Author Archives: apalmes

The “Bullwhip Effect” on Caterpillar

Good article in the Wall Street Journal Wednesday on the “bullwhip effect” as it relates to Caterpillar. Caterpillar Inc. recently told its steel suppliers that it will more than double its purchases of the metal this year—even if the company’s own sales don’t rise at all. What does a company like Cat do when it is rebuilding inventories? It means big increases for suppliers. How does a supplier cope with a sudden surge in orders after a long dry spell in survival mode? How do you beef up ordering and production if you are a small firm whose credit lines are already overextended? Read the article.

Question: Have you seen the bullwhip effect yet in your business?

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Swarf – Find Your Own Goat

For my 65th birthday on December 16th my daughter gave me a goat. When she told me about the gift I figured it was an effort to expiate the curse of the billy goat on my cherished Chicago Cubs. But no, this was an animal with an even better purpose.

For my Medicare birthday Sarah purchased a goat in my name from the WorldVision charity, which I’m told ended up in a small farm in Ecuador where it will provide milk for a family. The gift gave me pleasure, not only because it ended up in South America and not dropping dung on my patio and eating the hostas in the garden. It also gave me an insight into marketing to a jaded world, inundated with muddy media messages.

My daughter, a sophisticated and frugal person, put out $120 for a charity gift and photo of a cuddly goat presented to a milk deprived family in Ecuador. The goat sold her. The WorldVision Catalog would have ended up in the recycling bin along with a dozen other worthwhile charitable pitches, except for the hairy can eater on the cover of the brochure.

From a business standpoint the message is “sell the goat not the widget.” Your company and your product need a story and an image. I’m not talking about a building photo or a promise of precision.

Everybody has a building and if you can’t produce quality you would have been washed out two recessions ago. You need buzz, or at least a baa and your own credible goat to separate you from the herd. The competition wants to sell stuff. The buyer wants an authentic story.

Find your own goat.

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Negotiating Like Pirates

By Lloyd Graff

Pirate Negotiator

Connecting the dots from Wednesday’s news. Scott Brown, the Republican, won Ted Kennedy’s Senate seat, which he had held for 47 years. Brown’s résumé includes posing nude for Cosmopolitan in 1982 and having a daughter who was both a semifinalist on American Idol and a starter for the Boston College basketball squad.

Then there’s the saga of competing Somali pirate teams threatening to shoot at each other and blow up a Greek oil tanker if they don’t collect a ransom.

Don’t forget about Kraft’s $19.5 billion takeover of Cadbury, the $145 billion in tainted investment bankers’ bonuses, and the proposed Obama tax on the earnings of TARP babies.

A few more dots—a record week for junk bond sales, credit squeezed further for small business and the Federal Housing Administration, and Lebron James passing up the Slam Dunk Competition at the NBA All Star Weekend.

Here’s my take.

Scott Brown meshed with voters who are scared and angry at a Washington that rewards investment bankers, health insurance companies and big multinationals, while average Americans can’t get jobs because small business can’t get money.

The health care reform bill looks like an insider’s game brokered by snippy Nancy Pelosi and sourpuss Harry Reid. Reid probably won’t even win reelection in Nevada.

Health care reform looks like it has been hijacked by the insurance thugs, drug companies and greedy politicians, who look a lot like Somali pirates threatening to blow it up if they can’t get their cut.

I think the investment bankers at Goldman Sachs who played the Wall Street chaos like a banjo are also Somali pirate-like, and the dealmakers at Lazard are Captain Hooks, making fortunes for merging macaroni and crème eggs with Kraft and Cadbury. It feels unfair that Joe Schmo gets blacklisted for a job because he suffers from diabetes from eating too much mac’n cheese and chocolate bars. Life is often unfair—just look at poor Haiti.

Scott Brown’s election is a slap at the cynical partisan politics that rewards pirates. Unfortunately, replacing Ted Kennedy with the Republican who challenged Barack Obama to a two-on-two basketball game last night (teaming with his daughter) is no slam dunk for meaningful change in Washington. Obama could sure use Lebron on his team.

Question: Who are the baddies and pirates, legislators bargaining for goodies or investment bankers profiting from TARP?

Ayla Brown Singing National Anthem at her own basketball game

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On The Brink: GM’s Precarious Centenary

GM’s Precarious Centenary

Lawrence D. Burns, GM vice president, research & development and strategic planning with Volt.

Soft hums and gentle whirs fill the small studio hidden deep within the General Motors Technical Center, in the Detroit suburb of Warren. In one corner, designers and engineers keep their heads bowed low over their CAD/CAM screens, their labors transformed, at the other end of the building, by a set of automated milling machines carving new forms out of lumps of soft clay. What emerges could shape the future of the entire company.

“We know we have a perception problem, at GM,” admits design executive Bob Boniface. Where environmentally-conscious consumers look at Toyota and see “Prius,” they look at GM and see “Hummer,” and that’s “something we have to fix.” admits the former Chrysler stylist who now oversees design of the Chevrolet Volt.

First shown at the 2007 Detroit Auto Show, Volt quickly captured the imagination of motorists around the world, never mind environmentalists, regulators – and competitors, like Toyota. Unlike the Japanese automaker’s hybrid-electric sedan which primarily relies on its gasoline engine backed up by an electric drive system, Volt is a so-called plug-in hybrid. In production form, it will feature an oversized battery pack capable of running the vehicle for up to 40 miles – enough for most daily commutes – solely on electric power. But on longer trips, a small, internal combustion engine will kick in, providing Volt with the added range lacking in traditional electric vehicles.

If GM can hold to an admittedly aggressive schedule, and deliver the first Volt to dealers by 2010, it could gain the critical first-mover advantage over its rivals, notably Toyota. And with its big Hummer brand likely to be sold or shuttered, the Detroit maker could paint a green aura around itself at a time when it desperately needs, once again, to be seen as a leader, rather than a follower, a position the giant manufacturer isn’t used to being in.

For the better part of the last century, General Motors dominated the global auto industry. But in recent years, it has been casting a nervous glance over its corporate shoulder – especially in the home, U.S. market. Now, with the sudden run-up in fuel prices, there has been a sea change shift, with American motorists by the millions, switching from the big trucks that have long dominated GM’s line-up to the small cars and “green machines,” like Prius, that have made Toyota such a daunting competitor.

The two makers wrapped up 2007 in a global dead-heat, GM maintaining its position as industry king-of-the-hill by just 3,100 units. But if first-half figures hold for the rest of this year, the American maker is about to tumble off its throne. Through the end of June, Toyota held a worldwide global sales lead of about a quarter-million vehicles, and few see GM regaining its momentum anytime soon.

The automaker is drastically slashing production capacity in the U.S., shuttering or slashing production at its light truck plants, and eliminating tens of thousands of jobs.

The latest cuts were announced in July when CEO Rick Wagoner revealed plans to speed up production cuts, trim another 1,800 white-collar jobs and, overall, slash about $10 billion in costs, while raising another $5 billion to keep the vast empire funded. Only a few days later, GM delivered still more bleak news: a $15.5 billion loss for the April-June period, the third-largest quarterly loss in GM history. Wagoner continues to insist that there is “no thought… whatsoever” of bankruptcy, but frustrated analysts and nervous investors alike keep wondering just how much longer things can continue.

It’s a heck of a way to celebrate the carmaker’s 100th anniversary.

Déjà Vu All Over Again?

GM has dodged many bullets. In 2000, the new CEO, John Smith, was forced to unwind what Roger Smith (no relation), who died earlier this year, had put in place. Plants were rebuilt, even replaced. Products went through massive updates. And Jack Smith outlined a series of sharp cuts in manpower and production capacity. He also, belatedly, recognized one of the most significant shifts in American automotive history, committing billions, and the bulk of GM’s product development resources, to ramp up production of vans, SUVs and pickups.

While light trucks might have been the products environmentalists hated, consumers loved them, snapping up as many as GM could build, and finally frustrating the Japanese, who struggled to crack the code in segments they’d never entered before. Even Toyota seemed perplexed by minivans, pickups and SUVs, rolling out a series of costly failures.

But as GM had demonstrated before, success is a powerful narcotic, making it far too easy to ignore impending problems. Like the latest oil shock. Over the years, observers have often speculated about what would trigger the collapse of the light truck market. The answer was $4.00 gasoline.

Nancy Jaksich, who owns a Chevrolet dealership near Portland, Oregon, still hopes trucks will rebound, but her tone suggests that’s just wishful thinking. The current fuel price crisis, she concedes, “is a consumer wake up call, and definitely a Big Three wake up call.”

Four dollar gas would be a serious enough problem without what GM’s current CEO, Rick Wagoner, likes to call “negative headwinds,” which lately are blowing at hurricane force. Start with the American economic downturn; add stiffening foreign competition; then mix in sharp increases in the cost of raw materials such as steel for body panels, and rubber for tires. It adds up to thousands of dollars in added production costs, but in the current market, automakers can pass only a fraction of that onto consumers at a time when the U.S. market has plunged to its lowest level since 1992. In July, GM posted another double-digit decline, while sales overall dipped to an annualized rate of barely 13 million vehicles – down from more than 17 million earlier in the decade.

Hilary Clinton takes a tour of production at GM. Photo courtesy of GM.

Only a few years ago, employees at the GM Renaissance Center proudly wandered the halls wearing “29” buttons, a reference to the market share the automaker was aiming for. That was a far cry from the numbers former GM President MacDonald scoffed at, but the figure looks awfully nice at a time when the automaker could soon slip to 20 percent – or less.

If you compare the situation today to what happened under his watch, former GM Chairman Stempel says, “the ‘90s were a cakewalk. That was just a cyclical downturn, and there was no doubt in anybody’s mind that we were going to get out of it.” While he cautions that industry analysts have a tendency to “pile on,”
during a downturn, Stempel concedes the current situation is dire.

Piling on

It’s easy to paint a fatalistic image, and certainly it doesn’t help when analysts at big name brokerages like Merrill-Lynch start raising the specter of bankruptcy. But CEO, Wagoner, who has developed a remarkable skill at projecting a sense of both optimism and urgency, isn’t hearing any of it. “Under any scenario we can imagine,” the executive argued during a mid-July appearance in Dallas, “our financial position, and cash position, will remain robust through the rest of this year.”

Nonetheless, there are reasons to see some positives working in GM’s favor. This is a very different company from the one sculpted by Alfred Pritchard Sloan and mis-managed by Roger Smith. Though it still needs paring down, GM is a relatively streamlined entity, one
getting leaner by the day. And it is an increasingly global entity. A decade ago, Jack Smith had to stand up against a cadre of naysayers, investing heavily to launch the Buick brand in China. Today, that’s the automaker’s fastestgrowing market, while once-risky ventures in emerging markets like India and Russia are also helping offset troubles in the U.S. and Europe. The percentage of GM’s unit sales rung up overseas has risen, in just a couple decades, from 25 percent to 50, and Vice Chairman Bob Lutz, who has spent much of his own, long career abroad expects it to reach 75 percent in the coming years.

But for now, GM’s fate continues to hinge on the American market, where many of its once-prized products are now sitting, unloved and unwanted, on dealer lots. The first challenge is to come up with the products that the market is demanding, says independent auto analyst Dan Gorrell. The tougher task will be to get American consumers to put GM back on their shopping list, whatever it produces. In trend-setting markets, such as California, he cautions, that won’t be easy.

The shift has begun, GM sales and marketing chief Mark LaNeve pointed out that 11 of the carmaker’s last 13 launches were either cars or crossovers. And the executive noted that a number of the newest products are showing positive signs in the marketplace. But it’s critical to note that passenger cars have typically delivered a fraction of the profits of a truck. Indeed, for decades, GM has struggled to minimize the money it loses on every sedan and coupe it sells in the U.S.

Of course, it didn’t help that GM would often develop unique products for each of its key markets. Lutz has ordered a global consolidation of product development, readily apparent at the Saturn division, which is working in tandem with the European Opel subsidiary on products like the new Astra subcompact. There will still be regional differences, from sheet metal styling to the level of standard equipment. Considering a major new product can cost a $1 billion to bring to market, however, the savings are enormous.

Add to that the savings GM expects to generate as the result of its latest contract with the United Auto Workers Union. With its new, two-tier wage structure, Lutz expects it will eliminate “about two-thirds” of the cost gap between GM and the “transplant” assembly lines operated by foreign-owned makers, such as the Honda plant in East Liberty, OH. Other contract changes have helped GM—and its domestic brethren—rocket up the productivity charts, according to the 2008 Harbour Report. (Chrysler actually tied industry leader, Toyota, by requiring an average 30 manhours to assemble a typical vehicle. GM came in close behind, at an average 32 hours of labor.)

GM’s battery testing center in Warren, MI. Photo courtesy of GM.

Meanwhile, a new focus on quality shows GM steadily climbing up the quality charts, as well. The new Chevrolet Malibu ranked high in the latest J.D. Power Initial Quality Survey – and was named North American Car of the Year, by a panel of 50 U.S. and Canadian autowriters. But the best payback of all, GM can’t build enough to meet current demand.

GM, however, needs more Malibus and fewer Hummers. And it needs them fast, if it hopes to ensure that this won’t be its last anniversary. That’s why the Volt is so important. In terms of raw numbers, the plug-in hybrid won’t reverse GM’s sales decline, but it could give consumers a more favorable impression of the ailing automaker, just as it begins the switch back from trucks to cars. If it can’t regain that confidence, no matter how much it saves, no matter how more capital it raises, GM’s future will be bleak.

TMW: In the Atlantic Monthly about 2 months ago the price of the Volt was quoted at $35,000. In a recent interview with Phil Lebeau on CNBC the price was quoted at $45,000. How much will the Volt cost?
PE: I have heard numbers all over the place for what Volt will come in at. I am not convinced either of those numbers is correct, as Troy Clarke, president of GM North America, specifically told me, in a conversation several months back, GM expects to financially subsidize the first-generation Volt, much the same way Toyota swallowed at least $10,000 of the cost of building the Prius, for quite a few years. I wouldn’t be surprised to see the lower number, perhaps something even lower.  Perhaps GM has changed strategy since I spoke with Clarke, which is quite possible.

TMW: Will the Volt really come out in 2010? If two kids can put a lithium ion battery in their parent’s Prius (story from a recent interview in TMW) and get over 100 mpg, why can’t a giant like GM do it? What are the difficulties they face?
PE: I am so fed up with talk about what “kids” with aftermarket tech do. Let’s look at what a well-funded venture, like Tesla is still struggling to accomplish, and in their case, they’re forced to use more than 8,000 laptop computer-style batteries. They’ve only produced a few vehicles, and have changed key suppliers—primarily for the dysfunctional transmission—repeatedly. When Toyota can pull it off, not these kids, then we can talk. Okay, so Toyota is trying, and I’ve driven THEIR prototype. They’re using a more conventional parallel hybrid approach. And, Toyota, for now, says it will only get a minor fraction of the battery-only range of Volt. Oh, and look for a big price tag there, too. I have heard plenty of rumors that Volt is struggling to make 2010. Frankly, if they got a few out, late in the year, and had a hard date, in 2011, for retail, they’d be forgiven — again, if it’s a successful design. Not trying to defend GM, by the way, but go apples-apples. Okay, the difficulties: batteries are by far the real challenge. But as I am now seeing other makers, like Nissan, say they’re confident of their improved battery capabilities, I think GM may also be improving. FYI, Nissan’s pure EV will reach U.S. fleet buyers in 2010, with a promised 100 mile range.

TMW: Why is the GM quality touted as so wonderful in China and considered generally poor here? What are they doing differently in each country?
PE: For one thing, Chinese suppliers, ahem, are bad. So any automaker who can achieve quality levels there, equivalent to bottom of-pack (according to JD Power) here, is a star. GM has some of the most modern and efficient plants in China. This was a critical decision approved by Jack Smith, a decade ago. Many makers entered China with old-strategy plants; using lots of very cheap manpower and building old cars (market leader VW), dismissing the quality issue. Smith approved a relatively high-tech plant that was modeled after GM’s world-class Eisnach facility, in Germany. Initially, it was also low tech, in terms of raw manpower, but used much more state-of-art management systems to boost quality. As production has grown, and as labor costs have risen, the Buick facility, in Shanghai (S-GM), has steadily added more robotics and automation.

TMW: What’s with GM’s president, Wagoner? If any other company’s stock had fallen 75 percent in the last 2 years, the CEO would have been fired. Why do you think he still has his job? Could an outsider run GM?
PE: Everyone asks this question. Myself included. This is the subject of a very long conversation. He continues to have the support of the board. Indeed, the GM board has apparently given Wagoner another vote of support. To be honest, I don’t think an outsider would be able to tame GM in the way Mullaly is trying, at Ford. But I still don’t understand why he remains on the job.

TMW: What brand besides Hummer would GM be most likely to sell? What other brand is valued highly enough that it could be sold if need be?
PE: There have been reports (from myself, included) that GM is reconsidering the viability of ALL its brands. GM denies it, but I believe there’s a serious, internal discussion. Only Chevy and Cadillac are untouchable, and rightly so. Pontiac is a shell of itself, and Buick would be dead, but for its success in China. Ed Welburn, global design director, told me in April, that without China, Buick likely would have to go, but it’d be difficult to kill the brand in the States and not send a very bad message to Chinese buyers. Note the automaker has begun turning to its Chinese product development unit, PATEC, to lead creation of future Buicks. GMC is a clone of Chevy truck, and could go, what with its market collapsing, but with that name, who’d buy it. TRIVIA QUESTION: do you know what GMC stands for??? Saturn, well, they’re investing a lot in it, making it the most European of GM’s North American brands. If vehicles like Astra fail, there’ll be serious questions asked.

TMW: Why did GM really cut the EV1 electric car?
PE: Because it made no business sense. None, certainly not at the time. Sure, there were some high-profile folks making a lot of noise in its favor, but it was clearly the wrong technology and much too early. Again, easy to pile on GM— which often deserves it. BUT… guess what? It was the Japanese who killed the California EV market and mandate. Despite the rules on the books, Honda, then Toyota both quit the EV market well before GM pulled the plug on EV1. Everyone else walked out about the same time. Sadly, the EV1 was about the only offering with any potential, but simply not enough to make a business case. GM was losing a fortune and was never going to
reverse that… not until now, when the new technology, ie Lithionm Ion batteries, has makers rethinking the EV’s potential.

GM’s rocky past

The bad news comes across with stunning regularity: record losses, double-digit sales declines, plant closings, job cuts. It’s hard to read a headline out of Detroit that doesn’t deliver another body blow to Big Three.

It wasn’t supposed to be that way. Preparing for its 100th anniversary, as the year began, General Motors was forecasting a much-anticipated turnaround. Ford was hoping to gain traction of its own, with its oft-revised “Way Forward” program. And Chrysler was hoping to settle into a groove after its divorce from German partner Daimler AG and its acquisition by the huge private equity fund, Cerberus Capital Management.

Then things got rough. Commodity prices, for everything from steel to rubber to the platinum for catalytic converters, shot skyward. But the biggest price increase was for gasoline, which soared past a record $4 a gallon, suddenly triggering what Jim Farley, Ford’s director of sales and marketing, described as a “sea change” in the American automotive market.

When gas prices started nudging the $4 mark, demand collapsed. As the year began, full-size pickups accounted for a full 12 percent of the American market. By mid-year, that was down to barely eight percent. In July, domestic light trucks sales were off by nearly a third, and the Big Three couldn’t cut back production fast enough.

Of course Gm is not alone. The Asian companies are rapidly shifting to small cars – like the Honda Fit – and an array of hybrids and other “green machines,” leaving Detroit to play catch-up. Ford plans a major “Europeanization” of its American product line-up, starting with the launch of the Fiesta subcompact, in 2010. But under current market conditions, that’s a long wait, and many analysts wonder whether it can hold out, especially in light of its record, $8 billion second-quarter loss.

As part of the privately-held Cerberus, Chrysler releases only minimal financial data. CEO Bob Nardelli insists the automaker has been able to bank a billion since the year began, but most analysts see Chrysler in the worst condition of the Big Three. Without Daimler, it is all but totally dependent on the U.S. market, and doesn’t have European design operations to turn to. So, the American maker is racing to partner with the likes of Nissan – which will supply it with a version of the small Versa – and several Chinese makers. If any automaker has gone to the brink before, it’s Chrysler, which has an uncanny knack of getting in deep about once a decade. So far, it’s found a way to improve its fortunes every time. But the current crisis may be more than it’s bargained for, and the situation isn’t much better for Ford or GM, either.

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Swarf: Noah Graff’s Visit to Arve Industries, June 2008

Today’s Machining World Archive: June 2008, Vol. 4, Issue 06

Noah Graff spent the first week

of April in France’s Haute-Savoie region, just across the border from Geneva Switzerland at a press junket held by the Arve-Industries Haute-Savoie Mont-Blanc Competitiveness Pole (Arve-Industries for short). This is his account.

While famous for its ski resorts and mountain lakes, France’s Haute-Savoie region also happens to be a hot bed of screw machine companies; small to medium, privately owned firms whose origins date back to the clock making industry of the Middle Ages. Arve-Industries, named for its location in the Arve Valley, is what’s known in France as a “cluster.” It is an organization formed in 2006, of 183 companies in the region working together on joint R&D projects, to better compete in a relentless world economy. Lionel Baud President of Baud Industries, and Vice President of the Arve-Industries cluster, told me that before the cluster was formed, the small family businesses of the Arve spent little time or resources on R&D and rarely collaborated with one another. The cluster’s members believe their newly formed unity has the potential to bring the region’s companies unprecedented success.

I was the lone American journalist on the trip and the only one in his 20s, and I don’t think the French execs giving us the tours were accustomed to my frank, often sensitive questions. I asked them how French manufacturers could keep up with the rest of the world while tied down by their country’s mandated 35 hour workweek and laws prohibiting the firing of workers. I asked whether they were hiring a lot of workers from Turkey and North Africa to deal with the shortage of skilled labor. I asked why these companies wouldn’t just send all of their operations overseas, or at least 40 minutes across the border into Switzerland where many of these regulatory hurdles would be lifted. When I pushed the question about the difficulty firing workers as companies become leaner and automated one exec from Bosch, the one multi-national company we visited, answered frustrated, “Well, what do you want me to say?” But overall, most people I talked to, although a bit taken aback by my bluntness, really impressed me with their intelligent, honest responses.

The truth is, some companies in the Arve Valley do have plants in Switzerland containing some French employees who commute across the border daily. Switzerland has much lower corporate taxes than EU member states, it’s easier to find workers there, and its workweek is more flexible than that of France. Baud Industries concentrates its watch and medical device manufacturing there, yet Lionel Baud told me he still insists on keeping the most technical, complicated jobs in-house because the cluster is available for assistance and France is where he has the best communication with workers, which creates loyal employees and low turnover.

To deal with the 35 hour workweek, executives said that lights-out manufacturing, automation, and overtime helps keep up productivity. They also said that just because French workers put in less hours does not necessarily mean they can’t match productivity of workers with longer hours if they have superior focus.

As far as my query about firing workers – after a little badgering, the Bosch executive told me to downsize, the company sets up a type of early retirement plan for workers they want to lay-off that meshes with government regulations.

My questions about the employment of workers from the Middle-East and North Africa received the most diverse responses. One company said that 60 percent of its workers come from North Africa and that there are good training schools there producing a lot of quality skilled labor. He added however, that third generation North African immigrants born in France are often not interested in manufacturing jobs, similar to their native French counterparts. One company told me their workforce included 20 percent Turks or North Africans, but as more jobs are requiring advanced skills that number is declining. Another executive said he employs virtually nobody from those regions, but some of his best employees come from Eastern Europe.

Although the companies I visited had diverse business philosophies and strategies, throughout the week I felt a common spirit from my hosts; one of pride, creativity, and a passion to grow while still preserving their roots.

Managing Editor Jill Sevelow

attended the Delcam American Technical Summit, hosted by Methods Machine Tools in Sudbury, Mass., in mid-April. Jill was most impressed by the portfolio of Delcam products. Operations Director Clive Martell said their goal was “to build a series of ‘best in class’ when orchestrating their software CAM acquisitions. Aside from well-known turn/mill and Swiss-type lathe CAM software Partmaker (which Delcam acquired in July of 2006), Delcam includes DentCAD and DentMILL, a dental CAD system for dental machining, PowerMill for 5-axis machining, FeatureCAM, ArtCAM (which Delcam’s Rob Walker likened to “bringing craftsmen into the digital age), and now Crispin-CADCAM software for the shoe industry. In the age of increasingly individualized customization of product, Delcam’s software has evolved with market demand, generating sales of almost $60 million in 2007. Power point presentations laid the groundwork for each product, but customer testimonials drove the “message of excellence” home. Each attributed its growth and acceleration in its respective fields to the collaborative and innovative Delcam product used.

For many years I have been a

staunch advocate of gridlock in Washington politics. The visceral animosity on the national scene began when the Republicans ganged up on the Democratic House Leader Jim Wright, forcing him out of Congress. The Democrats finally got even by banishing Tom DeLay. The legislative process is a Pork Barrel provider presently and not a vehicle to tackle the serious issues of the day.

This might be starting to change. Assuming the presidential race is between John McCain and Barack Obama, a pair of mavericks in their parties who won their nominations as long shot outsiders, we might see each one reaching out to the other party for cabinet members and even vice presidential possibilities.

Some young people are reaching out to both parties to actually address issues that people care about. George Bush wasted eight years in addressing the health insurance problem that affects almost everybody in the United States. The insurance companies and Federal bureaucracy have made such a mess out of health care that we may be near some kind of national compromise if the partisans are circumvented by the people. With some baby boomers retiring soon and a new president, this would be the time.

Another huge Bush failure is immigration policy. He abdicated to the Lou Dobbsians and now the country is losing its transfusion of people energy. Hopefully McCain, who has a grasp of immigration issues from his Arizona experience, or Obama, who is sort of an immigrant himself, will pull us away from the know-nothing cheerleaders in both parties.

On Iraq it may be easier for McCain to extricate a lot of American troops from combat than Barack Hussein Obama, who may have to show the country, the Joint Chiefs and Bin Laden that he is a tough hombre.

I am strangely optimistic about this election and totally undecided about who I’ll vote for. These are two good men to choose from and I haven’t felt that way for a few decades.

On May 8, the state of Israel had

its 60th birthday as an independent country. The country has never been as strong economically as it is now with 20 years of spectacular growth behind it.

Americans can learn a lot from the Israeli experience.

The core strength of the Israeli economy derives from the creativity of a highly educated population. In technical fields, Israel excels. Silicon Valley is filled with Israelis who live in the U.S. and then go back to live in Israel’s Silicon Valley near Tel Aviv.

Israel thinks globally. A myriad of trade deals with other countries have thwarted the Arab economic boycott. After military service almost every secular young Israeli leaves the country for at least a year of travel. This gives the population a worldliness virtually unmatched elsewhere.

Israeli business has abundant access to money through a thriving venture capital network. A host of Israeli tech companies and medical firms have gone public on the Nasdaq stock exchange. Most children in Israel speak at least two languages, Hebrew and English, which is a necessity for global commerce.

The Israeli economy has continued to thrive despite terrorism, six wars, political isolation, and a tiny population with a large segment of parochial Orthodox Jews, many of whom barely work in the modern economy. In many respects, it is an economy functioning with one hand tied behind its back.

The United States can learn from Israel that terrorism can be contained with intelligent determination. We can also learn that immigrants, even poorly educated ones, can bring prosperity if properly acculturated and educated.

Israel has shown that a tiny country, surrounded by fanatical enemies, can thrive if its people have ingenuity, positive energy, intellectual capability, access to capital, a global outlook, and the determination to thrive – no matter what the obstacles.

Noah and I visited Vienna,

Austria recently on a business trip to central Europe. Our first order of business was to find the original Julius Meinl coffee shop, which is my favorite in Chicago.

Our first challenge was to locate the place. Vienna has a big central shopping area, the “zentrum,” with a vast array of shops and restaurants adjacent to the city’s historic buildings. We took the “underground” to the zentrum and asked people for directions to Meinl. Nobody was helpful until we found, of all things, Starbucks. I walked into the old reliable and asked the young barista behind the counter where Meinl could be found. He answered instantly and offered detailed directions in excellent English. He then added that Julius Meinl had recently opened a store in Chicago.

After several missteps, we found Meinl at about 6:00 in the evening on Sunday. The only part of the store which was serving customers was the outdoor seating area. The blond fraulein who came to take our order spoke no English. She was quite pretty but she carried a near scowl on her face. I tried to order a latte, but she only understood cappuccino, so that’s what we ordered.

The coffee came promptly and it was beautifully presented with a heart artfully drawn in the foam. The size of the cup was about one third smaller than the comparable American one and the price was double in American dollars. To the best of my tasting ability, the Viennese and American coffees tasted the same – excellent. But the attitude and the price were decidedly better at Julius Meinl in Chicago.

Jonathan Goodwin dropped out

of seventh grade to help pay the bills and follow his passion for cars and engines. Today the automotive world bows to his genius and wonders if this car nut might actually win the 10 million dollar X PRIZE for producing a low emission, competitively priced, 100 mile per gallon car.

His partner in this venture is Neil Young, rock legend, who contributed his 1960, Lincoln Continental “boat” as Goodwin’s test car.

Goodwin works out of a garage where he specializes in converting Hummers into fuel sipping diesels while boosting their power. He also likes to run his thug cars on fried chicken grease contributed by the local KFC outlet.

The fact that the prestigious X PRIZE contest committee has allowed Goodwin and Young to apply to join the elite, well financed, automotive companies from around the world gives him credibility.

Goodwin is negotiating with DHL to convert 800 vehicles to super efficient systems which cut fuel costs by 50 percent.

It appears that his approach is unique because he does not want to build a new vehicle and engine. His devious plan is to make inexpensive conversion packages for existing vehicles turning them into biodiesel burning plug-in hybrids.

Proving his point on Neil Young’s 40 foot “boat” may not win the X PRIZE, but that’s what they said about the crazy bike mechanics Wilbur and Orville Wright in 1903.

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