Category Archives: Current Events

Ep. 100 – Looking back on 99 Episodes of Swarfcast

October 22, 2020 • 2 Replies

By Noah and Lloyd Graff

Today is a special occasion. It is the 100th episode of Swarfcast

A lot has happened in our lives since the podcast began two and half years ago, and today we are going to look back at how the show reflected the world as it evolved.

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Main Points

Noah talks about the podcast’s second episode, recorded in April of 2018, in which he interviewed Miles Free, Director of Industry Affairs of the Precision Machined Products Association (PMPA). He plays a clip in which Miles discusses how tariffs on metals punish American factory workers and consumers. He also talks about a Chinese law (at the time of the interview) that said any foreign company in China is required to have a Chinese partner that has full access to the company’s technology. Miles says China was relaxing this law for foreign car companies. (3:00)

Noah shares thoughts about Episode 86, in which he interviewed Mike Micklewright, Director of the Kaizen Institute. Mike enthusiastically says that reshoring is happening, but he would not provide specific examples. Lloyd says he keeps hearing about the reshoring trend from machining business owners who are quoting jobs against China, but he has yet to see much proof of it actually happening yet (See Clip Below). (5:45)

Lloyd says that tariffs didn’t result in the immediate return of work from China, but they planted the seed for companies to analyze their relationships with Chinese suppliers. He says the pandemic dramatically changed how American businesses see working with China because it made the supply chain much less reliable. (7:15)

Noah plays a clip from Episode 72 with Daniel Hearsch, Managing Director at Alex Partners, a global supply chain expert. Daniel gave his best and worst case predictions for the impact of COVID-19 on the manufacturing economy. Back in late February when the interview was recorded, Daniel felt in a best case scenario American businesses would feel pressure for 4-5 months, with the stock market also taking a hit and the government providing some intervention. However, he also describes a worst case scenario, where people don’t take the threat seriously and the virus spreads, leading to further shut downs and slowing of business in the longer term. He seemed to be predicting more of the best case scenario in the interview. (8:50)

Lloyd discusses his feelings about doing business internationally in 2020. He describes it as being incredibly difficult due to travel restrictions, even between the US and Canada. Noah relates that Graff-Pinkert has had several deals fall through because it is so difficult to cross the border to inspect machines. (11:30)

Lloyd provides a counterpoint, saying that Graff-Pinkert also sold several Davenports screw machines to Chinese companies who were in a rush to receive them. He says that the fear of deteriorating international relations may have contributed to their sense of urgency. (12:20)

Lloyd says that for him, one of the most interesting guests on Swarfcast was Aneesa Muthana, owner of Pioneer Service Inc. a CNC shop near Chicago. (Episode 33). Aneesa provided a unique viewpoint as a Muslim woman in the machining business. We play a clip where Aneesa talks about diversity in her company and how she selects the most qualified candidates instead of placing limitations on herself and her business. She says she tries to make the environment of her company a welcoming environment for a diverse workforce, which has helped her employees thrive. (12:50)

Lloyd and Noah expand on the topic of diversity and how the podcast has not been as diverse as they would have liked. They wonder whether this might be a reflection of the machining industry itself. Noah shares that regrettably few women and African American guests have appeared on Swarfcast. He suggests it is something that the podcast may try to rectify in upcoming episodes. Lloyd shares his impression that the inclusion of women in machining is more of a concern to machining business owners than the inclusion of ethnic or racial minorities. (15:30)

Noah describes his process for selecting guests for the podcast. He says he looks for people with interesting stories who have something valuable to teach the podcast’s audience. Lately, Noah says he has looked at how the show’s content can provide practical benefit to listeners. He talks about a recent episode with Mike Campo of Firetrace, which addresses how to prevent machine fires (Episode 98). (17:30)

Noah talks about another one of his favorite interviews from Episode 80 and Episode 81, with Chris Voss and Brandon Voss. Chris, a former FBI hostage negotiator, and his son Brandon, apply hostage negotiation techniques to the business world. In the clip, Chris says that part of a successful deal is making sure a counterpart feels as if they have made a great deal. He says it’s important to play the long game with negotiation, to keep customers coming back. (18:15)

Noah plays a clip from another one of his favorite interviews, Ari Meisel. Ari calls himself an “Overwhelmologist.” He talks about time management and automating one’s business as well as other parts of one’s life. Ari talks about how he distinguishes “owning a business” versus “owning a job.” Ari feels every business owner should strive to be replaceable. He says business owners run a businesses with their ideas, not their hands. (20:10)

Lloyd says he learned a lot from this particular episode and from working with Noah, who attempts to use a few of the principals Ari describes. Lloyd says that he respects Noah’s discipline when enforcing a work-life balance. (23:00)

Noah talks about some of the recent changes to the podcast. He has started making seasons with specific themes. Also he now asks the same question to every guest about what they learned last week. (23:50)

Noah asks Lloyd what he learned in the last week. Lloyd says he has learned (or relearned) that people actually want to connect with him. The day before he and Noah recorded the podcast he reconnected with someone from a men’s group who he had not spoken to in over a decade. Lloyd also received a phone call from someone who read a recent Swarfblog Lloyd wrote on aging. He had never met this person but was pleased and astonished to learn how his words had resonated with the man. (24:45)

Noah says that one of the reasons he enjoys recording Swarfcast is that it might make a little difference in someone’s life. He feels if the show can entertain or teach listeners something new he has made a small impact on the world.

Question: What’s your favorite episode of Swarfcast?

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As Old as You Look

October 16, 2020 • 7 Replies

By Lloyd Graff

My high school class has a Yahoo group to connect with classmates from yesteryear. It is usually dormant except for an occasional obituary notice.

Yahoo recently announced that it is abolishing such groups, perhaps because Facebook has made them an anachronism. The notice has awakened our group. An old friend of mine volunteered to rejuvenate the internet group on Google, which has brought out thank-yous from around the country.

As each person pops up on the Web, I feel a sense of relief that they are still alive and lucid. Sometimes it is a spouse or friend who joins the group for a now-deceased member of the class of 1962. It is sobering to watch the names appear and wonder why some do not.

One of the tough things about the COVID-19 pandemic is realizing that the virus almost selectively kills off older people. For most young folks, it is an annoyance. The unlucky or sick or terribly obese are its targets from ages 30 to 60. From 60 to 75, you probably fare okay if you started out healthy. But over 75 it is truly a scourge, and that is where I will soon reside.

Lloyd in front of his childhood home in Chicago

I swing between the acceptance and rejection of age. One of the most objectionable aspects of Zoom and Skype is that I get to see myself as others see me. I find it different than looking in a mirror in the morning. I expect to look a bit haggard then, and the mirror usually confirms it. But Zoom allows other folks to inspect the configuration of your neck, unless you pull a Pelosi and cover up with a colorful silk scarf. They can see your hair thinning and the expanding sag under your eyes. And maybe they detect the occasional search for the perfect word that used to flow without effort.

But the really weird thing is that on a good day I can ignore all that baggage and feel 35, not 75. I want to go out and shoot baskets. I see no reason why I can’t run six miles before work. And my voice has the timbre of youth.

I do have the privilege of continuing to work and write a blog, which most of my classmates have chosen not to do or have been forced by ailing health or arbitrary bosses to stop doing—unless they are running for President.

Acknowledging my age to myself is awfully scary. I do it, though, every day when I run through my morning prayer ritual and remember friends and family, many of whom died at a younger age than I’ve already attained. The upside for me is to consider that I probably was scheduled to die 12 years ago when I somehow survived a heart attack that is lethal for most people.

Now I get to be what people used to think of as old. I get to wade in the lovely illusion of youth. I daydream of the swish of 10 straight 3-pointers rotating off my fingertips.

Life is strange. I relish it. I cherish it. It’s an amazing privilege to be able to dunk at 75.

Question: Do you feel younger than your age?

What it Boils Down To

October 7, 2020 • 6 Replies

By Lloyd Graff

This was a good year for applesauce. My farmers market guy, Mr. Hardin from near Kalamazoo, selected a bushel of apples, Honeycrisp, Mac, Fuji, Cortland, Jonagold, Gala, and a few Golden Delicious. Risa and Noah’s wife Stephanie peeled them, Noah and I sliced them up, and then we boiled them into the applesauce which will never last until next October.

Applesauce is a ritual for us every year. It’s a punctuation mark for the end of summer. College football is a mess, back to school is back to chaos, but for apples in the Midwest it has been a wonderful year, though not for the orchard man who relies on farmers markets to get a decent price. COVID-19 has crimped the crowds. Markets where I go in the Southern Suburbs of Chicago are drawing half the normal attendance because of fear and masks and a general fatigue.

But nothing deterred us this year. The ritual of making sauce was more compelling than ever in 2020. We aren’t the only ones. Ball Corporation, the famous jar maker, is painfully short of lids for the canners. People are searching the Web from eBay to Etsy to find extra jars and lids, and it is generally fruitless. Even plastic containers are short for winter storage.

I don’t think it is so much that folks fear shortages or think they will save money. It’s the participation in a yearly ritual, performed as a group with family and friends, that attracts people.

The Graffs gathered for traditional applesauce making.

When I was growing up, the biggest sign of fall was pulling out the football, corralling a group of guys, and heading to the park for an afternoon of touch football. Three on three, maybe four on four, counting “one one thousand, two one thousand, three one thousand” before you could rush the quarterback. We used to play on the street to add a little zest to the game. Parked cars were part of the challenge. Sorry to pull age, but Fortnite is pretty hollow next to catching a high spiral between a Chevy wagon and a Mercury convertible.

If you were religious, you had the fall holidays to miss school. But this piece is about the secular rituals that separate the seasons.

Today, people barbecue all year round. Growing up, the barbecue began in June. It was a charcoal affair. Kingsford did not own the market then. A mushroom was just a toadstool, cauliflower was for boiling, and propane resided at country homes.

The finished product.

But even then, my mom made applesauce in October, and we loved it. It was demonstrably better than Mott’s, with its preservatives and possibly even corn syrup (I can’t bear even saying the words). It’s the ritual of it, the sacred event that you took for granted until you got old enough not to take any yearly event for granted.

Thanks, Mr. Hardin. The apples were superb this year. But the sauce won’t last past March.

Question: What are your sacred rituals?

The Healing Has Begun

September 30, 2020 • 20 Replies

By Lloyd Graff

September 30, 2020. End of third-quarter. First presidential debate. Baseball playoffs beginning. NBA finals start. For Jews, it’s the beginning of a new year.

Today feels pivotal.

Sometimes you can sense things are changing. The weather has abruptly shifted in Chicago. It went from summer to decidedly fall overnight. The real apple cider has come in. The sweet corn is all but gone. I plan to buy my two bushels of 10 varieties of apples this Sunday at the farmers market from Hardin Orchards near Kalamazoo. It is my yearly ritual. My wife, Risa, peels them, I slice them. We boil them for an hour and we have applesauce for the year.

Business has shifted too. For six months, the focus was on staying alive, finding the Kleenex, arguing about masks. No longer. It’s no longer about finding hand sanitizer; it’s about finding hands to feed machines. Companies are ordering stuff and requesting that it be flown in. I looked for a propane bottle for my Weber and the hardware store was sold out. This is late September.

Apples and honey, a Jewish New Year tradition

People are no longer frozen in place. Populations are in flux. New York has been abandoned. Rentals in Florida are being snapped up early.

COVID-19 is still a real threat for folks over 60, but despite 40,000 positive tests every day, hospitalizations are half of what they were in April and May. As terrible as COVID-19 is and has been, we are getting used to it. We expect successful vaccines and effective treatments. It has been awful, and still is, but it is not the Black Death of Shakespeare’s time that killed 1/3 of the population.

The election will happen. It will be messy and contentious. There will be sore losers. We will endure shouts and certainly litigation. People will yell fire, they will scream robbery, and we will get through it with perhaps a few windows broken.

I am happy it’s fall. I am happy that Patrick Mahomes is still invincible. I’m sorry for you if you sold perfume at Macy’s. I pity you if you rented office space in New York. I am sad for you if you were a waitress at a pancake house in Chicago. And I am truly tearful if you are 88 years old and imprisoned in your apartment, by the rules that are supposed to help you.

But things are really changing right now, September 30, 2020. And it will get much better soon. I believe it. We will heal, if we can just live through it.

Question: Was there a winner in the debate last night?

Best of Swarfcast – Ep. 73 – Tracking Your Machine’s Productivity with Eric Fogg

September 17, 2020 Comments Off

By Noah Graff

Today, we’re going to do a quick Throwback Thursday to March of this year, to a discussion about going digital with machine data.

This week’s podcast is an interview we did with Eric Fogg, co-founder and head of machine connectivity at MachineMetrics. MachineMetrics produces an IOT device that connects directly with machine tool PLCs and controls to track realtime and historical data on equipment. Operators use the data to assess how machines are truly performing, which is often quite different from what they perceive.

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

Main Points

Eric explains that MachineMetrics is a machine data connectivity data platform. The company makes a device (he calls an “edge device”) that connects directly to machine controls and sensors of production equipment. The device gathers valuable data on how the machines are performing and sends it to operators to analyze. (3:10)

Eric talks about taking machine shop classes in high school. During high school he worked at a lot of different machine shops on nights and weekends and taught himself programming. (4:10)

Eric says that MachineMetrics can gather data from all vintages of machine tools, not just CNC machines, though CNC machines provide the most data. He says right now MachineMetrics has a client using its edge device to gather data from a punch press that was manufactured in 1925. He says, “As long as it moves and has electrons flowing through it we can probably get some useful data out of it.”(7:00)

Eric says that in college he majored in theology because he wanted to work in the field of corporate ethics. Eventually he started his own machine shop in his mid 20s that specialized in green technology products. (10:00)

Eric Fogg of MachineMetrics

Eric says that when the 2008 recession hit he started doing more job shop type work with low margins. He eventually closed his company started doing Six Sigma consulting for job shops in Vermont. The experience of analyzing the processes of different shops inspired the idea for MachineMetrics. He says he observed that shops were often making decisions based on a gut feeling rather than based on data. He came up with the idea to pull the data that already was on the machines’ controls to create reports, dashboards and analytics to help machining companies make decisions. (14:00)

Eric says the most basic data MachineMetrics tracks is machine utilization—how much machines are running versus how much people think they are running. He says the average perceived utilization of equipment by MachineMetrics’ customers is just under 80%. The actual average is in the high 20 percents to low 30 percents (the numbers are based on active shifts). He says that the numbers can be surprising as various markets differ. For instance, he says for some types of very low volume work (1 or 2 part runs) 15% utilization might be considered world class. He says for high volume shops utilization is often much higher. For instance, he says shops making millions of parts with much thinner margins sometimes have utilization in the 90 percents. He says that no matter what type of shop, clients are usually surprised at their utilization rates. (20:25)

Eric gives some examples of how MachineMetrics data uncovered problems that led to low machine utilization. He gives an example of a client who was using cheap 1/4” drill bits on a drill and tapping center. The company calculated it took only 5 minutes to change a drill bit out, so they used cheaper ones with short tool life. The problem was that while operators left to get a new drill bit from the tool crib they got sidetracked and the average time to change the drill bit was actually over 40 minutes. After learning this the owner of the company decided to go out and buy the most expensive drill bit that lasted 10 times longer than those he was using. It was a solution that was much faster and easier to implement then changing the procedure in the shop which could have tons of variables to consider. (24:10)

Eric says that MachineMetrics generally does not advise customers how to use the data they collect. He has found that customers usually take the initiative to solve their problems. He says his company is often surprised at the interesting ways that clients utilize the data. (27:40)

Eric discusses a phenomenon he sees in CNC shops he calls “cyclecreep.” What happens is that over time people gradually alter they way they run jobs by making tweaks such as changing tools or feed rates which often increases cycle time. The problem is that the manufacturer continues to bill its customer for the original cycle time. Operators see green lights on machines which makes them think everything is running fine but problems are occurring behind the scenes. (30:15)

Eric gives an example of a company running the same parts on 20 vertical machining centers that were bought over 10 years. MachineMetrics found that no two machines had the same original cycle time of 40 minutes. He says that some cycle times only differed a few seconds but the delta between fastest machine and the slowest machine was 15 minutes. After seeing this data, in just a week the company was able to adjust the machines to all have a cycle time within a few seconds of each other. (35:30)

Eric says it can be difficult for his clients because often MachineMetrics is delivering them bad news. He says that the consistent trend he sees is that the most successful shops have a culture around change. (37:25)

Question: Are the effects of the coronavirus a net plus or a net minus for your machining business?

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Sleepless in Chicago

September 15, 2020 • 4 Replies

By Lloyd Graff

Sleep and lack of it has long been one of life’s biggest mysteries to me. Some days it feels so easy and comfortable, an effortless, pleasant activity, and the next night it is an elusive phantom that I mentally grab for and continually miss.

I used to find it much easier. Wash up. Light stretch. Hug my wife. Casually discuss the next day’s plans. Turn over, and sleep would easily take me. Not so anymore.

For years, after being told I had sleep apnea disorder, I struggled with an annoying breathing apparatus that was supposed to provide me with a healthy, peaceful night’s rest. Over time, I doubted that analysis, and finally decided that at least for me, sleep apnea was a sleep industry fraud. I slept better without the infernal breathing apparatus that I used to schlep everywhere when I traveled around the country.

I gave up the machine after my heart surgery 12 years ago. I do not miss it at all.

Like many men, I suffered from prostate enlargement for decades, which impaired my sleep. Surgery solved that issue, though one interruption for urination is normal for me after four hours sleep. That is the tough one for me. It usually happens between 2:30 and 4 a.m. These days, slumber all too frequently eludes me.

I get back in bed and nothing feels quite perfect. The quilt is in disarray. Risa may be snoring. Light sneaking past the window is annoying.

And the thoughts, the challenges, the fears, the things I should have done better the day before, the Cubs bullpen collapse. It could be anything. Lately it has been a troubling dream, or the inability to remember the number sequence of the burglar alarm disarming code. Other nights I struggle to remember whether the name of the high school English teacher I hated was Rosenstein or Rosensweig. A lot of dumb stuff, but they are stealthy and persistent intruders.

I use my tried-and-true tricks, counting 1 2 3 4 5 while breathing in, 6 7 8 9 10 breathing out. I put tape over my mouth these days to eliminate mouth breathing. Other nights I envision shooting free throws and enjoying the imagined feel of the leather basketball releasing from my fingertips.

I usually swallow a melatonin pill before going to bed, but now I add a few sprays of melatonin if sleep feels distant. Unfortunately, a couple times per week, I stay up for two hours and occasionally never reenter the sleep state.

I pay the price during the daylight hours to come, and often the following day. It also tends to increase migraine symptoms like scintillating scotoma, the half moon shaped floaters that interrupt vision for around 25 minutes.

Hopefully your sleep is always peaceful, me and the other sleep deprived world would like to know your secret.

Question: Are you a successful sleeper and do you have any advice for the rest of the world?

The Manufacturing Rebound

September 9, 2020 • 1 Reply

By Lloyd Graff

I talk to a lot of folks in the machining trade every day, and the clear sense I am getting is that business is improving. The automotive segment is definitely firming. Auto related work has bounced back from the April, May, June, July doldrums. Demand has picked up, and car showrooms are extremely short of hot inventory.

European and Japanese companies were also shut down, and the supply chains are strained. Guns and the medical sector are strengthening.

We are seeing an uptick in the used machinery business. The auctioneers are surprised at how strong their sale prices are holding up. Inventory of late model Swiss-type and multi-axis CNC machines appears to be light.

On the macroeconomic front, the recent perverse behavior of stocks is being attributed by pundits to the surprising decrease in unemployment after PPP money ran out and extra layoff checks ended. Evidently some people did choose to return to work.

Small businesses, especially those travel-related and restaurants, have been severely hurt, but the wounded giant called the American Economy appears to be healing. The prospect of multiple viable vaccines being approved soon, while good for most people in business, is viewed by some speculators as negative for tech stocks like Apple and Amazon, which have continued to thrive despite the swooning economy. It appears that improving conditions are sell signs for the option trader gamblers.

From my observation, the impending election does not seem like it will be a significant issue for the stock market, but it could be an issue small business people.

They should ask LeBron for advice. He seems to know all.

****

Do politics and NBA basketball mix well?

Maybe the better question is does China own the NBA? Or perhaps the real question is does LeBron James play for the Los Angeles Lakers or Nike?

The three questions are tied together. LeBron signed a contract in 2019 easily worth a billion dollars with Nike, becoming its most valued endorser, though Michael Jordan trails him very closely.

The NBA also signed a $1.5 billion dollar contract last year with Tencent, the Chinese mega company, granting it the exclusive rights to broadcast all of the NBA games it chooses to air in China. The games are mainly watched by young people on their cell phones as they ride public transportation to work in the morning.

The NBA has built academies in China to teach and promote the basketball. When Daryl Morey, the general manager of the Houston Rockets, had the audacity to tweet critically about communist China crushing the human rights demonstrations in Hong Kong, the Beijing Party leaders bristled. Then the NBA bosses cowered and tried to make nice.

LeBron, who probably sees himself as a potential president of the United States, and heir to Oprah and Martin Luther King Jr. in America, had a real dilemma. It was magnified when COVID-19 hit midway through the 2020 NBA season. The players were undecided about continuing to play, but LeBron had the NBA, Nike, China, and Black Lives Matter all looking at him to thread the needle. It was a time to prove himself to be politically skillful before he even stepped on the court again with Anthony Davis and the rest of the Lakers.

I watched LeBron play brilliantly Monday in the playoff series, ironically against Daryl Morey’s Houston Rockets. Black Lives Matter signage was everywhere in the Orlando bubble, where all of the games are being played and broadcast on TNT and Disney’s ESPN. Player uniforms displayed social and political messages, and a huge VOTE sign was prominently displayed during all broadcasts.

It is a fascinating mishmash of sports, business, politics, and LeBron, who is proving himself to be the Confucius of America in 2020.

Question: Is your business rebounding?

The Tear Down

September 2, 2020 • 3 Replies

By Lloyd Graff

There is a common thread when it comes to success in baseball, business, and poker. You must have the guts and the strength to walk away from bad bets. You must admit mistakes, accept that they are part of life, and courageously walk away.

The Chicago Cubs and the Chicago White Sox are both in first place on September 1, 2020. This may be the first time that has happened in a hundred years.

The Cubs had the courage to rebuild a mediocre team when new ownership brought in new management with Theo Epstein in 2011, who had successfully rebuilt the Boston Red Sox into a World Series team in the early 2000s. White Sox general manager Rick Hahn found the courage to approach 80-year-old owner Jerry Reinsdorf to suggest a teardown and rebuild that he hoped would copy what the Cubs had done to get into the playoffs in 2015 and then win the World Series in 2016. Reinsdorf swallowed deeply and gave the go ahead, despite his age. The White Sox today have a terrific young team and could win a World Series this year or next

As a Cubs fan, true blue, I have always rooted against the Sox, but the team the Sox are putting on the field today is so powerful and dynamic that I have to applaud them. The moves they have made to reach this point are a blueprint for running a baseball team or a business.

The last blow that lead the White Sox to tear down the team happened in mid 2016, when the they traded Fernando Tatis Jr., their top young prospect, for pitcher James Shields, an old warrior, hoping to get enough wins from Shields to reach the playoffs. The team came up short, finishing 76-84. Shields had a 4-12 record with the Sox and was eventually released. Tatis now looks like the likely MVP in the National League this season.

After the 2016 season, when the Cubs won the World Series, Hahn reversed the course of the Sox and began the total tear down and rebuild that would culminate in the Sox becoming a legit World Series contender four years later.

The first crucial move, made on December 6, 2016 with Reinsdorf’s backing, was trading Chris Sale, one of the best left-handed pitchers in baseball, who also had a management friendly long-term contract, for two top prospects, Joan Moncada and Michael Kopech. The next day, Hahn traded their top outfielder, Adam Eaton, to Washington for pitching prospect Lucas Giolito.

In July 2017, they traded their best pitcher, lefty Jose Quintana, to the Cubs for their top prospects, outfielder Eloy Jimenez and pitcher Dylan Cease.

Also in 2017, the White Sox signed shortstop Tim Anderson to a six-year contract extension, and slugger Jose Abreu was signed to a three-year extension, which the Sox extended again in 2020. They also signed Cuban defector Luis Robert with a $26 million signing bonus. At 19, Robert had played for the Cuban National Team and was considered a fabulous prospect. Today at 23, Robert is being compared to legends like Mike Trout and Roberto Clemente.

At the end of 2016 and in 2017, the Sox made key moves that are coming to fruition this year as they have the best young team in baseball.

This is how you build a winner if you’re starting with a mediocre hand. Trade your best players for great position player prospects and draft the next Mike Trout. When you are ready to win, sign veteran free agents who know how to win to put you over the top.

You must walk away from the bad bets. Excellent players on a mediocre team will never get you to a championship.

In a business, you have to walk away from dead inventory and uncollectible receivables, even though it may show a nasty loss. In a job, you should quit if you do not see the upside or if the environment is hostile. A lousy marriage with wonderful children is hard to leave, but leaving may still be the best decision.

Getting where you really want to be often means absorbing some very nasty losses.

Question: What hard decision did you make this year?

Ep. 95 – The Machining Business in Canada with Sander Boelen

August 27, 2020 Comments Off

By Noah Graff

This week we head to Canada, as we continue our season exploring the diverse world of machining around the globe. Our guest is Sander Boelen, founder of Allegiant 3D in Montreal, Canada. Allegiant 3D engineers and produces prototypes for OEMs in the photonics industry around the world; companies making products like lasers, medical instruments and dental scanners.

As a used machinery dealer I’ve sold a lot of machines into Canada over the last few years. From my vantage point, the machining business generally seems to be doing quite well north of the border, and I wanted to find out why that is.

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

Main Points

Noah talks about meeting Sander Boelen when Sander inquired on Graff-Pinkert’s Trumpf TruLaser Station 5005 Laser Welder it has for sale. (2:40)

Sander talks about the origins of his company, Allegiant 3D, which began in the mid-2000s as an engineering firm. The company designs products and manufactures prototypes for the photonics industry, including lasers, receivers, and various types of medical equipment. (4:00)

Sander gives an example of the types of businesses he works with, including a local producer of intraoral scanners used in dental work. ( SEE VIDEO BELOW – 6:30)

Sander talks about the machine tools that Allegiant 3D has in house to make prototypes for customers. (8:00)

Sander talks about his personal experience growing up in the southern region of the Netherlands, which he calls a great breeding ground for technology. In his college years, Sander moved to Canada to take an apprenticeship in the Physics department at McGill University, located in Montreal, Quebec. (9:00)

Sander talks about higher education in Canada. He says public education there is free and universities are inexpensive, with tuition costing around $2,500 CAD per year. He says many Americans study in Canada because of the low cost. He also says Canada has good trade schools, including one close to his shop. (11:30)

Sander talks about Montreal, located approximately five hours from Toronto. He says in Quebec French is spoken in the street and signs are in French, but everyone knows English. (13:00)

Sander says that Montreal’s machining industry is mainly in the aerospace sector, while machine shops in Toronto, which aren’t far from Detroit, primarily work in the automotive industry. He talks about some of the aerospace suppliers in his area which range greatly in size.

Sander says Canada is a good place to start a machining company but at the same time it’s complicated to start a business anywhere in the world. (16:30)

Sander talks about the Canadian government. He says Canada has good programs that encourage business. He talks about R&D tax credits that encourage companies to be innovative and work together. (17:50)

Sander says he believes that running a machining company in Canada is not that different from running one in the United States. In fact, currently he is looking for potential opportunities to start a company in the US. He also says that Canada’s economy is very socialist, particularly Quebec. He says not needing to provide health care for employees was one reason it was easier for him to start a company in Canada, which has a public health care system. He says that successful companies in Canada often offer supplemental insurance as an extra benefit to employees. (19:00)

Sander talks about the higher tax rates in Canada. He says at a certain income bracket tax rates can be 50-55% but there are ways to decrease taxes such as investing in pensions plans. (21:40)

Sander says that the machining industry in Canada will be prosperous for the next few years and that he sees work coming back to North America. He says that though the value of the Canadian dollar is much lower than the American dollar the lower value is beneficial for exporting. He says currently the aerospace industry is taking a hit, but his business is busy right now. (23:00)

Sander talks about the advantages of having a niche, making parts for the photonics industry. (24:50)

Sander says a big challenge he is facing is having to say no to the demands of smaller customers as his company continues to grow. He also says it is a challenge to produce the right parts consistently all of the time. He says making one part well is easy, but making a lot of different parts consistently is difficult. (25:30)

Sander says the most interesting thing he learned recently is that pushing employees to work longer hours often has diminishing returns. (27:00)

Question: Is doing business with Canadian companies important for your business?

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“Fulfillment” Centers

August 26, 2020 • 4 Replies

By Lloyd Graff

Like desert marigolds flowering out of nowhere, 4 million square feet of new buildings are going up simultaneously this week in the primarily African American South Suburbs of Chicago where I live and work.

Twenty miles north of here in Englewood, where my dad grew up and attended High School, people are shooting at each other every night and connecting with disturbing accuracy. The daily carnage is staggering and overflowing into the expensive Magnificent Mile of North Michigan Avenue, leaving it looking like Beirut’s downtown.

Amazon loves the South Suburbs. They already have built half a dozen fulfillment centers in the area and are building two more. One of them is within walking distance of Graff-Pinkert, and the other is near my favorite corn stand. The Logistics Center of 2 million square feet, consisting of four expandable buildings, is also in walking distance. It is located on a 102-acre site, which was supposed to be an outlet mall until Amazon growth killed that idea. Its closest neighbor is a multi-story apartment building, built just a few years ago, which accepts people who have lost their jobs and have nowhere to go. The developers jumped on the site when they could put together $29 million dollars in tax subsidies from the village and county, plus the tax advantage of being in a designated Opportunity Zone with the recent tax law changes.

Add in cheap mortgage money and a great location between two interstates, plus an abundance of inexpensive workers with lousy job prospects in the neighborhood—and bring in the excavators.

The broker for the logistics project says there is an industrial real estate boom taking place, with Amazon picking up half of the new space in Chicagoland.

What is it like for the $15 per hour people who are drawn to the thousands of Amazon jobs, before the robots make them obsolete?

A woman who used to clean our friend’s house went to work for Amazon in Joliet a half hour west of the new fulfillment centers. Her work consisted of opening boxes 10 hours a day, four days per week. She wanted the job because it was her first opportunity for full-time work that offered health insurance. It was also an opportunity to get free tuition at a local community college if she worked for Amazon for 18 months.

It was demanding physical work and took its toll. Both of her hands absorbed enough punishment to require surgery. Her dream of training to become a nurse’s assistant sterilizing instruments was postponed by these injuries.

2-Million-Square-Foot Logistics Center

I am a capitalist, an investor, and a happy customer of Amazon. I think Jeff Bezos is a genius who has enriched me and my family because I invested in Amazon stock over 10 years ago and have held on to it. Bezos himself was born to a 17-year-old mother. His father, who he barely knew, owned a small bike shop in Albuquerque. His mom got an education, moved to Florida, and married into an upper-middle-class world. Jeff went to Princeton but he started Amazon on a prayer, and it is now worth hundreds of billions of dollars.

Our former cleaning person will not be taking another job at Amazon with her damaged hands. The two new 865,000-square-foot fulfillment centers will each hire a thousand workers for bigger packages, but Amazon has proudly announced that the buildings are built for robots when they become more capable.

The South Suburbs, the stepchild of Chicago real estate, is finally bustling. It has the cheap land on the interstate highways, and, above all, it has cheap people, the folks who will line up for the grueling jobs that more efficient, stronger robots will eventually take.

Capitalism drives America, and I love it. But it does come with a cost. My Amazon stock is up 2,218%. The gulf of income between people with securities and those who dream of sterilizing instruments keeps growing, but with Opportunity Zones and other tax breaks, we’ve got 4 million feet of new buildings blooming in my backyard.

Question: Have you lost workers to Amazon?

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