Factory World for Losers?

Jan. 1, 2003
Manufacturing expertise necessary for success in modern industry.

What do you advise your kids to focus on in terms of careers? If you’re like most folks these days, you don’t tell them to do what you’ve done all your working life. Manufacturing and industry have not been hot topics in school since I was there — which was not when the Bessemer Furnace was a new idea, but soon after.

Even then, manufacturing was only one option. The really hot areas were the “professions” like law, medicine and accounting. Nobody ever bragged: “My son, the manufacturing engineer or the plant manager.” The factory world was for losers.

So it went then and so it goes today. Everything we have that keeps us comfortable, mobile, healthy, safe and entertained is a manufactured product. Yet we never approach the topic of manufacturing with the same pride, the same status as other fields. Every so often, however, somebody comes along who has the knowledge and the nerve (besides us, of course) to stand up and say that manufacturing is the essence of modern business life, the central player in the international economic scene, and, as such, those who are expert in manufacturing should and will rise to the top.

That, in a shortened version, is what the leader of one of the most successful companies in the New Economy, the international high-tech world of manufacturing, said recently. He encourages his people to work in manufacturing because “if you do well in manufacturing, you get a good career at Nokia,” pointed out Jorma Ollila, CEO of the Finnish cell phone pioneer.

Fact is, Nokia sees manufacturing expertise and creativity as the essence of its competitive advantage. More specifically, the logistics function and material handling are areas Nokia’s manufacturing management concentrates on at its nine plants in terms of quality and time-to-market issues.

Consider this: Nokia, unlike all of its competitors and, indeed unlike much of industry in general, has not fled offshore to cheaper labor. Its famous phones are made in Finland and in the United States and Germany. In other words, Nokia has been able to compete, dominate in some market sectors, while producing in the most expensive labor markets in the world.

Nokia’s managers see manufacturing and logistics expertise as major components of their competitive advantage. The portable phone market is expected to “fragment” significantly in the very near future, and the industry will be required to offer many more variations, from games to television on the hand set, to the ever-larger market for communications on the fly. Nokia is confident that its focus on manufacturing and creativity will keep it the leader. Simply put, Nokia succeeds with higher-skilled people — not cheap labor. Labor rates in Finland are some 30 times what they might pay in the booming areas of Southeast Asia where competitors have invested heavily. Seems the key to industrial success in the West is not necessarily a ticket to the East.

Nokia is not the first successful producer company to run plants and corporate cultures that are admiring of manufacturing and logistics expertise. There have been many others and many books on the topic. The unfortunate point is that fads and foolishness seem to trump common sense too often. The attractiveness of manufacturing management and engineering as careers for young people is badly diminished while the oddness of people running companies with technologies they know little about continues.

How many times have you heard people, even economists or maybe especially economists, say that the most managerially ready people in industry are MBAs or corporate counsels or accountants or salesmen — or former politicians? The most appropriate candidate to lead any industrial organization seems to me to be the man or woman who knows a lot about the company’s products, markets and technologies — whatever the former formal education.

At Nokia, the competitive betting is on manufacturing expertise, particularly the kind that sees logistics and material handling as central to success in modern industry.

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