Category Archives: Auto Industry

Swarfcast Ep. 8 – Electric Cars and 3-D Printing with Jeff Reinke

By Noah and Lloyd Graff

Scroll down to listen to the podcast with Jeff Reinke.

In today’s podcast we interviewed Jeff Reinke, Editorial Director of Industrial Equipment News (IEN). He gave his take on several of the fastest emerging trends in the machining business, including electric cars and 3-D printing.

Reinke said that right now Elon Musk is suffering the consequences of overpromising and underdelivering on his products. He said that Musk is a unique car company CEO because when certain projects suffer setbacks he stubbornly charges forward instead of shelving them as other car companies would.

This boldness enables Tesla to develop innovative technology that sets the company apart from the established but conservative automotive makers.

Reinke said that when the big car companies start producing all-electric vehicles on a large scale Tesla will have to develop a niche to survive the market. Not having a niche could lead to being acquired by an established car company seeking to obtain Tesla’s technology.

Thirty four non-spring parts made with a laser-sintering machine out of Inconel 625 (weaponsman.com).

The big question is whether the majority of consumers will follow the electric technology or if they will stubbornly hold onto their current gas vehicles.

Reinke also said the advancement in 3-D printing is one of the current trends in machining he is most excited about. He said it is fueling the demand for customization and he is impressed by the cost-effective materials available for the process such as carbon fiber and metal. However, Reinke believes that for the near future large volumes will still be made with conventional metal cutting equipment rather than using additive manufacturing.

Question: Does producing guns with 3-D printers scare you?

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Is Chrysler the Cubs of Cars?

Last Sunday 60 Minutes did a story on Chrysler’s great comeback since Sergio Marchionne of Fiat took the reins of the company in 2009. When Marchionne came on, Chrysler used a $6 billion high interest loan from the U.S. Treasury to modernize the company’s plants with state of the art equipment, upgrade 16 existing car models in just 18 months and begin integrating Chrysler and Fiat’s operations. Last year Chrysler turned a $1.83 billion profit and paid back its $6 billion federal bailout six years ahead of time.

When Marchionne came on, one of the first things he did was overhaul the company’s hierarchical management structure. He appointed 26 new young leaders from within the company, many of whom had not previously been at the top of the food chain, to report to him directly. He then vacated the chairman’s office on the top floor of Chrysler headquarters and moved his office to the floor with the engineers so he could better connect with the people designing the products. The revitalized company has recently come up with ingenious advertising campaigns such as the Superbowl ad with Clint Eastwood and the “Imported from Detroit” commercial featuring rapper Eminem.

Marchionne’s story at Chrysler reminds me of Theo Epstein’s recent hiring as the Chicago Cubs new President of Baseball Operations. Epstein, the man who many credit with ending the Boston Red Sox “Curse of the Bambino,” immediately cleaned house, keeping only a handful of front office people from the previous Cubs regime. He then assembled a management team composed of several guys from his former Boston and San Diego stints. This offseason, in a matter of months, the Cubs went from having the smallest management team in the Majors to having one of the largest with an army of scouts. Epstein quickly cut large salaried players and traded a few popular ones for players he considered undervalued. He hired Dale Sveum as the new manager, a coach with a decent baseball pedigree but definitely not the sexiest crowd pleasing candidate available. Epstein believes that Sveum will change the team’s culture to emphasize fielding fundamentals and accountability, the basics it appears the team has lost.

Epstein and Marchionne were brought in to run the Cubs and Chrysler because the organizations needed a reboot. Quick fixes just wouldn’t cut it anymore. Radical, fundamental change was the only choice to succeed.

Why do people believe these guys will succeed where so many others have failed? Because they don’t have the same handcuffs which hinder most managers. They appear to have no fear to try new radical things even if it may mean hurting feelings, laying people off, creating a lot of new work, or just failing in front of everyone.

Most people are inclined to make decisions based on “how things have always been done,” and much of the time we are unconscious that this is the basis for our decisions. People also make wrong decisions because trying new things, although exciting, is scary. The Cubs will probably have to lose a bunch of games before they start to dominate. Maybe the next new Chrysler model will be an Aztec. The greats can deal with these possibilities.

Take a step back and examine your business, or your personal life for that matter. Are you too scared to make changes which likely are imperative to succeed and be happy? Do you have the guts to make decisions like a turnaround master? I need to work that out with my shrink next week.

Question 1: Which will happen first, Chrysler is Number 1 in American car sales, or the Cubs win the World Series?

Question 2: Does using Clint Eastwood and Eminem to advertise cars offend you?

Watch the “60 Minutes” Interview here

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Making Parts in Hoosier Land

 

OrthoVation Center at Micropulse

In mid-December I trekked 3 hours from Chicago to Northeast Indiana for a tour of manufacturing companies put on by the Northeast Indiana Regional Partnership and Indiana Michigan Power. On paper the trip didn’t exactly have the same allure as my last two traveling assignments for Today’s Machining World (to Japan and France), but the people and the companies I encountered on the trip may have been the most genuine, shrewd and successful out of the three destinations.

Turns out, when it comes to manufacturing Indiana is where it’s at. Over 40 percent of Indiana’s workforce is involved in manufacturing. A variety of industries have thrived there because of the state’s low taxes, its educational system which encourages young people to train in technical skills, and a culture which keeps manufacturing in vogue.

Many Indiana job shops such as C & A Tool in Churubusco invite students and teachers of a wide range of ages to come to their facilities to learn about factory equipment. C & A for instance shows teachers how to use comparators so they can demonstrate to their students practical applications for geometry. The Northeast Indiana region is also currently starting up what are known as New Tech Schools, which focus on teaching students creative problem solving and working in groups on practical technical projects.

I encountered another interesting spin on education when we visited Fort Wayne Metals, a thriving 500 employee company specializing in the production of wire for medical devices. The company’s CEO Scott Glaze offers to pay for a baccalaureate degree for every company employee. Employees are allowed to study any subject they choose, from history to the culinary arts. Glaze himself got a history degree many years after working in the family business and then felt it was important to have a well rounded educated workforce.

Micropulse was another impressive company we visited. President and CEO of the company, Brian Emerick, recounted the story of his company’s evolution from a small job shop in 1988 that produced for a variety of sectors to become a 200 employee operation which today produces parts almost exclusively for the medical industry. The company prefers to focus on producing medical implants because medical instruments are more of a commodity product, making them much less lucrative. Micropulse has also in recent years created incubator companies housed in its own facility, in an area it calls the “OrthoVation Center.” Micropulse provides resources for the startups such as administration, accounting, information technology, product design, testing, prototyping, distribution and inventory management. After the new companies have developed a specialized niche, Micropulse spins them off and then can become their exclusive supplier.

Custom License Plate Made at C & A Tool

Unlike Micropulse, C & A Tool prefers to serve a diverse group of sectors in addition to medical, such as aerospace, fuel systems and automotive. Our guide from the company, Rob Marr, told us that C & A never wants to turn down jobs because producing parts for a variety of sectors strengthens the skills of the company. The company believes that knowledge gleaned from running one type of job enriches its abilities to run other types. During the downturn, the company even cross trained its less busy employees in programming by teaching them to make custom license plates.

We also visited Steel Dynamics, the fifth largest steel company in the U.S. Kieth Busse, the CEO and founder of the company who just retired at the end of 2011, is one creative, shrewd Hoosier. According to Busse, the labor cost at Steel Dynamics is about .25 man hours (15 minutes) per ton of steel, while it takes around two man hours per ton at U.S. Steel. Busse came from working at Nucor and implemented a non-union, incentive based model for paying employees similar to Nucor’s. However, Busse told us that the incentive system of Steel Dynamics differs from that of Nucor because Nucor rewards employees mainly for how many tons of steel they produce, while Steel Dynamics uses a formula that figures in the actual cost effectiveness of the employees’ work. The employees are rewarded for increasing the company’s profits by reducing waste, rather than being paid just for steel they churn out. They also receive stock options and bonuses based on the company’s profit, which further instills a sense of ownership, unity and loyalty. Steel Dynamics is the only steel company that paints its own steel, an idea which one of its employees came up with.

Question: Do you like where you live?

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Manufacturing in Thailand – the “Detroit of the East”

Emily Halgrimson, Today’s Machining World’s Managing Editor, was invited to join 11 other journalists from the U.S. and Canada (six in the automotive sector and six in the food industry sector) by the government of Thailand’s Board of Investment (BOI) on a four-day media tour to promote Thailand’s industry around Bangkok and the Southeastern seaboard.

Saturday, January 14th 10 a.m. – Left Chicago’s O’Hare International for Thailand on American Airlines. It’s not comforting to fly a bankrupt airline’s 757 over the Pacific. The distance is a drawback to North Americans doing business in Southeast Asia – 15 hours to Shanghai and another six to Thailand is a haul. I was pleased to find PBS’s excellent series, Downton Abbey, on the inflight entertainment, but slept most of the way thanks to Benadryl.

Sunday 10:30 p.m. – Arrived at the airport in Bangkok, and while waiting for the other journalists to arrive, ate some of my favorite Thai food of the trip – deep-fried pork with a red coconut curry sauce and Tom Yum soup. Made a vow to eat only Thai food for the duration  –  was not a problem. Transferred to our five-star hotel, Novotel, and were welcomed with plates of Thai deserts, wine and palm-to-palm bows by all.

Some of the journalists after a tour of Western Digital’s hard drive production facility

Monday 8 a.m. – Totally jet-lagged. We visited Western Digital’s (WD) plant in a recently flooded industrial estate near Bangkok and were met by John Coyne, President and CEO. Forty-five percent of the world’s hard drives are produced in Thailand, and WD, worth $10 billion, is the largest company. Their plant was under 1.9 meters of water only weeks before our visit. Divers come in for the most valuable equipment and moved it to a kind distributor’s facility 100 km away so they could decontaminate and repair it while the floodwaters lingered. WD employs 38,000 Thais, most who make under $10/day. I’m not sure what I was expecting, but the modern clean plant was a total surprise. It contrasted heavily with outside the industrial parks, where the country’s poverty is more obvious. Western Digital’s projections for 2011 were $176 million; because of the flood they reached $119 million. No word yet on the cost of the cleanup.

The journalists preparing to enter the Board of Investment’s (BOI) Fair

Monday 11 a.m. – Headed across town to the Thailand Board of Investment’s (BOI) Fair. This was interesting. When Westerners hear the word “fair” we think animals and Ferris wheels. In Thailand, a fair is a showcase of the country’s industry direct to the consumer. The fair happens only once every 10 years and was a huge deal. The King of Thailand – whose authority and respect are reminiscent of Kim Jong-ll – is a “green nut,” and the green theme is seen country-wide. The “Royal Pavilion” showcased a “green themed” 3-D film, complete with a tree growing up from the middle of the room, and the finale – a real rain shower (watch your camera). Huge exhibits in the outdoor park included Toyota, the most popular carmaker in Thailand; Chevy, which had its own 3-D show about the evolution of the American-born automobile; and CP, a huge frozen food conglomerate born in Thailand who’s big in Costco. The show also had a beer garden (hint-hint IMTS organizers) and a joyous sort of “look what we have in Thailand” feel to it. The people of Thailand are proud of what they’ve done in attracting these international companies over the last 20-30 years, but seem cognizant of environmental mistakes the U.S. and China have made during their development, and are making an effort to not repeat them.

Tony Blair speaking at the CEO Forum Bangkok

Tuesday 8:30 a.m. – Attended the BOI CEO Forum. Guest speaker: Tony Blair. A very inspiring and encouraging speech. Interestingly, he noted strongly that America would not be where it is without its open immigration policies. Mr. Blair encouraged Thailand to create this immigration-friendly atmosphere now, and noted that Thailand has “enormous potential” – its people, geography, and relative stability. He emphasized that Thailand’s job was to let the world know that it’s “open for business.”

 

 

Tuesday 3:30 p.m. – Left Bangkok for Pattaya, a tourist city next to the Eastern Seaboard Industrial Estate (ESIE) and checked into our spa hotel on the beach – filled with Russian vacationers. Two Thais told me that the Russians are disliked, they are stereotyped as being cheap.

Dinner on the beach in Pattaya

Development in the industrial estate was shocking, in a good way. The government invested millions in infrastructure to attract international companies interested in supplying the Eastern Hemisphere. Roads, electricity and water supply are new, modern and reliable. Ate a fresh seafood dinner at a beach restaurant while the sun disappeared over the ocean and the beer and conversation flowed. Beautiful.

Wednesday 9 a.m. – Visited American Axle & Manufacturing’s  (AAM) Rayong Manufacturing Facility in the Eastern Seaboard Industrial Estate. AAM opened its Thailand operation in 2008. 2010 sales were $2.3 billion. They produce mostly axle systems, but also drivelines, drivetrain and chassis, and other metal-formed products for automotive. The plant is 124,000 square feet and is located in one of Thailand’s many “free zones,” (tax-free). They currently exclusively supply GM’s Thailand operation, but plan on doubling the size of their plant, as they will be supplying Volvo soon. The Auto Alliance Thailand (AAT) manufacturing facility, a joint venture with Mazda, which wouldn’t welcome us for a tour, produces the Ford Fiesta and lightweight trucks for that particular half of the world. I was told that Thailand can’t compete with China’s steel prices, so asked what Thailand’s advantage is over China and India. I was told that it’s Thailand’s supplier base. When GM orders a part, AAM must deliver within 70 minutes.

Journalists after a tour at the Thai Summit Group

Wednesday 11 a.m. – I was very interested to tour our first Thai-owned company, the Thai Summit Group, which started in 1977 and makes auto parts for major auto companies. The stamping and injection molding facility makes mainly front and rear bumpers for Mazda and Ford. The plant was impressive and had six 3,000-ton presses and can produce 800,000 bumpers and 6,000 chassis per year. Annual sales are about $10 million. There was a large difference in the atmosphere of the plants from the Western owned companies and this completely Thai run company. They have a basketball court just outside of the main office and President, Mr. Shigeo Sakaki, commented that the workforce there is young and has lots of energy, so they need to have activities for them. It was much more relaxed than Western Digital and American Axle. Young people roamed the grounds like on a college campus. It was nice. They’re obviously making money, but it felt like it would be a nice place to work.

A night out in Pattaya

Wednesday 2:30 p.m. – Visited Celestica Thailand, Celestica’s largest location in terms of revenue. They employ 5,630 people and are five minutes from the large port on the Eastern Seaboard and one hour from the airport. They mainly make networking equipment, high-end storage and servers and teleconference equipment (Web cams, phones, digital photo albums, etc.). They see their future in optical device assemblies for the Internet. The Senior Vice President, Mr. Duangtaweesub, was impressive. Thai born, he had studied 30 years ago in Washington State. He started the company, which was bought by Celestica a few years later. He has been running Celestica’s Asia operation ever since.

Thursday 9 a.m. – We were scheduled to visit Magna Automotive and Asia Precision Co. Ltd. in the Amata Industrial Estate, but Magna canceled because they couldn’t get permission from the U.S. office to let us in. Asia Precision was fascinating. It employs about 800 workers (mostly women, Mr. Karoonkornsakul, the CEO noted, because they’re patient, are very good with detail, and there’s little heavy lifting needed) and has over 400 CNC machines, almost all Japanese. They make parts for automotive and camera and their 2011 sales were $30 million, with $40 million expected in 2012. Most of their business comes from the East, but they are a key supplier for Emerson in the U.S., who has asked them to consider building a plant in Mexico, which they are researching now. They are also considering expanding into Indonesia, which the CEO commented would be “the next Thailand,” with production projections of 2 million autos in 2012.

Asia Precision hires mostly women because they are “patient, detail oriented, and the parts are light”

When the automotive crisis hit in 2008/9 they began making rollers for printers. In response to their foreign clients’ needs, they are trying to expand into medical and aerospace, and are facing many of the same hurdles American companies face: the need for skilled employees and regulatory know-how.

Thailand’s Buddhist culture was obvious at Asia Precision. They have weekly company-wide meetings followed by meditation and a singing of their national anthem, and are heavily involved in giving back to their community through projects. They also had the first recycling center we saw, the proceeds of which are donated to the poor. Most of the employees, who are typically age 20-25, are recruited from villages in the north, and once a year they return home for the holidays. They are also very into exercise and health, recently holding a company marathon to raise money for flood victims. The atmosphere of the company was relaxing and the CEO mentioned they have very little employee conflict. It was refreshing to see a company that makes money but has quality of life at the forefront.

A training room at the Thai-German Institute

Thursday 3 p.m. – Visited the Thai-German Institute, a government training program for industry. This was interesting – I kept wondering why the U.S. isn’t doing something similar, it seemed so obvious. This organization started in 1992 with German funds with the goal of providing high-tech workers to industry. It is now run by Thailand’s Minister of Industry and trains 2000-3000 young people per year, mostly in mold and die technology, but also in automation and machining. It provides workers to the industrial estates in the south, who pay a fee for each worker they hire. Recruiters from training programs like these go to the north in search of competent, bright, high school graduates whom they lure to the south with the promise of decent salaries, subsidized lodgings, and per diems for the duration of training. Then they find them jobs. It appears to be a very win-win system that’s working for Thailand.

Question: Would you consider moving your business or finding suppliers overseas to save money?

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Making a Beautiful Life

Chris Chapman is the new Chief Designer at Hyundai

The wonderful definitive biography of Steve Jobs by Walter Isaacson spends many pages on the close collaboration between Jobs and his Chief Designer, Jony Ive. Ive was the brains behind the design of the iPod, iPhone and iPad. He and Jobs worked closely since 1997, refining a minimalist approach with an emphasis on rounded rectangles that makes Apple’s products so beautiful and unique.

Great design works so effortlessly that we often ignore it as we enjoy it, while crappy design gets in the way of usage and pleasure.

When I read a blog by Joseph Szczesny of The Detroit Bureau a couple of days ago about Chris Chapman, BMW’s chief designer in the U.S., moving to Hyundai, it struck me as major news. Car design is huge in developing a brand. With the Sonata and Elantra Hyundai has moved into the top rank of auto makers. Snatching BMW’s #1 sounds like a real coup.

One of the primary ideas I’ve gotten from the Steve Jobs story is the importance of putting artistry into your life. Not just your products, not just your work, but your life. I think we all have some talent, a spark, something special and magical that we can access if we focus on it. Maybe it’s our voice that fits perfectly in a choir, or our gardening touch, or the ability to integrate machining capabilities to perform a job perfectly and repeat it.

Pursuing the special talent that makes magic is my goal for 2012. I’m looking for it in writing this blog.

I wish you joy in making your own magic today.

Question: Do you think Mitt Romney can ignite enough voters to beat Barack Obama?

Video of Jony Ive, Apple’s Chief Designer, explaining how the MacBook body is made from a single piece of machined aluminum.

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Industry Scuttlebutt

I was in Northeast Indiana last week for a press junket promoting the manufacturing sector of the region. The first company we visited was the General Motors plant in Roanoke, IN, a 716 acre facility with 35,000 employees where they build light and heavy pickup trucks–476 trucks in an eight hour period we were told. Our guide Mike Glinski, manager of Fort Wayne Assembly, a GM employee of 26 years, really impressed me with his presentation. He was one of the best speakers on the trip and we were all pleasantly surprised how relaxed he was about letting us shoot photos and video as we toured the line. He said the facility even gives tours to the public with an appointment.

I couldn’t believe how immaculate the facility was. The operation was well organized and highly automated. One topic that was discussed as we toured the different companies on the trip was Indiana’s strong political movement toward a “Right to Work Policy,” which would allow employees to work at any business without having to be in a union. A GM plant with employees not in the UAW just sounds unfathomable. But stranger things have happened right? After all, they took out the lard and then the trans fats from Oreos and they’re still delicious (and kosher!). In any case, Glinski’s intelligence and openness, along with the positive vibes I got touring the factory gives me optimism that GM is finally taking the steps to compete in today’s lean economy.

Best to check out the video below to get a better sense of the place.

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Wearing both my reporter and machinery dealer hats on the tour in Indiana I asked some of my presenters about what types of equipment they were buying lately. At one shop specializing in medical implants, the president  told me he was shying away from buying Mori Seiki lathes because after the U.S. partnership with DMG he had lost trust in the organization and customer support of the company. Most agree that DMG’s equipment is some of the best available worldwide, but they’ve always been notorious for weak customer support in the U.S. Merging with Mori Seiki was supposed to raise the company’s game in that respect, not pull down Mori Seiki’s.

But the next day we went to C & A Tool, a diversified, successful job shop (many times referenced in Today’s Machining World). The people at C & A told me the company had recently purchased several DMG machine tools, which they love. Their rationale for buying the DMG machines–C & A engineers had gained confidence in DMG after it had combined forces with Mori Seiki. So the merger of the two machine tool companies is working sometimes.

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Kim Jong-il’s son Kim Jong-un is about to replace his deceased despot father. One of the few things people know about Kim Jong-un is that he’s a huge NBA fan, a Chicago Bulls and Michael Jordan fan in particular. Supposedly the Jongs had a huge full court in the backyard of their palace, and when Kim Jong-un was allegedly studying in Switzerland many people remarked that basketball was one of his main uses of spare time. If Obama and Kim Jong-un ever end up meeting, the two leaders at least have one common passion on which to relate to each other. Maybe they can just settle their differences over a game of one on one.

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Happy to say that the Today’s Machining World blogs are getting plenty of traffic and comments lately. We often are surprised by the reactions of our readers and we get to learn a lot from their perspectives. For instance, when Lloyd wrote the blog about Newt Gingrich, we received a high number of comments by people saying they couldn’t support him because of his gun control politics. When we published the blog, Newt’s politics on gun control hadn’t even crossed our minds as an issue people would comment on, let alone that it would be a deal breaker for votes. The opinions were so strong it reminded me of an abortion rights debate.

Question: Was the Iraq War worth it?

Videos of General Motors plant in Roanoke, IN

 

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Is Elon Musk the Next Steve Jobs?

The new Tesla Store in Oak Brook, Ill.

Is Elon Musk, the head of Tesla Motors, the Steve Jobs of cars? Is his all-electric line of autos going to revolutionize the industry? Can one man with a vision and charisma redefine an aged, redundant, bureaucratic mammoth business with creativity and the leverage of ideas?

Noah, my son-in-law Scott, and I decided to seek some answers at the brand new Tesla store in the Oak Brook shopping center just west of Chicago. Yes, store, as in Apple Store, or Brookstone, or Victoria’s Secret, which are its neighbors. The store manager Seneca Giese explained that Tesla used to be located in a conventional showroom in downtown Chicago but got no street traffic. In the upscale Oak Brook Mall they get a tremendous number of lookers who meet the upscale demographic of a Tesla buyer.

The store had the Beta version of the five passenger “S” model, which is priced like a BMW 535 sedan, over the past weekend, but it had been dispatched to its next destination (Washington DC) on a flatbed 10 minutes before we arrived. Young Mr. Giese was extremely knowledgeable and patient with us. Since he has no cars to sell at the mall his job is to educate potential buyers about the sedan, the company and its concept. What he can sell is a refundable $5,000 reservation for a car that will be built in the spring of 2013. He says they sold five such reservations on Monday, a testament to the buzz Musk has built and the growing attraction of gasless driving.

The electric fever is definitely building. Bob Lutz, the former GM mogul responsible for pushing the Chevy Volt through the General Motors bean counter mentality, recently appeared on the Charlie Rose Show with Elon Musk. He said the Volt would not have been built if Musk’s success hadn’t given the idea credibility. With Nissan’s Leaf joining the fray at the same time, the electric car is reaching the first stage of critical mass.

Musk sold a piece of the company to Toyota and Mercedes to get cash, credibility and collaboration. It gave him the leverage to go public with Tesla earlier this year and the wherewithal to buy the 5,000,000 square foot Numi factory in the Bay area, in which he could produce 500,000 cars in a year. Tesla’s technology will be in next year’s electric Toyota RAV4 SUV being produced in Canada.

The pieces are coming together. The Tesla small car, similar in size to the 3 series BMW, will be built in 2015 if things go as planned. It will be priced in the $30,000 range.

I find Elon Musk a compelling leader, a Steve Jobs-like master of business who clearly is following the Jobs game plan. Personally, I’m undecided about buying a reservation, but I am leaning toward the purchase because by 2013 my 2003 Toyota Avalon will be deserving of replacement. I think the hype about Tesla is deserved. Musk is the kind of visionary that makes America unique. Call me nuts, but I believe Tesla is where Apple was when the iPod hit the market.

Question: When will you buy an electric car?

The chassis of the "S" model

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Machining Industry Scuttlebutt

By Lloyd Graff

Tesla Motors went public this week. The company’s all electric roadster has not been a resounding success financially or mechanically, but has been a publicity magnet. Elon Musk, one of the company’s founders has an amazing track record as an entrepreneur. He has Toyota money behind him now and the modern Nummi factory in the Bay Area to make the new versions of Tesla cars. Tesla chose not to participate in the X Prize competition to produce a production-capable 100-mile-per-gallon car, but the company could still be a big big winner over the next 10 years.

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Prices for nice CNC machinery at auction show some firmness in the market. On June 29, James Murphy Auctioneers sold a 2007 NV5000 A1B40, 20” x 50” table for $135,000. The machine had a Lyndex Nikken 5th axis trunnion. A 2005 NV5000A140 Mori 23 x 30 table brought $102,000. The sale of New Concepts in Redmond, Washington, also had a Mori DuraCenter 2005, which sold for $67,000 and a Doosan 3016, 2006 which fetched $25,000. A Zeiss CMM Contoura G2 2006 fetched $61,000.

On the same day Thompson Auction Co. sold Sherman Tool near Dayton. Two Hurco VMX 30 machines new in 2004 sold for $40,000 each, while a little Okuma ES-6 new in 2007 brought $35,000 and a 1998 Okuma Cadet with a 16” chuck brought $45,000.

Last week at a Winternitz sale near Duluth, Minnesota, a 2008 240-C Doosan 3-axis lathe sold for $49,000.

I would describe these prices as reasonably strong, particularly for the Hurcos. On the other hand a couple sales in Michigan, MetaVision in Traverse City and a Hilco and Maynards Auction in Detroit, were softer for machines that ran mostly automotive related stuff. Dealers bought the bulk of the equipment, and at Metavision a lot of older cam equipment went straight to the scrap yards.

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Statistics from the Precision Machined Products Association indicate that business amongst its member companies has made a full V–shaped recovery over the last 18 months. After business dropped by a third during the worst of the recession in the spring of 2009, it regained the base level of sales in May of 2010. The ascent of automotive business to the still not so lofty level of 11.5 million units and the rebuilding of paltry inventories everywhere have fueled the resurgence. Weak home sales, tepid employment growth and a depressing stock market have eroded confidence in June, but as the BP mess slips from the news and the stats show the world wasn’t coming to an end confidence will come back.

Question: Do you believe Wall Street insiders are manipulating the market to make President Obama look bad?

Telsa Roadster charging (Photo from Treehugger)

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Is Overtime “Lean Manufacturing”?

By Lloyd Graff

Is paying overtime rather than bringing in new employees lean manufacturing practice?

For adherents to lean concepts, the question of how to handle a  “bullwhip” effect where companies need to rebuild inventories is a challenge for suppliers. (All this “bullwhip” talk is making me hum the theme song from “Rawhide.” See clip below.) People who were laid off may be unavailable for a call back or may be happily pruned. Overtime is expensive, and eventually core workers get burned out working six or seven days a week or 12 hour shifts.

Temps are often an imperfect answer because they require significant training and may be poorly integrated into a group of standoffish employees who are offended that old employees are not being rehired.

As contract shops reach the “bullwhip” phase of inventory rebuild, how do you think workforce additions should be handled?

Question: Would the Obama $5000 tax credit proposal for new employees be enough to tip you into hiring new people?

Theme Song from the TV Show “Rawhide”

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Is Lean Manufacturing to Blame for Toyota’s Woes?

Toyota's Faulty Floor Mat Retention System

By Lloyd Graff

Toyota, the icon of lean manufacturing, now has a big fat problem that could devalue the brands which vaulted it to the top selling car company in the world.

The sticky gas pedal that has prompted the recall of Toyotas and Lexus going back to 2005 has been traced back to a bad design in a component made by CTS, an Indiana auto parts supplier. Because Toyota was so committed to lean manufacturing, which translated into common components across platforms and models, the company has to callback the RAV4 SUV, Avalon, Corolla, the top of the line Lexus and the ubiquitous Camry.

Besides being a tort lawyer’s buffet, this debacle besmirches the reputation of Toyota, because the problem must have been recognized in the field years ago, yet was never fully acknowledged until now by the corporation.

This is a tremendous opportunity for Ford, GM and Honda to attack Toyota. Toyota is suffering because of the dark side of lean manufacturing which corrupted virtually every one of its major models from the last five years. Toyota’s reputation will also take a blow just for the fact that it refused to come clean about the problem for years in a marketplace that increasingly demands transparency.

Question: Do you think Toyota’s commitment to lean manufacturing was a significant contributor to its current crisis?

Imagine, this goof is from a company that can develop a thought-controlled wheelchair.

Toyota’s Thought-controlled Wheelchair

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