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A Monthly Update for Optical Laboratory Owners and Managers June 2009


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Make What You Say, Pay!

Turn Iron Bars Into Watch Springs
By Anne Miller

Tech Talk

“A plain iron bar is worth $5. If you make horseshoes from it, the value increases to $10.50. If you make needles, it is $3,285. If watch springs, $250,000. Ergo, the difference between $5 and $250,000 is creativity.”
—Anonymous

No one loves a down economy, but the best salespeople and organizations are fighting it—and winning—by “taking iron bars and turning them into watch springs.”

Re-Positioning Results in Record Year
Corporate off-site budgets slashed? This hasn't phased Jodi Massey, Sales & Marketing Director for the Horizon Convention Center in Muncie Indiana. She had a banner year by re-positioning the Muncie site as the cost-effective “un-Chicago arena for terrific events.” (Echo of 7-UP, the un-cola?) Results? Business has never been better.

Surprise Use of Resources Sees 50% Growth
Donations are in free-fall at non-profits. Covenant House recently cut 15% of its $22 million budget and fired 17 people. In the face of this disaster, they took drastic action. Instead of using typical telemarketers to pitch for money, donors were greeted by formerly homeless teens thanking them for changing their lives and inviting them to visit the center to see what their money has accomplished. Results? Some 50% of the donors were more likely to make another donation and request a tour of the facilities.

How to Turn $5 Into $250,000
The common thread to the success stories above is creativity, the ability to look at a problem differently to come up with a fresh solution that works. The more facile you are at flipping how you “see” problems, the more you will succeed, even in sticky situations.

Here are just three creative thinking exercises we do in my Outrageous Thinking classes that help do that.

(Follow good brainstorming rules: go for quantity, don't judge, build on each other's ideas, be outrageous!)

Working with a group of five to seven is ideal for brainstorming sessions. After you identify the problem and the outcome you want, ask:

1. What can we substitute in this situation to solve the problem? E.g., Can we offer online what we offered in-person? Can we offer a service instead of a discount? What alternative materials, people, delivery systems, locations, or technology can we substitute for a new result?

2. What if we reverse our premises? E.g., If we can't get in to see someone, what can we do to get them to come to us? Possible ideas: Invite to a luncheon? Ask to interview them for a company newspaper article? Use someone or something else (LinkedIN) to bring us both together?)

3. What resources, services, people, or procedures, can you combine to freshen up your products and services? E.g, in my field of sales and presentations training and speaking, I have joined with others in joint ventures to create new services and expand both our markets. What products or services can you combine in packages at different price points? Who might you work with at another non-competitive company to sell your services together?

Feats of Imagination Pay Off
Jodi Massey succeeded by reversing her premise. Instead of selling Muncie as a solid, but second-tier convention site, she catapulted it into first place by calling it the un-Chicago site. Convenant House substituted a resource it didn't ordinarily think of as a resource, its clients the formerly homeless teens, for telemarketers to solve its problems.

The economy is what it is. How you thrive in it may be only one new idea away.

Keep that sales energy and creativity going! See you next month.

Anne Miller
Make What You Say, Pay!

©2009, Anne Miller, author, "Metaphorically Selling," www.annemiller.com.

 
HR Corner

Top Ten 'Very Important'
Aspects of Employee
Job Satisfaction

Job Satisfaction

Employees’ View:

Compensation & Pay - 59%

Benefits - 59%

Job Security - 53%

Flexibility to Balance Work/Life Issues - 52%

Communication Between Employees & Senior Management - 51%

Feeling Safe in the Work Environment - 50%

Management Recognition of Job Performance - 49%

Relationship with Supervisor - 48%

Autonomy and Independence - 44%

Opportunities to Use Skills and Abilities - 44%

HR's View:

Relationship with Immediate Supervisor - 70%

Compensation & Pay - 67%

Management Recognition of Employee Job Performance - 65%

Benefits - 62%

Communication Between Employees & Senior Management - 60%

Opportunities to Use Skills & Abilities - 49%

Career Development Opportunities - 49%

Flexibility to Work/Life Issues - 49%

Job Security - 48%

Career Advancement Opportunities - 46%

Source: Society of Human Resource Management 2007 Job Satisfaction Survey Report.

Hedley Lawson brings over 25 years of optical industry experience to JMI. For over 10 years, he has been a contributing editor to VM, most recently as writer of the monthly column “Business Essentials.” He is the Contributing Editor of VM's E-Newsletter Business Essentials.

 

 

Decision Making: Maximizing Investment Opportunities

Maximizing Investment Opportunities

Business owners are interested in making a profit. Limited resources require them to select from competing investment opportunities in order to maximize the return on their purchases. Evaluating what an investment should return is central to selecting the right opportunity. The Capital Asset Pricing Model (CAPM) is used to determine an appropriate rate of return on and asset. CAPM consists of:

Beta (β): An asset’s non-diversifiable systematic. Put another way, (β) is the sensitivity of asset returns to market returns.

Risk Free Rate (Rf): Risk free rate of interest, also known as the t-bill rate.

Market Premium (E(Rm)-Rf): The difference between the expected market rate of return and the risk free rate of return.

The CAPM formula is E(Ri) = Rf + βi*[E(Rm)-Rf] and takes the risk-free rate, or t-bill rate, and adds the beta times the market premium, also known as the risk premium.

Internal rate of return (IRR), also known as rate of return, is a capital budgeting metric used by firms to decide whether they should make investments. IRR measures the efficiency of an investment, as opposed to Net Present Value (NPV), which measures value or magnitude. The IRR of an investment is the discount rate that makes the NPV of cash flows equal to zero. Remember from the previous column that if an investment has an NPV > 0, then the firm should make the investment. If the IRR is greater than the required rate of return (which is calculated using the CAPM) the firm should make the investment.

For example, an investment that initially costs $25,000 and will generate net cash flows of $12,000 in year 1, $11,000 in year 2, $7,000 in year 3, and $4,000 in year 4. This investment carries a systematic risk (β) of 1.3, the risk-free (t-bill) rate of return is 2% and the market premium is 6%. Should the investment be made?

Using the CAPM, we can determine that the investment should have a return of 9.8% (2% + 1.3 x 6%).

A spreadsheet program can determine both the Net Present Value of the cash flows as well as the internal rate of return for the investment:

Initial Cost

Year 1

Year 2

Year 3

Year 4

IRR

NPV

-$25,000

$12,000

$11,000

$7,000

$4,000

17%

$2,816.97

Using the above table, the IRR (17%) which is greater than Required Rate of Return using CAPM (9.8%) and the NPV is greater than 0, which would indicate that the firm should make the investment. If the NPV was less than zero or IRR is less than 9.8%, the firm should not make the investment. Taking return analysis to the next step, business owners should evaluate all competing purchase opportunities in the same way and compare their potential IRR’s selecting those investments with the highest potential returns relative to their risks.

This article is the fourth in a series on “Decision Making.”

Read Part 1, Part 2 and Part 3

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Jason Meyer—Jason A. Meyer is senior vice president, HPC Puckett & Company. Based in San Diego, Calif., HPC Puckett & Company specializes in mergers and acquisitions of wholesale optical laboratories. You can send comments or questions about this article or any other Dollars & Sense articles to Jason Meyer at jam@hpcpuckett.com.

PPG

Darren Field of Duffens Optical

Darren Field

 Darren Field

Darren Field has been with Duffens Optical, part of Essilor Laboratories of America, since June of 2004. He started his career at their Lenexa, Kan. location as a lab manager designate, as part of a training program created by Essilor. Over the course of 12 months, he received training on everything from lab production and OLA testing, to sales and lab management.

Now in his fifth year with Duffens Optical, Field currently serves as the lab’s assistant manager at the Denver, Colo. location. His responsibilities vary daily, depending on the lab’s needs. He can be found analyzing financial lab statistics, working in production, performing maintenance, or riding with sales consultants to visit accounts. “Honestly, there is no typical day. With such a wide variety of lab needs, I could spend my day working on the production line, visiting accounts, giving a lab tour or even working to fix or improve our machinery,” said Field.

Being part of the Essilor Laboratories of America network provides motivation to Field, as the lab is allowed to run autonomously while having corporate goals aligning the direction of the lab. “The flexibility allows the management team to run the lab based on the skill sets and group dynamics of its employees,” he remarked. “It motivates me; I even have the support to pick up the phone and call a lab on the other side of the country and talk through issues.” Field noted that Essilor promotes employee recognition across the board and allows individuals to be recognized not only in the lab environment, but across the network.

Field says the highlights of his career are helping with the non-profit organizations Duffens Optical is involved with. This includes producing eyewear for homeless clinics, Special Olympic athletes and the Sight for Students program. “It’s a good feeling to know that I can personally impact the life of someone less fortunate through my job,” he said.

Before starting his optical career, Field interned in the estimating department of a construction company, helped pay for college doing commercial, residential and automotive glass replacement. When asked about his future career aspirations, he commented, “I enjoy what I do, and could see myself managing a medium to large-sized lab in the future.”

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Silmo
COLA

Transitions Optical’s Carol Baez (l), Brad Husted (c) and Kathy Carson (r) attend the COLA meet and greet event the first evening.

Despite Economic Crisis, Labs Still Value COLA Meeting— Although the economic crisis has forced some trade associations to cancel or curtail meetings, the California Optical Laboratory Association’s (COLA) annual meeting is still going strong. Over 60 optical laboratory representatives and vendors gathered in La Quinta, Calif. last month for the two-day conference and West Coast Good Fellow Award ceremony.

“Attending COLA offers a chance to meet with lab principals to share opinions and gauge the strength of our industry right now, as well as network and share strategies going forward. I felt attending COLA was vital and timely,” said John Haigh, president of J&J Optical, Paradise, Calif.

COLA  Meeting
VSP’s Jeff DeRose (l) and Santinelli’s Steve Swalgen (r) chat at the COLA cocktail reception.

The COLA meeting opened with a golf tournament and was followed by a cocktail reception and dinner including the presentation of the West Coast Good Fellow Award. This year’s recipient was Bob Babcock, special project manager for Essilor partner labs. The Good Fellow Award honors an individual who is respected and admired by his or her peers and who truly represents a “Good Fellow.” Babcock was presented with a perpetual trophy and the traditional golf putter by Younger Optic’s Terry Yoneda.

COLA Meeting
Younger Optics' Terry Yoneda (l) presents Bob Babcock (r), a special project manager for Essilor partner labs, with the 2009 Good Fellow Award.

In addition to the Good Fellow Award and networking opportunities, labs attended six presentations on the second day of the meeting, covering everything from a new overnight express courier service to a sneak peak at new edging technology. Steve Swalgen from Santinelli International presented information on high curve bevel and edging customization. Kevin Paddy of National Optronics discussed the benefits of five-axis edgers and auto blocking and Brad Husted of Transitions Optical discussed marketing opportunities for optical labs. Michael Morris, OD from Morris Vision Consulting spoke on the composite lens technology from PixelOptics.

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k-optical Team

The k-optical team consists of, from left, Marc Kellman, Michael Kellman and Kevin Kellman.

Michigan Lab Develops Net Niche— At a time when the economic crisis is forcing many optical businesses to retrench, k-optical, a small wholesale lab that caters to the Detroit metro area—one of the nation’s hardest hit markets—is pursuing new business opportunities. Last year, k-optical, located in Redford, Mich., acquired World Wide Optical, an Internet-based business that sells eyewear packages directly to eyecare practices. The company’s affordably priced packages include a private label frame, matching case and cloth and prescription lenses.

Although k-optical acquired World Wide Optical before the economic crisis hit, the company is well-positioned to meet the increasing consumer demand for value-priced eyewear. “We offer a low-end product with high quality,” explained Mike Kellman, who founded k-optical 12 years ago and remains head of the lab. “We give good prices on our package deals, which include our frames from our very own Albert Parke Collection. We have an inventory of frames and we do the prescriptions in our lab. A sales force services the practices.”

Kellman, a 40-year veteran of the lab business, runs k-optical and World Wide with the help of his two sons, Marc and Kevin. Each has their areas of expertise, although everyone multitasks, said Kellman. “I do almost all the order entry and work the phones. Marc does World Wide, Kevin takes care of order entry, tracing, cutting, edging and surfacing,” said Kellman. A fourth employee handles edging and tinting. “We average between 65 and 100 jobs per day,” noted Kellman, adding that 85 percent of the work is complete jobs.

Although the lab’s work volume has slipped slightly over the past year, the Kellmans take pride in being able to grow World Wide Optical, a profitable business they believe has a significant potential.

“We believe it to be quite an accomplishment to have started two companies with nearly zero capital in a state that has been in a recession/depression over almost the whole time we’ve been in business, and not have fallen into bankruptcy like so many wealthier, more established companies have,” commented Marc Kellman.

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Tom O'Brien

Tom O’Brien

Precision Optical Group Expands Finish Department— Precision Optical Group (POG) of Creston, Iowa has expanded its finish department and implemented new quality control and quality auditing practices. The company has hired Tom O’Brien, an optical veteran of 44 years, as quality control auditor. O’Brien, pictured here, owned and operated his own eyecare practice and was a longtime customer of POG.

Under POG new quality control guidelines, every full service job goes through a rigorous quality check list, first by the assembler and then by the final inspector. O’Brien will randomly re-inspect jobs that are complete and ready to ship out. POG reports that it is currently auditing 10 percent of all jobs processed and plans step it up to 18 percent to 20 percent by the third quarter of this year.

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Toledo Optical

Toledo Optical’s “Succession” expert panel consisted of, l to r, Rachel Bostelman, OD, Bob Limbird OD, Rick Cornett, director of the Ohio Optometric Association, John Archer, OD, Lindsay Basler, optometric student, Ferris State University and Jay Mentz, optometric student, Ohio State University.

Toledo Hosts Practice Succession Program— Toledo Optical and Williams Group hosted a continuing education program on Feb. 18 titled “Successful Succession of Your Practice.” The “principals only” meeting, which took place at the Highland Meadows Golf Club in Sylvania, Ohio, drew over 80 optometrist/owners. It kicked off with a lecture from Bill Nolan of Williams Group, who discussed the nuances surrounding the buying and selling of an optometric practice. A panel discussion followed, featuring John Archer, OD of Bowling Green, Ohio, Bob Limbird, OD of Napoleon, Ohio, Rachael Bostelman, OD of Defiance, Ohio, Rick Cornett, executive director of the Ohio Optometric Association, Bill Nolan of Williams Group, Jay Mentz, an Ohio State University optometry student and Lindsay Basler, an optometry student at Ferris State University.

“We wanted to bring a unique opportunity to our customers that would allow them the chance to better prepare for their futures,“ said Toledo Optical’s vice president, Jeff Szymanski. “The whole idea of ‘practice succession’ is something that weighs very heavily on the minds of not only practicing doctors, but also on optometry students, who will be the future of our industry.”

Toledo Optical
John Kruszewski, OD, left, and Darryl Mathewson, OD were among the optometrists who attended the “Successful Succession” seminar hosted by Toledo Optical and Williams Group.

Szymanski added that the seminar not only prepared attendees for the future but also helped to create some emerging opportunities.

“Toledo Optical is helping to fund further Williams Group consultatative services for our customers,” he said. “We have also begun to create an alliance with the Ohio State College of Optometry along with Ohio State's 'Private Practice Club' in order to help better facilitate future partnerships with students and independent eyecare professionals. By focusing on initiatives such as these, we not only help our customers to create success, but also help to ensure our own success along the way.”

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Indiana Ophthalmics, Insight Optical Join OSC— Optical Supply Co-op (OSC), an alliance of wholesale laboratories based in Pelham, Ala., announced that Indiana Ophthalmics and Insight Optical have joined its network.

Indiana Ophthalmics, located in Indianapolis, Indiana is managed by Danny Lawrence and Harry Fagedes, optical veterans who have been in business for over 30 years. The lab offers an extensive inventory, practice enhancement programs, sales promotions and simplified ordering to all their clients.

Insight Optical is a start-up laboratory that is due to open this month. Located in Missoula, Montana, the lab is operated by Randy Bishop.

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Younger Optics

Crizal Sun with Scotchgard Protector

Crizal Sun With Scotchgard Protector

Manufacturer: Essilor of America
Description: Scratch-resistant, smudge-resistant, and easy-to-clean sunlenses.
Features/Functions: Combines the superior performance of Crizal Sun with the protective power of Scotchgard Protector. Engineered to be easier to clean and stay clean. Patented HSD Process forces molecules in the top coat to be packed together very densely, giving strength and uniformity to the surface of the lens. This creates a higher surface contact angle and gives the top coat the durability that prevents it from breaking down, even after 20,000 cleanings.

Over 99 percent of the reflections and glare from the back of the lens are virtually eliminated so patient’s eyes do not have to work as hard to see on sunny days. Proprietary process prevents unwanted color changes to tinted lenses.
Availability: Crizal Sun Lenses with Scotchgard Protector can be added to tinted and polarized lenses. Colors include brown, grey, grey-green and black tints as well as silver, blue and gold mirrored lenses. For peak performance, Essilor recommends Crizal Sun with Scotchgard Protector on Xperio polarized lenses.
(800) ESSILOR
www.crizalsun.com

 
Grobet Hot Air Warmer

Grobet Hot Air Warmer

Manufacturer: Grobet/Vigor
Description: Upscale hot air warmer with digital display and multiple heat settings.
Features/Functions: The electronic system is highly energy efficient and controls temperature internally. A digital readout shows current working temperature and when unit is restarted the temperature returns to latest setting. Heat is controlled with simple up and down buttons for extreme control. Supplied with cup, intensifier and lid. 800 watts. 9.25 inches by 5 inches by 9.75 inches.
Availability: 110V and 220V
(800) 847-4188
www.vigoroptical.com

 
Mei641 Edger

Mei641 Edger

Manufacturer: MEI System
Description: Versatile industrial edger designed for small and medium-sized labs.
Features/Functions: Incorporates same technology and software as MEI’s MonoSpheraRX-DD. Manual loading. Four CNC-operated cutting axes. MEI Double Drive lens locking system. 2D probe device for lens detection. Cuts all plastic materials. Edge types include inclined and vertical V-Bevel with safety bevel, polished rimless with safety bevels and holes, polishing groove with safety bevels, inclined T-bevel, inclinced v-bevel with step, high-base sport frames and free-form frames.
Size: 37 by 37 by 62 inches
(847) 357-0323
www.meisystem.com

 
Carbonite AR

Carbonite AR

Manufacturer: Nexus Vision
Description: High-performance, next-generation anti-reflective coating.
Features/Functions: Uniquely formulated process incorporates new technological advances in all layers of the AR stack to provide added durability and longevity. Combines new super oleophobic topcoat, AR layering process and solvent-based, backside hardcoat. Comparable to factory applied front surface coatings, the backside hardcoat ensures a durable and long-lasting substrate, providing an ultimate platform for the Carbonite AR process.

Extended Life Process incorporates advanced materials that last for the life of the Rx, creating valuable patient benefits. Easy-to-clean oleophobic topcoat and increased abrasion resistance provide greater overall wear resistance.

Every Carbonite job includes Nhesive, an outer coating that eliminates slippage and reduces edging errors.
Availability: Carbonite AR and other NVision AR products are available with next day service in most cases. A complete line of sales aids is available including a lens demonstrator and various ECP and patient brochures.

Nexus Vision is an organization comprised of independent laboratories primarily located in the Southeast.
(866) 492-6949
www.nexusvisiongroup.com

 
Lfu 220 Hybrid Filtration Unit

Lfu 220 Hybrid Filtration Unit

Manufacturer: Santinelli International
Description: Tank and pump hybrid system with centrifugal filtration technology.
Features/Functions: System separates lens waste from water, maintaining clean water circulation while significantly lowering water consumption. After processing approximately 130-160 lenses, the waste is filtered and compacted into a single solid mass which can be disposed of easily, keeping the surroundings and operator’s hands clean.

Filtration process eliminates lens scratching while keeping the lens edger grinding chamber clean. Unit’s water only needs to be replaced every 1,000 lens cycles. The amount of water consumption per lens with the Lfu 220 is estimated to be .025 liters versus 13.5 liters with direct water.

While edger is processing lenses, the Lfu 220’s water flow minimizes splashing, eliminating foaming, and maintains a lower water temperature. Decreased temperature maintains high-quality polish; because there is no longer foaming, there is no need to add a chemical defoamer to the tank.

Environmentally-friendly and user-friendly. Compact design, automated operation.
(800) 644-EDGE
www.santinelli.com

 
LifeRx 7x28 Trifocal

LifeRx 7x28 Trifocal

Manufacturer: Vision-Ease Lens
Description: Photochromic polycarbonate 7x28 trifocal in gray and brown.
Features/Functions: LifeRx lenses are manufactured with 100 percent renewable energy and deliver a combination of rapid darkening and fade-back speed and indoor clarity.
Availability: D28 flat-top bifocal, Illumina and Outlook progressive lenses, aspheric semi-finished single-vision and spherical semi-finished single-vision.
(800) 328-3449
www.vision-ease.com

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In This Edition...
DOLLARS & SENSE
Decision Making:
Maximizing Investment Opportunities
FOCUS ON…
Darren Field of Duffens Optical
LAB NOTES

Despite Economic Crisis, Labs Still Value COLA Meeting

Michigan Lab Develops Net Niche

Precision Optical Group Expands Finish Department

Toledo Hosts Practice Succession Program

Indiana Ophthalmics, Insight Optical Join OSC

MAKE WHAT YOU
SAY, PAY!
Turn Iron Bars Into Watch Springs
TECH TALK
Calibration:
Layout and Blocking
check HR CORNER
Top Ten 'Very Important' Aspects of Employee Job Satisfaction
 

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Jobson Research
 
Tech Talk

Calibration:
Layout and Blocking

Tech Talk

Layout and blocking devices need to be checked daily for accuracy and proper function. If we layout or block the lens incorrectly to start with, everything else we do to that lens during surfacing will be at risk. If you are using pin style blocks, check that the centers are not worn causing a poor interaction between the pins and the block during fining and polishing, which can lead to aberrations, waves and surface deformation. For reception style blocking, make sure that the reference surfaces are not nicked or damaged in such a way that would prevent them from seating properly in the reception chuck. This is so fundamental, yet often overlooked in many laboratories. Treat your blocks with care and replace the centers as needed. If the block is bad, replace it.

When blocking with wax mediums, allow the lens and block to cool and cure for a minimum of 30 minutes prior to generating. This is especially critical when working with thin centered lenses such as high index and polycarbonate. With alloy blocking, the desired cool and cure time should be a minimum of 30 to 45 minutes. As with wax, this is very important with thin lenses.

 
LabTalk Spotlight
June 2009

LabTalk




In the LabTalk feature, Getting in Gear—Working Effectively With AR Coaters, by Liz Martinez, Martinez speaks to lab owners and AR coater manufacturers to find out what it takes to have an in-house R coating system in your lab. The article answers questions on when is the right time to begin, what is your ROI and what are the pitfalls you need to beware of when bringing AR in-house. Check out this excerpt and to read more, go to Labtalkonline.com for the entire article.

According to Brian Peterson, product manager of coating at Satisloh North America, “A lab that is currently outsourcing as few as 30 to 50 AR jobs a day should look closely at bringing AR in-house.”

George Kim, vice president of operations at Leybold Optics USA, agreed that 30 to 50 AR jobs a day is a break-even point. He added that labs should also expect a surge of new business. “Shortly after your AR equipment is in, you’ll see a dramatic increase once your customers know you do coating in-house,” he said. “You’ll increase your surfacing business because clients don’t want to split where they do surfacing and coating.”

Diane Strickler of Precision Optical Laboratory in Roanoke, Va., knows what it takes to start doing AR in-house since her lab is in the process of installing the necessary equipment. She advised taking a close look at your AR numbers before jumping in. “We have been tracking our AR for over a year,” she reported. “When the AR jobs got to be between 26 percent and 30 percent, it was time for us to get in.”

To read the entire article, “Getting in Gear...” log on to www.labtalkonline.com. There you will find the article listed under the Features section.