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?