A Bad Deal
Wednesday, Graff-Pinkert hopefully finally buried a turd of a Swiss screw machine. You probably saw it over the years in our advertisements—a Tsugami B0205 II, Mfd. 2014, that we bought in an online auction for about $45K. The great investor, Charlie Munger, who died last week at 99, famously said, “If you mix raisins with turds, you still have turds.” Graff-Pinkert better have a lot more raisins in its stock to cancel out turds like this Tsugami.
The biggest problem with the machine was that it was configured only to run blanked parts—not bar stock. We figured a customer could put a bar feed on it, install a guide bushing housing and it would be a solid Swiss machine. But that turned out to not be the case.
The second biggest problem with the machine was that it just didn’t look great no matter how much we cleaned it. The OEM also told every customer who asked about the machine that it was no good, which in retrospect I suppose was true.
A few months ago, we finally sold it to a local customer for about $30K—and we were very happy to get that price. The customer tried his hardest to make it work with a bar feeder that we supplied, but they just couldn’t get the machine to run bar stock. The control’s configuration couldn’t be changed. So they returned the machine.
In an online auction on Wednesday, the Tsugami fetched $5,500.
Time to put that deal behind us and learn from it. My dad (and mentor) says that you have to gamble in the machinery business, and sometimes we make bad gambles. Fittingly, gambling, also happened to be one of the main hatreds of Charlie Munger.
I prefer to look back on buying that machine as a serendipitous learning experience—you knew I had to bring serendipity into this blog. We learned that we need to be more careful buying Swiss equipment at auctions we’ve never inspected, particularly ones that don’t come with bar feeders and don’t look so great. In the future, if we decide to buy a machine that looks like this one did, hopefully we won’t gamble $45K on it.
The problem is that the machines we often make the most money on are the dirty ones or strange looking ones that turn other people off. The secret, which my fellow used machinery dealers know, is that you have to be able to tell “good dirty” from “bad dirty.” Good dirty looks bad, but you can wipe it off. Bad dirty is rust and milky residue left by water soluble coolant. I’m sure Charlie Munger would have summed that up more cleverly.
The Big Deal
Right now, we are working on the biggest deal of the year, hopefully selling some INDEX screw machines overseas. It’s First and Goal on the half-yard line. We are so close! Everybody wants it to happen, but it’s not quite done.
The deal has been a roller coaster so far. The customer’s customer kept changing their mind, so our customer kept changing their mind. I can’t get too detailed because people involved in the deal could be reading this, and I don’t want to jinx it. One day I will tell a better story about it.
But what I can say is that the deal has kept things fun and interesting in a so so year. It’s been a high stakes puzzle, first buying the machine and then selling it. But probably the part that has made the deal the most fun are the people I’m working with. I’ve gotten to know our partner and I’ve really enjoyed working closely with him. We had talked about doing deals before but nothing had ever happened. His dad has known my dad forever, and our grandfathers knew each other, and I suppose they competed against each other back in the golden age of cam multi-spindles.
Also, I’ve really enjoyed working with great people from our companies, our logistics people, our INDEX ace, the people who organize things and tell me what I already should know but don’t. They’ve made this thing happen. Of course it hasn’t happened yet. And if it doesn’t happen, its ok, because it will make a great story and someone else will buy the machines.
Our customer happens to be one of my favorites. They can be a tough negotiator, but if they say they are really interested in equipment deals often get done. I’ve met up with the head of purchasing on three different continents to sell various machines over the last 9 years. He always wants me to find a machine for him in the United States so he can travel here to look at it, and I’m always trying to meet him in some other exotic country to sell a machine. I’ve met up with him in Poland, Slovenia, Sao Paolo and Pennsylvania, just to name a few. We wrangle over some dollars and euros for a few minutes and then hopefully hang out until he has to go home way too soon. I’m grateful for our relationship.
A Great Hanukah Gift
I just saw a new LinkedIn post from our friend Scott Livingston of Horst Engineering (great podcast interview). Every year his company sells dreidels machined in his shop on Swiss lathes. They come in Titanium, Aluminum, or Stainless Steel.
It’s great to see something TANGIBLE and fun, made on the machines we sell.
It’s something directed at me–a Jewish used machinery dealer with a toddler who already is playing with the wooden one in our kitchen.