Monthly Archives: August 2020

Ep. 95 – The Machining Business in Canada with Sander Boelen

By Noah Graff

This week we head to Canada, as we continue our season exploring the diverse world of machining around the globe. Our guest is Sander Boelen, founder of Allegiant 3D in Montreal, Canada. Allegiant 3D engineers and produces prototypes for OEMs in the photonics industry around the world; companies making products like lasers, medical instruments and dental scanners. 

As a used machinery dealer I’ve sold a lot of machines into Canada over the last few years. From my vantage point, the machining business generally seems to be doing quite well north of the border, and I wanted to find out why that is.

Scroll down to listen to the podcast. Or listen on your phone with Google Podcasts.  Apple Podcasts or your favorite app.


Main Points

Noah talks about meeting Sander Boelen when Sander inquired on Graff-Pinkert’s Trumpf TruLaser Station 5005 Laser Welder it has for sale. (2:40)

Sander talks about the origins of his company, Allegiant 3D, which began in the mid-2000s as an engineering firm. The company designs products and manufactures prototypes for the photonics industry, including lasers, receivers, and various types of medical equipment. (4:00)

Sander gives an example of the types of businesses he works with, including a local producer of intraoral scanners used in dental work. ( SEE VIDEO BELOW – 6:30)


Sander talks about the machine tools that Allegiant 3D has in house to make prototypes for customers. (8:00)

Sander talks about his personal experience growing up in the southern region of the Netherlands, which he calls a great breeding ground for technology. In his college years, Sander moved to Canada to take an apprenticeship in the Physics department at McGill University, located in Montreal, Quebec. (9:00)

Sander talks about higher education in Canada. He says public education there is free and universities are inexpensive, with tuition costing around $2,500 CAD per year. He says many Americans study in Canada because of the low cost. He also says Canada has good trade schools, including one close to his shop. (11:30) 

Sander talks about Montreal, located approximately five hours from Toronto. He says in Quebec French is spoken in the street and signs are in French, but everyone knows English. (13:00)

Sander says that Montreal’s machining industry is mainly in the aerospace sector, while machine shops in Toronto, which aren’t far from Detroit, primarily work in the automotive industry. He talks about some of the aerospace suppliers in his area which range greatly in size.

Sander says Canada is a good place to start a machining company but at the same time it’s complicated to start a business anywhere in the world. (16:30)

Sander talks about the Canadian government. He says Canada has good programs that encourage business. He talks about R&D tax credits that encourage companies to be innovative and work together. (17:50)

Sander says he believes that running a machining company in Canada is not that different from running one in the United States. In fact, currently he is looking for potential opportunities to start a company in the US. He also says that Canada’s economy is very socialist, particularly Quebec. He says not needing to provide health care for employees was one reason it was easier for him to start a company in Canada, which has a public health care system. He says that successful companies in Canada often offer supplemental insurance as an extra benefit to employees. (19:00)

Sander talks about the higher tax rates in Canada. He says at a certain income bracket tax rates can be 50-55% but there are ways to decrease taxes such as investing in pensions plans. (21:40)

Sander says that the machining industry in Canada will be prosperous for the next few years and that he sees work coming back to North America. He says that though the value of the Canadian dollar is much lower than the American dollar the lower value is beneficial for exporting. He says currently the aerospace industry is taking a hit, but his business is busy right now. (23:00)

Sander talks about the advantages of having a niche, making parts for the photonics industry. (24:50)

Sander says a big challenge he is facing is having to say no to the demands of smaller customers as his company continues to grow. He also says it is a challenge to produce the right parts consistently all of the time. He says making one part well is easy, but making a lot of different parts consistently is difficult. (25:30)

Sander says the most interesting thing he learned recently is that pushing employees to work longer hours often has diminishing returns. (27:00)

Question: Is doing business with Canadian companies important for your business?

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“Fulfillment” Centers

By Lloyd Graff

Like desert marigolds flowering out of nowhere, 4 million square feet of new buildings are going up simultaneously this week in the primarily African American South Suburbs of Chicago where I live and work.

Twenty miles north of here in Englewood, where my dad grew up and attended High School, people are shooting at each other every night and connecting with disturbing accuracy. The daily carnage is staggering and overflowing into the expensive Magnificent Mile of North Michigan Avenue, leaving it looking like Beirut’s downtown.

Amazon loves the South Suburbs. They already have built half a dozen fulfillment centers in the area and are building two more. One of them is within walking distance of Graff-Pinkert, and the other is near my favorite corn stand. The Logistics Center of 2 million square feet, consisting of four expandable buildings, is also in walking distance. It is located on a 102-acre site, which was supposed to be an outlet mall until Amazon growth killed that idea. Its closest neighbor is a multi-story apartment building, built just a few years ago, which accepts people who have lost their jobs and have nowhere to go. The developers jumped on the site when they could put together $29 million dollars in tax subsidies from the village and county, plus the tax advantage of being in a designated Opportunity Zone with the recent tax law changes.

Add in cheap mortgage money and a great location between two interstates, plus an abundance of inexpensive workers with lousy job prospects in the neighborhood—and bring in the excavators. 

The broker for the logistics project says there is an industrial real estate boom taking place, with Amazon picking up half of the new space in Chicagoland.

What is it like for the $15 per hour people who are drawn to the thousands of Amazon jobs, before the robots make them obsolete?

A woman who used to clean our friend’s house went to work for Amazon in Joliet a half hour west of the new fulfillment centers. Her work consisted of opening boxes 10 hours a day, four days per week. She wanted the job because it was her first opportunity for full-time work that offered health insurance. It was also an opportunity to get free tuition at a local community college if she worked for Amazon for 18 months.

It was demanding physical work and took its toll. Both of her hands absorbed enough punishment to require surgery. Her dream of training to become a nurse’s assistant sterilizing instruments was postponed by these injuries.

2-Million-Square-Foot Logistics Center

I am a capitalist, an investor, and a happy customer of Amazon. I think Jeff Bezos is a genius who has enriched me and my family because I invested in Amazon stock over 10 years ago and have held on to it. Bezos himself was born to a 17-year-old mother. His father, who he barely knew, owned a small bike shop in Albuquerque. His mom got an education, moved to Florida, and married into an upper-middle-class world. Jeff went to Princeton but he started Amazon on a prayer, and it is now worth hundreds of billions of dollars.

Our former cleaning person will not be taking another job at Amazon with her damaged hands. The two new 865,000-square-foot fulfillment centers will each hire a thousand workers for bigger packages, but Amazon has proudly announced that the buildings are built for robots when they become more capable.

The South Suburbs, the stepchild of Chicago real estate, is finally bustling. It has the cheap land on the interstate highways, and, above all, it has cheap people, the folks who will line up for the grueling jobs that more efficient, stronger robots will eventually take.

Capitalism drives America, and I love it. But it does come with a cost. My Amazon stock is up 2,218%. The gulf of income between people with securities and those who dream of sterilizing instruments keeps growing, but with Opportunity Zones and other tax breaks, we’ve got 4 million feet of new buildings blooming in my backyard.

Question: Have you lost workers to Amazon?

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Ep. 94 – The Machining World of South Africa with Peter Frow

By Noah and Lloyd Graff

On today’s show we’re discussing the machining business in South Africa. Our guest is Peter Frow. Peter has been immersed in the machining business and has also been a participant in the social change of South Africa over the last 50 years.

While so many of his countrymen emigrated, Peter stayed and has recently started a business building a new machine tool in South Africa called FAS Machine Tools.

Scroll down to listen to the podcast. Or listen on your phone on your favorite app or Apple Podcasts and Google Podcasts.

Main Points

Peter talks about his businesses, Renfield Machine Tools, which he started in 1991, and his new company, FAS Machine Tools. Renfield Machine Tools reconditions used cam screw machines and turnkeys them, while FAS Machine Tools builds new machines. (3:40)

Peter says FAS Machine Tools builds a machine in South Africa that has the fast cycle times of a cam screw machine and the user-friendliness of a CNC lathe. He says his machine costs half the money one would likely pay for a comparable machine. Peter describes his machine as similar to a Swiss style machine but with a fixed headstock. It has an 8-station turret that moves on 2 axes, a dedicated turning slide that moves on 2 axes, a dedicated forming slide and a dedicated parting slide. The machine’s design allows for tools to work simultaneously on a workpiece, which gets cycle times down. (5:25)

Peter discusses what it’s like being 75 years old and starting a new company. He doesn’t worry about his age. (8:00)

Peter talks about his background in the machining industry. His father was an engineer at a power utility company in South Africa. Peter received a degree in mechanical engineering and for seven years worked for the same power utility company where his father had worked. In his late 20s he changed careers and went back to his hometown of Durbin. Once there, he joined his father’s screw machine shop. It was supposed to be a temporary gig, but he ended up staying and building up the company over the next nine years, from 1973 to 1982. (9:15) 

Peter describes the history of Apartheid in South Africa. He says country consists of essentially four racial groups: black, white, Indian, and those of mixed racial heritage, which South Africans call “colored.”  White South Africans are descended either from Dutch colonists (Afrikaners) or the English. In 1948, the Nationalist Party, supported by the Afrikaners, came to power and instituted the Apartheid, separating the country’s racial groups into different geographical areas. The whites, who represented only 20% of the population, controlled the majority of the land. Despite economic sanctions, the unjust situation lasted 40 years. In the late 1980s, F.W. de Klerk was elected Prime Minister. He eventually released political prisoners such as Nelson Mandela, allowed political parties that had been prohibited, and embarked on the process of negotiating a new constitution, which came to fruition with the 1994 Election. (13:50) 

Peter talks about his work as church leader and how he worked to bring reconciliation in South Africa in both a religious and political context from 1983-1990. (18:30)  

Peter talks about many whites leaving South Africa for fear of what would happen when Apartheid ended. He says he and his wife never considered leaving. He says he likes the complexity and colorfulness of the country. Peter says he enjoys the variety of people in South Africa, and sees a kinship with America in its diversity. Peter’s son lives in the US and holds dual citizenship. (21:20) 

Peter says many South Africans still want to leave the country, most of them white people. He says this is partly because the economy has had a lot of tough times, much of which stemmed from political corruption. He says the country at one point was over 20% white and now it is around 9%. He says that though unemployment is high, there are strong affirmative action programs in place that have helped to level the playing field for black South Africans. (23:40) 

Peter says the rise in the price of precious metals has helped South Africa’s economy. He says a big part of the economy is based on mining, specifically gold and platinum. (26:30)

Peter says there are a lot of black people and mixed race people working in machining in South Africa, but there still aren’t many who own machining companies. However, he says things are changing. (29:25) 

Peter says South Africa continues to suffer from significant disparities in income and living standards. The rich people live in modern cities, while others live in rural areas in mud huts, carrying water on their heads. However, he says the poverty in South Africa is not as extreme as places like India and that people from all over Africa travel to South Africa to find work. (30:10) 

Peter says engineering is a relatively popular career choice in South Africa, but the country has the same problems as the US when it comes to finding skilled people to work in machine shops. He says one of the reasons he created his new CNC lathe is because it’s hard to find skilled labor to work on cam machines. (31:40) 

Peter discusses where he lives. His home is in a suburban area on the edge of a wildlife reserve so he gets to see a lot of bush bucks and wild pigs nearby. He says his home is just 25 minutes from a small game park, but jokes that there are no lions roaming down the street. (33:00) 

Peter talks about wages of a factory worker in South Africa. He says it is not accurate to compare salaries to those in other countries because the cost of living in South Africa is relatively low. He says the standard of living for a person working in the machining industry is similar to what it would be in the US. (34:15)

Peter says one of the most interesting things he has learned in the last week was reading about the new peace accord between Israel and the United Arab Emirates (UAE). (35:20)  

Question: What country do you think builds the best machine tools?

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On the Road Again?

By Lloyd Graff

I had a very informative talk yesterday with a member of the machine tool brotherhood who is diversifying his portfolio into real estate, specifically Airbnb rentals in the Charlotte, North Carolina, area.

I thought Airbnb was in trouble because nobody was traveling out of fear of the pandemic, but he had a different view. He moved to Charlotte two and a half years ago from Chicago, where he had grown up and worked for two decades. His plan was to buy units he and his wife could manage themselves, saving any management fees. He wanted spots that would demand a premium during racing season and NFL season but would be close enough to the financial and restaurant meccas to appeal to men and women. Families could be accommodated but not emphasized.

This strategy has worked shockingly well. He claims to be making 30% to 40% yearly on his properties without the constant headaches of being a traditional landlord. Airbnb books the visitors according to its rules and the stipulations of the owner.

He told me travel has picked up significantly after falling off during the spring. Everybody is driving. Nobody wants to be at a property with elevators because of fear the virus will be left behind on surfaces by other guests.

Needless to say, he and his wife are searching for more potential acquisitions in the thriving Charlotte area.

****

Travel is rebounding. Southwest Airlines reported today that they are burning less money each week. The S&P 500 hit a new high yesterday, up 55% from the March lows. Gold is over $2,000 an ounce, Bitcoin is past $11,000, Amazon and Tesla stocks are going through the roof, and unemployment is still over 10%. Home Depot and Tractor Supply are going nuts with skyrocketing sales as plumbers, carpenters, and home improvers are in their heyday.

The odds are we will have a Biden presidency, pledged to higher taxes and monstrous spending on green schemes. The dollar is at a two-year low versus the euro, and Hong Kong is crushing free speech.

I don’t know about your business, but our machinery business is running uphill, and it is not easy. If you are not in the right part of the medical or weapons and ammo world, you are probably struggling. Covid-19 is going to be a major problem for at least six more months, even if we get a bunch of effective vaccines and useful therapies. Restaurants are buying scads of heat lamps, but unless you are in Miami or Los Angeles, the winter will be hell to serve outside. In late June Yelp stated that 53% of the restaurants that had closed during the pandemic indicated they would stay closed permanently.

It is quite a confusing picture in mid-August, trying to run a business and not die of coronavirus, especially if you are 75 years old. But I think we are healing if I look at the world from 30,000 feet without getting on a Southwest flight. I am incredibly grateful as I roll around to the 12th anniversary of my almost fatal heart attack in 2008.

My Cubs are in first place with 15 wins in 22 games, but don’t tell anybody that many of them were racked up against Pittsburgh and Detroit, which should only count as half wins. The NFL starts in a month, and Tom Brady is still slinging it at 64. The NBA and NHL are in playoff tournaments.

It is a time to cherish family and friends and every single day you are not sick. I’m trying. Be well, y’all.

Question: Would you stay in a hotel or Airbnb right now?

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Ep. 93 – Tricky Business of Running an Automotive Supplier in Brazil, with CEO Ali Jamil Jomaa

By Noah Graff

On today’s show we are heading back to Brazil as we continue our season exploring the machining industry around the world.

Our guest is Ali Jamil Jomaa, executive director at Samot, one of the most significant automotive parts suppliers in Brazil. Jamil has been at Samot for 32 years and is an authority on the tricky business of running a large machining company in Brazil.

Scroll down to listen to the podcast. Or listen on your phone on your favorite app or Apple Podcasts and Google Podcasts.

Main Points

Jamil gives his background. He says he has been working at Samot for 32 years, since he was 18 years old and loves what he does. He started at the company on the shop floor doing maintenance on CNC lathes.

Though he already had some training working on CNC machines, as a teenager Jamil worked for his father, who owned a Lebanese restaurant. He also happened to be dating the daughter of the owner of Samot, Tomislav Jancar. One day he was delivering food from the restaurant to her father (his future father in law), and they spoke about Jamil’s knowledge of CNC machines. This led Tomislav to ask Jamil if he wanted to work at the company. Over time he worked his way up to Executive Director. (3:00 – 6:30)

Jamil tells the story of Samot’s owner, Tomislav, immigrating with his family to Brazil from Austria when he was 13 years old as a refugee of World War II. In Brazil, Tomislav studied mechanics and then went to work at Mercedes Benz and Volkswagen. Then he started his own machining company in 1960. (6:30 – 8:15)

Jamil says that Tomislav’s business philosophy was to always reinvest in the company, keeping up with the latest technology. This legacy is clear today with the company’s many INDEX CNC multi-spindles and other late model turning equipment. (8:15 – 10:00)

Jamil says that the majority of Samot’s customers are Tier 2 automotive (87-88% of sales). He says the remainder of the parts the company produces are for the defense industry. (10:00 – 10:45)

Jamil talks about how Brazil’s low valued currency (currently approximately 5 Brazil real to one US dollar) effects his company’s exporting strategies. Jamil says that while other companies try alter their business models with fluctuating currencies, he prefers to continue to export regardless whether real’s value falls or rises. He believes if Samot can make parts efficiently it can remain competitive all the time. He says he has put three sales representatives in the United States to bolster the company’s exports. (11:00 – 12:45)

Jamil talks about why Brazil is a tricky place to do business. He says companies have to pay considerable taxes and provide lots of benefits for employees. He says the median salary for an employee at Samot is the equivalent of $10,000 US per year. He says the lowest paid person makes $5,000 and the highest paid makes $80,000. Jamil says that Samot has to pay 80% on top of an employee’s salary. This means if an employee makes $10,000 it costs Samot $18,000. The company has to pay several types of taxes and benefits such social security, private health care, and food (he says the company has a great restaurant). Employees also receive a 13th month of salary for vacation that is also increased by 30%. He says employees have to work 150 days per year to pay their taxes. (12:45 – 19:20)

Jamil talks about the disparity of income across Brazil’s population. He says Brazil has 210 million people. He says 47% Brazilians are “economically active people,” but among those people, 25 million are unemployed (searching for work). He says 40% of those economically active people are doing work off the grid. He says that 75% of Brazilians are medium to lower class and 19% of Brazilians are at the bottom “miserable class.” Jamil says that every month he and some friends distribute food to 250 poor people in the street. (19:20 – 24:00)

Jamil says he sees a bright future for Brazil, but he doesn’t know how long it will take. He says the government has been making a lot of promises about privatization and taking away extra benefits given to government workers. He says if the tax laws are changed, the country can thrive because it has so many diverse resources. (24:00)

Jamil says he knows a lot of Brazilians who want to move to other countries. However, he says that most of them don’t want to move because of economic conditions. Instead, they want to get away from the corrupt government and crime. (26:20)

Jamil says in recent times he has realized a great spirit of the employees at Samot, seeing how well they have come together to deal with the obstacles presented by COVID-19. (27:00)

Question: Where are you vacationing during the COVID-19 summer?

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Does Anybody Care?

By Lloyd Graff

Chicago is appalled by the disgusting and brazen looting of stores like Gucci and Nordstrom’s on its Magnificent Mile. Our Mayor, Lori Lightfoot, is furious and humiliated that her city’s elite shopping area has now been ransacked several times by bands of young thugs that communicate by cell phone, coordinating when to strike and who to hit first. They come by car and train and overwhelm the police so they can grab clothes, electronics, and booze.

There is good camera surveillance, so the authorities can pick up many of the looters later if they are inclined, but the State’s Attorney, Kim Foxx, seems disinclined to prosecute them and put them in jail. She is a political foe of Lightfoot, allied with Toni Preckwinkle, the Mayor’s archenemy who was trounced by the newcomer in the last election.

Chicago is broke, the state of Illinois is broken with its longtime Svengali, Mike Madigan, possibly on the verge of being prosecuted in a utility bribery scheme, for which Commonwealth Edison was fined $200 million dollars. People are fleeing the state for Indiana and Florida and Idaho, while I see my state and local taxes balloon.

It all stinks and everybody knows it.

While the city is being looted by politicians and thugs in different ways, I find it very ugly to follow the unfolding saga of the once-great Eastman Kodak, king of film that nobody uses anymore. Kodak was recently awarded a $765 million dollar federal government loan to start making the drug components that are no longer made in this country but are vital in the manufacturing of antibiotics and many key pharmaceutical products.

Target that was looted near Noah Graff’s condo in Chicago

When the loan was announced a couple of weeks ago, the $2 stock, still listed on the New York Stock Exchange, went nuts. It rose to $60 a share in a couple of days. This was when a member of its board of directors, George Karfunkel, gifted 3 million of his 6.3 million shares to a small religious institution that he happened to be the president of, enabling him to book a $116 million dollar donation. The charity received its charitable designation a year ago.

The whole deal may well be found legal if the loan to Kodak is not tainted by illegal bribery but rather a shrewd political contribution. Karfunkel was on the Kodak board for several years while the company was limping along, looking for a new blockbuster product in Rochester, New York.

The profit was neatly packaged as a contribution to a Jewish Orthodox synagogue in Brooklyn. The donation will hopefully do good in the world, but for Karfunkel and his wife, Renee, the write off will be worth at least $40 million dollars, usable for several more years. The suckers who made it possible were naive stock market gamblers whose shares are now worth a fraction of what they threw into the pot to buy them.

Can you draw a straight line from the brazen thugs who came from Chicago’s West and Southside slums to smash the windows at Gucci for the third time, to the sophisticated financial gamer, who sold his Kodak shares and gifted them to his favorite personal charity? I am curious what you think.

Question: Who is more disgusting, looters in Chicago, or Wall Street thieves?

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Ep. 92 – Machining Brass Fittings in India with Mayank Patel

By Noah Graff

On Season 4 of Swarfcast, we’re talking to people involved in the machining industry around the globe. On this week’s show, we visit India.

Today’s guest is Mayank Patel, director of Mayank BrassFit in Jamnagar, India. In the interview Mayank tells Noah his company produces Brass fittings primarily for Tribal Manufacturing and Parker Hannifin, both located in the United States. Mayank produces the majority of his parts on an expensive Buffoli Transfer machine. This is in stark contrast to his competitors who use cheap but slow single-spindle CNC lathes that require considerable manpower.

Scroll down to listen to the podcast. Or listen on your phone on Apple Podcasts and Google Podcasts.

Main Points

Noah introduces Mayank Patel, talking about the used Buffoli Transfer Machine Graff-Pinkert sold him a few years ago. (2:30) 

Mayank says he has  two Buffoli Transfer machines, one he bought new and other he bought used from Graff-Pinkert. He says that the new one cost 800,000 Euros. (3:20) 

Mayank gives his background. He lives in city called Jamnagar, which is the hub in India for manufacturing brass parts. He went to boarding school from ages 6-15, which he says is standard for a certain class of people in India. He spent two years in Bombay to complete is undergraduate degree. Then he went to London for four years and got a Masters Degree in international business. He says he later learned machining on the job, as opposed to having formal training. (4:30) 

Mayank talks about his family’s business. His family has been in business for a long time in the brass machining sector, and he wanted to join the company when he came back from studying in London. He wanted to run the international business operations of the company, but unfortunately he was 8th in line for this position. Mayank says the company did not want to expand into international markets like he did, but just keep the status quo, focusing on India’s domestic market. Ironically, Mayank says his father had explored opportunities to bring high production machines back to India and to export parts to the American market, but the family had never bought in. So, Mayank went on his own to start his own shop. (6:00) 

Mayank talks about exporting brass parts to US customers, Tribal Manufacturing and Parker Hannifin. He says it took him two and half years to get his first PO cut for those accounts. In 2018, when he came to the United States to dismantle the Buffoli he had bought from Graff-Pinkert he visited Parker Hannifin. He says before he started selling parts to Tribal and Parker Hannifin he was shipping parts to second tier distributors in Kansas City and Michigan.

Mayank says the main reason he bought his first Buffoli was to machine lead-free parts, which had not yet been done before in India. Mayank had to import lead-free brass rod samples from Italy to prove he could machine the material. At that time mills were not producing led-free brass in India because plumbing in India is entirely made up of iron pipes. Mayank says that before he proved he could run lead-free brass his own workers doubted him, saying it was impossible to run the material and he was wasting time and money attempting to. Mayank believed that if other countries required parts made from lead-free brass it had to be possible for him to machine it. He also knew that if he didn’t start machining it, a competitor would be the first to do it. (9:20) 

Mayank shows some parts he makes on the Buffoli for plumbing applications such as compression elbows machined from profiled bar. (See video). The parts are lead-free and he can machine them in 3.5 to 4 seconds. He also shows another part he makes from ECO BRASS with a volume of 1-2 million pieces. He says the tolerances are pretty wide open for brass plumbing parts (see video above). (14:00) 

Mayank says his competitors are now making parts with lead-less brass. He is using high quality ECO BRASS because he is sourcing OEMs in the United States, while his competitors are machining lower quality alloys for India’s domestic brass market. (17:00)

Mayank says that his competitors machine with inexpensive single-spindle CNC lathes. He says for each part it requires requires two machines. One lathe machines a blank, and then a second machine completes the part. Usually one person has to operate each machine. He says with this two machine process parts often have a 2 minute cycle time (one minute for each machine). Mayank runs the same parts on his Buffoli in 3.5 to 4 seconds.

Mayank says the machine shops running the single-spindle CNC lathes have to run lights-out to be profitable. He says he runs his Buffoli 20 hours a day. He also has 10 of the cheap single-spindle lathes in his shop for lower volume runs. (19:00)

Mayank says he personally works for 10-15 hours per day running the Buffolis and employs one other person to run them. He says he likes to be on the shop floor, solving problems and adjusting setups on the complex and powerful machines. (23:00) 

Mayank says that engineering is a very popular field for young people to study in India and that many companies send employees to their own engineering schools to groom their own workforce. (24:00) 

Mayank says a huge problem with running the slow single-spindle machines is that the large number of operators required creates tons of variables. He says the human factor decides the efficiency of a shop and the quality of the parts. If there are 50 machines, there are 50 different operators, 50 difference cycle times, and 50 different tolerances. (25:20) 

Mayank says when he was in Italy to get a demonstration of his Buffoli he observed a more efficient and focused work ethic than he generally sees in India. (26:50) 

Mayank says a typical machine operator in India makes less than the equivalent of $200 per month but this amount of money can go much further in India than many other countries. He says in India the cost of living is cheaper and often extended families live together sharing a house and car, which cuts expenses. (28:30) 

Mayank says a skilled machine setup person in India might make $600-$700 a month. He says that operators have the opportunity to climb the professional ladder and make more money as they acquire skills. He says his company also trains its own employees. (30:00) 

Mayank says nobody India wants to spend much money on technology. He says his peers tell him he is crazy to buy a million dollar machine when he could buy 50 single-spindle CNC lathes for the same money. Mayank says the stereotype that Indians like to negotiate is valid. He says there are negotiations on everything in India, from buying a carton of eggs, to buying materials, to buying machines. (33:00) 

Mayank says he sees India’s economy modernizing but says “change is always slow when you’re talking about a nation of 1.3 billion people.” He says the current Prime Minister is trying to change the country from what it was during the last 40-50 years, and obviously India is a huge market. He says there is a lot of high quality machining there but not for brass. He does not sell his parts domestically because Indians mainly want cheap brass products rather expensive high quality parts. (36:00)

Question: Do you expect products from India to be good quality?

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Juicing the Pickup Truck Market

By Lloyd Graff

The automotive world is churning these days. New cars are creeping out of the showrooms, but used cars are going bananas. CarMax stock has doubled since April. 

Yesterday’s announcement by Ford that CEO Jim Hackett is stepping down should come as little surprise after his 3-year tenure saw Ford’s stock plummet 39%. His predecessor, Mark Fields, lasted only 2 years. Ford’s big plus has always been its F-150 pickup, and it is reintroducing the Bronco, with 150,000 pre-sales to position itself against the Jeep Wrangler. Hackett was an outsider who was recruited from furniture maker Steelcase. His successor, Jim Farley, is a Ford veteran like Mark Fields. 

The pickup truck melee is getting more competitive with Elon Musk’s Cybertruck with its radical styling, now gearing up in Austin, Texas, which is also where Tesla’s new battery plant is being built. Musk has reported well over 500,000 pre-sales for the electric truck, priced at $39,000. As usual, he has taken an unorthodox approach to build the vehicle with stainless steel sheets, cut and laser welded, avoiding the cost of stamping out the body and doors with enormous expensive presses. Using lithium batteries is expensive, but making them in Austin in huge quantities will lower costs. The F-150 is cheaper in its base cost, but if we compare apples to apples for a bigger bed and 6-passenger capacity, the price edge goes to Tesla.

An interesting new entry into the electric pickup game is Lordstown Motors in Lordstown, Ohio. This is a start-up being funded by a money group from Wall Street. Who is really putting up the money is vague, but GM just tossed in $75 million and the company will be on the NASDAQ shortly. GM is also building a battery plant near the Lordstown, Ohio, plant, which it built in the 1960s to build the Chevy Caprice. Lordstown is famous for a strike in 1972, in which the UAW infamously turned out cars with torn upholstery in its guerrilla retaliation against the company. To me, Lordstown has always symbolized the downfall of American automotive companies and the stupidity of the UAW.

Will Lordstown Motors, which plans to build a plain vanilla electric pickup with a GM battery using a stealth group of investors, be able to compete with the sexy Cybertruck? It’s not a hand I would bet on.

Another player may be Rivian, which Ford invested in through its Lincoln division but has now walked away from. It is another stealth company, which supposedly got $700 million in backing from Amazon. If they ever really build a competitive electric pickup, they will be as far behind as a Volkswagen diesel.

Not to be forgotten is Nikola, which is planning to build a hydrogen powered pickup truck called “The Badger,” in a non-existent plant in Coolidge, Arizona. They claim to have 20,000 pre-sales, but everything about this company seems weird.

To me, the big question under the surface is do the real people who drive F-150s, Ram trucks, and Silverados really want an electric pickup truck? I know the US government is forcing electric vehicles on us because the sky is falling if we only get 30 miles per gallon from gasoline, but the market is telling us that electric cars, even Tesla’s, are not that useful in places like Chicago or Nashville or Frankfort, Kentucky. 

A hybrid makes more sense to me. The technology has been tested for decades and does not require a gazillion dollar charging station infrastructure. Did we all forget that the power plants to fuel the recharging stations run almost totally on fossil fuels in America? Same in China and Europe, and in those places they are still primarily coal-fueled.

I love Elon Musk for his entrepreneurial brilliance, but I still wonder if we have simply bought into the enchanting myth of electric vehicles.

Question: Do you think those who drive pickup trucks really want an electric pickup?

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