Ep. 97 – Reducing Machine Setup Time up to 50% with Paul Van Metre

September 25, 2020 • Leave a reply

By Noah Graff

On today’s show we’re talking about how to set up machine tools efficiently.

Our guest is Paul Van Metre, co-founder of ProShop ERP. ProShop produces a comprehensive web-based and totally paperless shop management system for small to medium manufacturing companies. Paul says that using a few best practices, guided by ProShop’s management system, can reduce a machine setup time up to 50%.

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Main Points

Paul shares his background. He grew up in New York and studied mechanical engineering in college. He says he found it dry, so he began looking for something more hands on. He found a program in Washington State that was heavily involved in the Formula SAE competition, which he fell in love with. He and his teammates decided to start a machine shop together right out of college. (3:10)

Paul says that for their machine shop’s first three years (in late 1990s) the company used Excel to make its job routers and travelers. As it added more machines, it put a computer next to each one. (5:15)

Paul explains that the idea for his company’s proprietary shop management system came out of desperation and need. As the company grew, introducing more machines and employees, Excel was not keeping up. His team researched shop management software in the old school Thomas Register books. (6:25)

Paul says that none of ERP software firms his company looked at offered products designed specifically for managing the shop floor. The products also required paper printouts, which Paul and his team felt was a step backward from what they were already doing using Excel. Ultimately, they decided to hire a software designer to design a custom ERP system for the company. Paul says it took a little less than a year to develop workable software to handle the company’s needs. (7:35)

Paul says it took about eight years before the company’s ERP software received outside attention. During the economic slowdown in 2008, a production manager from his company’s biggest customer came to the shop to work one day a week. When he tried using the ProShop ERP he liked it so much that he told his own company about it. (10:50)

The customer convinced Paul’s company to let it use ProShop ERP. Paul says that within six months of using the system his customer’s productivity was boosted so much it was able to free up three full time employees, and it drastically decreased its lead-times on various jobs. Then the customer asked if Paul’s company would allow some of its vendors to use ProShop ERP. Paul and his team then realized the opportunity to start a new business selling their ERP, which they founded in 2016. (12:30)

Paul says he misses the joy of the production process of running a machine shop, but he says providing ProShop to help other companies succeed is what he enjoys the most. (15:45)

Paul says that by using a few best practices a shop can save up to 50% of machine setup time. (17:45)

Paul says proper setup process starts when a machine has already been torn down from its previous setup. The teardown should be part of the machine’s previous job’s processes. (18:46)

Paul says the first thing to think about when starting a machine setup is to have all of the materials ready for the job at the machine—tooling, instructions, and rich media such as videos and photos to guide the setup person. This is because if a setup person has to leave the machine to get something that she forgot she can run into a multitude of distractions in the shop which significantly delay getting back to work on a machine.

Paul says one of the worst obstacles in slowing down setup time is when the shop doesn’t even have a necessary tools or materials on site. Then the setup process loses days while the company waits for materials to be shipped in. (23:00)

Paul says it’s very important for a setup person to have detailed work instructions for a job ready (SEE VIDEO BELOW). He says that ProShop ERP’s paperless system makes it easy for people to have all the important info about a job at the machine at all times (again, so they don’t have to get up and leave the machine). Having paperless instructions also makes it smooth to set up jobs that were already run on that machine in the past because the setup person doesn’t have to find an old printout. The instructions from the old job are ready on a computer next to the machine and may have important updates from the last time the job was run. Having organized instructions at a machine that are easily accessible enables a different person to set up a machine than the previous one. Paul says that ProShop ERP has plans to have software integrated right on machine tools in the future.(24:45)

Paul says ProShop ERP also helps with cutting time on the inspection step of a setup. It sets up processes for a setup person to do her own inspection on a part so the part looks good before it is sent to the Quality department. When the part goes to the Quality department there are notes for the quality technicians to pay attention to. (29:45)

Paul says another important part of every setup is continuous improvement on a part. One of the key features of ProShop ERP is that it allows machinists to document process improving ideas, flag their planning department, create action items, and assign tasks to save even more time. It’s all in one place so that communication is simplified and efficient. (31:40)

Paul says one of the most interesting things he learned last week was that 6% of the forests on the West Coast have burned this year within the last few weeks, which is nearly 20 times more acreage than last year. (34:05)

Paul says a key takeaway is that setup is very logical and doesn’t require specialized software if you have key systems in place. He believes that a little upfront work will have huge ROI on your time on the back end of the process. (35:15)

Question: What aspect of work do you wish you were more organized for?

For more information on ProShop ERP, visit: https://www.proshoperp.com/.

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Best of Swarfcast – Ep. 73 – Tracking Your Machine’s Productivity with Eric Fogg

September 17, 2020 Comments Off

By Noah Graff

Today, we’re going to do a quick Throwback Thursday to March of this year, to a discussion about going digital with machine data.

This week’s podcast is an interview we did with Eric Fogg, co-founder and head of machine connectivity at MachineMetrics. MachineMetrics produces an IOT device that connects directly with machine tool PLCs and controls to track realtime and historical data on equipment. Operators use the data to assess how machines are truly performing, which is often quite different from what they perceive.

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Main Points

Eric explains that MachineMetrics is a machine data connectivity data platform. The company makes a device (he calls an “edge device”) that connects directly to machine controls and sensors of production equipment. The device gathers valuable data on how the machines are performing and sends it to operators to analyze. (3:10)

Eric talks about taking machine shop classes in high school. During high school he worked at a lot of different machine shops on nights and weekends and taught himself programming. (4:10)

Eric says that MachineMetrics can gather data from all vintages of machine tools, not just CNC machines, though CNC machines provide the most data. He says right now MachineMetrics has a client using its edge device to gather data from a punch press that was manufactured in 1925. He says, “As long as it moves and has electrons flowing through it we can probably get some useful data out of it.”(7:00)

Eric says that in college he majored in theology because he wanted to work in the field of corporate ethics. Eventually he started his own machine shop in his mid 20s that specialized in green technology products. (10:00)

Eric Fogg of MachineMetrics

Eric says that when the 2008 recession hit he started doing more job shop type work with low margins. He eventually closed his company started doing Six Sigma consulting for job shops in Vermont. The experience of analyzing the processes of different shops inspired the idea for MachineMetrics. He says he observed that shops were often making decisions based on a gut feeling rather than based on data. He came up with the idea to pull the data that already was on the machines’ controls to create reports, dashboards and analytics to help machining companies make decisions. (14:00)

Eric says the most basic data MachineMetrics tracks is machine utilization—how much machines are running versus how much people think they are running. He says the average perceived utilization of equipment by MachineMetrics’ customers is just under 80%. The actual average is in the high 20 percents to low 30 percents (the numbers are based on active shifts). He says that the numbers can be surprising as various markets differ. For instance, he says for some types of very low volume work (1 or 2 part runs) 15% utilization might be considered world class. He says for high volume shops utilization is often much higher. For instance, he says shops making millions of parts with much thinner margins sometimes have utilization in the 90 percents. He says that no matter what type of shop, clients are usually surprised at their utilization rates. (20:25)

Eric gives some examples of how MachineMetrics data uncovered problems that led to low machine utilization. He gives an example of a client who was using cheap 1/4” drill bits on a drill and tapping center. The company calculated it took only 5 minutes to change a drill bit out, so they used cheaper ones with short tool life. The problem was that while operators left to get a new drill bit from the tool crib they got sidetracked and the average time to change the drill bit was actually over 40 minutes. After learning this the owner of the company decided to go out and buy the most expensive drill bit that lasted 10 times longer than those he was using. It was a solution that was much faster and easier to implement then changing the procedure in the shop which could have tons of variables to consider. (24:10)

Eric says that MachineMetrics generally does not advise customers how to use the data they collect. He has found that customers usually take the initiative to solve their problems. He says his company is often surprised at the interesting ways that clients utilize the data. (27:40)

Eric discusses a phenomenon he sees in CNC shops he calls “cyclecreep.” What happens is that over time people gradually alter they way they run jobs by making tweaks such as changing tools or feed rates which often increases cycle time. The problem is that the manufacturer continues to bill its customer for the original cycle time. Operators see green lights on machines which makes them think everything is running fine but problems are occurring behind the scenes. (30:15)

Eric gives an example of a company running the same parts on 20 vertical machining centers that were bought over 10 years. MachineMetrics found that no two machines had the same original cycle time of 40 minutes. He says that some cycle times only differed a few seconds but the delta between fastest machine and the slowest machine was 15 minutes. After seeing this data, in just a week the company was able to adjust the machines to all have a cycle time within a few seconds of each other. (35:30)

Eric says it can be difficult for his clients because often MachineMetrics is delivering them bad news. He says that the consistent trend he sees is that the most successful shops have a culture around change. (37:25)

Question: Are the effects of the coronavirus a net plus or a net minus for your machining business?

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Sleepless in Chicago

September 15, 2020 • 4 Replies

By Lloyd Graff

Sleep and lack of it has long been one of life’s biggest mysteries to me. Some days it feels so easy and comfortable, an effortless, pleasant activity, and the next night it is an elusive phantom that I mentally grab for and continually miss.

I used to find it much easier. Wash up. Light stretch. Hug my wife. Casually discuss the next day’s plans. Turn over, and sleep would easily take me. Not so anymore.

For years, after being told I had sleep apnea disorder, I struggled with an annoying breathing apparatus that was supposed to provide me with a healthy, peaceful night’s rest. Over time, I doubted that analysis, and finally decided that at least for me, sleep apnea was a sleep industry fraud. I slept better without the infernal breathing apparatus that I used to schlep everywhere when I traveled around the country.

I gave up the machine after my heart surgery 12 years ago. I do not miss it at all.

Like many men, I suffered from prostate enlargement for decades, which impaired my sleep. Surgery solved that issue, though one interruption for urination is normal for me after four hours sleep. That is the tough one for me. It usually happens between 2:30 and 4 a.m. These days, slumber all too frequently eludes me.

I get back in bed and nothing feels quite perfect. The quilt is in disarray. Risa may be snoring. Light sneaking past the window is annoying.

And the thoughts, the challenges, the fears, the things I should have done better the day before, the Cubs bullpen collapse. It could be anything. Lately it has been a troubling dream, or the inability to remember the number sequence of the burglar alarm disarming code. Other nights I struggle to remember whether the name of the high school English teacher I hated was Rosenstein or Rosensweig. A lot of dumb stuff, but they are stealthy and persistent intruders.

I use my tried-and-true tricks, counting 1 2 3 4 5 while breathing in, 6 7 8 9 10 breathing out. I put tape over my mouth these days to eliminate mouth breathing. Other nights I envision shooting free throws and enjoying the imagined feel of the leather basketball releasing from my fingertips.

I usually swallow a melatonin pill before going to bed, but now I add a few sprays of melatonin if sleep feels distant. Unfortunately, a couple times per week, I stay up for two hours and occasionally never reenter the sleep state.

I pay the price during the daylight hours to come, and often the following day. It also tends to increase migraine symptoms like scintillating scotoma, the half moon shaped floaters that interrupt vision for around 25 minutes.

Hopefully your sleep is always peaceful, me and the other sleep deprived world would like to know your secret.

Question: Are you a successful sleeper and do you have any advice for the rest of the world?

Ep. 96 – Precision Machining in Spain with Patrick Bosch

September 10, 2020 Comments Off

By Noah Graff

On today’s episode we are discussing the machining industry in Spain.

Our guest is Patrick Bosch, Managing Director of Nagamohr, a 150 employee Tier 2 automotive company headquartered in Madrid, Spain. According to Patrick, despite Spain’s reputation as having a relaxed culture, its people are quite serious about manufacturing.

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Main Points

Patrick talks about his family’s German origin and about a subsidiary his company started recently, Nagamex, in Mexico. (2:55)

Patrick talks about Nagamohr’s business, producing turned parts for Tier 2 automotive. The company has over 80 machines in its shop in Spain, including a large number of Hydromats, as well as CNC multi-spindles and other CNC machines. It has a turnover of around 15,000,000 euros per year. (4:05)

Patrick says Nagamohr was originally a joint venture between a Spanish firm and a German firm, Nagares and Mohr, but the two could not get along, even while the company just existed on paper. Nagares, the Spanish division, wanted out of the partnership, so Patrick’s family took its place. Only a few years after the company was founded, the Bosch family assumed full ownership of Nagamohr. (5:25)

Patrick talks about his background. He studied business administration and engineering at university. For a few years he worked in the finance field, but when the opportunity arose he decided to join his family’s company in 2011. He assumed a leadership role in 2013. (6:40)

Patrick’s talks about why his family moved to Spain. He is the first generation of his family born in the country. In 1962 Patrick’s father originally visited Spain to study Spanish, but decided he preferred to stay in Spain than return to Germany. Patrick’s mother is also German. (8:00)

Patrick says that the automotive industry represents over 10% of Spain’s GDP. He says Spain’s manufacturing is most significant in the country’s Basque region (in the north) as well as Catalonia, while his location in Madrid ranks third.

Patrick discusses the division between the regions of the Spain. He says half of the people in country identify themselves as Spanish, while the other half of people identify themselves by their region. (11:45)

Patrick talks about the skills gap in Spain. He says it’s hard to find skilled workers in the machining field, so usually its necessary to train employees in house. (13:10)

Patrick talks about the industries commonly found in Spain besides automotive, including the energy industry and engineering. (14:40)

Patrick says unemployment in Spain fluctuates quickly and can be very high because of the country’s reliance on the seasonal tourism industry. He says before the COVID-19 crisis the country’s unemployment rate was around 11%, but right now it is around 18%. (15:22)

Patrick dispels the myth that Spanish people are lazy workers. He says the Spanish work day is similar to that of other countries but the custom of the Spain is to operate one hour later than the rest of the world, as though it were in another time zone. For instance, someone working in a shop in Spain might start at 7:00AM rather than 6:00AM, but then work an hour later in the day. Rather than eating lunch at noon, Spanish people often eat lunch around 2:00PM. Then they typically start eating dinner around 8:30PM and as late as 10:00PM. (17:10)

Patrick discusses salaries in Spain and Spain’s government-run programs such as health care. He says salaries range widely, with entry level in a shop around 20,000 euros a year, with an additional 33% going to the government for social security and health care. He says that Spain’s public health care is very good. He says inexpensive private insurance is also available but generally everyone uses the public health care providers for serious medical concerns even if they have the private insurance. He jokes that he always asks himself why he pays for private insurance. (18:50).

Patrick says people in Spain work much harder than other nations realize. (21:20)

Patrick explains the origins of Nagamex, Nagamohr’s Mexican subsidiary, which was originally conceived in 2015 (See video below). Two major customers suggested the company should build an additional facility to be a local supplier to North America. It started the company there two years ago. Patrick says the biggest challenge of working in Mexico is the paperwork. He says there is significant employee turnover there but also many good workers. He also says he hasn’t encountered any corruption there so far. He says the Spanish language and Western culture was one of the driving factors behind building a plant in Mexico rather than in Asia. (21:55)

Patrick says business slowed for just a few months due to coronavirus. He says demand for automotive parts is at its peak during September and October, after which it will be easier to see where the company will be in the future. (25:50)

Patrick says that 99% Nagamohr’s work is automotive. The company was hit hard by COVID-19, with a reduction of more than 70% for two months. Business has picked up somewhat in the last few month. (27:00)

Patrick talks about something new he learned recently. He says two weeks ago at the beach he saw someone riding a special bicycle on water. (27:45)

Question: Do you prefer to work early or to work late?

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The Manufacturing Rebound

September 9, 2020 • 1 Reply

By Lloyd Graff

I talk to a lot of folks in the machining trade every day, and the clear sense I am getting is that business is improving. The automotive segment is definitely firming. Auto related work has bounced back from the April, May, June, July doldrums. Demand has picked up, and car showrooms are extremely short of hot inventory.

European and Japanese companies were also shut down, and the supply chains are strained. Guns and the medical sector are strengthening.

We are seeing an uptick in the used machinery business. The auctioneers are surprised at how strong their sale prices are holding up. Inventory of late model Swiss-type and multi-axis CNC machines appears to be light.

On the macroeconomic front, the recent perverse behavior of stocks is being attributed by pundits to the surprising decrease in unemployment after PPP money ran out and extra layoff checks ended. Evidently some people did choose to return to work.

Small businesses, especially those travel-related and restaurants, have been severely hurt, but the wounded giant called the American Economy appears to be healing. The prospect of multiple viable vaccines being approved soon, while good for most people in business, is viewed by some speculators as negative for tech stocks like Apple and Amazon, which have continued to thrive despite the swooning economy. It appears that improving conditions are sell signs for the option trader gamblers.

From my observation, the impending election does not seem like it will be a significant issue for the stock market, but it could be an issue small business people.

They should ask LeBron for advice. He seems to know all.

****

Do politics and NBA basketball mix well?

Maybe the better question is does China own the NBA? Or perhaps the real question is does LeBron James play for the Los Angeles Lakers or Nike?

The three questions are tied together. LeBron signed a contract in 2019 easily worth a billion dollars with Nike, becoming its most valued endorser, though Michael Jordan trails him very closely.

The NBA also signed a $1.5 billion dollar contract last year with Tencent, the Chinese mega company, granting it the exclusive rights to broadcast all of the NBA games it chooses to air in China. The games are mainly watched by young people on their cell phones as they ride public transportation to work in the morning.

The NBA has built academies in China to teach and promote the basketball. When Daryl Morey, the general manager of the Houston Rockets, had the audacity to tweet critically about communist China crushing the human rights demonstrations in Hong Kong, the Beijing Party leaders bristled. Then the NBA bosses cowered and tried to make nice.

LeBron, who probably sees himself as a potential president of the United States, and heir to Oprah and Martin Luther King Jr. in America, had a real dilemma. It was magnified when COVID-19 hit midway through the 2020 NBA season. The players were undecided about continuing to play, but LeBron had the NBA, Nike, China, and Black Lives Matter all looking at him to thread the needle. It was a time to prove himself to be politically skillful before he even stepped on the court again with Anthony Davis and the rest of the Lakers.

I watched LeBron play brilliantly Monday in the playoff series, ironically against Daryl Morey’s Houston Rockets. Black Lives Matter signage was everywhere in the Orlando bubble, where all of the games are being played and broadcast on TNT and Disney’s ESPN. Player uniforms displayed social and political messages, and a huge VOTE sign was prominently displayed during all broadcasts.

It is a fascinating mishmash of sports, business, politics, and LeBron, who is proving himself to be the Confucius of America in 2020.

Question: Is your business rebounding?

Best of Swarfcast – Ep. 35 – Graeme Sinclair on Precision Machining in Australia

September 3, 2020 Comments Off

By Lloyd and Noah Graff

Our podcast team is taking a short break to enjoy Labor Day weekend with our families. In the meantime, in keeping with the international theme of Season 4, we hope you will listen again to the podcast we did with Graeme Sinclair, owner of Parish Engineering, a machine shop in Melbourne, Australia.

Scroll down to listen to the podcast.

On today’s podcast we interviewed Graeme Sinclair, owner of Parish Engineering, a prominent precision machining shop in Australia. Graeme has been in the machining business for 60 years, since he served his apprenticeship at age 14.

In the interview, Graeme discussed the challenges faced by machine shops in Australia verses the rest of the world, his eclectic taste in CNC machines, and his passion for the game of squash. Sinclair explains that one reason he has many different types of equipment is that automotive companies have shut down their operations in Australia, meaning a lot of high volume work has disappeared.

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Main Points

Graeme talks about being a long-time fan of Today’s Machining World. He used to receive the printed copy of the magazine before it went digital and enjoyed sharing the printed articles around the shop. He talks about Lloyd offering him screw machines in the past. (2:40)

Graeme speaks about Parish Engineering, which was created by Mr. Parish in 1932. Parish ran turret lathes and single spindle cam screw machines such as INDEX B60s. In 1968, with no one to take over the company, Parish sold the company but remained to train others. Graeme joined the company in 1972 but was laid off in 1975. In 1980, Graeme returned and bought the company with his brother-in-law. His business partner retired in 2010, leaving Graeme and his daughter as the current owners. (4:30)

Graeme describes the company as a screw machine job shop with 28 CNC lathes and several vertical machining centers. The company owns Citizen, Star, Mori Seiki, Tsugami, Nakamura Tome, and INDEX machines. Graeme says he prefers Citizens for Swiss work. (6:00)

Graeme says the company made parts primarily for the automotive industry when he assumed leadership in the 1980s. It still does some automotive parts, specifically for the Ford Ranger, because the gear shift is made in Australia. Forty percent of the company’s current business is making pneumatic couplings and air fittings for track braking systems. The remainder of the company’s business comes from contract jobs. He says he is pretty sure the Ford Ranger is assembled in South America, South Africa and Thailand. (7:00)

Graeme talks about growing up in Melbourne, Australia, and how he got into the machining business. At 14, he left school because his parents were very poor and began an apprenticeship in fitting and turning. For 10 years, he went to night school three nights a week to get a degree in engineering. Both of his daughters are also mechanical engineers; one is the CEO of Parish Engineering and the other works in New York. Graeme is 74 and has been in the business for 60 years. He says he is finally down to working just five and a half days a week. He says he starts work at 8AM or earlier. (9:00)

Graeme says he didn’t plan to get into the machining business, but got into fitting and turning because it seemed like a good opportunity for someone with little formal schooling. He also worked in the machining business in England for a short time. (10:40)

Graeme talks about the differences between screw machine shops in the US and Australia. He has visited shops in the US and England, and says it seems like they all are facing the same challenges. The main difference he says is the US not using the Metric system. (12:20)

Graeme says about 20% of the parts produced by Parish Engineering is exported. (13:10)

Graeme says he still has use for multi-spindle screw machines. Three years ago, he acquired a second machining business, which he has been growing. He is thinking about adding another multi-spindle to handle high volumes. CNC work is diminishing slightly because of Australia’s declining auto industry. He says Australia doesn’t support manufacturing as well as other countries. He says manufacturing is strong but not as strong as it used to be.(13:40)

Graeme talks about the skills gap and how there are fewer jobs in the machining industry, as well as fewer skilled workers to fill them. He says many of his employees are immigrants because Australians are not as interested in working in manufacturing. He says Australians believe strongly in getting a college education, but many graduates struggle to find jobs in their fields of study. (14:10)

Graeme explains that immigration to Australia is not difficult for skilled workers from more developed countries. He says Australia is very culturally diverse and that the number of nationalities in Melbourne is close to 200. (17:20)

Graeme describes the differences between Sydney and Melbourne. He says Sydney is larger and closer to the mining industry, but Melbourne is the metal working manufacturing hub of the nation. Graeme says Sydney is similar to New York while Melbourne is Australia’s fashion capital and sports mecca. (18:40)

Graeme talks about playing squash, a sport that he has enjoyed for 57 years. He is the captain of his team and says he can still beat players 26 years younger than he is. He says the difference between racquetball and squash is the size of the ball and rackets. Both sports are played on the same court, but he says squash is faster and more challenging. He says when he was growing up, everyone played tennis. (21:20)

Graeme discusses the relationship between Australia and China. He says China is one of Australia’s closest large countries and its biggest trading partner. It buys a lot of Australia’s wine and agricultural products. Graeme says doesn’t buy much tooling from China and sells only one part to a Chinese company on an infrequent basis. (25:00)

Graeme says many Southern Australians where he lives are not fans of President Trump. He says many people including him regard Trump as “unprofessional.” Graeme says his business has not felt much impact from American foreign policy. (26:20)

Graeme says his businesses are going well and they consistently make profit. He says Parish Engineering is the oldest machine shop of its kind in the Australia. He says it has about six competitors of the same caliber. He says his philosophy is not to relax when things are good, and not to worry when they are bad. (28:35)

Graeme describes himself as hands-on. He spends a lot of time problem solving and trouble shooting on the shop floor. While he doesn’t mind time in the office, he says being on the floor is the best way to utilize his 59 years of practical shop experience. (30:20)

Graeme says having his daughter as CEO gives the company more purpose, knowing that the business will continue into the future. (31:25)

Graeme discusses the additional Lico CNC machine that he is looking to purchase for his company. He likes that it is quick and flexible. (31:50)

Question: Would you like to move to Australia?

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The Tear Down

September 2, 2020 • 3 Replies

By Lloyd Graff

There is a common thread when it comes to success in baseball, business, and poker. You must have the guts and the strength to walk away from bad bets. You must admit mistakes, accept that they are part of life, and courageously walk away.

The Chicago Cubs and the Chicago White Sox are both in first place on September 1, 2020. This may be the first time that has happened in a hundred years.

The Cubs had the courage to rebuild a mediocre team when new ownership brought in new management with Theo Epstein in 2011, who had successfully rebuilt the Boston Red Sox into a World Series team in the early 2000s. White Sox general manager Rick Hahn found the courage to approach 80-year-old owner Jerry Reinsdorf to suggest a teardown and rebuild that he hoped would copy what the Cubs had done to get into the playoffs in 2015 and then win the World Series in 2016. Reinsdorf swallowed deeply and gave the go ahead, despite his age. The White Sox today have a terrific young team and could win a World Series this year or next

As a Cubs fan, true blue, I have always rooted against the Sox, but the team the Sox are putting on the field today is so powerful and dynamic that I have to applaud them. The moves they have made to reach this point are a blueprint for running a baseball team or a business.

The last blow that lead the White Sox to tear down the team happened in mid 2016, when the they traded Fernando Tatis Jr., their top young prospect, for pitcher James Shields, an old warrior, hoping to get enough wins from Shields to reach the playoffs. The team came up short, finishing 76-84. Shields had a 4-12 record with the Sox and was eventually released. Tatis now looks like the likely MVP in the National League this season.

After the 2016 season, when the Cubs won the World Series, Hahn reversed the course of the Sox and began the total tear down and rebuild that would culminate in the Sox becoming a legit World Series contender four years later.

The first crucial move, made on December 6, 2016 with Reinsdorf’s backing, was trading Chris Sale, one of the best left-handed pitchers in baseball, who also had a management friendly long-term contract, for two top prospects, Joan Moncada and Michael Kopech. The next day, Hahn traded their top outfielder, Adam Eaton, to Washington for pitching prospect Lucas Giolito.

In July 2017, they traded their best pitcher, lefty Jose Quintana, to the Cubs for their top prospects, outfielder Eloy Jimenez and pitcher Dylan Cease.

Also in 2017, the White Sox signed shortstop Tim Anderson to a six-year contract extension, and slugger Jose Abreu was signed to a three-year extension, which the Sox extended again in 2020. They also signed Cuban defector Luis Robert with a $26 million signing bonus. At 19, Robert had played for the Cuban National Team and was considered a fabulous prospect. Today at 23, Robert is being compared to legends like Mike Trout and Roberto Clemente.

At the end of 2016 and in 2017, the Sox made key moves that are coming to fruition this year as they have the best young team in baseball.

This is how you build a winner if you’re starting with a mediocre hand. Trade your best players for great position player prospects and draft the next Mike Trout. When you are ready to win, sign veteran free agents who know how to win to put you over the top.

You must walk away from the bad bets. Excellent players on a mediocre team will never get you to a championship.

In a business, you have to walk away from dead inventory and uncollectible receivables, even though it may show a nasty loss. In a job, you should quit if you do not see the upside or if the environment is hostile. A lousy marriage with wonderful children is hard to leave, but leaving may still be the best decision.

Getting where you really want to be often means absorbing some very nasty losses.

Question: What hard decision did you make this year?

Ep. 95 – The Machining Business in Canada with Sander Boelen

August 27, 2020 Comments Off

By Noah Graff

This week we head to Canada, as we continue our season exploring the diverse world of machining around the globe. Our guest is Sander Boelen, founder of Allegiant 3D in Montreal, Canada. Allegiant 3D engineers and produces prototypes for OEMs in the photonics industry around the world; companies making products like lasers, medical instruments and dental scanners.

As a used machinery dealer I’ve sold a lot of machines into Canada over the last few years. From my vantage point, the machining business generally seems to be doing quite well north of the border, and I wanted to find out why that is.

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Main Points

Noah talks about meeting Sander Boelen when Sander inquired on Graff-Pinkert’s Trumpf TruLaser Station 5005 Laser Welder it has for sale. (2:40)

Sander talks about the origins of his company, Allegiant 3D, which began in the mid-2000s as an engineering firm. The company designs products and manufactures prototypes for the photonics industry, including lasers, receivers, and various types of medical equipment. (4:00)

Sander gives an example of the types of businesses he works with, including a local producer of intraoral scanners used in dental work. ( SEE VIDEO BELOW – 6:30)

Sander talks about the machine tools that Allegiant 3D has in house to make prototypes for customers. (8:00)

Sander talks about his personal experience growing up in the southern region of the Netherlands, which he calls a great breeding ground for technology. In his college years, Sander moved to Canada to take an apprenticeship in the Physics department at McGill University, located in Montreal, Quebec. (9:00)

Sander talks about higher education in Canada. He says public education there is free and universities are inexpensive, with tuition costing around $2,500 CAD per year. He says many Americans study in Canada because of the low cost. He also says Canada has good trade schools, including one close to his shop. (11:30)

Sander talks about Montreal, located approximately five hours from Toronto. He says in Quebec French is spoken in the street and signs are in French, but everyone knows English. (13:00)

Sander says that Montreal’s machining industry is mainly in the aerospace sector, while machine shops in Toronto, which aren’t far from Detroit, primarily work in the automotive industry. He talks about some of the aerospace suppliers in his area which range greatly in size.

Sander says Canada is a good place to start a machining company but at the same time it’s complicated to start a business anywhere in the world. (16:30)

Sander talks about the Canadian government. He says Canada has good programs that encourage business. He talks about R&D tax credits that encourage companies to be innovative and work together. (17:50)

Sander says he believes that running a machining company in Canada is not that different from running one in the United States. In fact, currently he is looking for potential opportunities to start a company in the US. He also says that Canada’s economy is very socialist, particularly Quebec. He says not needing to provide health care for employees was one reason it was easier for him to start a company in Canada, which has a public health care system. He says that successful companies in Canada often offer supplemental insurance as an extra benefit to employees. (19:00)

Sander talks about the higher tax rates in Canada. He says at a certain income bracket tax rates can be 50-55% but there are ways to decrease taxes such as investing in pensions plans. (21:40)

Sander says that the machining industry in Canada will be prosperous for the next few years and that he sees work coming back to North America. He says that though the value of the Canadian dollar is much lower than the American dollar the lower value is beneficial for exporting. He says currently the aerospace industry is taking a hit, but his business is busy right now. (23:00)

Sander talks about the advantages of having a niche, making parts for the photonics industry. (24:50)

Sander says a big challenge he is facing is having to say no to the demands of smaller customers as his company continues to grow. He also says it is a challenge to produce the right parts consistently all of the time. He says making one part well is easy, but making a lot of different parts consistently is difficult. (25:30)

Sander says the most interesting thing he learned recently is that pushing employees to work longer hours often has diminishing returns. (27:00)

Question: Is doing business with Canadian companies important for your business?

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“Fulfillment” Centers

August 26, 2020 • 4 Replies

By Lloyd Graff

Like desert marigolds flowering out of nowhere, 4 million square feet of new buildings are going up simultaneously this week in the primarily African American South Suburbs of Chicago where I live and work.

Twenty miles north of here in Englewood, where my dad grew up and attended High School, people are shooting at each other every night and connecting with disturbing accuracy. The daily carnage is staggering and overflowing into the expensive Magnificent Mile of North Michigan Avenue, leaving it looking like Beirut’s downtown.

Amazon loves the South Suburbs. They already have built half a dozen fulfillment centers in the area and are building two more. One of them is within walking distance of Graff-Pinkert, and the other is near my favorite corn stand. The Logistics Center of 2 million square feet, consisting of four expandable buildings, is also in walking distance. It is located on a 102-acre site, which was supposed to be an outlet mall until Amazon growth killed that idea. Its closest neighbor is a multi-story apartment building, built just a few years ago, which accepts people who have lost their jobs and have nowhere to go. The developers jumped on the site when they could put together $29 million dollars in tax subsidies from the village and county, plus the tax advantage of being in a designated Opportunity Zone with the recent tax law changes.

Add in cheap mortgage money and a great location between two interstates, plus an abundance of inexpensive workers with lousy job prospects in the neighborhood—and bring in the excavators.

The broker for the logistics project says there is an industrial real estate boom taking place, with Amazon picking up half of the new space in Chicagoland.

What is it like for the $15 per hour people who are drawn to the thousands of Amazon jobs, before the robots make them obsolete?

A woman who used to clean our friend’s house went to work for Amazon in Joliet a half hour west of the new fulfillment centers. Her work consisted of opening boxes 10 hours a day, four days per week. She wanted the job because it was her first opportunity for full-time work that offered health insurance. It was also an opportunity to get free tuition at a local community college if she worked for Amazon for 18 months.

It was demanding physical work and took its toll. Both of her hands absorbed enough punishment to require surgery. Her dream of training to become a nurse’s assistant sterilizing instruments was postponed by these injuries.

2-Million-Square-Foot Logistics Center

I am a capitalist, an investor, and a happy customer of Amazon. I think Jeff Bezos is a genius who has enriched me and my family because I invested in Amazon stock over 10 years ago and have held on to it. Bezos himself was born to a 17-year-old mother. His father, who he barely knew, owned a small bike shop in Albuquerque. His mom got an education, moved to Florida, and married into an upper-middle-class world. Jeff went to Princeton but he started Amazon on a prayer, and it is now worth hundreds of billions of dollars.

Our former cleaning person will not be taking another job at Amazon with her damaged hands. The two new 865,000-square-foot fulfillment centers will each hire a thousand workers for bigger packages, but Amazon has proudly announced that the buildings are built for robots when they become more capable.

The South Suburbs, the stepchild of Chicago real estate, is finally bustling. It has the cheap land on the interstate highways, and, above all, it has cheap people, the folks who will line up for the grueling jobs that more efficient, stronger robots will eventually take.

Capitalism drives America, and I love it. But it does come with a cost. My Amazon stock is up 2,218%. The gulf of income between people with securities and those who dream of sterilizing instruments keeps growing, but with Opportunity Zones and other tax breaks, we’ve got 4 million feet of new buildings blooming in my backyard.

Question: Have you lost workers to Amazon?

Ep. 94 – The Machining World of South Africa with Peter Frow

August 20, 2020 Comments Off

By Noah and Lloyd Graff

On today’s show we’re discussing the machining business in South Africa. Our guest is Peter Frow. Peter has been immersed in the machining business and has also been a participant in the social change of South Africa over the last 50 years.

While so many of his countrymen emigrated, Peter stayed and has recently started a business building a new machine tool in South Africa called FAS Machine Tools.

Scroll down to listen to the podcast. Or listen on your phone on your favorite app or Apple Podcasts and Google Podcasts.

Main Points

Peter talks about his businesses, Renfield Machine Tools, which he started in 1991, and his new company, FAS Machine Tools. Renfield Machine Tools reconditions used cam screw machines and turnkeys them, while FAS Machine Tools builds new machines. (3:40)

Peter says FAS Machine Tools builds a machine in South Africa that has the fast cycle times of a cam screw machine and the user-friendliness of a CNC lathe. He says his machine costs half the money one would likely pay for a comparable machine. Peter describes his machine as similar to a Swiss style machine but with a fixed headstock. It has an 8-station turret that moves on 2 axes, a dedicated turning slide that moves on 2 axes, a dedicated forming slide and a dedicated parting slide. The machine’s design allows for tools to work simultaneously on a workpiece, which gets cycle times down. (5:25)

Peter discusses what it’s like being 75 years old and starting a new company. He doesn’t worry about his age. (8:00)

Peter talks about his background in the machining industry. His father was an engineer at a power utility company in South Africa. Peter received a degree in mechanical engineering and for seven years worked for the same power utility company where his father had worked. In his late 20s he changed careers and went back to his hometown of Durbin. Once there, he joined his father’s screw machine shop. It was supposed to be a temporary gig, but he ended up staying and building up the company over the next nine years, from 1973 to 1982. (9:15)

Peter describes the history of Apartheid in South Africa. He says country consists of essentially four racial groups: black, white, Indian, and those of mixed racial heritage, which South Africans call “colored.” White South Africans are descended either from Dutch colonists (Afrikaners) or the English. In 1948, the Nationalist Party, supported by the Afrikaners, came to power and instituted the Apartheid, separating the country’s racial groups into different geographical areas. The whites, who represented only 20% of the population, controlled the majority of the land. Despite economic sanctions, the unjust situation lasted 40 years. In the late 1980s, F.W. de Klerk was elected Prime Minister. He eventually released political prisoners such as Nelson Mandela, allowed political parties that had been prohibited, and embarked on the process of negotiating a new constitution, which came to fruition with the 1994 Election. (13:50)

Peter talks about his work as church leader and how he worked to bring reconciliation in South Africa in both a religious and political context from 1983-1990. (18:30)

Peter talks about many whites leaving South Africa for fear of what would happen when Apartheid ended. He says he and his wife never considered leaving. He says he likes the complexity and colorfulness of the country. Peter says he enjoys the variety of people in South Africa, and sees a kinship with America in its diversity. Peter’s son lives in the US and holds dual citizenship. (21:20)

Peter says many South Africans still want to leave the country, most of them white people. He says this is partly because the economy has had a lot of tough times, much of which stemmed from political corruption. He says the country at one point was over 20% white and now it is around 9%. He says that though unemployment is high, there are strong affirmative action programs in place that have helped to level the playing field for black South Africans. (23:40)

Peter says the rise in the price of precious metals has helped South Africa’s economy. He says a big part of the economy is based on mining, specifically gold and platinum. (26:30)

Peter says there are a lot of black people and mixed race people working in machining in South Africa, but there still aren’t many who own machining companies. However, he says things are changing. (29:25)

Peter says South Africa continues to suffer from significant disparities in income and living standards. The rich people live in modern cities, while others live in rural areas in mud huts, carrying water on their heads. However, he says the poverty in South Africa is not as extreme as places like India and that people from all over Africa travel to South Africa to find work. (30:10)

Peter says engineering is a relatively popular career choice in South Africa, but the country has the same problems as the US when it comes to finding skilled people to work in machine shops. He says one of the reasons he created his new CNC lathe is because it’s hard to find skilled labor to work on cam machines. (31:40)

Peter discusses where he lives. His home is in a suburban area on the edge of a wildlife reserve so he gets to see a lot of bush bucks and wild pigs nearby. He says his home is just 25 minutes from a small game park, but jokes that there are no lions roaming down the street. (33:00)

Peter talks about wages of a factory worker in South Africa. He says it is not accurate to compare salaries to those in other countries because the cost of living in South Africa is relatively low. He says the standard of living for a person working in the machining industry is similar to what it would be in the US. (34:15)

Peter says one of the most interesting things he has learned in the last week was reading about the new peace accord between Israel and the United Arab Emirates (UAE). (35:20)

Question: What country do you think builds the best machine tools?

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