Author Archives: Emily Halgrimson

Amazin Opportunity

By Lloyd Graff

Take a flyer with me today. This is a blog about change, race, real estate values and the chance to make a fortune if my left field projections are actually correct.

Amazon will make its decision shortly about where to build its new headquarters. It’s original home office will remain in Seattle, but its second home will be built somewhere else in America. Chicago is one of the finalists.

Consider the other likely candidates such as Boston, Dallas, Atlanta, Washington DC and Chicago. Chicago is only a 4-5 hour plane ride from Seattle, making it a strong candidate. Chicago has another big advantage. It’s offering Amazon a huge clean site that the city acquired following the financial collapse 20 years ago, the former Michael Reese Hospital. The site can be expanded to 100 acres. The beauty of it—is the beauty of it. It is adjacent to Lake Michigan near McCormick Place, I-55 and outer Lakeshore Drive. It is located on several rail arteries and accessible to downtown on lakefront bike paths. It is within biking distance of the University of Chicago, Northwestern’s Downtown campus, University of Illinois Chicago (UIC) and Illinois Institute of Technology. Loyola and DePaul Universities are easily accessible too.

The Amazon Headquarters would mean eventually 14 million square feet of buildings plus the amenities and service businesses that go with it. A conservative estimate is 50,000 jobs will be spawned.

Amazon choosing the Michael Reese site would be a fascinating scenario because of the primarily African-American population that borders it on the south side of the city. Would the most valuable company in the world, Amazon, locate its $50 billion gem in a Black area of Chicago? I think so, because 100 acres flat against the beautiful lakefront land in Chicago trumps other considerations. Amazon will build its own neighborhood.

Chicago’s Former Michael Reese Hospital Site. Courtesy of The Chicago Tribune

America has changed enormously since I grew up a few miles south of the Michael Reese site. (Incidentally, I was born at Michael Reese Hospital.)

The racism that infected my childhood and colored the way I have looked at the world ever since is much different today. Barack Obama was President for eight years and his library will be built 15 minutes south of the Michael Reese site. I live in a southern Chicago suburb that’s more black than white. The Starbucks where I’m writing this blog has a 50-60% African American customer base.

Most of the Jewish people who once filled the four synagogues in the area I live in have died or moved away. Yet I am very confident that a new wave of Jews and other white people, even with children, will soon be moving back into my area, which is a 25-minute commute to the 100-acre Michael Reese site. This is going to happen even in the unlikely event Amazon does not opt for Michael Reese.

Apple will be building its own 50,000 employee second headquarters in a few years. One of the key factors a company like Amazon or Apple considers when building a new site is the availability of affordable housing in an urban area. Chicago ranks high in the nation on accessible affordable housing for potential younger employees.

Chicago’s Southside and the South Suburbs have available housing, lots of land, plenty of water, excellent transportation and infrastructure, and a desire to take advantage of it.

My old friends whose children have all left the area laugh at me when I outline my Amazon scenario, but the house flippers and real estate speculators are not laughing. They are buying right now. Better to be a little early than too late.

I make my living by identifying undervalued assets. Rarely have I seen an opportunity with such a big upside as the spin off housing of the Michael Reese development.

Question: Is racial makeup one of the first things you consider when buying property in a new neighborhood?

Share this post


By Lloyd Graff

Written June 19, 2018

This isn’t a blog I really want to write. But I feel like I can’t write anything else right now so I better just write it and get it out of the way. I’ll figure out whether I want to publish it later.

I am nearing the 10th anniversary of the heart attack that should have killed me just prior to Labor Day Weekend in 2008. I am a bit obsessed by the date. I can’t get it out of my mind.

Fortunately, I’m feeling pretty good physically, but the knowledge of the 10-year mark is driving me nuts. I know it is only a “date,” but 3,500 days since my friend and doctor Chris Costas wheeled me into the Emergency Room himself at St. Francis Hospital in Evanston, IL makes me feel both grateful and vulnerable.

It is not like a “yahrzeit,” which in Judaism is an annual ritual of remembrance of a parent or sibling who has died. My case is marking my survival. There is a prayer in Judaism for that also—“the Shehecheyanu,” which is said to mark a special fortuitous event. You say it when a child is born, when the Cubs win the World Series, when you survive an accident or when you reach a milestone like living 10 good years following a heart attack. 


Tomorrow I have an appointment with my cardiologist, Dr. Matthew Sorrentino. It’s a routine long scheduled visit, but it is adding to the drama I’m feeling. I know doctors say they schedule appointments six months ahead to assuage the drama, to normalize the appointments that are built in to eliminate crises. I wish it always worked that easily for me, and this 10-year appointment which I feared might never come is now gratefully upon me.

I know I need to quickly move from fear to gratitude, but honestly I’m feeling those emotions sometimes simultaneously while other times alternating between them.

Writing this piece 22 hours ahead of my doctor appointment is therapeutic. It helps to identify my fear and massage it. I can’t make it vanish. I know that. I think of the events of 10 years ago every morning. Every day that I wake up and touch my wife Risa and identify a small tapestry on my wall eight feet away, I know I’m alive and get to experience another day. Doing 2,500 steps in 20 minutes on my elliptical energizes me further, and then taking a hot shower following it zonks me out. It’s a reflection of my life these days—up and down, gratitude and fear, the joy I feel about all the blessings I have, the knowledge that life is fleeting and health can be a vapor.

I appreciate somehow finding the strength to write this piece and your patience in reading about my daily struggle. I know I am not alone in experiencing these kinds of feelings.

I am fervently hoping to walk out of my cardiologist’s office tomorrow whispering the special prayer of gratitude and relief, the “Shehecheyanu,” with great feeling and a huge exhale.

(Fast forward to June 22.)

The appointment two days ago went great. My doctor at the University of Chicago said the 10-year mark is meaningless today with good diet, beta blockers and ACE inhibitors.

June 20 was a beautiful day.

Question: Name three things you are grateful for.

Share this post

It Spoke to Me

By Lloyd Graff

I bought a gorgeous piece of art last Saturday, a painting of an “L” Train clacking through an apartment jungle in Chicago. At least, that’s what it represented to me. Another person might see something different. That’s part of the beauty of art.

I didn’t expect to be buying a painting. On the spur of the moment after a workout with my trainer I was driving home, focusing on NOT stopping at Dairy Queen, when I remembered there was an art fair in downtown Homewood, Illinois. I spotted a parking spot at Starbucks, went in and bought a bottled water and asked if I could park for a half an hour or so. They were cool, and I walked over to the fair. I saw Charlie Celander who used to be the art director of Screw Machine World in the early days of the magazine. He was in a booth with his daughter Anna who was showing her work. The “L” piece immediately caught my eye. That’s the way it is with art. If it doesn’t speak to you, yell out to you, when you first experience it, who needs it. I talked to Anna, who remembered me from the magazine days, and she told me about her work as an art therapist. I wanted to buy it then but figured it was wise for my wife, Risa, to see it because we would have to negotiate wall space in the house, though I also had Graff-Pinkert as a fall back location. Risa was working out at the time, and we had a dinner engagement in a couple hours, but I figured I could get her to see it before the fair closed at 6:00 pm.

“L” Train Painting by Anna Celander.

Risa arrived around 5:30 and checked out some Peruvian fashions I liked (that she didn’t like). Then I led her over to the booth with the painting. But on the way over we met some old friends, Joel and Gayla Kahan, who were grazing at the fair. I told them about the painting, and they wanted to see Anna Celander’s work. Joel loved the “L” piece, too. Both wives were a little less enamored of it.

Joel wanted to buy it, which only increased my desire for it. I asked Anna for “her best price,” which I’m sure my son Noah would have said was a poor negotiating tactic, but I considered her asking price of $525 framed and covered with glass to be something I could afford anyway. She stammered and went down to $475. Then my friend Joel stepped up and indicated he really wanted it too.

Impulsively, I said to him, “why don’t we flip for it.” Anna was a bit taken aback by this twist of events because nobody had ever sought out her work like this before. She offered to do another piece or make a copy, but both of us were really only interested in this “one and only” original.

Fortunately, my “flip for it” gambit knocked Joel and Gayla off their game. Joel Kahan is a gastroenterologist, not a used machinery dealer. Competing for a material object of unknown value at an art fair was not exactly a colonoscopy, so he gracefully backed off, and I immediately handed my credit card to the grateful artist as her Dad began wrapping it up.

I felt good, not because I beat Joel out of the “L” painting, but because I was decisive about something that really spoke to me.

It harkened back to 13 years ago when I commissioned a college kid named Mike Eisenwasser to paint an original mural on the side of a 40-foot steel shipping container to flank the driveway of our office. I had liked his work that had been displayed on the walls of my local Starbucks so I proposed this crazy assignment for Graff-Pinkert. He was up for the project, but I made it clear to him that he had to finish it in three months from inception to completion. That’s a lot of paint.

Mural outside Graff-Pinkert in Oak Forest, IL. By Michael Eisenwasser.

Mike completed the mural right before he left to go back to the University of Illinois, and I loved it. He created a colorful city-like scene in which the buildings are shaped like screw machine parts and tooling all found in Graff-Pinkert’s shop.

But the evening before he left for school he realized he had forgotten to sign it, so he and his dad came back to Graff-Pinkert that night, dug the paint can out of the dumpster and put the finishing touches on in the dark

That mural brings me pleasure every day when I drive into the parking lot and when I look out my office window. When I came back after my heart attack 10 years ago I cried when I stared at Mike’s mural.

How much is art worth? That is in the eye of the beholder. But when I saw Anna Celander’s painting last Saturday afternoon I knew it would bring me great pleasure, hopefully for a long time.

Question: Which art pieces have spoken to you? Both famous and not famous.

Share this post

Taster’s Choice

By Noah Graff

Last week in Palo Alto my fiancé, Stephanie, and I went to a unique coffee shop called Philz. Philz distinguishes itself from other coffee chains because its stores only serve pour over coffee engineered for each customer. They don’t make espressos, lattes, macchiatos, cappuccinos or frappuccinos. They don’t even have standard drip coffee, though they do serve wonderful pastries and tea that is also made with the individual pour-over method.

For those unfamiliar, a pour over cup of coffee is made one cup at a time, by pouring hot water though an individual filter into the cup. At Philz the baristas grind the coffee beans for each individual cup right before pouring the water. Grinding the beans right before the cup is poured helps bring out the strong distinct flavors of the coffee.

I had been to a Philz several years ago, but Stephanie had never been before. When we arrived I immediately told our barista, Edward, that we were Philz virgins so we needed guidance to order our drinks. Edward was extremely friendly and informative and put us at ease. He asked what type of coffee we normally drank at a typical coffee place. I told them that I normally get a latte, perhaps with a flavor shot. We went over a few choices and he guided me to a coffee variety called Tesora, which was described on the store’s blackboard as a medium blend with aromas of Caramel, Nuts, and Butter. All of the 20 coffee varieties on the cafe’s blackboard had descriptions like that, with in-depth flavor descriptions resembling a how one would characterize wine or cheese.

Noah and Stephanie with barista Edward at Philz Coffee in Palo Alto, CA.

Edward told me my cup of coffee would taste similar to a caramel latte. He told me that he would first give it to me with only cream and no sugar added. I just about always take a bit of sugar in my coffee, but he told me that because the coffee was so freshly roasted and ground just before my cup was made it would be bursting with flavor and sweetened by the proper amount of cream he would add.

He was dead right. The coffee had a wonderful flavor, in fact it had a lot of flavors that were easy for even my novice palate to identify. The coffee didn’t taste bitter despite having no added sugar. I wanted it just a tad sweeter, so Edward added just the right amount of sugar for me to insure the coffee’s distinct flavors would not be drowned out.

As Stephanie and I left the cafe I noticed there was no table with cream or sugar for customers to add themselves. This gave the cafe a paternalistic feeling. The cafe evidently thought it could engineer the coffee I desired better than I could. No cream, no sugar, and I had only one choice for how my cup would be made. But I suppose it made sense. If I knew how to make better coffee than a professional barista then why should I pay one to make the first 90 percent of the drink? I didn’t prep the coffee beans, I didn’t operate the coffee making equipment, so why should I put the finishing touches on the drink?

If a producer is great, why should it give the customer freedom to screw up what it sells? To me the Philz formula is a great model. Listen to a customer. Help a customer obtain her vision, but don’t give the customer the ability to screw up a beautiful product.

Question: Do you prefer fewer menu choices when you go to a restaurant?

Share this post

Negotiating Two Oceans

By Russell Ethridge

It was time to change oceans. John and Julie King, retired and fed up with California taxes and congestion, needed an experienced crew to take their 44-foot sailboat Myla from the Pacific coast to a new home in Maryland’s Chesapeake Bay. The Panama Canal was on the route, and I got the call to assist since John and I have been sailing together since childhood. It was an offer I couldn’t refuse. When else was I going to see one of the most remarkable products of human endeavor? A non-stop flight from any number of cities deposits you in Panama City, a metropolis of two million people going toe to toe with Miami as the economic capital of Central and South America. Skyscrapers define a shoreline cluttered with the clatter of commerce. A half hour car ride deposited me at a marina where I took a dingy out to Myla to join the crew.

The Atlantic and the Pacific was one really big ocean before plate movement in the earth’s crust three million years ago created the isthmus between the North and South American continents. Humans have been trying to traverse it forever; first by foot, later by train, and finally by water; a dream of kings and explorers for centuries. Success was achieved in 1914 after more than a decade of work by the U.S. that followed an even longer effort by the French that ended badly for many, including  thousands of laborers who died from tropical diseases. The U.S. really did “speak softly and carry a big stick” when it bought the failed French effort for pennies on the dollar and, after brewing up a revolution, made a deal with the new country of Panama, formerly a province of Columbia. Manufacturing and trade were booming, and the U.S. needed easy access to the Pacific rim, the fast growing U.S. West, and the ability to inject its military quickly.

The Myla: A 44-foot sailboat on its way to the Panama Canal.

The 48 mile trip through the Canal saves roughly 12,000 miles of travel around South America, some of it through the most treacherous waters in the world. Due to Panama’s geography, the canal actually runs from the southeast to the northwest, and it was slightly confusing to watch the sun rise over the Pacific. I thought we would probably spend a day or two transiting through the three locks at either end of the canal and Lake Gatun, an artificial lake between the locks that was the largest manmade lake in the world when it was created from 1907-1913. Pleasure boats like Myla only transit the canal alongside the huge container ships that comprise the bulk of the traffic and pay the big fees. The Panama Canal Authority estimates that around 5% of the world’s maritime traffic passes through it at 10% of the cost of traveling around South America. Myla’s modest fee of a few thousand dollars seemed like a pittance compared to an average fee of $400,000 for a loaded container vessel passing through the original locks or $500,000 to $800,000 for passage through the larger locks completed in 2016. When you are moving grapes from Chile or cars from Korea, time really is money. The Canal Authority claims to employ a value pricing model that factors in cargo and time sensitivity and, apparently, you can pay to jump the line.

Our passage was scheduled three weeks in advance, but the exact time was still uncertain. We spent the day before departure stashing gear and supplies and lashing old tires to the side of the boat in anticipation of the bumping and grinding that can happen in the locks. With three million gallons a minute pouring into an up bound lock (almost 28,000,000 gallons a fill), turbulence for a small boat like Myla is significant. The Canal Authority requires each boat to carry an advisor (an added $1,150 charge) and a crew capable of handling the lines controlled by lock employees that run between the boat and the lock walls. That’s where I came in. Keeping the boat stable while water pours in and the boat rises is complicated by Myla’s proximity to a ship over 20 times its size that may be carrying 4,000 Hyundai cars bound for Europe. Julie was on the phone to the booking agent (another fee) much of the day trying to confirm our departure time.

At 10:00 p.m. the night before departure, the Canal Authority notified our agent that we would be delayed a day. I’d cleared my docket for a two day transit with a day for return travel. I had to be in Court in Detroit on day 4, so unless we started before 6:00 a.m. to make it in one day, I was screwed. When the call came the next morning announcing a late start, I knew I had to get off the boat. But I was determined to transit the canal, even if it had to be by land. I hopped a cab to the first set of locks to watch Myla through the locks and answer the questions of tourists who wondered why the crew of this sailboat was waving at me.

Once through the Miraflores locks at the Pacific end and elevated 85 feet, Myla motored through the Culebra Cut for 8 miles across the continental divide and into Lake Gatun. Although the big boats typically make it through in about 8 hours, Myla moves at about 6 knots under motor. With a late start and an advisor who’d reached his work time limit, Myla was forced to spend the night in the lake and complete the transit with a new advisor the next day. My decision, disappointing as it was, was irrevocable. You may not leave your boat, even to swim, or you’ll be arrested. Most people going through the canal have not “entered” the country, and the canal certainly presents an opportunity for surreptitious entry. Although there is literally nothing around aside from the locks, there must be cameras because a patrol boat questioned the crew about a quick swim no one thought would be noticed. After that, the crew caught up on its reading. In the meantime, I took a locals’ bus to see the Gatun locks at the Caribbean end.

A Container Ship going through the Panama Canal.

The passage to the Caribbean the next day was reportedly uneventful and ended near Colon, a small city that has a deserved reputation for crime and filth. Aside from the impressive port terminal facilities of various worldwide shipping companies, it has little other than the decaying remains of colonial era buildings and an impoverished population of the decedents of the West Indians whose muscles built the canal a hundred years ago. It stands in stark contrast to Panama City, just 50 miles away, with its gleaming buildings and fancy cars. A return trip the same day by train on tracks built along the canal years before its construction gave me the chance to see what I’d missed and to speak to a guide shepherding some boisterous Eastern European tourists. He wanted to know why it was China, not the U.S., proposing a $4.5 billion dollar rail line from Panama City to the border of Costa Rica, both popular tourist destinations. He wondered why neighbors were not helping neighbors.

The story here, however, is of engineering prowess and political will that transformed shipping and our global economy and gave rise to construction techniques in use today. The building of the canal resulted in the discovery that mosquitoes transmit malaria and yellow fever, and confirmed that sanitation systems and paved streets were at the root of good public health. We have had other efforts that transform how we live such as putting a man on the moon and building the Internet. But this is the only one that allows the changing of oceans in a day without leaving the surface of the earth. I was impressed even though I sort of missed the party.

Question: What is the craziest trip you’ve taken?

Russell Ethridge is an avid sailor, lawyer for Graff-Pinkert, a good friend and occasional contributor to Today’s Machining World.

Share this post

Should We Forget?

By Lloyd Graff

I have been struggling to write this blog for over a year now, but it is a topic I really want to discuss, because it is so tough. It’s also about baseball – sort of.

Luke Heimlich is the best player on the best college baseball team in the country, Oregon State. He is a left-handed pitcher with impeccable stuff. He has lost only once all season. He is 22 and a Senior. He would easily be a first round draft pick at next week’s Major League Baseball draft. He would have been a first round pick in 2017 as well, but just before the NCAA Tournament last year, a reporter for a Portland newspaper accidentally discovered that Heimlich had registered as a sex offender at age 15, after pleading guilty to improperly touching his five-year-old niece.

By all accounts his behavior has been as impeccable as his control in the eight years since his guilty plea, which was expunged from his record after five years. He also now denies the incident occurred and says he pled guilty because he thought it would be expedient to avoid a trial with his brother’s daughter as the centerpiece.

Luke Heimlich

His reasoning was that his record would be cleansed after five years and he could live a normal life according to the recent cover story in Sports Illustrated. But fortunately, or unfortunately, Heimlich, one of six children from a religious family in Washington State, became an incredible athlete and earned a scholarship at the premier college baseball program in the country. When he enrolled at OSU he strictly adhered to the rules of registering in a new state as a sex offender, but evidently nobody in the athletic department checked the criminal files for Heimlich. He had been home-schooled during most of his time growing up. He did not go around campus in Corvallis with a “sex offender” sign on his back. He was just hoping after five years his record would be expunged and the stigma would go away.

I’ve been wrestling with this case for a year. It was brought to the forefront again with a Sports Illustrated story that covered the issue exhaustively without any clear conclusion or opinion.

Major League Baseball will make its judgement next week.

On the one hand, I think about a teenage boy who may have behaved inappropriately with his niece. She may be affected adversely, though she appears to be thriving now, according to the SI piece. Heimlich’s brother, the niece’s father, now divorced, is estranged from Luke. I think of my three granddaughters and how I would feel about a similar case involving them. Would I exude forgiveness? I doubt it.

But to me this case is not just about how his family regards Heimlich, but whether a kid who makes a mistake like he may have committed will ever be able to live his dream to become a Major League ballplayer or even just live a regular life. He has been incident free almost eight years now. Can he just be a ballplayer or is he forever condemned? His teammates at Oregon State have seemingly embraced him. Most likely some fans won’t.

Should my beloved Chicago Cubs draft him if he is available? I hope so, because I’m sure his talent will be undervalued.

We all have stuff in our past that we are not proud of. Heimlich’s issue is darker than most, but should it doom him for the rest of his life?

Question: Can you ever forget if someone is a sex offender?

Share this post

Hoping Against Hope

By Lloyd Graff

I read Matthew Stewart’s long, insufferable guilt laden essay last night, “The Birth of a New Aristocracy,” which is the cover story of the June Atlantic.

Stewart recounts his own background, he descended from a grandfather who was the president of Standard Oil of Indiana way back in the 1930s. He grew up well off and has the guilt of an academic liberal tattooed on his arm.

His mission in the article is to make Americans who manage to live in a comfortable home, educate their kids well and take care of their health feel like they are doing it at the expense of a large group of folks who aspire and often succeed in doing the same thing.

The article is a profoundly pessimistic, arrogantly negative screed against the American dream of upward mobility and the possibility of possibility.

I have to thank Stewart for getting me angry enough to write about the strain of negativity that has infected so much of the “respectable” media like The New York Times, The Washington Post and The Atlantic. Besides absolutely loathing Donald Trump, they despise the annoying possibility that anything good sprouts in America outside of the suffocating bureaucracies of Government.

Matthew Stewart’s Atlantic opus drones on endlessly about the gulf between the affluent 9.9% of America and the supposedly pathetic 90.1% who are falling further and further behind. Stewart implies that life is stacked so heavily against the 90% that they might as well give up, swallow more opioids and accept their inevitable decrepitude.

I wish Stewart would actually walk out of his dismal ivory tower into the machining world, for instance, where a person without a fancy degree has a real opportunity to advance, and even start her own business with ten grand, a customer and a dream.

I doubt miserable Matthew has watched a lot of Shark Tank on that plebeian bastion of optimism, the television set. If he watched he’d see tons of folk, young and old, trying stuff and dreaming the dream.

Stewart mocks the American public schools. He decries the fact that the 11 best public schools in American are supposedly in Palo Alto, California. As someone who spends a lot of time in Palo Alto, I see the kids walking and biking to schools, and a large percentage of them are of Asian descent, the children of immigrants, not the offspring of joyless country clubbers he seems to envision.

There is an educational elite in America, but the barrier to entry is far from impenetrable. The hiring frenzy in Silicon Valley is not one of exclusivity, nor is it confined to people with advanced degrees. The companies in the Valley are casting a wider net, because they know from experience that college does not necessarily produce original thought, which is not to say that they don’t have a big challenge with political and social orthodoxy that stifles daily conversation in the new office palaces of Google, Apple, Facebook and Amazon.

One reason the Silicon Mammoths are building second and third headquarters outside of the Bay Area is to get access to more diverse idea generators.

The thrust of the Atlantic cover story is that the United States is a hopeless aristocracy of the rich, educated and healthy, dedicated to keeping itself closed to outsiders who are stupid, angry and White.

While I did not vote for Donald Trump and find him a lout and a scoundrel as a person, I would vote for him today, if just to protest the intellectual sterility of negativists like Matthew Stewart. The no-nothing popular media hammers Trump mercilessly, and he provides ample juicy material. Yet his popularity is rising, and the Mueller vacuum cleaner cannot suck up the right dirt to impeach him.

The conception that America is hopeless and failing is the grist of the commentators who think everybody is as sour as they are.

If Matthew Stewart actually talked to the people he thinks he is defending he would find that optimism and belief are quite alive in America today.

Question: Were the people who voted for Trump hopeful or pessimistic?

Share this post

Swarfcast Ep. 3 Talking Steel with Miles Free

By Noah Graff

Two weeks ago at the Precision Machined Products Association (PMPA) Tech Conference I interviewed Miles Free, the association’s Director of Industry Research and Technology. He’s a guru of machining industry world politics and one of the world’s foremost experts on the steel trade.

In March when President Trump tweeted his intentions to implement a 25% tariff on steel and a 10% tariff on aluminum coming into the United States, Free was bombarded from news outlets around the globe for his analysis—he really knows his steel. I came into the interview knowing very little about global steel trade, so it was a great opportunity to get a solid breakdown of the effects of Trump’s proposed tariffs on the machining industry.

Below are a few interesting points I gleaned from the interview, which in a few weeks will be released as a Today’s Machining World Podcast!

Target of President Trump’s Proposal for Tariffs on Raw Material Imports

Miles Free says that the proposed tariffs target China. The Chinese have overbuilt their capacity to make steel. They can produce more steel than they can use and more steel than the entire world can use. This gives them power over the prices of raw materials used to make steel and also makes them vulnerable.

A steel foundry on the outskirts of Beijing. (

Also, solely owned American companies are illegal in China. An American company must have a Chinese partner, and that Chinese partner is supposed to have full access to the American company’s technology. The Chinese have just relaxed the regulation for ownership of car companies. The press is speculating that Tesla is going to build a plant in China, and this probably would not have been announced right now had the tariffs not been brought up.

Quality of Chinese Steel and Other Raw Materials Versus that Produced in the United States

Free told me that it would be difficult at times for even experts to be able to take a certificate of analysis and say if a batch of steel is from the United States or China. However, the Chinese have different production systems and inconsistent regulations in their manufacturing processes. The quality of Chinese steel is not legally guaranteed like it would be from a steel company in the United States. As a result, when Chinese steel is bought off the dock, a purchaser cannot know the quality of the product. Also, as opposed to big hot roll coils, steel bar stock used by machining companies is notoriously difficult to maintain in good condition when transported by sea because it has a lot of surface area that can rust.

Sanctions on Ourselves

Despite the desire of American companies to buy steel in the United States for reasons of both quality control and economic patriotism, there are certain grades of steel used for machined parts that are no longer produced domestically. Thus machining companies have no choice but to import those grades of steel. The tariffs may make certain types of steel cost prohibitive for American manufacturers.

If Trump’s policy of a 25% tariff on raw material were implemented, it would mean that if General Motors wanted to order a batch of steel parts, an American supplier would not be able to price the parts competitively with a foreign supplier who didn’t have the 25% penalty tacked on. General Motors would then be tempted to produce the parts in China or another foreign country and import the finished parts to the United States. Miles Free compared this potential raw material tariff debacle to the economic sanctions on imports that the United States would inflict on an enemy like Russia or Iran.

“Nobody would have dreamed that the White House would ever use an entire industry as a negotiating technique” Free said.

Hopefully the tariff threat will remain solely a negotiating technique and not something the U.S. government follows through on. The current postponement of the tariffs until June 1 and the many exemptions already discussed in Washington to protect machining companies from the tariffs are reasons to remain calm.

Question: Have the proposed tariffs affected your business already?

Share this post

The Retirement Question

By Lloyd Graff

Is retirement a curse or a blessing? Obviously, there is no single answer to the question.

I have answered the question for myself without a lot of soul searching. I enjoy the challenge of working, of pushing myself, interacting with people and creating new stuff.

If I can be productive I would like to work for the rest of my life. I am 73 years old. I find the number scary, but doing the mundane of “showing up” everyday still stimulates me like nothing else that I have discovered. I am very conscious of having the enormous asset of working with my son, Noah, and a cadre of bright reliable caring people who have my back and challenge me to be smarter than I am.

I am also acutely conscious of the fact that the year that somebody is most likely to die (other than the year they are born) is the year they retire. I’m sure that is partially related to folks retiring because they are ill, which may skew the numbers, but I also believe that for many people, the loss of interaction with peers, the boredom, the solitariness, the lack of purpose is a curse.

72-year-old Finn Esko Ketola. Four-times World Champion Weight Lifter.

I think the self-professed financial gurus who preach the virtues of retirement to feed their advisory services tend to be a group of circling vultures.

The traditional retirement age of 65 is totally outdated today. It was an invention of unions and do-gooders when the lifespan of workers (many of whom smoked cigarettes regularly) was rarely past 65. Today if you live to 65 you have a good chance to pass 80 in reasonably good health. With 4% unemployment now, there are many interesting job or gig opportunities as well as an infinite number of volunteer possibilities.

I want to identify my own biases at this point, because I do write this piece from a position of white privilege in America. People in failing health, weak in skills, or chronically depressed certainly lack the opportunities that I have. For them, retirement may be more of a blessing than a curse.

But I think that the notion of retirement has been sold to people from childhood, partly as a job preservation tool for workers and unions that see older people hogging the prime jobs. In an economy that increasingly is filled with service jobs and people doing part-time gigs, I think there will be loads of interesting opportunities for older people if they are not crippled by the notion that the world undervalues them.

My view of the world is colored by my wife Risa’s passion for Taekwondo at 67 years old. She is a 4th Degree black belt and is proceeding with the long test protocol to get to 5th Degree. She drives 37 miles each way to her school twice a week, partly to train with other women who have a similar commitment. She also maintains a private practice as an educational therapist in which people pay her $100/hour to help their children learn. Her clients do not care about her age.

I certainly know about the fragility of life. “Man plans, God laughs,” is the line I live by, but understanding how blessed I am to be alive and live in America makes me determined to keep squeezing the juice as long as possible. For me, that means to write, make deals, expand my networks and have fun.

Question: What’s your plan at 65? Keep working, retire, volunteer, hang out?

Share this post

Hiring Line

By Lloyd Graff

The Precision Machined Products Association (PMPA) Tech Conference just ended, and I had a chance to talk to many of the stalwarts in the machining business. I was hoping to get a feel for the hiring situation that was more nuanced than “you just can’t find good people,” which I know is the fall-back cliché of folks who are going through the motions of building their businesses.

The feedback I received was insightful. Victor DaCruz of DaCruz Manufacturing Inc. in Connecticut told me that he thinks the hiring issues are resolving themselves even in one of the most expensive locations in America. He says young people have moved away from the litany of “you must go to college to get a good job.” They have bought into the technical training idea that avoids the college debt malaise that kids see bedeviling their peers. He recently advertised looking for a person to train as a quality inspector and was engulfed in applicants. He wasn’t offering a fortune, $14 per hour, which is Amazon or Kohl’s type of pay for the area. Victor accepts the notion that he will need to do some in-house training to bring a new person to his standard, but he is optimistic that he can find bright young people to build his firm.

Mike Petrusch of Cox Manufacturing in San Antonio was not so upbeat about the caliber of folks who are available to him in San Antonio. He says the kids coming to Cox out of local tech schools are woefully weak in math skills and basic machine shop fundamentals. They also are quite naive about their value in the real world. On the other hand, Mike shepherded a half dozen fresh young faces to the conference so Cox must be finding a few nuggets in the dross.

Harry and Scott Eighmy of American Turned Products run a successful machining firm in Erie, Pennsylvania. To some degree they have built their family firm on the bones of unionized old companies like General Electric and American Sterilizer Company. GE’s locomotive division used to be the largest employer in Erie, but most of the operation that survives is in Texas today. The $28 per hour staring pay negotiated by the unions killed the Erie operation and left a residue of overpaid, unmotivated blue-collar workers in the town.

Though the sclerotic big firms are withering, a profitable batch of entrepreneurs have built on the infrastructure of blue-collar skills to build successful manufacturing firms. GE Locomotive was sloppily managed, but the culture of machining skills it fostered through the years has been the fertilizer that has helped resourceful people in Erie to thrive.


The economic news of the week gives a multicolored picture of the labor market we are dealing with in the machining world. Profits are coming in happily robust for the gigantic public companies like Google and Chase Bank. The tax cuts are definitely giving them a boost. Small business confidence has also soared over the past 18 months to almost record levels. Biggest problem is hiring. Interest rates are trending up. The 10-year Treasury which dictates mortgage rates has finally nudged the 3% level, meaning that house financing is costing more. New home sales are not as robust as we would expect in a 4% unemployment environment.

The Tuesday Wall Street Journal ran a front-page article on how Warren Buffett’s railroad, the BNSF, is paying signing bonuses of up to $25,000 to get hard-to-find employees. I’ve also been reading about bottlenecks in the Permian Basin of Texas, America’s Saudi Arabia, which are making it hard to get the oil to pipelines and ports.

Another interesting stat this week is that shipments of Class 8 trucks for the first quarter were the second highest in history. Trucking firms are really struggling to hire drivers now, yet they are ordering a lot of new big rigs.

If you imbibe the popular media you might think America is a mess, but for folks on the front lines of making and moving stuff it is a beautiful moment to be working.

Question: Do you think it is a good time to quit your job?

Share this post