New Unisaw - The flag is back

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My dear friend who was also a manufacturing superintendent for me called last night to let me know that the new Unisaw will be unveiled today at IWF and will have the "Made in America" badging.
"How can that be?" I asked. Well, it seems that all those decisions I (we) fought against have been reversed. The Brazilian motor will be gone in favor of a Marathon. Those chinese castings will be replaced with castings from, in my opinion, the best all around foundry in the country, Waupaca. So, with fabrication and assembly in Jackson, TN, the content will meet the requirement for "Made in America".
I expect it could be pricey. The cost benefit of a very efficient and nearly fully depreciated facility will not be there and I expect that all important overhead absorption volume will be down due to those disastrous decisions of the past. But it makes me feel good to see this happen, and I'm happy to see that B & D may actually get it where Pentair, didn't have a clue.
Wish I could be there to see it. I passed on IWF this year, it conflicting with a fishing/scalloping trip planned some time ago and it looks like TS Fay is going to wipe out that alternative.
Frank
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"Frank Boettcher" wrote

That's heartening sign! Thanks for sharing.
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That seems surreal in an environment that worships sending off all our jobs to China.
If in fact it would be a lot more expensive to manufacture it in the USA, why did they choose to do it? Any reliable gossip on that?
And how about their recent policy shift on stocking parts for their old tools. Any change there?
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On Wed, 20 Aug 2008 09:45:08 -0400, "Lee Michaels"

The price prediction more or less conjecture on my part, neither gossip nor hard facts to support. However, there was a pricing spread when the unit was made in Tupelo, but despite that fact, sales were growing. I've always believed that there is a part of the market that is willing to pay the premium for a higher level of quality. Certainly, those that make their living with a tool are not as sensitive to price as they are to accuracy, long standing reliability and serviceablity.

Don't know about that. Conjecture once again, but B & D may be making parts discontinuance decisions based on the status of the tooling. Prior to their obtaining the tool group, a lot of tooling, both supplier and in-house, was lost in the shuffle. Puts them between a rock and a hard place as replacing tools for very low volume parts sales is extraordinarily expensive.
Frank

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"Frank Boettcher" wrote:

Near as I can tell, about the only thing Pentair didn't totally screw up was Hoffman electrical enclosures.
Lew
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On Wed, 20 Aug 2008 18:24:45 GMT, "Lew Hodgett"

Lew, Pentair is doing much better in the business they chose to remain in that is the water business and the enclosure business. These fit their business model a little better. Consolidation and globalization work a lot better when globalization does not just mean send everything to China, but, actually develop markets outside the U. S. Those two groups are also more industrial and infrastructure related and less retail in nature, unlike the tool group and the vehicle service equipment group, both of which they ruined trying to apply a business model that had no chance of working.
They went away from the original business model which was to acquire underperforming companies with great names, leave them autonomous and give local management the support to do what needed to be done. The current management wants, it seems, to turn it into a G. E. on a smaller scale. Not surprised at this, the current CEO is both ex G. E. and ex McKinsey.
I think they will do well in the future, with most of the growth from markets in Europe and Aisa, although one component of the business is pool and spa which has been really negatively affected by the housing downturn. If you can anticipate the timing of that turning around, it would be a good stock to buy at that point. (disclosure, I own it).
But they get an F for their management of the tool group.
Frank
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"Frank Boettcher" wrote:

Back in the early 60s, a guy named Tinkham Veal, a Clevelander, formed Alco Standard, basically a holding company.
Aimed at the sole proprietor of a $3-$5Meg business..
The idea was that Alco would provide all of the overhead services such as human services, legal, etc, thus freeing up time to concentrate on growing the business.
In return, the sole proprietor would exchange their stock for Alco stock
Was successful back then, have no idea where things stand today.
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Lew Hodgett wrote:

It turned into IKON Office Solutions. 8 of the subsidiaries bought themselves out and formed Alco Industries, based in Norristown, PA.
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Frank Boettcher wrote:

Their stock prices haven't done well for quite some time. They were going pretty well when they had Delta, afterwards, they lost a significant amount of value and have been hovering in the $34 to $37 range, off from highs in the low 40's.
--
If you're going to be dumb, you better be tough

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On Thu, 21 Aug 2008 19:47:42 -0700, Mark & Juanita

The tool group was the top performing business that they owned until they embarked on the disasterous consolidation strategy in 2000. Measuring the key components ROS, ROIC, cash flow, organic growth, the tool group was an extremely high performing business.
Then they decided to kill the goose to look for the gold.......
The present value of the equity loss will never be recovered, but I believe there have been and will be entry points that will be attractive going forward. Additionally, there is always that "teaser" thrown out by analysts that they are a prime candidate to be bought by someone bigger. The recent joint venture with G. E. rekindled that dream.
Dividend is steady at just about 2% and most analyst have them at a hold or better.
Frank
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If quality is better sales should be OK. Festool is expensive and doing well. Consumers are willing to pay extra for quality but not extra and lower quality.
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"Leon" wrote:

There was a time, before automobiles, when that market segment was known as the "Carriage Trade".
Lew
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Sounds like a Harley come back story revisited. Let's hope that they are as successful.
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Interesting story on NBC news last night. Seems that Chinese manufacturing is in trouble. They estimate that 30 percent of the factories in one province will shutter their doors in the next year. As one Chinese interviewee stated "There's no cheap labor, anymore". Labor laws in China have doubled the minimum wage in the last year or so. Many companies are moving their manufacturing sites to Vietnam and Indonesia as a result.
Tom G.
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I have heard the same, plus the Chinese have been hoarding oil and gasoline to prepare for the Olympics.
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Tom G wrote:

Wow, what a shock, free markets actually work??? The anti-globalist, anti-trade sentiment one frequently hears (especially here) is foolish. The Chinese/Indian/Sri Lankan/Taiwanese... "cheap" labor advantage was/is temporary. As these nations continue to participate in global markets and thereby become more wealthy, their average salaries will - in currency adjusted terms - start to converge to be around the same as everyone else's. Sooner or later, people working in market economies want the same things the wealthy Westerners do - a nice car, a house, air conditioning, an education, etc. Wage inflation has already hit Indian IT outsourcing and it is inevitable in China's manufacturing sector. The only thing that can stop it is violent suppression by their government (possible) or an invasion by a foreign power (unlikely).
Trade not only benefits these people, it also makes nations more interdependent and thus less likely to go to war or otherwise behave in naughty and violent ways. Yet somehow, it is Westerners - the very biggest beneficiaries of trade - that lead the whining chorus in opposition to globalism and markets. Astonishing (and depressing).
One common example of this whining is the insistence that you only "Buy American" regardless of how good a value an offshore product might be. I prefer to buy *quality and value*. Sometimes that's an American product, but not always. Sometimes even the better American product has so much protectionist goo around it that buying it may be a mistake. For instance, GM and the execrable UAW are discovering just how bad the pain can be when you cease participating in fair markets and hide behind union restraint-of-trade. This makes me disinclined to buy another Chevy truck when I wonder if the company can even survive as its unions bleed it to death. As always, Reality trumps collectivist fantasy...
If you want more peace, slower population growth, better environmental conditions, better work conditions, fewer poor people, and more good things for more people, become a market Capitalist. If you hate your fellow man, subscribe to limited trade, central government control, tariffs, and "managed" economies.
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On Wed, 20 Aug 2008 11:58:13 -0500, Tim Daneliuk

Tim, I agree in principle but the reality is it is very difficult to bring anything back. When a successful and efficient manufacturing facility is closed in favor of moving offshore, many times the state of depreciation expense amortization and the present value of the tooling is such that, if lost, it is rare to be able of afford to come back, at least within a generation.
I was successful for many reasons. Well trained and efficient work force, reasonable labor costs, good supply chain management, great imbedded product knowledge, and a very reasonable depreciation expense component of the overhead. If closed and all lost or made obselete, the cost of retooling and equiping would cause depreciation expense to be about four times what it was. That alone would put me out of the running not to mention the impact of the lost imbedded knowledge.
So maybe in another generation that equilibrium you describe will be a reality. In the meantime, I hope this Delta initiative will be a success.
And I agree with your statement below about buying quality and value. Quality is a component of value.

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Frank Boettcher wrote:

<SNIP>
That's clearly true. But I'd suggest - at least at the Big Picture level - that there will always be a demand for high value/quality goods and people will pay a premium for it. For example, my first passion in life is not woodworking but traditional B&W silver chemical photography. My field camera is a hand made wooden box (Honduran quarter sawn mahogany and shiny brass) that I paid a *lot* for. Why? Because it is a superbly executed instrument that nothing else can touch in its class. It does thing that *no* digital camera, at any price can do (including the $40K Hasselblad H-39). The manufacturer, Wisner, has a nice little high end business, building the "best" of something for people who know the difference. So, while mass manufacturing will migrate to the lowest cost producer (in a commodity market, the lowest cost producer always win), I believe there will always be room for crafstmen to make Ferraris, Steinways, and so on.

I think it is happening already and a lot faster than many people realize. Indian IT outsourcing is taking a real hit because of wage inflation. Europeans are starting to build factories here in the US. For the moment this is because of the Dollar/Euro ratio. But in the not so distant future I think all this new technology and the success of global trade and markets is going to drive work to be done by whoever does it *best* at a fairly constant (currency adjusted) price. I too hope that Delta succeeds here, but not because "The flag is back" but because I love seeing high quality anything being made ... no matter where and by whom.
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Alas, Tim, the world is not quite so black and white as you see it. Everything doesn't have to be either ultra high end or cheap crap.
And, when you're buying something that's supposed to have some fairly decent level of quality that no longer does (e.g. Delta, made in China), but they still want their premium price (though not the $ of the ultra high end stuff, but not cheap), it's problematic.
GMs problems, even from a cursory look-see appear to go well beyond those #^%*$ unions.
We're not living inside a computer w/it's limitations to 1 and 0.
Renata
On Wed, 20 Aug 2008 15:11:38 -0500, Tim Daneliuk

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He didn't say he SEES it that way.
He said he PHOTOGRAPHS it that way...
--
FF



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