I think Buggaboo's right about it being an indication of something.
No offense meant all, but maybe it's not that his heart isn't in the work, but maybe his heart's not in working for you. Maybe he sees himself as self-employed someday or doesn't think your company is where he wants to work until retirement.
I think tardiness is rooted in respect. When he's late he's being disrespectful, whether it is due to absent-mindedness or lack of motivation.
Don't want to bum you out, just throwing possibilities out there.
The problem comes in when his actions start to affect the overall work ethic or attitudes within the company. I can understand wanting to keep a skilled craftsman with great potential, but if it starts to cause others' morale to suffer, the worst scenerio would be if the damage was done, and then this guy up leaves anyway.
