 40 touchdowns with one interception.

Potential MVP Russell Wilson of the Seattle Seahawks

It brings to mind the one season that Russell Wilson had at Wisconsin. He had had an okay career at North Carolina State, graduated with eligibility, and played minor league baseball till the Badgers called him for a last college hurrah. He was only 5’9” tall but played like a giant leading the team to the Rose Bowl and setting up his current NFL MVP status with the Seattle Seahawks.

To end this, let’s throw in a little NBA. Kawhi Leonard led the Toronto Raptors to the NBA Championship after a difficult, injury-riddled year with San Antonio. Some folks saw Leonard as temperamental and even faking the severity of his injuries while with the Spurs. He wanted out of Texas for his last season before becoming a free agent in 2019.

Toronto had an awful playoff record despite having good players. They gambled on trading for Leonard, knowing it might just be for one year. Kawhi recovered from his injuries, carried the team to the playoffs, and then played inspired basketball to help them win the NBA title.  And in the off season he headed home to Los Angeles and signed a mega contract with the LA Clippers.

Sports changed a lot in 2019. The athletes took more and more control over their short playing careers.

Questions:

Are today’s professional athletes too selfish?

Who is your NFL MVP for 2019?

 

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Ep. 63 – Running a Machine Shop like a Tech Company with David Wynn

By Noah Graff

Today’s Swarfcast is part one of an interview we did with David Wynn, CFO of ABF Engineering and Machining, a third generation screw machine shop in South Fulton, Tennessee. After earning an MBA, David joined his family’s business 17 years ago. His stated mission is to run a machining business composed of old cam screw machines as though it were a tech company.

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Main Points of the Interview

(2:40) Dave gives a history of ABF Engineering and Machining. The business was started by his grandparents and father in 1976. They primarily ran Brown & Sharpe screw machines.

(4:45) Dave talks about the machines in his shop. He said the company has Haas lathes, CNC Swiss, and a CNC mill, but still more than 50 percent of the company’s work is done on Brown & Sharpe screw machines. The company is running 15 Brown & Sharpes currently, but Dave says he has about 100 in the building.

(6:30) Dave gives a brief education about Brown & Sharpes. He says what makes Brown & Sharpes productive is that an operator can work with the turret and other tools simultaneously. The machines are extremely rigid, and have a gear driven 5Hp motor.

(12:47) Dave explains how building a cam for a Brown & Sharpe screw machine is similar to writing a CNC program for a Swiss machine. The main difference is the CNC program is immediately implemented while the cam takes days to build.

(14:45) Dave talks about how he came into the business. He had never stepped foot in the shop before he turned 18 years old. While in college and grad school he began working at the company. He earned an MBA, but instead of going into the finance industry he fell in love with the machining business and decided to do it full time.

(18:40) Dave talks about how ABF Engineering and Machining changed after he and his father bought it from his grandfather. He says they chose to focus on creating a new culture based on teamwork and innovative work practices. They prefer to hire people who fit into the company’s culture rather than hire based on an applicant’s talent.

(21:55) Dave talks about the company’s unconventional practices for work hours. Its employees have the flexibility to work when they like and choose how many hours they work as long as they get their work done and work as a team. He says that most outsiders look at him like he is a space alien when he tells them about some of his policies.

(28:40) Dave says that usually the people who are most successful at his company are the ones who put in a lot of hours at the shop and also at home. One of the characteristics he looks for in a great employee is someone who is constantly trying to better herself.

Question: Do you know how to run a Browne and Sharpe?

 

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Under the Tarp

By Lloyd Graff

Homeless people spook me. I hate it when somebody wearing a sign proclaiming their homelessness, holding a cup and looking forlorn, shoves the cup toward me begging for coins. Yet their plight, if they really are homeless, is a terrible thing.

It struck me hard recently when Noah and I were driving to a business conference in the city concerning hundreds of thousands of dollars’ worth of unsold screw machines.  We drove by a tiny makeshift shelter covered by a couple of blue tarps next to an apartment building which appeared empty and possibly being prepared for demolition in an area in the process of “gentrification” in Chicago.

It was a raw day in November ahead of Thanksgiving.   I saw nobody around it.  The blowing tarps were a more hurtful reminder of the misery of life on the street without a roof to call your own.

It brought to mind a story my friend Jerry Levine had told me at one of our weekly Saturday breakfast idea fests recently.  Jerry had volunteered to help kids at a Chicago high school several years ago.  One of the kids who was a star student had a problem giving an address of his residence.  The reason was that he was sleeping in a dumpster.  We have a dumpster at Graff-Pinkert.  Occasionally I haul a plastic bag of office garbage out to the dumpster.  Every time I look inside I think of that poor kid climbing inside and probably covering up and trying to keep warm with a blue tarp he hid away.

By the way, Jerry said the kid ended up getting a full scholarship to a prestigious college, somehow.

Chicago homeless sleeping under tarps

For many years I volunteered at a local homeless shelter.  It rotated among various churches and synagogues in the neighborhood I lived in.  I came in at 5:15 a.m. and helped clean and put the mats away the shelter people slept on, gave out toothpaste and Band-Aids, and cleaned up after breakfast was served.  It was a good education for me, that homeless guys (there were only guys at this shelter) were mostly just human beings who were at a down part of their lives.  Some had jobs (fast food joints, car washes, guards), but usually the jobs didn’t last long enough to enable them to get an apartment that required deposits and credit checks.  Many had drug and drinking problems.  A lot of them hung around the local White Castle or McDonald’s till they were urged to move along.  A few had cars; some of the younger guys rode bikes. I once hired one of the friendlier men, but he did not last long because of a chronic drinking issue.

The rotating homeless shelter no longer exists at the local synagogue.  My friend Jerry Levine and other local people somehow managed a minor miracle.  They found a mayor in the area who, rather than avoid a permanent shelter in his town, embraced the idea.  He claimed his mother on her deathbed told him to do it.  There was an unloved piece of real estate that the mayor obtained for granting zoning privileges to a developer who wanted to build a shopping center in the village.  The three-acre piece was far enough away from neighbors that nobody yelled much.  Jerry and friends with government connections got every grant the government had on the books and built a $18-million multi-story building for homeless people with good credentials to get nice temporary apartments.

Someday I hope the poor people under the blue tarps in Chicago or kids like the one living in the dumpster find their way out to that beautiful haven in Country Club Hills, Illinois, within walking distance of my office.

Question: Do you prefer to give money to people on the street or to an organized charity?

 

 

 

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