Making the Most of My Life?

June 9, 2021 • 8 Replies

By Noah Graff

What the heck did I do last month? What did I do last week? What did I do today? Do you ever ask yourself those questions?

The last three years, I’ve written in a diary nearly every day. It takes me about 10 to 30 minutes to recount the day’s main events and then ramble about my reflections and feelings. I also try to take a selfie photo each day to go along with the diary entries that I type into my iPhone or computer.

I write because I want to make sure the memory of each specific day is not lost. Life keeps feeling like it’s going faster and faster, and sometimes I have trouble recounting what I did just hours earlier, let alone years ago.

I think I’m hung up on a fear that I am squandering my one precious life on this earth. It’s important to me to know that each day mattered. What would “mattering” entail? To me, a day that mattered would mean I created something, learned something, tried something new, or helped someone. Spending time with loved ones also makes my days count.

Noah’s Diary, June 8, 2021

While writing this blog, I looked up what I did on June 9, 2018,—three years ago today. I was on my bachelor party weekend in New Buffalo, Michigan, a special day that I hadn’t thought about for a long time. I also read that on June 9, 2020, I almost sold a Tschudin grinder, did a great podcast interview, made dinner with my wife Stephanie, and watched a Chicago Bulls documentary.

In 2021, I also started writing down at least one new thing I learned each day. Yesterday, I learned from a colleague that a thread whirling live tool attachment for a Citizen machine could cost anywhere from $10,000 to $20,000. I also learned from a business partner that putting sugar in bread dough slows down yeast activity, because “yeast likes to eat sugar.”

I think my paranoia about squandering my time on earth may represent a longing for greater purpose. Maybe if I was fighting for a human rights cause, maybe if I was raising children, perhaps then I would worry less about my days being lived to their potential. If I felt like I was doing more things that left a tangible mark on the world, maybe I wouldn’t feel like I needed to document every day.

Do a lot of people ponder this stuff all the time? Would most people find my daily ritual unnecessary?

I have to stop writing now. It’s 12:30 PM, and I haven’t even documented June 8, 2021, yet.

Question: What makes a specific day significant for you?

Ep. 123 – How to Find Serendipity with Christian Busch

June 3, 2021 • 1 Reply

By Noah Graff

Our guest on today’s podcast is Christian Busch, author of the new book, The Serendipity Mindset: the Art and Science of Finding Good Luck.

Have you ever noticed how certain people always seem to get lucky breaks? According to Christian these lucky people have a skill for recognizing luck when it materializes. In his book he guides readers on how they can create luck, recognize it when it appears, and then turn it into positive outcomes.

After hearing Christian interviewed on another podcast a few months ago, I was so fascinated I started listening to his book myself.

My job as a machinery dealer revolves around serendipity. Opportunities for machines always pop up when we’re not expecting them. It’s one of the most interesting parts of the job. But I’m seeking other serendipity in my life. I’m looking for inspiration for new creative projects and opportunities to bring more purpose into my life.

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Key Takeaways From the Interview

Serendipity Hooks

Christian prescribes using what he calls serendipity hooks, triggers to cause serendipitous outcomes in social interactions.

He advises introducing yourself to new people by using alternative questions to the typical, “What do you do for a living?” For instance, if you meet someone at a conference you could start a conversation by asking people what book they are currently reading, or you could ask them what they are thinking about at that moment and why.

If other people ask you what you do for a living, Christian suggests to mention several diverse things that could spur a connection with your counterpart. For instance, in my case I could say, “I’m a used machinery dealer, I have a podcast, and I’m passionate about making documentary films.” That response would create three different potential hooks that the other person might relate to.

Good salespeople use serendipity hooks by casually mentioning alternative uses for a certain item or various other products available. The strategy is to not make a blatant pitch, just mention things in passing that could possibly strike a chord a client.

Christian Busch, author of The Serendipity Mindset.

Changing Your Paradigm

In his book, Christian brings up the Seinfeld episode in which George Costanza decides to do the opposite of everything his instinct tells him. The behavioral shift results in him meeting a beautiful woman and getting a job with the New York Yankees. Christian suggests that people try to think of one thing they could do differently every day.

One issue he says we need to overcome is the “hammer and nail problem.” If we need push a nail into a wall we automatically think we need a hammer. Our current knowledge closes our minds. However, if we have less expertise in an area, we are more likely to try new innovative ideas, for instance, the development of mobile banking in Third World countries where ATMs are hard to come by.

Always Keeping Your Eyes Open For Serendipity

Christian says if you believe interesting things can happen, it makes them likelier to happen. You should be prepared that every meeting could lead to something. For instance, if you spill coffee on a stranger at a cafe you should be open to using this as an opportunity introduce yourself to the person. Christian happened to have met an ex-girlfriend as well as his current wife that way.

He suggests to keep a serendipity journal in which you write down examples of when serendipity strategies worked and didn’t work. It is also useful to write down when you failed to use a strategy that might have led to serendipity.

Connecting the Dots

Christian says we can’t always change a situation, but we can influence our response to it. We can often use negative circumstances in our lives to get to positive outcomes, for example, the reinvention of a brewery during the Covid-19 pandemic, which used alcohol to become a hand sanitizer company.

Last year Christian became severely ill from Covid-19 and almost died. While he was sick and alone in his house he read Man’s Search For Meaning, by Viktor Frankl, a book about a man in a concentration camp who tried to find meaning in something every day despite being in a place where there should be nothing meaningful. He says reading the book made him rethink his life’s priorities. When he recovered, he started a romantic relationship with a friend of 12 years. They are now engaged and expecting a child.

Question: If you could be granted one wish for a serendipitous occurrence, what would you wish for?

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Worth the Risk?

June 2, 2021 • 7 Replies

By Noah Graff

Last Friday we sold a Swiss machine. It was an OK deal, but in order to complete the sale we had to take some live tooling from a different machine we own and transfer it to the one we sold. We don’t know how much the live tooling is going to cost to replace it, but we made a calculated judgement that robbing one of our other machines was worth it. The important part was to make a sale. Close the deal! Because even in a good market, as we seem to be in right now, it’s hard to close deals.

It’s funny how a used machine can stay on the market for six months, a year, two years. Then all of a sudden you get interested in purchasing it. You start doing your research to see if it’s the right machine to buy, and boom! Someone else is interested too, and it’s gone the next day.

It’s not out of the ordinary for Graff-Pinkert to buy machines from people we have never met. We buy machines on other continents, machines sitting in caves or barns, machines old enough to be my parents.

We buy some machines we have only seen a few photos of, let alone seen running on video.

In 2012, we bought our first INDEX MS32C at an auction in Australia. We did not know how much we could sell it for, and we didn’t know how much it would end up costing to ship it to Chicago—$70,000. We still ended up doing well on it.

We have also taken some risks on deals in the past that had horrible consequences. We suffered one our worst loses a few years ago on a CNC machinery deal in Asia. I spent several days with the seller and his wife. They shared intimate details about their family with me. They paid for my train ticket. They conned me.

In our business, it’s important to constantly question ourselves whether a risk is worth taking. Are we are making a decision with limited knowledge because we were too lazy or careless to do the necessary research that could prevent a mistake? Or, do we really have to make a snap judgement on deal because otherwise we risk losing out on a great opportunity?

What would be worse, losing out on a lot of great opportunities because we were too indecisive or scared, or taking a big hit from a disastrous deal?

Question: What interesting calculated risks have you taken in the past? Did they pay off?

Lean to Excess

May 25, 2021 • 8 Replies

By Lloyd Graff

The Ford F-150 pickup trucks, with an average selling price $40,000, are sitting unfinished in assembly plant parking lots. For lack of computer chips, they cannot be driven or sold. Ford will lose at least $2.5 billion in sales this year. Most of it will never be recaptured.

Ford and most of the car companies are victims of being slaves to the philosophy of “lean.” Their unwavering belief that their computers and data analysts can predict usage and dictate the ordering of components to wring out the last nickel of profit in order to raise the price of the stock and pad their bonuses, is one of the fallacies of 21st-century business practice.

In the Great Chip Fiasco of this year, the sheep who decide how to keep the factories running at peak efficiency made hugely incorrect estimates on demand for 2021. Unlike the components that come from primarily domestic Tier 1, 2, and 3 producers in North America, chips come almost entirely from Asia.

Frankly, I do not understand why a chip made in China or Taiwan should be significantly cheaper than one made in Albuquerque or Phoenix, but that was the calculation car companies bought into over the past 20 years, so the chip makers followed their reasoning and built almost all their high-volume new plants across the Pacific.

In the midst of a pandemic, before the FDA had okayed two extremely effective vaccines, the car guys all believed that sales of the 2021 model would be awful.

Evidently, they and their “smart” computers were so sure of their predictions of misery they chose to order chips from Asia in paltry amounts. But chips were the one component in a car or truck that they could not ramp up quickly. They could not start churning them out within weeks, the way American manufacturers did when called upon to produce respirators in 2020.

The obvious and enormous weakness of dependence on foreign chips with limited North American capacity was that they had to be right in their predictions or face a production nightmare. The stupidity of “lean” has always been the blind belief in predictability and the illusion that you can quickly pivot from a mistake.

Fat in the supply chain is insurance. Evidently, insurance is not part of the computer programs that dictated the “lean and mean” mess of hundreds of thousands, and eventually millions, of unbuilt vehicles.

As any human being knows, life is unpredictable. Who saw a pandemic coming two years ago? Who saw water shortages in Taiwan? Who saw an increasingly testy relationship with China? And who saw a huge rebound in demand in 2021?

But that is why lean to excess is dumb, and the F-150 pickups sit unfinished, and new chip plants in America are several years away.

Question: What stuff do you always keep extra of?

Ep. 122 – Using Thomasnet.com to Find Customers and Suppliers with Tony Uphoff

May 20, 2021 • 1 Reply

By Noah Graff

Today’s podcast is Part IV in our series about how machining companies find new work.

Our guest is Tony Uphoff, CEO of Thomas, the parent company of Thomasnet.com, an online directory of over 500,000 North American manufacturers that was founded 123 years ago. Thomas filters its listings into 72,000 categories, which enables buyers and suppliers to pinpoint the exact partners who fit their needs.

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

Origin of Thomas

The idea for Thomas Register came about in the late 1800s when its founder, Harvey Mark Thomas, observed some friends who were trying to build restaurants. He noticed they were struggling to source equipment—commercial ovens etc. He created a catalogue specifically for industrial supplies, which over time became the dominating platform in North America for procurement, engineering, and MROs (Maintenance, Repair, Operations). In 2006, Thomas went all in on a Web platform, ending its print format that had made it the king of industrial directories in North America for 100 years

The Online Directory

Today Thomas organizes its listings into 72,000 categories. Meta categories such as Machining or Metals are subset into hundreds of more specific categories. The purpose is to make it as easy and fast as possible for buyers and suppliers to find the exact right match for each other. Sophisticated search filters on Thomasnet.com guide users to the companies which best fit their specific needs. Users have the opportunity to view data about the listed companies to evaluate if a prospect is worth pursuing.

Thomas has around 1.3 million active registered users. The platform uses info about their demographics and interests to point users to the right search filters. It is possible to use Thomasnet.com without registering (about 30% of users do so), but a user cannot unlock the benefits of the filters unless registered.

Advertising

Right now there 600,000 suppliers on Thomasnet.com. Every firm is offered a free listing, but to have greater reach Thomas offers the option of paid advertising, ranging from $500 per month to millions of dollars per year. Tony says the key advantage of Thomas is that it’s an in-market browser, so it attracts the specific type of users companies are seeking out. He says regardless of what companies spend, being listed can be valuable.

Building Industrial Websites

Thomas also builds private industrial websites for companies, independent of its main platform.

Tony says the latest data shows B2B purchasing is over 70% finished before a buyer engages with a sales rep. He says the top complaint from buyers is slow response time after they are contacted about potential work. This inspired Thomas to create WebTrax, a website add-on to help customers set up systems and standards for tracking phone calls and other communications. It organizes leads and allows companies to see who is browsing their sites.

Where Tony Uphoff Sees Manufacturing Upside

Noah asks Tony which arenas he would go into if he were to start a manufacturing company right now. Tony says he likes the automotive sector, seeing growth in related computer technology and battery fueled cars. He also sees a big impact of 5G and related technologies in the sector.

Tony also sees huge growth in the space industry, and renewable energy. Basically, follow whatever Elon Musk is doing—minus the Dogecoin.

Question: What’s been your most successful method for finding customers?

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Junk or Treasure Revisited

May 19, 2021 • 3 Replies

By Lloyd Graff

May of 2021, after over 50 years of treasure hunting in the machinery business, I am still making a living by searching for overlooked items to find diamonds covered in cutting oil. Some of these machines we might have actually sold their current owners. It makes me think back to a blog I wrote in 2018 about six de Kooning paintings found by a man named David Killen in a New Jersey storage locker. I decided to check up on what happened to the paintings and see if they sold for much money.

Here is the original blog, followed by an update of what happened to the paintings.

David Killen is an art dealer in the Chelsea neighborhood of New York. He is also a treasure hunter of the modern variety, a profession a humble used machinery dealer like myself connects with.

David is the kind of guy who frequents flea markets and auctions, not just because he needs inventory for his own bi-monthly auctions of prints and Tchotchkes, but because he loves the hunt. He’s 59 now and has been schlepping around art fairs and Swap-O-Ramas for 50 years. He thought that one day he might find an overlooked stash of value. It looks like he finally did.

Late last year at an estate sale in Ho-Ho-Kus, New Jersey, Killen bought the contents of a locker in a warehouse. The property had been owned by Susanne Schnitzer, who was the partner of Orrin Riley, a prominent art restorer who had restored several paintings by the Dutch painter Willem de Kooning. Riley died in 1986, and Schnitzer was run over by a garbage truck in New York City in 2009.

Schnitzer’s friends from New Jersey were her executors and they ultimately tired of paying the warehouse fees on the odds and ends in the locker. They had an auction house peruse the contents before they sold it, and it was pronounced “junk.” A bunch of prints of little value.

Killen lives for times like this. The rules of the game in situations of this nature are that the bidders get a glimpse of the contents but cannot analyze the goods in depth.

It’s a lot like bidding on a warehouse crammed with the flotsam and jetsam of 50 years of screw machining. ACMEs, Davenports and New Britains caked with chips, clotted oil and crud, chip conveyors and stock reels askew, making for an obstacle course tougher than an an American Ninja Warrior challenge. I’ve seen men fall into the base of 8-spindle ACMEs, never to be heard from again.

Untitled XXXI, by Willem de Kooning

David Killen knew the locker’s contents had the “junk” judgement by the fancy auction house, but he also knew the history of Orrin Riley being a confidante of de Kooning back in the 1970s when nobody knew his name. A guy like Killen develops a nose for value over 50 years. Did he have special inside knowledge about the locker? No. I can say this confidently because he hauled the contents out last December in his own truck and didn’t even check everything out immediately. It was just another collection of dusty goodies that he would auction off in his sweet time.

But then he saw the wooden boxes that said de Kooning printed on the outside. Maybe these weren’t prints. He had suspected there could be some gold in the locker when he bought it, or he would not have paid $15,000. He knew the background of Orrin Riley, who had done restoration work on de Kooning and begun the restoration department for the Guggenheim Museum. Riley was “big time.” David Killen’s nose for treasure smelled something sweet.

Last week Killen made an announcement to the press that he owned six authentic, but unsigned de Kooning paintings. They were authenticated by Lawrence Castagna, an art restoration authority who had worked both for Riley and as a studio assistant for de Kooning. Castagna feels confident that six of the paintings are the real thing. Willim de Kooning died in 1997, and his foundation in Manhattan does not authenticate works by the artist.

Killen also found a painting by Paul Klee, the famous Swiss painter.

The most recent comps on the seven original works of art, though the de Koonings are unsigned, would indicate a value of around $100 million for the group. What a haul for a struggling art dealer who deals mostly in nice prints.

As a lifelong treasure hunter who has never found a de Kooning myself, I love this story. I am not jealous of David Killen. I am thrilled for him.

His story is about the chase, not the pot of gold at the end of the rainbow. I could have done a lot of other things in my career, but the machinery treasure hunt and all of the fascinating folks I’ve met along the way has kept me passionately in the game. I love it as much as ever, probably more, because I am acutely aware of the time limits we all have.

I really hope the de Koonings are the real thing, but honestly, I don’t think it will change David Killen much either way. At least I hope not.

Update: Killen was not one to sit on his prizes hoping they would gain in value with more scrutiny. He held an auction at his own gallery for the largest piece, with himself as the auctioneer. To his delight, it brought $1.2M in 2018. He sold the other five works sometime after on eBay for $1.3M, meaning he had pulled in $2.5M for his $15,000 educated gamble.

Question: What treasure have you uncovered?

My Quest for Serendipity

May 14, 2021 • 3 Replies

By Noah Graff

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

But I digress.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

May 13, 2021 Comments Off

By Noah Graff

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

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

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

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Main points of the interview

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

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

Greg Paulsen of Xometry

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

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

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

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

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

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

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

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

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

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A Year of Misery and Vitality

May 12, 2021 • 2 Replies

By Lloyd Graff

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

****

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

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

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

***

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

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

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

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

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

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

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

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

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

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

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

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

May 6, 2021 Comments Off

By Noah Graff

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

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

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

Main Points

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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