Swarf – Battling for Steel

Today’s Machining World Archive: March 2010, Vol. 6, Issue 02

I recently talked to General John Batiste who I interviewed three years ago in Today’s Machining World. Batiste served 30 years in the U.S. Army before walking away from the carnage in Iraq before the surge turned things around.

He went to work at Klein Steel in upstate New York, helping to run the large steel service center business. Today he says he‘s happily hustling steel and sees business improving.

General Batiste had been stationed at Fort Hood in Texas during his military career. I asked him about the psychiatrist, Major Malik Nidal Hasan, who turned militant and allegedly killed 13 people on base during his rampage. He said he was appalled that Hasan had
not been ushered out of his position after displaying so many signs of erratic and potentially dangerous behavior. He says the Army has clear procedures for such cases, and he saw a lot of troops in Iraq who needed counseling who he made sure were channeled correctly.

I asked him if he had seen the movie, The Hurt Locker, about a bomb diffuser in Iraq. He had seen it, but felt it didn’t realistically depict the standard procedures and discipline of the U.S. Army, though he believed the film gave an accurate portrayal of the addiction to adrenaline that combat can create.

The General didn’t want to talk about the Afghanistan war, but after I prodded him he said that it is looking like a quagmire.

Three years removed from the Middle East, John Batiste sounds quite content to battle for steel orders far away from the cold steel of rifle fire.

I talked to Joe Hammer recently to see how his company, Process Screw Products Inc. was fairing and he was quite upbeat. Joe runs an old school screw machine shop with 100 Brown & Sharpes in little Shannon, Illinois, 125 miles west of Chicago.

Joe bought a dozen nice Brownies out of the Micro-Master auction sale four months ago. Most of the value in that sale came from the late model Star Swiss CNC machines, but there was a lovely B&S department that sold for $500 to $1,500 per machine.

Joe Hammer has put six of the machines into production and is delighted with the buy he made. His business, which was started by his father 50 years ago, runs well because of the homegrown talent. Sons and daughters and assorted family members make up the core team and enable him to compete successfully in a CNC world. And he may not be the lone contrarian.

Lately I’ve been getting a lot of calls for Brown & Sharpes, which seem to fit a niche for 1,000 piece orders that repeat.

Is something old becoming something new?

Seth Godin’s new book Linchpin, is troubling and provocative. Godin is a brilliant marketing commentator who has now tackled the subject of how to make yourself indispensible to an organization. It is troubling because the skills which make a person the glue that holds a place together are not what is being taught in school. President Obama and talking heads in government and the media extol
the value of “education” and learning math and science like it is the Holy Grail of the country. But Godin argues that high schools and colleges are turning out people who fit a 1960s and 1970s world of assembly line workers and interchangeable and expendable people. Godin’s message is that every worker needs to strive to be the crucial piece of a firm, “the linchpin” that cannot be let go. The linchpin is the glue person, the one connected to clients and the staff or the one who knows the recipe of the company’s secret sauce. This is not what school trains you for. The specialist may get hired, but then he or she must quickly master the keys to the organization if they want to be fireproof.

The cross currents of job growth, environmental protection, energy and raw material security for the United States make for a public policy jumble. The Obama administration is showering incentives to build alternative energy facilities using wind and solar under the “green jobs” theme, and some Republicans have joined in the chorus. The sad fact is that the subsidies usually benefit foreign
manufacturing more than domestic. Bloomberg recently ran an informative piece talking about a $2.1 million subsidy for Suntech Manufacturing to build a polysilicon solar panel plant in Goodyear, Arizona. It will employ 70 workers who will assemble 30 megawatts of power. Meanwhile in China, Suntech plans to boost production 40 percent to 1,400 megawatts. In Wuxi, China, where the Suntech plant is located, minimum wage is $141 per month, about 15 percent of the U.S. minimum wage. The stimulus package contained $2.3 billion in tax credits for renewable energy manufacturers. Obama wants to expand it to $5 billion next year. The unfortunate fact is that the big solar producers are making their stuff in China and Malaysia. “Green workers” will install it here, but the incentives will benefit big multinationals more than local American manufacturing companies.

This year’s Super Bowl hinged on the recovery of a surprise onside kick by the New Orleans Saints at the beginning of the second half. Saints coach Sean Payton gambled that his team could recover the ball and change the momentum of the game. It worked. The Saints then outscored Indianapolis 25 to 7 in the second half to upset the Indianapolis Colts. I laud Payton for the gamble. Most pro coaches are extremely conservative in mapping a game, but Payton was willing to gamble, as he had done late in the first half by shunning a sure field goal to go for a touchdown from the one-yard line on fourth down. The Colts stopped the run, but New Orleans still made a field goal just before the first half ended. According to the blog, Advanced NFL Stats, the Payton gamble was not roulette. The blog reports that although the success rate of NFL onside kicks is 26 percent, the success rate of surprise onside kicks is actually around 60 percent. The reason they have a bad name is because they are usually attempted when the other team is expecting them and playing a “hands team” of ends and backs who practice receiving onside kicks regularly. I submit that teams should make the onside kick a more common practice. If kickers became extremely proficient at onside kicks like they are for field goals, they could completely upset the special teams’ return game. Large segments of the field would be vacant, and blocking schemes would be a mess if teams routinely used “surprise” onside kicks. In business, most people live in the world of routine. They play it safe, follow accepted practices and live in the world of the average—perhaps a little below or a little above. We all need more onside kicks. Actually, we need to get more kicks period.

I read an interesting piece about a new nickel mine being developed at considerable cost by Kennecott Eagle Minerals Company in the Upper Peninsula of Michigan.

It will produce 300 million pounds of nickel per year when it hits its stride in three years. But naturally it is being challenged by environmentalists and Native Americans, who believe it will endanger the Coaster Brook Trout and pollute tribal lands. Normally I pooh-pooh the Greenies, but I have actually caught trout in the U.P. and I believe in the value of bio-diversity.

Before we dismiss the Sierra Club as nuts we should consider the hellhole China has become from gross pollution which shortens the life of its citizens and even floats across oceans to mess up the world.

The importance of humble species of reptiles like the Gila monster is dramatized by the advent of Amylin Pharmaceuticals’ diabetes drug BYETTA®, which is improving the treatment of the dreaded disease in a meaningful way. In a few months we will see an injectable BYETTA®, which will allow a diabetic person to require only one shot per week. The active part of BYETTA® came from Gila monster saliva. No Gila monster, no BYETTA®.

The nickel mine will be the only U.S. nickel mine and will help meet the demand for more stainless steel. But it would be a pity to ignore the Coaster Brook Trout. The balance is hard to find, but even a Green doubter like me is grateful that the big miners have to allow for the complaints of fishermen before they push the earth around to make a buck.

Is paying overtime rather than bringing in new employees a lean manufacturing practice? For adherents to lean concepts, the question of how to handle a “bullwhip” effect where companies need to rebuild inventories is a challenge for suppliers. People who were laid off may be unavailable for a call back or may be happily pruned. Overtime is expensive, and eventually core workers get burned out working six or seven days a week or 12 hour shifts. Temps are often an imperfect answer because they require significant training and may be poorly integrated into a group of standoffish employees who are offended that old employees are not being rehired. As contract shops reach the “bullwhip” phase of inventory rebuild, how do you think workforce additions should be handled?

Hans Peters needs some help. He recently bought a machining business with several late model Citizen CNC Swiss-type lathes. He has business, but his key setup and programming guy was the previous owner who temporarily stayed on to ease his path into the operation. But he’s moving on shortly to run another company he owns, which leaves Hans in big need of a sophisticated CNC person to join his firm, M&M Specialties, in the small town of Greeneville, Tennessee, located between Knoxville and Nashville. It’s not an area like the Twin Cities, or even Memphis or Puerto Rico, where you have a well established medical manufacturing complex that supports CNC training. So Hans figures he needs to import somebody. He has contacted three recruiters, but so far no cigar. Even with 10 percent unemployment and 16 percent shadow unemployment, it is hard to find the type of skilled people Peters needs who will relocate. Peters understands the rigors of relocating. His wife and young children are at the family home in Delaware, where previously he had been in business with his three siblings. At 44 years old he wanted to run his own shop, and spent close to a year looking for the right situation. He went into the precision machining business because he saw opportunity in the depth of a recession. It
was a gutsy call, especially for somebody who lacked technical sophistication. Hans Peters is 600 miles away from his family, and his programming lifeline is moving on. Is there anybody out there who can help?

They say tough times are the best ones in which to start a business, and Zach Peterson hopes to build his new machining company, SoDak Machining Inc., near Rapid City, South Dakota, out of the ashes of the recession. Zach is 28, with 13 years of being around machine shops. He grew up in Gillette, Wyoming, where his father mines coal. He took high school shop classes, did a two-year tech college stint, and has worked on lathes and mills all along the way. He started up in a pole barn outside of Rapid City, about the same time his wife became pregnant. His first machine was a Hwacheon CNC lathe with a 12” chuck, manufactured in 1997. He then picked up a Mazak vertical machining center with the help of a Twin Cities dealer, new in 1998. He had $20,000 in personal seed money to start and went to a local bank for instruction on how to acquire an SBA loan. He said the paperwork was amazingly easy to navigate. The bank steered him to a consultant who helped him write a business plan with projections. In a short period of time he had $50,000 for capital investment and a $95,000 line of credit. He has found clients by knocking on doors and using some of the contacts he had in the coal and oil industry in Wyoming. Business is growing. He hopes to acquire a larger vertical mill soon. His wife has helped in the office and the plant, but with the baby imminent, she’s about ready for some maternity leave. Zach was proud to tell me that his first non-family employee was starting work on Presidents Day.

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