It takes tremendous balls to start a machining company from scratch. And, maybe a little extra chutzpa to start a shop that primarily runs cam screw machines making millions of parts for automotive.

After 23 years working in job shops and running a small farm, Karl Drasgow cashed out his 401K to found Drasgow Inc., a Wickman job shop in Gainesville, New York, in 2003.

In the interview we talk about how he made this happen–from running his first screw machines in a barn, to taking local entrepreneurship classes, to fixing up cam machines built in the ‘70s, and waking up at 2 AM to shovel

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Interview Highlights

Karl Drasgow’s professional journey began in high school when he attended a vocational technical school, initially studying automotive repair before discovering his aptitude for machining.

After high school in the 1980s, he gained diverse manufacturing experience across four different shops, developing expertise in NC mills, CNC lathes, and tool room work. His pivotal career moment came when he began working with Wickman multi-spindle screw machines, which he operated for 16 years at one company. During this time, they needed someone to manufacture a specific key body part, and Karl saw an opportunity.

While working full-time, Karl had already developed his entrepreneurial instincts by running a small farm business, raising and selling pigs and beef to his coworkers. He had built several barns and set up a small machine shop where he made custom parts for agricultural and motorcycle applications. This early business experience proved invaluable in Karl’s subsequent business ventures.

In 2003, Karl cashed in his 401k and purchased two Wickman multi-spindles from Graff-Pinkert, which helped to finance part of the purchase. He initially operated those machines in his agricultural repair building, later expanding to four machines across multiple buildings.

Five to seven years into running his business, Karl recognized he needed to evolve from being a technician in business to becoming a true business owner. A local acquaintance recommended the Center for Entrepreneurial Leadership program at the University of Buffalo, which proved to be transformative for Drasgow Inc. The program is designed specifically for hands-on business owners with about five years of experience. Karl describes it as a mini-MBA education covering financial reports, human resources, and general business management.

The program’s second semester paired Karl with a mentor and required him to present his business to the class, facing questions that helped identify areas for improvement. He says the experience not only enhanced his business acumen but also taught him how to evaluate other businesses critically. He supplemented this education with additional community college courses in HR and business management, and participated in Rochester’s TEND program, which encouraged bigger business aspirations.

Today, Drasgow Inc. is an ISO-certified tier-two automotive parts supplier. Karl has found his niche in high-volume production using Wickman cam operated screw machines that can produce parts with cycle times 10X the speed of a CNC lathe that can cost hundreds of thousands of dollars more.

Rather than investing in new multi-spindles, which can cost hundreds of thousands or even millions of dollars, Karl purchases used Wickmans for $20,000-$50,000 and invests $50,000-$80,000 in rebuilding them. This gives him a huge cost advantage over competitors with more expensive machines.

When I asked Karl if he had advice for aspiring entrepreneurs, he emphasized the importance of understanding the lifestyle commitment of a business owner. Using the example of plowing snow at 2 AM before employees arrive, he explained that small business owners must be willing to handle everything themselves, from maintenance to lawn care. He stressed that entrepreneurship isn’t for those seeking a predictable 8-to-5 schedule—it requires flexibility, dedication, and the ability to handle significant stress and uncertainty.

Karl’s career journey exemplifies how technical expertise combined with business education and work ethic can lead to entrepreneurial success in manufacturing. His story demonstrates the importance of being willing to learn, adapt, and take calculated risks while maintaining a practical, hands-on approach to business growth.

Question: What was the first machine you ever purchased?

Click for more information on Drasgow Inc. or to contact Karl.

This summary was aided by Claude.ai

The post What it Takes to Start a Multi-Spindle Shop–EP 235 first appeared on Today’s Machining World.

Our guest on the podcast today is Rogério Mezadri, Director of SAMOT Mexico, a 200-employee automotive machining company in Guanajuato, Mexico.

Rogério and I discussed the challenges running a machining company in Mexico. We talked about Mexican manufacturers upgrading technology. We also talked about the difficulty to find enough skilled manufacturing workers in Mexico. Yes, they have that problem too.

Scroll down to read more and listen to the podcast. Or listen on your phone with Google Podcasts, Apple Podcasts, Spotify, or your favorite app.  You can also view the podcast in video form on our YouTube Channel.     Follow us on Social and never miss an update!

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Main Points

Background on SAMOT Mexico

SAMOT Industria Mecanica, a large automotive supplier based in Brazil, opened its plant in Mexico in 2009. 

Rogério worked at SAMOT’s São Paolo, Brazil, headquarters for many years, following in the footsteps of his father who also worked there. In 2014, he came on to lead the company’s Guanajuato, Mexico, plant.

The state of Guanajuato, Mexico, assembles more cars than anywhere else in the country. General Motors assembles its trucks and SUVs at its Silao plant there.

SAMOT Mexico runs a lot of cam operated multi-spindle screw machines, such as Wickman and ZPS, as well as INDEX CNC Multi-Spindles. The company also has its own in-house anodizing line.

Gradually, SAMOT has been decreasing its use of cam screw machines, to focus on more complex parts.

Labor Market in Mexico

Rogério says that Mexico has a decent skilled labor force. He says that Mexicans on the whole have good manual skills, and they like to work with their hands. Nevertheless, he is still dealing with a skills shortage.

SAMOT Mexico’s industrial park has 120 companies with over 30,000 workers. Currently, there are 1,000 open positions throughout the industrial park, including 10 vacancies at SAMOT.

Japanese Workers Imported to Mexico

Toyota, Honda, and Mazda assemble cars in Guanajuato. They have elected to bring over a lot of workers from Japan at all different levels, not just upper management. According to Rogério the Japanese working culture is so different than the local culture that Japanese firms would rather import their own people.

Salaries for Manufacturing Workers in Mexico. 

Rogério broke down manufacturing labor costs in Mexico into US dollars. For a machine operator, the labor cost is around $1,000 per month. Skilled technicians cost $1,000 to $1,500 per month, and managers cost around $5,000 per month. 

Meanwhile, the salary of a doctor in Mexico averages around $1,000 per month. Rogerio’s wife studied to become a doctor when she moved with him to Mexico. He says the country has high quality medical schools available for a very reasonable price.

Mexican Machining Companies Upgrading Equipment and Automating

Rogério says he sees a lot of companies in Mexico bringing in more sophisticated machines such as INDEX CNC Multi-Spindles.

He also is seeing a lot of automation implemented. SAMOT recently bought Universal Robots. He says Universal Robots was the only brand available with short lead-times. 

SAMOT is trying to diversify its product line in addition to traditional automotive. The company is purchasing new types of CNC machines for making lower volume, more complex parts for the industrial sector and electric cars.

Question: Does it bother you less if manufacturing work is outsourced to Mexico rather than China?

The post Machining in Mexico, with Rogério Mezadri–EP 167 first appeared on Today’s Machining World.

Damn. It’s already 2025? I was just getting used to the idea that it was 2024.

Today, Lloyd and I are reflecting on what worked and didn’t work in our used machinery business and our personal lives over the last year. We’re also discussing our intentions and predictions for the new year.

Will we sell more old multi-spindles in 2025 like we did this year? Will our incoming president be good for precision machining?

And how does it feel to turn 80?

Question: What are your greatest hopes and fears in 2025?

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Interview Highlights

Working Together

NOAH: It’s December 15th, 2024, and I am very honored to be with Lloyd Graff, my dad, my occasional co-host, and just a wonderful guy. It’s great to do this episode with you at the end of the year. We like to do this every year, sort of sum things up and look forward to the next year.

LLOYD: It’s a pleasure to be here. And I look forward to being here next year more than once.

NOAH: Tomorrow is Lloyd’s 80th birthday (Dec. 16). Happy birthday. So, how does it feel?

LLOYD: It feels great. It feels like a relief also, because in a way I’ve been dreading reaching this date and being decrepit. But I don’t feel decrepit. I feel lively and I feel like I still am capable of making a contribution in this business. And I am so grateful for a wonderful family.

NOAH: I think it’s wonderful that you’re still so engaged in the business still.

LLOYD: I’m engaged as much as ever. I do not work as many hours as I once did. I find that I can be effective working four or five hours a day at the office and working at home. At 4:00 AM, at times.

NOAH: I feel like it’s just not as fun if you’re not there, so I’m grateful that you still come in.

LLOYD: Oh, thank you.

NOAH: There’s just a different energy. Even if I talk to you on the phone frequently, it’s definitely a different energy when we’re not talking in person.

Success of Used Machinery Business

NOAH: So where has Graff-Pinkert found the most success this year? It’s been a decent year for us in the end. Is it because of what we’ve done? Is it because of what the economy is doing? Is it because of luck? Probably a little bit of all three.

LLOYD: I would agree with that. I would say that the success of Graf Pinkert has been in machinery deals selling multiple machines, of various types. INDEX multi-spindles, and various other types of CNC equipment.

We also sold seven Davenports to India, and they’re talking about buying five more. And we liquidated a dozen old multi-spindles out of Sioux Falls, South Dakota—Acmes and New Britains.

NOAH: If you can buy those old machines for very cheap and sell a whole bunch, you can do well. But few people are paying top dollar for cam machines.

LLOYD: Yes. But, we have a Wickman Spare Parts Department, and that’s done quite well.

NOAH: So, they’re keeping their machines. It’s not like they’re throwing out their Wickmans. They’re just choosing to fix them and not doubling down on them.

Current Automotive Climate

NOAH: Another topic we’ve been discussing lately is Europe’s difficulty in it’s machining sector.

LLOYD: It’s dismal because particularly because European automotive is very weak, very weak. Mercedes, BMW, and especially Volkswagen. Volkswagen, whatever decision they make, seems to be the wrong one. Their efforts to manufacture in the United States have been feeble and misguided and they keep going right and left on the cars that they manufacture. So, basically, as far as an American market for VW, it’s been very weak, and now they are doubling down on the electric cars. That appears to be a dubious decision, particularly as far as the American market is concerned.

NOAH: Why do you say that?

LLOYD: Well, the only American manufacturer who’s been successful selling electric cars is Tesla. And a lot of our clients are doing work for Tesla. But Ford, GM, they have been unsuccessful with electric cars. They’re now cutting back and slowing down on electric. They have also not been successful in developing self-driving cars. Now Tesla says they are going to. But it’s so far it’s just smoke and mirrors. The only people who’ve been truly successful, at least in the United States, is Waymo.

NOAH: Tell people who Waymo is for the people who don’t know. Because I think a lot of people don’t know. And what our connection is.

LLOYD: My son in law, Scott, works for Waymo. Waymo is 92 percent owned by Google. Google has the money to implement the research. They have the people who have the knowledge to make the research work. And they are willing to be patient and develop the market slowly and wait for the regulations to be covered.

Predictions for Precision Machining in 2025

NOAH: Let’s just do a little predicting about what 2025 will be like. And of course it’s impossible to tell.

LLOYD: We have a new president coming in. We have a world situation, which is chaotic. It is difficult. But on the other hand, we have low inflation, although we’re coming off a period of fairly high inflation post-Biden early years.

There’s hesitancy amongst consumers because of the past history of high inflation and it makes people reluctant to spend. But they are starting to spend. Automotive looks like it could be a better year because the automotive companies are not obsessed with building electric cars anymore.

I think the American builders have basically given up on the idea of building electric cars in the United States, at least temporarily. They’ve abandoned that market to Tesla.

The Korean companies have their share, the Japanese companies have their share. And they have manufacturing plants in the US, at least assembly plants.

What we do see is military is strong. And I anticipate that will continue. Medical continues to bounce along and be moderately strong.

Aerospace has been very difficult in the United States because Boeing is your biggest customer other than the Air Force.

The firearms business, it’s up and down.

NOAH: So it seems like most of our customers are excited about the new President.

LLOYD: The only thing that is a negative sign, at least in my opinion, is the tariffs as a possibility. While I think it’s mostly a bluff by Trump, we don’t know.

What we learned in 2024

NOAH: What was something interesting you learned in the business this year?

LLOYD: Graff-Pinkert cannot do all deals by itself. First of all, we don’t have enough money. But secondly, more than the money, the money we could obtain if we want to, but what we need are the contacts, the connections, the specialized knowledge, this is what is essential often in making the deals that really count.

NOAH: One thing I’ve really tried to embrace recently is that although goals are great, it’s vital to take a step back and say, “take a breath and enjoy this process.” There’s so many interesting, good things going on. And I’m going to keep looking to the future, but I’m going to just ride this wave, because before you know it…

LLOYD: You’ll be 80.

NOAH: All right. Well, happy 2024.

LLOYD: Happy 2025.

 

 

 

The post What the Heck is Our Strategy for 2025?–EP 234 first appeared on Today’s Machining World.

Do you ever ask yourself why the majority of businesses out there are struggling to survive while an elite handful are crushing it? On today’s podcast we are discussing that question.

Our guest is Steve Preda, founder of Steve Preda Business Growth. He is also an author of three books and the host of the Management Blueprint Podcast.

Steve coaches business owners to help them reach their ambitions, which often means scaling and maximizing their companies’ profitability or making business ownership a more pleasurable, fulfilling experience.

Steve’s life mission is to eradicate what he calls “Business Covid.” He says 180,000 businesses in the U.S. disappear each year because their owners don’t have the knowledge and tools that are essential to be successful.

Steve himself is an entrepreneur. He founded investment banking firms in his native country of Hungry and later in the United States.

If you you’re looking for insight to help your business reach its potential I suggest you have a listen.

Question: What do you think you need to improve on in your business? 

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Interview Highlights

Noah Graff: Steve, give me an overview of your business.

Steve Preda: My business is called Steve Preda Business Growth. We grow businesses by systemizing, simplifying, and conceptualizing methods to increase profitability and create engaged workforces.

There are 1.7 million small and medium businesses in the US alone. Many suffer from what I call Business COVID – they lack the skills to scale up. Our mission is to eradicate “Business COVID” and help owners achieve their ideal life by building great companies.

About 180,000 businesses disappear each year because founders are technicians, not formally trained in business.

As Michael Gerber’s The E-Myth explains, technicians start businesses but don’t know how to build them. We simplify concepts and tools to grow businesses more methodically.

Noah: Can people learn to think like entrepreneurs?

Steve: Yes, they need things simplified and tailored so they can stay focused on their expertise. We bring them proven systems and make it easy to implement.

Noah: Tell us your story.

Steve: I was born in Budapest to professional parents. My idol was my entrepreneur great-grandfather who built a successful bakery business between the World Wars. I thought I’d be an entrepreneur after college.

But I got scholarships and corporate jobs that delayed my entrepreneurial journey. At 35, after getting “pushed out” during bank downsizing, I finally started my own investment banking firm in Budapest. I acquired and prepared small-medium companies for sale, like I did for larger public corporations at the bank.

Noah: Was it difficult to come to the US?

Steve: No, I opened a US affiliate of my firm easily on a business visa. But America’s competitive landscape was totally different than Europe’s. I ultimately pivoted to join Vistage, a coaching organization, to learn sales, marketing and recruitment in this new environment.

Noah: Explain Vistage and why you saw it as a gateway to coaching.

Steve: Vistage facilitates peer advisory groups for high-level executives. I saw it as running a mastermind group. The concept is: none of us is as smart as all of us. A group can access collective knowledge through conversation, brainstorming and networking.

I had run a mastermind group in Budapest and implemented coaching concepts from Michael Gerber’s book The E-Myth. So Vistage felt like a logical step, though my revenues were much smaller than peers. I wanted to “fly with eagles” and absorb their entrepreneurial experience.

Noah: How did you transition to individual coaching?

Steve: After two years of facilitating, I needed a scalable coaching model to afford four kids’ college (tuition). I devised a plan to speak at Vistage events to attract clients. I began facilitating leadership team sessions focused on business viability.

I implemented Traction’s operating system and wrote some books. When Vistage franchised, I started an independent firm teaching the five Pinnacle principles: Purpose, People, Playbooks, Performance, Profit.

Noah: Walk through the Pinnacle model.

Steve: You align people to a powerful purpose through playbooks that create consistency. You coach employees and clarify roles. With an exciting vision, strategy and aligned team, performance improves. Profit is the byproduct.

We also set goals, metrics and processes to weed out unproductive activities. I help clients build a business machine and then make it unassailable through strategic differentiation.

Noah: In your coaching sessions, what is one of the main obstacles?

Steve: The owner. They want to control everything even as it bottlenecks growth. I push clients to delegate and get uncomfortable. With the right plan and team, the founder can be replaced operationally. My mission is helping committed entrepreneurs build an organization that scales.

Noah: What percentage of your clients succeed versus stay stagnant?

Steve: My client selection has improved, so now over 90% of clients achieve change and growth. The key is picking people truly willing to get uncomfortable and listen to new approaches. 

Their business also needs to solve a market need and have leadership team support.

Noah: To wrap up – what is your message to entrepreneurs?

Steve: View your company as a vehicle for growth, not a static entity. With the right systems and team, you can build an organization that empowers you to achieve your ideal life. But you must take risks and step outside your comfort zone. There’s no greater adventure!

Note: This transcript excerpt is a condensed depiction of the interview, created with the assistance of AI. Various sentences and paragraphs have been combined or paraphrased to improve readability. 

The post How to Think Like an Entrepreneur—Not a Technician, with Steve Preda-EP 202 first appeared on Today’s Machining World.

One of my favorite machinery dealers we work with is from Brazil. He specializes in sending machine tools to South America. 

A used machinery deal is usually a challenge to close—even if a customer says they need it. Even if it’s an excellent machine that’s rare on the used market, at a good price, it is hard to close a used machinery deal.

But selling a machine to Brazil from the United States adds extra challenges. The customers usually can’t inspect the machine in person, and the Brazilian government charges more than 30% import tax on used machinery brought into the country.

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But my friend from Brazil is the most optimistic partner I’ve ever worked with. 

His optimism makes working with him fun, yet it’s frustrating sometimes. Once I told him that his constant excitement for deals that were going to happen, was starting to make me skeptical when he would tell me about his next great prospective buyer.

He smiled and told me that to succeed in the machinery business, which is often fueled by finding equipment or customers seemingly by chance, you have to be optimistic. If you seldom believe deals will succeed then it’s not a good business to be in. If you don’t believe that someone in another hemisphere will pay good money for a dirty, 20-year-old Walter CNC grinder that somehow you stumbled upon at an auction in Rockford, Illinois, it will be hard to make it in the used machinery business. That was a good deal we did together.

I discovered the podcast coaching program I recently joined from a paid ad while scrolling through Instagram late on a Saturday night. When the program, Grow the Show, was pitching to me, they told me my show’s listenership would likely grow 10- 20% in the first month. They said within a year it could be bringing in $100,000 in revenue. 

I was seduced by these optimistic claims because they gave me hope, even though I knew deep down I should keep my expectations tempered. After all, they didn’t know me nor my podcast audience. They also didn’t know how much time I would have to put into their program.

But I allowed myself to buy into their optimism and made the significant investment to try it. 

I’m happy to say in the last six months the podcast has grown a significant amount in listenership. Not yet to the extent that they sold me, but I’m pretty sure it would not have grown much at all if I didn’t take a chance on the program. Seeing that Instagram ad turned out to be serendipity. But only because I was optimistic it would work.

I met my wife, Stephanie, on an internet dating site. That became serendipity because I was optimistic enough to believe it was worth the time to meet her for a drink.

Maybe your machine shop is taking on an exciting new type of work for a customer you stumbled upon at a trade show. Maybe you’re thinking about hiring someone you met randomly working at Home Depot because they seemed sharp. To make those chance discoveries mean something, you must be optimistic that they will lead to something successful.

This is Seeking Serendipity.

Question: What are you the most optimistic about in your business?

The post How Optimism Will Lead You to Luck in Business: Seeking Serendipity–EP 179 first appeared on Today’s Machining World.

I often ponder—why do some people own and build companies, while most people are destined to spend their careers as employees.

In Part II of my interview with Mike Payne, owner of Hill Manufacturing & Fabrication, we explore this question. Mike comes from a family of six generations of teachers, not business managers or entrepreneurs, and he says he was a “mess” in high school without direction.

There’s no question that he’s smart and ambitious, but there are lots of people out there with those qualities, and only a small handful of them acquire and grow manufacturing companies.

I enjoyed pushing Mike to analyze how and why he does what he does, and I think he enjoyed being pushed. Spoiler alert, it goes a lot deeper than just making a bunch of money and being your own boss.

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Interview Highlights

Do the Richest People Work Less?

Noah Graff: Many people in the world work incredibly hard, but the richest people aren’t necessarily the ones working the hardest. What is it about entrepreneurs and successful company owners who can replace themselves that makes them different?

Mike Payne: I’ll start with a slight disagreement. You said the richest people don’t work the hardest. I don’t totally disagree, but let me use one example that challenges that—Elon Musk. He’s the richest person in the world, and I’d venture to say he works harder than anybody.

Noah: A lot of the richest people don’t work as hard as somebody in India digging a ditch, or somebody working three jobs. It depends what you mean by work.

Mike: As a society, we think this way. My own team sees me drive a nice truck and go on trips, and they think, “I’m working harder than he is.”

In many ways, they are—physically for sure. This is true of most successful people. And I want to distinguish between business owners and successful business owners, because there are many business owners in the world.

If I put myself in the category of someone who works hard and is “successful,” I still get up and go to work every day. But my favorite line, which I read a couple years ago, is perfect here: “The best thing about owning your own company is you get to choose which 80 hours a week you work.”

I’m not stuck on someone else’s schedule. I get to do it whenever I want, but I have to do it.

Why Mike is a Company Owner

Noah: Let’s go back to the hardest question—why are there certain people like you who just naturally take charge?

Mike: I have a sense of purpose that’s bigger than me. When we talked about creating opportunities for my people, that’s my purpose. Yes, I want to buy companies, make money, do good deals, but a lot of that purpose is to create opportunities for other people.

Your purpose could be a lot of things, but with a purpose, you automatically do more. You’ve got to care about something. I can see it with everybody we hire in the shop. If they have a purpose in their life, they’re a better employee than the ones who see it just as a means to get a paycheck on Friday.

Noah: Do you think your parents did something to make you have this mentality?

Mike: No, I can’t point to that. My dad’s side of the family is six generations of educators. Mom’s side was farmers, blue-collar labor workers. I didn’t have that “I’m gonna follow in the footsteps” thing at all.

But in all honesty, I don’t know that I can even really take credit for it. All I ever did was just work. I work hard. I’m not the smartest person in the world, I’m definitely not the best looking, but I do work hard and I always worked hard. When I got myself in binds, financially or otherwise, the only thing I ever knew to do was work harder.

 

How his Wife Changed Mike’s Life

Noah: Can you recall a big serendipitous moment in your life?

Mike: My wife and I went to the same high school. I was two years older. We both went to the University of Tulsa. We knew each other, had mutual friend circles, but weren’t close. I was a mess in high school.

I didn’t have a lot of direction in life. When I think about me then versus me now, I’m like, how does that journey even add up? How does that guy become this guy?

I was finishing my sophomore year of college, she’s coming in as a freshman. I see her at the bar and say, “Hey, I know you, we went to high school together.” It takes me like two months to convince her to go on a date with me because she’s so well-grounded that all she knew was the me from high school. She’s like, “I’m not dating that guy. He’s a mess.”

From that point forward, I had to prove myself. I had to convince this woman that I had changed and that I had purpose in life. Quite honestly, I would still tell you today that I out-kicked my coverage.

Question: Why do you own your company, or why would you want to own a company?

The post Why Some People Build Companies and Others Don’t, Mike Payne (Part 2) EP 233 first appeared on Today’s Machining World.

On today’s podcast, I’m talking with Mike Payne, owner of Hill Manufacturing and Fabrication in Broken Arrow, Oklahoma, to peek inside the mind of a prolific acquirer of manufacturing companies.

Before purchasing Hill in 2018, Mike spent 20 years in M&A, orchestrating over 100 deals across nearly every industry.

Since then, Mike has acquired four machine shops, and he’s constantly scouting for more opportunities to expand.

What struck me about Mike isn’t just his deal-making successes – it’s his genuine passion for manufacturing. While some people get caught up in the game of acquisition deals, Mike seems to remain committed to his stated purpose, making quality parts and building lasting companies.

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Main Points

Working in the M&A Industry

Mike Payne’s career began in the mid-1990s when he graduated from the University of Tulsa with a computer science degree. He started a software company specializing in shop floor data collection, working with manufacturers during the era when Walmart was pushing barcode implementation. This early exposure to manufacturing sparked his interest in seeing how things were made, from tires to fishing reels.

After successfully growing and selling his software company in 2003, Payne transitioned into private equity, where he spent 15 years buying companies across various industries.

What set him apart in the M&A space was his approach: rather than just completing deals and moving on, he would typically take board positions or operational roles in the acquired companies to ensure their success.

He completed over 100 deals during this period, attributing some of his success to being an outsider who asked “dumb questions” that often led to valuable insights.

 

Purchasing Hill Manufacturing and Fabrication

In 2018, Payne purchased Hill Manufacturing and Fabrication, a company he’d known for 30 years. The company, established in 1976, had become “tired” under an owner looking to sell, with minimal reinvestment in equipment and growth. Payne saw this as an opportunity to revitalize a solid business. Since his acquisition, the company has doubled in size through both organic growth and the acquisition of four additional shops.

What distinguishes Payne’s approach to business is his complex motivation. While he openly acknowledges his desire to make money (“I’m a capitalist”), he emphasizes that his greater satisfaction comes from creating opportunities for others. At 51, he could coast or even retire, but he continues growing his business because he enjoys developing his team and seeing them succeed. He shares examples like watching a 27-year-old manager building his first home and starting a family.

Payne also maintains strong relationships with the previous owners of companies he’s acquired. He shared a story about receiving a photo from a couple whose shop he bought in 2022. While he was at IMTS viewing the latest manufacturing technology, they sent him a picture from their retirement travels of an old lathe in an Arizona campground. This exemplified his goal of not just making profitable deals, but helping owners successfully transition into their next life phase.

Philosophy of Business Growth

The conversation also touched on the philosophy of business growth. While Payne acknowledges that maintaining a steady, non-growing business can be viable, he believes companies need to at least stay current with technology and market demands to avoid slow decline. He shared an example of a recent acquisition target that had gradually declined from $2 million to $1.2 million in annual revenue because they weren’t reinvesting or replacing lost customers.

Throughout the interview, Payne’s enthusiasm for manufacturing shines through. He describes the satisfaction of seeing raw materials transformed into finished products and particularly enjoys giving shop tours to people unfamiliar with manufacturing, as their fascination helps him see the magic of manufacturing through fresh eyes. He compared this to hiking with his daughter, who helps him notice beautiful details he might otherwise miss in his rush to reach the destination.

The discussion reveals Payne as someone who has successfully merged the analytical skills of a private equity investor with a genuine passion for manufacturing and people development, creating a business approach that values both profitability and purpose.

Questions:

If you were to acquire a manufacturing company, what would you be looking for?

What would it take for you to sell your manufacturing company?

Check out Mike Payne’s  podcast, Buy the Numbers.

The blog was assisted by Claud.ai

The post Manufacturing Acquisitions with Purpose, Mike Payne (Part 1)-EP 232 first appeared on Today’s Machining World.

Today’s show is the first episode of a multi-part series about how machining companies acquire new work. 

Our guest is Federico Veneziano, CFO and COO of American Micro Products Inc., a precision machining company in Batavia, Ohio. Federico says one his key strategies for getting new customers is proving to them his company will minimize the problems that are bound to occur in most manufacturing jobs.

Scroll down to read more and listen to the podcast, or listen with Google Podcasts, Apple Podcasts or your favorite app.

Main Points

Federico talks about how the selling process in the machining business has changed in the last few years. He says there are fewer face-to-face meetings now, but he still prefers the traditional human touch. (3:20)

Federico gives an overview of American Micro. The company is located in Batavia, Ohio, just outside of Cincinnati, and it was founded in 1957. It mostly focuses on turning, but also does milling. It makes parts for the automotive, aerospace, and defense sectors, along with a little bit of industrial and medical. American Micro’s workforce fluctuates between 150 and 200 people. It has also had a factory in China since 2005, with around 100 employees. (4:20)

Federico came to the United States in 2004, working for the machine tool builder DMG. He did technical support and service, process engineering, and sales, which gained him a lot of knowledge of machining companies and cultures around the world. He worked on American Micro’s Gildemeister GMC35 CNC multi-spindles, which eventually led to him coming to work there. (6:40)

Federico hates to say it, but aerospace is one of American Micro’s most significant markets, so it has been hit hard by the current troubles of the commercial aerospace industry. The company has had success doing specialized automotive parts such as fuel diesel components and parts for steering pumps. Defense is becoming one of the company’s most important sectors. He says the medical industry has been harder to penetrate because it requires a company to have established contacts already in the business. (8:20)

Federico says one of American Micro’s strategies is to stay in markets it already knows well so it can provide good service to customers. The company uses databases and other resources to find potential customers and then contacts them via phone or email. If a job seems like it has potential, the company tries to set up a meeting to do a presentation, where sales representatives talk about the added value American Micro can provide beyond just price. Federico says he tries to identify potential customers’ pains and then come up with solutions to their problems. He says this is the key to getting new jobs. (10:30)

Federico reiterates that it’s important to make a value proposition beyond a good price per part. He says the constant emphasis today of customers choosing venders exclusively on the basis of price is diluting the value of manufacturing. He says price pressure causes work to go overseas, which creates new complications that sometimes make parts more expensive than if they were made in the United States. He says it worries him particularly when some sectors move overseas, such as aerospace and defense because a drop in quality could have dangerous ramifications. (13:30)

Federico says meeting customers in person is important for American Micro to get to know them and understand the problems they are dealing with.(15:35)

Federico says it’s important for salespeople to have a technical understanding of jobs so they can set realistic expectations for customers. He says in the past there may have been enough margin that even if suppliers couldn’t reach their promised results, they could still meet their customers needs, but that usually isn’t possible nowadays. (16:40)

Federico says in China getting work is an entirely different process than in the United States. It usually consists of an online bidding process. However, he says that model doesn’t necessarily apply to American Micro because foreign companies in China usually do work for other foreign companies, not Chinese companies. This enables some personal relationships. He says payment processes are totally different in China than in the United States. (19:00)

Federico discusses the negotiation process for machining jobs. He says the process depends on whether a product is ongoing and established or if it is a new product. If the product is already being produced by someone else, a buyer will either offer an expected target price or they will ask the supplier to propose a price first to see if they can get a better deal. Federico says he thinks it’s best if the customer starts out by giving their target price because if the target price is dramatically different from what a supplier can offer it will be a waste of time to try to make a deal. Also, he says if everyone is pushing as hard as they can to get the best price possible it will hurt the market as a whole. Every deal will become based on price, rather than important value added services and longterm relationships. He says it can be a problem when traditional salespeople do the negotiating because their commission might be their only concern. (20:20)

Federico says American Micro uses manufacturer’s reps, but in a controlled framework that has been quite successful for the company. Its manufacturer’s rep has technical knowledge and has an intimate relationship with the company. American Micro has an exclusive agreement with its manufacturer’s rep, so for a specific service or part he can only represent American Micro, rather than working for several companies. He says the exclusive relationship is necessary, otherwise the rep will become a quoting house where he has the power to choose between several companies who gets a job. He says traditionally a manufacturer’s rep receives 3-5% commission for a supplier or customer. Even after the manufacturer’s rep makes an introduction, American Micro still has to make its pitch to a customer to get the work. He says to him it’s more difficult to get new work than get a new supplier (23:30)

Noah asks if American Micro prefers to buy equipment before the company has work for it or wait to acquire the work first and fill the need with a machine. Federico says it’s great if you can get jobs for equipment a company already has. He says if American Micro buys a machine for a specific job, it needs firm long-term agreements in place to insure the work for the machine. However, he admits it can still be risky, so it’s important to have knowledgeable people making deals, increasing the likelihood jobs will be executed. He says 15-20 years ago, long-term agreements were less common than today. (29:30)

Federico projects 2021 to a be a decent year for American Micro, but it’s important to the company that aerospace makes a comeback. Based on the company’s market research he thinks in August the sector will ramp up. For other sectors he is bullish. He was surprised that automotive was not hurt significantly by the pandemic in 2020. (31:30)

Federico says he thinks small and medium manufacturers should collaborate more, rather than always fighting for work. He says constantly fighting for work causes a lot of jobs to be decided only by price, which hurts the quality of parts in the overall market. He says companies should instead divide up work based on each company’s strengths, rather than every company trying to hoard all the jobs. (32:40)

Question: Do you prefer to buy a machine before you have any work for it, or buy equipment only when you have a job for it?

The post Reducing Your Mfg. Customers’ Pain, with Federico Veneziano-EP 119 first appeared on Today’s Machining World.

Have you ever wondered how a used machinery dealer like myself approaches buying secondhand equipment?

About a month ago, I did my first LinkedIn live talk and featured that subject. I focused the talk on my techniques for communicating with sellers and equipment experts.

I believe the majority of people these days lean too much on online networking, emailing, texting, and instant quotes. I discussed the art of actually talking to people to better understand the machines they’re looking at, to discover serendipity, and negotiate the best price.

This episode is a little different style than our typical interview or my solo podcasts that are scripted, but if you like me or at least like my stuff, I think you’ll dig it.

FYI, I reference a few slides of machines in my stories, so if you’re listening to this you’ll just have to use your imagination.

I hope you find a few little nuggets of wisdom in this.

It might help you avoid making a some of the mistakes I’ve made in the past when specking on old iron.

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Link to Graff-Pinkert’s Acquisitions and Sales promotion!

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Interview Highlights

Main Points

After 14 years of buying and selling machinery at Graff-Pinkert, our family business specializing in precision turning equipment, I’ve learned that successful machinery purchases hinge on one often overlooked aspect: communication. The following are some of the most important principles I’ve learned over my career for making smart purchases in the used machinery market.

Build Your Network of Experts

The first crucial step in buying used machinery is developing a network of industry experts. Even if you’re knowledgeable about the equipment you’re seeking, having connections with specialists can provide invaluable insights. I have specific people I go to for advice before I buy various machines. I have a Tornos Swiss guy, a couple of INDEX guys, a robot guy and a some other machinery dealer friends who are helpful with all types of equipment.

I’ve also found LinkedIn and industry forums to be excellent starting points for building these type of relationships. It was a little surprising to me at first, but people genuinely enjoy sharing their expertise when approached respectfully. It actually creates friendships and bonds beyond just work.

These connections have saved me from making costly mistakes and helped me understand the true value of machines I’m considering.

Uncovering the Machine’s Story and Serendipity

Something I’ve learned the over the years is that every used machine has a story. While it’s tempting to rely on email communications and online listings, picking up the phone and speaking directly with sellers is the only way to reveal crucial details about a machine’s history.

For example, several years ago, Graff-Pinkert bought some Hurco mills from an auction that had been in a shop which had a fire. The machines looked good in the photos, and the price seemed right. And overall, they were in decent working condition. But, while we were transparent about the machines’ history with customers, not all sellers volunteer such information. But, if you speak to a seller on the phone and ask the right type of questions, you have a better chance of uncovering the background of a machine. Of course, one of the most important ways to understand the condition of a machine is go inspect, but still, talking to the seller is a good first step.

Another crucial reason to call a customer rather than just emailing is it enables the potential for serendipity—lucky breaks that lead to different opportunities than you planned for.

A while back, we had a potential buyer request a quote for a Tsugami BO205 Swiss machine we had in stock that we were struggling to sell. Rather than email him a quote, I called him and discovered he actually needed a different model, a BO325. I quickly remembered another dealer who had that exact model and we got a quick deal done. That customer might not have found the machine he was looking for had we just sent him a quick quote.

Negotiation on the Phone

Talking to someone during a negotiation is invaluable to both the buyer and seller. You get to feel each other out. When someone names a price you can get a sense if a buyer or seller is angry or nervous, or seems like they’re lying.

New information and creativity for deals often appear when talking rather than emailing or texting.

Conversations humanizes each other. They create trust.

I finished my talk by recounting what I sometimes say to endusers when we are haggling over just a few dollars to complete a deal.

While dealers like me focus on resale value when purchasing machines, I suggest that end-users prioritize long-term value over small price differences. A few thousand dollars in purchase price becomes less significant when considered against years of production value.

To sum it up

My advice to used equipment shoppers is to not buy a machine just because it looks pretty online and the price seems right. I’ve made that mistake before, and unfortunately there is a good chance I will make it again.

The secrets to making great buys are cultivating great relationships, gathering information through direct communication, and mindful negotiation—on the phone or in person if possible.

The post 3 Secrets to Buy Used Equipment like a Used Machinery Dealer-EP 231 first appeared on Today’s Machining World.

Sometimes machining companies tell Graff-Pinkert they have long running, lucrative jobs supplying parts to the D.O.D., and it always has seemed a little mysterious to me. What are these parts they are supplying to the government? How does a company get to become a supplier to the D.O.D.?

Is supplying parts to the U.S. Government a good idea for a small-sized or medium-sized machining company?

I got some answers from today’s guest on the podcast, Mike Topolewski Jr. Mike is Vice President of Sales and Operations at Perigee Manufacturing Company in Detroit, Michigan.

Perigee is a three generation, screw machine and CNC shop with a specialty in fasteners. The D.O.D. has been a significant customer of theirs for decades.

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Noah Graff: What was the catalyst that got your company to start supplying to the Department of Defense?

Mike Topolewski: We have been making defense components almost for our full existence—55-plus years. We did indirect (work) prior to being certified as a defense contractor.

Becoming a direct defense contractor can be a very daunting path. It’s not straightforward, so to speak. There are multiple steps and multiple departments you have to go through to get certified. The one caveat is we’re a fastener precision turn component manufacturer. The way that we do business can be very different than a service provider to the Department of Defense. 

Graff: How do you get certified to be a direct defense contractor?

Topolewski:  It’s a multi-step process. 

It was complicated. A lot of bureaucracy. I wouldn’t say it was necessarily difficult. It was a long process. There’s quite a bit of paperwork and background checking to confirm we are viable corporation?

The first steps are getting registered with federal government, getting issued a cage code, so to speak. I believe the acronym stands for Corporate and Government Entity.

Our code is 1X4X7. When you bid on contracts and you are awarded contracts, that is public record. It’s available to anybody to see which entity was awarded what.

Graff: What is a PTAC (Procurement Technical Assistant Center)? How can they aid people in doing work for the D.O.D.?

Topolewski:  These are agencies that I believe are backed by the federal and or state government to assist contractors with existing contracts.

These contracts are very long. They’re not one or two pages. The government is so big, and there is tremendous bureaucracy. The PTACs can be a very helpful resource.

Graff: What is the bidding process like to get government contracts?

Topolewski: The bidding process for our industry is typically done on a bid board.

There are several procurement boards that the government uses to disseminate the solicitations. You need to have the credentials and the access to these portals. You go in there and you see what the government is looking for, and you review these solicitations, which can be longer than the contract sometimes.

Then you enter your bid via the portal.

We’re bidding on contracts that are typically for discrete number of parts with a specific delivery date requirement. 

Graff: What is an example of a quantity that your company would bid on? Obviously, you’re screw machine people, so you’re making a lot of parts.

Topolewski: We are. But we have eight CNC machines which are running low volumes as well. Back during the war in Afghanistan or war in Iraq, there were times when we were making very small quantities and they were immediately sent out overseas to the troops.

Graff: Tell me about your bidding strategies for getting D.O.D. jobs.

Topolewski: Once you enter your bid you are notified via email or via the portal if you’re awarded the business. You’re also notified if you aren’t.

You can see previous contract history for that particular part. You have a general idea of the market value, maybe not the current value, especially through the pandemic and supply chain issues, but you have an idea if you’re going to be somewhat competitive.

There are too many things out there to bid on. You have to be selective. You have to know what your strengths are, what you’re competitive at, and go after that.

Graff: What are the greatest challenges to supplying parts to the D.O.D.?

Topolewski: Obviously, there are the obvious barriers to entry to doing defense work. Getting registered, going through the various steps. Many companies don’t have the patience or the wherewithal. 

Graff: So you’re saying there’s less competition, which is an advantage.

Topolewski: Possibly yes. And for those reasons, but also the length of these contracts and the requirements that are forced upon the contractor. That contract has many clauses that may have costs associated with them to our company.

One obvious difference is packaging requirements. If you’re bidding on these contracts, they don’t just want them in a box and shipped to the depot. They have to be sometimes individually bagged.

And some of these bags are expensive, and they have RFID enabled labels and barcodes. Cybersecurity is another (issue). We are required to have certain cybersecurity measures in place in order to bid on these contracts.

Graff: What are your favorite and least favorite parts of supplying the D.O.D.?

Topolewski: We make a fair amount of parts that go into various vehicle platforms within the military. We

take pride in supporting and protecting the war fighter. These parts are critical to their safety.

Another positive is that federal government pays very well, and they pay on time. And if they don’t, you get interest. 

Graff: That makes sense. They want to be able to rely on their suppliers.

Topolewski: The defense industrial base in this country is critical to the national security of this country, and they take that very seriously. 

If these defense contractors go away and especially critical ones then we have a real issue.  It’s important.

Question: If the United States went to war, what are your greatest concerns for the country’s manufacturing preparedness?

The post Manufacturing Parts for the Department of Defense, with Mike Topolewski—EP 189 first appeared on Today’s Machining World.

You may have noticed that I often talk about friction on this podcast. That’s because everyone has to fight friction in business—and there is A LOT of friction in the manufacturing business. Friction from time consuming stuff. Friction from stuff being too hard to figure out. Friction from stuff we’re not qualified to do or [...]

The post Your Shop Is Too Slow, with Const Ivanov-EP 230 first appeared on Today’s Machining World.