Swarfcast Ep. 44 – Bruno Schmitter on Hydromat vs. Swiss Machining

June 21, 2019 • 3 Replies

By Lloyd and Noah Graff

Today’s podcast is part two of an interview we did with Bruno Schmitter, CEO and COO of Hydromat USA.

When Bruno came to America in 1979, his competition was National Acme and New Britain Multi-Spindles. Today he says his competition is mainly CNC Swiss and 5-axis Turning Centers. Bruno argues that having one machine that can do many operations at a time is a better option than having multiple machines which require more space, more people and more tooling.

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In the interview we also discussed Hydromat’s diversification into selling bar loaders and the company’s newest offering, the Eclipse 12-100, which offers machining up to 100mm.

Question: Would you rather have a Hydromat or six CNC Swiss machines?

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The Purchasing Bottleneck

June 19, 2019 • 2 Replies

What else doesn’t count anymore? PURCHASING DEPARTMENTS. The bottleneck of “purchasing” in big companies has become laughable to me as an outsider and to shop folks who make the money in manufacturing. The big gripe used to be “management,” but I don’t hear that as much now.

Today, the outcry is with purchasing departments in larger companies that slow everything down with paperwork and “justifications.” When you need 1,000 pounds of 12L15 round tomorrow, and Central Steel is happy to get it to you at a fair price so the company can make five grand on a hot job, and purchasing just can’t quite make it happen for a week, that is dumb, antiquated management. We see it all the time. It’s why small companies survive and often prosper, while bigger firms trip all over themselves.

It is also why private equity firms are eyeing even small shops with 20 or 30 employees if they have a “secret sauce,” few destructive fiefdoms, and a culture of cooperation. Unions have failed in America today because they rely on a culture of conflict. Enlightened management has reduced conflict in many cases, thus reducing the desire for institutionalizing conflict in a union setup.

American stock markets edged close to all-time highs yesterday. The mavens of the market, who I think really know less than nothing, think it is the prospect of the Fed lowering interest rates today. I doubt it. The Fed is generally rather irrelevant during these days of low inflation and tiny unemployment. The Fed is almost as irrelevant as the United Auto Workers who after 25 years still have not managed to unionize one auto plant in the South. They lost last week at the Volkswagen plant in Chattanooga again. This is at VW which has a Board thick with Union folks in Germany. The UAW now has 30% of the workers it used to have.

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We are celebrating 10 years of growth in the economy according to the numbers. I am a bit skeptical of that personally. I have seen plenty of ups and downs in my work over the last 10 years, but the broad sweep has been upwards — unless you build single-family homes in places like Chicago.

The national press and Democrats running for President are up in arms about the “lack of affordable housing.” If you live in Seattle, Portland, or Manhattan, yes, you cannot find a cheap place to live except for an alley, but to generalize it for the rest of the country is absurd.

You want affordable, move to Bismarck or Oklahoma City or my neighborhood of beautiful homes on big lots, 35 minutes from downtown Chicago. You may have a neighbor with darker skin than you, but this is America, folks. Or you might prefer 900 square feet of quite-functional, newer space in Chicago and forgo a car. Affordable housing is in the eye of the beholder. I just heard of a couple from Seattle who made a study of the entire country as they prepared to move. They were both in jobs which required them to have access to a major airport. They were hoping to have kids. They wanted an area that was not homogeneous. They bought a home under $200,000 near me where they can live on one earner’s pay. Affordable housing is plentiful if you have flexibility and don’t accept the conventional wisdom of scarcity.

Where is the “economy” heading? It depends on what economy you identify with. My economy of people making stuff out of metal using creativity and grit looks quite promising, even as automotive companies deal with a young population increasingly bored with cars and trucks. There are plenty of more promising areas to gravitate into than pickups and SUVs.

Interest rates, inflation, the Fed, tariffs, the deficit, barely move the needle except to stock market junkies. U.S.-China competition will continue whether Donald Trump wins or loses in 2020.

Enjoy the opportunities. Ignore the noise.

Question: Does “Purchasing” get in your way?

Swarfcast Ep. 43 – Bruno Schmitter on Bringing Hydromat to America

June 14, 2019 • 3 Replies

By Lloyd and Noah Graff

Today’s podcast is part one of a two part interview we did with Bruno Schmitter, CEO and COO of Hydromat USA.

In 1979 at the age of 25, Bruno came to St. Louis to sell and popularize the previously unknown transfer machine in North America. Bruno told us that at a young age growing up in Switzerland his father began encouraging him to go into the machine tool business. He also discussed his first years in the United States when he traveled the country convincing multi-spindle screw machine shops to use Hydromats.

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Question: Did your father encourage you to go into the machining business?

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Trying To Be The Hero

June 12, 2019 • 3 Replies

We’ve all done it. We’ve all done it and gotten away with it. We’ve all done it and suffered the consequences.

Tuesday night in the potentially climactic game of the NBA Finals Kevin Durant, the seven-foot shooting star of the Golden State Warriors, played ball after sitting out 32 days with a calf injury. After 10 minutes of playing beautiful and surprisingly fluid basketball his leg buckled on a seemingly inconsequential move, and Durant crashed, all 84”, to the floor in Toronto.

Some ignorant Raptors fans started cheering, but to their credit, Toronto players immediately shushed them to silence. They knew what likely happened to Durant, and they took no joy from it. Durant had done what they had probably all done at one time or another. He wanted to show his greatness. He desperately wanted to show the world his toughness. He wanted to be a hero to the world, to his own teammates, and perhaps most of all to himself. And he paid the price.

In a fascinating coincidence that sports is so great at highlighting, he was opposing the magnificent Kawhi Leonard who was playing the most incredible basketball of his very nice, but not LeBron James- or Michael Jordan-like, career. Leonard had become a superstar in the playoffs, yet last year he languished at San Antonio, sitting out the season for physical and personal reasons. He would be a free agent after the 2018-19 season, and he did not want to spend it with the Spurs.

Kevin Durant After Being Injured

Kevin Durant was also in his prelude to free-agency season at 30 years old. He was on a five-time NBA championship team in the GoldenState Warriors. Playing with Steph Curry, Klay Thompson, and Drayman Green, Durant made Golden State seemingly unbeatable. For his choosing to sign there in 2016 Durant was criticized for taking the pebble-free path to titles.

But in sports, like real life, stuff happens. Earlier in the playoffs DeMarcus Cousins, a former All Star, had hurt his quad. This had put him out of the playoffs until the middle of the Finals, and he was a poor imitation of the outstanding player he had once been.

Klay Thompson hurt his hamstring and sat out Game Three. With Golden State down 3-1 in a seven-game series going into Game 5 in Toronto, Durant was under huge social pressure to play and seemingly faced a moment of personal self-examination leading up to game time. The doctors had cleared him to play. His teammates certainly let him know that they needed him. But only Kevin Durant really knew how his leg felt. Money was also an issue for him. He would be a free agent after the season. He was already rich, but soon he could be mega-rich.

He was a defending NBA champion, but the team would always be seen as Steph Curry and Klay Thompson’s Golden State Warriors. Unless – somehow – Kevin Durant keyed the team to three straight wins to steal back the NBA Championship for the Bay Area. Then Kevin Durant, incredible all-around, 7-foot player that he was, would finally also be heroic.

Durant played. And he played really well for 10 minutes. Then his personal disaster struck. His Achilles apparently popped—and he seemed to know it. A ruptured Achilles tendon injury doesn’t hurt as bad as it sounds. (I’ve done it twice.) But it messes up your walking, much less your jumping, immediately. It wrecks your athletic career for 10 months and, at almost 32-years-old before Durant can fully compete, it will dramatically affect his athletic future. The career of a basketball prodigy, #2 draft pick in 2007, phenomenal scorer, great teammate, could be all but over. Poof.

By all accounts Durant was emotionally crushed. The Warriors’ General Manager was literally in tears when he tried to conduct a press conference after the game that the Warriors won by one point.

Steve Kerr, Golden State’s coach, chose not to talk about it.

Before writing this piece I thought about Kerr’s life. He knows heroism and its price.

Steve Kerr spent a lot of his formative years in Beirut, Lebanon, where his father, Malcom Kerr, was teaching at the American University of Beirut. Americans were always endangered there. Two hundred and eighty-two American soldiers had died in one attack in Beirut. Steve left as a teenager, went home to comfortable Los Angeles, and played guard at the University of Arizona, going to the NCAA Final Four in 1988. His father went back to Beirut to become University President in 1982. He was trying to bridge the gap between Christians and Muslims — to be a hero in his own way. But 18 months after arriving, at the age of 52, he was gunned down by terrorists in the hall of the University.

Question: Have you ever gone out there when you knew you shouldn’t have? What happened?

Swarfcast Ep. 42 – John Habe IV on Valuing a Machining Business

June 7, 2019 • 3 Replies

By Lloyd and Noah Graff

Today’s podcast is part 2 of an interview we did with John Habe IV, President of Metal Seal Precision, a machining company based in Mentor, Ohio.

Listen to the podcast on the player below.

Over the last several years John has grown Metal Seal Precision both organically and through major acquisitions. According to John, growing through acquisitions can be financially rewarding but does not come easily. John discussed the difficulty in buying companies, which often have emotionally attached owners. He also talked about how he calculates the buy price of a company. He looks at cashflow, often called EBITDA in the acquisitions business, as well as criteria such as product sector, customer diversity, and management style of the current ownership.

Question: Is this a good time to go into the machining business? If so, what sector?

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Quandry, Gold or Dross?

June 5, 2019 • 9 Replies

The scary, little, chubby chess piece sat in the old Scottish antiques dealer’s desk for 50 years. He bought it for a few pounds and stuck it in a drawer. After his death his heirs were checking out his belongings and discovered the elaborate carving made from a walrus tusk. One of them thought it might have some value. They guessed correctly.

On July 2, it will be auctioned off by Sotheby’s. Its anticipated sale price is around $1 million.

It is a piece from the collection of Lewis Chessmen, carved in the 12^th century in the form of Norse warriors. In 1831, 93 pieces of the group were found on Scotland’s Isle of Lewis. They now are on display in museums in London and Edinburgh, Scotland.

I read about the 3-1/2” high Lewis Chessman yesterday morning in The Wall Street Journal at my factory office. Later that morning we had an inquiry from South America on a used threading attachment for a 2-5/8”-6 spindle Wickman screw machine. I immediately started wondering if the attachment was a potential Lewis chess piece. I haven’t sold a big Wickman machine for years. I have stripped several of them for key parts, but we don’t sell much big Wickman stuff anymore.

Then came the pricing quandary. What do you ask for a 50-year-old attachment for a machine few folks in the world use anymore? I am blessed to have a complete one in stock and the components to almost complete another one.

I pulled a price out of my behind, $7,500. Another member of the team objected. He suggested that another party who was apt to also have a complete attachment available might be asking more money for theirs. He argued that we probe the other dealer’s price before quoting our prospect in South America. I pushed back. To me $7,500 was a nice price for a probably useless antique that would very likely outlast me. To me it was iron. To him it was gold. It’s what makes a market and attracts all those cars to estate sales.

I am fascinated by how things are valued by people. It is also the apple pie of my business, guessing the value of stuff, believing in my judgment, but having a willingness to throw in the towel when the market proves me wrong.

If I had bought that Lewis Chessman and I didn’t know the ugly carving was 900 years old, I probably would have dished it off, made a few hundred quid, and celebrated with chocolate ice cream. If you have a business with expensive employees, rent to pay, taxes, and health insurance bills you need a semblance of steady cash flow. It is hard to wait for the market to discover your hidden brilliance.

I knew that the potential buyer for the seldom-coveted threading attachment might decide to run his other big Wickman longer hours, rather than schlep a heavy piece of metal 5000 miles, pay 40% duty, then find a technician to put it on his machine correctly. Or maybe he could find a soon-to-be-scrapped machine in Sao Paolo for $1,000. A collector can afford to wait, but a business person has tuition to pay.

I may have a few ugly ivories on my shelves – dusty, grimy die heads or screw machine manuals that Mr. Davenport may have signed. I don’t know, and I don’t really care. Very often less is more in business, and a visually impaired old dude like me is quite likely to trip over a vagrant ivory that falls on the shop floor.

Question: Do you collect or throw out? Why?

Swarfcast Ep. 41 – John Habe IV on Growing a Machining Business through Acquisitions

May 31, 2019 Comments Off

By Lloyd and Noah Graff

Today’s podcast is part 1 of a two part interview we did with John Habe IV of Metal Seal Corporation, a machining company based in Mentor, Ohio.

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John and his two brothers own Metal Seal and several other machining companies, along with some granite countertop firms. He told us that since they purchased their father’s machining business in 1999 they have built their enterprise into one doing over $100 million in sales per year.

In the interview John discussed how Metal Seal dealt with a catastrophic fire in 2014, as well as his approach to delegation of power in a family business.

Question: Do you have a fire story?

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The Journal Deserves a Medal

May 29, 2019 • 6 Replies

If you are interested in women’s soccer, obscure foods, and the tortured lives of Congressional Medal of Honor winners, last weekend’s Wall Street Journal provided hours of Gatorade for your thirst for quality content.

As a writer I appreciate a well-researched and written piece. As a former magazine editor, I know what it takes to put together a readable monthly publication. I can only applaud the editors of the Journal who produce a superb publication five days a week and an absolutely brilliant one on the weekend.

As the supposed competition, The New York Times and Washington Post, have deteriorated into political rags and the TV competition from the networks plus NPR are now biased jokes, the Journal shines like a ruby. On the financial side, Bloomberg is a legitimate challenger, but only on the business news.

I decided to read the WSJ weekend issue cover to cover over the recent holiday and was blown away by the quality and variety of articles. Let me give you a brief review of just a fraction of this one issue.

On Page One was a photo of Dakota Meyer, a recent Congressional Medal of Honor winner, under the caption “Medal of Honor’s Heavy Burden.” It directed you to the “C” section for the piece by Michael Phillips, so appropriate for Memorial Day weekend. Phillips’ article was a 2000-word series of interviews with CMH recipients beginning with 71-year-old Gary Beikirch who received the Medal in 1973 for his actions in Vietnam. Beikirch’s captioned quote was, “it is harder to live with the Medal that it was to earn it.” He was a Green Beret medic whose unit was attacked by North Vietnamese at a Special Forces outpost on the Laotian border. He was badly wounded but continued to treat his comrades while he was carried on the shoulders of two Vietnamese aides.

When Gary arrived home, “filled with rage and racked by guilt,” he decided to head for New Hampshire and live in a cave in the White Mountains, looking for “the peace and contentment he had lost in the jungle.” He took classes at a local seminary, and a few weeks after moving he found a note in the local post office instructing him to call the Pentagon. He called and found out about the CMH award and that he had an appointment to visit President Nixon. He met Nixon, who fitted the star-spangled blue choker and wreathed medal around his neck. A couple days later he returned to the cave with the Medal in his duffle bag. He did not take it out for seven years.

Phillips’ soulful article continued with interviews with Ron Shurer, Flo Groberg, and Dakota Meyer, all of whom were wounded heroes who saw their comrades die. They are all living with the hell of the day that won them the CMH. They all wish that day, that brought them personal fame and honor, had never occurred. Dakota Meyer says “it represents the worst day of my life.”

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I read at least a dozen more memorable articles in this one newspaper. There was a long, thoroughly researched piece on Huawei Technologies, the Chinese electronics firm which epitomizes the America-China discord regarding intellectual property theft, and competition between the two countries. Five Journal writers had the byline on this article, detailing how Huawei plays the game of business. It was a damning article, but one written without an obvious editorial edge. It chronicled numerous lawsuits filed by electronics firms, large and small, illuminating Huawei’s ruthless pursuit of technical knowledge by any means available, including copying competitor Cisco’s products so closely that bugs deliberately left by Cisco and typos in the manuals were in Huawei products. A comprehensive, beautifully researched Journal piece.

Next to the Huawei article was one on Novartis attaining approval for a gene therapy cure that treats an inherited disease called spinal muscular atrophy which kills most babies it afflicts by the time they are two years old.

There was also a fascinating feature about the hunt for the next “superfood,” mostly in obscure locations in West Africa. Entrepreneurs like Phillip Teverow are looking for the next quinoa and kale. He was pushing “fonio,” which looks a lot like golden sand, at Whole Foods in Brooklyn trying to get adventurous eaters to give it a try. The writer, Jessica Donati, also discussed moringa, a chewy green “energy plant” and baobab fruit from the biblical “tree of life.”

Also on the front page of the weekend Journal was the beginning of an in-depth article on Tesla and what its falling stock price was all about. Written by Charley Grant, it was a thorough piece about Elon Musk’s challenge to establish Tesla before the rush of electric car competitors start to really challenge the company and before their cash runs out. Elon Musk is probably the most interesting and gutsy entrepreneur in the world. This article told us how close to the edge he continues to run.

Another piece tucked in the back of the “Off Duty” section by their auto writer, Don Neil, reviewed the new Audi e-tron and compared it to Tesla Model X. According to Neil it fell short of the Tesla in several significant ways.

I could keep going about the two hundred different unique articles in this one issue. But one that will stay with me is an op-ed piece by Burgess Owens, a former NFL player for the Oakland Raiders and today a writer and entrepreneur.

His great, great, great grandfather came to America shackled in a slave ship. He was sold at an auction in Charleston, South Carolina, but eventually escaped with others via the Underground Railroad to Texas and ultimately became the owner of 102 acres of farmland and an entrepreneur.

In the article, Owens decried the notion of reparations for African Americans as divisive and demeaning for whites and blacks. “The idea of reparations demeans America’s founding ideals. A culturally Marxist idea promoted by socialists, reparations denies the promise granted by God that we are truly equal.” He called it a cynical ideology promoted by an elitist class to divide us.

The Wall Street Journal is a consistent masterpiece of variegated content. Last weekend’s issue was truly remarkable.

Question: What are you reading these days? What have you given up?

Best of Swarfcast: The Self-Taught Machinist, With John Saunders of NYC CNC

May 22, 2019 • 1 Reply

By Noah Graff

In Throwback Thursday fashion, Lloyd and Noah are out of town this week, so we’re sharing one of our favorite podcasts from the past. Be sure to listen in and weigh in on the new question below.

In December, we interviewed John Saunders, founder of Saunders Machine Works and the creator of the NYC CNC YouTube channel. John is an innovative entrepreneur who lives and breathes CNC machining. When he was 24 he had an idea to sell an automatically resetting steel target for practicing firearms, but he had no engineering background, no CAD experience and no machining experience. After working on a prototype with a contracted engineer he decided that before he would pursue production of his product he wanted to fully understand the production process.

Scroll down to listen to the podcast.

He bought a Taig CNC milling machine and put it in his one-bedroom New York City apartment. He quickly realized he was passionate about CNC machining and taught himself to use his machine on nights and weekends for two years. Using resources on the Web, instructional DVDs and New York’s MakerSpace NYC community he eventually gained the skills to machine a prototype of his automatically resetting target by himself. Since his first time experimenting with his Taig until today he has religiously documented his machining projects on YouTube and now NYC CNC has acquired over 273,000 subscribers.

Today Saunders with a staff of six employees, runs a machine shop in his hometown of Zanesville, OH. His company runs an intensive training course on machining and welding, and it uploads at least one YouTube video a week about machining. He also cohosts a weekly podcast where he discusses his challenges running a small machining business.

Question: Is the machining business too capital intensive for most entrepreneurs?

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Swarfcast Ep. 40 – A New Person Every Day, With Noah Graff

May 17, 2019 • 5 Replies

By Noah Graff

In today’s podcast I was interviewed about a book I am writing which documents a year in which I have met at least one new person every day. I started 364 days ago when I met a guy named Tommy, working the bar at a restaurant in Chicago called the Blue Door Farm Stand.

Listen to the Podcast on the player below.

Over this year I estimate I have met 450 to 500 strangers. I have met people on the street, a ton of Uber drivers, and folks from all over the world. I have even been forced to call Comcast late at night, desperate to meet just one new person that day.

The quest to meet a new person every day has forced me out of my comfort zone, and it has made each day more meaningful than it would have been otherwise. How often does time go by and you wonder to yourself, what did I do this week? Maybe you can’t even remember what you did yesterday? But after meeting a person and writing about it, and often taking a selfie photo together, I usually feel that something meaningful happened. I learned something new. I had a new experience.

Right now I call the book “The Meeting People Project” as I haven’t thought of anything more clever.

Question: Who is the most interesting new person you have met this week?

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