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Swarf: The Money Gravitates West

By Lloyd Graff

Today’s Machining World Archives June 2010 Volume 06 Issue 05

Let’s connect a few dots. The head of the Russian government, Dmitry Medvedev, is coming to visit Silicon Valley because he wants to build a competitive science center in his country. He hopes to learn something about what makes the Bay area so attractive to the Apples, Googles and Genentechs of the world. Toyota is putting a sizeable investment into electric carmaker, Tesla Motors, and is providing the closed Nummi factory in Fremont, Cal., to make Tesla cars. The DMG/Mori Seiki collaboration is probably going to manufacture machine tools in Davis, Cal., near Sacramento.

While the California government may have to pay people with IOUs, the state is still a magnet for investment and young people looking for opportunity. With Wall Street’s reputation muddied up by financial scandal, the best and brightest are turning to the left coast again for opportunity. This is a good thing. In the mid 2000s it seemed like every smart kid wanted to trade derivatives on the Street. A lot of young people actually wanted to be the next Gordon Gekko.

Apple Inc. headquarters in Silicon Valley, Cal.

The pendulum has swung the other way today. Apple, Google and Genentech are hiring tons of people now. Soon Tesla and DMG/Mori Seiki will be in full swing. The momentum is moving west again. The economy is turning toward making things in the highest labor market in the country. Money gravitates to energy and creativity. The magnetism of northern California is strong right now.

After the Memorial Day weekend I posed the question, “Should we be economic patriots”?

When I wrote the car buying stories for the April and May issues, I took heat from readers who felt I was derelict in not coercing my sons to buy American cars rather than Hyundai Sonatas.

It turns out that the Sonatas are made in Montgomery, Alabama, and have more than 50 percent American content. Hyundai spent $1 billion to build a factory, and the workforce is almost entirely Alabaman, but ultimately my sons’ buying decisions were based entirely on the products and price. Economic patriotism had nothing to do with it.

Do you buy a Haas vertical machining center because it is American or because it is the best machine for the money? Do you pass on bananas because they come from Honduras? Do you shun an iPhone because it was made in China at a FoxComm plant that has had 10 suicides among its workers this year? Where does your economic patriotism start or end?

Personally, I am not an economic agnostic. I have never bought a German Mercedes or BMW because of the Nazi atrocities of 70 years ago. But considering most of the taxis in Israel are Mercedes, I know that particular economic discrimination is now ridiculous.

Many of my long time screw machine customers have shops in China now. Are they economic Benedict Arnolds?

I recently talked with Joe Arvin who owns a big aircraft gear company near Chicago. He considers himself an economic patriot because he will not put up a plant in China, even though his clients are pushing him to do it. Do you think our soldiers died for Ford or for the economic and political freedom to buy oil from Saudi Arabia to drive a BMW to the sushi restaurant?

Here’s the good news and bad news. Bad news—75 percent of Americans are overweight. We’re French frying ourselves to death. Good news—it’s going to be great for the precision machining business.

Dr. Uli Sutor, key account manager at DMG, gave an illuminating talk at the first day of DMG/Mori Seiki’s Innovation Days, May 24, at its national headquarters in Hoffman Estates, Illinois. The event was a combination sales and networking event for the collaboration between two of the biggest players in the world machine tool business.

Sutor’s presentation discussed the opportunities in the medical machining business. As he sees it, orthopedics, primarily knee hip and spine, are the biggest growth segment. The passage of Obama’s health care plan in the U.S. will expand the area even faster. According to the literature it takes 40 minutes to do a knee replacement—20 if there’s no insurance.

A person who is at least 30 pounds overweight is three times more likely to need a knee or hip replacement than a trim person. It’s easy to see that the obesity trend is the friend of orthopedic surgeons and hospitals.

Sutor mentioned the number of bone screws and plates produced in the world. His number astounded me—200 million orthopedic screws and plates last year.

Last year 1.1 million knees and hips were replaced in the U.S. The expectation is 4.6 million per year by 2030, partly because a joint replacement lasts 10-12 years, so many people will need redos if the obesity trend continues.

Dr. Sutor gave the presentation from the DMG point of view. He employed a lot of data from the European perspective. One piece of information I found valuable was that “turbo whirling” is now being made by DMG for bone screw threads. The process employs linear technology, which uses no gears or belts and provides a superior surface finish. This is particularly valuable if a doctor will eventually remove the screw from the repaired joint.

The $64 billion dollar question for the economy is, what will happen to employment? What happens to unemployment is related, but the two numbers do not always shift in tandem.

We are seeing a strengthening in manufacturing now and the overtime strategy seems to be waning. Productivity stats are still impressively bullish but they are starting to level off. You can only squeeze so much juice out of the lemon. The Labor Department acknowledges that people are being hired in manufacturing and my anecdotal evidence confirms this.

New construction is still pathetically soft in most markets, but we are seeing a weird anomaly in the most devastated markets of Nevada, Arizona and Florida. Builders are starting to build houses. According to a recent article in the New York Times, the most devastated housing markets are starting to get hot. It appears that some buyers just want a new home and hungry builders with low cost lots are providing value. Buying out of foreclosure or employing a short sale is such a hassle it is pushing buyers to new. According to the article, individual buyers are losing out to out of state buying syndicates who are picking up large collections of foreclosures at cheap prices and
paying cash. Perhaps the dreaded foreclosure overhang will prove to be similar to a mild flu season, which bodes well for employment—but not necessarily unemployment.

Juan Williams, the astute Fox and NPR commentator, recently did an interesting piece on the composition of today’s long term unemployed. The stubborn unemployment is in older, white, blue-collar workers. He compares this demographic slice with black factory workers laid off in the early 1980s downturn. That group was very slow to get new work, saw families dissolve and higher levels of drug abuse and births out of wedlock. According to Williams, we are seeing similar trends now from the bluecollar, white, male demographic.

When I talk to people in the machining world I often hear confirmation of this employment issue. Company owners do not necessarily want to retrace their steps on new hiring. They may be looking for different skills and younger workers who are willing to start at a cheaper wage and be less insistent on health insurance. Immigrant workers with a strong work ethic may look more appealing than a 50-year-old former union guy who has been out of work for nine months.

I think the recovery of 2010 will be a little different than past rebounds. Companies will be hiring, but not necessarily rehiring. Unemployment will be sticky, but millions of people will be finding jobs.

The hot movie at the Cannes Film festival was Wall Street: Money Never Sleeps, the sequel to Oliver Stone’s Wall Street (1987). Michael Douglas plays Gordon Gekko again, who returns to the Street after spending eight years in prison. Art imitates reality. Reality imitates art.

I just finished Michael Lewis’ brilliant new book, The Big Short: Inside the Doomsday Machine, about the appalling fraud among the big shooters on the Street during the subprime fiasco. He could have used the same title he used for his last best seller, The Blind Side: Evolution of a Game, because of the duplicity and stupidity of the bond packagers and the rating agencies who blind-sided the government regulators and most investors.

In my callow youth I thought Wall Street banks were conservative stewards of investor money. The Big Short exposed them as crooked, dumb, cynical casino operators who lacked the scrutiny of Las Vegas.

I think the civil suit against Goldman Sachs was a preliminary probe by the SEC. Goldman’s management probably saw it as a political stunt to help the Obama 2010 Congressional election effort. But Lloyd Blankfein’s poor showing in Washington seems to have emboldened the Feds and New York’s Attorney General, Andrew Cuomo, to keep the pressure on. I’m sure Obama and Cuomo have read Lewis’ book, which lays out the derivative conspiracy with dramatic clarity. The big players—Morgan Stanley, Bank of America (Merrill Lynch), Bear Stearns, UBS, Goldman, AIG—are the names under scrutiny.

I really think we are going to see criminal indictments and “show trials” down the road. Lewis’ number one bestseller lays out the trail like dropped breadcrumbs. There will be a few Gordon Gekko’s headed to the penitentiary this time around, but unless we shut down the taxpayer funded Wall Street casino, it will all happen again in a few years.

Industry Scuttlebutt

  • I understand that some Japanese machine tool builders are running painfully short of inventory in the United States. Sales in Japan are up 260 percent year to year. The American distributors under-ordered last year and the Japanese factories slowed production, while huge Chinese orders flooded in several months ago. Six hundred CNC Swiss lathes were sold by one builder and 285 machining centers went to another for cell phone dies, swamping the companies. Now American demand is perking up, and the cupboards are bare. It will be interesting to see if ¥92 to the dollar will justify higher prices at IMTS.
  • The liquidation of Fadal machines in California has surprised the doubters. The liquidator, Machinery Network Auctions, has sold over 100 machines and has about a dozen left.
  • We hear that companies like Caterpillar, Deere and Case are still starving for inventory. They are pressing their vendors hard and their projections for next year are even more bullish.
  • On June 28 Cy Zvonar of Industrial Machinery Corporation of Milwaukee turned 99 years old. He still comes to work every day wearing a suit and tie like he has since 1939. It’s an incredible coincidence that three generations of Zvonars, Joseph, Cy and Jim, were all born on the same day of the year.
  • The authorities that operate McCormick Place in Chicago, where IMTS will be held Sept. 13-18, have awakened to the threat posed to its convention business by Orlando and Las Vegas. Millions of dollars will soon be flowing into marketing, but unless the total expense of exhibiting and attending is addressed, I can see the day when IMTS leaves the Windy City.

Elena Kagan has impressive credentials to become a Supreme Court Justice, but her nomination brings up some interesting questions about the composition of the Court. If she is confirmed there’ll be three Jews and six Catholics on the High Court—no Protestants, Buddhists, Muslims or evangelical Christians.

Four of nine Justices will be from New York city if Kagan gets in, one from each borough except Staten Island.

With Kagan’s appointment all nine Justices will have gone to either Harvard or Yale Law School. There will then be three women on the High Court, which would be a record number.

Kagan has written about the confirmation process, criticizing the charade of candidates for the bench who dance around their beliefs about crucial cases which the Court will hear. Now that she’s the one in the hot seat we will see if she’s as candid herself.

Ms. Kagan clerked for Abner Mikva who was one of Barack Obama’s early mentors. She was brought to Harvard by Larry Summers, who is head of Obama’s National Economic Council. She also worked in Bill Clinton’s White House with Rahm Emanual. This woman has great connections.

The only drama I anticipate is that a senator will ask her about her sexual orientation. If Ms. Kagan is gay, as has been speculated, it may come up in testimony about cases of special interest to gays. Personally, I hope she addresses the whispers. I would like to see a gay woman on the Court—especially a Court that begs for diversity.

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Swarf: Hyundai Heresy

By Lloyd Graff

Today’s Machining World Archive: May 2010 Vol. 6, Issue 04


I received impassioned letters (one is printed on page 13) about my “Swarf” piece in April recounting the purchase of new Hyundai cars by my two sons Noah and Ari. The letters were clearly heartfelt and probably representative of the feelings of many readers. They deserve an honest reply.

I did not buy the cars. My sons bought them, and they were focused on the monthly payments. Like me, neither are car buffs, but they valued my opinion on the car buying process more than on which car to purchase. They both did some research, but the primary reason Hyundai was on their radar screen was that they had driven a Sonata on a family trip in February and found it to be a capable performer.

I think the letter writers believe I conspired to have my sons reject American cars. But the fact is that they were rather naive car buyers and their driving experience was mainly with Toyota and some GM.

They were probably biased toward Toyota, especially Noah, who loved his 1997 Lexus despite a bad siege of transmission problems, dead air conditioning and a messed up radio. Ari’s strong bias was towards safety after working with badly injured patients in Chicago’s famed Rehabilitation Institute. I do confess I pushed them to look at the Prius, and if I were buying a car it would have been my choice because of the gas mileage. The question of buying American never really came up in the conversation. I had been a “buy American only” guy until 1996, when I chose Toyota because my Buicks and Chevys had been mediocre vehicles. GM had entered its desperate years and Toyota seemed more committed to America than they did.

I knew that my bread was buttered by the Big Three, but they were asking me to buy apple pie, motherhood and crappy products, and I rejected them with sadness.

Personally, I regret that we did not give Ford and Chevy a better shot. But the reality is my sons did not care, and I probably did not nudge them as much as I should have. We looked at Ford because it was gaining market share and I suggested they check it out. The fact that the salesman acted like he was doing us a favor to test-drive a Ford Fusion did have an effect on us. The attitude of a seller is important because it puts a human face on the brand.

In retrospect, I ask myself why we never even looked at the Chevy Malibu. It was probably because the Chevy dealer had shut its doors at the auto mall we visited. Both Ari and Noah were in a time crunch to buy because both of their cars were literally falling apart. They didn’t have the inclination to shop the market for weeks or months.For both sons, the last dealer we visited was Hyundai. (They never shopped together.)

Noah bought his car first. He wanted a vehicle with pizzazz, the lowest possible monthly payment and immediate availability.

Ari was more indecisive, but the fact that Noah bought the Hyundai probably affected his decision. He purchased his car a week after Noah, choosing a 2011 Sonata with a little less horsepower and smaller wheels. He really wanted a car that day, and buying a Hyundai offered the path of least resistance.

Response Letter
As an avid reader and financial supporter I was greatly saddened to see how your family makes major purchasing decisions. In your car shopping “Swarf” piece, you and the boys go to the local mega dealer, spend a couple of hours walking around and end up buying two cars based primarily on the “energy” of the salesman and the music in the showroom?

Let me get this straight. Both boys had to have new cars that day? They wouldn’t give the Ford guys enough time to check inventory at another lot and bring in the color or options they wanted? So some Koreans have good jobs because the Graff family is shallow and impulsive and won’t even take the time to see how good the American offerings are?

Where do you sell machinery? Hopefully to Koreans and the like, because it is people just like you that cause the high unemployment and loss of quality jobs right here at home. No, I don’t work for the Big Three. No, I am not a “union guy.” But I am an American manufacturing employer that works hard every day to keep my 40 people employed. I do that by quoting against companies across the globe that have the distinct advantages of near slave labor wages, a lack of employee safety and environmental compliance and trade imbalances that I have no control over. All I can do is to fight hard every day and hope that there are enough Americans that care to give American products a fair look. Obviously you are not such an American, even in these economic times.

I guess next IMTS I will wander around and see who has the best music, maybe even get a free latte and see who has the prettiest clueless girl standing out front. I will buy their machines, and who cares who the maker is? Who cares what the features are? Who cares about the impact on jobs? Not me, just bring on the energetic salesman!

Brian Capece has a five person shop in rural Maryland. He does wire EDM and precision machining for aerospace, satellite, medical and commercial clients, often working 65 to 70 hours a week. His wife runs his office now that his two children are in school. He’s been doing this for 10 years, since buying his first die sinker at an auction. It’s been a rough year for Brian. He says he used up his cushion of money to keep the business afloat while not letting any of his people go, because those core employees are the key to his business and if he lost them he would be in the soup.

He is finally back in the black but wonders if the path he has taken for the last decade was the right one. “After going to the tax man this year and seeing how much I had to pay, I really think I would have been better off working for somebody else than having my own business,” he said. His comment was not said out of anger or great regret, but I wonder how many people feel the same way—for the same money and less risk, they’d just as soon pull down a paycheck than sign all the checks.

Brian Pendarvis of Anaheim says he hasn’t felt the recession. His company, Pendarvis Manufacturing grew despite the softening that battered almost everybody else in the machining game. He attributes his success to marketing his job shop on the Web. Brian says he spends about $50,000 a year maintaining his Web site and spreading the word about his company’s capabilities on Yahoo, Google, ThomasNet.com and MacRAE’S. He pays for Google ad words, but just to promote the company within a 100-mile radius of Orange County.

His niche is combining fabricating, welding and machining, a combination we don’t see that often as firms reach for specialization. He says he tracks 5-8 calls per week directly from his Web prominence, which he says enables him to land one new customer per month on average. He lauds the work his Web designer has done for him—a firm that split off from ThomasNet—Creative Works.

Jim Chanos is famous for identifying the Enron scam, shorting the company’s stock and making a fortune. He runs a hedge fund named Kynikos Associates, which means “cynic” in Greek. He specializes in spotting emperors without clothes and is currently betting big that the Empire of China is a naked power. He compares China to Miamand Dubai of recent memory. The common thread is runaway condominium and office construction, huge real estate inflationand a shortage of able buyers. He says that today, all over China, high-rise buildings are rising, fueled by aggressive bank lending to developers. They are building 1,100 square foot shell apartments without floors, and selling them—or attempting to sell them, for around $150,000. The problem is that even though half are going empty, they are still building.

Chanos sees the phenomenal growth numbers in China being fueled primarily by real estate speculation and construction. In his view it is unsustainable. State and local governments are being funded by real estate development, so they have an interest in seeing it accelerate. They will suffer mightily when and if the bubble bursts. What happens if Chanos is right and the giant cranes go away like they did in Dubai and Miami? He feels that the raw materials companies who are supplying the steel, copper and cement will suffer immediately. Copper at $3.60 a pound could plummet, as well as iron ore and scrap prices. Crane companies will get killed. He feels that the Chinese currency, which everybody including the Obama administration is hoping will rise when it is no longer pegged—will fall.

Incidentally, Gary Schilling, the noted bearish economist who predicted the American stock market collapse (not the rebound, however) also feels the Yuan will fall in value when it is allowed to float. Jim Chanos is a very smart guy. He sees the Chinese bubble bursting later this year or in 2011. The Chinese have enormous reserves in dollars to soften the blow and may tighten credit dramatically soon to try to avert a property crash. China bashers may be happy to see the country suffer and revel in lower raw material prices, but with an interconnected world, be careful what you hope for .

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Swarf – Find Your Own Goat

For my 65th birthday on December 16th my daughter gave me a goat. When she told me about the gift I figured it was an effort to expiate the curse of the billy goat on my cherished Chicago Cubs. But no, this was an animal with an even better purpose.

For my Medicare birthday Sarah purchased a goat in my name from the WorldVision charity, which I’m told ended up in a small farm in Ecuador where it will provide milk for a family. The gift gave me pleasure, not only because it ended up in South America and not dropping dung on my patio and eating the hostas in the garden. It also gave me an insight into marketing to a jaded world, inundated with muddy media messages.

My daughter, a sophisticated and frugal person, put out $120 for a charity gift and photo of a cuddly goat presented to a milk deprived family in Ecuador. The goat sold her. The WorldVision Catalog would have ended up in the recycling bin along with a dozen other worthwhile charitable pitches, except for the hairy can eater on the cover of the brochure.

From a business standpoint the message is “sell the goat not the widget.” Your company and your product need a story and an image. I’m not talking about a building photo or a promise of precision.

Everybody has a building and if you can’t produce quality you would have been washed out two recessions ago. You need buzz, or at least a baa and your own credible goat to separate you from the herd. The competition wants to sell stuff. The buyer wants an authentic story.

Find your own goat.

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Swarf: Noah Graff’s Visit to Arve Industries, June 2008

Today’s Machining World Archive: June 2008, Vol. 4, Issue 06

Noah Graff spent the first week

of April in France’s Haute-Savoie region, just across the border from Geneva Switzerland at a press junket held by the Arve-Industries Haute-Savoie Mont-Blanc Competitiveness Pole (Arve-Industries for short). This is his account.

While famous for its ski resorts and mountain lakes, France’s Haute-Savoie region also happens to be a hot bed of screw machine companies; small to medium, privately owned firms whose origins date back to the clock making industry of the Middle Ages. Arve-Industries, named for its location in the Arve Valley, is what’s known in France as a “cluster.” It is an organization formed in 2006, of 183 companies in the region working together on joint R&D projects, to better compete in a relentless world economy. Lionel Baud President of Baud Industries, and Vice President of the Arve-Industries cluster, told me that before the cluster was formed, the small family businesses of the Arve spent little time or resources on R&D and rarely collaborated with one another. The cluster’s members believe their newly formed unity has the potential to bring the region’s companies unprecedented success.

I was the lone American journalist on the trip and the only one in his 20s, and I don’t think the French execs giving us the tours were accustomed to my frank, often sensitive questions. I asked them how French manufacturers could keep up with the rest of the world while tied down by their country’s mandated 35 hour workweek and laws prohibiting the firing of workers. I asked whether they were hiring a lot of workers from Turkey and North Africa to deal with the shortage of skilled labor. I asked why these companies wouldn’t just send all of their operations overseas, or at least 40 minutes across the border into Switzerland where many of these regulatory hurdles would be lifted. When I pushed the question about the difficulty firing workers as companies become leaner and automated one exec from Bosch, the one multi-national company we visited, answered frustrated, “Well, what do you want me to say?” But overall, most people I talked to, although a bit taken aback by my bluntness, really impressed me with their intelligent, honest responses.

The truth is, some companies in the Arve Valley do have plants in Switzerland containing some French employees who commute across the border daily. Switzerland has much lower corporate taxes than EU member states, it’s easier to find workers there, and its workweek is more flexible than that of France. Baud Industries concentrates its watch and medical device manufacturing there, yet Lionel Baud told me he still insists on keeping the most technical, complicated jobs in-house because the cluster is available for assistance and France is where he has the best communication with workers, which creates loyal employees and low turnover.

To deal with the 35 hour workweek, executives said that lights-out manufacturing, automation, and overtime helps keep up productivity. They also said that just because French workers put in less hours does not necessarily mean they can’t match productivity of workers with longer hours if they have superior focus.

As far as my query about firing workers – after a little badgering, the Bosch executive told me to downsize, the company sets up a type of early retirement plan for workers they want to lay-off that meshes with government regulations.

My questions about the employment of workers from the Middle-East and North Africa received the most diverse responses. One company said that 60 percent of its workers come from North Africa and that there are good training schools there producing a lot of quality skilled labor. He added however, that third generation North African immigrants born in France are often not interested in manufacturing jobs, similar to their native French counterparts. One company told me their workforce included 20 percent Turks or North Africans, but as more jobs are requiring advanced skills that number is declining. Another executive said he employs virtually nobody from those regions, but some of his best employees come from Eastern Europe.

Although the companies I visited had diverse business philosophies and strategies, throughout the week I felt a common spirit from my hosts; one of pride, creativity, and a passion to grow while still preserving their roots.

Managing Editor Jill Sevelow

attended the Delcam American Technical Summit, hosted by Methods Machine Tools in Sudbury, Mass., in mid-April. Jill was most impressed by the portfolio of Delcam products. Operations Director Clive Martell said their goal was “to build a series of ‘best in class’ when orchestrating their software CAM acquisitions. Aside from well-known turn/mill and Swiss-type lathe CAM software Partmaker (which Delcam acquired in July of 2006), Delcam includes DentCAD and DentMILL, a dental CAD system for dental machining, PowerMill for 5-axis machining, FeatureCAM, ArtCAM (which Delcam’s Rob Walker likened to “bringing craftsmen into the digital age), and now Crispin-CADCAM software for the shoe industry. In the age of increasingly individualized customization of product, Delcam’s software has evolved with market demand, generating sales of almost $60 million in 2007. Power point presentations laid the groundwork for each product, but customer testimonials drove the “message of excellence” home. Each attributed its growth and acceleration in its respective fields to the collaborative and innovative Delcam product used.

For many years I have been a

staunch advocate of gridlock in Washington politics. The visceral animosity on the national scene began when the Republicans ganged up on the Democratic House Leader Jim Wright, forcing him out of Congress. The Democrats finally got even by banishing Tom DeLay. The legislative process is a Pork Barrel provider presently and not a vehicle to tackle the serious issues of the day.

This might be starting to change. Assuming the presidential race is between John McCain and Barack Obama, a pair of mavericks in their parties who won their nominations as long shot outsiders, we might see each one reaching out to the other party for cabinet members and even vice presidential possibilities.

Some young people are reaching out to both parties to actually address issues that people care about. George Bush wasted eight years in addressing the health insurance problem that affects almost everybody in the United States. The insurance companies and Federal bureaucracy have made such a mess out of health care that we may be near some kind of national compromise if the partisans are circumvented by the people. With some baby boomers retiring soon and a new president, this would be the time.

Another huge Bush failure is immigration policy. He abdicated to the Lou Dobbsians and now the country is losing its transfusion of people energy. Hopefully McCain, who has a grasp of immigration issues from his Arizona experience, or Obama, who is sort of an immigrant himself, will pull us away from the know-nothing cheerleaders in both parties.

On Iraq it may be easier for McCain to extricate a lot of American troops from combat than Barack Hussein Obama, who may have to show the country, the Joint Chiefs and Bin Laden that he is a tough hombre.

I am strangely optimistic about this election and totally undecided about who I’ll vote for. These are two good men to choose from and I haven’t felt that way for a few decades.

On May 8, the state of Israel had

its 60th birthday as an independent country. The country has never been as strong economically as it is now with 20 years of spectacular growth behind it.

Americans can learn a lot from the Israeli experience.

The core strength of the Israeli economy derives from the creativity of a highly educated population. In technical fields, Israel excels. Silicon Valley is filled with Israelis who live in the U.S. and then go back to live in Israel’s Silicon Valley near Tel Aviv.

Israel thinks globally. A myriad of trade deals with other countries have thwarted the Arab economic boycott. After military service almost every secular young Israeli leaves the country for at least a year of travel. This gives the population a worldliness virtually unmatched elsewhere.

Israeli business has abundant access to money through a thriving venture capital network. A host of Israeli tech companies and medical firms have gone public on the Nasdaq stock exchange. Most children in Israel speak at least two languages, Hebrew and English, which is a necessity for global commerce.

The Israeli economy has continued to thrive despite terrorism, six wars, political isolation, and a tiny population with a large segment of parochial Orthodox Jews, many of whom barely work in the modern economy. In many respects, it is an economy functioning with one hand tied behind its back.

The United States can learn from Israel that terrorism can be contained with intelligent determination. We can also learn that immigrants, even poorly educated ones, can bring prosperity if properly acculturated and educated.

Israel has shown that a tiny country, surrounded by fanatical enemies, can thrive if its people have ingenuity, positive energy, intellectual capability, access to capital, a global outlook, and the determination to thrive – no matter what the obstacles.

Noah and I visited Vienna,

Austria recently on a business trip to central Europe. Our first order of business was to find the original Julius Meinl coffee shop, which is my favorite in Chicago.

Our first challenge was to locate the place. Vienna has a big central shopping area, the “zentrum,” with a vast array of shops and restaurants adjacent to the city’s historic buildings. We took the “underground” to the zentrum and asked people for directions to Meinl. Nobody was helpful until we found, of all things, Starbucks. I walked into the old reliable and asked the young barista behind the counter where Meinl could be found. He answered instantly and offered detailed directions in excellent English. He then added that Julius Meinl had recently opened a store in Chicago.

After several missteps, we found Meinl at about 6:00 in the evening on Sunday. The only part of the store which was serving customers was the outdoor seating area. The blond fraulein who came to take our order spoke no English. She was quite pretty but she carried a near scowl on her face. I tried to order a latte, but she only understood cappuccino, so that’s what we ordered.

The coffee came promptly and it was beautifully presented with a heart artfully drawn in the foam. The size of the cup was about one third smaller than the comparable American one and the price was double in American dollars. To the best of my tasting ability, the Viennese and American coffees tasted the same – excellent. But the attitude and the price were decidedly better at Julius Meinl in Chicago.

Jonathan Goodwin dropped out

of seventh grade to help pay the bills and follow his passion for cars and engines. Today the automotive world bows to his genius and wonders if this car nut might actually win the 10 million dollar X PRIZE for producing a low emission, competitively priced, 100 mile per gallon car.

His partner in this venture is Neil Young, rock legend, who contributed his 1960, Lincoln Continental “boat” as Goodwin’s test car.

Goodwin works out of a garage where he specializes in converting Hummers into fuel sipping diesels while boosting their power. He also likes to run his thug cars on fried chicken grease contributed by the local KFC outlet.

The fact that the prestigious X PRIZE contest committee has allowed Goodwin and Young to apply to join the elite, well financed, automotive companies from around the world gives him credibility.

Goodwin is negotiating with DHL to convert 800 vehicles to super efficient systems which cut fuel costs by 50 percent.

It appears that his approach is unique because he does not want to build a new vehicle and engine. His devious plan is to make inexpensive conversion packages for existing vehicles turning them into biodiesel burning plug-in hybrids.

Proving his point on Neil Young’s 40 foot “boat” may not win the X PRIZE, but that’s what they said about the crazy bike mechanics Wilbur and Orville Wright in 1903.

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