Category Archives: Business

Swarfcast Ep. 3 – Part 2 of Miles Free Interview

By Noah Graff

Miles Free, Director of Research and Technology at the Precision Machined Products Association, opines on electric cars, economic patriotism and how American machine shops have evolved to thrive in today’s economy.

Question: Are tariffs aimed at China economic patriotism or a tool for the enemy?

Listen to Swarfcast in the player below.

Honda Assembly Plant in Liberty OH   (Dayton Daily News)

 

 

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Machinery Marriage

I often ask clients of our machine tool business where they make the most money in their businesses. They usually have an answer immediately, and it isn’t in the place where they are investing fresh money.

I’m frequently talking to folks who run multi-spindle automatic screw machines, usually cam-operated, in tandem with a host of other equipment. Many people regard these machines as antiques from the antediluvian epoch of manufacturing. These are machines that some folks say won World War II. For the uninitiated, that was the war in which we fought the Germans and Japanese, while the Russians were our allies. The world does have the ability to change.

The ironic answer I often get is that the multi-spindles make the most money, and the return on investment is off the charts because they were written off eons ago.

But the secret sauce is the knowledge of where they fit in the picture. Banging out a half million dumb parts on old Acmes or New Britains is a losing game. Increasingly, sharp manufacturers in Shanghai or Bangalore will make you bang your brains out. Subsidized steel in China and dirt priced brass in India make the simple threaded widget yesterday’s game. But, combining the raw machining strength of 6- or 8-spindle multis with the

finesse of twin-turret, twin-spindle CNC turning centers can turn 20 cent blanks into $2 medical or aircraft pieces. Running single bars through an Okuma or Nakamura will make you a bit player in a crowded cast, but combining those machines with the muscular multis that still can pull their not-so-insignificant weight, makes a potent combination that Shanghai and Bangalore can’t beat.

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President Trump’s tariffs are an annoyance which could grow into a blister if they do not bring any fundamental shifts from the Chinese. American manufacturers, particularly steel users, are today’s sacrificial lambs as the Administration vaguely pushes for China to stop stealing intellectual property. The naïveté of somehow expecting Beijing to allow one of its biggest employers, the inefficient State-run steel industry, to suddenly erode because of the tingling jab of American tariffs is quite surprising. I fret that the strong U.S. economy has made an overconfident Trump start a fight without a clear endgame.

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My son Noah is getting married next month and already receiving some gifts. It brought to mind a few memorable gifts my wife Risa and I received for our wedding that have lasted over the decades we have been together.

We still use our copper bottomed Revere Ware skillets and sauce pans almost every day. Amazingly, 48 years later, they are better than when we got them from Shirley Silverstein as a gift, because they have been seasoned. We seldom shine the copper bottoms, however.

We still have aluminum baking pans, perfect for brownies and cakes, which have remained as wonderful as they were when we received them more than four decades ago. Then there is the cookie recipe book that Risa refers to often and the old Better Homes and Gardens recipe book that never seems to age.

The ideal present does not have to last for 40 or 50 years. Luggage can be used hard for 5 or 10 years and happily discarded, and a sweater that you wear often has a finite life. My wife and I have our own good china, but she usually uses her mother’s china for Sabbath meals and special occasions.

We have several weddings coming up besides Noah’s. The Amazon gift certificate is an appealing surrogate for the special wedding gift that will be remembered fondly 50 years from today. Gifts also go out of vogue. Silver serving bowls seem like such an anachronism today. Who has the space for them to sit idly on shelves?

With wedding season at its peak, I am curious to know who has gifts that have withstood the test of time. Who has a great idea for a gift that will keep on giving or impart a memory which will last forever?

Question: Is running multi-spindles a losing game?

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Swarfcast Ep. 2 – Talking Tariffs with Miles Free

By Noah Graff

Listen to Swarfcast in the player below.

In Episode #2 of Swarfcast, Today’s Machining World’s podcast, Noah interviewed Miles Free of the PMPA (Precision Machined Products Association). Free is one of the world’s foremost authorities on the steel trade. They discussed how the recently implemented tariffs on raw materials into the United States affect the U.S. precision machining industry.

In the interview Free equated harsh raw material tariffs to economic sanctions on imports that the United States would inflict on an enemy like Russia or Iran.

If you want to learn about Trump’s new tariffs listen to this interview!

This interview was conducted in April, so at times Free will refer to tariffs as a potential threat rather than a current one.

Question: How are tariffs affecting your business?

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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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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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A Day in the Life of a Job Shop Guy

The “old gal” W&S #4

“Mike” owns a small job shop in South Carolina. He started from scratch building a machining business from a turret lathe and a mill. He loves the business and asked to write a column about life on the front lines of the machining world, clawing to make a few bucks, sometimes just holding on. -Lloyd

This week’s been rough. If we were playing Blackjack I’d be in “stay” mode, knowing that if I “hit” I’d go bust, but not sure this “13” is going to pull me through.

The life of a Charlie Brown screw machine shop is getting more tense as the holidays draw close. Of course we are up against deadlines with customers’ projects as the year draws to a close, but most of the stress will come from the money, or maybe a lack of it. It’s happened pretty much every year of the 18 years I’ve been in business. But we have pulled it off. But that doesn’t seem like much of a consolation as I look over at my wife Laura. I can see that oh-too-familiar look—you know it, that worried, uncertain, getting ready to ask me the same question for the fourth time today look.

This week Laura’s out in the shop operating our Fanuc Robo-drill on a second op. job. Lucky for me I’m on a turning center right across from her. Laura wears many hats here. From accounts payable, receivable, invoicing, and bookkeeping, to being my best machine operator and maintenance mechanic. I like to hold the position of “Janitor” (my self-proclaimed title when anyone asks what my function is here at the shop). It’s roughly two weeks from Christmas and she knows all too well about our account receivable status. You see, this shop is flying by the seat of its pants at the moment. We’re standing out there on a limb. But what worries Laura is that not only are she and I out there, 100 feet up in the air standing on a 1″ diameter limb on a weeping willow tree 15 feet away from the trunk in gale force winds, but that there are people living right under this stress cracked branch that I’m jumping up and down on like a 500 ton obi press at work.

There are a few people that work for us, that depend on us, for their livelihoods and their Christmas. It’s a tight ship right now, and we depend on our customers to pay us promptly so we can keep the ball rolling. As quick reassurance I stop the chuck boring operation I’m doing on some soft jaws and take Laura in the office, scan over the office computer, and for a minute go over the finances. “See,” I say, “even if nothing else comes in, and I’m sure something will, there is enough to pull it off, money wise to take care of the little bonus’s and buy the Butterballs and handle our business.” And with a lower voice I say, “uh… we will just be a little light personally, so, uh… forget that new GMC Dually I asked for, ha-ha-ha.” Of course she didn’t find this funny and I had to hear, “how it’s always the same, every year! Barely getting by!” I then quickly change the subject about how I liked the lighted wreath she put on the shop entrance door, and quickly things go back to semi-sane.

Its lunchtime now and on Fridays we usually run out for lunch. Laura likes this little lunch spot right up the street called Alfies, a sort of upscale mom and pop type place, old school, a rarity in this area—they have the best tuna melts. As I go out to wash up I stop to talk with Brad, our shop foreman of sorts. Brad’s not a machinist by trade, but he’s been with me on and off for over 16 years. He’s one of those guys you can trust with anything. I tell him to “kill the Double Ought until I get back, it’s running and I’m down to my last circular cutoff.” I’d rather wait and keep my ear out for it when I get back. So I’m home free, for lunch that is.

Well wouldn’t you know, I spoke too soon. As I enter the office I see Danny standing there speaking with Laura and holding what looks to be some sort of giant lollipop. Danny is a local guy that owns a fairly large fabrication shop. He specializes in larger welding projects for chemical plants in the area, and primarily works with stainless steel. Danny recently got work from a local aircraft manufacturer, in one of those unfortunate “who you know gets the work” scenarios. He gets a good deal of work from this customer, and about a year or so ago started coming to me with any machining needs for these projects. Most of the work was not a good fit for us at the time, but I have become accustomed to a “do what ever comes your way” mindset in this economy. And most of it really isn’t that bad, just milling work, though a little large for our capacity, and low quantities.

Danny always needs it “right now.” I think he has no clue what it takes to precision machine a piece of 316 stainless that’s maybe 3″ thick and 36″ long. To top it off, he always waits until the last minute to get in touch with me, so it’s very hard to schedule. I’ve come to the conclusion that if you want to stay in business in this “new order” machining world then you need idle equipment. Ironically, you need everything else running wide open and pumping out parts as fast it can.

Those lollipops he brought in through me for a loop. Danny went on to explain that he’s in a jam. These 10 parts are hangers for the job we finished yesterday. They’re basically just ½” diameter 316 SS round bar, and they have a 6″ diameter eye rolled around the end. The shanks are 30″ long, and they need a ½-13 thread cut, 10″ of thread. Danny says, “No big deal for ya, I know you’s the screw machine guy.” “Danny!” I said, “why the hell didn’t you bring the stock over, let me thread it, and then you could have rolled the eye on the end?” Danny started, “I thought I could thread ’em with a die, you know, save me a little something for Christmas. Damn die couldn’t do nothing!”

Now you have to remember, we are in the South, and Danny is a hard-boiled good ole’ boy. You have to adapt to all kinds, and who am I to question his five-man shop with sales in excess of $5 million annually? Then he says he’s got to deliver at 3pm, (It’s now 12:30) and all hopes of that tuna melt have left the building with Elvis. “I’ll just wait on ‘em. I know you can knock ’em right out.” So I’m looking hard at this part. Bare with me now and visualize. An I-bolt, ½” in diameter shank, 6″ diameter eye, and over 3 feet long. I’m thinking, how the hell am I going to thread this? Not to mention doing it with one of my biggest pet peeves, a frickin’ studio audience!

By this time my lovely bride is in tune with my mental condition and softly offers to run up to McDonald’s and bring me something back. Okay, I’m running out of time, I don’t have a lathe with a large enough hole for the 6″ eye to sit in the spindle so I can thread, you know, spot a center, and hold with the tailstock, and single point. Obviously, I can’t cut the thread with a geometric head, because I can’t chuck up the part.

Then all of the sudden, while staring at my old girl in the back, (no, not Laura) the redneck rocket scientist in me kicks in. Who’s the old gal you ask? Well she is my old Warner & Swasey #4 turret lathe. She’s old, she’s green, she’s a ram type, and she’s not easy on the eyes, but damn she’s one of the most useful pieces of iron ever made. I quickly fasten the ¾” Geometric head in the 10″ Cushman chuck, I then move the turret saddle all the way back. I grab a ER-32 collet drill holder and fasten the part stationary through the turret hole and into the drill holder on the other side.

I’m thinking I’ll spin the Geometric head in the chuck and feed the part through, tripping the dead stop on the turret. I’ve never tried this before, but what choice do I have? Well, in about 30 minutes we had 10 beautiful ½-13 threaded 316 SS I-bolts. Danny said, “Damn I knew ’em screw machines could do it.” Whew, and another one bites the dust.

Later that night at home we were putting the final touches on the Christmas tree and my son and I were on the floor assembling my grandfather’s old Lionel trains around the tree. My son picked up an old switch engine locomotive, probably dating back to the late 1930s and said, “Look at all these parts in here Dad, all made in a machine shop.” And I could only think of Captain Billy Tyne of the Andrea Gail during her last voyage. I thought to myself, “That’s right Mike, you’re a machinist. Is there really anything better in the world?”

Question: I What was the best thing that happened to you this week?

Question II: Could you work with your wife?

Note: Do you have something to say and want a chance to be published? Consider writing for TMW. Email emily@todaysmachiningworld.com. 

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NBA Flunks Negotiating

NBA owner rep, David Stern, is getting blamed more and more for the failed NBA negotiations.

One of the more interesting parts of attempting to teach my son Noah the art of business concerns negotiating. It’s a topic of enduring interest because there is seldom a day when I don’t negotiate with somebody−a client, an employee, or a partner.

Lately, I’ve been reading the accounts of the messy negotiations between David Stern, who represents the NBA owners, and Billy Hunter, who speaks for the players union. From an outsider’s perspective it appears to be a botch for both sides, with everybody involved losing big−except the lawyers.

What I try to teach Noah and continually relearn myself is a lesson I learned from my father and uncle. “Always let the other person feel that they’ve won, because the relationship is more important than one deal.”

The reality is that often there is only one deal to be made with a particular client, but that really isn’t the point. You never really know when you will meet up again, but each deal helps establish your reputation in the wider world, and teaches you lessons.

As I talk to machining firms these days I am regularly hearing that big company buyers are now negotiating with the mindset that good suppliers are scarce assets, not interchangeable widget makers. The balance of power in the supply chain world has changed over the last year and the shrewd buyers of machined parts have recognized it.

One of the most important aspects of a negotiation is how time plays into it. We are watching that play out dramatically right now in the NBA talks because players have now missed their first big paycheck of the season, agents are missing out on rookie signings, and the owners are staring at a cancellation of the entire season.

When I negotiate a deal I always try to ascertain the time requirements of my potential buyer and withhold my own needs from him. By talking to a client frequently, not only can I often discover his time restraints but I can also build a mutual investment in working out a deal. One of the drawbacks of email negotiating is that it removes that feeling of personal investment in a deal and tends to make it seem like it’s all about the money.

From my experience, money is just one factor in most negotiations, and often not the most important one. In my reading about what’s going on now with the NBA, a deal was within reach, until the owners pushed the players into a corner on peripheral issues like random off season drug testing, which energized a weak, disorganized, even apathetic group of players into an angry opponent. David Stern evidently misjudged how far he could push. It’s okay to leave money on the table, my Dad told me and I say to Noah. “Does the deal work for us?” is question number one. But the important corollary is, “Can the other person feel good about it, too?”

The great negotiating mavens such as Herb Cohen argue that you should plan your moves ahead and know your own bottom line. I adhere to this idea in theory, but I believe you also need to be creative and improvise because there are crucial moments in a negotiation that you can’t afford to miss. This is when the active listener can pick up on cues about the time needs of the opposing party to conclude a deal. If the big moment is missed the deal that was makeable can go away.

I often go home and tell my wife that I am frustrated about deals that keep sliding away. She’ll say that it probably doesn’t have anything to do with you. Be patient, it will come.

Sure.

Sometimes it does.

Question: Do you care if the NBA season is canceled?

Question 2: If you could choose between deer hunting and going to an NBA playoff game which would you pick?

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Why is my business so good if the economy is so bad?

CBS news announced in January that Austin, Texas, leads the U.S. in job growth and CNN has it in its list of the 10 fastest growing cities

I attended the Precision Machined Products Association’s annual meeting in Austin over the weekend. The question I heard often was, “Why is my business so good if the economy is so bad?” Unfortunately the speakers hardly addressed this topic, so I will try to explain it.

1) Structural changes in the world economy now favor American manufacturing. A lot of businesses have gone away in the last 10 years. They’ve closed, moved to China, downsized, gone bust, or merged—and not much has started up in the last decade and a half. Manufacturing was downsizing in the ’90s but it was masked because of the Internet and telecom boom.

2) Automotive is coming back, but we mistakenly think of automotive as just GM, Ford and Chrysler—American vendors are doing a lot of work with Toyota, Honda, and Mercedes, too. High yen and Euro values relative to the past make America a low cost producer.

3) Relentless productivity advances in manufacturing makes for better margins. The press mistakes “restructuring” and cutting people as indicative of bad business. It may be the reason for continued good business. Head count and profits no longer rise together and even the Wall Street Journal misses it.

4) Contrary to popular opinion we are starting to get better young people to join manufacturing. Old people always think the younger generation is shiftless and inept, but I think that the notion that you cannot recruit capable new people is obsolete in this labor climate. Nonexistent desk jobs no longer look appealing next to $80,000 machinist jobs with benefits.

5) China is struggling to compete—wages are rising 15-20 percent per year, the workforce turns over constantly, there is a shortage of skills, and high-energy costs. The realization of what it really costs to make things in China with the travel, logistics, and quality issues has made outsourcing to China less attractive for American firms.

6) Innovation. If you look at big companies like Apple, Cummins and Amazon.com you see that America still has game. Add the brilliance of our farmers and the revolution in oil and gas production with horizontal drilling and you see a core economy that is thriving and world class, but one does not necessarily hire unemployed 56-year-old bankers.

All of this does not mean that Europe is not a mess and that retired Chicago teachers are going to get the pensions that were promised them for the next 50 years. The world economy is in the throes of a nasty restructuring not that different than what American manufacturing has gone through for the last 15 years. I like our odds. I wouldn’t bet on the French though.

Question: Do you feel optimistic about 2012?

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Starbucks Betrayed My Wife

By Lloyd Graff

Call it the frap flap but Starbucks is pulling the New Coke.

Evidently the Buck is feeling the pain from McDonald’s competitive and cheaper McCafé, in tampering with one of its most successful products, the beloved Frappuccino. My wife Risa was addicted to the mocha, light, double blended Grande Frappuccino with easy whip. Along with the shortbread cookie it was the break in her rigorous workday that usually goes to 8 p.m. (The shortbread replaced her former staple, the Rice Krispy Treat, after Starbucks ruined that by taking out the Trans Fats a few years back). The baristas at our local Starbucks all knew her order and started making it when they saw her approaching the store. If I came in they asked me if I was there for the Missus.

And now they’ve ruined it. According to Risa the new process using pumps is so inconsistent they’ve lost her recipe and cannot seem to recover it. From store to store the variance is enormous. I would compare this to McDonald’s using different hamburger grinds and ketchup at each store.

Fast food depends on consistency. White Castle makes the slider the same way everywhere, and Wendy’s chili is always reliable. A Frappuccino is not a Domino’s Pizza, which was so uniformly awful everywhere that it begged for a redo.

Risa is appalled. She’s furious. It is a topic of conversation daily. She feels like she’s been robbed of something dear to her without warning. She says she beat the New Coke debacle by buying cases of old Coke ahead of time. But there is no old Frappuccino to be had.

Starbucks you were stupid. Let’s see how long it takes before you realize it.

Question: If you were Starbucks CEO Howard Schultz what would you do to compete with McDonald’s?

From Blog Will Starbucks Die soon?

From Blog Will Starbucks Die soon?

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Do you really want to be the boss?

By Lloyd Graff

Brian Capece has a five person shop in rural Maryland. He does wire EDM and precision machining for aerospace, satellite, medical and commercial clients, often working 65 to 70 hours a week. His wife runs his office now that his two children are in school. He’s been doing this for 10 years, since buying his first die sinker at an auction.

It’s been a rough year for Brian. He says he used up his cushion of money to keep the business afloat while not letting any of his people go, because those core employees are the key to his business and if he lost them he would be in the soup.

He is finally back in the black but wonders if the path he has taken for the last decade was the right one.

“After going to the tax man this year and seeing how much I had to pay, I really think I would have been better off working for somebody else than having my own business,” he told me.

His comment was not said out of anger or great regret, but I wonder how many people feel the same way—for the same money and less risk, they’d just as soon pull down a paycheck than sign all the checks.

Question: Do you think you would be happier owning your own company or being a well compensated, valued employee?

Michael Scott from The Office

Michael Scott from The Office

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