Today we’re celebrating the milestone of 150 episodes of Swarfcast. This is actually Episode 155. We just didn’t get around to doing this one until now. I hope you enjoy as we look back at four of our favorite past episodes spanning the last four years. Four years! Not much has happened for me? Besides getting married, surviving a pandemic, and having my first child a month and a half ago.
Making this podcast I’ve been privileged to meet and learn from a ton of interesting people and then share our conversations with the world. When we started the podcast we racked our brain to find some interesting guests. What we quickly discovered was that rather than interviews with famous people or “experts” on manufacturing or business topics, often the interviews our audience liked the most were with owners of machining companies. Every machining company runs differently, and people love to learn how others approach the same type of work they do.
In today’s podcast I inserted some old clips of two past interviews with owners of machining companies. In Episode 63, I interviewed David Wynn, CFO of ABF Engineering, a third generation screw machine shop in South Fulton, Tennessee. Wynn’s business philosophy is to run his machining company as though it were a modern tech company. This is somewhat ironic because at the time of the interview in 2019, more than 50% of the company’s work was produced on ancient Brown and Sharpe screw machines. One of ABFs management strategies that sets itself apart from typical machining companies is its undefined work hours. Its employees have the flexibility to work when they like and choose how many hours they work, as long as they get their work done and do it well as a team.
Another clip I included in today’s podcast comes from Episode 121, Finding Customers Through Great Networking with Jay Sauder. Jay’s company Sauder Machine in Plymouth, Ohio, makes casings for mechanical pocket watches as well as wheel cylinders for horse drawn buggies driven by Amish people. Jay is Mennonite, which has enabled him to develop a customer network of Amish companies. He also has a large customer base of companies not owned by Amish people, but he says all of his customers came to him through word of mouth, as opposed to advertising on the Web or using salespeople.
Over the past four years, I have interviewed several experts on the show who have had a profound effect on my life. One of my all-time favorite interviews was Ep. 80 and 81, with negotiation masters, Chris and Brandon Voss, who wrote the best selling book, Never Split the Difference. Chris is a retired FBI hostage negotiator who adapted his negotiation skills for use in the business world. In the interview we talked about the advantage of having one’s counterpart in a sales negotiation name price first, as opposed to starting a negotiation with a high asking price or extremely low offer. We also discussed why it is best to make the other party in a negotiation say “no” rather than “yes.” Over time, I have incorporated their techniques into my daily personal and professional life. I still sometimes watch video clips from the interview to review some of their brilliant lessons.
Another interview that has had a profound influence in how I approach my life is Episode 123—How to find Serendipity with Christian Busch. Busch is the author of the book, The Serendipity Mindset: the Art and Science of Finding Good Luck. He gives strategies to enable people to “be in the right place at the right time.” One of his techniques to find serendipity in conversations he calls “serendipity hooks.” The concept is to purposefully bring up topics that inspire connections between people.
For example, if someone were to ask me what I did for a living, instead of telling just them I was a used machinery dealer, I could say, “I’m a used machinery dealer, I also have a podcast, and I love salsa dancing.” That response would create three possibilities for interesting conversations, rather than just one that might not lead to talking about anything of substance.
Christian also emphasizes the importance of keeping one’s eyes open for serendipity. If a person believes that important “lucky” things might happen on a given day, there is a better chance they will.
Interviewing all the interesting guests on Swafcast creates a fountain of serendipity that really energizes me. I need that energy because making a podcast is often a grind! Thankfully, I have some good help to make the podcast possible. Ridgely Dunn, our Managing Editor, gets these pesky blogs and podcasts up, takes care of social media, and helps make the whole thing happen. Our editor Patricio Garcia does a good job making me sound a little smoother than I really am on the mic. Obviously, Lloyd is the great Lloyd Graff! He is the creator and nucleus of Today’s Machining World. He is my occasional cohost, mentor, and most importantly my dad.
Much of the podcast-making process is fun, and it fulfills my need for a creative outlet to some extent. Perhaps one day it will be a profitable business. But what really motivates me to make Swarfcast is the propose it gives me. I’m not a heart surgeon helping people cheat death, or a therapist helping someone cope with depression, or a philanthropist working to end world hunger. It’s easy to identify purpose in those occupations. Swafcast is my vehicle to effect a lot of people, to leave my mark on the world, at least just a little. If 500 people listen to it and 1000 people read the summary and they learn something important, or they reflect on a new idea or just have a nice 45 minutes of diversion, I feel purpose.
What is one of your favorite episodes of Swarfcast?
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Tyler Jarosz sent me an email about a month and a half ago to ask if Graff-Pinkert would be interested in a used little parts washer he no longer needed in his machine shop. He found out about Graff-Pinkert from listening to Swarfcast, which I’m proud to say is the only podcast he has ever listened to.
At 40 years young, Tyler recently retired, closing Twenty6Products, his 1-employee shop, which had been lucrative enough over the last decade and a half that he can now spend his time doing whatever he wants. For the most part, that’s going mountain biking and snowboarding near his home in Bozeman, Montana. I knew Tyler had an interesting story. How does a someone start a 1-person machining company and make enough money to retire at 40? What kind of person would take that path?
Tyler grew up in a small town in Wisconsin. He was diagnosed with learning disabilities when he was young. In high school, the kids in the school’s learning disability program were taken on a tour of the local technical college where Tyler was exposed to machining. He immediately fell in love with the trade. After graduating from tech school in three years, he headed straight to Bozeman, Montana, where he could enjoy the outdoor hobbies he loves, mainly mountain biking and snowboarding.
He got a job in a machine shop right away, starting at the bottom, loading parts into a CNC machine. On weekends, he rented the shop’s Haas mills to make break levers for mountain bikes, which he then sold to local bike shops. Later he designed and sold his own bicycle pedals machined from anodized titanium.
At age 26, after four years working at two shops, there was enough demand for Tyler’s products for him to start his own machining company. He had gained such a great reputation from the consistent quality of his bike parts, that a more diverse customer base started seeking him out. He says it was scary to go off on his own, but he had confidence in himself, which he attributes somewhat to competing in snowboarding and mountain biking events when he was younger.
During his 15 years in business, Tyler never employed any more than one person in his shop, and that person was more or less a button pusher. His business philosophy was simple. He trusted his own quality and commitment, and by having virtually no employees it cut out overhead and a lot of management burden. After a few years, he at least had the sense to farm out managing the company’s book keeping. Tyler has never taken a business class and never read a business book. He sums up good business as having common sense. He hired a financial advisor, who laid out a plan to reach a fast retirement, though Tyler says he didn’t necessarily expect to do it as soon as age 40.
One of Tyler’s secrets to his success was his commitment and laser focus on his work. He always put in 10-hour days, five days a week. He says he held himself accountable to be “a good employee,” meaning if he took off two hours out of his day to go to the doctor, he would make up that time later.
Tyler says he is passionate about machining, so of course, I asked him, why he would stop doing it for a living. He replied that he hasn’t stopped machining, but now machining is a hobby. He does it because he wants to, not because he has to. Retirement has finally given him the time to do his other passions whenever he wants—mountain biking and snowboarding. When I spoke to him the first time, he was outside digging his own bike trail. Sometimes he likes to listen to Swarfcast while digging. He had never listened to any podcast prior to retiring. Another thing he really enjoys in retirement that he says he used to not have time for is sharing a cup of coffee with his wife in the morning. She is a therapist who works 20 hours a week, which enables she and Tyler to spend a lot of time together.
Tyler’s new relaxed yet active life sounds lovely, and he comes across as very at peace and content. But I begged the question, is this existence enough? Is merely getting to do the simple things that give him pleasure whenever he wants enough to make him happy? What about effecting other people other than himself? What was his purpose? Tyler responded that being outdoors doing what he loves is his purpose right now. He also added that in the past he has enjoyed going to speak to high school students about careers in machining and he even gave a student the opportunity to work in his shop. He also was conscious enough to recognize that he can’t predict the future. Right now this is where his life’s journey feels right. I feel like he really means that when he says it. That I really appreciate. He goes for what feels right, despite that path being different from what the majority of us would likely do.
Tyler is unusual, not just because he was successful enough to retire at 40. Lots of people could retire at 40, but just don’t. So many people say they just need to finish this one last thing and then they will have time to rest and “enjoy doing all the things they’ve always wanted to do.” They say they need their kids to graduate, or they need to make just a little bit more money to feel secure. They need to pull off just one more bank heist. Tyler said the same thing. He put his life on hold. He sacrificed 15 years of working non-stop to reach the point where he could stop working. But unlike so many others he actually meant it when he said he would retire. He didn’t have ambitions to get richer or accomplish more goals. He reached the moment he could stop working so he could enjoy his passions and spend time with his wife. Then he cashed in his chips.
Personally, I think the ideal career path is to work in a job where you enjoy what you are doing every day and are not waiting for something else. Those gigs are rare I think, but they do exist.
In any case, what I really admire about Tyler is the confidence with which he seems to approach his life’s path. He was interested in machining, so he learned to do it. He wanted to move to Montana, so he went as soon as he could. He started his own company alone, despite having no experience or formal education about running a business. He took a chance on himself that if he worked hard enough and smart enough that the time and sacrifice would pay off.
He is all in in what he does. He believes in himself. He believes he is doing what he should be doing at that moment. I think that is a key to happiness.
Question: What would you do if you could retire right now?
Our guest on today’s show is Steve Tamasi, owner and CEO of Boston Centerless, a distributor and manufacturer of ground bar stock. I asked Steve why there is such a shortage of raw materials for precision turning manufacturers and what companies can do to deal with this problem. We also talked about how the war in Ukraine is affecting metals prices. What is pig iron, anyway?
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Steve characterizes Boston Centerless as a value added distributor of precision bar materials, usually used in Swiss style screw machines. The company provides material for companies of all sizes from one employee to large OEMs. Boston Centerless provides bar for just about any material, but it specializes in stainless steel, titanium, aluminum, and red metals. The company even supplies plastic bars.
A One Stop Shop for Material
Steve says traditionally machining companies have bought material from a mill and then sent it to centerless grinding houses to be ground to their specifications.
Boston Centerless has a different business model because it sources the ground material for customers. Customers don’t have to have negotiate with multiple mills to purchase their bars and don’t have to worry about quality control from several sources. The company secures and procures material and takes care of straightening, grinding, chamfering, cutting if necessary, heat treating, and non-destructive testing. Tamasi says Boston Centerless seeks to simplify customers’ workflow and guarantees the quality of the material. If customers have material issues they only need to call one party to solve their problems.
History of Boston Centerless
Steve’s father started a centerless grinding business in 1958 after immigrating from Italy in 1946. Eventually his customers started asking him if he could supply material, rather than just grinding the material they provided. This laid the foundation for Boston Centerless’s business model today. The company bought bars from a mill that were slightly oversized, which then were ground down to the manufacturers’ desired specs.
In the 1960s and early 1970s manufacturers realized that if they ground the bars before machining, they could achieve much better tolerances. CNC Swiss machining emerged in the ‘70s.
Steve joined his father in the business in the ‘80s after working for Agathon, a high-end grinder manufacturer from Switzerland.
The Importance of High Quality Material
Machining companies have to have both high quality material and it must be cut to the correct dimensional tolerances. Without both of these characteristics the quality of parts suffers.
Steve says starting the machining process with quality ground bars can compensate for a lack of skilled labor or mediocre equipment.
Why is there a material shortage?
At the beginning of the Covid-19 pandemic, many of the major mills that produce high quality stainless steel and specialty metals let go of their most experienced people when demand fell.
When demand later skyrocketed because manufacturers had gotten rid of excess inventory during the downturn, mills were caught off guard and unable to satisfy demand. They were called upon to produce more high quality material than in normal times but with fewer good people. Steve says it takes a long time to train people at the mills, and it is even difficult to attract unskilled labor right now. Constrained capacity is the reason for the material shortage, not a bottleneck at the ports.
Right now, companies have to order certain materials 12-15 months out. Pre-pandemic material orders typically were six months out. Lead times are also being exacerbated by panic buying as companies want to insure they have material in the future, even when they don’t have the current work.
Advice for Dealing with the Material Shortage
Steve advises manufacturers to take a longer view of their businesses. They should communicate with customers that they need to project 12 months out. They also should go to suppliers to find out what their time frame is and then communicate that information with customers.
Boston Centerless can suggest alternative materials to use if customers provide them characteristics of the materials they need. Its experience and vast network of mills gives Boston Centerless as a good a chance as any source to find a supplier because they know so many different suppliers. They also have the ability to do spot buys from multiple sources.
Effects of the War in Ukraine on Material Supply
Currently there is a world shortage of pig iron, an essential ingredient in steel production. Ukraine and Russia happen to be two of the world’s largest suppliers for the natural resource. Scrap metal is an alternative to pig iron, which is causing scrap prices rise.
(According to Wikipedia, pig iron, also known as crude iron, gets its name because the traditional shape of the molds used for pig iron ingots is a branching structure formed in sand, with many individual ingots at right angles to a central channel or “runner.” They resemble a litter of piglets being nursed by a sow.)
Many of the raw materials to make titanium comes from Russia. Nickel is another element abundant in Russia. It is important in stainless steel production and other alloys for machining. It is also a prime component for lithium ion batteries.
Question: How are you dealing with the raw material shortage?
Today’s guest on the podcast is Jon Perin, owner and President of Perin Industries, a young CNC machining company in Webster City, Iowa. Jon, started Perin Industries in 2018, after a 12-year career as a hospital administrator. Like many entrepreneurs, Jon has had to face some daunting challenges. Starting out, he aggressively bought new state of the art CNC equipment to make parts for the medical sector. When he had trouble penetrating that market he successfully pivoted to fire arms work.
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When Jon Perin started Perin Industries in 2018, he planned on making parts for the medical industry. Early on, Perin Industries devoted a lot of resources to obtaining ISO 9001 and AS9100D certifications. Achieving those certifications was costly, so before the company could start the process of obtaining medical work certifications it had to start producing revenue. Also, Jon realized that medical customers prefer to work with companies who have established track records and experience, so he steered the company to work in more general industry.
Jon grew up around his father’s screw machine shop and learned to run ACME multi-spindles in high school. His shop is right across the street from his father’s shop, which is now primarily managed by Jon’s sister. Jon attended college in Florida and after graduating went to work as a hospital administrator for 12 years. Working in the hospital environment played a part in Jon’s interest in making medical parts. Jon says he appreciates the manufacturing business’s simplicity compared to that of the health care field. He says it is easier to quantify success working in manufacturing because success can be measured by the quality of parts produced.
Perin Industries has eight full-time employees. In addition to managing the company, Jon does CNC programming and setups. He jokes that he is also the janitor. He says his employees are becoming more capable to perform setups, which will free him up to focus on more administrative tasks in the future.
When Jon started his company, intending to do medical work, he purchased state of the art complex CNC equipment, including an INDEX C200 twin spindle/3-turret lathe he bought new for around a million dollars, and a Traub TNX65/42 twin spindle/4-turret lathe that he bought used for around $500,000. He says that after attending Design-2-Part trade shows around the US he concluded that the opportunities for Swiss work and traditional screw machine work were extremely competitive and dominated by established companies. This influenced him to invest in sophisticated turning centers.
After being unsuccessful in penetrating the medical sector, Perin Industries pivoted to the fire arms business, primarily making parts for Glock barrels and slides. Jon says that many companies produce the same parts using Haas machines. However, using his turning centers Jon can single-op the parts, making them in less than a third of the time as his competitors. Getting into medical work is still Jon’s longterm goal. He also aspires to one day buy his dad out, which would open his company up to many new types of customers.
Jon says he preferred to start his own company rather than go into business with his dad, but he says one of the main reasons he has been able to keep his startup company going is having good mentors such as him. Jon’s first year in business he made some costly mistakes, many of which experienced companies are also guilty of. Sometimes he took the wrong types of jobs, he bought equipment too early, and some jobs took him twice as long to set up than he had planned. Through it all, Jon’s father and another mentor have guided him to stay resilient. Jon says he’s grateful his company didn’t make enough bad decisions to fail. He plans to keep learning from the past and push forward.
Question: If you could go back in time and give yourself advice, what would you say?
Our guest on the podcast today is Jennifer Grant, marketing manager for Haizol Global Europe.
Haizol is a company that connects manufacturing companies in plastics and metal working with suppliers in Asia, most often China. The company’s value proposition is that it bypasses daunting challenges inherent when outsourcing to foreign countries, such as vetting suppliers and communicating in a foreign language.
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Haizol.com is a matchmaking service, connecting buyers in Western countries with suppliers in Asia. Buyers log on to haizol.com where they can submit part drawings and receive quotes from available suppliers. They narrow down choices of suppliers using filters for characteristics such as certifications, location, capacity, number of employees, and R&D departments. Haizol.com assists with negotiation and communication between the companies, but the buyers and suppliers have autonomous relationships.
Rather than acting as a matchmaker, Haizol Global serves buyers directly. It has its own manufacturing capacity and sometimes outsources work to some preferred manufacturers. The advantage of Haizol Global over haizol.com is that buyers receive constant customer support with an English speaking account manager who works with them throughout the production process. Haizol Global has a portal which gives buyers realtime information throughout the process. Account managers are available to answer buyers’ questions.
Buyers submit their drawings on Haizol Global’s website. Engineers look at the design and decide which of its shops should produce the part. A sample part is produced, which buyers then must approve. Then full scale production begins. Buyers don’t have the burden of having to choose between different suppliers. Haizol Global takes on the responsibility to deliver the part to the expectation of the buyers. Buyers don’t have to spend resources coordinating with Asian suppliers or performing regular quality checks.
Haizol Global’s customers are able to visit the shops making their parts, though Jennifer says very few companies have made the trip in the last few years during the pandemic. Usually the customers who travel to the factories in Asia are doing larger part runs, rather than single prototype jobs.
Jennifer says some clients want constant updates during production, while others are satisfied just waiting for the finished parts to arrive. Haizol Global guarantees parts will arrive at the promised time, baring unforeseen circumstances like worldwide pandemics.
Before buyers upload part prints to either Haizol Global or haizol.com, they can upload NDAs online. I questioned Jennifer about the risks of sending proprietary drawings to Chinese companies, notorious for stealing intellectual property. She argues that though that is a risk, Haizol has vetted the factories it works with, meaning it would be less risky working with Haizol than with a company found in Asia through a less established channel. Haizol has been working with the same factories for years and weeds out the ones who produce inferior work.
Jennifer says the language barrier is one of the biggest hurdles preventing companies from outsourcing overseas. Even small misunderstandings from language discrepancies can cause huge problems, which is why a company like Haizol is so attractive for Western buyers.
The majority of the manufacturing for haizol.com and Haizol Global takes place in China, but it also uses shops in Vietnam and the Philippines, which is advantageous in case of a problem with the supply chain in one country.
Effects of Reshoring
Haizol Global has a lot of customers in Western Europe, but most customers are located in the United States.
Jennifer says Haizol has not seen a recent reduction in users, despite current trends of bringing back manufacturing work to North America. She says that using Haizol helps prevent some of the supply chain issues that have given outsourcing to China such a bad reputation.
She says that the quality of manufacturing in China is significantly better than it was a decade ago. China’s Made in China 2025 initiative passed in 2015 has improved its manufacturing standards. Also, as more Western countries continue to outsource to China manufacturing abilities have improved.
Haizol’s Female Founder and CEO
Haizol’s CEO, Sherry She, founded the company. Jennifer says female CEOs are quite uncommon in China, but it is becoming more normal to find women in leadership positions at large companies.
Jennifer’s Story of Living In China
Jennifer moved to China in 2013 and spent most of her 20s living in Shanghai. Before starting at Haizol four years ago, she worked for a different Chinese firm, also in the manufacturing sector. She says she loved living in China, but decided to return to London at the end of 2020. She lived in China for the first year of the COVID-19 pandemic when the world still believed it would not spread to the rest of the globe. If you listen to the interview, you can hear details about what it was like to be “locked down” in China. There were guards at the door of her apartment complex, baring people from leaving.
Question: What is a part or service you have outsourced?
Nobody knows how the current tragic war in Ukraine will play out, but I hope that those listening to the second half of our interview with Dr. Andrew R. Thomas will get a little bit of new insight into how the conflict fits into the world’s energy economy.
Andrew is an author and business professor at University of Akron. In 2018, he published a book called American Shale Energy and the Global Economy. He also published a book in 2014 called Geopolitics, Development and National Security, Romania and Moldova at the Crossroads. His latest book coming out in 2022, is about the Panama Canal, The Canal of Panama and Globalization: Growth and Challenges in the 21st Century.
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Where Ukraine fits into the current situation of Europe
[02:17] Andrew points out that the Russia has been at war with Ukraine for eight years, starting with invading Crimea. The rest of the world did very little in response, partly because United States was already in Afghanistan and Iraq. The US imposed a few sanctions to appease the media and try to demonstrate it was doing something, but Russia never faced real consequences for its actions from the US or Europe. People didn’t realize what had been happening until Russia ratcheted up the violence in the last few weeks.
What the Ukraine-Russia Issue means for Global Energy
[03:54] Andrew says the war in Ukraine is going to put a lot more unpredictability into the world’s energy system. When nations do not buy Russian energy in order to punish Putin, it dramatically alters global energy production, pricing, and availability. In the past the variable in the energy economy was energy suppliers who refused to sell, but in the current situation we have energy consumers saying they are not going to buy.
Andrew says that companies cannot instantly start mining more oil and gas. It will take several quarters to “turn the spigot on.”
Canada Mining for Oil and Gas in the Tar Sands
[08:17] Before fracking took off in the United States, the Canadians had figured out how to extract oil and natural gas from tar sands. Tar sands contain a lot of energy, but extracting it is a very intensive and costly process. When oil prices were shooting up in the early 21st Century, processing oil from the tar sands made more sense.
The Environmental Aspects Mining Tar Sands
[08:51] A key issue with mining in the tar sands is that if it’s not managed properly the environmental damage can be huge. This makes it an expensive process. It requires a massive amount land, water, and labor, and can produce a lot of residue. Because we have been living in an era, starting with the fracking revolution, where the price of energy has been pretty low, mining in tar sands has not been that attractive. But if oil stays consistently at $120-$150 a barrel, there is a good chance for investment and activity going in that direction.
Is Putin “putting the Soviet Union back together?”
[10:10] Putin cannot to put the Soviet Union back together because that would involve many other states that are now in European Union and NATO. Currently, Russia is faced with several ongoing crises. One is a demographic challenge. The life expectancy in Russia is low, and Russians are not having many children.
Putin is on the defensive. Russia has a lot of territories to defend. With the expansion of NATO and Romania joining the European Union, those organizations push right to the boundaries of Ukraine, which historically has been a buffer for Russia. Putin views NATO’s expansion near Russia’s borders as an offensive gesture. He does not want to see military bases and nuclear missiles pointed at Russia from such a close range. This fear is similar to what the United States felt when missiles were pointed at it from Cuba in 1962.
[12:55] Belarus is playing a very important role in facilitating the invasion of Ukraine. Russian troops have used Belarus to enter into Ukrainian territory. Rather than a reconstruction of the Soviet Union we are witnessing an alliance network in Eastern Europe, made up of Belarus, Russia, Moldova, and parts of Ukraine. This is a reconstitution of some elements of the Soviet state as it existed in that portion of the Black Sea region.
Timing of the Invasion
[13:28] It seems as though Putin timed the recent invasion carefully. The United States will not have reconstituted its military following the wars of Afghanistan and Iraq until 2028, according to the latest DOD estimate. Europe doesn’t want to get into a conflict. The United States does not want to send American soldiers anywhere to fight. Also, Andrew says that he does not think Russia would have invaded if it did not have China’s blessing. Russia needs China’s help to withstand the sanctions from Europe and the US.
The Panama Canal
[17:48] The Panama canal was originally built to avoid developing a 2-ocean fleet navy. Yet, within 25 years after World War Two, the canal was rendered useless because US had created a multi-ocean fleet navy, and its ships were too big to fit through it. Eventually, President Carter gave the canal back to a dictatorial government of Panama, which the country has done a brilliant job running. Panama has made more money with the canal in the last 20 years than the US did in the entire time it ran it.
In 2006, Panama decided to invest billions of dollars, about 15% of the country’s GDP, to expand the canal to handle larger ships. This timed well with the fracking revolution in the US. The US can now send ships transporting liquefied natural gas (LNG) to Europe and Asia through the expanded canal. The canal is also being used for transporting agricultural goods to Asia from Argentina and Brazil.
America is reluctant to send troops around the world
[21:09] The United States has become incredibly reluctant to intervene worldwide at a national level. Most people agree that the US exited Afghanistan poorly, but at the same time most Americans are still glad that we left.
The nations of the world are realizing that the United States is not going to be the policemen of the world anymore, that the American people do not have the stomach to send their soldiers and their treasure to fight in faraway places. The US is spending less money on its global military, from 60% 30 years ago at the end of the cold war to around 40% today. Other countries are increasing their spending on their own defense because they know the US is not going to defend them. Andrew thinks we’re going to enter back into a period that will be much more dangerous, unpredictable, and violent.
Has the Green Energy Movement reached its peak ?
[26:07] Andrew says the European Union admitted it was impractical to reach its goal to sustain itself without fossil fuels in the coming decades when it quietly reclassified natural gas as a “renewable” in January.
Learn more about Dr. Andrew R. Thomas at https://andrewrthomas.us/
Question: Have you donated to help Ukraine? If so, how have you done it?
Today’s podcast is Part 1 of a two part series discussing the current state of the global energy supply and how it ultimately relates to the war in Ukraine.
Our guest is Dr. Andrew R. Thomas, author and business professor at University of Akron. He has published 25 books, most of them at the intersection of global strategy, business development, security and energy. In 2018 he published a book called American Shale Energy and the Global Economy. He also published a book in 2014 called Geopolitics, Development and National Security, Romania and Moldova at the Crossroads.
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Andrew started the interview by explaining the fracking process. Fracking is defined as fracturing the rock under the earth’s surface to extract trapped carbon fossils, particularly oil and natural gas. Fracking in the United States first began in the late 19th Century, in Titusville, Pennsylvania. People shot artillery shells down holes using old Civil War cannons to break up rock.
By the 1940s, companies like Halliburton started experimenting with shooting water down holes in the ground to break up rock. The process pretty much remained the same until 1995, when Nick Steinsberger, an engineer at Mitchell Energy, discovered that by shooting water 20 or 30 times more intensely than had been done previously one could break up the rock enough to release substantially more oil and natural gas. Fracking suddenly had the potential to be a sustainable and profitable business. Other technological advancements in fracking were developed in following years, namely, drilling horizontally. In the mid 2000s the United States suddenly found itself energy independent for the first time in decades. Energy independence dramatically changed US foreign policy, which often had been dictated by its reliance on oil and gas from other countries, who were not always the friendliest to the US.
Fracking does have some environmental problems, which Andrew says have been significantly reduced in recent years. There are two main environmental issues fracking companies run into. Sometimes drilling can pollute drinking water if it is too close to the water table. In the fracking process the fluid that is shot down to break up the rock contains chemicals such as sulfuric acid and guar gum. Guar gum happens to be an ingredient in Twinkies, but it’s not a good addition to drinking water.
For a while, drillers didn’t know of a good way to dispose of the fluid they used for fracking, and sometimes they dumped it into rivers. Also, frackers dispose of fluid shooting it down into concrete-lined injection wells, going 20,000 to 30,000 feet beneath the surface of the earth. The fluid usually doesn’t leak, but the process can cause earthquakes because it’s done around geological plates. The US Federal government, primarily under the Obama administration, insulated itself from handling the environmental regulations of fracking by designating most oil and gas drilling under the jurisdiction of state governments. Most States with fracking industries have dramatically improved their environmental regulations for fracking. Unfortunately, Oklahoma and Texas have not self-regulated significantly. Texas happens to have the greatest supply of oil and natural gas in the country.
In recent years, the private investment going into fracking has softened because releasing large amounts of energy resources into the world causes prices of oil and gas to fall, making the business less profitable. Also, energy producing countries such as Saudi Arabia and Russia flooded the world market with their oil and gas in an effort keep energy prices low, which would put American frackers out of business. Vladimir Putin even put out propaganda arguing the negative environmental effects of fracking. Some fracking companies did not survive the falling energy prices, but the ones who did survive improved their companies, coming up with new creative, more efficient processes.
European countries, aside Great Britain for a time, have stayed away from fracking, primarily for environmental reasons. They don’t have a federalist system like that of the United States, which grants autonomy to state governments to make their own environmental regulations. Russia has enough easily accessible oil and natural gas that it has no need to frack.
In 2010, Germany set a virtually impossible goal to no longer rely on fossil fuels or nuclear energy by 2020. During that period, the Germans became reliant on Russia to supply them with natural gas, which they deemed more environmentally friendly than other types of energy. Because it has become clear that for the foreseeable future they will remain dependent on natural gas, they have started building liquified natural gas (LNG) terminals that enable them to import natural gas from the United States. Natural gas must be converted into LNG when it is transported long distances. When it reaches its destination it then must be converted back to its former state.
The three largest importers of natural gas are China, Japan, and South Korea, and now there is an increasing demand for US natural gas in Europe because it is cheaper than most other sources. Andrew says China is in an energy crises right now. The country has had rolling blackouts since October because they don’t have enough coal and natural gas. In October, China started buying coal from North Korea (violating US sanctions). China also relies on Russia for energy, which explaines Putin’s visit with Xi Jinping a week before the Olympics. There is a pretty good chance they also discussed an invasion coming in the next few weeks.
Tune in next week to hear how all this relates to the war in Ukraine.
Question: Would you mind if fracking was done near your home?
Our guest on the show today is my friend Miles Free, Director of Industry Affairs at the Precision Machined Products Association (PMPA).
Miles was actually the first featured guest on this podcast four years ago, and we are very thankful to have him back for episode 149. He is definitely one of the most passionate people I know about the machining world. It was a great conversation in which we covered an array of topics, such as tariffs, shop safety, electric cars, and even a bit about Ghostbusters.
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Miles and I started the interview reflecting on the first episode we did together back in April of 2018. It was right around the time when President Trump was introducing tariffs on imported metals. Despite leaning conservative politically, Miles was very critical of the policy at the time and still is. He labels it the equivalent of implementing economic sanctions on ourselves—harsh sanctions. He reported to me that in December of 2021, for hot roll band, the US price for steel was $1,947 per ton. In Europe that same steel was $1,016 per ton, in China it was $634 per ton, and the world export price was $820 per ton. The policy was originally implimented to prop up the production of US steel mills. Today US steel mills are at 82.4% capacity, up less than 15% since the tariffs were implemented
Despite the huge disadvantage in raw material costs, US manufacturing is currently thriving, which Miles attributes to the fantastic ingenuity of US shops. He says several months after the initial Covid-19 panic caused demand for parts to plummet, customers suddenly needed new parts and demand shot back up. US contract manufacturers were prepared to step up to the plate to fill the demand. In 2021, PMPA shops had their highest average sales ever for December, up 23% from the average sales of the last five Decembers. Sales were up 18% over the prior year.
Miles says he is not sure if reshoring is actually occurring but according to the last census report, exports of US manufactured goods were up 18% from 2020 to $1.1 trillion.
Miles is a huge believer in the future of electric cars. He loves to reminisce about his first white paper for the PMPA back in 2003 in which he predicted a bright future for electric cars. Many association members said he was crazy at the time. Miles says today he can only think of five shops in the PMPA currently making automotive parts for the Big 3 automakers, but he can name a dozen PMPA members making parts for Tesla.
He pointed outside his office window to show me his own Tesla Model Y, which he was able to buy from selling portion of his own investment in Tesla stock. He boasts that he spends 1.7 cents per mile driving the car. Prior to gas prices shooting up, his 2015 Honda Civic Hybrid got him 5 cents a mile. He estimates a conventional internal combustion engine car would get about 15 cents a mile.
Miles made a point of covering the topic of safety in our interview. He says shops need to prioritize keeping their talented employees safe. He argues that if companies have a reputation for neglecting the safety of their people they will have trouble finding good talent. Also, the penalties for breaking safety laws can kill companies economically. Starting in 2022, the government passed a law that if a company even fails to post a sign with safety regulations they can be fined $14,502. Even accidental first offenses can trigger huge fines. It’s possible for a company to be fined $145,000 per violation per day.
According to Miles, the EPA also has very harsh punishments for violations—harsh for gross violations that are obviously detrimental to the environment, but also harsh punishments for unnecessary regulations designed by people ignorant about the processes in question.
I told him that sometimes talking about the EPA makes me think about the scene in Ghostbusters when the the ignorant EPA agent shuts down the protection grid, releasing all of the captive ghosts.
But I digress.
Talking to Miles is always interesting and an upper because he is so passionate about our industry. If you want more of his wisdom, I suggest you check out his blog at pmpaspeakingofprecision.com and his podcast, Speaking of Precision: Mondays with Miles.
Question: What has been the most surprising thing to you about the machining business in the last year?
Our guest on the podcast today is Jim Gosselin, owner and President of Genevieve Swiss Industries. Genevieve Swiss sells innovative accessories specifically for Swiss CNC lathes, such as live tooling and cutting tools, to combat the problems small parts manufacturers constantly deal with.
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Jim gives an overview of Genevieve Swiss. He says the company’s mission is to make the job of the machinists easier. If machinists have the right tools to get better efficiency and quicker setups then machining companies will be more profitable. (2:30)
Jim says he was always interested in mechanical stuff from a young age. He liked to take apart his toys as a kid to try to understand how things worked. He dropped out of high school in his Junior year and went into the military where he became a combat engineer. He summarized that job as “building things and blowing things up.” (3:00)
After getting out of the military, Jim got a GED and took college courses at night. He worked at a machining company called Savage Arms in Westfield, Massachusetts, that made shotguns and other hunting equipment. In 1983 he became a programer and ran the new Citizen CNC machines that the company purchased. The machines had 2 turrets with 5 stations each, with cross drilling and milling capability. He says those machines were not actually sliding headstock. Rather, they were sliding guide bushing machines. The turret and the guide bushing slid together on the machines. (4:00)
In 1987 Jim became an applications engineer and salesperson at Brookdale Associates, a Citizen distributor in New England. In the late 1980s Brookdale Associates began building high pressure coolant systems for Swiss machines. He says before then, high pressure pumps were not used for Swiss turning. The company also sold a line of accessories, including tool holders for Swiss machines. In 2002, he and his colleagues traveled to Switzerland where they began a relationship with PCM, a company that sold high quality live tools. Jim thought that Brookdale would distribute PCM’s tooling, but it was a difficult year for the machining industry, so his boss didn’t want the risk of taking on a new product line. He told Jim if he wanted to start his own company he supported the idea and would be his best customer. That was the start of Genevieve Swiss. (5:45)
Jim says that when he started Genevieve Swiss he realized at the time that many Swiss operators were getting older and they were burning out because the Swiss machining process caused too many headaches. He decided his company’s mission would be to make Swiss machinists’ lives easier by supplying them with products that enable faster setups and better cycle times. (8:00)
Jim talks about developing gear-driven head live tools for Swiss machines with PCM. He says that prior to gear-driven live tools, typically live tools on CNC Swiss machines turned at 4000-5000 RPM for cross drilling or cross milling. He says this wasn’t efficient for end-mills that could be as small as a diameter of .020” or .030”. The slower turning speeds caused burrs and slower cycle times. The new gear-driven heads produced 3 times the output as the older technology. (9:25)
Jim talks about the products Genevieve Swiss sells. The company sells accessories specifically for Swiss machines such as live tools and cutting tools. It sells arbors for slitting as well as coolant that is specifically designed for high pressure delivery. He talks about a thread whirling head for a Citizen L20 that is designed to have coolant flow right through the head and then delivered to the cutters. (see video above) (10:30)
Jim says that chip control problems are one of the most significant hurdles for Swiss operators. He says often in medical work that uses difficult metals like 465 stainless, chips can come off the machine like ribbons. Genevieve Swiss is working with its insert tooling supplier UTILIS to sell laser ground chip breakers. (see demonstration video below) (12:40)
Jim talks about insert tooling developed by UTILIS in which coolant flows through the tool and is focused on the tool tip. (17:00)
Jim says most of the Genevieve Swiss’ innovations come from listening to customers on the shop floor. He says the company talks to customers and distributors to find out what machining problems operators are complaining about. (20:00)
Jim compares the construction of older Swiss CNC machines to those of today. He says that Swiss machines used to have heavier castings to achieve rigidity. While today’s Swiss machines are built with lighter castings, Jim says they are designed more intelligently based on factors such as stress analysis, which enables them to stay ridged. (21:30)
Jim says the incorporation of lasers is one of the most interesting recent innovations on Swiss machines. Lasers can do cutting, milling, cross drilling, and knurling. They also enable welding two parts together while still on the machine. He says though 3D printing is slow right now, it could be a disruptor in small parts manufacturing one day. He brings up a scenario of a Swiss machine that also incorporates 3D printing. (22:30)
Learn more about Genevieve Swiss at Genswiss.com.
Question: What are the biggest challenges you run into running CNC Swiss machines?