Machining

Imports from Asia are rising again. China is allegedly going to allow its currency to rise. Scrap steel is leaving the U.S. and foreign steel is rushing in to fill the warehouses.

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?

By Lloyd Graff

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.

By Lloyd Graff

WESTEC as we know it is changing. There will be no show in 2011 in Los Angeles. SME (Society of Manufacturing Engineers), which organized the 2010 event, is planning an Aerospace Defense oriented manufacturing show for next April in Anaheim, Cal. In September, 2011 they will host a Las Vegas event which will be a cross between a trade show and a collection of open houses.

SME has found it increasingly difficult to put on a major L.A. show during an IMTS year. It isn’t that the West Coast people are necessarily going to IMTS, but the exhibitors do not have the budget for two big shows in one year.

WESTEC was becoming the Haas Show (Gene Haas came on the first day) but even they were reducing their presence in 2010. There were a lot of small exhibitors but no major ones besides Haas. Attendance was not terrible, but by the time business had begun to rebound the die had been cast for the large displayers.

Question: Are trade shows becoming obsolete?

By Lloyd Graff

Alan Beaulieu of the Institute for Trend Research spoke at the Precision Machined Products Association Management Update and gave his predictions about the next couple of years. Beaulieu is not just any dismal soothsayer. He specializes in looking at the manufacturing world and had correctly predicted the dramatic recession we are just poking out of today.

He is quite confident we are in a sustained recovery, which will gain momentum through next year. He sees 2012 as a seesaw year.

The most surprising aspect of his talk for me was his prediction of significant inflation by 2011. Beaulieu suggested an inflation rate of 6.5 percent next year, pushed by a surge in commodity prices.

Beaulieu sees commercial lending by banks gradually easing. In his view, banks want to lend but are being restrained by government examiners who are working at cross purposes to the avowed intent of the administration to expand credit for small business.

Beaulieu sees us at a classic inflection point of opportunity to buy residential real estate. In his view, we have six months to get a historic discount on real estate. His admonition was to buy a condo or a house either to use or rent out as soon as possible because both price and interest rates are going up soon.

He had some interesting political and economic views as well. He sees Russia as a crumbing mess with a dying population and extremely low birthrate (1.1 children per woman). He sees the Euro headed back to parity with the dollar. He recommends buying gold and sees copper prices reaching for the moon because of Chinese demand.

His top categories for growth are medical, food, energy (he likes wind), security and water. He is very bullish on India.

The best thing about Beaulieu’s talk—he didn’t hedge his bets.

Question: Are you considering buying residential real estate in the next six months?

Alan Beaulieu at PMPA Management Update

By Lloyd Graff

The most stunning conclusion I reached from the Precision Machined Products Association (PMPA) Management Update Conference last weekend in Phoenix is that the precision machining operations business is good right now. Whether it was the automotive contingent, the aerospace guys from the coasts, the mixed baggers, the brassers or the ammo and firearms suppliers, the PMPAers were generally happy. What a change from a year ago.

The PMPA’s statistics show the same reflection of business. Sales levels are still off peak levels but profits are solid because of significant gains in productivity. The pruning effect was referred to by almost everybody I talked to. Weak employees have been shed. Processes have been sharpened. Companies are lean and hungry.

Contrary to the idea that nobody is hiring, the folks in Phoenix were looking. What they were seeking is youth and energy. Skills are a plus but they can be developed. We are at a point in the business cycle where you can find smart eager young people who are ok with starting out on the cheap and working their way up.

Dave Knuepfer of DuPage Machined Products outside of Chicago is hiring high school kids as interns hoping one out of three will stick. Ron Bracalente of Bracalente Manufacturing in Trumbauersville, Pa., is hiring engineers out of school for $13 per hour and fast tracking them up the pay scale if they can cut it.

Precision Machining is shedding its old skin coming out of this recession. The focus in Phoenix was not about adding machine capacity, it was about acquiring young talent during one of those rare windows of opportunity.

Question: Are you using this period to acquire young talent?

Richardson Ng, 2nd year Mechanical Technician at Centennial College, watches the sparks fly off a grinder in Precision Machining lab.