Category Archives: Business

Betting on Yourself

I think I can learn something from anybody. I think there is a lot to be learned from James Holzhauer who has won $1,691,000 on Jeopardy and is still going strong.

I don’t watch the program, but I have seen it on occasion and remember Rosie Perez in the movie White Men Can’t Jump prep for the show like her life depended on it, hoping for her chance to make a big score. It is a quiz show competition with a betting component which is the perfect combination for James Holzhauer, a 35-year-old Chicagoan who is a trivia champion, math whiz, fast-twitch buzzer, and professional sports better.  He is the archetype of the Jeopardy savant that Rosie Perez dreamt of becoming.

His winning approach naturally depends on his breadth of knowledge and quick-twitch ability, but what sets him apart is his aggressive and unconventional strategy. James starts with the most difficult questions, trolls for Daily Doubles, and bets boldly, often risking his earnings in an effort to quickly put away his opponents.  He knows he is on a streak and so do most of his opponents, which gives him a big psychological edge.

His mantra is “all I have to lose is money,” and he knows he’s the smartest dude on the block, so he continually overwhelms his tentative opponents no matter how skilled they are.

I think there is a lot to be learned from Holzhauer.

I love his confidence and boldness. He believes in himself and that is vital to be a consistent winner. Intimidation can be a huge factor in sports and business. It does not have to go with obnoxiousness. You know when your opponent knows in their heart of hearts that they are going to win.

What really sets James Holzhauer apart is his audacity, his calculated chances in the betting.

In my own business career I have usually been cautious. My son Noah delights in questioning most of my business decisions, often challenging me for hedging my bets. Having seen a million things go wrong in my long business career I have good reason to be cautious, but I know I can learn from the aberrant tack that Holzhauer takes to bet big when he thinks he has superior knowledge.  This is how you win in sports betting and Jeopardy and probably in business over time.

A fascinating complement to the James Holzhauer story is the spotlight on Alex Trebek, the host of Jeopardy since its inception.  He is battling pancreatic cancer at the same time he is hosting the show and pulling in big ratings. Alex is showing supreme confidence in himself as he does five shows in a taping session while dealing with chemotherapy.

My hope is that he and James keep charging boldly into the dark nights of uncertainty.

Question: What is the best bet you’ve ever made?

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To Spray or Not To Spray?

By Lloyd Graff

I am in the process of making a lot of changes in my surroundings. The axiom used to be that as you get older it gets harder to change, but I don’t find that to be true. Seeing friends and associates get sick and die makes it easier because I want to sandwich more stuff into my life while I still can. If I have the energy and the money to replace the old appliances in the house and sand the floors and paint the walls I want to do it now.

The redo in my house has nothing to do with enhancing its value. Where I live home prices have stagnated for 30 years. Whatever money I’ve spent is an investment in happiness, not appreciation. Maybe that is the ultimate value play, anyway.

This year I’m spraying the apple trees on the Graff-Pinkert property. They have a fungus on the bark, and last year we lost the entire crop. This year I hope to see a big crop of tasty, red Jonathan apples in September. Is it an economic judgment to spray? Hardly. It is all about the fun of picking and eating the fruit.

I think of all the money I have sunk into my warehouse over 35 years. Recently I spent $10,000 to remediate moldy walls and drywall. It was an investment in health, but it really brought me no joy. Of all the investments I have made in the property the one that undoubtedly has brought me the most pleasure is paying a young artist, Mike Eisenwasser, 15 years ago to paint a mural on the side of a 40-foot container next to my warehouse. I see it every time I drive onto the property and every evening when I leave. I look out on it during the day. It is colorful and symbolic. It tells a story that gives meaning to my life and work, of connecting people through commerce and writing. It gives a visual voice to how I feel about my work.

used machine business graff pinkert with apple treesI think the value of art and storytelling is really undervalued in manufacturing businesses. People like to work in pleasant surroundings. I think customers often want context for what they are buying, whether that is in a story on the website, a sales person embodying the product, the packaging of the material, the voice that answers the phone, or the follow-up or apology for mistakes or delays.

The people who think everything in business is by the numbers are wrong. Decisions often are not clear cut in business. If it is a close call the winner is usually the one who is considered the most reliable or easy to work with or caring.

I imagine lots of folks are bewildered that Noah and I spend so much time on stuff that may seem frivolous and frothy to the community we serve. From a financial standpoint Today’s Machining World and the podcast are hardly great investments in time and energy. But Noah and I view ourselves as storytellers and artists. We do this work because our creative souls long for expression. It gives us joy to reach out to the thousands of people who connect with us frequently or once in a while.

I think the connections we make do ultimately bring us customers but that is not the purpose of this investment. We do it because we love to do it. We do it because we almost have to do it.

Question: Can you justify epoxying a factory floor?

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Machining the Fair Way

Francesco Molinari, the Italian professional golfer who has entered the top tier of pros who are factors in every major tournament, led by two strokes going into the final round of the Masters Sunday.

I have followed Molinari with more than a casual interest of late because he has used a putter made by a 90-person job shop just down the road from Graff-Pinkert in Tinley Park, Illinois. I met the owner, Bob Bettinardi, at IMTS. We were both resting our bones for a few minutes next to the Universal Robots exhibit, and we talked a bit about CNC mills and his putters business, which has evolved from the job shop that was its origin.

Bettinardi had a golf shirt on with Bettindari Golf’s logo. He has built a product with worldwide reach out of a small Haas mill shop.  This is the dream of so many independent entrepreneurs in our machining world who long for the margins and stature that come from a world-renowned product.

Bettinardi’s branded putters sell for $300-$400 for a club similar to the stick Molinari used to win the British Open at Carnoustie last year.  He also makes an $800 putter with a copper insert.

For a shop running VF-3 Haases with less than 100 employees, Bettinardi is playing in the big leagues with Callaway Golf and Mizuno dominant in the golf club world. It appears Callaway lured Francesco Molinari away from Bettinardi this year though Matt Kuchar, still a prominent pro, and many other up-and-comers are still using the Tinley Park shop’s putter.

Francesco Molinari's former Bettinardi Putter

Francesco Molinari’s former Bettinardi Putter

A Bettinardi faces a daunting challenge going up against the Callaways of the golf world. They have enormous marketing budgets, and a putter’s design can be easily copied. I do not believe Bettinardi has a patented putter. He has to make a product that pro golfers adore, convince them to stay with it for years, and hope his devotees win big tournaments to popularize his sticks. A company doing maybe $20 million a year in sales can do the golf shows and hit the big retailers, but it is always an uphill battle against the Callaways who have constant exposure in the equipment market and have their name on half the golf bags on the pro tour.

This is why small, closely held family businesses like Bettinardi Golf sell out to the behemoths. I do not know if Bob will sell out or if Callaway, with a market cap of $1.6 billion, will eventually crush him by stealing away all the Molinaris of the golf world when they get hot.

As an independent observer and former mediocre golfer, I hope he keeps milling fantastic, elegant putters in Tinley Park, Illinois, and selling them direct on Amazon for $399 a pop.  I’d like to see him buy a dozen more Haas mills and put “Made in USA” on every lovely club he makes.

Maybe today Francesco Molinari will wonder if he could have beaten Tiger Woods at the 2019 Masters if he had had the Bettinardi in his bag.

Questions: 

Is there an even playing field in the machining business?
Has Haas helped even the playing field?

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Swarfcast Ep. 36 – Ben York on Taking the Art Out of Machining

By Noah Graff

In today’s podcast I interviewed Ben York, an inventor and consultant for machining companies. I met him at the 2019 Precision Machining Technology Show where his company, Theory 168, was presenting his Perfect Zero Alignment system. The system uses a camera installed in a CNC machine to set work coordinates and align and set tooling (see demonstration video below).

Ben said his mission is to “take the art out of machining.” He wants machining to be easy enough so people can do it even if they don’t know the “tricks of the trade.” In the podcast Ben talks about his process of inventing his new product and starting a company in the machining field.

Listen to the podcast below the video.

Question: Is machining an art form?

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Machining Show Business

I attended PMTS, the exhibition put on by the Precision Products Association last week, not really to sell screw machines, but to learn and connect. Accomplishing this goal gave me a satisfaction and closure that I’ve never felt before at a show. Here’s the crux of what I learned.

This was the happiest crowd I’ve ever seen at an event of this type. The endless mope of the last recession finally has drifted away.  Nobody mentioned losing work to China which was a theme for so long. The prevailing vibe was that big companies are finding China a scary place to make large bets. Costs are converging with America finally, and production mistakes and logistical headaches make China a wash as far as costs go. The Trump tariffs cut both ways as far as competitiveness is concerned, but they do emphasize the uncertainties of depending on a competitor for crucial production. “I’ll make it in China,” used to be an automatic response by large corporations to a production requirement. Today it isn’t. This does not mean a torrent of work is coming back, but it is more than a trickle. The major point is that the gutting of American manufacturing has ended, and the mood of suppliers has changed to positive.

Another nonissue for PMTS participants was the worker shortage. In three days of connecting with participants I never heard it mentioned. My sense is that owners and companies are adjusting to the employee scarcity. Interest in robots is keen for the dumb jobs that used to require thoughtless loading and unloading. Robotics programming and training is a hot category. Recycling 5- to 10-year-old refugee robots is getting to be an important business category.

Lloyd, Noah, and Rex at the PMTS 2019 Graff-Pinkert Booth

Lloyd, Noah, & Rex at the PMTS 2019 Graff-Pinkert Booth

The large number of young people attending makes me think they are starting to get intrigued by interesting factory work and becoming disenchanted with piling up debt in four-year collegiate programs. I also saw more women who have moved into shop floor work and supervision. It is still a piddling percentage, but growing.

I found it odd that the machine tool behemoths like Mazak, DMG-MORI, Okuma, and Doosan chose not to display. They seemingly blow millions of bucks on IMTS and then claim poverty for off-year shows like PMTS. This leaves the field open for specialty builders to make a big pitch for capex budgets.

Davenport made a splash with their CNC multi-spindle. Many old Davenport folk gasped at the $345,000 price tag, but compared to European 20mm multis the price looked provocative. They sold two the first day.

All of the Swiss CNC folks showed except Tornos. The field is crowded, with Citizen, Star, and Tsugami hogging most of the market.  Citizen folk were beaming as they were coming off their best year ever, their fiscal year having ended just a few days before in March.

Reflecting the boom in Swiss sales, Kevin Meehan of Edge was ebullient about his past year, selling record numbers of FMB and Taiwanese bar loaders and hiring the staff needed to get them out the door and install them.

Yet this was not a crowd of people jumping for joy and putting up new factories. The folks I talked to were pleased but not complacent. Nobody wanted to talk politics, which was not the case during the later Obama years. OSHA was never mentioned.  People wanted to buy stuff, update, improve, but not add square footage. They wanted to buy shops to get customers and employees, not bricks and roofing. It was a Midwestern crowd, an increase over previous years in Columbus, Ohio. I think that was not an indictment of Columbus, but a reflection of happier times and greater convenience.

Hopefully the 2021 PMTS will show similar trends and even greater optimism.

Question: Do you still go to trade shows? Why?

 

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Swarfcast Ep. 35 – Graeme Sinclair on Precision Machining in Australia

By Noah and Lloyd Graff

In today’s podcast we interviewed Graeme Sinclair, owner of Parish Engineering, a prominent precision machining shop in Australia. Graeme has been in the machining business for 60 years, since he served his apprenticeship at age 14.

In the interview Graeme discussed the challenges faced by machine shops in Australia verses the rest of the world, his eclectic taste in CNC machines, and his passion for the game of squash. Sinclair explained that one reason he has many different types of equipment is that automotive companies have shut down their operations in Australia, meaning a lot of high volume work has disappeared.

Question: Would you like to move to Australia?

Listen to the podcast on the player below.

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Swarfcast Ep. 34 – Ed Crowley, Master of Insert Tooling

By Noah Graff and Rex Magagnotti

On today’s podcast we interviewed Ed Crowley, owner of Crowley Tool Company, a company that specializes in making custom insert form tools and quick change tooling packages for the precision machining industry. Ed explained in detail how his company has developed modular tooling that an operator can change on the fly, which can reduce set up time from days to minutes.

He admits that the marketshare for form tools is shrinking as the cam multi-spindles have lost favor, but he thinks that his products will stay relevant for the foreseeable future.

Question: Are you replacing your form tools with quick change insert tooling?

Listen to the podcast on the player below, or go to swarfcast on your favorite podcast app such as iTunes, Stitcher, or Google Podcasts.

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Book Review: Merchants of Truth

By Jerry Levine

Just as online shopping has transformed U.S. retail sales, the Internet has also remade the newspaper industry, but in a manner less obvious to most people. The old print newspaper business and revenue model has been seriously broken by young upstarts—young both in age and in technology. In Merchants of Truth: The Business of News and the Fight for Facts, Jill Abramson, a former senior editorial executive at both The New York Times and The Wall Street Journal, has provided an insider account of an industry fighting for its life. She examines four competitors—the traditional New York Times and Washington Post, and two digital upstarts—BuzzFeed and Vice.

The generational gap among readers of the traditional papers and the upstarts is astounding. The median age of subscribers to the Times or Post is over 60 years old. Whereas, people under 35 get most of their news online. The old system relied heavily on an extensive world-wide staff gathering and reporting stories. The new news organizations like BuzzFeed rely heavily on a small staff gathering online information from various sources, mainly Facebook postings, that then is consolidated, edited, and reposted. What is news is no longer determined top-down by an authority like Walter Cronkite or The New York Times. On the Web, the audience establishes its own priority. The readers become the publishers. Or, more sarcastically, the inmates are running the asylum.

Similar to BuzzFeed, Vice built its business on the back of YouTube. To quote Vice’s founders, Shane Smith and Spike Jonze, “The video site was overflowing with amateur uploads and bootlegged clips. To attract a young audience, stories were told from the street level by people with absolutely no training in news.”

The traditional newspaper model was broken both on the content side as well as the business side, and newspapers were very slow to see it coming. New York Times editors clung to the notion that their new website would merely be a superficial resemblance of their existing print paper. But news and opinion sites like the Huffington Post and Drudge Report were already siphoning off its reporting, digital advertising, and audience.

Other websites were destroying the traditional newspapers’ classified ads, which had accounted for millions of dollars of revenue. Craigslist lured away “for sale” ads, and Monster.com or Jobs.com grabbed the “help wanted ads.” Travel and auto ads were hammered by Expedia and Autotrader. Local ad revenue also declined as local department stores and businesses closed, due to online shopping. The Washington Post was especially hard hit because classified ads made up 40% of its revenue. Additionally, local papers supported by The New York Times and The Washington Post have been either gutted or closed, depriving many rural and suburban readers of local information, like high school sports.

As profits declined, both papers began extensive cost cutting. The stock price for The Washington Post fell from about $1000/share to under $400/share. It needed a huge cash infusion to avoid going bankrupt. The Graham family proposed selling to Amazon founder and Chairman, Jeff Bezos, based on his Internet expertise. Bezos had three essential questions: 1) Was the Post still an important institution? 2) Could he be optimistic about its future? And 3) Did he have the technical knowledge to reverse the paper’s downward spiral?

He finally concluded yes to all three. Katherine Graham came back with a $250 million proposal and Bezos accepted. Fortunately for Bezos, shortly after the purchase the paper broke the Snowden/NSA story. This gave a short-term boost in readership, but also answered the first of Bezos’s questions: the paper was still relevant.

The Times was also hemorrhaging money, and needed a White Knight. Carlos Slim, the richest man in Mexico, came forward with a $200 million loan at 14% interest and the right to buy 16 million shares (about 17% of the company) at $6.36/ share. (As of this writing, NYT stock is selling for about $32/share and are servicing the loan. Slim made quite a good deal.)

In the near term, both The Washington Post and The New York Times seem to have survived the ferocious waters of the digital revolution. Before Trump, but especially after Trump, both papers moved further to the left in both their editorial positions and their news reporting. They are regularly attacked by the President as “failing” purveyors of “fake news,” with minimal impact on their readership. They have revised their websites to include more news updates and videos. They are still relevant, but need to explore additional revenue streams to maintain financial stability. Most important they need to worry about their aging demographic.

Question: Where do you get your news from?

Jerry Levine is a former chemical engineer, political expert, and frequent contributor to the Today’s Machining World website. Check out our interview with Jerry on Swarfcast Episode 18: Jerry Levine on Why Global Warming is Not a Problem.

 

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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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