Category Archives: Sales

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?

Share this post

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?

Share this post

Is Toyota the Microsoft of Car Companies

Software Malfunction. This photo has nothing to do with the story.

By Noah Graff

My boss, one of my favorite free thinkers in the world, asked me the other day whether Toyota is today’s Microsoft of the car industry.

It felt like a ludicrous question. I hate Microsoft products (I’m a Mac guy all the way), and I’ve always enjoyed driving Toyotas. Well, at least my parents’ Avalons and my 1997 Lexus ES 300, which has 175,000 miles on it.

So what was the thinking behind this analogy? Toyota like Microsoft has become the largest seller of products in its sector in the U.S. market. It appears as though Toyotas have gained such a reputation as the benchmark for quality and reliability that the company has grown complacent in keeping up its highly touted standards. As the world has seen in the last week, the cars have their share of bugs, which has always been a trademark of the Windows operating system. Because Windows’ has minimal competition in software it has been able to get away with mediocrity year after year.

But is comparing cars to computers really “Apples to Apples”?

When I googled “Toyota and Microsoft” I found a brilliant blog written back in 2006, called none other than “Toyota Vs. Microsoft.” The following is an excerpt:

“At a recent computer expo (COMDEX), Bill Gates reportedly compared the computer industry with the auto industry and stated, “If Toyota had kept up with technology like the computer industry has, we would all be driving $25 cars that go 100 miles to the gallon.”

In response to Bill’s comments, TOYOTA issued a press release (perhaps fictional) stating:

If Toyota had developed technology like Microsoft, we would all be driving cars with the following characteristics:

1. For no reason whatsoever, your car would crash twice a day.
2. Every time they repainted the lines in the road, you would have to buy a new car.
3. Occasionally your car would die on the freeway for no reason. You would have to pull to the side of the road, close all of the windows, shut off the car, restart it, and reopen the windows before you could continue. For some reason you would simply accept this.”

There are several more on the blog but you get the picture.

It was a brilliant comeback for Toyota back in 2006. But these days Toyota isn’t doing much snickering.

Question: Is Toyota the Microsoft of cars, and are Ford and GM now Apples?

Toyota Adds Prius to Recall

Share this post

A CAM Operated Davenport in a CNC World

Last month I wrote an article about the death of Automatic Machining, in which I ended the piece with a reference to the magazine being a CAM operated Davenport in a CNC world.
Bob Brinkman, owner of Davenport, took umbrage at my comment. I am taking a moment to answer him.

Bob,
I love you and I love your product. My father made a lot of money running Davenports in World War II with the assistance of your father, Earl.
But sadly, today, the world of machining tends to look at your and my beloved Davenport automatic as a noisy representative of a bygone era. Right or wrong, the market for used Davenports, the world I live in, is in shambles. My brother Jim, my partner in our used machinery firm, Graff-Pinkert, attended an auction last week in Rhode Island and saw nice, operable, used Davenports with attachments sell for $250 each—and he passed on them. We recently traded our stock of 21 used Davenports for Maglites because we could not find a cash buyer. I know that your machines are still wonderfully productive pieces of equipment, but the market today is telling us bluntly that they are no longer valued by many buyers.

As always, I wish you all the best.

Lloyd

Automatic-machining-cover

Letter from Bob Brinkman

August 11, 2009

Dear Lloyd,

To quote President Ronald Reagan, “There you go again.”

In your article on the demise of Automatic Machining you imply that Davenport is going the way of Automatic Machining.  “A cam operated magazine (machine) in a CNC world.  The comparison could not be farther from the truth.

In spite of my repeated advice, Wayne Wood could not quite understand that he had to get engaged in the business, develop new perspectives and improve his product.

In comparison, we at Davenport have constantly improved the machine, the parts and our customer service to the point that we are now considered the only alternative for spare parts.  Lower prices, highest quality, and extensive inventory continue to provide our customers with a superior customer experience.  Not only that, our machines continue to produce millions of parts a day because the Davenport is the most economical, efficient and cost effective way to produce these parts.

Sure, CNC has its place and is very effective for many applications.  But the thousands of Davenports running out there prove that the machine is still viable and will continue to be.  Our HP servo driven machines can do many of the things a CNC machine can do at a fraction of the cost.

We intend to continue to support our customers with the best in parts, service, and support.  When I took over in 2003 our motto became, “Davenport, Another 100 Years”.  As the only remaining American made screw machine builder we would appreciate your support instead of your repeated derision.

R. J. Brinkman

Chairman

Davenport Machine

Share this post

Industry Scuttlebutt

Hydromat of St. Louis is suffering through a soft spell and has let about 35 people go from its peak employment. But a sign of the times is a fresh notice on the company’s Web site looking for new people.

They need a design engineer, a draftsman and an electrical control integrator.
I also heard through the grapevine that Bruno Schmitter, the head of the company, would like to buy a couple of CNC lathes to make more components in-house.
There is a strong rumor that Pfiffner in Switzerland has a severe cash flow problem and that company founder, Mr. Pfiffner, has infused the firm with a sizable sum of personal cash.

**************

Tad Yamamoto has been named CEO of Okuma America. He spent 1994 to 2002 in the U.S., then went back to Japan for six years and then spent a year getting reacclimated to the American company. This is not an unusual career path for a top executive of a Japanese multinational company.
By moving back and forth between Japan and the U.S. a Japanese executive keeps his ties and credibility strong in both places. The home Japanese execs keep their confidence that the man still shares the parent company values and the Americans believe that he knows the territory. Larry Schwartz continues as President and COO of Okuma America.

**************

The glutted screw machine market is going to get even more saturated in September. Niagara Machine Products in St. Catherine’s, Ontario, is being auctioned off by Glenn Gray’s Premier Asset Recovery Group September 16th and 17th. There are 50 multi-spindles including an MS32-C Index and (2) 8 spindle Euroturns to go with 40 Acmes and 60 centerless grinders.
This sale will be followed a week later by a DoveBid sale in Athens, Alabama, with 25 more 8 spindle Acmes and Conomatics.

**************

Chad Arthur, whose Arthur Machinery was the most dynamic dealer in machine tools in Illinois until his company spiraled into bankruptcy, has resurfaced as exclusive distributor for DMG in Illinois. Chad’s company, CDA Machinery, is based in Elk Grove Village Ill., as was Arthur Machinery. I think this is a good move for DMG because they needed a surge of energy, and few people in the business have more energy than ex-hockey player Chad Arthur when he is truly engaged.

Question:

Which machine tool builder from your experience has the best service?

And, which is more important for customer service, the builder or the distributor? (You can also comment at www.shopdoc.com)

Tad Yamamoto

Tad Yamamoto

Share this post

Motivating Employees

Daniel Amos, the head of Aflac, the remarkably successful medical insurance firm, was interviewed in the New York Times on Sunday. His remarks on leadership and motivation are intriguing. He treats employees like voters and challenges his sales staff not with overt quotas but by telling his people he wants them to make a particular figure. For instance when he used to be a sales manager he would say to an employee, “I want you to make $60,000.” He recounts that employees couldn’t say, “No, I really don’t want to make that much.” He says they didn’t know how to argue with him when he said, “I want you to make more money.”

Link to full article: New York Times

Question: Do you think it’s advisable to treat employees as if they were voters?

Dan Amos

Share this post

Inside the Swiss Screw Machine Industry

Paul Huber of Comex comments on the recent Bosch auction in which 75 Escomatics were sold by Asset Sales Corporation. Paul came to the U.S. as a Tornos service engineer and is now the wise man of the Swiss screw machine industry.

Share this post

Thank God for Guns and Ammo!

By Lloyd Graff   

With the machining community so riddled with woe at the moment, the guns and ammo boomlet is manna from heaven.
    It’s a great time to be in the gun business. The buzz on the Web is that Barack Obama is going to push for a ban on assault riffles, something households need more than refrigerators.
    Evidently, Obama’s campaign reference, that “bitter” small-town Americans “cling to guns or religion,” has fueled a tremendous surge in gun and ammo sales. People are buying AR-15s, the civilian version of the M-16 military rifle, like 42” HD televisions. At $1000 a pop (sorry) they are pumping out of the gun shops and gun shows. Wal-Mart is struggling to keep ammunition in stock because the NRA is implying that a big tax will soon be coming on each ammo box.
    The high profile mass murders in Binghamton, N.Y. and Pittsburg are reinforcing a sense of insecurity, even panic, while right wing commentators foment unease as the economy slides.
    But the gun run is a great boon to the Swiss CNC business as manufacturers rush to cash in on the gun bubble. While hunting rifles are currently dead, hand guns are the new Rolexes as folks look to show off their fancy shooting hardware.
    It is still quite doubtful that Obama is going to risk his political capital in a quixotic joust with the gun lobbies. But the power of fear, for the moment, trumps rationality.

Share this post

New Credit Game for Industrial Equipment

By Lloyd Graff

I think we got an important signal Tuesday when Bank of America decided not to raise credit lines for McDonalds franchisees to buy new equipment such as coffee machines. They’re keeping credit lines as they are – that doesn’t mean they’re cutting them, it just means they’re not raising them as a general policy. This is important because it shows that the Wall Street mess is starting to filter down to the lending habits of major banks.

I think this is going to affect industrial equipment purchases because it affects the money available to borrow. It’s going to mean that distributors and machine tool builders are going to have to become more resourceful in enabling their customers to buy new and used equipment. A Haas or an Okuma is going to have to be more involved in the financing issues of their customers, using their clout with lenders to find money for them. They will probably be paying more for the money than in the past, but I think this is part of what the FED is all about in providing ample liquidity in the system. The sources for the money may not be the traditional ones that people have used in the past. There will be leasing money, off-shore money and bank money available, but the banks will probably be lenders who fall to the sidelines, because the more resourceful and nimble lenders will probably be the ones to step in.

Question: Have you had a problem in buying equipment recently?

Share this post

Rick Simons Back at Hardinge

Hardinge Inc. has made a significant change in management bringing in Rick Simons as CEO, a veteran of the company who had left to go to Carpenter Technology
Corporation
for three years before coming back ultimately to replace Pat Ervin.

Hardinge stock has been on a long plunge over the last year. Simons appears to be a popular change from the old regime. Under Ervin, Hardinge focused on developing its worldwide business and had acquired prestigious Swiss brands like Kellenberger and Tschudin, but the North American machine tool business had decayed from the Haas onslaught on the less expensive end of the market and Japanese and Korean builders on the upscale side.

The Hardinge machine tool brand has been lost in the blizzard of brands and marketing. Simons has the advantage of knowing the cast of players in Elmira N.Y. and the insight from spending three years in Hardinge exile.

Since Simons has taken the reins, the stock has bounced like a yoyo, hitting a low of $11 and then quickly jumping up to $17. Could this indicate interest by an acquirer? With the cheap dollar, you never know.

Share this post