Category Archives: Business

Guilty Parts?

For many years, I have wavered between being judgmental or agnostic about who I do business with. I felt twinges of discomfort twice this past week.

I had a request for a quote on a Wickman multi-spindle screw machine from a customer who, among many other products, makes accessories for AR-15 semi-automatic weapons. He told me business is robust and they have tripled in size in recent years. He could buy a Wickman multi from someone else (it won’t be as good), but it is in my economic interest to sell him one if he will pay my price and meet my terms.

I felt chills down my spine last Friday when the news hit about the massacre at the mosque in Christchurch, New Zealand. As in most terrorist attacks such as Parkland and Tree of Life, the perpetrator used an AR-15 semi-automatic weapon.

Would I be a guilty link in the supply chain if I sold a spare part for a screw machine that could have made a component for an AR-15 that had a remote possibility of being used in a terrorist attack? Is it my obligation to give a sniff test to every email inquiry for a machine or screw or bushing? If the inquiry is from Turkey, do I have to check if they support Erdogan or Assad in Syria?

What about Purdue Pharma, and the fabulously rich and highly philanthropic family that controls it, the Sacklers of Connecticut.

Purdue makes OxyContin, fentanyl, codeine, and a line of ADHD drugs. OxyContin is the most prescribed pain controlling drug in America. It has made the lives of millions and millions of people more tolerable during chemotherapy and after surgery.  For most users it is a marvelous drug, but for a significant minority of people who become addicted to it, OxyContin can be an agent of hell.

Purdue Pharma is under constant scrutiny. Its officers have paid hundreds of millions of dollars in fines, and some have served a small amount of jail time. But the company keeps on making OxyContin, doctors keep prescribing it every day to patients who desperately need its pain reducing power, while the Sacklers get richer and keep giving away millions.

If you run an art museum, a seminary, or a hospital, do you tell the Sackler Foundation you do not want their OxyContin tainted money? Do you tell the doctors not to prescribe it when patients are in bone throbbing pain? If you make parts for the pharma production line that produces OxyContin in Wilson, North Carolina, do you opt out of the supply line and allow an Indian supplier to step in?

I am not a total agnostic on these issues. I am willing to sell a screw or bushing to the company that makes AR-15 accessories, yet I want to know what a Wickman screw machine is supposed to make before I sell one to an inquiring company. Hunting supplies are okay with me, and ammunition for the Army and target shooting is fine. AR-15 bump stocks are not okay for me.

Am I a hypocrite if a sling for an AR-15 is okay, but a bump stock is not. Am I so far down the supply chain that my screw and bushing are inconsequential? In business, we make these kinds of decisions every day.

How do you deal with such questions, or do you just ignore them? If you ran a charity, would you take the Sackler’s OxyContin money to do good works?

Question: Would you produce parts that go in AR-15s?

 

 

 

 

 

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A Shop Doc Question

Dear Lloyd – I read all of the issues of Today’s Machining World and really enjoy the insight and information. I’m a 62 year old journeyman tool and die maker who morphed into a scientific instrument maker, designer, manager over the last forty years.

In my current position, I am running a CNC department for a 100 year old family business. I’m helping the fourth generation to go another 100 years. The company started as a tool and die shop, moved into manufacturing (almost a captive shop for Western Electric Hawthorne Works), stamping, forming, laser, waterjet, and is now working in CNC machining. We do mostly small lot aerospace work. Right now, I am saddled with a problem I have never encountered.

Question: We need to put a #2 Philips feature on a custom screw on about 300 screws. I don’t think that cold heading is an option due to the material and tolerances. Other than sinker EDM, I don’t know how to make the feature. Do you have any ideas? Any thoughts would be appreciated.

We want to bring back the Shop Doc feature as a frequent part of Swarfblog. Please write us if you have a thorny job you could use help with. lloydgrafftmw@yahoo.com

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Swarfcast Ep. 31 – Ken Mandile, Employees Are Buying His Business

By Noah and Lloyd Graff

On today’s podcast we interviewed Ken Mandile, founder of Swissturn, a successful CNC Swiss machine shop in Oxford, Massachusetts. Ken’s children are not interested in taking over Swissturn when he eventually retires, so five years ago Ken began restructuring his company into an employee stock ownership plan or ESOP, in which he will gradually transfer ownership and management to his employees.

Scroll down to listen to the podcast.

Before going the ESOP route Ken turned down two lucrative buyout offers from private equity firms. Ken reported that after the first year of restructuring as an ESOP, the value of the company increased by 51%.

Question: Would you want to work at an employee-owned business?

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Plumbing Brass is Sweet

In the machining world, plumbing products are a sweet spot again because even though new home sales are drifting, the rehab/refurb market is thriving. Faucets are fun again. Hot tubs are hot. India is big in plumbing brass, but a lot of its product goes to Asia, Africa, and South America. If you want quality at an affordable price, you buy American.

For me, this brings up many memories of Price Pfister. They used to make a million faucets in Los Angeles and had a name for quality in California. That was until they shut down all of the American production of brass goods and moved production to Mexico and China.

Pfister is now part of Spectrum Brands, based in Madison, Wisconsin, which owns Rayovac batteries, plus several pet care companies including Dingo and Lazy Pet, and makes insect repellent. Last year, Spectrum merged with another holding company called Harbinger, out of Rochester, New York. The Price Pfister that Izzy Familian ran successfully for so many years in LA is now a little piece of the Home Depot and Walmart supply chain.

Price Pfister’s real estate in LA would be worth a fortune today. The New Britain screw machines they ran hard have fanned out over the country or were scrapped. Could Price Pfister have survived in the US? Maybe if they’d moved to Nevada and invested in their people and equipment, but holding companies have no interest in people or continuity. Manufacturing is fungible. If Mexico isn’t working, move it to Shanghai. If Shanghai is a problem, Chennai in India is welcoming. Personally I think with commitment to quality and innovation, Price Pfister could have made it in America.

Question: Could Price Pfister have made it in America?

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Ceiling of Complexity

I took a quarterly seminar many years ago taught by Dan Sullivan. It was aimed at entrepreneurs and focused on how you could grow your business and enhance your life through planning and simplification. One of Dan’s catchphrases that I go back to frequently was, “reaching your ceiling of complexity.” As I entered the library this morning to write this piece, that line struck me between the eyes.

I realized that I was bumping my head against that “ceiling” that felt five feet high at that moment. I had attempted to write this blog three times in three days and hit a blank each time, something that rarely happens to me. My head was definitely bruised from bopping into that low ceiling. Why now?

A few days ago, Noah and I attended the Precision Machined Products Association annual Management Update Conference. There were more than 150 people at the event, many of whom I had known for decades. A lot of younger people attended too, which is a sign of vigor and optimism in the industry. The focus of the meeting was on change and the ability to build a foundation of relationships and culture which would enable a business to weather the inevitable ups and downs of being in the game.

Lloyd experiences deep thoughts on buying and selling machining businesses.

Underlying the topics was the tough reality of people nearing what they deem to be “retirement age” struggling to exit the industry and businesses they have loved and prospered in all their lives. How do they exit gracefully with the gains they have made? To whom do they sell the businesses or pass them on? Quite a few people are now asking me to help them in this process, and the emotional investment for families in the center of these decisions is heavier than I expected.

I’m not playing with the private-equity boys who are all about the numbers. The EBITDA, accounts receivable, and the viability of the customers is their only focus. It simplifies the game for them. For me, it is the people, their life’s work, more than just the money that is the magnet, and that’s what makes everything so damn complicated.

Selling a business is a quantum leap more complicated than selling a Wickman or a Nakamura. More emotions, more family input, more tugs and eventually hugs. It shouldn’t have surprised me, but it has. Knowing the buyer and seller by their first names is a blessing and a curse. The beauty of selling machining businesses is that I’m invited into people’s lives in a profound way. It gives me a purpose akin to the purpose of writing a blog aimed at the people in this industry.

The deals I’ve been working on are much more complex than selling one machine or buying a package of machines. When somebody is buying a business to gain access to contractual relationships and may encounter erratic income streams, the deal is constantly in flux. The broker becomes an interpreter of facts and feelings on both sides of the transaction and sometimes has to soften the emotions on both sides to keep things on track. My ceiling for complexity rises and falls with the vibes of each deal. I find the process exciting and exhausting at times. I think I’m getting better at it, but occasionally the ceiling is a little bit tight.

Question: How do you simplify your life?

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Swarfcast Ep. 28 – Bryan Batten, Mechanical Psychologist

By Noah Graff

On today’s podcast, I interviewed Bryan Batten, CEO of Palmetto Precision Machining, located in Anderson, South Carolina. Palmetto Machining is a precision machining/fabrication shop specializing in tooling and automation for the automotive industry. Bryan, who jokingly refers to himself as a mechanical psychologist, discusses the difference between working with automotive companies in different countries, his experience purchasing a machining company, and the manufacturing boom in the South.

Question: Do you have a machine that should go to a shrink?

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Swarfcast Ep. 27 – Dave Thuro on Growing a Machining Business (Part 2)

By Noah and Lloyd Graff

Today’s podcast is Part 2 of our interview with Dave Thuro, second-generation owner of Thuro Metal Products. In this episode, Dave discusses his growth philosophies. He believes in aggressively acquiring as many job opportunities as possible, but then saying no to most of them. The company tries to acquire at least two long term accounts per year that will bring in monthly sales of $50,000 to $100,000.

Scroll down to listen to the podcast with Dave Thuro.

Dave also discusses his hiring practices. He believes in hiring the majority of his employees at the entry level and training them from within the company. The company’s 56 person workforce happens to be 50% women.

Question: How does your shop go about acquiring new clients?

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Swarfcast Ep. 10 – John Griner, Twists and Turns of a Hydromat Shop

By Noah and Lloyd Graff

Scroll down to listen to the podcast with John Griner.

In today’s Podcast we interviewed John Griner, founder of Griner Engineering in Bloomington, Indiana.

John has been cranking out turned parts for the last 40 years, and since the ‘90s his bread and butter has been the legacy Hydromat business.

He’s a renaissance man. He studies philosophy, flies planes and has played the guitar for 50 years. He has had 34 different startup businesses as diverse as centerless bar stock grinding, cold forming, video production, and an exotic animal business called “wild things.” But in the end, the one that always stuck was the multi-spindle/Hydromat business.

John Griner in New Orleans

We talked to John about how his machining business has evolved over the years. He started running single spindle screw machines, graduated to cam multi-spindles, then added Hydromats and finally introduced modern CNC turning equipment into the mix.

John talked with us about how he copes when deals go bad, how he finds good employees and why he prefers not to drug test in his shop.

Question: Is a strict drug testing policy a necessity for a successful machine shop?

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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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Swarfcast Ep. 6 – The Mind of an Auctioneer with Robert Levy

By Lloyd Graff

Scroll down to listen to the podcast interview with Robert Levy.

In today’s podcast we interviewed Robert Levy, longtime industrial auctioneer and owner of Robert Levy Associates, a firm that consults with companies looking to monetize their industrial assets.

Robert joined his family auction business, Norman Levy Associates, in 1980 but only had the opportunity to work with his father for three years. He and his brother continued to grow the company until finally selling it to DoveBid (now GoIndustry DoveBid) in 2000 for $30 million. He stayed on the board of directors at DoveBid but then parted ways four years later, dissatisfied with the direction of the company, which many unhappy former Norman Levy Associates employees had already quit.

At the end of the interview Robert said, “I’ve been in the business 40 years and I’ve been in three companies, and I would still like to be in the one I was at originally.” It was an interesting comment, but my bet is that Robert doesn’t regret his life’s journey from stand to stand.

Robert Levy of Robert Levy Associates, Inc.

Sometimes you have to burn down the old to grow and thrive, and if nothing else just survive. Sometimes the clear choice is to sell out to a competitor or private equity firm. Or, you hire someone like Robert to help liquidate your assets that are not giving you what you need anymore. Then go build something new and great.

You still get to keep your fond memories of the past.

Question: Does bidding in an auction excite you or make you crazy?

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