If Mitt Romney does decently in Iowa and wins New Hampshire he has the Republican nomination. If Newt Gingrich wins Iowa and is respectable in New Hampshire he has a chance to be the nominee. If Newt is the nominee, Barack Obama gets four more years to fight with Congress and Carterize his presidency. Anybody for a third party?

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Bud Pohlman died last week. He saw the future of high production turning in the Hydromat rotary transfer machine manufactured in Switzerland by Pfiffner. In his way he was a visionary in the screw machine world in America.

Looking at the positive, manufacturing is skyrocketing. Seemingly headed for a 14 million car pace. Automotive suppliers are going nuts trying to keep up. The unemployment rate is down sharply. Pundits are confused. Retail sales on Black Friday and Cyber Monday were out of sight. What’s going on? People are working part time, on contract, off the books, etc., screwing up the traditional employment/unemployment numbers. The statisticians have not caught up. Revisions are all over the place. Don’t trust the employment numbers. Look at the sales. People are gaming the government and it’s hard to blame them because the government does not pay us back fair value. There are a lot of people not paying their mortgage. Some of them were standing in line Thanksgiving night waiting for the $200 flat screen for their next apartment paid for with cash generated in a part-time job (off the books).

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Measured over many metrics like unemployment, health insurance coverage, percentage of residents with a high school diploma, debt ratings, etc. California is the worst governed state and Wyoming is the best. Would you rather live in San Francisco or Cheyenne?

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Interesting anomaly. The United States has many positive trends now. Lower rate of violent crime, less family debt, lower rate of abortion, less drug addiction among young people. The country is repairing itself while government is in disrepair. But not everywhere. In Chicago we are seeing Rahm Emanuel take over from Rich Daley, transforming the perception and probably the reality of governance almost overnight. The public employee unions are backpedaling, the Teachers Union hardly knows what hit it, the patronage corruption system is being dismantled, and the budgets are being chopped. It looks like we elected the wrong Chicago politician to be President.

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Look for more businesses being bought and sold in manufacturing in 2012. As skilled workers get harder to hire, new vendors harder to vet, and China less of a factor, baby boomers are going to be selling to companies and groups with access to credit. I look for the earnings multiple to rise significantly this year on buyouts and boomers taking advantage to solve succession and retirement desires.

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What does America do if (when) Iran gets a nuclear weapon or gets to the position they could build one in a week? This is the military and foreign policy problem that we will face soon and there seemingly is no credible way out. Even a revolution in Iran may not stop the momentum toward nuclearization. I cannot imagine a U.S. preemptive strike, but Israel might move with or without an American wink.

The big fear is not so much that Iran attacks Israel as much as they might pass the bomb to Hezbollah, Hamas or Al Qaeda. That is a Jack Bauer scenario. Now we really need a prescient CIA.

Question: Would you vote for Newt Gingrich?

Will a marriage of distribution and machining firms turn out like Kim Kardashian's?

I see a mini-trend developing in the consolidation of companies in distribution and Hydromat machining companies. A major automotive supplier whose core business process is rotary transfer turning of steel bars is close to closing a deal with a fastener supply firm with CNC machining capability. I’ve already seen two other acquisitions of this type and I can anticipate more as the supply chain becomes more taut.

Three years ago Tribal Corporation, a plumbing supply company, bought Marshall Brass to add screw machine and rotary transfer capability to their successful distribution firm.

MultiTech, a primarily cold heading company near Chicago, bought its rotary transfer vendor a couple years ago in a distress sale.

The distributor buying the manufacturer can be a marriage made in hell because the cultures usually are quite different. The theory of distributor and vendor under the same tent sounds so simple in the business plan or annual report, but the reality is usually fraught with suspicion.

Tribal shrewdly cleaned house at Marshall, culled the workforce, and rehired at a lower pay scale. They managed to turn a chaotic manufacturing company around, from what I’ve heard.

From my observation, companies that develop distribution or manufacturing by growing it themselves get bigger more slowly, but probably with less company upheaval.

What prompted me to write this blog was reading the Web site of the fastener company which is acquiring the rotary transfer machining machining firm. The copy on the Web site described how they acquire “human capital.” When I see PR drivel about “human capital” I immediately suspect the company is run by Wall Street MBAs who think threaded nuts are cashews.

The stats I’ve seen say most acquisitions end up as failures for the buyers in the long run. But for many CEOs the “long run” is the next guy’s problem.

Vendors and distributors. Mars and Venus. Two different planets. Take the money and run.

Question: Do you think distribution and manufacturing firms can easily combine?