Machinery Auctions Off the Stand, with Robert Levy (Part I)—EP. 145

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By Noah Graff

Today’s episode is Part I of a two part interview with Robert Levy, President of Robert Levy Associates. Robert has been an industrial auctioneer for 44 years and knows more about the auction business than anyone I’ve met. Auctions are fascinating and sometimes mysterious to me, so my goal in this interview was to get a glimpse into the head of a person masterminding these events.

We first interviewed Robert back in 2018, our sixth podcast ever. After three and a half years and 139 episodes, it’s obvious that the used machinery market and the auction world have changed. Robert hasn’t been on the live auction stand in two years, that’s after over 40 previous years when he often averaged doing two live sales per week.

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

Today’s episode is part I of a two part interview with Robert Levy, President of Robert Levy Associates. Robert has been an industrial auctioneer for 44 years and knows more about the auction business than anyone I’ve met. Auctions are fascinating and sometimes mysterious to me, so my goal in this interview was to get a glimpse into the head of a person masterminding these events.

We first interviewed Robert back in 2018, our sixth podcast ever. After three and a half years and 139 episodes, it’s obvious that the used machinery market and the auction world have changed. Robert hasn’t been on the live auction stand in two years, that’s after over 40 previous years when he often averaged doing two live sales per week.

When I spoke to him last Friday, Robert had just finished a successful online-only sale of Duffin Manufacturing, in which he partnered with Miedema’s Orbitbid. The sale was a sign of the times. People bid from the comfort of their living rooms, rather than brave COVID-19 and Ohio in January. Multi-spindle New Britains and Acme-Gridleys sold for half the price of Winter thread rolling attachments. On other hand, two 10-year-old OKUMA CNC lathes and two late model Tsugamis brought over $500,000.

Robert started the interview telling me about his father’s auction company, Norman Levy Associates, founded in 1951. Robert says his father, Norman, cleaned up the industrial auction business, which was marred by corruption. Norman wanted to create an auction experience where regular people had a chance at getting a bargain and where the auction process was considered a respectable way for legitimate companies to turn equipment into cash. 

Robert and his brother went into the auction business in the 80s’ and built the family’s company into a global enterprise. Robert admits that back in those days, auctions were often dominated by dealers, like my company, Graff-Pinkert, who knew where all the sales were and had more ability to travel then many endusers. 

In the late ‘90s, with advent of the Internet, the auction world was turned on its head. Everyone with an eBay account considered themselves an auctioneer. People from all over the world suddenly could bid simultaneously on a sale in a remote corner of the earth. Endusers everywhere could be instantaneously notified when new interesting equipment went up for sale. 

Also, the resources necessary to become an industrial auctioneer became more accessible in the last 15-20 years. This led to many used machine tool dealers starting their own auction companies. Robert and other auctioneers often have told me that used machinery dealers who are also auctioneers run into conflicts of interest during sales. He believes that when bidders know a dealer is behind a sale, they don’t feel like they have a fair chance to get good deals, so the sale suffers.

I understand the theory, but as a dealer myself, I’ve often wondered if this is just a case of auctioneers trying to hold onto their turf. I understand the temptation of my peers to be both dealers and auctioneers. If Graff-Pinkert were to find a company that wanted to sell its assets and we had the resources to organize and advertise a sale, why would we want to give a piece of the action to someone else? Robert admitted to me that he could understand where I was coming from, and I will admit that Graff-Pinkert has been quite successful partnering with auctioneers, who have expertise, resources, and infrastructure that allow us to focus on what we do best.

It’s beautiful to observe someone so passionate about their craft, like Robert. I can spot a little smile when he talks about being on the stand, where he lit up shops for over 40 years. He says he sees himself as a kind of engineer when he makes a deal with a client and then conducts the actual auction. The night before a sale, he walks the shop, scoping it out, so he will be ready when he needs to improvise, perhaps combining items or changing the order of lots if he needs to shift the momentum of bidding. Still, as much as he misses the stand, for the Duffin auction last week, Robert suggested to his client that the way to get the best return would be an online-only sale.

What I found most interesting in this interview was how much purpose Robert says he has in his vocation. He told me several stories about how great he felt when helped good people maximize the value of their assets. Interestingly, he also talked about his desire to create fair opportunities for buyers. Balancing those two intentions seems like a difficult high wire act. Can an auctioneer really look out for both buyers and sellers? 

You will have to tune into Part II of this podcast interview to judge for yourself.

Question: What’s the best deal you ever got at an auction?

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We’ve Overcome, a Little

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By Lloyd Graff

I grew up in between. 

Eight blocks to the West were the people my parents called the “Schvartze,” and eight blocks to the East was the South Shore Country Club, where no Jews or dogs were allowed. 

It was also the time when school desegregation was taking hold in Charlotte, North Carolina, where my wife grew up, and Martin Luther King was leading a March in Selma, Alabama, with Bull Conner lined up against him.

I was “in between” the races at the time when America was starting to change significantly. I think I’ve lived my whole life struggling with the gut fear and racism I felt at home. I feel an emotional and spiritual pull to cleanse my fear of African-Americans from my soul. 

I sang “We Shall Overcome” with the demonstrators at the University of Michigan. That was easy. Everybody was chanting and marching, but just talking to a black girl was scary. They weren’t from my Tribe. They weren’t even from my race. I played basketball and baseball with black guys and had an easy, casual friendship with many, but socializing with women was too scary. What if I got emotionally involved with one? Horrifying.

In my heart of hearts I knew this was crazy. The racism I grew up with was not Bull Connor variety, but close to Archie Bunker. It infected me for life.

I hated myself for it and made a commitment to myself that my kids would not have the same genes. 

I moved to the south suburbs of Chicago to raise a family. It was that extremely rare place in Chicago where blacks and whites lived next to each other and the kids went to school together.

I vowed never ever to use the word “Schvartze,” which is the Yiddish equivalent of the N word. My boys dated black girls. I never objected. This was the new America, the country Martin Luther King had tried to move toward, with acceptance and ultimately love and brotherhood. 

I lived the dream, but I never absorbed it in my soul like I had hoped I would as an idealistic college student. I must admit with some shame that when I watch NBA basketball games, the body tattoos and the hairstyles of black players upset me. I assume it’s their intent, to emphasize their differentness, and it works. Also, I count the white players on the teams, and I’m ashamed that I do. 

I have tried to live an ethical, non-racist life, yet I am still a racist. I have to admit I always will be. Most of our neighbors are African-American. I smile and say hello, but I tend to keep my distance emotionally.

Yet when we went to California for three weeks, we gave them our keys, and they baked us delicious sugar cookies for the plane trip. This is America, almost 54 years after Martin Luther King Jr. was assassinated in Memphis. We celebrated a federal holiday yesterday. I admit I hate the idea of Critical Race Theory and 1619 embedded in every black kid’s mind, but I do get it. Racism is still inculcated in most people’s minds from birth. 

But America is a much better place regarding racism, despite wokeness and white supremacists. Integration is everywhere. We’ve come a long way. 

We have overcome, at least a little bit. 

Me too.

Question: What do you think of on Martin Luther King Jr. Day?

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Where Rotary Transfers Fit, with Kris Fugate—EP. 144

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By Noah Graff

My guest on today’s show is Kris Fugate, President of Revolution Machine Works, a prominent rotary transfer machine rebuilder, specializing in Hydromats. Hydromats can seem strange and overwhelming to those unfamiliar with them. Some say they their circular shape with 12 or 16 work stations reminds them of a UFO, and the machines can crank out complex turned parts like nothing else out there.

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

Find us on Social:

Facebook: https://www.facebook.com/swarfcast

Instagram: https://www.instagram.com/swarfcast/

LinkedIn: https://www.linkedin.com/company/todays-machining-world/

Twitter: https://twitter.com/tmwswarfblog

Main Points

How Rotary Transfers Work

Kris started the interview explaining how rotary transfer machines, particularly Hydromats, function and why they are such unique productive machines. How is it possible that parts which require several multi-spindle screw machines, or have cycle times of 2 minutes on a CNC lathe, can run complete on a Hydromat in 20 seconds?

Most Hydromats are configured in a rotary dial-like shape. Unlike on a screw machine, in which the bar of material rotates and the tools are stationary, on a Hydromat the bar remains stationary and the tools rotate. Each station (unit) of the transfer machine functions like a CNC lathe or CNC mill. Units can do work such as turning, threading, milling etc. Each station machines one operation and then transfers the part to the next station for the next operation. 

Advantages of Hydromats over other Turning Machines

Hydromats have individual feeds and speeds in each station, so they aren’t held captive to the slowest operation, such as on an Acme-Gridley or other traditional multi-spindle screw machine.

They usually come equipped with an inverting unit, which removes a part from a collet, rotates it and places it back in the collet so it can be machined from the other side. This feature makes Hydromats ideal for machining double sided fittings. 

Unlike a lot of other rotary transfer machines, which are set up with the stations vertically arranged in the trunnion style that resembles a Ferris wheel, most Hydromats are set up horizontally, more like a carousel. This enables modular units that can be easily swapped, making easy, quick changeovers. 

Also, Hydromats are designed with a hirth ring coupling, which enables them to maintain tight tolerances part after part. 

Revolution Machine Works

Kris’s company, Revolution Machine Works, services and sells refurbished and rebuilt turnkey Hydromats, and also supplies Hydromat spare parts. They often do entire overhauls on the machines, stripping them down to the casting. They rebuild units, and equip the machines with new Fanuc controls. While the Hydromats that Revolution provides are the non-CNC hydraulic generation, the company sometimes equips the machines with individual CNC units made by the Italian rotary transfer machine company DM2. Revolution Machine Works also distributes new DM2 machines in the U.S.

Hydromats are Tough Business

Since I went into the used machinery business over a decade ago, I’ve spent a lot of time learning about Hydromat rotary transfer machines. I’ve traveled to Germany, Italy, Switzerland and Norway to find them because you can make a nice buck if you find the right customer. Still, it’s always seemed like we had to have 10 interested customers to sell one Hydromat. It can get frustrating watching the machines sit in the Graff-Pinkert warehouse for years.

Why do customers hesitate to buy these machines that can crank out great parts by the millions. Perhaps its because they often cost a few hundred thousand dollars, and then a bunch more money to set up. Kris could relate to my experience. A rebuilt, turnkey Hydromat, has double or triple the price tag of one that Graff-Pinkert would sell, and the customers expect considerable service. 

In the interview, Kris pointed out a lot of the other challenges Hydromat customers face. The machines take up a lot of floor space—perhaps large enough to fit three CNC machines. They require at least one expert to keep them running correctly, and it can take six months to a year to train a Hydromat operator.

Kris says he and colleagues often joke that they picked the hardest way to make money.

We both agreed that it’s much easier to sell a Hydromat to someone who already has them. They have units on the shelf, expertise, comfort, and enough work for the machines. 

Yet Kris says his work is most rewarding when he is able to get a new client into the Hydromat business. A Hydromat can be a game changer for a company in the high volume parts business, yet a purchase comes with significant risk. Years ago, he ran Hydromats in his family’s machining company D & S Machine Pts. He says he can still remember how it felt when the company paid over a million dollars to buy its first new Hydromat, its biggest capital investment at the time. I can tell that being able to put himself in the shoes of his customers is helpful for Kris to sell machines, but more importantly, it’s clear that it gives him a sense of purpose.

Question: Do you prefer to buy, used, rebuilt, or brand new machine tools?

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Sometimes the Star Must Take Over

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By Lloyd Graff

What makes a great team out of a group of good players? 

I’ve considered that question since I first started watching team sports on TV and playing on organized teams myself. I could almost feel when a team would fail, not just because they lacked the talent to win, but because they did not have the other elements it took. I’ve been searching a lifetime trying to define those elements and putting them into practice. 

Recently I’ve been watching a TV show that took the issue head on.

Ted Lasso on Apple TV addresses teamwork with a light touch, flavored by sadness and loss. Each of the major characters are dealing with loneliness and pain. The lead character, Ted Lasso, leaves Kansas after a successful career as a football coach in Wichita. His marriage has failed and he needs a change. He has been recruited to coach a Premier League soccer team which has been a perennial loser, even though he knows virtually nothing about European football. The woman who now owns the team after a bitter divorce settlement hires Ted as a vehicle of her own revenge, desiring to ruin the team her rogue husband loved dearly. 

Over two seasons, a sense of team develops among an assortment of mediocre players from around the world, and the owner’s attitude changes from contempt for Ted to genuine friendship and respect. 

When Ted Lasso arrives, the first thing he does is post up a handwritten, slightly crooked sign that says “BELIEVE.” Over 22 episodes, it takes on various meanings that describe a sense of team to me.

For a team to work, you have to believe in your teammates. You have to know they will have your back in a crisis. You have to feel they “believe” in the group as much as you do. You have to “believe” that they will not single you out as the cause of defeat.

Team Star, Jamie Tartt on Ted Lasso

Several episodes focus on the relationship of the fading star player, Roy Kent, and the young rising star, Jamie Tartt. They hate each other. Both covet the same woman who at various times has an intimate relationship with each one.

The most interesting aspect of the relationship between Roy and Jamie is that the aging Roy ultimately steps aside so Jamie can be the star and then coaches him on how to be a good teammate. “Always make the extra pass,” is Ted Lasso’s credo and it is adopted by Roy Kent. 

But in the big game, when Roy is no longer a player and the team desperately needs a win, Kent tells Tartt that it’s time for him to revert to the selfish jerk that he has tried to squelch. There are times when every good team needs the star to step up, to be the SOB that everybody used to hate and score the winning goal alone. 

A good team needs a star at times and a coach who knows when that time is. 

I’ve watched successful and failing teams in business. Respect for one another and belief in the ultimate success of the group are vital elements. But every business is tested by competition, external forces, a crisis of confidence when the leader or the star has to be tough and connect with their own self belief, and take the final shot.

You don’t have to score to be the ultimate winner. But simply “trying” is never enough either.

Question: What is the greatest team you’ve seen and why?

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Attached to Multi-Spindles, with Elliott May—EP. 143

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By Noah Graff

Our guest on today’s podcast is Elliott May, engineer at BME in Port Huron, Michigan. BME builds original custom attachments for cam multi-spindles. They also rebuild Acme-Gridley screw machines.

Elliott and I talked about a lot of fascinating things in this interview. How to keep old mechanical beasts relevant, getting young people into machining, and what it’s like to work closely everyday with your dad—who’s also the boss.

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

Find us on Social:

Facebook: https://www.facebook.com/swarfcast

Instagram: https://www.instagram.com/swarfcast/

LinkedIn: https://www.linkedin.com/company/todays-machining-world/

Twitter: https://twitter.com/tmwswarfblog

Main Points

Custom Attachments

Elliott says that customers come to BME when they want to make a part on a cam screw machine but can’t figure out how to make it happen. The company offers an extensive line of proprietary attachments such air operated pickoff assemblies, rotary recess attachments, and synchronized slotting/milling attachments. 

Elliott’s father, Brett, started BME 15 years ago. Nine years ago, Elliott started working at the company at age 14. His first job was cutting steel bars with a bandsaw. Later he worked in shipping and receiving, and then graduated to assembling attachments for multi-spindles. After studying engineering for a few years he began working in tandem with his father engineering attachments. Generally they are tasked with tweaking attachments already in their product line to suit the jobs of specific customers. A few times a year, they are called upon to engineer more novel devices, when a customer’s job calls for something special that they haven’t invented yet.

Elliott says his father, Brett, is the “idea guy.” Brett analyzes what he wants to accomplish, then Elliott puts the idea down on paper (often CAD). They both are constantly putting their heads together to solve problems. It’s not uncommon for the two to stand at several whiteboards for long periods of time, brainstorming various drawings, trying to work out a solution. Elliott says they have a good chemistry at work, and over the years his role has changed as his knowledge and skills have grown. He admits that when he was younger and less experienced he may have been too overconfident in his ideas and he had to be put in his place. But nowadays, it sounds like he is genuinely challenging his dad in the engineering room.

Acme Rebuilding 

As a used machinery dealer myself, selling old cam multi-spindles, I grilled Elliott on a lot of the same questions we grapple with at Graff-Pinkert, our family business. I asked him if rebuilding old multi-spindles from the ground up, particularly Acmes, was a good business to be in. Graff-Pinkert still refurbishes some cam multi-spindles such as Wickmans and Davenports, but the work we do is much less comprehensive than that of BME. Also, we stay away from doing a lot of work on Acmes. The parts for Acmes can be very expensive, and the Acme rebuilding process is extremely labor intensive.

For a rebuilt Acme, BME charges several hundred thousand dollars. The price depends a lot on what kind of turnkey the customer requires, if any. Elliott says the rebuilding and attachment businesses compliment each other. Often the rebuilt machines come equipped with BME’s proprietary attachments. He says he believes the cam multi-spindle business has a significant future because the machines are often still the best option for high volume jobs, assuming companies have the personnel to run them.

Elliott May, Engineer at BME

Young People in Machining 

I asked Elliott why it’s a struggle to get young people to go into manufacturing and an even greater struggle to get them to run old multi-spindles. He says manufacturing has to shake off its bad reputation from the past, as having a top-down style of management that doesn’t care about the needs of employees. He suggests that if manufacturing employees could count on a clean, pleasant work environment, and felt supported and heard by management, more people would want to go into the field. 

Working with His Dad

I was very curious to get Elliott’s perspective about working closely with his father, as I also work with my father. I asked him if he felt like he was in a strange position as someone who is not the boss, but also not a normal employee either. It’s a position that I’ve often analyzed for over a decade. 

Despite being only 23, Elliott says he has the advantage of having the longest tenure at BME of all its employees. He also says because of his experience and confidence in his ability, he earns the respect of his coworkers. I remarked to him during the interview that he often referred to his dad in the third person as “Brett,” rather than “my dad.” He says it’s a useful way to draw less attention to himself as the boss’s son, even if everybody knows he is. I personally have seldom used this strategy because referring to my dad as “Lloyd” just feels strange. But I admit that I sometimes refer to him as “the boss,” or some other euphemism, when I’m talking about him at work.

It was Brett’s idea for me to ask Elliott to be on the podcast. I could genuinely feel his enthusiasm about the idea when he suggested it to me over the phone. I joked to him that it seemed like he was really “kvelling” about his son excelling in the business. He easily inferred the meaning of my Yiddish. 

After interviewing both Brett and Elliott, it’s clear to me that both men share a passion for the nuts and bolts, and working together.

Question: What’s something important you learned from your father?

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An American Tune

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By Lloyd Graff

I had the privilege to listen to a series of interviews with Paul Simon by Malcolm Gladwell over the past week, in an audio book called Miracle and Wonder. I found it absolutely riveting, Paul Simon talking about the early days of Simon & Garfunkel and then giving us great insights into the development and fruition of his brilliant musical career.

Simon is 80 years old now. His voice has lost a little of the energy of his youth, but his mind is sharp, his memory remarkable, and his ability to inform us through Malcolm Gladwell’s well-researched questions is magnetic. And he still makes great music.

Paul Simon grew up immersed in music. His father, Lou, was a well-schooled musician who cherished classical pieces and played bass in local jazz clubs in New York City at night. It was clear from the hours of interviews Gladwell shared that Paul and his father were close. Paul’s present on his thirteenth birthday (he did not call it a Bar Mitzvah present) was a guitar. By this time he was already singing on street corners with Art Garfunkel, who lived near Simon in the borough of Queens in New York. At the age of 13, recording under the name of Tom and Jerry, Paul Simon and Art Garfunkel already had a hit record.

What I found remarkable was that Paul wrote both the melody and lyrics for all of his work. He has been a storyteller and composer for almost seven decades. The partnership with Art Garfunkel ended while they were both in their 30s and had already made hit after hit albums. Art apparently left the music rat race, but Paul was possessed by his creative muse and continues to work on his musical stories to this day.

He began work on his latest album, Seven Psalms, on the 25th anniversary of his father’s death in 2020. 

Gladwell teased out the history of Simon’s biggest hits like Bridge Over Troubled Water. The name of the song was derived from a line in a gospel song recorded by Claude Jeter in 1958. He went to New Orleans to talk to Jeter and eventually recorded it at the old studio that Jeter had used in Muscle Shoals, Alabama. 

Art Garfunkel sang the song almost solo in their last album together before they broke up. Supposedly, Paul Simon was jealous of the fame Garfunkel received from the song because it was his creation, even though he had insisted that Art sing it because he could give it the “white choirboy treatment.” Simon was the genius who wrote the song, directed all of its versions in various studios, selected the musicians, collaborated on the final sound editing, and sang harmony with Art in the final verse, but it was Art who got the applause and foot stomping at the end of concerts. Simon felt creative envy because he felt it was “his song.”

Gladwell’s interviews do not focus on Simon’s personal life, his marriages, or his home life growing up in Queens. Simon talks about his music, his creations, and the many influences that shaped them.

While I was curious about his life, I hungered to get a feel for his creative compulsion and desire to tell his stories with a combination of anger tempered by tenderness. The Boxer was partly inspired by the Bible but was written at a time when he felt he was being unfairly criticized. What I found fascinating was that the part of the song everyone remembers, the plaintive refrain, “lie la lie,” was inserted because Paul couldn’t think of a lyric that fit. The power of serendipity rises up in the song that he considers one of his best, as a filler when he thought his muse had deserted him.

I was moved almost to tears by these interviews because even though I don’t know that much about music, I could relate strongly to my own telling of stories coming from the many strands in my life. I’ve always wanted to write, but the material that I longed to weave together came from family traditions, sports, putting together deals, raising a family, and living a marriage. 

I wanted to clap when Simon and Gladwell ended with the music of American Tune, the song written by a child of Hungarian immigrants, which is about the promise of the melting pot of America and it falling short of its promise. Simon wrote it at the height of the Vietnam War. It was a time that left its mark on me. It made me think of a high school friend of mine who had died in an F-15 fighter in the skies above Laos.

Question: What is your favorite Paul Simon song?

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Best of Swarfcast: Finding Purpose in Your Work with Brent Robertson—EP 37

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By Noah Graff and Lloyd Graff

Have you ever asked yourself what your purpose is when you go to work in the morning? Sometimes I wonder if I’m spending enough time making an important impact on the world, or if I’m too wrapped up in the mechanics of making deals on machine tools.

In this week’s podcast we interviewed Brent Robertson of Fathom. Brent is a business philosopher and consultant. His mission is help people discover what their purpose is, beyond just making money. He has found that if he can give people purpose in what they do, it inspires those they work with and their clients as well.

Listen to the podcast below the video.

Question: Is making money purpose enough for you?

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As The World Turns

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By Lloyd Graff

What a year I’ve been blessed to experience. 

First big thing for me is that I am alive, not suffering from dementia except for occasionally forgetting Cubs players’ first names, and I’m still writing this blog most weeks, which a few people evidently still read. 

When you see your peers dying and failing, these are major things to be grateful for every single day. 

Enough personal thought. 

This has been a huge year in a lot of ways. From a business standpoint this has been the best year Graff-Pinkert has ever had. We paid off all our debts, gave the biggest raises, and the biggest bonuses, and still had leftovers. 

This is after an awful 2020 that seemed like the end of the line for our business, and was for many. How did this happen? 

First, I must admit we took advantage of the federal government’s Paycheck Protection Program loans, and it actually worked like it was supposed to for us. It gave us liquidity when we needed it, kept workers working, and came promptly. With government failures rampant, this was a program that worked brilliantly for smaller businesses.

COVID-19 has been a tragedy for millions of people, but from a business point of view it has been a great boon to many folks in the machining world. 2021 will be seen as the year when reshoring–bringing back work from China–became a reality and not a prediction. It happened because bigger firms finally saw the downside of dependence on China for the sake of a few pennies per part. 

When you are dependent on a container traveling thousands of miles with a possibility of a lot of bad things happening on the way, your company is fragile, which means your job as CEO is in jeopardy, which means that the company private jet might have different passengers soon. Suddenly China did not look nearly as attractive, and jobs finally came back to the United States and Mexico. 

Companies needed machine tools, and some of that business trickled down to our used machinery company. Also, the U.S. and the rest of the world began to live with COVID and its deviant variants.

The major professional sports franchises figured out how to maneuver around absences and quarantine. Zoom video conferencing became a lifesaver for businesses in a million different ways. 

****

From a political point of view, 2021 will be remembered as the year China began its long-term decline as a dominant world power, as we saw with Russia in the 1970s and ‘80s. 

China has had enormous vitality and growth for 25 years. The Communist regime provided economic freedom to allow the entrepreneurial and creative class to thrive as long as they stayed in line politically. But with the persecution in Tibet, the genocide and enslavement of the Uyghers, the jailing of protesters in Hong Kong, and President Xi consolidating power to become dictator for life, the failures we saw in Russia, Eastern Europe, and Venezula are visible. 

Some see China now reaching for world domination. I feel fortunate to be witnessing the beginning of its long-term decline. 

I wish you all a wonderful year ahead and look forward to an upbeat and hopeful 2022.

Question: What has been the highlight of your year?

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Best of Swarfcast: Citizen CNC Swiss Lathes with Marc Klecka—EP 109

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By Noah Graff

oday’s show is the first episode of our new season about Swiss-Type CNC machining. Our guest is Marc Klecka, founder and president of Concentric Corporation, a prominent distributor of Citizen-Cincom CNC Swiss lathes in Cleveland, Ohio.

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

 

Main Points

Marc talks about his company, Concentric, which has been distributing Citizen Swiss machines for 31 years and Miyano for 10 years (after Citizen acquired the company). (2:20)

Marc gives his “5-year-old explanation” of Swiss CNC Machining (sliding headstock machining). He says the original technology of “Swiss style machining” was developed in Switzerland over a hundred years ago for producing high precision watch components. He says what differentiates CNC Swiss machining from conventional CNC turning is that a CNC Swiss machine grips the part with a collet and also supports the part with a guide bushing. This eliminates the vibration that normally occurs when machining bar on a a conventional CNC lathe. (3:00)

Marc says a traditional Swiss part has a length to diameter ratio of 3 to 1 or more because that is the point where you start sacrificing the rigidity and accuracy on a conventional CNC lathe. He tells a story about a Citizen customer who produced a 10-foot part out of aluminum tubing. (4:40)

Marc talks about the importance of running ground bar stock on Swiss machines, particularly for running lights-out. However, he says that says in the 31-year history of Concentric, he estimates that only 30% of the material run (in Swiss mode) on the machines he has sold has been ground bar stock. He says it is a misconception that Swiss Style CNC machines are only good for running ground stock. (7:25)

Marc says that during 2020 Concentric’s business did ok, but the pandemic made it more difficult to sell machines because it was harder to have in person contact with customers. (11:00)


Marc says that there are lots of good brands of machine tools on the market, but he sees the support and service of local distributors as something that sets Citizen apart. He says that many years ago Marubeni Citizen made a point of having all of its local distributors become self-sufficient for servicing customers. He says that all the Citizen sales engineers also are applications engineers. He says it is important to have sales people who can get in the trenches with customers to solve their problems. (12:00)

Marc talks about Citizen’s proprietary LFV (low frequency vibration) technology, which is featured in many of the latest models. It enables operators to control the geometry of the chip coming off the machine using the machine’s CNC control. He says this capability is significant for manufacturers who want to do lightly attended or unattended machining. (17:20)

Marc talks about the significance of the medical sector for Citizen machines. He explains thread whirling for making long bone screws. He discusses a bone screw that was made on a Citizen featuring a laser that performed a cut on that part while still inside the machine (see video). (21:45)

Marc talks about diverse markets where he sees Citizens being used. He says during COVID-19 woodworking has become more popular and Citizen machines are making tools used for the art. Also, he says tattoos have become more popular during the pandemic and Citizen machines are making parts that go into the tattoo gun pens. He says demand continues to grow for parts for the electric car markets. (26:00)

Noah asks Marc tell him something he learned the week before. Marc jokes hat he learned it probably was not a great thing to break into the Capital building. He also said that he learned about the new LNS chip conveyors that are being put on some of the newest Citizen machines equipped with LFV technology. (31:00)

Question: Which Swiss machine do you prefer to use and why?

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Some Good Fiction for Christmas

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By Lloyd Graff

When I think about it, which is not too often, I realize that people in business live in a fictional world.

Many of the numbers that bankers base their lending decisions on are backward-looking constructs that follow accounting rules that are almost meaningless in the actual functioning of a business. Inventory, depreciation, and earnings are meaningful yet meaningless artifacts in the real world that are supposed to show value. As most business owners will admit, with inventory lingering on their shelves, and capital equipment aging ungracefully on the shop floor, the values on the year-end report have little to do with their actual value.

On the other hand, an old lift truck or rumbling overhead crane, which might have no value on the books but are used everyday, may have tremendous importance in running a business. Inventory, which will likely never sell, may be carried on the books for a fortune, but probably should be scrapped. The bosses need to show value to justify their loans.

When I look at my own books at the end of the year, I have to ask my accountant, who plays by the dumb rules because he thinks he has to, to tell me what is really important. In other words, did we really make any money, not fictional money? 

In recent years, I have been involved in selling several viable businesses. Usually the crucial number for both buyer and seller is the previous year’s EBITDA,  which stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. 

I have come to learn that from an income generating point of view the term has limited meaning, but it is the number that the lender, who usually puts up all or most of the money to buy the business, considers to be the holy grail. For the buyer, it is the number he or she will use for depreciation, which will have an enormous effect on the future income taxes to be paid. 

The irony is that the parties in the deal know EBITDA is a fiction as far as predicting the future income-producing capability of the business. That will be determined by the people who will run the business. Are they good managers? Do they have people skills?

Are the people at the top creative? Can they retain their customers and find new ones? Are the key people ready to retire or walk away? If the boss is retiring, is that a good thing or the company’s death knell? 

Yet for buyer, seller, and lender, it is EBITDA that often makes or kills a deal and usually determines the pricing.

If accounting is useless for small businesses, I can only guess how phony it is for big public companies, yet stock prices are often dictated by price to earnings ratios. The earnings are affected by thousands of little lies in huge corporations. 

Maybe the fictions balance out over time. Or perhaps they multiply.

Question: What would you like me to write about next year?

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