Author Archives: Lloyd Graff

My Feelings About Gas

By Lloyd Graff.

I listened to President Obama’s speech on Syria Wednesday. It shook me up, particularly the line about the children who were gassed and “never woke up.”

I woke up at 4:30 am in a cold sweat and I could not go back to sleep. I saw the images of the poor gassed children in their burial white sheaths. And then I remembered my moment under the showers that spewed the Zyklon B gas at the Majdanek concentration camp in Poland.

I was a concentration camp “tourist” at Majdanek, which is inside the Polish city of Lublin. The Germans did not put the killing camps in out of the way places. Dachau, which my son Noah visited a few days ago, is 25 minutes from Munich.

The “showers” at Majdanek were just a few steps from the barracks where people slept before being gassed to death. The ovens – crematoria – were also close by. Efficiency, Nazi style.

One thing I learned in my visit during the winter of early 1999 was that Jews were not the only ones exterminated. The mentally challenged, homosexuals, gypsies, criminals, malcontents and protesting priests were all herded into Hitler’s camps.

We got to Majdanek, a small group from Chicago that I joined while on a business trip to Poland, late one snowy afternoon. I shed my coat, then my sweater and shirt while the others moved into the buildings. I wanted to feel the chill to my bones. It hurt – a little – but it was nothing like the shower room. I just stared at the showerheads, mesmerized by their ordinariness. I felt like puking, but I didn’t. I just stared and imagined. And then I walked away.

When Obama talked about “the children who never woke up” I returned to Poland in my mind. Syria seems a long way from America, but Assad’s atrocity must not go unpunished. People speculate that a few well-placed bombs at Auschwitz might have saved many more lives than they would have cost. A drone strike on Assad’s palace might well be the wakeup call that could end the carnage and force him to give up the gas.

I will never forget Majdanek. The civilized world should never forget the 1,400 gassed to death in Syria.

Question: Should the U.S. punish Assad?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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Charge by the Hour?

Time Card Machine at Graff-Pinkert.

By Lloyd Graff.

A big topic of conversation these days is “What do you charge per hour?” The hourly rate, either as a wage or a basis to charge clients, has been baked into the economy for decades, but is it the wrong way to measure the value of time?

Adam Davidson, an economics writer for NPR, just published an excellent piece in last Sunday’s New York Times Magazine, entitled “What is an Hour of Your Time Worth?” The subtitle was “The hazards of measuring the economic value of an idea.” Davidson discusses Jason Blumer, an accountant who took over his father’s small accountancy practice in South Carolina and rebelled against the standard practice of billing by the hour. “He realized that the billable hour was undercutting his value — it was his profession’s commodity, suggesting to clients that he and his colleagues were interchangeable containers of finite, measurable units that could be traded for money,” writes Davidson. “Billing by the hour incentivized long boring projects rather than those that required valuable insight that couldn’t (and shouldn’t) be measured in time,” Davidson adds.

The manufacturing world has long been the bastion of the pay by the hour/bill by the hour approach, but it does not have to be that way. In Graff-Pinkert’s machine tool business, we are finding that some of our clients who have the available cash and willingness to risk it these days have leaped out of the hourly rate mentality. They have developed unique products or approaches for the medical or gun world (I know the irony of that) and do not compete for time and material rates.

If you work in a commoditized environment, somebody in China or Vietnam, or Alabama will eventually undercut you.

The stupidity of rote hourly billing was brought home to me this year after we switched our accounting business to a well known, highly respected national accounting firm. The bill tilted up as they tried to understand our business of buying and selling used machinery. I hated the charges, but I could accept that there was a learning curve. But after tax returns had been filed they decided that a mistake had been made on whether to account for a sale in 2012 or 2013. They demanded that we refile our returns. Big new bills ensued–more billable hours, because it had to be correct. The firm would not allow an incorrect return, and of course, we paid.

It infuriated me. Did they add value, or just billable hours?

This was the billable hour world gone mad. The employee who does a lousy job still gets paid.

Before I wrote this piece, I talked about the billable hour syndrome with my lawyer Russ Ethridge, who I gladly pay by the hour because he is client friendly and extremely efficient. He feels penalized by his integrity and efficiency. Billable hours cut both ways. If you have a lawyer like Russ it works for you. If you have an accountant who charges you for the firm’s rigidity you lose.

In the machining or machinery dealer world I live in, you need to find ways to provide value for your clients and yourself. For both parties, I think the hourly rate is becoming obsolete.

Question: Do you prefer to pay for services by the hour or pay a flat fee?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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Colorblind?

At Yesterday’s Gentlemen Barbershoppe in Flossmoor, IL. Photo courtesy of their Facebook page.

By Lloyd Graff.

The wine shop that sold $40 bottles of French Sauvignons shut down in the elegant red brick storefront in downtown Flossmoor, Illinois, an upscale suburb south of Chicago. The new tenant moved in soon after they closed.

Yesterday’s Gentlemen Barbershoppe & Spa–a Black men’s barbershop, with a shoe shiner.

Across the street is Cutters, a barbershop owned by a woman that caters to White men. I’ve gone to Cutters for many years. When I saw that a new shop had opened across the street I immediately checked it out. All Black clientele, all Black staff.

America 2013, in Flossmoor, Illinois, an integrated community of 16,000 folks, maybe a little more White than Black, but about as close to half and half as you are going to find in America today. But the two barbershops face off 80 feet apart, as different as black and white–or so it appears.

I’ve been a student of race relations in America. I grew up on the South side of Chicago when Black was Black and White was White, and God forbid they should mix. But we did mix. My public grade school, Parkside, had virtually all Irish ladies for teachers. Maloney, McInerney, Chapman, Fealey, are names I remember. Forty eight kids in a class, seated arbitrarily by rows in a rough form of class ranking. White kids on one side of the room, Black kids on the other side. Mottled integration in the middle two rows.

Oh, the good ole days.

After 8th grade graduation, the group split up. Black kids went to Hyde Park High school, with a virtually all Black population. White kids moved or went to Catholic schools in the area. The Jewish kids whose parents could afford it and wanted to stay in the area went to the University of Chicago Lab School where I attended. It’s the school President Obama’s girls went to and Rahm Emanuel’s (Mayor of Chicago) kids now attend. Arne Duncan, Obama’s Education Secretary, also was a Labbie.

We had about 20 Black kids at Lab in our class of 110 students, unusual back in 1960.
The world has changed.

My wife, Risa, is from Charlotte, North Carolina, which was on the cutting edge of racial conflict in schools in the mid 1960s.

When we had children we had a decision to make about where we would live and ultimately send the kids to school. We chose the South Suburbs of Chicago, knowing that it was one of the few places in Chicagoland where Blacks and Whites actually connected on a regular basis.

Then we helped start a private Jewish day school of 20 students where our children learned only amongst their own. America–do your own thing if you think you can.

The Jewish School folded after eight years of unending struggle to survive, and our children then attended the public high school that was becoming more Black each year.

We chose to stay in the South Suburbs, while almost all of our White neighbors moved to whiter neighborhoods. It’s America. You can live where you’re comfortable. We still live in the same house we bought in 1979.

My sons took Black girls to the Senior Prom. My wife’s educational therapy practice is becoming populated with Black students. Blacks and White socialize at our local Starbucks.

But my psyche is still imprinted by color sensitivity. Every Black face is noted – BLACK. RACE is RACE, is RACE. I have made a conscious choice to live an integrated life in America. Well, at least a little bit mixed.

When I saw the new Black barbershop in the old wine shop almost directly across the street from MY White barbershop, I had to check it out – from the outside. I saw all Black patrons that day, but on Facebook they have a photo of a white customer. Maybe America really is changing? Have I?

Question: Is it possible to be colorblind?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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A Day for Sports

Castro’s lapse in June — he forgot how many outs there were in the fifth inning, and the eventual winning run scored as a result.

By Lloyd Graff.

Back in the day, I was the Sports Editor and Columnist of The Michigan Daily, the best college newspaper in the world. Today I’m returning to my roots and writing unabashedly about one of my true loves – Sports.

An important change has apparently taken place in Major League Baseball. The majority of players seem to have decided for various reasons, primarily fear of getting caught, to abstain from “performance enhancing drugs.” They are angry that some of their peers who they are competing against are still getting an unfair advantage and potentially robbing them of a job or a title. You now see baseball administration and players wanting the guys trying to “game” the game punished. Ryan Braun was the National League Most Valuable Player in 2011. Now he is banned for the rest of the season. And the players, even on his team, the Milwaukee Brewers, do not appear to be complaining about it.

I must admit, I enjoyed watching Barry Bonds, Mark McGuire and Sammy Sosa hit thousands of mammoth homers, but watching Chris Davis and Miguel Cabrera wallop them today is just as entertaining. I just hope they aren’t fooling us too.

* * * * *

The National Football League is starting training camp again. The most compelling players are the quarterbacks. I love how great young guys, including several who were relative unknowns, are taking over the game. Last year Andrew Luck and Robert Griffin, the two biggest names coming out of college, made a big splash, but then there was Russell Wilson, a third round pick out of Wisconsin who turned around Seattle, and Colin Kaepernick, the unknown from Nevada-Reno who almost won the Super Bowl, but lost to the underrated Joe Flacco, the best player to come out of the University of Delaware.

I find it interesting and surprising that the most popular football jersey today is not Flacco’s or Griffin’s, but Kaepernick of the 49ers, the fully tattooed, mixed race, adopted son of white parents who was not even recruited by a major college as a quarterback.

* * * * *

I love NBA basketball. I think the NBA playoffs always bring some of the most compelling sports moments of the year. This off-season we saw Coach Doc Rivers traded to the Los Angeles Clippers from Boston. I’m surprised this hasn’t happened before. Rivers is a terrific coach who would be wasted on a Celtics team just beginning a rebuilding process. With the Clippers, he has a team that can win the NBA Championship. If a coach does not have the respect of his players in the ego rampant NBA, it cannot win. Rivers can make the difference.

I think that in general, a baseball manager is less important than an NFL or NBA coach, but Joe Madden of Tampa Bay, is the exception. The Rays are a nice small-market low-budget team, but Madden’s enthusiasm, creativity and leadership makes them a favorite to win the World Series. Bob Melvin of Oakland is also outstanding. I think the American League champion will be one of those two teams, even if Bartolo Colon gets suspended from the A’s.

* * * * *

Starlin Castro with his Rolls Royce

A little bit of inside baseball, especially for Chicago Cubs fans. We hear from a close source that Starlin Castro, the shortstop who was going to be a Cubbie superstar but is having a stinker of a season, is a huge partier who stays out all night and drives home at 8:00 a.m. in his Rolls Royce ahead of a Wrigley Field day game.

Castro is currently batting .249 with 6 homers and a bunch of errors. He does look better on the road. Wonder why.

Question: With the current knowledge about concussions, would you want your son or grandson to play competitive football?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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Optimistic about the machining business?

Fixing the Graff-Pinkert parking lot

By Lloyd Graff.

I am spending $25,000 this summer to repave the parking lot, install a generator, fix the roof and redo the bathroom of the 21,000-square-foot factory my company, Graff-Pinkert, occupies. These are repairs I’ve put off for several years, but I am finally feeling confident enough about the future of our economy and my business to make some improvements that will not be directly reflected on my bottom line.

I also have raised the hourly wage I pay my key employees significantly, without them asking. Most of them have worked at the company for many years, and many of those years saw their hourly money stagnate.

These are difficult business choices because none of them were forced upon me. They all could have been pushed down the road, enabling me to pull out the money I invested in the business to buy out my brother last year.

But when my wife and I decided to do the buyout, our belief was that it was time to rebuild the company that had been so much of my life for 40 years.

For the last 15 years, machining and all of manufacturing in America has been in rolling decline. The decline was masked by the dot-com bump in the late 1990s that fueled the huge surge in telecom manufacturing. This disguised the shift in manufacturing to China, Korea and other parts of Asia. Manufacturing was being hollowed out, but it was not so visible.

Then we had the telecom bust that coincided with the tragedy of September 11. Bush tax cuts, war spending and the phony housing boom kept the economy from collapsing until 2007-2008. But then we had the horrendous recession that only Ben Bernanke managed to contain, by putting his finger in the economic dike with his imaginative interest rate manipulations.

Now, 15 years after this wicked decline started, the survivors in manufacturing in North America have fresh opportunity.

China has become a manufacturing behemoth, but its growth has been stagnating for a while. The Chinese are looking inward now, and about as much manufacturing is coming back here as there is leaving.

Automotive is in a cyclical rebound headed for 16 million units. More vehicles are being built here and in Mexico. Trucks are hot because construction has reawakened here. The shale boom in hydrocarbons is enormously fortuitous for the U.S. and will gain steam despite the determined opposition of environmentalists. The fear of terrorism has abated. Medical, telecom and electronics are in ascent, and ObamaCare is being pushed back.

This is a relatively bullish picture. There is never a perfect time to do anything. You can make a pessimistic case, emphasizing the budget deficit, rigor mortis in D.C., sluggish growth, bad education, and the Cubs rebuilding–again.

But I am paving the parking lot and raising my people because I want to be proud of where I work, and I want to show the folks who I depend on that I value them highly and I want them to stay.

Question: Are you optimistic or pessimistic about the machining business?

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Deliver on Your Promises

My wife and I used to buy our drugs at Walgreens, the largest drug purveyor in Chicago and one of the largest in the United States. Now we don’t.

Figuring the retail value of my wife’s various medications and my heart medications – the alpha-blockers, beta-blockers and assorted linebackers – we used to spend several thousand dollars a year there.

Walgreens wasn’t a horrible store. The prices were fair, if American pharmaceutical prices can ever be labeled fair. We stopped going there primarily because they forgot about “niceness” at the pharmacy and frequently made us wait a half an hour or so at the drive-through. It is ironic that we took our business to Target’s pharmacy, which doesn’t even offer a drive-through drug pickup.

Walgreens promised us convenience, but disappointed. Target did not promise drive-through convenience but the store executed well what it did offer. We virtually never have to wait at the pickup counter at Target. The drug staff is friendly, courteous and knowledgeable. The cashiers are appropriately friendly and efficient. They run the store like they care about it.

My takeaway from my own behavior as a customer is that the key thing a seller must provide is consistent service with a smile. Walgreens provided my drugs and had competitive pricing, but they constantly annoyed me by taking too long and then not apologizing for the delay.

As I began writing this piece, I started thinking about the times I have failed people in my own business – disappointments that I probably thought were trivial like a phone call unreturned, a bill paid late, or a request by an employee ignored. Over time, I am sure the omissions, perceived rudenesses and egotism have cost me dearly.

We often think business rises or falls based on big ideas, creativity and boldness. Perhaps success depends more on having an efficient drive-through and smiling cashiers.

Question: What businesses have you abandoned?

Lloyd Graff is Owner and Chief Space Filler at Today’s Machining World and Graff-Pinkert & Co.

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$15 Minimum Wage?

From medillmoneymavens.com

Bill Moyers, the old grumpy liberal of the Lyndon Johnson era, was bemoaning the income gap between the rich and poor in America on Charlie Rose recently. Moyers was despondent enough to advocate the tired remedy of raising (actually doubling) the minimum wage in the U.S. to $15 per hour.

Although I think putting this into practice would be disastrous for working people and the economy, I am sympathetic to the distress in this country over the widening income disparity and a widespread hopelessness of people who look at Wal-Mart cashiers with envy.

College is no longer a pipeline to middle-class America. It isn’t even a guarantee of a Starbucks job. For a job at Wendy’s, it’s probably more important if you can pass a drug test and if you haven’t served time.

There is a strong feeling in the country that there is less opportunity today than my generation had. Sadly, the statistics bear that out.

If the do-gooder lefties like Moyers have no good ideas, I wonder if the smart folks who read my blog are hopeful for their children, grandchildren, and themselves. Or, have you all given up on 21st Century America?

Obamacare, when it finally is implemented, is a lot like the $15 minimum wage. It is a reaction to the insurance hole, where less productive workers reside. If businesses do not respect a worker’s skills enough to provide health insurance, the Federal government will force them into it with Obamacare.

In the past, we could grow our way through the productive work problem, but the cleverness of technology and the blowing away of trade barriers has changed the equation. The $15-per-hour worker will be replaced by a computer, a robot, or a Bangladeshi. Business people will videoconference instead of traveling, the hotdog vender at the Cubs game will no longer waddle through the aisles.

The routine answer to joblessness and the income gap, besides the $15 minimum wage, is “more education.” I believe this is shallow thinking. Employers have difficulty finding people with basic qualities such as attentiveness, honesty, reliability, and positivity. Today’s ideal employee can construct clear sentences, follow directions, and also question those directions if they don’t make sense. Do you learn those things in school — or at home? Do you get them off a computer program? I don’t think so. The sad thing in America today is that so many people who should be teaching the life lessons do not know the lessons themselves. Who steps up? A coach, a clergyman, a gifted therapist, grandma? Will the lost kids find their special role models — or drift though prison, welfare, and despair?

There is no easy alternative to the $15-per-hour free lunch–that actually is no lunch. Bill Moyers is naive, but he is not stupid. The America I see is drifting apart. The social contract that has long been implicit in the fabric of the country is thin and fraying. Government has few answers. Sadly, I don’t think the markets offer much, either. Change, if we ever see it, will come one person at a time. I wish I were a little more optimistic. You?

Question: Would a $15 minimum wage help Americans?

Lloyd Graff is owner and Chief Space Filler of Today’s Machining World and Graff-Pinkert & Co.

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Brother Bump

Bryan Brothers Chest Bump (mdjonline.com)

The Bryan twins, Mike and Bob, won the Wimbledon Tennis Doubles Championship Saturday. They now hold every Grand Slam Doubles title simultaneously, plus the Olympic Gold Medal won in London in 2012.

Mike and Bob Bryan have been winning at doubles since they won a 10 and under tournament when they were 6. At 35 they have won 91 professional events and the NCAA title when they were at Stanford. They own 15 Grand Slam Doubles titles. They have to be considered the greatest doubles team in the history of the sport.

The Bryan twins are not just twins, they are rare “mirror image” twins who have opposite features. One is right handed the other left, which is a significant advantage in covering a doubles court. Only 1% of live births are monozygotic twins (identical) and only 25% of those are “mirror”–opposite feature twins.

The Bryans come from a tennis family. Mother, Kathy, was a tour pro for several years and father, Wayne, teaches tennis and practices law. When Mike and Bob were kids their  parents forbade them from playing each other in tournaments. They alternated forfeiting to one another when they met in junior tournaments.

The Bryans’ trademark is a jumping chest bump to celebrate a victory or a well played shot. They usually bump fists after both made and missed shots. They give off a wonderful vibe of caring and positivity on the court.

Chest bumping violates the norms of pro tennis, though court celebration is hardly forbidden. Personally, I love the habits of mutual positive reinforcement the Bryans exhibit. I think that in many business relationships the fist bump, either physically or metaphorically, is neglected. Business-as-usual indifference among teammates can be death to energy and creativity on the court or in the shop. Sometimes it may seem forced, but the habits of encouragement never get old.

In professional tennis, doubles teams change like “musical chairs.” It is unusual for teammates to last three years together. The team the Bryans beat this year in the Wimbledon finals had been together for a year.

Naturally, the Bryans get peeved with one another at times. After a first round Wimbledon win in 2006, the brothers got into a fist fight in their rented apartment in London. While Mike had retreated to the bathroom, Bob smashed his cherished guitar. But afterward, they worked out their spat, going on to win Wimbledon for the first time.

Tennis is the Bryan family business. They have a rare and incredibly successful partnership that has flourished more than 25 years. They have made twinship and brotherhood into a huge asset. It’s fun to watch them on the court because their bond is genuine, seasoned and practiced. They are not only great doubles players, but also extremely loyal to one another, from all appearances.

Having had my doubles team in business with my brother recently break up after 40 years, I salute the Bryan brothers and their parents. What they have accomplished is a singular achievement by two remarkable siblings.

Questions: Do any sports celebrations offend you?

Do you have any rituals to celebrate victory in your job or business?

Lloyd Graff is chief space filler of Today’s Machining World and Graff-Pinkert & Co.

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Hero or Traitor?

Sometimes we get a week in the news that compels me to write about it, even if I’d rather talk about the Blackhawks, the NBA, or what a great year it is for the tree fruit crop. Edward Snowden, a real life Terminal Man, can’t seem to get out of the Moscow Airport, but he’s causing a heartburn epidemic in Washington by exposing widespread collection of data on just about everybody everywhere. It makes it hard for Obama to complain about Chinese spying and theft of intellectual property when the NSA is gathering data on you and me and every other person in the world with a phone, a computer, and a tin can with a string attached. Snowden will go down as a useful historical asterisk. I doubt he will ever serve a day in prison, but he’ll probably get a nice book deal. Unfortunately, the “right to privacy” will never be the same, unless you use sign language or carrier pigeons to pass messages.

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The big financial news was that Ben Bernanke and his band of brothers are considering “pulling the punch bowl.” The Fed’s hinting sent interest rates on the 10-year bond up .5%, a 25% increase. Mortgage rates have bounced up a point. The Fed is considering this action because the economy is improving and it wants to prick bubbles before they get too puffed up. Bernanke will be out of the Fed soon, so he’s also working on his book deal. I still wouldn’t buy bonds – or gold.

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The immigration reform bill got 68 votes in the Senate after they threw a ton of money at the Border Patrol. The administrators have no idea how they can spend it all. It is a great moment to be in the electric fence business. The Republican controlled House now has a very bad case of heartburn. Does Pepto-Bismol have a futures contract? Latino voters went 71-29% for Obama in 2012. If the GOP House kills the immigration bill, that 71-29% may go to 90-10% in 2016, putting Hillary in the White House. Do the Republicans truly have a death wish? Stay tuned.

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And finally, the Supreme Court goes 5-4 against the Defense of Marriage Act. The country is clearly moving toward acceptance of gay marriage, especially younger people. It was a really tough week if you are a secretly gay Tea Partier who visits gay Web sites, is presently negotiating on a condo, and has bet money on the Republicans for the Presidency in 2016.

Question: Is Snowden a hero or traitor?

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Multi-spindles are Coming Back

Graff-Pinkert, where the multi-spindle business is coming back to life.

“What goes around, comes around.” It’s a dumb cliché, but it’s what I am seeing in the screw machine business today.

The cyclicality of business is playing out as the auto industry in North America pushes toward the magical 16 million units a year mark. Thank god for the F-150, now the “best selling car or truck in America.” Tradesmen are buying, businesses are buying, even Aunt Millie is buying a vehicle today, and most of them are put together in North America with millions of perfectly turned components also made here.

Add a revival in home building and all those unleaded brass fittings needed and it means a lot of spindles turning, after the up and down gutting of the traditional turned parts world over the last 15 years.

My guess is that one third of the shops that ran multi-spindle automatics have gone away since the wholesale outsourcing trend to China began in the late 1990s.

The decline and the current revival were masked by the countercyclical growth in mining and Chinese infrastructure, which has made up for some of the huge decline in cars and homes over the last decade. Now weakness at Caterpillar and in the hydraulics industry is hurting some of the firms that prospered during the widespread decline. The shale boom in the U.S. has boosted that area, but it cannot make up for the China slowdown, which could last a few years, and the parallel mining weakness.

The recent relocation edict by Beijing to bring 100 million people from the countryside to cities will limit the correction, I think.

I am heartened to see veterans of the turned parts world starting to reinvest. Recently several clients of Graff-Pinkert have told me, “I thought I’d never buy a multi-spindle again, but I’m so busy in that area now, I need to reassess.”

I see this as the beginning of an upgrading cycle in turned parts manufacturing here. Mindsets change slowly, but necessity can force a pivot. I think we are near that pivot point, at least in North America. Many of the younger people who have gravitated to the industry over the last decade have seen mostly declining volumes, which has made multi-spindle turning look obsolete. But today, with well-financed incumbents few and far between, the survivors in a depleted environment should thrive for the next five years.

Question: What equipment would you invest in for your business today?

Lloyd Graff is the owner and chief space filler of both Today’s Machining World and Graff-Pinkert & Co, a reseller of used screw machines, Hydromats, and CNCs.

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