In 2007-08 I spent a year in Benin, West Africa, as a volunteer with the U.S. Peace Corps. Although Africa is easy to write off as a hopeless mess, there’s an important culture and movement toward economic change fueled by locals and West African nationals living abroad that is not visible in the calamity-focused news.

Michael Frank, the COO and founder of HUFRA, a precision machining company in Accra, Ghana, in West Africa, is one of those people. He has made it his mission to bring precision machining technology to his homeland by establishing one of the first CNC job shops in West Africa. Frank finished his Masters degree in manufacturing engineering in Russia and worked for 10 years in Britain. He now splits his time between his family in the UK and his homeland of Ghana, trying to get his fledgling business up and running.

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The Hufra Precision Machining Company located in Accra, Ghana, West Africa. Photos courtesy Michael Frank

The skills of deal making resemble those of writing a journalistic piece. Both require research—acquiring the facts from disparate sources. On the machinery side I am constantly looking for sources to provide me with solid comparisons of values. Is a four-year-old Mazak 30” x 16” vertical machining center worth $25,000 or $45,000? The difference in value may hinge on a change of controls, a choice of options or the hours on the spindle. Another variable affecting the price is the quality of Mazak service, availability of spares or whether the dealers are discounting at the moment.

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The financial world views Greece as the hole in the Euroland dike. Riots in Athens sent the U.S. stock market down 1500 points because people feared it was the beginning of another subprime-like tsunami.

I didn’t have a good feel for Greece’s problems so I called Nick Logarakis, an old friend who had built and sold General Automotive Manufacturing in Milwaukee after emigrating to the United States from Greece following college at University of Wisconsin Madison. Nick is active in banking now and still has a hand in manufacturing through his son-in-law’s firm, Northern Gear in Franklin, Wisconsin. He maintains a home in Athens and imports Greek olive oil for fun. Nick understands Greece as a native, but has the perspective of an American businessman.

“What you’re seeing in Greece is the result of 30 years of Socialism,” he told me Friday. “Government workers get two weeks off for Easter, two weeks off for Christmas and four weeks off for summer. They get paid for two months not working,” according to Nick.

The orientation of the country is to make work. “I go in to pay a tax bill, and the clerk records the transaction on the computer, then he takes out a big ledger book and writes it down. It makes more work for the bureaucrats,” he said.

Coupled with the make-work is corruption. Companies work with two sets of books, one real and one for the tax collectors. The cash economy thrives while the country’s treasury starves

Nick says when he goes to a well-regarded doctor in Greece the expectation is that he pay 30 euros at the desk, but slip an envelope with 100 euros in cash to the doc when he’s alone.

Logarakis says in Greece you see a lot of people driving around in expensive cars, eating in restaurants and going out to clubs.

Government services cost more than the country can afford, the way they are presently being run. The European banks that hold Greek bonds are scared. Spain, Portugal, and Ireland, are in the same boat.

Now we have a new Euroland taxpayer bailout for Greece and its creditor. Take a deep breath and pass the Kalamata olive oil, please.

Question: Is the United States headed in the direction of a Greece-like debacle?

Call it the frap flap but Starbucks is pulling the New Coke.

Evidently the Buck is feeling the pain from McDonald’s competitive and cheaper McCafé, in tampering with one of its most successful products, the beloved Frappuccino. My wife Risa was addicted to the mocha, light, double blended Grande Frappuccino with easy whip. Along with the shortbread cookie it was the break in her rigorous workday that usually goes to 8 p.m. (The shortbread replaced her former staple, the Rice Krispy Treat, after Starbucks ruined that by taking out the Trans Fats a few years back). The baristas at our local Starbucks all knew her order and started making it when they saw her approaching the store. If I came in they asked me if I was there for the Missus.

And now they’ve ruined it. According to Risa the new process using pumps is so inconsistent they’ve lost her recipe and cannot seem to recover it. From store to store the variance is enormous. I would compare this to McDonald’s using different hamburger grinds and ketchup at each store.

Fast food depends on consistency. White Castle makes the slider the same way everywhere, and Wendy’s chili is always reliable. A Frappuccino is not a Domino’s Pizza, which was so uniformly awful everywhere that it begged for a redo.

Risa is appalled. She’s furious. It is a topic of conversation daily. She feels like she’s been robbed of something dear to her without warning. She says she beat the New Coke debacle by buying cases of old Coke ahead of time. But there is no old Frappuccino to be had.

Starbucks you were stupid. Let’s see how long it takes before you realize it.

Question: If you were Starbucks CEO Howard Schultz what would you do to compete with McDonald’s?

From Blog Will Starbucks Die soon?

Brian Capece has a five person shop in rural Maryland. He does wire EDM and precision machining for aerospace, satellite, medical and commercial clients, often working 65 to 70 hours a week. His wife runs his office now that his two children are in school. He’s been doing this for 10 years, since buying his first die sinker at an auction.

It’s been a rough year for Brian. He says he used up his cushion of money to keep the business afloat while not letting any of his people go, because those core employees are the key to his business and if he lost them he would be in the soup.

He is finally back in the black but wonders if the path he has taken for the last decade was the right one.

“After going to the tax man this year and seeing how much I had to pay, I really think I would have been better off working for somebody else than having my own business,” he told me.

His comment was not said out of anger or great regret, but I wonder how many people feel the same way—for the same money and less risk, they’d just as soon pull down a paycheck than sign all the checks.

Question: Do you think you would be happier owning your own company or being a well compensated, valued employee?

Michael Scott from The Office

From dreambox.com

I spoke on a panel about the power of social networking and blogs at the Precision Machined Products Association tech conference on Monday. My specific segment was on how best to use videos to promote your business.

The presentation seemed well received by our good sized audience, and at the end we fielded some questions. Someone in charge of marketing at a company attending the conference asked us, “How do I justify to my boss the ROI on having a blog?” We all responded by saying that your ROI from a blog isn’t easily quantifiable, yet that doesn’t mean it can’t be a powerful tool for self-promotion.

Seth Godin’s blog April 27^th summed it up in an astute way. Godin says that ROI from having a Blog or Forum is like “Santa Math.” It’s not a normal investment like paying for a college degree that could lead to a high paying career.

You have to do a blog because you genuinely want to give to a community of people.  Having a great blog or publication takes dedication, care and heart. Those efforts have to be genuine in order to create something that people love and value. This he compares to the way Santa Claus operates. Santa flies everywhere, giving presents and good cheer to people and doesn’t ask anything in return. Doing this he earns trust, friendship and gratitude. Maybe one day he can license his image and make a chunk of change to feed the reindeer and elves. But Santa wouldn’t be the loved icon he is if he was expecting money in return for giving presents to kids and brightening people’s lives.

James Chanos

Jim Chanos is famous for identifying the Enron scam, shorting the company’s stock and making a fortune. He runs a hedge fund named Kynikos Associates, which means cynic in Greek. He specializes in spotting emperors without clothes and is currently betting big that the Empire of China is a naked power.

He compares China to Miami and Dubai of recent memory. The common thread is runaway condominium and office construction, huge real estate inflation and a shortage of able buyers. He says that today, all over China, high-rise buildings are rising, fueled by aggressive bank lending to developers. They are building 1,100 square foot shell apartments without floors, and selling them—or attempting to sell them, for around $150,000. The problem is that even though half are going empty, they are still building. With middle class dual earner couples earning an average of $3,500 a year, buying a $150,000 apartment would be the equivalent of an American couple making $40,000 a year buying an $800,000 home. We saw how that worked out in 2007.

Chanos sees the phenomenal growth numbers in China being fueled primarily by real estate speculation and construction. In his view it is unsustainable. State and local governments are being funded by real estate development, so they have an interest in seeing it accelerate. They will suffer mightily when the bubble bursts.

Chanos feels the problem in China is that the central planners set a growth goal, say nine percent, and then tell the underlings to make sure it happens. The easiest way to do it, other than fudge the numbers (which they may do), is to let the builders build with easy money.

What happens if Chanos is right and the giant cranes go away like they did in Dubai and Miami? He feels that the raw materials companies who are supplying the steel, copper and cement will suffer immediately. Copper at $3.60 a pound could plummet, as well as iron ore and scrap prices. Crane companies will get killed. He feels that the Chinese currency, which everybody including the Obama administration is hoping will rise when it is no longer pegged—will fall. Incidentally, Gary Schilling, the noted bearish economist who predicted the American stock market collapse (not the rebound, however) also feels the Yuan will fall in value when it is allowed to float.

Jim Chanos is a very smart guy. He sees the Chinese bubble bursting later this year or in 2011. The Chinese have enormous reserves in dollars to soften the blow and may tighten credit dramatically soon to try to avert a property crash. China bashers may be happy to see the country suffer and revel in lower raw material prices, but with an interconnected world, be careful what you hope for.

Question: Do you hope China collapses?

Lux Hills community in China

Much of the trade in goods travels in metal shipping containers, those 20 and 40 foot long boxes you see on rail cars and trucks everyday.

Normally about 20 percent of the containers on ships at any given moment are empty, especially those headed toward Asia. This imbalance costs shipping companies billions of dollars each year, but it presents a gigantic entrepreneurial opportunity for inventors and engineers to make a killing. In the April 12th Wall Street Journal, John W. Miller wrote a fascinating piece on the race to build stackable or foldable shipping containers. It’s an idea that has been floating around for years, but so far nobody has been able to build one that meets all of the demands of shipping firms.

The Port of Rotterdam in Holland is Europe’s busiest port, and container ideas are flowing out from there. Rene Giesbers has designed a composite fiberglass container whose vertical walls fold inward, giving it an “x” shape as it collapses on itself. It supposedly saves 75 percent of the fuel needed to transport it and won’t rust.

Another Dutch engineer, Simon Bosschieter, has designed a container made of steel alloy with folding walls that slide into each other.

An Indian banker, Avinder Bindra, also designed a container with folding walls, but his are stacked vertically instead of horizontally.

With such a big pot of gold out there awaiting a killer design, somebody is going to get it right.

How about you?

Personally, I have no three dimensional brain—I can’t even rearrange my closet. But for people who can envision how to cut precise metal parts in their sleep and who have knowledge of materials, the collapsing container is the Rubik’s Cube of a lifetime.

Why not give it a go?

Hunter Jamison and his two brothers Scot and Terry own and operate Millipart Inc., an aerospace machining firm southeast of Los Angeles in Glendora, Cal. Their father Jim Jamison started the company in 1954 after tiring of selling hardwood floors.

Millipart recently bought a new Kitamura vertical machining center with a 30,000 rpm spindle. I asked Hunter, who has a daughter in college, if he felt a third generation of family was destined for the business. He was unsure, but then mentioned that his sales manager was third generation with the company. “She started here when her mother was pregnant,” he said.

Besides Hunter and his brothers, the core employees of Millipart are from three Mexican families. For close to 30 years the company has made room for daycare for its employees at their machining plant. The company’s kids grew up around the CNC machines. The lathes and mills were as common as swings and jungle gyms to the kids of Millipart. G-Code was not a foreign language. It was almost as common as Dick and Jane.

When I grew up, dinner table conversation was often about deal making, competition and the stock market. My wife grew up at a table where legal talk prevailed and two of her brothers became lawyers.

We tend to gravitate toward the familiar. According to Hunter Jamison one of the pivotal reasons Millipart has succeeded for the long haul was the decision made long ago to allow kids to smell the cutting oil when they were toddlers.

Question: Is company sponsored daycare still a viable option today for machining firms?

Chuck DeLong says he “can’t deal with people,” but he loves his old CNC machines, which he cajoles to run perfect pieces like other people baby their pet Corvettes.

DeLong’s machine shop is out in the sticks, yet only 30 miles from the Charles River in Boston where he keeps his 37-foot Silverton Sport Fisherman. He says it’s the boat he doesn’t use because every fill-up is $1100.

When he isn’t boating Chuck is running his Hardinge CHNC-1 and CHNC-3 lathes which he claims make parts just as exquisite as a 2010 Mazak or Mori if you treat them with respect and use sweet oil. His operating philosophy is to run his machines slowly but steadily and then adjourn to his desk to write boating articles.

DeLong is 64, he loves being a machining artisan. He makes 100 grand in a crappy year like 2009 and $150,000 in a livelier one. He works a lot of hours at the shop but looks for any opportunity to bop over to the nearby lake to use his boat of choice, a 1965 Cavalier ski boat with Chris Craft engines, made in 1965. He bought the boat on eBay three years ago.

Chuck just bought a 1994 Haas VF-2 CNC mill from Graff-Pinkert, which he also spotted on eBay.

DeLong likes the solo business life. He used to have 20 employees, but shed them for the companionship of his vintage Hardinge and Haas buddies. He prefers the simplicity of doing it all by himself.

His introduction to the machining business was in 1959 when his parents bought three Brown & Sharpes which they ran in their basement. His folks would trade places running the machines. Their house was filled with clackety background noise, but after all these years he has developed a talent for tuning it out.