G.M. (27% owned by the federal government) is close to making a bid on Ally Financials’ (74% owned by U.S. Government; 9.9% owned by G.M.) Latin American and European Operations, according to the Wall Street Journal

So will the money G.M. uses be from its corporate performance or will it be a  “Wash Sale” – a return of Government monies?

Hmmm?

It sounds like money laundering  if you or I did it, but they have lawyers and stuff so it must be okay, Right?

Enron power barges.

Nigerian Barge Scam.

Here’s my suggestion of a logo:

Parts of Ally Financial owned by US Government and GM (which is part owned by the U.S. government) will be sold to GM to pay back the U.S. Government?

If you can figure out why  GM’s repurchase of  some of Ally operations from the U.S. Government to pay back the U.S. Government, while GM is still owned in part by the U.S. Government, is NOT Money Laundering, please let me know…

Logo idea

Laundry

Enron Power Barges

In the late 1980’s, I ran for school board.

I had just moved into a new town a year or so prior, and had been active in the local Chamber and attended school board and city council meetings.

There were a number of issues that motivated me,

  • That they didn’t understand the demographics that were upon them was the most benign of my reasons.
  • The fact that they had more quid pro quos with vendors than Mrs. Ponte’s Latin Dictionary  was one not quite so benign;
  • They routinely warehoused students in decrepit trailers;
  • They seemed to always over pay and overspecify;
  • They seemed to be locked into a pattern of adding staff rather than contract out non-mission critical work like snow plowing or lawn maintenance;
  • They thought that paying for asphalt parking lot repairs with thirty year bonds was good stewardship!

But the real issue for me was that the rubber stamp school board never seemed to have a genuine difference or public discussion over any proposal by the administrators.

Together, these things called to me, to step up, and not just be a critic, but to do my part.

So having actually attended all the board meetings, having went through the proposed budget, and having actually mapped out the  enrollment demographic trajectory, year by year, for the next 10 years or so, I decided to run for school board. I didn’t put together a committee, but one assembled itself after hearing me speak; I got the endorsement of the local newspaper and the chamber of commerce, despite the fact that I was the only one running that was  from out of town. In fact the chief issue that two of my opponents used to close their appearance remarks was that they were “born here, bred here, and going to die here.” One of the candidates actually ran because they didn’t want to see an “outsider” on the board. And that they were close personal friends with several of the school admins.

I did not win a seat on the board. I still attended meetings, and I watched in bemusement when the newly elected board members were asked to approve the new text books and one actually said in the meeting ” Well, don’t you think that we should have a chance to look at these  first?” despite the fact that they had been available for inspection for the past three months. And when they would adjourn to executive session to deal with personnel matters, well, I knew that there was some serious emotional toil for the folks that ‘won’ the election.

What I really learned was that the folks that don’t win the election set a non-negotiable agenda for the ones who did. The voters didn’t know eneough about ‘the new guy in town’ to actually elect him, but they listened, and damn if they didn’t hold their “ol’ buddy from high school” who they did elect to the board to deal with all those issues that the new guy brought up into the spotlight.

The person who ran to keep me, the outsider off the board, told me several months later, “If I’d have known then  what I know now, I’d have financed your campaign. I’d have paid YOU to run. I haven’t had dinner with my family most evenings for almost three months.” They got to deal with the trailers, the parking lot- which a few years later would be torn up to make room for an expansion- based on the demographics that everyone poo-pooed at the time.

And they got to negotiate the separation agreement for their administrator buddies who left after the game changed.

The lesson I learned by not winning the election was this: the agenda for the winner is created and burned into their future by those who ran against them.

I also learned that winning is not always what it appears to be at the time.

My victory lap came about six months later when the person who ran to keep me off the board stopped by and asked me- “If I resigned from the school board, would you apply for the vacancy?”

My answer, of course, was “No. The voters have spoken.”

“They chose you to do the work I said needed doing. Good luck.”

Rubber Stamp

The frequency of occurrence of an unexpected characteristic or non-conformance is an important indication of possible root cause.

When you tie  frequency of occurrence numbers back to the process you can gain some insight into what just may be the root cause.

“Occasionally I get one of these parts with the drill going off-center.” While this sentence names the problem, it doesn’t give us much insight as to where to look- the drill I guess.

“I have about half a percent of the parts exhibiting an off-center drill feature on my six spindle,” gives us enough information to think that perhaps the first couple of inches of one bar on a stock up was crooked, resulting in the off-center drill.

If you can do the math, you can uncover the root cause.

Converting count to a percentage of production can help you prioritize where in your process to look for the likely cause.

Chemobabe the numbers girl.

Without a process for reviewing a job after completion, our shops are doomed to make the same mistakes the next time…

Does your shop have a regular interdepartmental post job review meeting to eliminate issues and drive continuous improvement?

One of the best aspects of social media- blogging and LinkedIn- is the follow up and connections  in response to what is posted.

I continue to be impressed by the quality of the comments and conversations on LinkedIn as a result of my posts.

My recent post regarding quoting- Two Most Important Aspects of Quoting elicited this  comment from Michael Unmann  in the Wire-Net LinkedIn group:

“And how about closing the loop? You need to have a post job review with the estimating dept to make sure the quote was accurate and if it wasn’t why wasn’t it and what will you do next quote so it doesn’t happen again.”

Thank you Michael, we couldn’t agree more.

Does YOUR SHOP have an interdepartmental  post job review process to address issues with the process and improve it going forward?

Is it real or just proforma?

What are the best lessons you have learned from your post job review debriefing?

Thanks again to Michael Unmann for taking the conversation to the next level.

Thanks to Potomac Testing for the photo of an interdepartmental meeting.

The PMI™ registered 51.7 percent, an increase of 0.2 percentage point from September’s reading of 51.5 percent, indicating growth in manufacturing at a slightly faster rate.”

Underperforming at best. We have the tools…

“The New Orders Index registered 54.2 percent, an increase of 1.9 percentage points from September, indicating growth in new orders for the second consecutive month.”

Why we’re not exactly ecstatic over October’s 1.9% increase in new orders- Look at  our shipments for the month September…

“The Production Index registered 52.4 percent, an increase of 2.9 percentage points, indicating growth in production following two months of contraction. The Employment Index registered 52.1 percent, a decrease of 2.6 percentage points, and the Prices Index registered 55 percent, reflecting a decrease of 3 percentage points.”

“Comments from the panel this month reflect continued concern over a fragile global economy and soft orders across several manufacturing sectors.” (emphasis mine)

“Order book is really soft,” according to my industry contacts. I won’t say who said “As soft as a pair of fuzzy slippers.”

According to the ISM release, the following manufacturing sectors- listed in order reported declines in October: Primary Metals; Wood Products; Machinery; Fabricated Metal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Nonmetallic Mineral Products.

The precision machined products industry is a sub sector of Fabricated Metals, and we directly serve the Machinery, Transportation Equipment, Electrical Equipment, Appliances and Components, Computer and Electronic Products Industries, mentioned as contracting in the ISM report.

Many of the United States’ export markets are currently contracting, with the Eurozone being especially hard hit by declining new orders across the continent. The BEA and US Census reported that goods exports decreased from $130.7 billion to $128.5 billion; goods imports declined as well from $188.5 billion to $187.8 billion. The fragile global economy is slowing trade.

Precison machined products are used in a wide variety of applications and technologies, and contraction in those markets can’t help but be felt by our industry.

You can see the full ISM release here

Calculated Risk Chart

Soft Slippers

The current perfect storm- whether you call it Hurricane Sandy, Frankenstorm, or “OH S**t what am I gonna do now?”-  provides a compelling testimony to the strengths of effective associating. Networking.

At PMPA today, networking  means   “Helping match shops with open capacity and similar capabilities to shops needing an assist to keep shipments on time due to a natural  or other disaster.”

That’s an “invaluable when you need it,” kind of networking.

Yes, networking can take place at a conference but…

The Precision Machined Products Association (PMPA) created our Disaster Recovery Plan for PMPA members several years ago.

You can find it on our website at Disaster Recovery Plan

We prepared it to  have a structure for providing assistance when a member shop had a fire, storm damage, or lost a key piece of equipment.

We are fortunate to have not had to employ it more than a handful of times.

Yesterday, I posted a notice about where to find the plan, and requesting shops who were available to provide assistance via open capacity or capability  to notify PMPA so we could put them on our  list of candidate shops.

In less than an hour a  couple dozen shops had sent details of their capability, open capacity, materials worked with, and quality system credentials  so that we could prepare our candidate list of shops ready willing and able to assist disaster stricken fellow members.

Many people hear the word “networking” and think of golf, or conversations at conferences, or at local meetings.

At PMPA networking is not just a round of golf…

But networking can also be a more substantial, value added, support function at the time when you need it mostwhen your shop is in the midst of “disaster” and you are torn between the needs of your shop and the needs of your customers.

PMPA’s Business Disaster Recovery Plan for PMPA members is the highest and best form of networking- sharing our strengths to support our customers and fellow members at the time that they need support the most.

Networking. It’s not just a casual synonym for friendly chat or connecting.

In times like this, networking is about making a profound difference. Helping a fellow shop meet their obligations. Protecting and serving the interests of our mutual customers.

PMPA members are stepping up with their offers to assist.

PMPA is  ‘all about’  networking.

Networking as in “Helping match shops with open capacity and similar capabilities to shops needing an assist to keep shipments on time due to a natural  or other disaster.”

We call that effective associating.

What’s your shop’s safety net? Where can you turn for support when the waters rise or a fire shuts you down? 

How do you answer your customers’ queries about your disaster recovery plan?

A lot of people have a false idea about “power” in their ideas about authority at work.

And from what I can see in the run up to this election, the false ideas aren’t just limited to the business world.

Power must be directed to a purpose to provide useful work.

I have worked for Absentee bosses.  Authoritarian bosses. Benevolent bosses.  Frighteningly competent bosses. Incompetent bosses. Knowledgeable bosses. Machiavellian bosses. Respectful bosses. I have learned a lot from each.

What to do, from some.

What not to do, from others.

I have concluded that the Responsibilities and Authorities that define a managerial position are not about “power.”

At least not “power” per se.

The purpose of the Responsibilities and Authorities that define managerial positions are to assure that the managers clearly understand that they “have both the power and duty to make a difference.”

Power and duty to make a difference is a very different thing from power.

Anybody would want the power.

What separates the great bosses, the true leaders, is that they understand that it is not about the power; it is about the power and duty to make a difference.

Are you empowered?

Do you have what it takes as well as a duty to make a difference?

You see, from my experience, it’s really not about the power. Or the title.

It’s all about results.

Arc photo

A colleague asked me this question via email the other day.

Actually, he asked: “Simple question for you this morning- what do you consider to be the most important piece of the puzzle when quoting a precision machined component?”

What would your answer be?

Cue Jeopardy theme song here…

I responded that there were two equally crucial pieces of the quoting puzzle:

  • Confidence in my process cost data;
  • Confidence in my process capability data.

With inadequate process cost data, you die a slow death with every part produced.

With inadequate process capability data, you can lose a ‘whole lot of money’ if the capability isn’t there and you are forced to abandon the ‘as quoted’ process path.

My colleague agreed:

“Exactly! Cycle time (for each of the processes) and how much you need to charge per hour. Then you can take those numbers and put them into cells and have one operator running two or three machines and include automation and do the 5S and Lean and Kanban and paint lines on the floor and all the other things we do. But the bottom line is you better pay attention to your process!!!”

His comments about cells, automation and painting lines give us insight into the fact that his world of precision machining is a world of  low mix  and high volume. But even in  a lower volume and higher mix shop, making a mistake on either cost to process or capability of process  on a quote is a great way to make a small fortune out of a much larger one…

What do you think? Are process cost and process capability the two most important aspects of your quoting process?

Jeopardy photo

I know some folks who have an uncanny ability to predict the future. They are not psychic, indeed, they are the kind of people that discount that sort of thing out of hand.

The secret of these folks is that as critical thinkers, they are able to recognize the assumptions of the present state, AND MAKE INFERENCES from the data that they have.

They make these inferences by not being slavishly tied to the present assumptions.

12 page pdf about your impending future. Scarier than Stephen King.

The folks at the National Association of Manufacturers (PMPA is a member) have issued a new report fiscal shock: America’s Economic Crisis Executive Summary.

8 bullets that tell the future your business is facing:

  • Absent legislative action, large spending cuts and large tax increases will hit the economy at the same time, causing a total fiscal contraction of $500 billion, or about 3.2 percent of GDP.
  • Washington’s failure to address the pending fiscal cliff is already having an impact, cutting 0.6 percentage points from GDP growth for 2012.
  • The worst could be ahead. If the fiscal contraction happens, the economy will almost certainly experience a recession in 2013 and significantly slower growth through 2014.
  • From 2012 to 2015, the economy will lose 12.8 percent of the average annual real GDP it could have attained with moderate growth, sapping critical resources from all economic sectors.
  • Job losses will be dramatic. By 2014, the fiscal contraction will result in almost 6 million jobs lost, and the unemployment rate could reach more than 11 percent. (U-3 unemployment U-6? Too scary to contemplate!)
  • Households will take a big hit. Real personal disposable income will drop almost 10 percent by 2015.Reduced U.S. Standard of Living
  • Manufacturers of consumer goods and defense contractors likely will see large and durable contractions in their industries.
  • It will take most of the decade for economic activity and employment levels to recover from the fiscal shock. Another recession could deal a substantial blow to long-term economic potential, permanently reducing living standards in the United States.

These eight points document why manufacturers are worried about slowing economic growth.

You know what to do…

If you think that Hurricane Sandy is the perfect storm, wait until you see what happens when sequestration cuts, other federal spending cuts, and layoffs  hit at the same time that U.S. taxpayers- investors, businesses, employees get hit by a sudden increase in tax liability.

Get the report.

Seatbelt

PMPA’s Business Trends Index of Shipments fell to 100 in September, a non-seasonal move that shows our industry shipments gain for the year slipping to just 102% year to date.

September shipments are just 88% of same month last year.

The slump in sales was widespread in September; of 92 companies reporting this month, only nineteen (19) were in positive territory, and just ten (10) of those in the double digits. Seventy–three (73) firms reported declines, and sixty-three (63) of those reported double digit sales declines compared to prior month.

You can’t grow faster than GDP forever…

The three month moving average (3 MMA) for sales has fallen below the 12 MMA for the second month in a row. This indicates that our industry’s shipments are no longer growing.

While we still have confidence in our industry’s ability to record a very positive increase in shipments by year end, we are aware of the “regular and special causes” that seem to be suppressing orders and shipments at this time.

The “regular causes” that we see operant are the stagnation of demand in the broad economy. We believe that this is exacerbated by the “special causes” of the present uncertainty of the 1) November election and 2) Spending cuts mandated by the looming ‘Fiscal Cliff.’

Precision machined products are crucial components that perform vital functions in critical technologies including anti lock brake, airbag depoyment, HVAC, fluid power, aerospace, and medical device (including implant) applications. According to the latest U.S. Census Report precision machining industry shipments totalled $13.3 billion in 2010.

See the full report for detailed outlook on Sales, Lead Times, Profitability, and Employment.