My Quest for Serendipity

By Noah Graff

Wednesday I sold a LICO LNT-42S CNC lathe to an old customer (assuming I’m not jinxing the deal by writing about it now). I confess, a month ago a European customer agreed to buy this same machine and its mate, but then 24 hours later he backed out! Wait, did I have a similar story in my last blog? 

But I digress.

The story of this LICO goes back a bit. A few months ago, a different customer sent me an email out of the blue, telling me he was interested in buying this machine model. I suppose he contacted us because this machine is described by people as a sophisticated CNC version of a Brown & Sharpe screw machine. It’s a machine that almost never turns up on the used market, which can be a good thing or a bad thing for a used machinery dealer/treasure hunter like myself. 

I posted online that I was looking for this machine on Surplus Record, a bulletin for people who have used equipment they want to buy and sell. A few hours later, a used machinery dealer, who we had done a deal with recently, contacted me to tell me that he had just bought two of these machines. He had never sold a LICO before and neither had we, but the machines looked really good, so we took a chance and bought them for stock.

The original customer who asked for the machines never ended up buying them, but we weren’t phased. We knew we would eventually sell them to somebody.

Were we lucky to find these machines—one of which I sold this week? We wouldn’t have found them if we hadn’t been searching for them for customer who turned out not to really want them.

Rather than sheer luck, I classify this occurrence as serendipity, a vital ingredient for success in the used machinery business. 

Noah with a LICO LNT-42S At Graff-Pinkert

I recently started listening to a book, The Serendipity Mindset: The Art and Science of Creating Good Luck, by Christian Busch. Busch says that people who experience a lot serendipity in their lives, aren’t just lucky, they set themselves up for the unexpected. If people want to find new treasure, be it a good used screw machine or the love of their life, they have to put themselves in situations where a lucky discovery can happen. 

As time consuming and awkward as it sometimes feels, talking on the phone is one of the most useful things for me to find serendipity. Often I call a customer to try to sell a machine and he says he doesn’t want it. But then we talk a bit, and I discover something way better than the thing I had first called about. Maybe he does’t want my Wickman, but he has three Citizens he wants to sell.

I’ve discovered over time that specificity in a conversation is an important trigger to bring out potential serendipity. If I call someone out of the blue and ask them, “Is there any used equipment you want to buy or sell?” more often than not they will say, “no, we’re good.” But if I look on their company’s website and comment on certain machines I see, or if a customer teaches me about their business, new potential opportunities materialize. If a customer has a lot of ACME-GRIDLEYs and I make a comment about that, there is a decent chance there is either an ACME they wish they had or one they don’t want anymore. 

Maybe the conversation does not lead to a deal, but the customer tells me something important that ends up improving my life. Maybe the customer is smart and fascinating, and they agree to be a guest on my podcast! That’s quality serendipity.

When I get to work in the morning, the first thing I do is update my to-do list for the week and for that specific day. I want to keep my eye on the ball and get stuff done. Unfortunately, if I am too focused, I miss out on the chance to explore and find things accidentally. So I try to set aside my afternoons to loosen up a little and make some calls. I try to plan to have a period of time that is a little less planned.

Busch says we need to stop pretending that we can map everything out and control everything. Instead, we need a good compass, a guiding principle or north star so we can embrace the unexpected but still filter out distractions that can hinder success. I’m still trying to find the right formula.

Question: When has serendipity played a part in your life?

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Best of Swarfcast – Ep. 61 – Facilitating a Manufacturing Network with Xometry’s Greg Paulsen

By Noah Graff

This season we’re talking about how your machine shop attracts new customers. Today, we wanted to share a podcast from our second season which we feel provides a useful solution to finding fresh business. Tune in to our interview with Greg and share your own experience with manufacturing networks in the comments below. Thanks for listening.

Today’s podcast centers around a company that provides capacity for machining firms that lack resources to meet clients’ needs.

Our guest is Greg Paulsen, Director of Application Engineering for Xometry. Xometry provides manufacturing on demand using an artificially intelligent quoting system and a manufacturing partner network of over 3,000 companies.

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

 

Main points of the interview

(3:00) Greg explains his background in product development working for firms in the additive manufacturing sector. He discusses the his dislike in his previous job of sending out lots of RFQs and then having to wait for responses. 

(3:40) Greg explains that Xometry’s purpose is to get rid of the RFQ process for most parts using AI technology. On Xometry’s website a person can submit a 3D CAD file and instantly receive an estimate for price and lead time on a job. 

Greg Paulsen of Xometry

(4:12) Greg says that Xometry has a network of manufacturing partners that can provide CNC machining, sheet metal processing, injection molding, as well as 7 different 3D printing processes for over 60 different materials.

(5:05) Greg characterizes Xometry as a storefront that connects work with those that are best able to produce it. It has over 3,000 manufacturing partners, mostly small manufacturers of diverse disciplines. Greg says that the large number of companies in Xometry’s network quoting work enables it to determine what price is “market fair” for a job.

(7:35) Greg says it is easier to quickly determine prices on low volume jobs (1 to 1,000 pieces). He says often large companies such as Bosch use Xometry so they don’t have to worry about producing very small volumes. He says that Xometry can also facilitate high volume jobs, but clients would have to have a more involved consultation with Xometry’s staff to set up the process, rather than using the online quoting system.

(9:30) Greg says Xometry is usually used by companies who are already working at full capacity and then receive unexpected work. He says shops also utilize Xometry when they need to do work that doesn’t fall into their normal areas of expertise. 

(11:30) Greg talks about how manufacturing firms can join Xometry’s partner network. He discusses a vetting process in which Xometry pays potential partner manufacturing companies to make a sample part.

(27:50) Greg talks about another service Xometry provides that he calls the Finishing Network. Xometry matches manufacturers with partners that can provide secondary operations, anodizing for example. In these matches the clients can communicate directly with each other, unlike Xometry’s anonymous manufacturing on demand service. 

(35:40) Greg talks about Xometry’s supply services. The company can provide manufacturers with raw materials as well as tooling.

(44:50) Greg talks about Xometry’s revenue model. He says it generally inserts around a 20% margin for transactions. Its system finds the delta between the market fair price for manufacturers’ take rates and the market fair price for the customers’ take rates.

Question: What have been your experiences with manufacturing networks like Xometry?

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A Year of Misery and Vitality

By Lloyd Graff

It is finally a moment to look back on the Covid-19 Pandemic of 2020 and think about the changes in America it has hastened. Many of them would have happened over time but were dramatically sped up by sickness and recovery. 

****

First, healthcare. The astonishing development of the mRNA vaccines to quickly spur immunity with minimal side effects will go down as one of the greatest advances in medicine in a hundred years. The Turkish husband and wife team in Germany and the Moderna scientists in America had both been working on their ideas for more than a decade when the first whiff of COVID-19, wherever it came from, showed up and immediately started the wheels turning.

The COVID-19 vaccines showed America that the entrepreneurial medical system with a profit motive could move faster than any government organized medical system. The Turkish couple in Germany heading BioeNTech almost immediately teamed with Pfizer in America, headed by Albert Bourla, a Jewish Greek immigrant, to get a vaccine into production and accepted by a timid medical bureaucracy.

A second important shift was telemedicine replacing physical appointments. This was in its infancy prior to the pandemic, but with lockdown and rampant fear it quickly became a viable substitute for a large percentage of office appointments. In business we have seen similar changes.

***

The Great Office Boom from 2010 to 2019 vanished overnight. The WeWork fad of shared office space quickly became a joke as the downtown offices of huge law firms and major corporations lay vacant except for venturesome mice and lonely janitors. Zoom tied everything together, business travel virtually ended, and hotels and restaurants lay fallow.

Will downtown offices, commuter trains, and business entertaining come back? Unlikely, I think. In Silicon Valley Google, Facebook, and others have quickly decentralized. People are leaving New York, Los Angeles, and Chicago, and heading for Provo and Austin. Will they come back? Unlikely, unless taxes fall, housing costs shrink, and city crime turns into mass friendliness. 

These are fairly obvious shifts, but they are so hugely important that I had to discuss them first. But there are also more subtle changes that I see. 

The used machinery business is good again. In fact it is better than good, unless you are dedicated to the oil patch. For the first time since the late 1990s, almost every metal working business in America is busy. Yes, we have inflation of steel prices and non-ferrous metals, and it is hard to find workers, but if you pay enough for either you can keep rolling. 

The new minimum wage is $20 per hour, or soon will be. A person can finally make a middle-class living as a machinist, and this will draw people to the field who no longer want starvation wages in the restaurant and travel business. 

Housing is hot again, with cheap interest rates and people on the move. Also, younger people can finally afford to get a starter house if they are willing to leave stagnant, overpriced cities for smaller, overlooked locations.

And, young people are starting to go into business for themselves. It may be a side business like baking bagels and selling them at a farmer’s market, or starting an interior decorating business to help people who are moving or help people staying in their homes, who want them updated to provide the office space they need.

Certainly one reason I think the back to work numbers seem light to the “experts” is fat unemployment benefits, but another reason is the multitude of new opportunities to begin side businesses or work quietly for untaxed cash. 

In our business, we have looked to retired people and entrepreneurial skilled people to fill holes for us. I am sure we are not alone. 

America is still an entrepreneurial country. I look for immigration, legal and illegal, to expand as a post-pandemic boom widens. The toll of COVID-19 has been terrible, but when we look back on the Post-Corona years, it will be astonishing to see the vitality unleashed.

Question: What positive changes do you see following COVID-19?

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Ep. 121 – Finding Customers Through Great Networking with Jay Sauder

By Noah Graff

For the third episode of our season about how machining companies acquire new work, I interviewed Jay Sauder, owner of Sauder Machine in Plymouth, Ohio. Sauder makes a variety of precision components such as casings for mechanical pocket watches and wheel cylinders for horse drawn buggies driven by Amish people.

Sauder Machine has no sales team nor a social media presence, yet it has a diversified, profitable customer base that continues to grow through great networking. Jay Sauder told me about how doing great work and establishing great relationships with customers has been the fuel to keep his business rapidly growing year after year.

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points

Jay talks about the origin of Sauder Machine. His dad started the business with his uncle in 1982 in Lancaster, Pennsylvania. Jay is the fourth generation of machine shop owners in his family. In 2009 he started at the business and eventually took over administrative duties from his dad, who prefers to be working on machines to pushing pencils. Jay says when he started, the business had a lot of good customers, but his dad had not been charging some of them enough for various jobs to be profitable. (3:00)

Jay talks about his Mennonite background and how that has brought him Amish clientele. He grew up as Old Order Mennonite, a religious group with many common customs and origins as the Amish. He started driving a horse and buggy when he was 15 years old (he has only been driving a car for six years). Jay says the communities vary, but on the whole, Amish people are more conservative than Mennonites. Jay says he grew up with electricity and telephones in his house, while Amish people usually don’t have those amenities. Mennonites don’t have to have beards and don’t have to dress quite as conservatively as Amish. (5:00)

Jay says the commonalities and connections between Mennonite and Amish communities have brought Sauder Machine some important customers. Sauder Machine designed a hydraulic brake system for Amish and Mennonite carriages. The carriages already had brakes, but they were using cast iron rear cylinders imported from China, which were modeled after those on a 1941 light-duty Ford truck. Sauder’s wheel cylinders are made of anodized aluminum and are water resistant. The company also makes master cylinders. Since Sauder started making the wheel cylinders in 2012, it has produced 140,000 of them, which the company makes on an OKK CNC 500mm pallet horizontal mill. (7:45)

Jay says his company uses no advertising, sales team, manufacturer’s rep, or social media. The company has a single page website that Jay says has brought him a few RFQs in the past. He says his business connections and customer good will are his key getting new business. (10:20)

Jay talks about a casing for a mechanical pocket watch he produces. Amish people do not wear wrist watches, and some require the watches to be mechanical rather than battery operated. An Amish watch producer in Wisconsin had been been importing his casings from China, but he was looking for a supplier in the United States. He spoke with an Amish owned machine shop in Ohio that Sauder made parts for, and they referred him to Sauder. Sauder sent him a quote and the watchmaker immediately ordered 5,000 pieces, which Jay says he will make on the company’s INDEX C65 lathe. (11:00)

Jay talks about a 2% discount he gives every customer if they pay within 10 days. He says 90% of his customers take this discount, everyone from the Amish watchmaker, to steel producers and Parker Hannifin. (15:00)

Jay says the same principles that have grown his business within the Amish community have helped him in other spheres. He says that a steel company customer in Ohio refers new clients to Sauder Machine. Jay says he keeps the steel company as a middleman, rather than working with those new clients directly. This reinforces their cooperative relationship. (16:00)

Noah asks Jay, what advice he would give a new company who does not have an existing network of customers to bring it referrals. Jay admits that he does not have experience in this scenario, but he suggests to try a service like manufacturing.com to source work, which hopefully would start a network of more customers. (18:30)

Jay says since he took over the business operations of Sauder, he has had to go to longtime customers and dramatically raise prices because the company was losing money on various jobs. He says some of the customers left, but within a year they came back and didn’t even try to negotiate. He says if you do parts right the first time, customers are not going to want to go elseware. (20:30)

Jay talks about the negotiation process with customers. Noah asks him what he would do in a hypothetical scenario where customer came to him with target a price of $2.00 per part, while he knew that Sauder could actually produce the part for $1.00. Jay says his first instinct is to offer to make the part for $1.75. This way Sauder makes some decent money, and the customer feels good as well. He says however, that if later he is able to improve his process internally to make the part cheaper, the price of the part to the customer will often stay the same. Sometimes he might lower the price to strengthen a relationship with a customer or stave off competition. (24:20)

Jay talks about his constant reinvestment in his business. He always is concerned with upgrading equipment and taking care of employees. He says taking the right steps to do good work is one of the most important ways to keep customers and find new ones. If people know they can buy parts from his company and there won’t be problems they will continue to come back and bring him new customers. (27:20)

Jay says he likes to buy equipment (always used) if he sees fantastic opportunities—he does not need to have work for it yet. He says the most money he has ever paid for a machine was $140,000 for a Traub he recently bought, which might have cost 6 or 7 times that price new. He says he is considering buying his first new machine, a Mazak Multiplex, for a Parker Hannifin job. To make a part come of the machine complete he needs a machining center that can do probing, induction hardening, and grinding. He says he is not afraid about losing the job because he could repurpose the machine. He also says that large companies often make decisions slowly. He says a part Sauder makes for Parker took two years from the time it made a sample part until being approved for production. Then it took another year to make one change on a print. (29:40)

Noah asks Jay to tell him something he learned last week. Jay says he learned he can draw out a solid piece of steel rod cheaper than the price of tubing by using an Iscar SUMOCHAM drill. He says the material cost is about $.60 cheaper. Jay says his philosophy is “live and learn, crash and burn. If the tool doesn’t crash you’re not pushing it hard enough.” (32:45)

Question: Is word of mouth the best way to find new work?

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Happy Mother’s Day?

By Lloyd Graff

FYI: If you have ended up on this blog post after clicking the link for the “My Quest for Serendipity” blog on the email blast, click here to the go the proper post. 

 

 

 

Growing up, I never really “got” Mother’s Day. My mother never did either. 

The holiday was a big deal, but not for her. It was always about my grandmother, my father’s mother, Ethel Graff, who I think my mother hated. She cast a pall over our family because my dad, a strong, powerful and loving man, was manipulated by her for as long as she lived. 

We saw her every Friday night and Sunday. My father physically visited her almost every day when I was growing up. I was reminded of her and my grandfather, Louis Graff, who died three years before I was born, when I saw the latest Henry Louis Gates episode of Finding Your Roots, featuring my cousin, Mandy Patinkin, who I loved in The Princess Bride

My brother Jim, who is much more of a student of our family than I am, sent me the link to the episode a few days ago and filled in some of the holes in the family story. Three Patinkin siblings married three Pinkert (Pinkevich) siblings. They hailed from a shtetl in Russia/Poland, called Bransk.

Ida Graff, my great aunt, married a Pinkert, Simon. Supposedly, he slept in the same bed she did right after he came over from Europe because he was working at night in a bakery. When she vacated the bed in the morning, he jumped in. He must have liked the scent because they eventually had 12 kids together. 

Simon soon started a business with a Patinkin, Max, who was Mandy’s grandfather, the father of Lester Patinkin, a contemporary of my “Uncle” Aaron Pinkert, who was a few years older than my father.

Lloyd’s childhood home on Chicago’s South Side

So the Graffs, Pinkerts, and Patinkins were all very close, growing up in the Englewood neighborhood in Chicago. Somehow my grandfather, Louis Graff, ended up marrying Ethel Levinson in an arranged marriage. She was a rabbi’s daughter. A local matchmaker set it up. Louis met her on their wedding day and often told my dad it was the worst day of his life. 

I guess divorcing the rabbi’s daughter was frowned upon in those days, and he chose not to walk away. 

My father was the youngest of five children, four of whom lived full lives.

He lived with a mother who was neurotic on her good days, psychotic on the bad ones. She underwent many shock treatments and spent time in sanitariums. My father spent many of his growing up hours with his relatives, the Pinkerts, Lavins, and some of the Patinkins.

His father, Louis, never knew how to deal with his wife, Ethel, and died at the age of 54 of a heart attack. My father Leonard took over the management of his mother, except for a couple of years when she moved to Kansas City to stay with my Aunt Edith, his oldest sister. My dad was forever grateful to her for enabling him to start his business and get married to my mother, Thais Kassel.

My mother was swept off her feet by my father and loved him deeply, but at 19 years old she was unprepared for dealing with his mother and their relationship. 

I watched this dynamic as I grew up. I saw my Grandma Graff as pathetic, nasty, and strange. Gradually I began to understand the family dynamic, but I never really understood my mother’s anger and sadness about my dad’s situation. My father tried to make it up to her, but the Friday night dinners and Sunday afternoons with Grandma Graff were obligatory to him and everyone just accepted it. 

So Mother’s Day was Grandma Graff’s Day. It was never a happy day in our house. My mom sucked up her feelings, my brother and sister said the hollow, expected, laughable greetings, and my dad’s siblings ignored her. 

I tried to make the holiday tolerable for my mom, but it ended up being a weird day at our home. I always tried to watch the Cubs game with my mom on TV with broadcaster Jack Brickhouse. He was a much better companion than sitting with my grandmother.

Question: What is one of your favorite memories of your mom growing up?

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Ep. 120 – Constantly Quoting Work with Wes Szpondowski

By Noah Graff

On today’s podcast we continue our season about how machining companies acquire new work. Our guest is Wes Szpondowski, plant manager of Wyandotte Industries, a multi-spindle job shop near Detroit that predominantly runs good old ACME-GRIDLEY screw machines. We interviewed him  last week when he came to Graff-Pinkert to inspect an ACME 1-5/8” RB-8.

Wes says one of the keys to Wyandotte’s success is that the company is constantly quoting new jobs. He says even if a machining company only lands a small percentage of work it attempts, persistent quoting gets the company’s name out, which leads to more work down the road.

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points:

Wes gives some background on Wyandotte Industries. He says his grandfather started the company, specializing in producing custom nuts. In the late ‘90s the company branched out into more diverse and complex parts. (2:00)

Wes talks about Wyandotte’s constant search to find employees—talented, reliable people who want to run older cam screw machines. He talks about a young guy he met at working at a deli counter the day before, who he invited to apply for a job at the shop. (6:00)

Wes says Wyandotte’s mantra is “quote, quote, quote.” The company has an internal sales team that works with a number of manufacturers reps working on commission. Then Wes works with the internal sales team to quote the jobs. He says because the company is so aggressive in seeking new jobs, it gets its name out there, which brings new opportunities to make a lot of different parts. (8:00)

Wes says that it doesn’t matter how lean a company is or how clever its manufacturing operations are if it doesn’t do a good job of getting new work. He says he has seen many shops that are “better” than Wyandotte who went out of business because they didn’t know how to get new work. (10:10)

Wes reiterates that it’s important for as many buyers as possible to know who your company is because sometimes the suppliers they currently have fail to get the job done. When that happens they come running to you. (11:00)

Wes says manufacturers reps are useful because they represent diverse clients. The clients aren’t supposed to be competitors of one another, but the reps have interesting networks that can bring them new business. For example, a manufacturers rep might represent a forging company or cold heading company and those connections can lead to new clients. (12:40)

Wes talks about competing with Chinese manufacturers. He says nowadays the quality from Chinese suppliers is often pretty good, but the delivery from China is still a big issue, particularly if companies in the US are trying to keep low inventory. (14:00)

Wes Szpondowski of Wyandotte Industries

Wes talks about the advantages of running ACME multi-spindles, which he characterizes as “reliable tanks.” He says Wyandotte likes CNC lathes as well, but unlike CNC machines an ACME can run forever. He says ACMEs put Wyandotte at a good price point that many shops can’t compete with because the machines are cheap and can crank out large volumes of parts. He says as long as a shop can have the people to run them, ACMEs can lead to getting a lot of jobs. He says it’s difficult to find good people to run the ACMEs, but he jokes that once the people learn how to operate the machines the job is actually a lot of standing around for pretty good money. He also talks about the simplicity of repairing an ACME, comparing it to repairing a classic car vs. today’s models. (16:00)

Wes says Wyandotte tries to supply to a diverse customer base rather than only auto companies because that work is too unreliable. (19:45) 

Wes says Wyandotte is constantly evaluating which jobs make sense financially. If the job isn’t making money, the company is not afraid to ask customers for more money. (22:00)

Wes debates buying a machine for a specific job vs. buying equipment on spec for future work. He says that he will take advantage of opportunities for great deals on used equipment that come up if he knows he has the talent already in-house to run it. But, he says he doesn’t want to buy million dollar machines like Hydromats, or Buffolies or CNC multi-spindles because those aren’t who his company is. He wants to use some sophisticated CNC equipment but still wants to keep the operation somewhat simple, so it’s reliable. He says that more complicated machines require higher priced, skilled people to run them. (23:50)

Wes says the biggest challenge he has for getting work is having the right talent to produce it. If he doesn’t feel his people are good enough to produce the part he won’t take the job. (31:30)

Question:  Is running quality ACME screw machines a good business plan right now?

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Biden is Not My Number One Pick

By Lloyd Graff

President Joe Biden speaks to Congress after his first 100 days in office tonight. Washington and the media will listen as he intones a profoundly left-wing agenda. The Congress is closely divided, a 6 vote margin in the House, 50-50 in the Senate. The Democrats are hoping for court packing of the Supreme Court to 13 and getting Senators from the District of Columbia. Currently 6 House seats are vacant, awaiting interim elections. 

The left-wing media is cheering and the Republican strategists are delighting as Biden tilts strongly to the left in his rhetoric and policies, almost ensuring (in my opinion) that the Democrats blow their opportunity to maintain control of both the House and Senate in 2022. They hope to pass the expensive portions of their program between now and then.

What Biden has going for him is a strong economy, rising stock market, and a rapidly falling unemployment rate. This is being propelled by the Pfizer and Moderna vaccines and their effectiveness in shrinking the pandemic in America. President Trump’s Operation Warp Speed program may go down as his biggest success, and Biden is reaping the benefits.

President Biden is attempting to throw enormous money into a rapidly growing economy, with the Fed accommodating him with low interest rates. Nobody seems to know when or if inflation will reappear, but it is hard to imagine that it is banished forever.

People are pouring money into homes, particularly in the suburbs and rural areas. States like Idaho, Utah, and Florida are growing like mad with their low taxes and open spaces. New York, California, and Illinois are shrinking. This will make it tough for the Democrats to hold Congress because Republican state legislators control the majority of states and will do what they do best, gerrymandering districts to make it tough for the Dems to hold the House in 2022

It appears that Biden is going to advocate a far left agenda Wednesday night to make Bernie Sanders and Alexandria Ocasio-Cortez jump for joy, knowing that not much will pass other than huge money being thrown at his combination climate change and infrastructure ideas, which will accomplish little except building charging stations all over the place to stand idle. 

Meanwhile, as the left media fawns over Joe Biden’s speech to Congress, the majority of American men will be thinking about the NFL draft happening Thursday night, and what players their favorite teams will pick in the first two rounds.

As the league has become more and more quarterback dependent, it is expected that Jacksonville will pick Clemson’s Trevor Lawrence first, and then the trades and surprises will excite America. Zach Wilson of BYU may go second to the New York Jets, but don’t be surprised if it is Justin Fields from Ohio State, Trey Lance from North Dakota State, or possibly Mac Jones from Alabama. 

My prediction is the Chicago Bears will throw everything they have to move up from 11 to 4 or 5 to get a quarterback. The Chicago fans will never accept Andy Dalton as Mitchell Trubisky’s replacement. 

Interesting TV coming up tonight and Thursday. President Joe Biden is not my pick in the ratings.

Question: Are you more interested in Biden’s State of the Union or the NFL Draft?

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Ep. 119 – Minimizing Your Customers’ Pain with Federico Veneziano

By Noah Graff

Today’s show is the first episode of a multi-part series about how machining companies acquire new work. 

Our guest is Federico Veneziano, CFO and COO of American Micro Products Inc., a precision machining company in Batavia, Ohio. Federico says one his key strategies for getting new customers is proving to them his company will minimize the problems that are bound to occur in most manufacturing jobs.

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points

Federico talks about how the selling process in the machining business has changed in the last few years. He says there are fewer face-to-face meetings now, but he still prefers the traditional human touch. (3:20)

Federico gives an overview of American Micro. The company is located in Batavia, Ohio, just outside of Cincinnati, and it was founded in 1957. It mostly focuses on turning, but also does milling. It makes parts for the automotive, aerospace, and defense sectors, along with a little bit of industrial and medical. American Micro’s workforce fluctuates between 150 and 200 people. It has also had a factory in China since 2005, with around 100 employees. (4:20)

Federico came to the United States in 2004, working for the machine tool builder DMG. He did technical support and service, process engineering, and sales, which gained him a lot of knowledge of machining companies and cultures around the world. He worked on American Micro’s Gildemeister GMC35 CNC multi-spindles, which eventually led to him coming to work there. (6:40)

Federico hates to say it, but aerospace is one of American Micro’s most significant markets, so it has been hit hard by the current troubles of the commercial aerospace industry. The company has had success doing specialized automotive parts such as fuel diesel components and parts for steering pumps. Defense is becoming one of the company’s most important sectors. He says the medical industry has been harder to penetrate because it requires a company to have established contacts already in the business. (8:20)

Federico says one of American Micro’s strategies is to stay in markets it already knows well so it can provide good service to customers. The company uses databases and other resources to find potential customers and then contacts them via phone or email. If a job seems like it has potential, the company tries to set up a meeting to do a presentation, where sales representatives talk about the added value American Micro can provide beyond just price. Federico says he tries to identify potential customers’ pains and then come up with solutions to their problems. He says this is the key to getting new jobs. (10:30)

Federico Veneziano, CFO and COO of American Micro

Federico reiterates that it’s important to make a value proposition beyond a good price per part. He says the constant emphasis today of customers choosing venders exclusively on the basis of price is diluting the value of manufacturing. He says price pressure causes work to go overseas, which creates new complications that sometimes make parts more expensive than if they were made in the United States. He says it worries him particularly when some sectors move overseas, such as aerospace and defense because a drop in quality could have dangerous ramifications. (13:30)

Federico says meeting customers in person is important for American Micro to get to know them and understand the problems they are dealing with.(15:35)

Federico says it’s important for salespeople to have a technical understanding of jobs so they can set realistic expectations for customers. He says in the past there may have been enough margin that even if suppliers couldn’t reach their promised results, they could still meet their customers needs, but that usually isn’t possible nowadays. (16:40)

Federico says in China getting work is an entirely different process than in the United States. It usually consists of an online bidding process. However, he says that model doesn’t necessarily apply to American Micro because foreign companies in China usually do work for other foreign companies, not Chinese companies. This enables some personal relationships. He says payment processes are totally different in China than in the United States. (19:00)

Federico discusses the negotiation process for machining jobs. He says the process depends on whether a product is ongoing and established or if it is a new product. If the product is already being produced by someone else, a buyer will either offer an expected target price or they will ask the supplier to propose a price first to see if they can get a better deal. Federico says he thinks it’s best if the customer starts out by giving their target price because if the target price is dramatically different from what a supplier can offer it will be a waste of time to try to make a deal. Also, he says if everyone is pushing as hard as they can to get the best price possible it will hurt the market as a whole. Every deal will become based on price, rather than important value added services and longterm relationships. He says it can be a problem when traditional salespeople do the negotiating because their commission might be their only concern. (20:20)

Federico says American Micro uses manufacturer’s reps, but in a controlled framework that has been quite successful for the company. Its manufacturer’s rep has technical knowledge and has an intimate relationship with the company. American Micro has an exclusive agreement with its manufacturer’s rep, so for a specific service or part he can only represent American Micro, rather than working for several companies. He says the exclusive relationship is necessary, otherwise the rep will become a quoting house where he has the power to choose between several companies who gets a job. He says traditionally a manufacturer’s rep receives 3-5% commission for a supplier or customer. Even after the manufacturer’s rep makes an introduction, American Micro still has to make its pitch to a customer to get the work. He says to him it’s more difficult to get new work than get a new supplier (23:30)

Noah asks if American Micro prefers to buy equipment before the company has work for it or wait to acquire the work first and fill the need with a machine. Federico says it’s great if you can get jobs for equipment a company already has. He says if American Micro buys a machine for a specific job, it needs firm long-term agreements in place to insure the work for the machine. However, he admits it can still be risky, so it’s important to have knowledgeable people making deals, increasing the likelihood jobs will be executed. He says 15-20 years ago, long-term agreements were less common than today. (29:30)

Federico projects 2021 to a be a decent year for American Micro, but it’s important to the company that aerospace makes a comeback. Based on the company’s market research he thinks in August the sector will ramp up. For other sectors he is bullish. He was surprised that automotive was not hurt significantly by the pandemic in 2020. (31:30)

Federico says he thinks small and medium manufacturers should collaborate more, rather than always fighting for work. He says constantly fighting for work causes a lot of jobs to be decided only by price, which hurts the quality of parts in the overall market. He says companies should instead divide up work based on each company’s strengths, rather than every company trying to hoard all the jobs. (32:40)

Question: Do you prefer to buy a machine before you have any work for it, or buy equipment only when you have a job for it?

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Looking for a Few Good Human Beings

By Lloyd Graff

My machinery sales company, Graff-Pinkert, is looking for at least one more person to work in our factory. 

I let two people go during the pandemic because of lack of business, and we just lost a skilled screw machine rebuilder who had worked for us as a gig employee four days a week. The pace of business today is hectic, with more action than we can readily handle, so I am looking for one or two people to join us.

How do you find good people who fit into your organization?

Networking is my first choice. Talk to your people to see if they know of somebody with the right skills who is between jobs, interested in switching, or wanting to start a new career. This has worked for me before, but it has had no traction this time.

Recruiting firms are another idea, but my impression is that they are primarily aimed at high-priced, specialized talent.

Informing folks at vocational schools has been another approach I have tried with no success. In the past, I have hired kids with no skills, no drive, and a few who were thieves.

An approach which worked for us in the past is focusing heavily on the local publications which cater to the community where our business is located and may catch just the right person at the right time. One of our best recent hires came in a serendipitous way. The man’s wife saw an ad in the most local of local publications and recognized the name Graff, which she knew was a member of the synagogue I belong to. She is the synagogue’s staff manager. She called my wife and said that her husband had just lost his job, which he had held for 20 years at a local firm that was experiencing hard times. 

I said to come in for an interview and hired him on the spot. 

This time around I am hoping again for serendipity. I decided to try something quite different than any wanted advertisement I had ever seen before for a cleaner-painter. I also knew we were competing with Amazon, which just completed a gigantic nearby warehouse, with decent benefits and college tuition dangled as a bonus offer after 18 months on the job.

The first sentence of the Graff-Pinkert advertisement stated that the company was looking for “a good human being.” I then lauded the values and history of the firm, emphasizing it was a local family business in Oak Forest, Illinois. Then I described the job and the pay and stated that the person we hire must not mind getting dirty on the job.

We experimented by running the ad in just four communities in the local internet news publication. We requested that people who were interested come by the office to fill out an application. The ad cost $28 for the week.

We got one interesting 20-year-old who stopped by and one highly overqualified person with a great deal of experience in repairing CNC equipment, which we have been investing in heavily. He lives five minutes from Graff-Pinkert and is commuting an hour each way to his current job. He saw an opportunity from the text of the ad and the address of the company. He knew exactly where our building was.

Will we hire him? I don’t know yet. That would probably mean hiring two people, which is what we really need.

We will run the ad again with a wider circulation this week. 

Do you know of any good human beings in the neighborhood? It’s a long shot, but aren’t they all?

Question: Do old school help wanted ads still work for you?

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Ep. 118 – Coping with Stress at Work with Darcy Gruttadaro

By Noah Graff

Today is the final episode of our series about mental health in the workplace.

 

Our guest is Darcy Gruttadaro, Director of the Center for Workplace Mental Health at the American Psychiatric Association Foundation. Darcy’s organization works with companies of all sizes, giving them tools to support the mental health of their employees. She says that having a warm and social atmosphere in the workplace is more important than ever to keep people relaxed during these stressful times. 

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

 

 

Main Points

Darcy explains how her organization works with employers of all sizes to develop programs, tools, and resources to support the mental health and wellbeing of employees and their families. (2:30)

Darcy talks about how she got into her profession. She has family members with serious mental health issues. She was a lawyer and had worked with some hospital clients related to their psychiatric units, work that she found interesting and important. She moved to Washington D.C. to work for the National Alliance on Mental Illness (NAMI), doing policy work mostly related to the public sector. She then joined the American Psychiatric Association Foundation, where she works with private employers to improve their mental health programs. (3:40)

Darcy says in the two and half years before COVID-19 hit in March of 2020, the number of companies taking an interest in the mental health of their employees was growing. However, when COVID-19 came into the forefront of people’s lives, the interest of companies in the mental health of their employees increased dramatically. (5:00)

Darcy Gruttadaro, Director of the Center for Workplace Mental Health

Darcy says that her organization provides employers with support around raising mental health awareness, eradicating stigma, and breaking down various barriers that stop people from getting help when they need it. It also works with employers to develop strategies to build a more mentally healthy company culture, so employees feel more safe getting mental help when they need it. Finally, it works to make mental health therapy accessible. She says most health insurance provides access to mental health care, but it’s important for employers to help employees navigate the mental health system, which is often complicated. (5:50) 

Darcy compares the mental health issues faced by people who are mandated to work at home to those faced by people mandated to work in factories during the current pandemic. She says since March of 2020, the CDC has been collecting weekly pulse data showing that nationally the number of people experiencing symptoms of anxiety or depression has tripled. (9:30)

Darcy discusses data that shows many people prefer not to work at home because they find the social connection with colleagues in the workplace to be comforting. On the other hand, she says many people go to work feeling anxious about COVID-19 but hide their feelings from colleagues and employers because they think they will look weak or flawed. She says when people allow negative stigma to prevent them getting the mental help they need it can lead to suicide. She says openness to talking about mental health in manufacturing environments is not prevalent enough. (11:10)

Darcy says that depression impacts women at a higher rate than it impacts men. She says she thinks it’s likely there is greater risk for substance abuse among men working in physical jobs, who may be using alcohol or painkillers to cope with pain suffered on the job. She says the stoic culture of people in trades such as manufacturing makes it less likely that they will get the mental help they need, but she admits she is not sure what research has found in this scenario. (13:20)

Darcy advises that business owners and leaders not be afraid to show some vulnerability to their employees because it can make them feel more at ease with their own mental issues. Also, it helps for leaders to simply tell people they realize the difficult and stressful times everyone is going through. She says it’s important for people to get professional help as soon as possible, because the longer people allow mental health issues to linger, the greater toll they take. (14:50)

Darcy talks about traveling through Texas where she saw an entire crew at a construction site stretching together before work. She talks about a utility company that had workers do group meditation to quiet their minds, help them focus, and prevent injury. She says management taking time for employees to do self-care activities demonstrates to them it cares about them, which has positive effects on moral. (18:00)

Darcy says during our current stressful time period it is more important than ever for people at work to be social with one another because people by nature need social connection. She prescribes that managers reach out to employees working remotely via video teleconference to tell them that they know they are going through difficult times. Even if people role their eyes or poo poo the gesture, it still makes employees feel cared about. (19:20)

Noah asks Darcy her predictions about widespread mental health when the pandemic is over and things “get back to normal.” She says there will be some strong concerns about mental health for at least three years, particularly for kids or teens, whose lives were drastically disrupted in 2020. However she says that after this difficult period people may have also developed resilience to difficult situations and learned new coping strategies. She says it will be important for managers to remind employees how they have weathered the storm together but still need need to stick together. (21:30)

Darcy talks about mental health in several different countries. Canada has voluntary workplace mental health standards that employers are asked to follow, which California is currently trying to emulate. In the United Kingdom the Royal Family has taken an interest in creating organizations that support workplace mental health. (24:00)

Darcy says to her the word “happiness” means feeling settled, feeling like you’re contributing to the world, having purpose, and looking forward to every day (26:30)

Noah asks Darcy what she learned last week. She said she relearned how much work (and fun) it is to get a new puppy. (27:00)

To learn more about the Center for Workplace Mental Health at the American Psychiatric Association Foundation go to workplacementalhealth.org.

Question: Do you prefer working around a lot of people, or very few people?

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