Category Archives: Sales

Ep. 105 – Selling Cow Bone to Medical Manufacturers with Mary and Jim Rickert

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By Noah Graff

Today’s podcast is the first episode of our new season about companies related to medical manufacturing.

Our guests are Jim and Mary Rickert, owners of Prather Ranch in Fall River Mills, California. Prather’s closed herd, in which no female cattle have been introduced since 1975, enables it to sell cow bone and other organic matter to medical manufacturing companies that require material from disease free animals.

Scroll down to read more and listen to the podcast. Or listen on your phone with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points

Jim and Mary Rickert talk about the history of Prather Ranch, which has been operated as an agribusiness since the 1860s. They bought the ranch in the ’80s. (3:30) 

Mary and Jim explain that Prather Ranch has a closed herd, which means that no new female cattle have been introduced for a significant period of time. It is a quite large ranch, with 2,600-2,800 cattle. The primary ranch hasn’t had any females introduced since 1975, and Prather’s backup closed herd has not had any female animals introduced since 1992. The animals are constantly tested for illnesses, and if they are infected they are removed from the herd. Also Prather Ranch only uses its own trucks to transport animals between ranges to further prevent infection coming in from the outside. They say their ranch is the truest example of “herd immunity.”   (4:10)

Jim and Mary talk about the Prather Ranch’s primary business, selling organic beef. The ranch even has its own slaughter house, which no other ranches have, to insure the meat undergoes the strictest health standards. (8:40)

Jim and Mary talk about their secondary business. In addition to selling beef to consumers, Prather Ranch supplies companies in the biomedical sector with raw biomaterials that come from its cattle. Biomedical companies want to buy organic materials from Prather Ranch because they can feel secure that the livestock don’t have diseases, such as Mad Cow Disease. (10:00) 

Prather Ranch first started selling organic material from its livestock in 1990 to the Collagen Corporation, which was manufacturing collagen for cosmetic procedures. (11:00)  

Jim and Mary talk about customers that took bone from cow femurs and machined into bone screws, pins, or plates. Then those parts were supposed to dissolve inside the recipient body. People at the time also were using bones from humans, but it was hard to get enough quality bones from dead people. Mary and Jim think that bovine raw materials are generally superior than that of humans because people can know about the animals it is coming from—the animals are in a controlled environment, unlike people. (13:00) 

Jim and Mary say that the bone screws and similar products made from cow bone unfortunately sometimes are rejected by recipients because their bodies recognize they are foreign materials. Human bone can also be rejected. These types of bone transplants are less popular now and have been supplanted by synthetic bones made in a lab. (15:15)

Jim and Mary talk about a startup company currently working on a new technology that overcomes the body rejection, which is in Stage 3 of testing. 

The following is a summary of the technology:

When a person’s bone is crushed, the company machines a slightly smaller replica out of cow bone using a 3-D scanner. Then undifferentiated T-cells are extracted from the patient’s body fat. Then they 3-D print new cells based on the extracted T-cells around the reconstructed bone. Through a series of other complex processes they join the new cells to the reconstructed bones. Afterward, the patient’s body hopefully will accept the new reconstructed bones. (16:50-21:30) 

Jim and Mary talk about other biomedical technology that companies are trying to develop using bovine products to improve the people’s quality of life. Jim and Mary say that it gives them purpose to be able to give animals a healthy comfortable life, produce healthy meat, and contribute to manufacturing products that can help people’s quality of life. They say they have been officially certified since 2003 that their animals are raised in a humane manner. (21:30)

Noah asks a few beef questions. Jim and Mary say that in their opinion male and female beef tastes the same. They say the taste of beef is dependent on how gently the animals are treated—less stress means better flavor. Mary’s favorite cut of beef is Filet Mignon, Jim likes New York Strip, Rib Steak, and some hamburger if it is dry aged with the proper type of added fat. (24:00)

Jim and Mary say they have recently learned about how to handle employees who have contracted Covid-19, as two of theirs just got the virus. (26:30) 

Mary says at restaurants she is hesitant to order beef because she knows too much about the typical beef producing process. Jim says he is a lot less picky. (27:00) 

Question: Carnivorous readers—What is your favorite type of meat or favorite cut of beef?

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Ep. 103 – Listening to Customers and Selling Hammers with Joel Trusty

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By Noah Graff

On today’s podcast we continue our season talking to successful companies who produce their own products.

Today’s guest is Joel Trusty, co-owner and President of Trusty-Cook, a company that manufactures a diverse group of industrial polyurethane products such as dead blow hammers and spindle liners for bar loaders. Joel says one of the keys to the company’s success has been talking to customers about what they need.

Scroll down to listen to the podcast. Or listen on your phone with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points

Joel talks about the origins of Trusty-Cook. His father designed ship-to-shore missiles for the military. When he tired of that, he moved on and started a company making custom electronics. He hired a man named Cook, who went to Chrysler and came back with a purchase order for 3,000 polyurethane wear pads for an assembly line, something that the company did not make. In response, Joel’s father bought a used pizza oven, bought a book on polyurethane and figured out how to hand-batch the order. Two years later, he invented the dead blow hammer, one of the main products Trusty-Cook manufactures to this day. (2:55)

Joel explains the company’s polyurethane dead blow hammer. It is constructed to have good power when striking, but it avoids damaging the target or sending a lot of vibration through the user’s elbow. (3:40)

Joel says it was difficult to get into the market at first. The products were expensive to make, but the company landed deals with Matco Tools, Cornwell Tools, and Snap-On. Originally Stanley Tools wanted a private label as well but instead decided to buy out the company in 1982. In the mid-1980s a recession hit, and Stanley wanted to move the company under the same roof as a screwdriver plant in South Carolina. Joel’s father and brother agreed to assist the move in return for commercial ground and two product lines Stanley Tools was no longer interested in. They moved the plant and founded Trusty-Cook. The non-compete for the hammer ran out in the mid-1990s, so they created the Trusty-Cook brand. They also landed a private brand called Estwing out of Rockford, IL. Matco and Cornwell came back on board, and Trusty-Cook continues to make sledgehammers for Snap-on. The company also makes a line for NAPA. (4:00)  

Joel explains that Trusty-Cook’s polyurethane hammer is made to replace hammers made of lead or brass. It is constructed so that it will not spark and not damage the material it is hitting. The durability of polyurethane is what inspired Joel’s father to create the hammer. Joel also talks about his father’s other inventions, including a machine to cook hamburgers in 6 seconds and the first blood machine to analyze kidneys, which is still in use today. The hamburgers tasted terrible, so that invention was not taken to market. He says inventing new products comes naturally to him and other members of his family. (6:30)

Joel says Trusty-Cook now makes 29 different hammers, which Joel calls a “rock on a stick.” The price to make them has not changed much since the ‘70s. Joel says the average retail price of a Trusty-Cook hammer is in the $50 range. The hammers are made in Indianapolis in-house. The company produces the steel components and the polyurethane for the hammers’ exterior. Each hammer is handmade using no automation. (listen for more a detailed description) (9:55)

Joel discusses other Trusty-Cook products, including polyurathane spindle liners for bar loaders for CNC machines. He talks about how the company got the idea for the product when a customer called up wanting to reduce a diameter in his bar loader he was using with a Mazak CNC lathe. Now the company makes spindle liners for running bar stock with irregular shapes such as hex and rectangle. It also makes spindle liners to enable running bars less than a millimeter in diameter. The OEMs selling machine tools refer customers to Trusty-Cook, rather than bundling them in a sale. (11:30)

Joel says that listening to customers is the number one reason why his company is successful. He describes feedback he received on forum for garage mechanics. The mechanic wanted a ball peen hammer for use in tight work spaces. In response, Trusty-Cook developed a large-headed ball peen hammer with a short handle. On the same forum, another mechanic asked if a similar product could be built with a flat end on both sides, so Trusty-Cook started making this design of hammer as well. (19:10)

Joel talks about why the company was monitoring the forums. At the time there appeared to be a lot of confusion about who was making various products because of all of the different brands distributing for Trusty-Cook. Joel says Trusty-Cook doesn’t participate often on online forums, but the company does post when it develops something new and asks for feedback. It has developed relationships over time with some of the users on the forum. Joel says Trusty-Cook will sell limited editions of various products at a low price to some users to get them to try them. (23:00)

Joel talks about building relationships with customers like custom bike builder Eddie Trotta star of the TV show Thunder Cycle. Joel says Trotta was having difficulty holding tolerances on his Mazak and put in an order to Trusty-Cook for spindle liners for his machines. Eddie was so happy with the results he gave a free testimonial. Eddie later called and asked if the company could make a dead blow bossing mallet to shape metal. Joel says he didn’t know what one was at the time. With Eddie’s feedback Trusty-Cook created three different polyurethane bossing mallets for him free of charge. Eddie said the hammers cut the work time in half. Today Trusty-Cook ships them all over the world. (25:55)

Joel describes the company’s relationship with bar feeder companies, LNS and IEMCA. He told the companies that if they came to him with an idea for a polyurethane product, he would work with them free of charge. He describes a split block Trusty-Cook designed for Edge bar feeders. (see video) He says LNS also called them with a predicament, in which some bar feeder channels were filling with lubricant and swelling over time. Trusty-Cook now makes all the channel sets for LNS. (28:10)

 


Joel says feedback from both endusers and OEMs is Trusty-Cook’s lifeblood.(29:40)

Joel shares advice for new companies who want to bring a product to market. He says that too many creators spend time perfecting something because they are afraid to test their product on the market. He says a company needs to test the sales end of things so it knows if a product has the potential to be successful. He suggests sending new products at no charge to friends or trusted contacts in an industry and letting them try it out to get feedback. It might cost money to produce the product, but so does doing nothing while you perfect it. (30:05)

Joel reflects on something new he has learned recently. He says the week before was the first time he could recall that he started feeling stressed about all of the negative stuff going around the world—the election, the pandemic etc. He says he had to take a step back to reexamine what he does, stay focused, make sure he is doing what he likes, and make sure he his doing things for the right reasons. (31:45)

Question: What is the most important tool you have in your shop?

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Ep. 84 – Advertising Machinery with Tom Scanlan of Surplus Record

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By Noah Graff

Our guest on today’s podcast is Tom Scanlan, publisher of Surplus Record, an online and printed marketplace for buying and selling used industrial equipment, founded in 1924 by Tom’s Grandfather.

Scroll down to listen to the podcast. Or listen here on Apple Podcasts and Google Podcasts.

I use Surplus Record along with several other online platforms every day for our machinery business, Graff-Pinkert. But Surplus Record is unique because it combines the simplicity and transparency of an old school print publication with the convenience and speed of an online platform.

Main Points

(3:00) Tom says Leonard Graff and Aaron Pinkert, owners of Graff-Pinkert, taught him about Wickman Screw Machines when he started at Surplus Record in 1982.

(3:25) Tom says Surplus Record is the only print publication left of used machinery and industrial equipment. He says it is sent out monthly to 137,000 subscribers, 99% in the U.S. and Canada. 

(3:55) Tom talks about putting Surplus Record listings on the Web in 1995 after urging from his brother, who was in Silicon Valley. He laughs about how most of the machinery dealers at the time didn’t even know what a website was. 

(6:10) Tom says Surplus Record’s Website is constantly updated by machinery and electrical equipment dealers. He says one thing endusers appreciate about Surplus Record is that they don’t have to register to get information. Company names and phone numbers are clearly visible, unlike some other online machinery trading platforms. Also, Tom says Surplus Record’s own contact information is clearly visible on its site for endusers to call if they need credit references for sellers. He says his office gets six to eight calls per day by people asking to confirm if advertisers are legitimate. Tom says he or one of his staff personally visits 90% of Surplus Record’s advertisers, so they can stay up to date with what’s going on at their businesses and who is currently working there. 

(10:15) Tom says in the last few weeks several manufacturers have called Surplus Record to make sure they would receive their monthly print editions. They were concerned that during the COVID-19 crisis they might lose access to the Web and not be able to get the equipment they need if it goes down in the shop.

(11:40) Noah says he uses Surplus Record every day for its constantly active free bulletin board of wanted and for sale equipment.

(13:00) Tom talks about Surplus Record first accepting advertisements from auctioneers in 2005. This came about because many machinery dealers were becoming auctioneers. 

(14:45) Tom says Surplus Record is very popular for people who need electrical equipment quickly when it goes down. He says the transparent information about Surplus Record’s sellers (company name and contact information) makes it quicker and more user friendly than eBay.

(16:00) Tom talks about his father dying suddenly, which led to him running Surplus Record. He says he was trained on the job by a lot of the company’s clients.

(17:00) Tom says he is happy that his 32-year-old son, Tom IV, is now working at Surplus Record and will become his successor. He says his son still believes in keeping the print publication, but he admits that his son is much more Internet savvy than he is. He says he knows his son will come up with new ways of doing things, just like each successive generation of the 96-year-old company. 

Question: Do you prefer reading print or on the Web?

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Ep. 81 – Negotiating Like an FBI Agent with Chris and Brandon Voss Part II

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By Noah Graff

Today’s podcast is the second half of a two part interview with Chris and Brandon Voss, coauthors of the best selling book on business negotiation, Never Split the Difference: Negotiating As If Your Life Depended On It.

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Chris Voss used to be an FBI hostage negotiator. When he retired, he applied the negotiation techniques he learned in law enforcement to the business world. Some of the methods Chris and Brandon teach can seem difficult to execute and counterintuitive, but I can personally vouch for their effectiveness in my own business dealings.  

Main Points

(3:00) Chris and Brandon talk about why they prefer not to name price first in negotiations. They also explain why they don’t like extreme anchoring (naming an extreme asking price to begin a negotiation). Brandon says that it’s a problem that so many people come into a negotiation and automatically assume the first price is an extreme anchor. 

(5:35) Chris says that very often when people ask you to give them a price they are not actually interested in buying. He says that researchers have found that at least 20% of the time people ask you for a price they are only looking for a competitive bid, which he equates to lying in business. He says this percentage is an underestimate because people don’t naturally admit to lying, so you have to use strategies to bring out the truth.

(10:40) Brandon gives examples of how to use labeling to get a customer to reveal what they are willing to spend. As explained in part one of the interview, a great strategy to get information is to use labels—verbal observations such as “it seems like,” “it sounds like,” “it looks like,” and “it feels like.” He suggests saying, “It sounds like you haven’t spent that much time thinking about what you would spend on this,” “It sounds like there is a ceiling you don’t want to cross,” or “It sounds like you have a range in mind.”

(13:17) Brandon says it is also good to let a counterpart name price first because it  makes that person feel they are in control. He says that when people feel autonomous and in control of what is happening they are more likely to want to make a deal. 

(15:10) Chris explains the purpose of asking “no” questions. One of the negotiation techniques Chris and Brandon prescribe is getting other people to say “no” in conversations. He says that people are unfortunately conditioned that the word “no” is a word they don’t want hear in negotiations. People associate it with failure. However, he says research has shown that when people say “no” it actually makes them comfortable and safe and prompts them to take action (see video below).

Click here to watch more videos from the interview.

(18:40) Noah asks if Trump is a good negotiator. Chris asks jokingly, “Do you want the Trump people to hate us?” Chris brings up Trump’s dealings with North Korea. He says Trump did a spectacular job opening the negotiation with  North Korea—something unprecedented. However, he says that today nobody seems to know where the negations are at. Chris says that Trump is by nature an “assertive” negotiator, similar he and Brandon. He says that assertive negotiating can yield to some early spectacular successes, but people will not want to deal with you long-term if you can’t change from that mode. He says that every negotiator needs to be assertive, but it cannot be the only component in how you operate.

(21:35) Brandon and Chris discuss their dislike for the concept of “win-win” solutions. Brandon says the term is associated with compromise in which both parties give up things, leading them to feel unsatisfied. In his experience, deals that people call “win-win” often fall apart. Chris says when someone says “win-win” in a negotiation, they are either a cutthroat negotiator or a naive negotiator. He says if someone calls him to propose a “win-win opportunity,” he will hang up. Unfortunately this subject came up at the very end of the interview, and Chris and Brandon said they could easily give an entire lecture about it because of its complexity.

Question: Do you like to haggle when buying a car?

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Ep. 80 – Negotiating Like an FBI Agent with Chris and Brandon Voss

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By Noah Graff

Today’s podcast is part 1 of a two part interview with Chris and Brandon Voss, co-authors of the best selling book on business negotiation, Never Split the Difference, and executives at Black Swan Group, a company offering business negotiation training.

Scroll down to listen to the podcast.

Never Split the Difference teaches how to approach business negotiations using the same the techniques that Chris Voss learned from decades working as an FBI hostage negotiator. I can vouch for its effectiveness personally, having listened to the book from start to finish 3 years ago. I probably use its principles in our business every day.

Main Points

(3:45)  Chris and Brandon explain their company, Black Swan Group, which teaches business negotiation. They sum it up as the company that “makes sure you don’t leave money on the table.” They also say that it provides guidance for navigating difficult conversations.

(5:35)  Chris talks about working as an FBI hostage negotiator specializing in terrorism. He says that his son Brandon learned a lot about negotiation from a very young age by observing him. He says that Brandon used his skills of “disarming agitated adversaries” to deal with disciplinarians and Vice Principals in high school. After Chris retired from the FBI he taught negotiation in business classes at Harvard and Georgetown. A few years ago he and Brandon cowrote Never Split the Difference, which has become the best selling business negotiation book around the world.

(9:00) Chris says that the principles of hostage negotiation work for business negotiations across all cultures. He says that in every business deal something is under siege or threat.

(12:25) Brandon explains one of their most important negotiation strategies, mirroring and labeling. He explains that “labeling” refers to a verbal observation in which a person says, “it feels like,” “it sounds like,” “it seems like,” or “it looks like.” A “mirror” means repeating the last few words of the last sentence that someone has just said. These techniques help sound out your counterpart. They give a person new information about how the counterpart sees a situation, but the counterpart stays relaxed because you don’t have to ask questions. Questions can make people feel they are being interrogated.

(17:15) Noah brings up his own recent challenge using mirrors and labels to get a machinery rigger down in price.

(19:25) Brandon talks about a negotiation technique called an “accusations audit” (see video) that Noah could use to try to get a machinery rigger down in price. The negotiator mentions all of the difficult things his counterpart has had to do to accommodate him. This can neutralize his negative feelings before he has a chance to say them. In the case of Noah’s machinery rigger, he could say to him things like, “I know you have had to do a lot of work already for this job,” “I know you’re the only game in town,” “I know you’ve already tried to get the price down,” and “I bet your sick and tired of having this conversation with everyone you speak to.”

Click here to watch more videos from the interview.

(24:15) Chris explains price anchoring. He says that most academics say a person should start a negotiation by naming an extreme asking price. However, he discourages this strategy because it can scare customers away and cause one to lose potential deals. Also people don’t know what price their counterparts will start at—perhaps his price is better than they thought. Chris says the majority of the best negotiators get the counterpart to name a price first. When both people are trying to make each other name price first a person can use mirrors and labels to get important information about the price the counterpart has in mind.

Question: Do you usually like to name price first in a negotiation?

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Talking to Strangers

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By Noah Graff

Not long ago our company made a deal to purchase a significant amount of machinery outside the United States. The deal seemed like a great opportunity, but we thought the sensible thing would be to visit the seller before making any purchase because he was someone who we had never met before.

I traveled a long way to meet him, and we spent several days together looking at machines. He brought his wife along with him for the whole trip. We had dinners together during which they told me about their children. His wife repeatedly acted like a concerned mother when she noticed my runny nose. They seemed like decent people, and they gave us a good price so we made a significant deposit on some machines. In the end, things did not go as planned. The company attempted to pocket the deposit and did not send any machines.

We felt dumb. We asked ourselves, how could we not have realized we were being conned?

I recently finished listening to Malcolm Gladwell’s new book, Talking to Strangers, which sheds some light on our experience. The thesis of Talking to Strangers is that the majority of people are incapable of judging the true character of others based solely on “getting to know” them. The book contains many powerful examples of people who seemed genuine but then turned out to be liars, along with other examples of people who seemed suspicious but turned out to be innocent.

Talking to Strangers - What We Should Know About The People We Don’t Know, by Malcolm Gladwell.Early in the book, Gladwell tells a story about multiple double agents in the CIA who spied for Cuba for many years before being uncovered. The agents who were supposed to be spying on Cuba were in actuality spies for Cuba! U.S. Intelligence agents who were supposed to have been “experts” on judging the honesty of other people were made to look like complete fools.

Gladwell discusses another example of flawed human character assessment in a passage about judges in New York whose job is to choose which suspects should be released on bail and who is too risky to let out of custody. Several elite computer scientists, a Harvard economist and a bail expert from the University of Chicago created a computer program to research the ability of the judges for discerning which suspects should be released. From 2008 to 2013 550,000 defendants were brought for arraignment to the group of New York judges, and the judges released just over 400,000.

The researchers built an artificial intelligence system and fed it the same information that had been given the judges in the 550,000 arraignment cases, mainly the defendant’s age and criminal record. The artificial intelligence system chose its own 400,000 defendants to be released over that time period to see which 400,000 releasees committed the fewest crimes on bail and made their trial date. The 400,000 released by the computer were 25% less likely to commit a crime than those chosen by the judges. The computer program only had the defendant’s age and rap sheet to make its judgment, while the judges also got to hear the arguments from the lawyers and look the defendants in the eye.

Gladwell also writes about Neville Chamberlain misjudging Hitler after meeting him several times. He writes about the people who misjudged Bernie Madoff and sex offenders such as Jerry Sandusky and Larry Nassar.

Gladwell says that the usual inclination of people is to “default to truth.” People want to trust other people because that trust is what makes society function. If the default opinion of a youth sports team coach is that they are a pedophile nobody would let their child play on a team, and nobody would take a job as a coach.

If my default opinion of every person selling machines is they are trying to cheat me, I will never be able to make any deals. Business must go on, and life goes on because I know most people are relatively honest. Going forward I will try to keep my guard up, and I won’t put as much stock into looking people in the eye.

Questions:

Do you trust most people you do business with?

Have you ever been conned?

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Manufacturing in Thailand – the “Detroit of the East”

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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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NBA Flunks Negotiating

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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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Is Toyota the Microsoft of Car Companies

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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

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A CAM Operated Davenport in a CNC World

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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

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