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Oil spill

Courtesy of The Economist.

As the oil price plunges, gloom and ill-will, oddly, abound

BE CAREFUL what you wish for. After years of grumbles about a historically high oil price, the cost of crude has tumbled. But cries of woe are outnumbering the shouts of joy. Exporters, oil-company shareholders and industry suppliers are all contemplating a future of oil at $60 a barrel—or below. So too are all the people who lent money to them. Markets are pricing in the pain and pessimism immediately, while seeming to discount the future gains to energy users.

Russia’s currency is at a record low, falling below 60 roubles to the dollar on December 15th. Indonesia’s rupiah is at its weakest for six years. The FTSE 100, a London-based stock market index dominated by extractive-industry shares, had its worst week since August 2011, with a 6.3% fall. European equities across the continent suffered their biggest weekly loss in more than three years. Emerging market stocks are also down to a nine-month low.

Over the weekend Abdallah Salem el-Badri, secretary general of the Organisation of Oil Exporting Countries, (OPEC), a cartel which produces 40% of the world’s oil, said he saw no grounds for production cuts. “The decision has been made. Things will be left as is,” he said. That was the first official comment from OPEC since its meeting in Vienna at the start of this month, at which it decided not to try to curb production in order to support prices.

That will be little comfort to those squeezed by the 50% fall in the price of oil from its peak three years ago. Mr el-Badri says he believes that the drop is excessive. “The fundamentals should not lead to this dramatic reduction [in price],” he said. OPEC was “assessing the situation” to determine the real reasons behind the decrease.

That assessment should not take too long. Increased efficiency, weak economic growth and the use of alternative energy sources are all dampening demand. The International Energy Agency (IEA), an intergovernmental body which represents the industrialised economies that consume oil and gas, has cut its forecast. It believes that demand will grow only by 0.9 million barrels a day (mb/d) in 2015 to 93.3 mb/d.

Weak demand is only a minor factor, though. The biggest cause of the falling price is rising supply from non-OPEC countries, particularly from America. The IEA believes that American supply will raise total non-OPEC production by a record 1.9 mb/d in 2015. In theory, lower oil prices will curb that. Spending on new projects is falling, chilling the prospects for jobs and profits.

But such effects come with a lag. Once wells are drilled, it makes sense to pump them. As the IEA notes “Today’s oil spending cuts will dent supply—just not right now.” The short-term outlook for American shale oil production, known as “light tight oil”, remains unchanged it reckons, so long as the producers do not actually go bust (and perhaps not even then–someone else will buy the well). The only place where oil production is likely to fall immediately, it reckons, is Russia, where the combination of sanctions and a collapsing currency may trim production.

So news that fighting has closed two oil-export terminals in Libya—something that would normally have spooked markets—has cheered them instead. Libya is a small oil producer, with about 900,000 barrels a day (b/d), around half its peacetime production. But the belief that geopolitical risk is not dead has put a little resilience back into prices.

The burning question for those hit by falling prices is what if anything OPEC and other producers are going to do. The answer so far seems to be “not much”. Russia (a non-member), Venezuela and other hard-pressed countries want an emergency meeting of OPEC. But the Saudis and their Gulf allies—the biggest force in the cartel—are not interested. They prefer to keep market share. Only a real commitment from the non-OPEC countries to make production cuts themselves would spur the Saudis to turn off the pumps. There seems little chance of that right now.

In theory, lower prices should boost demand. That is the assumption of research by the International Monetary Fund (IMF), which suggests that a 25% drop in oil prices boosts oil demand by around 0.4 mb/d. But the IEA disputes that. It thinks that some of the falling demand is structural, not cyclical. And governments may respond to the falling prices to cut subsidies. China, Indonesia, Kuwait, India, Thailand, Egypt and Malaysia have all taken this step. Kuwait has announced plans to triple diesel and kerosene prices (though not gasoline) in 2015. That will help keep demand weak.

So long as the era of excess supply and declining profits continues, rivets are popping. European refining margins are coming under pressure, because American competitors, stoked by cheap crude oil which cannot be exported, are sending what some call a “diesel tsunami” across the Atlantic. In Britain, thousands of jobs in the offshore oil and gas industry are at risk. Total full-year output for the entire North Sea is expected to decline to 840,000 b/d, its lowest level since 1977.

Hundreds of billions of dollars of investment are needed to extract the remaining reserves. Wood Mackenzie, a consultancy, says 32 potential European oilfield developments that could produce 4.9 billion barrels of oil may be mothballed if prices fall below $60 per barrel. BP, a London-based energy company, has already cut $1 billion from its capital expenditure plans. Other oil majors are following suit.

But such ructions are mild compared with Russia, where Rosneft, the partly state-owned oil giant, has been bailed out with cheap central bank cash to prevent it defaulting on its debts. But at least Russia has the foreign-currency reserves to do this: countries such as Venezuela may not be so lucky. However much oilmen may hope that the price will eventually recover, for now their woes are mounting.

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War on Terror History

By Noah Graff.

Delta Force Tryouts, day after physical selection. Haney in middle of first row.

While the U.S. government has been interrogating the CIA this week for the organization’s own controversial interrogation practices on suspected terrorists, I reflect on how our country’s perspective on terrorism has morphed over the last 13 years since September 11, 2001. The “War on Terror” is a term that many Americans have grown numb to as we encounter it on such a regular basis, whether it be in the real news or watching our favorite primetime shows. But of course, the United States has been officially at war with terrorism for decades, and the evolution of this war has been complicated and fascinating.

I just finished listening to Inside Delta Force by Eric Haney. Haney was an original founding member of Delta Force in 1978, the first U.S. Special Forces unit specifically devoted to international terrorism conflicts. Although today Delta Force isn’t a truly secret unit, as it was when it was first formed, it has managed to stay out of the limelight, aside from the 1980s Chuck Norris movies. The Pentagon refuses to comment publicly on Delta Force’s highly secretive activities, and Delta operators almost always wear street clothes, and have civilian hairstyles and facial hair to remain undercover.

I am wowed by the sophistication of Delta Force verses the traditional military forces that preceded it. In 1977, Colonel Charles Beckwith created Delta Force because he saw a need for an elite Special Forces unit that specialized in fighting international terrorism. He sought to create a unit resembling the British Special Air Service (SAS), in which he had served as an exchange officer in 1962. There had never been a U.S. Special Force like it up until then, but Beckwith convinced the U.S. army of his correct prediction, that terrorism would be huge threat around the world in the not so distant future.

In the first tryouts for Delta Force, only Eric Haney and 11 other men were accepted out of 163 other elite soldiers invited to Fort Bragg from around the world. That 7% acceptance rate was the highest ever for Delta Force tryouts.

The tryout process put the soldiers through the wringer both physically and psychologically. It finally culminated in a 40 mile solo course, which took the soldiers off main paths and roads with minuscule navigation assistance. No soldier was allowed to help a comrade in any of the tryout challenges. The Army has almost always relied upon structured orders and working in teams, but the Delta tryouts are designed to test soldiers’ abilities to work autonomously, without plans set up ahead of time by superior officers. One of the unique characteristics of Delta Force versus other military forces is that the small teams of operators participating in a mission are the ones who plan the mission. This enables Delta Force operators to plan missions in which they believe they can succeed. According to Haney, the Delta Force operator is still the only fighter who can be sent out alone or in small teams in extremely difficult conditions with limited or no guidance. (This version of the book was published in 2005)

In training the Delta Force operators, Colonel Beckwith’s philosophy also broke with Army tradition by utilizing experts from resources outside the Army. For instance, it used CIA field agents to instruct on trade craft (espionage) in hostile territories, the Secret Service for its expertise on sniping, and even consulted incarcerated expert thieves to teach soldiers such techniques as lock-picking and hot-wiring cars.

One of the specialties of Delta Force is hijacked airplane rescues, so its operators consult commercial airlines to study every model of aircraft available. Interestingly, Haney recounted that Delta Airlines was always the most cooperative and helpful airline during his time in Delta Force.

In the book, Haney describes some of his successful missions and disastrous ones, such as the attempted Iran hostage rescue. When Delta Force is not tasked with rescues or espionage, its operators are often used to protect American embassies in the most dangerous locations or to train foreign armies when it suits American interests. Haney did much of his service in the 1980s in hot zones such as Beirut and Latin American countries. In the book, he sometimes questions the motives of some of his missions in Latin America, where Delta’s purpose was to aid despotic regimes to squelch revolutionary guerrillas.

Politics and wars will always be messy. Despite our powerful media, U.S. citizens still don’t know what’s really going on behind the scenes — for better or worse. But at least we can feel confident that we have some of the most talented trained people defending us.

Questions:

Does torture bother you?

Are we winning the War on Terror?

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Surgically Repaired

By Lloyd Graff.

A Stryker brand knee replacement

I’m writing this column one week after a full knee replacement. The surgeon used a Stryker knee. Some of you may have made parts that are now in my right knee. Thank you. The recovery is going ok, I guess. I’m taking the narcotic Oxycontin twice a day, and I am not used to its side effects which make me dopey, mess up my vulnerable vision, and perhaps give me slight hallucinations. The pain is tolerable, but I am annoyed by my struggle to concentrate. Everybody tells me that the recovery gets easier after the first week, and I feel good that I have written this blog. I will keep you informed as I go along with my recovery.

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My son-in-law Scott lives in Palo Alto, California, working at at Google about 12 miles from his home. He is looking to replace his 13-year-old BMW 330i, which is now too small for a family with three kids and a lot of carpools. He asked me recently what I thought he should buy. I stammered a bit and then mentioned the upscale Toyota Camry XLE because it was the car I was most familiar with.

Scott has toyed with the idea of the Tesla Model S, which we looked at together at the Palo Alto showroom and took for a test drive.

We both loved the ride and coolness, but Scott never went any further on it. I think it’s a value question for Scott. If he keeps the car 10 years, which is his pattern, the car will probably have little value eventually because it will be needing a new battery pack.

So I’m throwing it out to you folks. The family already has a Honda van for the family trips and the school carpools. Scott likes the responsiveness of the BMW and is comfortable with tight steering wheel action. I don’t think a pickup truck is the right choice for the carpool life, but I will leave it open to your suggestions.

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My Chicago Cubs beat out the San Francisco Giants and Boston Red Sox last night to sign ace pitcher (and cancer surviver) Jon Lester for $155 million over 6 years and a signing bonus of at least $20 million. It is the most expensive signing for a free agent pitcher ever. My question is how valuable over the course of a season is a #1 starter? There are very few true #1 starters in the Majors. Max Scherzer of Detroit, Los Angeles Dodgers’ Clayton Kershaw (30.7 million over 7 years), Madison Bumgarner of the Giants, and Felix Hernandez of the Seattle Mariners are the first to come to mind. On paper they do not calculate as fair value for $30 million a year for six or seven years, because you know their production will decrease over the full span of the contract. But evidently, some smart people in baseball think that wins per dollar of investment are the incorrect way to figure an ace’s value. They believe the feeling of invincibility an ace brings to a team lifts the abilities of the other players, so he is worth more than just his numbers. He may also enable a team to recruit other top players.

You could argue that teams without an ace starter normally do not win a pennant or World Series, but consider the 2014 Kansas City Royals model of having average starters but a super bullpen. Maybe this is the new baseball model and decreases the need for an ace. Although many people would say that the Giants prevailed in 2014 because of their invincible #1 starter and World Series MVP Madison Bumgarner.

In today’s new “dead ball” era of fewer home runs, the big money may not go to hitters. The Kansas City versus San Francisco World Series may usher in a new era of both mega rich ace starters and teams stockpiling power arms for super bullpens. The Yankees’ current signing of Andrew Miller as a left-handed bullet out of the bullpen may be an indication of this trend.

What do you baseball fans think? Does it make sense to overpay for a really top starter, considering all the bad things that can happen to a pitcher’s arm over six years?

Questions:

What are your experiences with knee replacements?

Does it make sense to pay a starting pitcher $30 million a year for 6 years?

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Oil keeps sliding on oversupply fears

Courtesy of BBC.

The price of oil has hit another five-year low as fears of oversupply continue to mount.

Brent crude was down $1.77 at $67.30 a barrel in Monday afternoon trading, having earlier hit $66.77 – its lowest since October 2009.

US crude was down $1.44 at $64.40, after falling as low as $64.14.

Morgan Stanley predicted that Brent would average $70 a barrel in 2015, down $28 from a previous forecast, and be $88 a barrel in 2016.

The investment bank also said that oil prices could fall as low as $43 a barrel next year. Analyst Adam Longson said that markets risked becoming “unbalanced” unless the Opec producers’ cartel decided to intervene.

Saudi Arabia, the cartel’s biggest member, resisted calls at last month’s meeting to cut production despite the slide in prices, which have fallen more than 40% since June.

Kuwait, another Opec member, said that oil prices were likely to remain about $65 a barrel untilthe middle of next year unless Opec cut output.

The further falls in the oil price put more pressure on both the rouble and Russian stock markets, with the currency losing 2.2% against the dollar at 53.66 and down 1.8% against the euro at 65.80 in afternoon trading.

Some analysts believe that Russia will increase interest rates to as much as 12% this week in a bid to prevent a full-blown financial crisis.

Last week, the Russian government warned that the economy would fall into recession next year as the falling oil price and Western sanctions, in response to its role in eastern Ukraine, take their toll.

Russia’s economic development ministry estimates the economy will contract by 0.8% next year after previously estimating growth of 1.2% for 2015.

China slows

Global confidence was also undermined on Monday after European Central Bank governing council member Ewald Nowotny warned that the eurozone economy was experiencing a “massive weakening”, sending the euro lower against the dollar and the pound.

The head of Austria’s central bank is keener than Germany on the idea of the ECB introducing more money printing, or quantitative easing, and using the funds to buy government bonds in a bid to help stimulate flagging European economies.

Markets were also unsettled by official data showing that China’s export growth slowed sharply in November, while imports surprisingly contracted, resulting in a record monthly trade surplus.

Tony Cross, market analyst at Trustnet Direct trading group, said the figures indicated that the world’s second-largest economy was slowing down: “Chinese trade data fell well short of expectations and this has sent traders scurrying for the exits as the new week gets under way.”

Meanwhile, figures showing that the Japanese economy contracted more than initially thought in the three months to 30 September hit the yen, sending the dollar to a seven-year high.

Gold edged up $1.25 to $1,195.25 an ounce in London.

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Predictably Irrational

By Noah Graff.

Pepsi Challenge

I just finished listening to a great book called Predictably Irrational, by the acclaimed professor of behavioral economics, Dan Ariely. As I listened, I kept thinking of the irrational factors we deal with every day in the machine tool business.

Ariely says that standard economics assumes people are rational, thus they can make logical and sensible decisions, and quickly learn from past poor decisions either on their own or with the help of standard market forces.

However, his research has shown that people are much less rational than we assume. He says that people make the same mistakes over and over because of how our brains are wired, so we need to look at economics based on how people actually behave rather than how we think they should behave.

One concept Ariely discusses he calls “anchoring.” This often relates to prices as well as other benchmarks people encounter in business. Anchoring refers to how people’s minds set a standard based on the first figure they hear. For instance, if I’m selling a used machine and the first price I quote a customer is $100,000, that figure will guide the customer to believe that anything higher than that price is too expensive. That’s assuming the customer hasn’t been quoted a different price on that machine previously. If so, he will be anchored to that price instead. For an Acme-Gridley that is 40 years old, it is difficult to objectively assign a value based on market factors, so the experience of receiving a starting price can have a strong impact on the brain. At Graff-Pinkert one of our greatest struggles is figuring out the “right” value to put on a machine. In the end, the right price is when the customer’s irrational brain is in sync with our own irrational ones.

It works the same when quoting a cycle time to a customer. If the first figure we estimate for a customer is 15 seconds, any cycle time significantly higher than that will likely seem to him unacceptable. There may be plenty of logic and calculations which show that the 15 second cycle time first quoted was a ridiculous estimate, but after 15 seconds was mentioned, good luck pleasing the customer with a 25 second cycle time.

Restaurant owners have found that raising the prices of items on a menu can significantly increase revenue. People may want to stay away from the filet mignon that costs $60, so they settle on the prime rib, the second highest price on the menu for $50, which they are made to feel is a better value. If the restaurant owner is clever he could make the second most expensive item the one with the highest profit margin.

Another concept the book covers is how expectations will cause one item to seem superior to another. Ariely conducted an experiment in which for several days he served MIT students cups of coffee from a makeshift cafe. He served the students coffee in plain styrofoam cups and offered condiments like sugar and cream in simple containers sometimes made to look extra shabby by labeling them with felt tipped pens and cutting off their edges. The students then filled out surveys rating their satisfaction with the coffee. Other days the condiments were put out in fancy glass and metal containers on nice trays with silver spoons. When the condiments were served with the better presentation, the students rated the coffee better quality. Upscale presentation made them believe the they were drinking upscale coffee. When you walk into a shop or an office of a customer, does cleanliness and nice presentation give you more confidence in the quality of the products? Do clean machines actually produce more accurate parts? Maybe not, but I’ll admit there is a distinct positive feeling I get when I walk into a shop where we dealers say “you can lick the floor.”

To further study the effects of expectations, Ariely revisited the famous “Pepsi Challenge.” I’m sure you all remember when Pepsi conducted blind taste tests against Coke, from which they claimed their drink was preferred. Coke also conducted their own taste tests from which they claimed their drink was preferred. What is interesting is how the companies differed in their taste test procedures. For Pepsi’s taste test, the participants were supposedly blindfolded. While in Coke’s test, the subjects could see which beverage they were drinking.

Some neuroscientists conducted an experiment in which participants tasted the two soft drinks while using an MRI to test how the drinks stimulated the brain. By the way, it’s pretty difficult to drink while lying in an MRI tube. The scientists had to inject beverages into tubes running into the participants’ mouths. The participants were told before each gulp whether Pepsi, Coke, or an unknown drink was coming. The neuroscientists found that when the name of the drink was told to participants it stimulated the part of the brain known as the ventromedial prefrontal cortex (vmPFC), which is associated with strong feelings of emotional connection. Another part of the brain called the dorsolateral prefrontal cortex (dLPFC) was also triggered when the participant knew the brand of drink. This region can produce dopamine and activate the brain’s pleasure center. Both beverages had this effect, but significantly more participants drinking Coke stimulated the dLPFC, which produced dopamine, than those drinking Pepsi because more people had fond memories drinking Coke. Who knew — great branding actually has the power to stimulate people’s brain chemistry. Personally, drinking Pepsi is a last resort for me — blind taste test or not. Coke is delicious, and I think I’d prefer to drink water over Pepsi.

Will parts produced from your company produce more dopamine in your customers’ brains than those made by your competitors? You better have some good branding like Coke.

Questions:

Coke or Pepsi?

Does it bother you to pay $5 for a drink at Starbucks?

Read the interview Noah Graff did with Dan Ariely in 2009 here.

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Fracking For Fords

By Lloyd Graff.

2015 Ford F-150 aluminum frame shown at the 2014 Detroit Auto Show

Going into 2015, the machining folk have an interesting reversal of fortune from recent years. Automotive sales are nudging towards 17 million with trucks and SUVs taking 52% marketshare. The new Ford F-150 with the aluminum body is just hitting the showrooms, and Honda’s CR-V was last month’s top seller. The remarkable drop in oil and gas prices should expand volume especially for trucks. It’s possible that the weak retail sales numbers from Black Friday indicate more buyers gravitating to auto dealerships.

The losers in the oil plunge are the folks heavy into oil exploration and drilling products. Until recently there was a $20 to $30 per barrel “political risk” premium built into oil prices. The American fracking boom turned this premium on its head, but the market did not take notice until last month. Now the political risk has shifted to the downside as the Saudis keep up their output to punish Iran, Russia and the American shalers. It will be interesting to see if President Obama okays the Keystone Pipeline to inflict more pain on the Russians and Iranians via oil prices, though it is less important today than two years ago. The Alberta tar sands oil will ultimately get into the world market through a Canadian port or a U.S. port unless prices fall far enough to make it uneconomical.

The huge solar farms in the Arizona and California deserts are reaching parity with carbon fuels, which is another huge development. If a real breakthrough occurs soon in battery storage capability, the oil and gas industry could see long-term flat to dropping prices. The oil patch guys are quite worried now, which explains the recent Halliburton – Baker Hughes merger.

New home sales are still rather sleepy compared to 10 years ago, with family formation limping along, immigration shriveled and mortgage money hard to get. College debt also dampens demand. This is not changing much, but the overhang of foreclosed dwellings has substantially shrunken. Banks are loaded with cash, but the regulators are forcing them into super conservative investments like U.S. Government bonds, which cramps small business borrowing for startups and machinery.

With manufacturing down in Europe and China, it will be worth watching to see if companies there become more aggressive in penetrating the U.S. market. The Euro and Japanese Yen have dropped substantially in value, which could make European and Japanese products more competitive here.

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As a University of Michigan alum I have never been a big fan of Ohio State football, but I admit that I admire Urban Meyer as a coach. He dealt with the adversity of losing All-American candidate Braston Miller at quarterback, replaced him with freshman JT Barrett who had a Heisman Trophy-type season only to get a broken ankle in his 12th game. Then came the news about OSU’s defensive lineman Kosta Karageorge, who had gone missing from a self-inflicted gunshot wound. His body was found in a garbage dumpster at the Columbus bus station Sunday.

If Meyer can beat Wisconsin in the Big Ten Championship game this Saturday, he is worthy of Coach of the Year. But perhaps we should wait for more of the Kosta Karageorge story before we get carried away.

Question: Do you decide whether or not to buy a truck based on the price of oil?

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The Industrialization of Space

Courtesy of The Atlantic. By MEGAN GARBER.

This week, NASA marked a milestone: the first object manufactured outside of Earth.

We may talk about “space tourism” as a specialized form of space travel; even the most cutting-edge space exploration, though, is disconcertingly similar to the basic experience of Earth-bound voyaging. You pack your bags, trying your best to plan for every circumstance that might arise while you’re away, and then you’re stuck with what you’ve brought. In space’s case, the suitcases in question may be spacecraft and the tools required may be slightly more complex than voltage converters and travel-size shampoos … but the idea’s the same: If you’ll need something on your trip to space, you have to bring it with you.

That basic paradigm, though, is changing. This week, NASA announced a breakthrough: For the first time, humans have 3-D-printed an object to be used in space exploration from space itself. The item in question was appropriately meta: a faceplate for the 3-D printer that was recently delivered to the International Space Station, the laboratory that orbits some 240 miles from Earth.

“It’s not only the first part printed in space, it’s really the first object truly manufactured off planet Earth,” Aaron Kemmer, the CEO of Made in Space, which built the printer for NASA, told NBC News. “Where there was not an object before, we essentially ‘teleported’ an object by sending the bits and having it made on the printer. It’s a big milestone, not only for NASA and Made In Space, but for humanity as a whole.”

Read more here.

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First World Problems

By Noah Graff.

Photo courtesy of www.funnyjunk.com

As Thanksgiving is upon us, a few issues will likely preoccupy many Americans.

Many of us will be unhappy with the quality of the cooking, and our dinner guests will annoy us. On Thursday, some people will be saddened by the result of a football game.

I like to classify these issues as “First World problems.” When I get annoyed because I haven’t eaten lunch by 3pm, or I get some grease on my pants from leaning on a dirty screw machine, or maybe I’m just having trouble dunking a cookie in my glass of milk (see photo), I smile and tell myself, “These are ‘First World problems,'” and I feel better. Seriously, if you ask people who know me, they will tell you that I spout this line all the time. Sure, people do have real, tough problems living in this First World nation of the USA, in my opinion one of the best countries in the world to live in. But sometimes, we need to just remind ourselves to take a step back for some perspective. I’m not going hungry, I don’t live in a war zone, I’m healthy (as far as I know), I live in a decent home, my government — although far from perfect — gives me freedom (maybe not as much as I’d like), and I don’t have Ebola. Perhaps my life is pretty simple and easy compared to that of most people. But I believe it’s mostly up to you whether you want to feel thankful for what you have in this world or focus on problems, many of which are trivial.

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One First World problem some of us will be encountering Thursday will be the social awkwardness that sometimes comes with spending time with “friends” and relatives.

Personally, I love my family and feel very comfortable spending time with them, but I know not everyone has that luxury, and starting and sustaining a conversation can be a painful struggle for anybody.

I recently bought a book on a whim that has been useful in navigating some awkward social challenges. It’s a book about small talk, called What to Talk About.

The book is hilariously written and gives practical suggestions for making conversation at family get-togethers, at work, or on a date. One of the main principles the book encourages is to make your conversation partner tell stories. For instance, rather than ask someone, “How was your day?” the book suggests to ask, “What did you do today?” Or, instead of asking someone, “What do you do?” ask them, “What’s your story?” If someone starts talking about how the weather that day is cold, instead of responding with, “Yeah, it sure is cold,” you ask them about the craziest coldest day they have ever experienced.

To combat awkward pauses in conversations the book suggests playing the “Versus” game. Come into your conversation armed with some canned comparison topics to bring up during a lull, such as, “pie vs. cake,” “breaking up in person vs. breaking up by phone or text,” “caffeine-free vs. gluten-free for the rest of your life,” and “wine vs. beer.”

I love this book. It’s brilliant. It even has a wonderful section about what to say on a date if you fart by accident.

It’s my sincerest hope that all of you have a fun, relaxing, socially un-awkward holiday. I hope you are able to appreciate the great gift it is to live in America, despite its flaws. People all over the world would kill to switch places with us.

Questions:

What is your first world problem?

Cake vs. pie?

Caffeine-free vs. Glutten-free for the rest of your life?

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3D Printer for Christmas

By Lloyd Graff.

An at-home 3D printer by Cubify. www.cubify.com

Is 3D printing going to radically change manufacturing as we know it? I see General Electric investing mega millions in 3D printing of components for jet engines. The top management at GE sees additive technologies as the future of manufacturing. Hewlett Packard sees the 3D printer as their big consumer product of the next 10 years. They think it will stand next to the traditional computer ink printer business as a profit center by the 2020s.

I ask you, the smart folks of old school manufacturing, is 3D the next big thing, or just an interesting adjunct technology like wire EDM, Waterjet, and laser?

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Malcolm Gladwell, the fascinating author of Blink and David and Goliath, calls NFL football a “moral abomination.” He argues that one third of the players will sustain life altering injuries. He sees football losing the interest of young men across the country, except in the Southeast and Texas. He thinks Roger Goodell is clueless about what to do about the players and the sport and that the game is headed toward extinction.

I love Gladwell as a writer, but I think he is overstating the case on pro football. The game is still coining money because the TV Networks are starved for programming that reaches a male demographic. The incredible popularity of Fantasy Football (i.e. legal gambling) has given the game an enormous shot of testosterone. But Fantasy Football does not require a live audience. The games could be played without people in the stands and still provide the statistics for betting.

Personally, I have lost my taste for NFL games, unless an artist like Aaron Rogers or Peyton Manning is playing. The Chicago Bears bore me. The injuries in every game make me feel like I’m in Rome at the Coliseum watching the Gladiators.

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I heard an incredible journalistic piece by Ira Glass and cohorts on his NPR radio program, “This American Life.” Glass followed a car dealership, Town & Country Jeep Chrysler Dodge on Long Island, for a month as it attempted to meet the quota of 129 new cars to be sold in October of 2013. He followed the eight salespeople and the sales manager as they struggled to meet the formidable goal, knowing that their livelihoods hinged on hitting that arbitrary number. Chrysler paid a bonus of $85,000 to the dealership each that it hit its quota, but one less car sold meant the dealership received nothing. Commission and bonuses all were contingent upon hitting the magic number.

Glass found out that the dealership often lost money on sales toward the end of the month as the salesmen became desperate for deals. He interviewed all of the people on the floor, exploring what made one guy, Jason Mascia, a 28-year-old “sharp dresser” with bursting self confidence and off-the-map drive, outsell every other salesperson every single month.

The story absolutely fascinated me from a human interest standpoint, but also from a business point of view. I wrote a piece several years ago for Screw Machine World (predecessor of Today’s Machining World) about a small machining company in Iowa whose management set goals for shipping a preset amount of product each month. If the goal was met, the employees got a shopping spree at the local grocery.

Personally, I have found it difficult to set useful sales goals in a used machinery business selling illiquid but valuable used machinery, but I know that other companies do manage to do it. I have set sales goals for Today’s Machining World, but they are more for me than other people.

I am curious how folks who read this blog use or do not use goal setting to reach financial objectives. What are the consequences of missing the arbitrary goals? Do you lose good people who can’t stand the pressure? Do you make money because there are marks that must be reached?

Question: Are sales quotas useful in your business?

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My Noble Paws

By Emily Halgrimson.

I’m currently at “Peak Dog” with 18 of “man’s best friends” in my home. You are probably thinking “hoarder,” but please don’t dismiss me as a wacko quite yet.

Me and my four dogs: L to R Golden mix Dex, Beagle Penny, Pittbull mix Bean, and Chihuahua mix Max. All rescues, of course.

I got started in dog rescue about four years ago when I adopted my beagle, Penny. She was bought by a dog rescue at an Amish dog auction in Ohio, which is similar to  a machinery auction. Animals used for breeding are numbered and auctioned off to the highest bidder with selling points like “four healthy litters last year!” and “breed in demand!” The Amish are well despised in the rescue community for their treatment of dogs, which to them are akin to cattle. Penny’s feet were splayed wide and raw from the chicken wire she had lived her life on, and at five years old she was emaciated at only 16 pounds (she’s now a happy 40).

A year later, not long after my divorce had been finalized, I fostered Max, a small Chihuahua mix, for a local rescue group. After one week, I knew I had found my second dog. He and Penny bonded immediately and complimented each other. Plus, Max was a man-hater, which echoed my own feelings at that time of my life.

Now, three years later, I’m slated in the next couple months to be the Director of the 501c3 non-profit, Safe Haven Rescue and Adoption Inc., currently out of Portage, Indiana. The rescue began in 2000 and has saved over 500 dogs. It is run by all volunteers and has no shelter, instead using a network of wonderful foster homes that take care of the dogs.

An emaciated Pittbull I rescued this year from a hoarding case. It look a long time but he eventually found a great family. Wonderful, sweet dog.

Dog rescues act as go-betweens for dog shelters and the public. Shelters are over-run, under-staffed and have limited space, so when they become too full or have a dog that has sat too long, instead of euthanizing, a good shelter will reach out to local rescues to “pull” the dog. Rescues then take the dog straight to the vet for a thorough exam, a heartworm and fecal test, vaccinations, and make an appointment to have the dog altered (spayed or neutered). They find a screened foster-home to commit to caring for the dog until they find a “forever home.” Popular breeds can be adopted out in a week or two, but Pittbulls, Chihuahuas, seniors, and black colored dogs can take months and months to find homes for. A rescue like Safe Haven can handle 10-15 dogs at a time, depending on available funds for vetting and the elusive good, open foster home.

My dogs and my foster dogs watching me in the front yard.

It costs $150-$250 on average to vet a dog, and dogs are usually adopted out for around $200 — less if the dog is a senior, although a senior dog almost always costs a lot more to vet, with dentals and bloodwork. People often complain that adoption fees are too high, but they don’t understand that when they adopt a dog from a rescue they’re getting a fully vetted dog. If they were to do all that vetting themselves they’d spend much more than the adoption fee.

Sites like Craigslist and Facebook’s “Free Pet” Community are a bane to the dog rescuer. “Free” dogs can be scooped up by dog fighters or people selling dogs to research facilities. A dog rescue volunteer often feels like no matter how hard they work, how many dogs they pull, or how much money they collect from sitting for hours at weekly adoption events at Petsmart, they’re barely making a drop in the bucket. The supply of dogs in need never ends.

One of 14 Shih-tzus we helped rescue from a large rural breeder this year. This is what the parents of pet store dogs usually look like.

The need is so great, the way we throw out our senior dogs or our no-longer-cute-puppy 1-year-old hyper dogs, never ceases to amaze. “The greatness of a nation can be judged by the way its animals are treated,” said Mahatma Gandhi. We aren’t doing very well — over 20,000 animals are euthanized each week in the U.S., while we put on our blinders to the suffering we perpetuate and breed and buy and breed and buy.

The consensus in animal rescue is that the longer you do the work of saving animals, the more you dislike people. You’re continually confronted with the selfish and heartless side of people. We get calls for dogs burned with cigarettes, dogs hung up as training bait for dog fighting, dogs tossed out of car windows and over bridges, Mama’s with their newborn puppies on the street with ingrown collars, dogs that can’t walk because their nails have grown in circular from neglect, dogs without a single hair on them because the fleas have had their way so long, dogs that have been starved into complete skeletons, dogs that have their growth stunted because as they grew they never left their crate so their bones re-shaped. Every day there’s another case like this, another reason to cry over the suffering humans inflict.

Pregnant Oreo the day I brought her home from Animal Control

Two weeks ago, I was at a nearby city’s Animal Control on a late Friday afternoon and came across a very pregnant Chihuahua. The conditions of Animal Control vary city to city, but this was Halloween and in Northwest Indiana it was a blustery day. The kennels are made of concrete and have a heavy metal door that drops like a guillotine to separate the inside from the outside. The wind whistled under the door and the very pregnant Chihuahua was curled up in a small dog bed on the concrete floor. I said “crap” under my breath and knew I was in for a long weekend. I scooped her up and brought her home. No question, if Mama Chihuahua (who we named Oreo) had given birth there that weekend she and the pups would have died. Cold drafts are an enemy to puppies, and newborn Chihuahua puppies can fit comfortably in the palm of your hand. I didn’t need this new commitment as I already had a litter of six four-week-old Lab mix puppies I had sunk over $1300 in vet bills into, as two of them had developed serious pneumonia and were hospitalized for a week undergoing nebulizer treatments. (Donate here)

I settled in the poor old Mama, who had been found on the streets as a stray, at my house into a nice comfy crate with a bed, and she gobbled up two large bowls of wet puppy food. She was terrified, but not aggressive, and she flinched when I pet her. Not a sign of an easy life. I was shocked by how old she was — at least six or seven from look of her teeth and frail bones.

Mama Oreo with her five healthy baby girls born November 3, 2014

By Sunday night Mama had gone into labor, and Monday morning at 5:00 a.m. the first baby appeared, dry, feet first, and stuck tight. I knew immediately this was bad and I grabbed Oreo up, put her in the car, and rushed to the emergency vet only a mile or so from my house. The first baby hadn’t had a chance, but over the next five hours I waited in the waiting room while Mama Oreo had five healthy baby girls. A morning off of work and $350 later, we came home and settled Mama and the babies in. She’s a good Mom, and even the runt, who is half the size of the others, is hanging in there.

Every puppy (and Mama Oreo) will be completely vetted with checkups and vaccines, spayed, and microchipped. We will then screen adoptive homes for them through applications and vet reference checks, and do home visits for each puppy. Rescues are there to fix the problem of homeless pets, and do not want to leave any chance open that a dog in their care will contribute to the problem of unwanted litters or end up in a shelter. That’s why they’re so picky about choosing adoptive homes.

I want people to be aware that that gas chambers are still used in some states (like Michigan) to kill unwanted animals; puppies bought at pet stores have parents who will suffer horribly their whole lives; thousands of beagles are hooked up to breathing masks and piped in oven cleaners and other chemicals in labs until 50% die from the fumes;  and there are people out there care so deeply and feel the pain of these animals so palpably that they’re willing to sink their life savings into easing their suffering.

It’s a whole new world out there when your eye is on the four-legged creatures that look up at us with such love. “Think occasionally of the suffering which you spare yourself the sight,” said Albert Schweitzer.

Emily Halgrimson is Today’s Machining World’s Managing Editor and Marketing Manager. To support her “Noble Paws” please click here or send a check to: Safe Haven Rescue and Adoption, PO Box 593, Portage, IN 46368.

Question 1: Do you prefer animals to people?

Question 2: What is your noble cause?

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