By Lloyd Graff

Today’s Machining World Archive May 2008 Volume 4 Issue 05

Greg Maddux is one of the greatest pitchers of all time, nearing 350 wins in the Major Leagues. He is a master of pitching in almost every sense, which enables him to still win consistently with a fastball that can’t break a window pane.

When Maddux was asked recently about his pitching performance on a particular night he answered very succinctly – “50 out of 73.” It was the number of pitches executed perfectly, not the score, his arm, or his mood.

I was stunned by his simplicity. Though Maddux is renowned for his sophisticated knowledge of the game, his acumen in setting up hitters, and his Gold Glove fielding prowess, it is his ability to not think and just execute that marks his remarkable career.

I am reminded of Tom Hanks’ portrayal of Forest Gump. For Forest, life was “like a box of chocolates.” He made up for lack of worldly intelligence with a purity of purpose and good humor.

I have observed through the years that success in business often goes to those who can see through the temptations of tricks and guile and just do the simple tasks they can understand. The most recent Wall Street debacle over mortgage instruments is a direct result of building a web of complexity that obscured the safe and simple. The derivative market was so complicated and opaque nobody could really evaluate the risky slices of potential insolvency, but the big players hoped they could buy their home in the Hamptons before the music stopped on their financial musical chairs charade.

Lean manufacturing is a noble effort to pare the tough skin off the perfect mango of proper production management. Nucor Steel was one of the earliest practitioners of simplifying the steelmaking process by using electric furnaces and scrap steel. They demolished the antiquated

Bethlehems, and Jones and Laughlins who needed the constant ore boats resupplying the United Steel workers on the featherbedded floor.

I write this piece from the vantage point of a used machinery dealer who has lived off opaque markets and challenging intrigue. Sometimes complexity is fun if you think you have the teachers’ copy of the workbook with the  answers in the back. But the periods of time when I’ve been the most successful and the happiest are when I refined the game down to its essence. “Listen to the customers. Meet their needs. Make a fair profit.” Business is hard, but it isn’t that hard when you keep it simple.

In my personal life I have learned, at times painfully, that clarity makes life so much easier. If a relationship is not working, state the obvious because to the other party it may not  be so obvious.

Greg Maddux. Simply the best. 50 out of 73.

Greg Maddux (Photo from The Higlight Reel)

Interview by Noah Graff

Today’s Machining World Archive February 2009 Volume 5 Issue 02

Dany Romach

Israeli machinery dealer Dany Romach, originally from Argentina, has been buying and selling machine tools worldwide for 43 years. He has watched Israel’s economy transform from primarily agriculture and military to high-tech.

How did you get started as a machinery dealer?
DR: I was a teacher at a technical high school. One time we didn’t have the budget to buy a machine, but I [heard] a rumor that machines were being sold from the military industry. So I went and saw them, and on a budget for one milling machine we bought six. From there the business began. I left teaching and I started rebuilding machines.

How is business in Israel right now?
DR: I would say that it’s strong. Don’t forget that we have many factories in Israel — HP and Boeing, and many factories of household goods supplying to Wal-Mart and others in the U.S. The big advantage we have in Israel is that it’s one of the only countries in the world, like Finland or Denmark, in which the banks are very strong. There is no fiddling around with mortgages, and we have a very strong person controlling the money — Stanley Fischer. So in finance, it’s okay. It’s not okay because there is a clamp down of the stock exchange, but people believe the economy is slightly stronger [here] than in other countries.

What is the typical salary of a machinist in Israel?
DR: I would say today that if you’re a good CNC person and know how to render and [solve] problems — and you are working one or two shifts — you could end up with a $3,500 a month salary. For the simple people, who just keep the machine without programming, it’s less. It’s a good living in Israel. You can buy a house and pay a mortgage. It’s about double the average salary in the market.

Is it hard to find good CNC people in Israel?
DR: The problem is that the educational system decided about 10 years ago to shut down the technical schools that taught how to turn, mill and measure. Everybody went running for the high-tech. Now they are reopening those technical schools because they are the basis not only for industry but also for maintenance in the army and aviation, which influence all of the market.

Are there labor unions in Israel?
DR: There are. Not a lot in manufacturing, but in the ports, electric and water supply — in all the things which can strangle the country. There are no strong unions in the metal industry because there is no car manufacturing. There is no one production that keeps a big percentage of the population working — it’s thousands of small factories.

Do you think in five years there will be an official Palestinian state?
DR: No, because I truly believe that the Palestinians themselves have a problem. They are like a shot blasting machine. A shot blasting machine is a machine that is also called a “self-destructive machine.” They have too much terror in the blood. They will have some kind of autonomy, but not a state.

What would it take for them to get a state?
DR: This is very difficult question — I cannot answer this on the phone. But I will tell you one thing. [I think that] in all of the West Bank, with 2 million people, there is not even one good, modern CNC 4- or 5-axis machine. They do not know how to operate them. They don’t have the skills. They have nothing. Even in Saudi Arabia and Egypt the people who handle the machines are Indians and Pakistanis. The Arabs do not have the ability and the skills to operate CNC machines.

Thanks, Dany.

By Scott Livingston

Today’s Machining World Archive June 2008 Volume 4 Issue 06

Red is SRAM’s top of the line component group-set for road bikes.

The French Alps are a long way from Chicago, Ill., especially when a bicycle is your chosen mode of transport. In July, the Alps are home to the Tour de France, the world’s most prestigious multi-day bicycle race. Year round, Chicago is home to SRAM Corporation, one of the most successful bicycle component manufacturers in the world. The pro riders who compete on the Tour are the ultimate test riders for SRAM’s high end road cycling components, but it is the average enthusiastic recreational cyclist that has helped drive SRAM’s amazing growth.

SRAM has progressed tremendously from its launch in 1987 to its present day status as one of the big three bicycle component manufacturers. The company has grown through both traditional internal product development and acquisition, establishing itself as a major player in the mountain bike, road bike, and comfort bike markets. The February 29 issue of BusinessWeek Chicago reported that privately held SRAM grew 15-20 percent in each of the last five years and had 2007 fiscal year revenues of $318 million. Publicly-owned Shimano, Inc. of Japan, the market share leader, had bicycle segment revenues in 2007 of more than $1.5 billion and total revenues of more than $2 billion. Shimano’s other industry leading business is fishing products, including reels, rods, and jigging.

Whether the products are bicycle parts or fishing gear, Shimano is a formidable competitor and SRAM has had to climb to gain its share in a challenging market. The third major player in bicycle components is Campagnolo S.r.l., an Italian based company. While SRAM and Shimano build parts for all segments of the market, Campagnolo focuses on the enthusiast road bike segment. Shimano is well known for its history of technical innovation, and Campagnolo, though also known for some technical innovation, is more known for their European style and design. Seemingly, SRAM has been able to meld the two together. Their strong position in the mountain bike segment has fueled its leap to the high end road bike segment. Campagnolo used to have a lock on supplying the top European based pro teams, but first Shimano, and now SRAM have made inroads by supplying parts to top teams at the high visibility professional level.

Lennard Zinn is a bicycle frame builder, technical writer for Velo News, and author of numerous books on bicycles and bicycle maintenance. He has been following SRAM since its founding and says that their growth is very impressive. “If it weren’t for SRAM, the whole industry would have ceded the mountain bike business to Shimano and the road bike business to Shimano and Campagnolo,” said Zinn. He is amazed at the amount of capital that SRAM has pumped into its acquisitions and noted that the inorganic growth has not slowed down its internal product development. Zinn fully expects SRAM to continue its growth.

Pedaling for Growth
How did SRAM move from scrappy upstart to a major player in a market that has changed dramatically in the past 20 years? During the entire history of the bicycle, U.S.-based companies have made big contributions. As the mass market for bicycles commoditized, U.S. companies lost their grip and domestic manufacturing migrated to the niche bicycle frame building business and small segments of the market where innovation was still thriving. U.S. manufacturers have led in the development of new materials and technologies like suspension and lightweight composite wheels, but until SRAM’s growth kicked in, there wasn’t a dominant U.S. player focused on large scale component manufacturing. Many of the large U.S.-based companies producing complete bicycles, such as Specialized, Trek, Cannondale, Schwinn, and GT have shifted from in-house manufacturing to a design, market, outsource model of brand development.

Some still operate U.S. factories, but there has been a fair amount of consolidation and most of the sourcing is done offshore, primarily in Taiwan and more recently in
China.

SRAM started out as many companies do, with a single product idea in the mind of an entrepreneur. Stan Day, Jr. founded SRAM with his brother and three friends. The name SRAM is derived from the first and middle initials of some of the founders. Day’s first design was the GripShift, a handlebar mounted derailleur shifter. The technology for that shifter is still present in their current line of twist shifters. SRAM has grown to be one of the largest component companies that still has internal manufacturing, most of which is offshore. Their line of components and collection of brands is one of the most comprehensive in the industry. Their main brands are: SRAM (drive-train, shifting, and brake components), RockShox (suspension products), Avid (cantilever and disc brakes), Truvativ (crank sets, bearings, seat posts, stems, bars, pedals), Zipp (composite wheels, crank sets, bars, and stems), and Pitstop (bicycle tools and mainte-nance products).

The Bicycle Shop Owner’s Perspective
Dave Barrow, owner of Tolland Bicycle in Tolland, Conn., is a self professed, “campy guy,” but that hasn’t stopped him from stocking both mountain and road bikes with SRAM’s products. Though he personally rides Campagnolo parts, he is a dealer for Taiwan-based Giant Bicycles where some models are sold complete with SRAM parts. When asked if SRAM, once the upstart, is now a viable competitor to Shimano and Campagnolo, Barrow said, “Yes, without a doubt.” He noted that SRAM made really good mountain bike components for years and they are now making their impact with innovative parts for road bikes. He doesn’t think that his average customer knows or cares that SRAM is a U.S. based company. His customers want the best value for their dollar. SRAM’s top component group-sets are “lighter than anyone on the market,” said Barrow.

Weight Weenies
In bicycle-speak, a “weight weenie” is a rider who measures the difference between bicycle components in grams. Even casual riders, who could lose a few grams or pounds themselves, are infatuated with the drive to ride the lightest possible bicycle available. High-end complete bicycles can routinely cost $5,000 or more, and recently, there have been examples of custom bikes with top components going for double that price. As with any luxury good, the sky is the limit when it comes to customization and cost. Between the frame, the wheels, and the component group-set, the cost per gram of weight savings can be hundreds of dollars. SRAM has developed components that maintain their performance and durability while shaving weight. For the pro riders in the Alps, this may mean the difference between winning and losing, but it won’t make a huge difference for that ride to the coffee shop or that commute to work. Still, the trickle- down technology from the automotive and aerospace industries, and lighter and more user friendly components, can benefit the average rider when the bicycle is easier to pedal and control.

Jack Greetis is SRAM’s Chicago office Engineering Manager and has been with the company for 10 years. He has witnessed the company’s growth and has a good pulse on SRAM’s global operations. “SRAM’s strategy is to be in locations near our customers,” said Greetis. Many of those customers, the marketers of complete bicycles, have migrated to Taiwan and China. According to Greetis, the high-end bike parts are about “weight and whiz bang stuff. Cycling is fashion.” Hence, the annual product development cycle pumps out new parts every year. SRAM’s successor to Force, their inaugural road group-set, is called “Red.” SRAM supplied lightweight chains and cassettes to top European pro teams in the past, but only recently began outfitting ProTour teams like Astana, Saunier Duval-Scott, and Agritubel with their full group-sets.

Global Manufacturing
SRAM has thousands of manufacturing employees spread amongst six main factories. Two are located in Taiwan; two are located in China (Shanghai and Guangzhou), one in Germany, and one in Portugal. Over the years, acquisitions have gained small operations in Indiana and Colorado, but Greetis said it has been 10 years since SRAM operated a major metalworking facility in the United States. Labor cost was a big factor in the subsequent moves. He said there was an experiment in Chihuahua, Mexico, but that lasted only two years before the focus was turned to Asia, namely Taiwan, which has been a global center for the bicycle industry for more than 25 years. SRAM’s approach is to perform research and development at engineering centers in Illinois and Germany before establishing production manufacturing at the global plant site that best fits the product. Greetis said both R&D locations are blessed with “strong knowledge bases.” When pressed for an explanation why products are still produced in higher cost countries, he went on to say that the “technically challenging products, such as internal gear hubs,” are made in Germany, and a specialized factory for bicycle chains is in Portugal.

They have worked with outside experts to implement lean enterprise processes, and some best practices are shared between their facilities, but for the most part, the operations are independent of each other. “In the bicycle industry, innovation is driven by the patent landscape,” said Greetis. He said that a lot of time is spent on reviewing previous designs and that much of the lean focus has been on the design process. He leads a group of nine engineers and lean product development has allowed them to launch new designs more quickly. SRAM has posted information about its own patents on their website for others to see.

Like many U.S. based companies, SRAM has focused on design, marketing, and assembly. “We look to experts who are doing what they do best – our expertise is in assembly and we have been adding resources each year,” said Greetis. SRAM still has substantial in house manufacturing capabilities, including turning, milling, centerless grinding, carbon fiber molding, plastic injection molding, and die casting. It also outsources some of these processes to gain added capacity, and rely on suppliers for other processes like forging and stamping. SRAM prefers to work with suppliers who are located close to its factories. Greetis said that in Taiwan, there is a cottage industry for bicycles with lots of small family run firms supplying the larger companies.

Dave Barrow, owner of Tolland Bicycle, confirmed that bicycles and components have become a lot more expensive in recent years. Rising commodity costs, shipping costs, and manufacturing costs are contributing factors. A recent trip to SRAM’s Taiwan and China plants proved to Greetis that costs are rising in Asia.

The Market
Seven Cycles is another U.S.-based bike company, though their focus is on custom road and mountain bike frames. It is a small organization compared to SRAM, but Seven Cycles has made a name for itself in the industry. Seven manufactures all of its products in their Massachusetts facility. Jennifer Miller, Seven’s Marketing Director, said that the company is “neutral” when it comes to parts manufacturers. Seven features their mountain bike frames with both Shimano and SRAM parts, and road bike frames with Campagnolo, Shimano, and recently, SRAM component group-sets. Since Seven doesn’t sell complete bikes, it is up to the customer to work with a bike shop on the parts selection. Two of Seven’s sponsored mountain bike professionals, Mary McConneloug and Mike Broderick, are candidates for the 2008 U.S. Olympic Team, and both ride bikes built with SRAM parts, including RockShox suspension forks. Miller noted that SRAM has had a strong presence in the mountain bike segment for many years, but that it has made a recent push to capitalize on the faster growing road bike segment.

Switching Sides
Richard Sachs, a Chester, Conn., custom road and cyclo-cross bicycle frame builder has made the switch to SRAM products. For more than 30 years, Sachs was loyal to the Italian company Campagnolo, but made the significant decision to move to SRAM both personally and professionally. “I’m riding my new bike and loving it,” Sachs said. “Last fall, SRAM had a major league presence at the U.S. Grand Prix of Cyclo-cross.” Sachs networked with some of SRAM’s marketing folks, and ultimately switched. Sachs said, “It looks right on the bike.” For years, Sachs favored the look of Campagnolo parts on his bicycles. Trained in England, his work has a European fare that could be considered old school. His frames are hand built from steel tubes, and meticulously brazed together.

Thirty percent of his frames are sold complete with the components and they all used to be specified with Campagnolo’s products. However, many of the patient customers, who are next in line on his six-year waiting list, are following his lead and going with SRAM. When pressed to explain his choice in parts, Sachs said, “Shimano is ugly and androgynous; SRAM is organic and beautiful.”

His output is only four or five frames a month, so his volume isn’t going to dictate the direction that the market swings, but his 35 years in the industry have made a difference and people do respect his opinions. Sachs is less concerned where SRAM’s parts are made. “Only three things matter; the stuff works, it is beautiful, and I can get it,” said Sachs.

So Jack Greetis, the SRAM employee who studied aeronautical engineering at the University of Illinois and was a competitive amateur cyclist in the 1980s, has seen things come full circle. He has worked at SRAM and been part of the fast-paced growth. From the sounds of it, the pace of innovative product development and acquisitions indicate that SRAM will continue to make their mark on and profit from the global bicycle industry.