Unskilled at Hiring the Unskilled

By Lloyd Graff.

Cleaning Process for Screw Machines at Graff-Pinkert

These last several months have been a struggle for me to find workers for the cleaning and painting department of our used machinery business, Graff-Pinkert. You might think, with so many millions of Americans unemployed or underemployed, it should be quite easy to find manual laborers who want to make $11 per hour with the chance to get on the company health insurance plan worth $5 per hour more, plus virtually guaranteed overtime pay and a year-end bonus.

But it isn’t.

I’d like to share my recent experience.

First of all, few women apply for the cleaning and painting jobs. Seemingly, they self-select because the advertising indicates it is a fairly dirty environment to work in, with dirt, grease, oil and chips. In retrospect, I find this a bit surprising and regrettable, because women are moving into all kinds of jobs formerly the exclusive domain of men.

So we mainly have guys to choose from.

During the summer we found a college senior from the University of Illinois, we’ll call him Fabio, who was majoring in Statistics. He was small in stature but savvy and industrious. He caught on immediately to the job and applied himself with a happy attitude. He was a keeper. I noticed it immediately when I asked for a volunteer to prepare our raised tomato garden for planting the vines, a yearly ritual at Graff-Pinkert. He immediately volunteered, which enabled him to work directly with me for a few hours. Fabio understood work was a social enterprise and a physical effort. Without the ability to get along with co-workers and supervisors you do not last, even in a manual labor job.

Unfortunately, Fabio left for college at the end of August and his replacements paled by comparison.

The first failure was hired via Craigslist. We’ll call him Frank. A little guy, he seemed eager for a job. He was 19, a high school graduate living with his grandfather in the area. He seemed shy in the interview. A check for arrests was clean, and I decided to try him on our fledging night shift. I also hired an 18-year-old, Dick, who was in a program at the local community college to prepare kids for joining the workforce. The counselor at the college said he was a good kid, that he was hardworking and “tested off the charts” for technical aptitude. He told me he aspired to be an electrician.

Our nightshift foreman quickly reported problems. Frank disappeared for lengthy bathroom breaks. The foreman also noticed doors were open or unlocked when he was quite sure they had been locked by the first shift group. A few nights into Frank’s short stint at Graff-Pinkert several guys that our foreman called “gangbangers” invaded the parking lot at 11:00 pm to meet Frank when he was leaving work. Our foreman was extremely scared and locked himself in the lunchroom until they left. He reported this event to me the next day. A few days later we discovered that $700 of petty cash from the office was missing.

I could not prove Frank took the money, but I suspected enough to fire him immediately.

Dick, the other kid who had “tested off the charts” was another problem child. He retreated into his phone constantly, was almost totally incommunicative to co-workers, and appeared oblivious to his surroundings. His co-workers saw him as a slacker and constantly complained that he wasn’t doing his share. He also had become chummy with Frank prior to his firing.

In my opinion this kid suffered from being socially ill equipped for a workplace. I felt a little badly that we did nothing to prepare him for the job, but I did not have the inclination to coddle him when his peers had completely rejected him.

Meanwhile, we had hired a temp though an agency who was older and street savvy. He knew he had a good gig and he applied himself, making himself valuable on the shop floor. He did not look like our other employees, with his hair in dreadlocks, but he earned their respect with diligence and following directions. I hesitated to hire him full-time because of health insurance costs, but the temp agency’s weekly charge virtually matched the cost of the health plan.

I also had considered hiring an older guy who seemed intelligent and pleasant, but his 60 extra pounds scared me for such a tough job.

Then, out of the blue, Derrick came along. He had a “big personality” and was completing a course to get a commercial driver’s license. His job pitch appealed to the sympathy factor. He said he was out of work and virtually destitute. He seemed eager and strong so I gave him a chance.

He was great for the first week, then he started to get into arguments with the other men on the floor. He demanded “equality with radio time,” to listen to gospel music, not a good idea for a guy in his second week. He approached me to buy a semi-truck for the company, which he would drive. He started slacking off in the plant and taking long bathroom breaks, while making a grandiose effort to ingratiate himself to me. Our guys hated him. I fired him and received a soliloquy about how he would be out on the street.

I have a better idea about the workforce after these encounters. I respect Starbucks’ ability to hire and train kids, and pick them skillfully. Seemingly, we do not have the knack.

I see now why so many young men slip through the cracks in the workplace. They do not understand the demands of work, and bosses have little time and inclination to teach people what it means to work.

Question: How can we do better at hiring and firing?

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Thank God for America

By Lloyd Graff.

Jewish Americans. Courtesy of www.haaretz.com

Wednesday was the first night of the Jewish New Year holiday, Rosh Hashanah. I took the day off from work, went to the Synagogue and thought about my life. We celebrated by having friends and family over for a big meal.

I am grateful to live in a place that has allowed Jews to flourish and prosper. America is such a crazy wonderful exception in a world of intolerance and outright hatred. Anybody who has lived long enough to know people who fled the Nazis or has seen photos of Auschwitz, or like me, had the privilege to visit a concentration camp and walk into the shower room where millions were murdered, appreciates what a gift it is to grow up free in America.

My brother-in-law Maury was born in Italy and came to this country when he was three years old in 1940. Many of his relatives died in the Holocaust at the hands of the Nazis. He feels the immense gift of living in this country even more vividly than I do, as a European thankfully dropped into America just days before his family would have been trapped in the old country.

Today, American Jews fight wars vicariously through our cousins in Israel. We watch movies about World War II, but it feels like another planet to most of us. For me, growing up in the 1960s, the Holocaust burned hotly in my gut. I had nightmares about my ancestors suffering and starving and dying in Dachau. But today those dreams and visions are more remote. The Holocaust is no longer a reason, by itself, to be a practicing Jew in America, because of the country’s religious tolerance. Freedom and equality in the U.S. have enabled many Jews to move into the business and political elite. It’s a tantalizing pleasure to fit in with everyone else, rather than always thinking about being Jewish and different.

Unfortunately, much of the world still seems to despise Jews like the bad old days. Anti-Semitism in France and Belgium is rampant. The Arabs generally still hate us. The Turkish government has become an enemy. Venezuela is a hostile place. All the more reason to treasure the gift of being born free here in the United States.

The big challenge for me is to stay engaged with the spiritual aspects of Judaism without the external challenge of hostility and alienation that Jews have almost always lived with.

I am not longing for outsiderness. I know how great we have it here, and I am acutely aware that America is an aberration in a world of hatred and jealously. I see my grandchildren growing up so sheltered and innocent, yet they go to school in a fortress patrolled by armed guards because the parents of the kids know the bigger world still loathes the Jews.

It is the great challenge of today’s American Jews to stay engaged in Judaism with the threats to our well being seemingly an ocean away. But I fear deep in my gut that these last 50 years in America have been too good to last.

Question: Do you think the United States is tolerant towards minorities?

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A Robot For Everybody

By Noah Graff.

Universal Robots’ booth at IMTS 2014.

One of the definitive currents I see in the economy of the 2010s is the democratization of technology.

Computers and devices cost a tiny fraction of what they did just a few years ago, and the learning curve to operate them has eased dramatically.

For a few hundred bucks a person can buy an HD video camera, edit video on a consumer computer and then broadcast what they’ve shot to the world online for free. People can create Web sites with free open source software like WordPress that they can learn to operate in a few days. A person can buy a Haas MINIMILL for $35,000 and make parts in his garage.

Universal Robots has continued this democratization of technology with its robotic arms, which sell for between $34,000 to $44,000. For the price of a luxury car, a small machine shop can automate its operation, saving on labor costs by automating applications such as pick and place processes. Also, the simplicity of the robots decreases the need for skilled labor because the robotic arms made by Universal Robots are simple enough that a technically savvy person can learn to program and operate one in a half hour. The company’s robotic arms also create virtual barriers around them for safety if people move too close, a tremendous advancement from traditional robots that require large expensive physical barriers to surround them. It’s not Cyberdyne Systems Model 101 (your favorite cyborg Governor with an Austrian accent), but it can still be a terminator of people — in a machine shop.

At IMTS 2014, I visited the Universal Robots booth and interviewed the company’s CEO, Enrico Krog Iverson. I also talked to Empire Robotics’ President, Bill Cully, whose company was sharing the Universal Robots booth. Iverson told me the story of how Universal Robots started. The company was founded in Denmark in 2005. Engineer Kristian Kassow was working on food industry applications for robots — one of the tasks being to place pepperoni on pizza. He combined forces with Esben Østergaard and Kasper Støy, who were working on a PhD project about the market for robots. Their goal was to change the definition of a robot from a heavy, expensive, and unwieldy technology that could only be utilized by small group of people, to a simpler, lighter, cheaper technology that many people could afford and operate.

Empire Robotics’ product, the Versaball, which it calls an “agile robot gripper,” has further enhanced the practicality of the robot arms from Universal Robots and those of other robot brands as well. The Versaball, which sells for just a few thousand dollars, has the ability to pick up objects of diverse shapes and materials. Empire Robotics’ team demonstrated how the Versaball, right out of the box, can work together with the robot arms of Universal Robots. It has several sets of holes on its mounting component that make it ready to fit physically onto a variety of robot arm models, more importantly, the Versaball’s computer easily integrates with the computer control of the robot to which it attaches. The Empire Robotics team raved about the robot arm from Universal Robots, saying that the person at the booth operating the robot learned to program it in a day, and he had never programmed any Robots before.

Question: Do you feel bad when human workers are replaced by robots?

Demonstration of Robotic Arm from Universal Robots Integrated with Versaball of Empire Robotics (IMTS 2014)

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Scuttlebutt From IMTS 2014 and More

By Lloyd Graff.

Fire at Metal Seal Precision in Mentor, Ohio, on July 25, 2014

Two months ago, Metal Seal Precision of Mentor, Ohio, had a fire. The incident is a warning to people who run screw machines that the workplace is a dangerous environment. Nobody was injured, but it caused a huge mess from the smoke, heat and water. John Habe IV runs the family owned company and he is one of the smartest, shrewdest guys in the turned parts business. He is doing a massive juggling act, getting his insurance money, reviving the Metal Seal shop in their nearby Arrow Manufacturing plant. He currently is deciding which machines to save and which to replace while he attempts to keep his clients happy and supplied. IV, as John Habe is sometimes called, is one of those guys with the temperament to pull off this balancing act.

*****

Autocam, the big machining house based in Grand Rapids, Michigan, sold out to NN Inc. in July for $300 million. John Kennedy, the owner of the company, which he founded 25 years ago, has had a brilliant if bumpy career in the machining world, but he certainly is riding the wave of the improving automotive machining market of 2014. Kennedy appears to have learned from his ill-fated foray into the European precision machining arena in the early 2000s. This time, as the economy rises, he is harvesting the money while betting on the continuing up cycle by taking a big piece of NN Inc. stock to go along with $244 million in cash and the assumption of $30 million in debt. Plus he is keeping his medical business.

The deal sounds a lot like the sale of PPC of Syracuse in 2012. Belden Wire paid $500 million to the founding Mezzalingua family for a big Davenport and Hydromat shop that knew how to make cable TV connectors. Meanwhile, the very bright third generation operators of the company retained the intellectual property for the next iteration of products for the industry.

*****

The Precision Machined Products Association (PMPA) in Cleveland is a well-run trade association that our used machine tool company Graff-Pinkert belongs to. Mike Duffin, who had led the group successfully for 11 years, stepped down a year ago. The PMPA replaced him with Michael Kobylka, which turned out to be a marriage not made in heaven. Kobylka moved on by “mutual decision” last week. Rob Kiener, a longtime respected PMPA staff member, now has the Interim Executive Director title. My guess is that he will stick in the job. Usually when a person gets a job on the rebound like Rob, the people at the firm or trade group will rally around the guy who has been a reliable stalwart. For what it’s worth, I think Rob would be an excellent successor.

*****

One of the things I confirmed at IMTS, is that Mexico is becoming the new Detroit of North American manufacturing. With auto company after auto company building capacity in the country, it is estimated that 4.5 million cars will be manufactured there by 2019. Parts suppliers are stepping over each other to create enough capacity to meet production needs. Much of the production will still come from plants in the United States, but with NAFTA there is a big push to build capacity in Mexico. Very few of the parts will come from border plants. It is too messy and dangerous near the U.S. border — the interior of Mexico is much safer. But the challenge in Mexico is the same as in the U.S. and Canada, but more so — a lack of skills. Hydromat is putting in place full-time sales people and two full-time service people in Mexico. The company also has two bi-lingual field technicians working out of St. Louis. The ramp-up is an exciting opportunity for American machining firms, but certainly one with huge obstacles.

*****

Wondering what it costs to exhibit for six days at IMTS? Plenty. The scuttlebutt is that DMG MORI budgeted $13.5 million for their extravaganza. Hydromat put in $850,000 for their exhibit. Swisstek Inc. had two Swiss CNCs in a small space and spent $85,000. Universal Robot spent $250,000, which included the expense of flying its Board to Chicago from Denmark, but the company corralled orders for 50 robot arms and acquired 1200 leads.

*****

I love farmers markets and farm stands in the summer. I visit a local farm several times a week during the season for obscenely delicious sweet corn and melons. As I was leaving recently, I saw a half dozen pickers laboring in the field next to the stand. It startled me to see how hard they were working, stooping awkwardly to pick the delicious ripe tomatoes. This food that I love so much during the short season definitely comes with a human cost.

Question: If your factory had a fire, would you replace your capacity with similar equipment? What might you change?

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IMTS 2014 — Is Showmanship Dead?

By Noah Graff.

ISCAR/Ingersoll booth at IMTS 2014. That’s Showmanship!

I walked the floor of IMTS two days this week. I saw some impressive machine tools and robots, made some important business contacts, ate at Connie’s Pizza twice and saw a lot of sports cars in booths that seemed to be placed there for no reason. Was IMTS 2014 a productive show for me? Yes, but much of the flavor — the FUN that for decades defined IMTS — has been stripped away like steel scale passing through a Cincinnati centerless.

This year’s IMTS booth budgeters must have not realized that it is not 2010. The time of austerity in the manufacturing world has ended. Manufacturers are not just going lean, they are fattening up on expensive high-tech equipment. They are paying high wages for skilled people.

So why were there virtually no giveaway items at the IMTS booths this year, and where were the booth babes? Where were the spectacles, the parties, the memories? It’s not because of money struggles. I was told that DMG MORI spent almost $14 million on its booth this year, and judging by the size of some other booths, I know they shelled out as well.

The lighter Techniks gave out at IMTS 2010, which Noah cherishes to this day.

My IMTS plunder was pathetic this year. There were the usual free bags handed out by some of the big companies like Doosan, Haas, and Sandvik, but I received virtually nothing noteworthy to put in my bag. Nobody was passing out anything fun or useful. Usually the best free thing I could hope for was a bowl of candy or mints on a table — who cares. It’s not like the good old days. In my office at Graff-Pinkert we still have a little bell that National Acme produced on a multi-spindle at IMTS 40 years ago. A while back, INDEX produced an entire metal chess set in a live demonstration at IMTS and gave away the pieces to attendees. At IMTS 2012, Doosan passed out cool blue soccer balls with their logo. Four years ago, Techniks, historically one of my favorite IMTS booths, passed out lighters with women in bathing suits on them whose clothes disappeared when you put a flame on them from another lighter. The lighters also contained a bottle opener. Now those were useful! I still have mine to this day, and it reminds me of fond memories at IMTS and the Techniks booth. I’m sure there are many other people around the world just like me who cherish the lighters they received from Techniks and think about the company all the time when they use them in their office, car or home. This year I received no blue soccer balls, monogrammed baseballs, super balls — balls of any kind for that matter. I got no bells, no whistles, keychains, or frisbees, not even measly pens! A few booths gave me thumb drives holding their company info, and I guess I can use them to hold my own data. They are a useful take home, but still boring and provide no sweet associations with a company or IMTS on the whole.

IMTS 2014 also must have set an all-time show low in the quantity of booth babes. I know, writing this paragraph likely will brand me as a sexist, but I am of the opinion that amidst of the stress and strain of networking and walking the colossal McCormick Place in a show where I estimate 98 percent of attendees are men, wouldn’t a little eye candy be an innocent perk? Why can’t all the cold expensive iron be surrounded by a little beauty? Booth babes are an IMTS tradition and I felt deprived this week. Doosan, Haas, DMG MORI, ISCAR, they had a few pretty faces, but I noticed no woman at the show who lured me into a booth just because I had to get a better look.

But more troubling than missing girls and giveaways, what really got me down at IMTS 2014 was the absence of showmanship.

At the first IMTS I attended in 2006, Walter USA brought in two live tigers! In 2014, the same booth had a measly computer screen with a tiger animation. Techniks that year featured a breathtaking Russian hulahooper contortionist. She could hula 100 metal hulahoops up and down her body while she bent herself into seemingly impossible positions, all choreographed to classical music. Sandvik’s booth used to be great. They used to have huge ice sculptures, and featured a bar made entirely of ice, serving drinks in “glasses” that were entirely composed of ice! The ice theme correlated with a promotional offer to stay at the famous Ice Hotel in Sweden. In 2008, even little old Today’s Machining World hired the Chicago Tin Man, a silver human statue who could breakdance. In 2014 — no tigers, no ice, no hulahoopers — tragedy.

In my observation of IMTS 2014, the shared booths of ISCAR and Ingersoll was the only exhibit that kept alive the tradition of IMTS showmanship. The two companies (of same ownership) installed a large round table surrounded by at least 50 seats, where people drank free beer and other beverages served by attractive waitresses. The booth felt like a party! Pop music played loudly, attractive women danced on the table (although poorly I’m sorry to say), and every so often three lovely female violinists came on stage, playing classical music. The booth was the place to be. It was an oasis from the seriousness of the show, a bright spot, the place a show attendee needed to go to at least once.

The budgeters and planners for the majority of boring booths at IMTS 2014 probably would say that my thoughts are shallow. My critics will say that people come to the show to see the the new products that will help their businesses — not to enjoy sex objects, sideshows, and tchotchkes. They will say, “why have the extra stuff, even if it is fun, if it doesn’t lead to sales?” But that claim is wrong. Those fun things do help companies obtain customers, and they make people want to come to IMTS.

I think of the products exhibited at IMTS as cakes. Fun and showmanship are icing. Cakes can be tasty on their own, but usually they are significantly better with good icing. Icing makes a cake memorable. Icing makes us choose to go to the ISCAR booth rather than one of a similar cutting tool maker. When it is time for a buyer from a manufacturing company to decide where to buy cutting tools, which company does he have a fond memory of, which company’s booth did he spend time in, in which company’s booth did he take a photo of himself? I know that being creative and having fun still matters when selling products. I’m grateful for that.

Question: What is the most memorable booth you have seen at a trade show?

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IMTS Grand Slam

By Lloyd Graff.

The Bryan brothers, Winners of 16 Grand Slam titles

The International Manufacturing Technology Show, IMTS, takes place this week in Chicago. It has a lot of meaning and symbolism for me.

It brings the community of those who make manufacturing their life’s work together in one place every two years. A lot of the folks walking the floor and manning the exhibits are grizzled veterans of a dozen or more of these grueling events. They are filled with memories of past shows and the characters, some dead and many retired, who walked the aisles and shared drinks in the evenings.

IMTS to me is a testament to grit, stamina and endurance.

I was reminded of this while many of you were watching the NFL games Sunday. I was watching the US Open Tennis Tournament. I saw the Bryan brothers, Bob and Mike, win their 16th Grand Slam doubles tournament together at age 36 (they are twins). It was their 100th tour tournament win. They have been playing tournament tennis since they were six. Their last Major win was at Wimbledon in 2013, but they were still the #1 seed at the US Open and won in straight sets. Their record is incredible for any pair. Staying together for so long, dealing with a million miles of travel and working as a team as brothers, with wives and children, takes remarkable stamina, endurance and probably a good shrink.

Later in the day, Serena Williams won the US Open Women’s title in straight sets for her 18th Major, tying her with Chris Evert and Martina Navratilova. Serena won her first US Open of six in 1999. She has also done it while her sister Venus usually competed in the same tournaments. Serena is a remarkable player, a phenomenal physical specimen in women’s tennis, but her body type limits her foot speed. She plays to her strength, her huge serve and powerful forehand, but she has fought through self-doubt and injury, as well as the difficulties being one of the few African American big time tennis pros.

Serena started winning Majors at 17 years old in 1999, the year I started Screw Machine World Magazine, the predecessor of Today’s Machining World Magazine and this online publication. I spent several hundred thousand dollars to get it off the ground and pay staff and printing bills, which overwhelmed the revenues. I believed in my ability and the concept of an interesting, provocative, non-pandering magazine for the people in the machining industry. Today the online publication is a winner financially and creatively (I hope). My tenacity has been rewarded.

I think most of the people working and attending IMTS this week understand the stamina it takes to make a business work. Manufacturing requires enormous endurance and commitment to succeed. Most businesses require it. A lot of folks think that high tech businesses are a different breed, but most successful startups are the descendants of several failed attempts. The overnight successes are rare.

I salute Serena and the Bryan brothers, but also the persistent, tenacious, enduring folks putting one foot in front of the other this week at McCormick Place. You are heroic in my eyes.

Question: Do you like going to shows like IMTS?

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Your Ice Bucket List

By Noah Graff.

Bill Gates doing the Ice Bucket Challenge. Courtesy of forbes.com

For those few people reading this who have been dwelling in a cave in Greenland all summer and still don’t know what the ALS Ice Bucket Challenge is, I shall enlighten you. In July and August of 2014, inspired by similar fundraisers, some folks came up with the CRAZY idea that people should call out contacts on social networks asking them to give $100 to ALS research, or in lieu of the donation, pour a bucket of ice water on their heads. Variations evolved in which people post videos online pouring the bucket of ice on themselves and then still donate to ALS or a different cause if they prefer. Celebrities soon joined the HILARIOUS FUN including Oprah, Charlie Sheen, Bill Gates, and of course, Mark Zuckerberg. The Challenge has become “the thing to do” for people who want to feel part of something — better yet, part of a good cause. Hundreds of thousands are exhilarated by doing the same goofy stuff that the celebrities are doing. Oh, and people want to show off how funny and good they are to all their Facebook friends, and hopefully get “liked.”

Or, perhaps like me, when they were tagged they felt obligated to participate, despite feeling cheesy and too cool for such shenanigans. In any case, according to Forbes.com, during the month of August 2014, the ALS Association received $100 million, compared with $2.6 million during the same period in 2013. More than 3 million people have donated from the Ice Bucket Challenge.

I admit, I don’t give enough money to charity and hardly ever volunteer. Every year I say I will do more charitable things but I don’t. I’m generally inspired to give to a few causes every year, which is better than nothing. As I write this I’m thinking about those few causes that I have contributed to recently and I realize that they are usually ones where I am swept up in the hysteria of the masses. I almost always donate to NPR each year during their year-end drive, I donated to Philippines relief after the country’s typhoon, and I donated to Hurricane Sandy relief. I’m glad I did those things, but now it dawns on me that I was a follower. The Ice Bucket Challenge is this summer’s Hurricane Sandy and I again am a follower. Bottom line, I was challenged to dump a bucket of ice water on my head and give money to ALS research and I’d feel like a jerk not to participate.

I will admit that before my friend “challenged” me on Facebook for the ALS Ice Bucket Challenge, “ALS” was just another acronym for a horrible disease that I knew nothing about because I don’t think I have personally known anybody who has had it. I was literally getting it confused with MS and Osteoporosis. I didn’t even know that it was the infamous “Lou Gehrig’s Disease.” But now I have talked to people whose friends and relatives have had ALS, and read a bit about it on Wikipedia, so at least I know something about the disease. But my bet is that the majority of Ice Bucket Challenge participants still don’t know what ALS is and that half of them have not gotten around to giving money to the cause after all the hoopla.

After I was called out for the challenge last week on Facebook, I saw a powerful video on Facebook of a woman graphically describing the symptoms of the disease. I posted it on my Facebook wall and received only two “likes” (one from my mom, and one from my friend who called me out for the challenge). When I posted the video I decided that if people paid attention to it then I would donate to ALS research but would be off the hook for pouring a bucket of ice water on myself. But because apparently nobody noticed this heartfelt and educational video, I’ve decided I will participate in this ridiculous, but I’ll admit, powerful viral promotion.

It is a pity that this contest was necessary to make me donate to this important cause, but it was. Now I will broadcast my participation and annoy four “friends” on Facebook to hopefully guilt trip one of them into donating to this good cause like me.

Question: Does it bother you when friends lean on you to do good deeds?

Click here to watch Noah accept the ice bucket challenge.

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Do you have a job or a gig?

By Lloyd Graff.

With elections coming up we are hearing more talk about raising the minimum wage. In Chicago, Mayor Rahm Emanuel advocates $13 per hour. Seattle is phasing in a $15 rate. New York’s left wing Mayor, Di Blasio is blathering on for the need to lift it substantially in the city. President Obama obviously is promoting it as a good way to save the Democratic majority in the Senate in 2014.

My do-gooder side sympathizes with the plight of the $8 an hour worker cutting lawns or flipping burgers. But the sad fact is that a significantly higher minimum wage in America will mean fewer workers with full-time jobs and ultimately just fewer workers.

The anomaly of America’s workforce is that we have an estimated 4 million unfilled jobs. Try to hire a drywaller, a screw machine setup person, or a machine tool rebuilder. You probably won’t get a bite, even at $25 per hour. Sure, there will be a disgruntled person looking for a change, or a refugee from a failed company, but there is no steady flow of qualified people to draw upon. This makes it difficult to grow businesses without an in-house training program, which is an expensive  luxury for most firms.

The interesting trend that I see taking root in the U.S. is the skilled person becoming a travelling professional, selling his skills to the highest bidder. The Hydromat or multi-spindle setup person or rebuilder will ultimately command $75 – $125 per hour as scarcity drives the price up. They may well earn more than the company owner, but they will be “hired guns” brought in only for as long as needed.

We are seeing this already with organizing websites like Uber, which is known for providing rides from point to point, but the concept works for all sorts of tasks requiring particular skills or tools.

The part-time workforce manned by entrepreneurial specialists skirts the health insurance-by-employer model that has become the norm in recent decades. Businesses will increasingly maintain a small core of daily employees, but that core will shrink as the pool of specialists increases.

As I see it, the low-end jobs will consistently be filled by machines. The trend will speed up all the faster as we raise the minimum wage. If we continue to make 30-hours per week the threshold for benefits, companies will spread the work with 29-hour per week people. The spread between richer and poorer will become more pronounced. One beneficiary may well be the armed forces, which will become a significant work option for young people who do not like their civilian job options.

The American educational system is starting to adapt to this new normal, but the institutional biases toward a 1960s style of education still prevails in high school and colleges. We are not getting enough even moderately skilled blue collar workers, whether it be drywallers, plumbers or machinery rebuilders to re-supply the workforce needs.

But the hopeful element I see today is the potential visibility of entrepreneurial specialists, organized by entrepreneurial web sites. This will pull more smart folks into overlooked but increasingly well paid gigs. This is why Uber, the archetype of this approach, has a value of $17 billion based on current venture capital funding. Times are changing. The $13 minimum wage will be irrelevant in the long run.

Question: Will a significant change in the minimum wage change your economic life?

Read an interesting piece about women breaking into the taxi industry with Uber at The Atlantic.

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Paying for Ideas

By Lloyd Graff.

15th Anniversary of Madden NFL from EA-Sports

As we diligently rub metal on metal, producing the stuff that makes the wheels roll smoothly, the big money in the economy continues to flow to the world of ideas, entertainment and health.

A few thoughts to connect.

Monday Amazon agreed to buy Twitch for $970 million. Google thought they were going to get it but Amazon swooped in at the last minute. Twitch is a site that broadcasts online video game competitions. They aspire to be the ESPN of video gaming. Who knew?

But this is a big business and growing fast. Twitch is in the top 15 most trafficked Websites. It gets 55 million unique viewers a month as a three-year-old company. The number of hours users spend on Twitch is the same spent on MTV and a tad behind CNN. For Amazon it means an advertising vehicle for the company and a big opportunity for growing ad revenue to reach a prime demographic that is hard to reach – young men.

One of the video game competitions Twitch broadcasts is Madden NFL, which came out with its 15th edition Monday. The 25-year history of this game is fascinating. The game’s creator, Trip Hawkins, was a football player at Harvard. He wanted to combine his love of the game with his passion for computers. As a child he had played the board game Strat-O-Matic and wanted to bring a version of it to the Apple II, the computer gaming platform of the day. While he was not banging helmets on the field for the Crimson, he worked on the code for his video game, which became the genesis of his multi-billion dollar firm, Electronic Arts. Hawkins admired John Madden as a student of football and wanted to get his input and possibly even his name and voice for the game. John Madden was famous for his fear of flying and traveled to every game on a land conveyance. Through a friend of a friend, Hawkins located Madden traveling on an Amtrak train in 1984. He bought a ticket and found the famous coach and commentator in the club car. He introduced himself and told Madden about his project in the hope that Madden would buy into the idea even though he was not computer savvy.

The game’s popularity has grown steadily through the years, with total sales of $4 billion since its inception. They have an estimated 6 million active players today. Madden receives $2 million a year from Electronic Arts, a nice royalty but paltry compared to the $50 million Electronic Arts pays the NFL and NFL Players Union for the exclusive gaming rights. With Twitch under Amazon’s flag I can imagine those numbers rising significantly.

Meanwhile, Kevin Durant, the NBA’s Most Valuable Player last season, weighs shoe offers from Under Armour and Nike. Under Armour has offered him a $265 million 10-year deal to endorse its shoes. Current shoe endorsement Nike probably will not match it. Kevin Plank started Under Armour in his basement and has come a long way toward challenging Nike in athletic apparel. He is hoping that Kevin Durant will be his Michael Jordan, or his Madden.

But the Durants and the Maddens are the tiny exception. Consider the lock the NCAA and its schools have had on their huge cash cows, the college football and basketball players who have always worked for nothing except their scholarships. The NCAA cartel has really taken advantage of its players. The organization rakes in billions of bucks each year and then terrorizes the players if they get a hamburger from an alum.

The era of athletic serfdom is beginning to end now with smart lawyers blitzing the NCAA from all directions. Some players will be getting a little money soon, and considerably more of the pie down the road.

A side note. The Libman family, which owns a 118-year-old cleaning products family business that started with brooms manufactured in downtown Chicago in 1896, recently signed a smart endorsement deal with the Big Ten Conference. Libman is the exclusive floor mop at all 12 of the conference’s schools.

Every time a kid swoops onto the basketball court of an Indiana vs. Ohio State game to mop up sweat, you see the Libman brand. It’s a nice branding device for the company and another piece of money for the colleges. Of course, the players don’t see a penny.

What these disparate dots on the economic map illustrate is that money gravitates to good ideas and where we spend our time and cash. When we go to IMTS in a few days, the emphasis will be on better machines to make things, which is crucial in the machining business. There will be a little booth in the corner where a geeky young woman or man will have a better idea for your business, like Trip Hawkins offered John Madden on the Amtrak train in 1984. Maybe you will feel a twitch when you see it.

Question: Should college athletes be paid?

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Little League is Big League

By Lloyd Graff.

Philadelphia’s Taney Dragons, Mo’ne second to left

I was going to write about the important stuff — unemployment, Fed policy, Ferguson, and the price of the new Hepatitis C wonder drug. But then the Little League World Series came on TV and I knew what really spoke to me.

I’m one of the millions of men and women hooked by the Little League World Series — broadcast on ESPN, brought to you by Kellogg’s Frosted Flakes. I know it’s all brilliantly packaged by the media flacks, but the authenticity of the 11-13 year-old boys and one amazing girl have lifted the event from obscurity to center stage.

A million years ago I played Little League Baseball. But my team could not have challenged these kids. They are focused and athletic, yet still unpolished enough to relate to.

The big hype for the event is around 5’4” Mo’ne Davis, the female star of the Philadelphia Taney Dragons. She is superbly athletic, plays shortstop, and pitches. She can bring it at 70 miles per hour, which is the equivalent of a 91 mile per hour fastball from a Major League mound. She has control and an effective curveball.

When my daughter Sarah was growing up I taught her to “throw like a guy” with full arm rotation. She was bigger than Davis, but not as coordinated. And girls and their fathers would never have dared to intrude on the male domain of Little League Baseball. A pity, in retrospect.

I love the Mo’ne Davis story. The girl has moxie and a remarkable calmness about her to go with her technically perfect left-handed delivery.

Jackie Robinson West, the Little League team from the south side of Chicago, has excited the Windy City. In a year when both the Cubs and White Sox are pathetic, these kids have achieved front page status. With rampant gang violence and kids their age being slaughtered daily in random shootings, it is fresh air for the city to see a cohesive group of black boys, coached by fathers, compete with the best teams in the country. Baseball has lost favor amongst kids in Chicago. The ball diamonds in my neighborhood are neglected. Girls play softball, but boys hardball has generally been forsaken for basketball, soccer and football. So the Jackie Robinson West boys are a delightful anomaly for a city where baseball seems like more a sport for middle aged (and older) white guys.

In South Williamsport, Pennsylvania, the annual Little League World Series has struck a national nerve. The television ratings of Wednesday evening’s Jackie Robinson West vs. Philadelphia’s Taney Dragons were seven times that of the ESPN broadcast of the first place Los Angeles Angels vs. the Boston Red Sox the same night. People wanted to see Mo’ne pitch. She had just been put on the cover of Sports Illustrated — generally a bad omen. She lost that night, but struck out six batters in less than three innings against a powerful Las Vegas team that had a burly blond kid 6 feet tall who threw even harder than her.

The baseball in the Little League games is not as artistic as in the Big Leagues, but the energy and passion makes up for it. The kids really care. They cry after losses. Chubby kids with glasses hit home runs. Shrimpy kids make terrific plays in the outfield. Coaches really coach and comfort devastated young boys who have just lost the biggest game of their lives.

I’m a sucker for a good story. I even loved the Tim Tebow saga. I understand that a Mo’ne Davis autographed baseball is going for $500 on eBay. And the beauty is that she couldn’t care less.

Question: Should girls play Little League Baseball?

Question 2: Will a woman ever play in the Major Leagues?

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