As the end of the year holidays and time off arrive, it is time to reflect on just what it is that gives us satisfaction of a job well done.

It is the end of a very trying year.

We'll see the next data point shortly...
We’ll see just how trying with the next data point shortly…

Emotionally it was a roller coaster as we saw a strong year ahead of us in our sales and performance numbers in the first three quarters, followed by a dive to the dumps in the final quarter driven by outside forces: Eurozone economic meltdown, U.S. Presidential Election, Fiscal Cliff, Huricane Sandy. Unemployment is still high, and 54% of recent college grads are under-employed or unemployed according to a number of reports- yet we are looking for skilled craftsmen in our shops.


Lost Promise.


Our industry has seen its shipments on a slow decline since May.

Manufacturing had been leading the recovery, but today I saw a report that perhaps manufacturing in North America is already in a recession.

Rather than mope and whine about the bad things, I thought that perhaps I could lead us into a reflection of what it is that our small precision machining businesses do that makes a difference.

For our customers, employees, and our communities.

For our customers

  • We provide products. On time. On spec. Zero defects. From the material as ordered. That’s pretty much the standard here in North America. There are many places in the world where that is not the case.
  • We provide expertise. Our customers are experts about their business and their customers. We provide to our customers our expertise about  design for manufacturability and  material optimization as the yapply to their products.We add more value than just making the dog-gone parts.
  • We provide service. When they call, our people answer. We have a commitment to get to yes. We exist because our customers have a need.

Demand is the most important determinant of our economic success. We learned this at the end of 2008 and 2009. We manufacture precision machined products to serve that demand.

For our employees

  • We provide an opportunity to put their talents to highest and best use.
  • We appreciate their expertise, their performance, and even their unique personalities.
  • We spend a lot of time with our fellow employees on the job every day. I for one, am glad that the folks I work with bring different strengths, weaknesses, talents, and points of view to the job. And I’m glad they tolerate mine.
  • We provide an opportunity to grow and advance.

The gains in productivity  in manufacturing have everyone in the media bemoaning the fact that this has been a jobless recovery. They miss that the forces of demographics as the baby boomers age, and the increase in the level of deployed technologies in our shops have made our skilled and talented craftspeople even more essential than ever. A young person starting out in precision machining today is catching the perfect wave of employment and career growth. The majority of our shops are still looking for talent, too.

For our communities

  • Our small businesses contribute the time and talent of our managers and professional staff to various organizations.
  • We serve on boards.
  • We serve on committees.
  • We help to grow the tax base.
  • We provide opportunities for employment.
  • We purchase local goods and services.
  • Our products make a difference in our neighbor’s lives.

If you have any modern conveniences at all, chances are that you have a precision machined component  as a key part of that technology. Automobiles, Trucks, Airplanes, Appliances, Medical Devices, Tools- our industry- our craftspeople- our companies- we made the parts that make them go.

2012 was a year of painful headlines. Of promise lost. Of pessimism aplenty.

But when I reflect on who we are and what we do as an industry, I couldn’t be prouder. We’re the people that make things. Important things. Things that improve the quality and standard of life. Across the globe-as well as here at home.

These are my thoughts on what we do. It continues to be a good time to work in advanced manufacturing and precision machining here in North America.

As the legendary uber-craftsman, S.Claus  (a  precision craftsman himself and fan of our precision machining technology) once said

And to all a good night!
And to all a good night!

Sleigh Tech photo and cool holiday blog

Guest post  by Dr. Ken Mayland, Clearview Economics

Here is a picture of the last year of durable goods orders and shipments (in nominal, not inflation-adjusted terms).

Thank you Washington D.C.
Washington politicians, we thank you for this near recession in manufacturing.

Orders and shipments are both below July levels. 

Furthermore, orders have fallen significantly below shipments, which is not a good sign for future production.

Lay this souring of the manufacturing climate at the feet of the Washington politicians, who have allowed uncertainties re: taxes and spending in 2013 (and beyond) to fester.

As a result, we are very close to a recession.  (The broad-based NBER indicators in November are almost flat versus July.)

Dr. Ken Mayland

ClearView Economics, LLC

Santa is Real!
Santa is Real!

I attended a holiday dinner with my father and guess who showed up?


I know he’s real. He called me by my nickname when I was a kid  (how did he know ?) and asked me how the  electric train, three speed bike, and some other requests worked out.

You can see him beside me in the photo above.

I told him  they worked out Great!

Funny how those don’t seem to be on my mind these days.

So when the jolly old elf asked me what I’d like this year, I gave him a short list

  • I’d like to see US GDP growth hit 4-5%
  • I’d like to see U-6 unemployment drop to single digits.
  • I’d like to see The White House come up with a budget that gets spending in control and does not further balkanize America into Us vs Them camps.
  • I’d like to see fairness out of the Washington Bureacracies and stability in raw material pricing.
  • I’d like to see the Treasury Department deal with Chinese currency manipulation.
  • I’d like to see the Fed stop printing money and stealing interest from the savings of retirees.

Santa looked at me  and said

“I see you have matured  quite a bit since I visited you last. Are you sure you wouldn’t rather have a new Bike?”

If Santa was real what would you ask him?

Talking on a hand-held cellphone while driving is banned in 10 states (California, Connecticut, Delaware, Maryland, Nevada, New Jersey, New York, Oregon, Washington, and West Virginia)  and the District of Columbia.

Text messaging is banned for all drivers in 39  states  and the District of Columbia.

DOT reports that in 2010:

  • 3092 people were killed in crashes involving a distracted driver and an estimated additional 416,000 were injured;
  • 18% of injury crashes in 2010 were reported as distraction-affected crashes;
  • Drivers who use hand-held devices are 4 times more likely to get into crashes serious enough to injure themselves;
  • Text messaging creates a crash risk 23 times worse than driving while not distracted;
  • Driving while using a cell phone reduces the amount of brain activity associated with driving by 37%.
The way I see it, this map shows our industry  located predominately in NO DISTRACTED DRIVING states. Capice?

Many localities have enacted their own bans on cellphones or text messaging, too.

Where do you stand on this issue?

More importantly, do your supervisors and employees know?

Finding talented and skilled workers is already difficult. Lets help them stay alive and keep our roads safe.

Train and enforce “no distracted driving,” to your staff. On and off the job.

And be a good example- don’t drive distracted yourself.

As we said in an earlier post:

For Executives/Administrators/Managers, motor vehicle incidents had the highest total societal costs for 1999– 2001.

Don’t bee… a bad example.



If you think that just multiplying the part length by the number of parts needed is the answer you will be quite disappointed…

The number of these needed is more than just the number of parts times the part length in inches...
The number of these needed is more than just the number of parts times the part length in inches…

The part length usually accounts for the vast majority of stock required.

But the amount of material lost by cutoff tooling(kerf loss), the first piece and remnant in the machine “steal” parts makeable from the material you purchase.

Parts can also be lost from production by failure to conform to requirements for dimension or during an extended campaign to get the set-up dialed- in.

Quick rules of thumb to allow for bar end and scrap loss based on the length of the finished part (plus cutoff loss)  include:

  • For short parts under 2 inches in length, allow for 5% extra material needed to make the desired quantity;
  • For parts between 2 to 3 inches inclusive allow for 6.5% extra material needed to make the desired quantity;
  • For parts between 3 to 4 inches inclusive allow 8.5% extra material needed to make the desired quantity;
  • For parts 4 inches and over allow 10.0% extra material to make the desired quantity.

Your mileage may vary. If you use narrower than usual cutoff tools, this may be reduced a bit.

If you use cutoff saws, you may achieve a significant savings.

But if your team can’t get the setup and dimensional control right, these numbers are downright optimistic.

Getting the setup correct the first time is key to effective use of material too.
Getting the setup correct the first time is key to effective use of material too.

Note, do not confuse this for for scrap loss by weight. Heavy stock removal parts may have up to 90% of total material (by weight) removed to create the desired geometry during machining. These guidelines are just an estimating tool to give you a minimum order quantity to assure you can deliver the required number of parts ordered.

Curly adjusts the machine.

Guest post by Steve Staub, Made In Dayton Blog

Steve Posts on Made In Dayton Blog
Steve Posts on Made In Dayton Blog

We have enjoyed many of Steve’s posts via Linked In, this one I just HAD. TO. SHARE.

I was contacted recently by a potential customer asking for our hourly shop rate. When I asked him why, he said it was so that he could compare our services against that of our competitors. I told him that our hourly rate doesn’t really matter when looking at the overall cost of manufacturing a part and choosing the right supplier.

He did not understand what I was talking about so I went on to explain it like this. Let’s say that Company X has a new state of the art Whatzit machine and Company Z has a 10 year old Whatzit machine. Company X charges $ 100.00 per hour on their machine, Company Z charges $50.00 per hour on the machine that they have. Which company are you going to choose?
I’m guessing that you have decided to go with Company Z because they charge only $50.00 per hour. But, did you know that with technology improvements a new Whatzit machine is actually 50% faster than they were just 10 years ago? This actually makes the price the same between the two companies… or at least close.
But what if the pricing wasn’t the same? Let’s say that two companies quoted production of a part and Company A came in around 10% cheaper than Company B. Do you automatically give the project to Company A? If you do, you’re certainly not alone. Many companies do this all the time and the lowest price always wins. But is it really a lower price if you have a lot of rework? Is it truly a better price if the project is late?  Here are some questions I like to ask to really find the lowest overall cost:

  • Does this company have a track record of on-time delivery?
  • How is their quality and what is their rejection rate?
  • Can they track my material and offer material certification?
  • How easy are they to deal with?
  • Will a real human answer the phone?
  • Are they convenient to get to or are they located in the middle of nowhere?
  • Are they ISO certified and do they have a Continuous Improvement plan?
  • Are they the newest kid on the block or are they an established, stable company with an Outside Board of Advisors?

All of these questions (and likely more) need to be answered to make sure that you are dealing with a reliable and reputable company that is going to provide you with a good value and be around to service you for years to come. I’m not saying this is the only way to evaluate a supplier. I’m just sharing some things to think about.

So… how do you choose?

Found this infographic at Compliance and Safety on the cost of new hires.

$57,968 may seem like a lot to some readers. To others who have experienced the consequences of a bad hire, this number is optimistic.

Our thanks to Compliance and Safety for the infographic.

Related: Our American National Standard Cost Per Hire Post

The reason everyone wants to describe our current unemployment situation as cyclical just might be because ‘cyclical unemployment’ is cause agnostic. Cyclical unemployment is defined as just “the deviation of unemployment from its natural rate. Link

Since it is just a variation, we need not look too hard for causes, it will go away.

Sandra Pianalta, Chairman of the Cleveland Fed,  and a member of the FOMC, is on record as saying that unemployment is cyclical:

Pianalto: I still believe that our current high unemployment is a cyclical problem and not a structural one. There’s been a longstanding relationship between the amount of growth in the economy and the improvement that it translates into in terms of job creation. We’ve had a very weak recovery that hasn’t created a lot of jobs. So the slow pace of this recovery is causing that unemployment rate to move down more slowly than we’d like.

I’m reassured that this issue is cyclical and not structural when I look at job openings. Prior to the recession, there were two individuals looking for every job that was open, so it was a 2-for-1 ratio. During this recession, that number has jumped to four people looking for every one job opening. So we just have a very slow pace of job openings, which, again, is cyclical, in my thinking.  Link

Structural unemployment is defined as a mismatch between skills demanded and labour available

Structural unemployment means the folks you can hire can't do what you need done.
Structural unemployment means the folks you can hire can’t do what you need done.

“Unemployment caused by a mismatch between workers’ skills and the skills needed for available jobs. Structural unemployment essentially occurs because resources, especially labor, are configured (trained) for a given technology but the economy demands goods and services using another technology. Employers seek workers who have one type of skill and workers seeking employment have a different type of skill. This mismatch in skills, largely the result of technological progress, creates unemployment of the structural variety.” Link.

Those of us trying to hire people with skills to operate our CNC equipment, people who can do math- trig, offsets, enter programs into controls, read vernier calipers- we know its a structural problem. We see and hear it in each interview.

Those college grads with all those student loans needing to be repaid can’t do these things.

Sure looks like “Employers seek workers who have one type of skill and workers seeking employment have a different type of skill” to me.

But I have a very smart (and modest) friend who suggested that I might be mistaken.

“Perhaps it is cyclical, ” he explained, “if the ‘cycle’ you’re referring to is 40 years of failure in public education, undermining the family as a social building block, the complete decoupling of executive compensation from everybody else, an eroding sense of the “public good”, the reckless expansion of easy credit, extremist positions on the social safety net, even more extreme positions on law, order, and incarceration (including drug policy) and, in some pockets, the fostering of contempt for empericism, all while the rest of the world gets leaner, smarter, and richer.”

Maybe he’s right. I’ll admit that our unemployment  today is cyclical,  if cyclical means 40 years of failure in public education, undermining the family as a social building block, and extremist positions on the social safety net that keep job seekers at home instead of job seeking and the host of other factors  he mentioned. These are the reasons our precision machine shops and advanced manufacturing companies can’t seem to find the skilled labor for which we have openings.

So  what’ll it be? Structural or Cyclical?

What'll it be?
What’ll it be?

Today’s unemployment problem is structural, unless you want to accept a 40 year cycle of failure in public education and culture.


Diesel mechanics photo