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.
That seems surreal in an environment that worships sending off all our jobs
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?
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
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.
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.
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
Was successful back then, have no idea where things stand today.
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
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
Dividend is steady at just about 2% and most analyst have them at a
hold or better.
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.
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
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
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.
Tim Daneliuk email@example.com
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
And I agree with your statement below about buying quality and value.
Quality is a component of value.
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.
Tim Daneliuk firstname.lastname@example.org
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.
On Wed, 20 Aug 2008 15:11:38 -0500, Tim Daneliuk
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