Summer 2009 -- Click here to read the article by Ed Richardson
Dear Editor,
I agree with pretty much everything Ed Richardson wrote, but I note a consistent lack of data in one area, not only for the area of focus, but for innovative products in general.
For some unknown reason, nobody wants to analyze the effect of venture capital on this whole arena. Having spent some years now chasing VC money for a start up company some things have become quite clear.
- The Chinese in particular have figured out that jobs are more important than short term ROI. As such they are willing to lose money on setting up a factory in the short term, knowing they will recover the investment long term via reduced social costs, payroll taxes and perhaps profits. Meanwhile the US based VC community is primarily focused on short term returns that tend to concentrate on software or other intangible products.
- The US based VC community is actively leveraging the Chinese (and similar) willingness to absorb technologies via short term losses. I have had large VC groups insist that manufacturing start in China as this reduces the total dollars to be invested by them. The VC group intends to get out of the enterprise with a profit, the fact that they have transferred the future of our industry, or even our economy has no impact on short term ROI considerations.
- With respect to small business financing, our government is completely captive to the banking industry. In fact the vast majority of bureaucrats can not tell you the difference between debt and equity. When you speak to them about funding a start up company, they almost chant: “SBA loans” not understanding that banks do not lend equity funds. Next line in the chant is “Venture Capital” not realizing that less than 1 in 10,000 applicants to VC’s ever get a dime. In addition the VC’s are literally assisting the transfer of jobs and technology off shore.
In summary, I’m saying that the Chinese government is not playing the same game as private venture capital. They have found a great hole in our finance structure created by concentration of wealth into the hands of professional money managers, and they are exploiting it to great advantage. Maybe we will wake up before it’s too late, but I doubt it.
Yours truly,
Rick Halstead, President, Empire Magnetics, Inc. |
April/May 2008 -- Click here to read the Guest Column by Ed Richardson
Dear Editor,
We feel it is important to respond to the article “Buying Magnets Overseas: A Strategic Decision” in the April/May edition of Magnetics Business & Technology magazine. While for the most part we agree with the basic tenet of the article and support the four steps that were outlined we don't agree that the capability to produce high-volume alnico magnets simply no longer exists in the US. We (Arnold Magnetic Technologies) have a very vibrant factory in Marengo, IL that has been a major producer of cast and sintered alnico magnets for more than 60 years. We have had significant business growth and are fully capable of taking on any variety of additional volumes. Our factory is AS9100 certified and through recent lean events and improvements we have reduced lead times and are able to supply tens to millions of pieces monthly, all of which are melted in the US and are therefore DFARS compliant.
Thank you, Rob Strahs, Chief Marketing Officer, Arnold Magnetic Technologies |
