Optimistic about the machining business?

Fixing the Graff-Pinkert parking lot

By Lloyd Graff.

I am spending $25,000 this summer to repave the parking lot, install a generator, fix the roof and redo the bathroom of the 21,000-square-foot factory my company, Graff-Pinkert, occupies. These are repairs I’ve put off for several years, but I am finally feeling confident enough about the future of our economy and my business to make some improvements that will not be directly reflected on my bottom line.

I also have raised the hourly wage I pay my key employees significantly, without them asking. Most of them have worked at the company for many years, and many of those years saw their hourly money stagnate.

These are difficult business choices because none of them were forced upon me. They all could have been pushed down the road, enabling me to pull out the money I invested in the business to buy out my brother last year.

But when my wife and I decided to do the buyout, our belief was that it was time to rebuild the company that had been so much of my life for 40 years.

For the last 15 years, machining and all of manufacturing in America has been in rolling decline. The decline was masked by the dot-com bump in the late 1990s that fueled the huge surge in telecom manufacturing. This disguised the shift in manufacturing to China, Korea and other parts of Asia. Manufacturing was being hollowed out, but it was not so visible.

Then we had the telecom bust that coincided with the tragedy of September 11. Bush tax cuts, war spending and the phony housing boom kept the economy from collapsing until 2007-2008. But then we had the horrendous recession that only Ben Bernanke managed to contain, by putting his finger in the economic dike with his imaginative interest rate manipulations.

Now, 15 years after this wicked decline started, the survivors in manufacturing in North America have fresh opportunity.

China has become a manufacturing behemoth, but its growth has been stagnating for a while. The Chinese are looking inward now, and about as much manufacturing is coming back here as there is leaving.

Automotive is in a cyclical rebound headed for 16 million units. More vehicles are being built here and in Mexico. Trucks are hot because construction has reawakened here. The shale boom in hydrocarbons is enormously fortuitous for the U.S. and will gain steam despite the determined opposition of environmentalists. The fear of terrorism has abated. Medical, telecom and electronics are in ascent, and ObamaCare is being pushed back.

This is a relatively bullish picture. There is never a perfect time to do anything. You can make a pessimistic case, emphasizing the budget deficit, rigor mortis in D.C., sluggish growth, bad education, and the Cubs rebuilding–again.

But I am paving the parking lot and raising my people because I want to be proud of where I work, and I want to show the folks who I depend on that I value them highly and I want them to stay.

Question: Are you optimistic or pessimistic about the machining business?

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13 thoughts on “Optimistic about the machining business?

  1. Kelly

    1200 days and counting then I will be completely optimistic.
    But in the mean time things are improving slowly.

     
  2. Peter @ Polygon

    I’m very optimistic. I don’t remember a time (other than when I was young and being groomed by teachers, counselors and family) that so many people were excited and positive about manufacturing.

     
    +2
  3. Jeff

    I am leaning toward pessimism. When I finished my tool and die apprenticeship in 1984 I was making $13.75/hr. If you are lucky a toolmaker may get $25/hr, but it is more likely to get about $20. There is no training in place. The government is still wasting great sums of money on regulation. I have no hope for a resolution to the gridlock in Washington. College loans are going to be our next mortgage crisis. And, I still can’t figure out Obamacare. I just want another ten years so I can live at the poverty level on my 101k.

     
  4. Lance

    Pessimistic. Work is sporadic, prices are stagnant, costs are escalating and workers (at least in the manual machining arena that so many customers seem to demand work that can only realistically be done ) are non-existant

     
  5. Eric

    We are doing the same. We did the 1983 roof in April. No more buckets every time it rains! We just replaced a 1992 CNC mill that had a punch tape drive on it with a new one. And now we are replacing an Air Compressor. It’s nice because this was all stuff that should have been done in 2009 and has been put off but it is tough because we aren’t exactly making tons of money right now but this is all stuff that needed to be done. I know if the economy held up we would be alot further down the road on all the stuff we need to replace around here.

     
  6. Jeff

    Definitely optimistic that Machining and Manufacturing is on the upswing in the USA and North America Lloyd! A real sense of pride to rebuild and improve the MADE IN THE USA brands so many before I have built! While many of my generation have sat passively on the sidelines during the 90’s and trying times of the first decade of 2000, wondering what would be left for our legacy, it is cool to see this re-emerging pride taking hold in all facets of Manufacturing, Social and Mainstream Media, and Consumer Awareness….While there is, no doubt, a long road ahead to leave the lasting legacy, at least we at Trusty Cook know there are many like us who are rolling up their sleeves to get the job done….definitely makes it easier buckling up the chinstrap and repaving the parking lot!

     
    +2
  7. arpad

    Optimistic.

    And as a tech head, a software guy from way back, it’s manufacturing, the much denigrated “smoke stack” economy that’ll lead the way.

    I’ve noticed that those in manufacturing see the CNC revolution as an incremental change. Sure some of those increments are pretty, damned big but still it’s a quantitative change; we’re doing more with less, we’re not doing something fundamentally different.

    But quantity has a quality all its own to quote Joseph Stalin and when the quantity is money the changes engendered are fundamental.

    Society, even the entire human race, is being changed by the relentlessly dropping prices of all things electronic, driven by Moore’s Law. Something similar is happening in the machining industry although there’s no catchy name for the phenomenon.

    There ought to be because there’s hardly any aspect of people’s lives that isn’t touched by manufacturing and the “CNC revolution” is simultaneously cutting the cost of manufacturing at the same time it’s reducing time to market and increasing quality.

    Fundamental technological changes seem to take about thirty years to mature. A supply chain built on the new technology has to develop. Engineering and skilled trades have to understand the new technology. Designers and entrepreneurs have to imagine new products that would’ve been previously uneconomic. I’m not sure where on the calendar to mark the birth of the CNC revolution but I’m pretty sure thirty years hasn’t passed yet. Should be pretty interesting to see what happens when that day rolls around.

     
    +3
  8. Jim Goerges

    Great question, it depends if you want to talk about making chips or making money. Chip making will be OK if you are diversified, if your not, well you could be having problems. The making money part, well it will not be so good. Who do you think will be paying the bills, add cap and trade, to welfare, healthcare, and retirement, then add that cities, states and the national government has issues, um, can you say DETROIT! Do you remember the article that was produced by your people, look at my response. There are huge issues before we talk about government debt, at that and this will be getting ugly real soon, uh, wanna bet?

     
  9. Val Zanchuk

    Generally optimistic. The economy is slowly and sporadically recovering. We have made major machine tool investments and raised salaries and wages. New business is still coming in at a good rate. Our backlog is better than this time last year. Productivity is rising. We prosper in spite of dysfunctional governments – that’s nothing new.

     
  10. Kevin Hartford

    We’ve done many of the same things Lloyd has done. In fact we have four key employees who actually own 10% of our business and we pay them handsomely. We’re also in the process of expanding our shop by over 4000 square feet, so we’re optimistic.

    Our shop has been on a steady incline for the past four years. In fact we were just named one of the fastest growing 100 Companies by the Pittsburgh Business Times in Western PA, so our outlook is optimistic. We’ve been fortunate to have customers in the Energy Sector who are very busy, which in turn keeps us busy.

    I read one comment that said there is no training in place. That is simply no true in Pittsburgh. The NTMA’s Pittsburgh Chapter has a highly respected Apprenticeship Program that has been in place for almost 40 years. Right now we have five young machinists going through the program and they’ll have their Journeymens Papers in a couple of years.

    I encourage everyone to checkout the NTMA in their area because NTMA National now has NTMA-University which is an online accredited program designed specifically for our industry.

     
  11. Jeff Kernell

    I feel the same way. 61 years young, and planning on staying until 75 min.. We will continue to on the job train new employees. Thank you for your insightful articles.

     
    +1
  12. jax thomas

    i would be curious to know what % of hourly increases are you talking about. i am going to do the same and i am having a hard time coming up with the % to go with. my accountant says 2.5% is the average increase these days. after no raises for the last few years, that seems low to me. ???????????? i have no idea what to do

     

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