Author Archives: Emily Halgrimson

Buying and Selling Machining Businesses

By Lloyd Graff

I’m writing this blog to announce a slight shift in my business career, which has been evolving this year.

Several longtime clients of Graff-Pinkert have asked me to help them find machining businesses to acquire and other owners have requested I find them a buyer for their businesses because they felt that I had the right network and skill set to do it. My initial inclination was that I’m purely a machinery dealer, not a business broker. But then I thought, why not try this. Perhaps I can add value for some people who I really care about. If I hit a dead end I’ll know soon enough. Currently I have four deal deals in process and have completed two.

Lloyd Graff, Owner of Graff-Pinkert and Today’s Machining World.

I have not approached this task like a traditional business broker who would contact private equity groups because my clients have preferred that I not publicize their decision to the world, thus jeopardizing their long-term relationships with customers and employees. Such a broad gage approach can also be toxic as far as tipping off the seller’s competitors who are good at sniffing out situations and taking advantage of them. Despite nondisclosure arrangements that supposedly insure anonymity in the market, a business broker soliciting offers is going to inadvertently leak a potential seller or elicit rumors.

I have been able to keep a lid on leaks and rumors by connecting with prospects directly, because I have stuck primarily within my extensive network of relationships within the precision machining industry rather than try to cover the gamut of businesses in the marketplace. I also have focused on companies doing $20-million-in-sales or less, because I do not feel comfortable right now with bigger transactions.

One trend which has surprised me is how many foreign firms are highly motivated now to enter the American market in this field and are looking for businesses in our sweet spot. Our extensive network of users, suppliers and other dealers worldwide has served us well in this search. To Europeans, South Americans and Asians America truly looks like the land of opportunity, and in many cases their existing customers are asking them to do business here.

I don’t want to take on a lot of projects, because they are quite time consuming and I want to be able to give them the attention they deserve. I would like to work on 6 or 8 a year that I think I can shepherd to conclusion.

I may not be long on mergers and acquisitions experience but I know the people in the machining business. It appears that my ability to “talk the talk” and really listen to people explain their needs resonates today in this field.

This is a fascinating new gig for me, and I have Noah and Rex Magagnotti adding their knowledge and networking to help make it work.

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Why I Didn’t Vote

By Lloyd Graff

It’s November 6, and I’m sitting at Starbucks writing this piece, across from the polling place I chose not to vote at in 2018.

For over 50 years I have voted at every opportunity. I’ve voted for Republicans, Democrats, Independents and Idiots. But this year I’m not going to be an idiot and participate in an exercise that does nothing positive for me or my community and wastes almost two hours of my precious day.

In my America of 2018 the political system has evolved into a fat duopoly (a dual monopoly) of parties that vie for the spoils from the willing masses who lemmingly abet them.

Maybe I would feel differently if I had just one actual race where I felt my vote would matter, but in my Chicago south suburb of Olympia Fields this year the political institutions, Democrats, Republications and a cynical press have totally turned me off. For Illinois Governor I have two centimillionaires who have been throwing dirt at each other for six months. Bruce Rauner, the Republican, has been an impotent failure trying to move an utterly recalcitrant legislature. J.B. Pritzker, the Democrat who inherited a real estate fortune, seemingly has done very little in his life except “live large”—in his case 300 pounds worth. For my choice for Congress I have none. Robin Kelly, a pleasant lady and Democrat who I wouldn’t recognize if she was standing in front of me at Starbucks, is unopposed. She is a professional unknown, perfect for my locale which elected Jesse Jackson Jr. for a decade before she inherited the job.

I have come to see our National and Illinois political scene as a well-orchestrated charade game played by the insiders of both political parties. It appears they do hate one another, and they fight hard for the right to collect the spoils of power.

Photo courtesy of fee.org

The lobbyists will pay greater tribute to the winners than the losers, but the sad fact is that neither party really cares about the poor and sick and dispossessed because they are regarded as just tools to be used to amass power and win the GAME.

Donald Trump is an interesting intruder into the political duopoly, but he has embraced the Republican Party and they have embraced him to stay in the game. Trump has done a lot of good things for the country in two years, but his narcissism and ego make him prone to major miscalculation in the world arena. If I could vote for Trump on today’s Illinois ballot I would vote, but on today’s ballot there is nothing for me to vote for. So here I am at Starbucks, bitter that America has a political system that rewards greed and voter laziness.

I will watch the returns come in tonight hoping for a stalemate in the Congress. Trump needs restraint, and a Democratic House will provide that. A Republican Senate will restrain the lefty loonies in Congress and hopefully keep the economy on track.

But until we break the grip of the haters in both parties and attract some people who actually care about doing good, not just keeping power and accumulating spoils, I think I’ll just boycott elections and drink my coffee.

Question: Does the state of American politics make you sick?

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Trick-or-Treat Economy

By Lloyd Graff

The mavens and savants are struggling with lots of economic numbers coming in that do not conform to popular wisdom.

We have a very tight labor market right now, but the wage increases are merely bubbling up at a 2% per year pace.

I have to admit this number does surprise me because Amazon just raised everybody at least a buck an hour, and the minimum wage law, which used to be an issue for the angry liberals, is now a forgotten artifact in a competitive economy.

People in the food-serving business do have to pay more or they will have nobody to flip the burgers, but in the industrial economy I have been surprised that the wage push appears to be subdued.  People are just getting by with fewer people than they used to, because hiring is so difficult.  A lot of people who are joining the production workforce are fresh faces at lower wages than the retirees who are exiting.

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Investment by middle-sized business is softer than one would expect with 3-4% GDP growth in the economy.

Bigger companies, particularly a lot of foreign firms, are investing major money in factories, equipment and training but not small and mid-sized firms.  For independent business people the scars of 2008-2009 are still palpable.  I think many older business folks are still in a “recovery” state and very cautious about acquiring debt to expand.  Also, the tax law favors Type “C” corporations over “S” corporations which are common for small businesses.

Big companies, whose managers are mandated to grow their companies without having to spend their own cash, are putting up new factories and buying others.  Small and midsize firms find it harder to borrow and are inclined toward conservatism.

For those wanting to sell out, they need to build “EBITDA” to command a decent price, and often the willing buyers are private equity firms that want to milk the acquisitions to quickly pay down debt then flip them to the next willing group.

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Donald and Melania Giving Candy to Trick-or-Treaters at the White House.

The stock market is sliding down.  This should not be terribly baffling after nine years of buoyancy.  When the Dow was over 26,000 I found myself checking my retirement account every day.  For me this was a sure sign that we were headed for a plunge.

Looking at it coldly, the Fed has been whacking the market incessantly with rate raises.  The short-term rates go directly at my lending line, making me wince quarterly.  Interestingly, the 10-year bond which dictates mortgage rates has been relatively kind to us because zillions have poured into that bond from around the world.  Nevertheless, mortgage rates have moved up faster than the 10-year has, and the new and used home markets are sluggish.  I think that many people, correctly or not, view the home market to be out of reach for what they want and expect.  One significant reason for this is the choice by many owners to rent their homes by the day, the month or the year because CD rates are paltry and demand for rental housing is robust.  The amount of owner-occupied housing is falling in America, a phenomenon few predicted 5 or 10 years ago.

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We are in a period when automotive is stagnant, housing is mediocre, rates are rising, wage growth is modest, stocks are falling, yet small business confidence is at record levels and much of the Press says America is a mess.  Pretty weird.

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I’ll take another shot at explaining what is going on.

The U.S. economy is running on borrowed money.  The tax cut made for bigger deficits, but the happy fact is that all the borrowing is well within our means – if the economy keeps growing and folks are confident.

The big jump in military spending has given us more extra juice.  Will the glee over defense splurging go on forever?  Doubtful, but for now it is a plus.

Business owners, especially small business owners, like Donald Trump, tax cuts and lighter regulation.  The New York Times and CNN hate this fact, but it is true for now.  I think the stock market drop is a hedge by Wall Street against a Democratic victory in the midterms.  If the Republicans get to 55-45 in the Senate I think we’ll quickly see stocks jump 5-10%.

If you’ve read this far you have absorbed 600 words of Lloyd Graff’s opinions.  Do you agree?  Are you confident or pessimistic?  Are you making more money and saving it or buying a new F-150?  Have the higher interest rates soured you or do you ignore them?  Sock it to me.

Question: Is your confidence in the U.S. economy rising or falling?

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Why do I care so much?

By Lloyd Graff

The World Series between the Boston Red Sox and Los Angeles Dodgers starts tonight in Beantown.

I’ll probably watch, but I may listen to a podcast or write or play Words with Friends. But if the Chicago Cubs were in it this year I would be watching with rapt attention and texting my son-in-law, Scott, and Noah. I’d be living and dying with the team I love so much.

Why do I care so much?

I don’t know the players personally. They change every season and often a lot during the season. Many of them are from the Dominican or Puerto Rico and barely speak my language. I doubt I could have a meaningful conversation with most of these young kids who have devoted their lives to refining their swings or their sliders. Yet I spend hundreds of hours a year obsessed with how many games they win, their on-base percentages, and the spin rate of their breaking pitches.

My daughter, Sarah, is a Rabbi in Palo Alto, and every year in her most important sermon she talks about the Cubs at some point. It has become a trademark for her, a part of her brand, and I know I am partly responsible for her mixing Cubs and religion. For me and her, the Cubs rooting is akin to a religious experience.

Jackie Robinson safely steals home plate in 1955 under the tag of New York Yankees catcher Yogi Berra in the eighth inning of the World Series opener at New York’s Yankee Stadium. Photo courtesy of the Orange County Recorder

The Cubs are certainly secular and do not rely on a higher power, but the importance of ritual imbues both baseball and religion with a habit-forming routine. The routine and the history of both, ties families together and gives them endless topics of discussion and argument. Both invite converts yet do not accept them readily. A White Sox fan who claims he or she has embraced the Cubbies is regarded as untrue to his own faith and cannot easily be accepted as a “real” Cub fan.

I sometimes wonder how I became such an ardent Cub fan. My father did not grow up with baseball. His parents were immigrants from Eastern Europe. Sports were irrelevant to them.

But my mother, Thais Kassel, grew up within walking distance of Wrigley Field. Her father, Sam, loved the game and especially the Cubs. Sam Kassel’s mother owned a little grocery store, and Cubs players used to buy their booze there. My grandfather actually met Tinker, Evers and Chance of double-play fame in 1908 at her corner grocery.

Some of my earliest memories are of mother and grandfather, and talking about Jackie Robinson and Ernie Banks with them. I remember going to a Cubs-Dodgers game. The Cubs were terrible, but I saw Robinson, Roy Campanella, and Duke Snider play, and Jackie Robinson stole home. I don’t remember much about my 0-10 years other than baseball, either talking about it or playing it.

My mom took me to a few Ladies’ Day games. Twenty-five cents to get into the Park. Baseball bound my mother and I together until she died in 1990.

But there’s more to my love of the Game than family and tradition. The nuances, the subtleties, the strategy fascinates me. In the recent National League Championship Series Craig Counsell, the Milwaukee Brewers’ manager, used an unorthodox approach with his pitchers. In one game he started his left-handed pitcher Wade Miley and then pulled him after one batter to try to fake out the Dodgers’ manager, Dave Roberts, on lineup matchups. The Brewers lost the game.

In the seventh, and deciding, game he used his most-potent weapon, pitcher Josh Hader, in the third through fifth innings thus losing him for the decisive final part of the game. The Brewers lost the game. Counsell was trying to finesse his lack of starting pitching, yet he had his best starter, Jhoulys Chacin, starting that game. People will argue about his strategy for years. It’s one of the beautiful things about the game.
I’ll be reading Cubs blogs all winter. Scrutinizing trades. Hoping the pitchers’ sore arms heal. God willing, 2019 will be our year again to celebrate.

Question: Do you still love baseball, or do you see it as yesterday’s game?

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Harvard Material

By Lloyd Graff

The recent Kavanaugh spectacle enthralled me as much as any big sports event. It really was the Super Bowl of Senate pillow fights, and I loved it.

Now we have another fascinating slugfest shaping up in Federal Court. It’s Harvard, Yale and MIT against the Asian kids and parents who want to break down the admissions barricades. Harvard and buddies in the Ivy League are fighting fiercely to uphold their right to handpick their Freshman class of 2,000 or so students. They want the right make their schools look how they like. Can you blame them? They are their schools, aren’t they?

Oh, if life were that simple.

Harvard, Yale and MIT are all private institutions, but they are the place Presidents come from, and Presidents want their kids to go there. It ain’t so easy to tell Barack and Michelle that daughter Malia did not make the cut. How about Ann Arbor instead?

Students Protesting Harvard’s Discrimination of Asian Applicants. Courtesy of xinhuanet.com.

According to some sources many other elite schools have higher average test scores than Harvard because Harvard takes into account other factors besides grades. Harvard took Malia Obama. It accepted George W. Bush to business school, a likable “C” student. Jared Kushner, Donald Trump’s son-in-law, got into Harvard after the Kushner family pledged several million bucks to its endowment fund.

Life isn’t fair and neither is Harvard, but the hard question is “What is fair?”

Harvard thinks it should be able to take a terrific athlete who is a smart kid but no genius. It wants to be able to take a Mark Zuckerberg, son of a Jewish dentist in New Jersey, because he is a go-getter and has some special qualities. Harvard wants some African American kids in the class, whether they have perfect SAT numbers or not. The school has an almost equal number of female and male students while the national average of women in undergrad universities in 2017 was 56% according to The Atlantic. Is Harvard so wrong about putting together a more gender balanced class with a mix of rich kids, go-getters and jocks?

Way back in the day when I applied to college I knew that Northwestern had a Jewish quota, and it annoyed me when they rejected me probably because of my religion.

So it hits close to home when Harvard has a big donors slot, an athlete’s category and a “we can’t take too many Chinese and Indian kids policy” with the rationale that we might miss a Zuckerberg or Bill Gates.

In California, at an elite school like Caltech, the last Freshman class had 43% Asian students, but who’s counting? They take a more colorblind approach as a public university.

There is no perfect system of admission to a college like Harvard. The Crimson reported in March of 2018 that Harvard that accepted 1,962 of 42,749 students for its class of 2022. I really do sympathize with school’s dilemma. How do you turn down a charming, African American President’s daughter even if her test scores were not as high as an Indian kid from Louisville? The even harder question — should they? Malia Obama, with her name and upbringing may have a greater opportunity to change the world and bring positive feedback to Harvard than a kid who will probably become a chemistry professor.

The Justice Department is lining up against Harvard, MIT and Yale in this case. Is it correct from a public policy standpoint? I don’t know.

That’s why I’m really interested in what you folks think. Should test scores be the primary criterion for admission to the Harvard student body? Does Harvard or a business have the right to discriminate by body type or the quality of a smile? One day Brett Kavanaugh, Yale and Harvard Law Alumnus, may be the deciding vote on the outcome of this case.

Question: Should Harvard be able to take the students it wants?

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How to Lose a Customer

By Lloyd Graff

You never know when life will teach you a lesson when you least expected it.

I was at the local Farmer’s Market in Homewood, Illinois, last Saturday.  I was hoping to buy the last good peaches of the year.  I surveyed the sellers’ wares, and nothing looked spectacular.  I finally found a batch that appeared okay.  I asked the farmer, a young woman from South Haven, Michigan, how the peaches were.  “They’re good, last ones of the season,” she said.  So I bought them.

I took them home, left them out overnight and tried one the next morning.  Awful.  Mushy garbage.  I threw them all out.  I made a quiet vow never to buy another ounce of fruit from her again.  It was not just that they were bad. It was that she had to have known they were bad, yet sold them to me with a straight face. I am a bit of a fruit fanatic.

The next day I went to my favorite farmers’ market to buy apples for the winter’s applesauce.  I went to my favorite fruit vendor, Mr. Hardin of Hardin’s Orchard, west of Kalamazoo.  I bought a bushel and a half of apples from him and then asked if he had any good peaches.  I’ve been buying from him for 10 years, and he always tells me the truth about fruit.  If he’s selling blueberries and too much rain made them look plump and delicious he’ll tell me to wait a couple of weeks when the good ones will be ripe. Hardin knows his apples, and I rely on him.  He told me his peaches were sweet and delicious, and they were.  Every single one.  He earned my business for another year.

By the way, Hardin is the busiest vendor at the market every Sunday. It was a business lesson relearned on peaches.  If you want long-term customers always be straight with them, especially the less-experienced ones who may not know what they don’t know.  Don’t promise more than you can deliver.

Mistakes will always be made.  When Graff-Pinkert resells used machinery we do not get any guarantees from the people who sold us their no-longer-needed machine tools.  Sometimes they answer us honestly if we ask the right questions.  Actually, most people are straight if you know what to ask them and ask it in the right way.  But at an auction rarely do the sellers volunteer information, particularly if it is negative. But if you are in the business of trying to develop long-term relationships you have to tell people when the peaches are mushy when you know they are.

Question: What stories do you have about being duped?

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Swarfcast Ep. 13 – Jason Zenger on “Making Chips” and the Industrial Supplies Business

By Noah Graff

Scroll down to listen to the podcast with Jason Zenger.

In today’s podcast I interviewed Jason Zenger, president of Zenger’s Industrial Supply, in Melrose Park, Illinois, a company that specializes in selling tooling and industrial supplies to the metal working industry. Jason also has a popular podcast called “Making Chips,” which he cohosts with Jim Carr of Carr Machine & Tool.

Jason and I discussed how he eventually came to work at his family’s business and how it has grown and modernized over the years. Rather than simply distribute commodity products the company’s strategy is to become its customers’ single source supplier for tooling and machining accessories like drills, inserts, hand tools, etc.

I see some parallels between Jason’s podcast “Making Chips” and Today’s Machining World’s “Swarfcast” in our focus on similar topics in the metal working industry. Also for those of you baffled by our podcast’s and blog’s name, “Swarf” actually is a reference to the chips and grime in the belly of a metal cutting machine. One major difference between our podcasts is that “Swarfcast” is hosted by machinery dealers, while “Making Chips” is produced in the lens of a tooling and machinery supplies vender, and the owner of a machining company in Jim Carr.

Listen to “Making Chips” at https://www.makingchips.com/, or any apps (iTunes, etc.) where you get your podcasts.

Question: How are tariffs affecting your business?

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Unforgettable?

By Lloyd Graff

I’ve really been trying to stay away from political stuff in this blog, but the Kavanaugh sex allegations are just so juicy I feel compelled to comment.

I was aghast when I first heard that Senator Dianne Feinstein was pulling a “Hail Mary” with the Christine Blasey Ford letter, but the more I read about it and her, the more I felt she really does believe that Brett Kavanaugh, as a 17-year-old prep school basketball player and self-proclaimed virgin, assaulted her, groped her and left her indelibly scarred. Did he really do it while “stumbling drunk”? I doubt we will ever know. But if I were Kavanaugh testifying to the Senate Judiciary Committee, as well as to his wife and children, and Christine Blasey Ford, I would say, “I do not remember ever doing what you accuse me of, but if I did do it when I was drunk at a party as a teenager, I am horrified and appalled, and I ask forgiveness for being such a stupid awful lout.

I think about myself. I am a person who does not drink alcohol but certainly does not have a perfect memory of events 35 minutes ago, much less 35 years ago, and that is without being impaired by drinking. Could a selective fallible memory cleanse an unpleasant event 35 years ago at a noisy party? Absolutely.

Georgetown Prep School Football Team. (Kavanaugh on far left)

So Brett Kavanaugh, you’ve spent three decades trying so hard to be the guy worthy of the Supreme Court, why not step forward and set an example for the country, but even more so for your wife and daughters, by apologizing for something you can’t remember doing but Christine believes you did do. Be a Mensch (Yiddish for “man in the best sense”) Kavanaugh. It may get you your seat, or it may cost you, but you won’t be left with scars like those of Clarence Thomas after Anita Hill testified in his confirmation hearing in 1991.

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I have very positive memories of this year’s International Machine Tool Show.

I felt grateful just to attend IMTS. Ten years, exactly, since leaving St. Francis Hospital after almost dying of a heart attack and undergoing quadruple bypass surgery, I walked McCormick’s halls for hours with a purpose.

At 73, with the experienced eyes of a writer and used machinery dealer, my goals were different than those of a person trying to decide between buying an Okuma or Mazak. Spindle rpm and software were of little interest to me. I was interested in the people, the captains and lieutenants of manufacturing who managed the exhibits, and the foot soldiers like myself who schlepped around the endless corridors.

I talked to Bruno Schmitter of Hydromat about his son who is finally working full time with the company. I connected with Mindy Mikami of Okuma, who sets up the company’s spectacular exhibit every two years and then hauls it back to Charlotte, North Carolina. The Okuma folks were all worrying about how hard Hurricane Florence would affect their homes and travel plans.

I talked to Mette McCall, who has worked so hard to put Universal Robots on the map. She told me about how Odense, Denmark, has become the robot capital of the world. She’s Danish but now lives in Mobile, Alabama. Before robots Odense was known primarily as the home of Hans Christian Andersen.

I was very happy to catch up with Michi Tajariol, whose family owns TAJMAC-ZPS, which builds its machines in Zlin, Czech Republic. Michi lived with our family and worked at Graff-Pinkert when he was 23 years old for three months. He has a close relationship with my son Noah, and he and I also have much more than a business relationship. I caught up with Michi at the ZPS booth the day before he was leaving to return to Europe. We embraced, talked about some business, but mostly talked about the important family stuff that we could access without preliminaries. Life and death, marriage and divorce, cancer, birthdays of kids, the stuff that counts. This is business too, because relationships give you access.

Finally, perhaps the most important of all my meetings at the show was spending good time with my brother Jim after a long cold period.

These are the things I’ll remember from IMTS 2018.

Question 1: What are your favorite and least favorite memories of high school?

Question 2: What left an impression on you at IMTS 2018?

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Swarfcast Ep. 9 – Russell Ethridge Small Business Lawyer

By Lloyd Graff

Scroll down to listen to the podcast with Russell Ethridge.

Today Brett Kavanaugh is being interrogated in hearings of the Senate Judiciary Committee as he attempts to thread the political needle to become a U.S. Supreme Court Justice.

In today’s podcast I interviewed Russell Ethridge, a solo practitioner lawyer in Detroit, who also listens to cases as a judge two days a month for the humongous sum of $15,000 a year. He believes the legal system must work for the guy accused of drunk driving for the second time and the secretary in the local real estate firm accused of embezzling $65,000.

Russ has been Graff-Pinkert’s lawyer for 25 years. I got to know him when he was spending a stint in Jamestown, New York, representing a French multi-national called Valeo. He sold Graff-Pinkert 13 Wickman multi-spindle screw machines for more money than I wanted to pay. Good negotiator.

Russell Ethridge

Ethridge has a knack for quickly assessing the nub of the issue in a potential legal hassle and pointing to a way out with the least aggravation possible. Many lawyers like to milk a case for the billable hours. Russ thinks the opposite way, always looking for the smartest, most efficient resolution of the problem.

Russ’s Dad was the Editor of the Detroit Free Press in its heyday in the late 1960s and ’70s. In Russ’s younger days he worked as a reporter for a tiny paper in West Virginia close to where his grandfather practiced law for 60 years.

Russ’s grandfather had a one man retail legal practice, which to some degree was a model for Russ. In the podcast Russ discusses the impact his grandfather’s funeral had on him when he observed the huge cross section of people who talked about how his grandfather had helped them over the years. Russell Ethridge—lawyer, judge, one man band—continues his legacy.

Question 1: Is our legal system rigged against the little guy?

Question 2: Would you prefer to pay a lawyer by the hour or by the job?

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The Machinist Gig

By Lloyd Graff

How much would you pay for a bottle of clean water if you were thirsty and could not find drinkable water? How much would you pay for a room if you had no place to sleep?

How much would you pay for a programmer for your CNC machines if they were down there was nobody to hire?

We are apparently in a period, or on the cusp of one, in which there are almost no skilled machinists available. In such an environment the logical thing to expect is that men and women with skills that the market demands will begin to auction their expertise to those who will pay the most. We may be entering the “gig economy” for machining people with quantifiable expertise. Smart entrepreneurs will develop websites that sell manufacturing skills by the hour or by the day. Businesses have employed freelance specialists for many years, but today’s Google economy is empowering more individuals than ever before.

The machining world has thrived in the land of the reliable and predictable—long-term clients, machinery that lasts for decades, dedicated employees who spend a career with one firm. It has worked pretty well for both employers and employees in a period of employment stasis.

Ten years ago, some companies in the machining world would have extra workers paint the floors when there was no production work. They had core people who they believed in and who believed in them. Today, life is quite different. Skilled people who dutifully worked loyally for humane owners have retired or died in many cases.

Private equity firms with professional managers own many medium sized manufacturing firms and are acquiring more every day. Their mission is to pay off debt, build equity and sell the businesses to the next firm in line. They have a short-term horizon which affects their view of employees. I would think that they would buy into the idea of a gig economy where employees auction their services, if that was necessary.

Traveling Knife Sharpener in Paris.

I think the gig economy has plenty of negatives for both employers and workers. I write this as somebody who has hired many gig workers for both Graff-Pinkert and Today’s Machining World. Paying for hotels and rental cars for the pricier freelancers can bite.

For workers, shifting to new work environments is scary and can wreak havoc with family life and relationships. Stable businesses with long-term employees develop community and rapport. Gig people are often not accepted easily in that milieu.

I think we have a real predicament in the machining world in late 2018. There’s lots of business, but not enough skilled people in the wings to hire. Owners and managers have a logical reluctance to upset the status quo by hiring new people for $10-$50/hour more than steady, loyal current workers. Meanwhile, they see contracts for the plucking or projects running late or unfulfilled.

Silicon Valley has lived with this dilemma for a long time. Workers have been drawn to the riches of the Valley, but the side effect has been sky-high housing prices and cost of living. The buses on Highway 280 and 101 are filled with folks who commute long distances for the wages in Palo Alto and Mountain View.

Most of the manufacturing in the Bay Area has moved to Nevada, which is causing a similar mini-inflation in Reno and Vegas.

For the moment, I expect a significant bump up in wages in the machining world. It will be hard to stomach for employers, who are dealing with tariffs and escalating metal prices. The result may be more work heading to Mexico and possibly China and Europe. But American manufacturers are extremely resourceful. They have weathered 20 years of headwinds. They will train young people, get by with fewer workers and hire the pricey experts when absolutely necessary. We will see the machinist as entrepreneur in isolated situations, but I doubt it will become the norm in the near future.

Question: In the future will more skilled machinists quit full time jobs to become freelancers?

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