The consulting firm AlixPartners makes a yearly assessment of competitive economies worldwide for manufacturing firms. The number one country for the last two years has been Mexico. Interestingly, China was sixth and the U.S. was eighth. I was particularly dubious of the survey after reading yesterday’s lead piece in the Wall Street Journal about the chaos in Mexico that has spread from the border drug wars to the capital of Mexican industry, Monterrey.

The last time I was in Monterrey I stayed at the Holiday Inn near the exhibition center. According to the Journal piece, that hotel was stormed by masked gunmen last April. “The security environment has changed from seeming benevolence to extreme violence,” said U.S. Ambassador to Mexico, Carlos Pascual, recently.

Monterrey is a city of 2 million people, a four hour drive from the Texas line. It is a wealthy town with Mexico’s top technical college, the Monterrey Institute of Technology. In March two students were killed in a shootout with soldiers. The mayor of the wealthy suburb of Santiago was just assassinated. Mexico may be competitive with skills, infrastructure and great access to the American market, but the carnage from the overflow of the Narco Wars, which has left 28,000 people dead in the last four years, would make me hesitate to make a major investment in the country.

The last time I visited Mexico was three years ago to see a client in Tijuana. I had a ride to and from the crossing point, but even with the escort I was relieved to return to San Diego.

Is Mexico the most “competitive” economy in the world? Not if you need a bodyguard when you check into the Holiday Inn in downtown Monterrey.

Question: Should the U.S. spend billions on a fence to secure its borders with Mexico?

Alternative question: Who is your favorite of the Three Amigos?

The Mori-Seiki-DMG partnership is starting to pay dividends. I recently talked with a client who’s buying one and possibly two expensive DMG twin turret lathes. He liked the DMG technology, but he told me he would not have considered buying DMG if they were not selling through Maruka on the East Coast. Maruka is the Mori distributor based in Rockaway, New Jersey, and it now also sells DMG. He trusts them, he respects his salesman, and he believes in Maruka’s support.

The Mori-DMG showroom near Chicago (Hoffman Estates) is a superb facility, but it is the reliability of Maruka that will ultimately make the New York sale of a $500,000 machine tool.

*********************

The tight credit straitjacket is still stifling small business capital expenditures and hiring. Business is strong for many companies but many banks are still fighting the last war. We are hearing of forced bankruptcies and liquidations for firms who thought they had weathered the storm.

*********************

Western extrusions of Carrollton, Texas, will be installing an extrusion press in 2011. They are aiming at construction, transport, electrical, and solar markets among others.

*********************

The contraction of American automotive manufacturing is making 11 million car-years the new normal. The 5 million square-foot Willow Run transmission component plant is being sold off by the Maynard’s and Hilco auction firms in three giant sales. The work from that plant is going to facilities around the world, but some is landing at job shops in the U.S. The survivors who are getting the work are mega busy with the opportunity to get much more busy in the coming year. For the automotive suppliers who survived the recession and the bank withdrawal syndrome, the future is very rich.

Random Question: This baseball season there have been seven no-hitters thus far. Are pitchers getting better or is it steroid withdrawal?

Houdini Escapes from Straitjacket During a Free Fall

JetBlue flight attendant, Leonard Spivey (Wall Street Journal)

For the past 10 years, JetBlue, one of the few successful airlines in the sky, has hired several hundred New York police officers and fire fighters as flight attendants. Some estimate that 10 percent of the company’s total cabin crew workforce of 2,400 has emergency response experience. Seemed pretty weird to me when I read about it in the Wall Street Journal last week. When someone mentions the word “flight attendant” the first words that pop in to my head are “cute,” “female,” and “young,” then “grouchy” if it’s United Airlines and “friendly” if it’s Southwest.

Retired cops aren’t prototypical stewards, but after further reflection, maybe it’s not such a crazy idea. Police officers and fire fighters are trained to remain calm in stressful situations and deal with volatile strangers. They’re adept at noticing subtle social cues, to identify if a passenger may be disruptive or potentially dangerous. Also, prior to September 11, pilots on occasion would leave the cockpit to defuse disruptions in the cabin. Today they are prohibited from leaving the cockpit, so ex-cops and ex-fire fighters are useful to fill that role.

Police officers and firefighters are also used to the alternative schedules of flight attendants—working long shifts for a few days and then getting a few days off. They don’t make as much money as they did before, but they are already retired, so it’s a nice supplemental income to their pensions.

Meanwhile, unemployment remains the same at 9.5 percent. In the month of July, 150,000 jobs were lost overall, while 70,000 jobs were gained in the private sector.

Who are the people getting the 70,000 new jobs? They’re often not the ones who held those same positions previously. Many of the hires are younger people, who may possess less experience and skills than their processors who held the same job but require fewer benefits and less pay. But bringing in new blood should be done more shrewdly than just on a basis of getting younger and leaner. It’s an opportunity to hire like JetBlue, to find people with fresh ideas and new skills, for a chance to take a company to higher level of success than ever before.

The best new talent may be walking the streets right now, just wearing a different uniform.

Question: Do you prefer to hire or work with people who previously worked in a different field than that of your business?

President Obama with the Chevrolet Volt after a groundbreaking ceremony for a new battery plant in Holland, Mich (Photo source: NY Times)

Yesterday, Barack Obama visited the Compact Power plant in Holland, Michigan, to attend the groundbreaking of a new plant to produce battery cells for Ford and GM electric vehicles.

The $300 million facility is the ninth factory to begin construction since the administration allocated $2.4 billion from the president’s economic stimulus program toward production of advanced batteries and electric vehicles. It is one of two factories in Holland, which together have received $450,000 in grants from the U.S. government.

The factory that broke ground Thursday will employ 400 people, in 18 months. It and others like it could be a decent starting point to jumpstart economic growth in Michigan. In five years, officials say, the government subsidized plants will be making batteries for 500,000 new cars a year and will cost 70 percent less.

The Holland area happens to have a large Tea Party movement. They have come out with a mixed reaction to the government stimulus and the President’s visit. Jim Chiodo, a Tea Party leader in Holland, said that he has nothing against the jobs that the plant will provide the town. But says he doesn’t believe it’s up to the government to pick and choose which towns get help.

“For every winner, there’s 10 losers,” Chiodo says. “It’s really, really hard to take a position that’s against your hometown. And I’m not against my hometown. I love Holland. I’ve been here 25 years. It’s a great town. But it’s going to hurt towns like Holland when this gravy train gets turned off.”

If that’s all Chiodo can say to criticize the stimulus program, he’s having some trouble keeping his Tea Party cred in my book.

I’ve always been a big fan of analogies, here’s what I came up with in response to that criticism.

Is it fair for one guy on dialysis to get a kidney transplant while another guy who needs one dies because he was further down on the list? Of course not. So does that mean nobody should get a new kidney then? Take this further now, what if you knew that the guy who was lucky enough to receive the kidney was an amazing doctor who had a good chance to help prevent others from having kidney problems like his own. And, what if the only way the doctor could get the kidney fast enough to survive was with help from an arrogant, socialist, idiotic president who had no experience with kidney problems?

One could say that Holland and lot of towns in Michigan are on economic dialysis. I’m not sure how doing nothing “Tea Party style” can save it and places like it.

Question: Should the Obama administration not have helped build the battery factory in Holland, Michigan?

Source: NPR.org

For an extra $5,800, buyers of a Corvette Z06 or ZR1 can go to the General Motors Performance Build Center in Wixom, Mich., and assemble their own car’s engine. Even car maintenance novices will have the opportunity to build their own engines because as part of the deal a GM technician supervises the process.

“Corvette owners are some of the most passionate—and most involved—enthusiasts in the industry,” Jim Campbell, vice president of Chevrolet marketing in the United States, said on Monday. “The Corvette engine build experience offers customers an unprecedented opportunity to participate, hands on, in creating the car.”

Now I’m not the most mechanically inclined (ironic for an editor at Today’s Machining World), but I still think that it’s a way cool idea. But why?

Why are people fascinated with doing things independently and creating things themselves? I know, some of you are skeptical of this commentary, because after all, in America we are notorious for watching copious amounts of TV, eating fast food and going to Wal-Mart to buy everything we need.

Most people reading this article do a least one of those things, but still, tons of Americans like watching reality shows about hands on topics like cooking, building customized motorcycles, and restoring houses. Americans like to go to restaurants like Big Bowl where we pay for the right to create our own Asian dishes. We go to fish hatcheries and go berry picking where we hunt and gather our own food and then pay someone for the experience. Along with that caveman phenomenon, it seems like every other American is proud to have created his or her own HD home video.

Is it human instinct to want to build and create? Or maybe even just animal instinct? I believe it is. Many people don’t create things on a regular basis because we’ve been conditioned that the ideal is for other people or machines to do things for us, whether it be cook, farm, program computers, or fix our car engines.

But if you put kids together in a sandbox, or in a room with Legos, or even in a kitchen with pots and pans, there is a good chance they will create something, be it be a structure or a story or a work of art.

Question: Is it human nature to create things?

Source: nytimes.com

Corvette LS9 Engine Built From Start to Finish

I recently came across a hysterical YouTube video satirizing the screw-ups by BP management as they try to stop the oil leak in the Gulf of Mexico. In the video, a group of BP execs are sitting in a boardroom and someone spills a cup of coffee on the table. The group panics and makes blunder after blunder trying to corral the coffee. They try things as ridiculous as pouring garbage on the table, throwing wads of hair, and sucking the coffee up with a drinking straw.

I stepped back and asked myself, why did the guy spill the coffee in the video? How does an “accident” like this happen? The spill happened because the guy in the video wasn’t paying attention, he was distracted, he was relaxed about the risk of spilling the coffee.

I think back to a ski trip I took 14 years ago in Colorado when I was 16. I met this middle aged guy on the trip, who had some of the greatest stories I’d ever heard about racing stunt cars, doing illicit drugs, and traveling to dangerous places around the world. These were his words of wisdom, “Noah, it’s ok to do dangerous, crazy stuff. The important thing is to stay paranoid while your doing the dangerous stuff.” His rational was that usually the people who get hurt are the people who relax and feel like they have nothing to worry about. You get away with something risky long enough and before long you forget that it’s a big deal—be it cheating on your wife, sub-prime mortgages or faulty engineering.

Toyota’s management skimped on quality control in recent years, BP didn’t follow accepted safety protocol, Wall Streeters believed they could get away with bad bets over and over again. If the guy in the video had been paranoid about spilling the coffee he probably wouldn’t have done it.

Question: Do you think that good BP management would have been able to stop the oil spill by now?

When I wrote the blog a couple of weeks ago about Meg Whitman using her eBay wealth to win the Governorship of California while Rod Blagojevich defends his mastery of payoff culture in a Chicago courtroom, I was unconsciously touching a bigger theme—the rise of women in American life.

Hanna Rosin’s cover story in the current Atlantic—“The End of Men: How American Women are Taking Control of Everything”—brilliantly tells the story of the decline of men in 2010. Economically, this trend is related to the decline of manufacturing and construction. Current unemployment is heavily weighted toward males but the long range trends are even stronger than recession related layoffs.

Testosterone, physical strength and a gambling spirit, the traits that tamed the Old West, are not as highly valued in today’s world. Women are earning 60 percent of the college degrees now. Statistically men struggle more in school, and school is the gateway to advancement.

I think that the shift towards female dominance is less apparent in the machining world we inhabit, but I find women taking more of the purchasing agent roles. Men may still be making most of the stuff, but women are often signing the checks.

When Pierre Omidyar, founder of eBay, realized the business was getting too complicated for him to manage, his venture capital investors found Meg Whitman in Boston biding time as a consultant and brought her to San Jose to grow the business by harnessing the entrepreneurial fervor of mom and pop companies everywhere.

Meanwhile, Rod Blagojevich, who still can’t use a computer (see video below), was wheeling and dealing in the backroom of Chicago politics. His first big move was marrying a powerbroker’s daughter. He then joined the law firm of Eddie Vrdolyak, a famous fixer and Chicago dealmaker. He used his smile and big hair to charm the voters all the way to the top of the State. Very competitive, very male, very Chicago, very corrupt—our Rod.

Meg goes to Sacramento if she beats the old liberal pol—Jerry Brown, former governor of California from 1975-1983. Rod goes to prison if the wiretaps stick.

It’s getting tough to be a good ole boy.

Click to go to the Atlantic article

Question: Are women taking control of everything?

The Street.com recently interviewed John Maccarone, CEO of Textainer, a company that owns and leases more than 10,000 containers. According to Maccarone, there will be a huge shortage of containers in the coming years. The capacity of world containers declined last year because all of the container manufacturers had closed. The closings caused the companies to lose a ton of skilled labor, so now their output is less than half of what it would be in normal years.

According to Maccarone, global trade is forecast to grow by 9-10 percent next year, in contrast to 2009 during which it declined by 10 percent. Presently containers are at a 90 percent utilization rate.

Tough to get enough containers, but at least we need them.

Watch the video to learn more.

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?

Along with being known as a great point guard and solid coach, Cheeks is known as just real good guy. Back in 2003, Cheeks was head coach of the Portland Trailblazers. During a pre-game, he came to the aid of a 13-year-old girl who forgot the words while singing the National Anthem, inspiring the entire stadium to join in to help. You need to check out this video on YouTube. It’ll make you proud to be an American.