Olin King might not have invented EMS, but his approach is a model for public-private partnership.
An old Army ballad says, “Old soldiers never die; they just fade away.” The same is apparently true for electronics manufacturing services entrepreneurs. Olin B. King, founder of SCI Systems, passed away on June 16, with very little mention outside of northern Alabama.
I had to do a little soul-searching before writing this. I spent five years in what I jokingly called the Olin King School of Hard Knocks in the early ’80s and not all of it was good. That said, I honestly can’t say I’ve worked with a CEO since who had as many accomplishments or helped as many people. And I think it is important to discuss a few of those accomplishments, not from the perspective of accolades, but in terms of examples worth emulating.
King was one of the founders of Space Craft Inc. in 1961. The company name was later changed to SCI Systems to better reflect its diverse customer base. One obituary credited King with inventing contract manufacturing. That isn’t exactly true. Contract manufacturing was a widespread cottage industry in the ’60s and ’70s. However, SCI won the contract to build the first IBM PC. That turned it into the EMS industry’s first Tier One contractor, and it stayed in that leadership role for decades. King actually deserves credit for laying the foundation for the Tier One business model. SCI was the first predominantly EMS company to go public and enter the Fortune 500, although other publicly traded companies had divisions that did some form of contract manufacturing at that time. King was also instrumental in educating financial markets on the potential for the business model, actually bussing in analysts once a year to tour factories and listen to presentations on company and industry trends. King literally plowed the road for future competitors’ IPOs, with SCI’s success stories.
Northern Alabama also benefited from SCI’s presence in the region. SCI was headquartered in Huntsville. At the time it started to grow with the IBM PC contract, that region was depressed. Huntsville had been a big winner in the fledging space program, but when the Apollo program wound down concurrent with military downsizing, Huntsville was hit hard. The interstate highway system bypassed Huntsville, making it less attractive as a manufacturing center for new industries. Under King, SCI didn’t simply grow as a company; it grew the region. King would regularly call the governor’s office looking for resources for SCI. Most of the time those resources benefitted Huntsville as well. When I was there, SCI became Huntsville’s largest employer, and many of the employees it hired had no manufacturing skills. Alabama paid for classroom trailers and instructors to teach soldering skills. SCI set the trailers up in its parking lots. The best students got hired, and the rest walked away with skills that made them employable in other companies in the region, many of whom preferred not to hire unskilled labor. King was instrumental in getting the city connected to the interstate, growing a major technology park and enhancing the state university system. Today, Huntsville has a diverse economy, but I wonder what the city would look like had King not worked to improve the infrastructure. The SCI public-private partnerships in the ’80s translated to thousands of jobs, conversion of unskilled applicants into trained production operators, and enhancements to the local transportation and educational infrastructure that benefited the entire business community, all within promised deadlines.
Wages at SCI back then were low. I used to joke that I made more money in college as a waitress. However, SCI had Cadillac benefits. It wasn’t all philanthropy. SCI had been a union target, and King saw good benefits as a way to compete with unionized factories. Union avoidance was another reason unskilled workers, mostly women, were hired in large numbers. Women would work for lower wages, were less prone to organize, and were willing to do repetitive tasks like drop loading components or clipping leads. While some would call this a sweatshop environment, I saw a totally different picture. The health insurance benefits were quite comprehensive, and sick leave could be accumulated indefinitely. The few employees I knew who got serious injuries or illnesses had jobs when they came back, and if they’d saved their sick leave, got full pay, plus disability coverage, during recovery. There was also strong United Way support, and United Way agencies helped a lot of people in that community. While I can’t speak to what the company did after I left in 1986, I can say that during my time there, SCI was one of the more stable employers, because wages and salaries stayed low. The unionized operations seemed to have annual strikes, often driven by negotiations in other parts of the country, and non-union employers with higher wages often course corrected through layoffs. But the crown jewel in SCI’s benefits was the best tuition refund program I’ve ever seen. Any full-time employee could receive reimbursement for classes at any state university, provided they earned a C on undergraduate classes or a B on graduate classes. It didn’t have to be job-related. And, King and other business leaders worked with the University of Alabama in Huntsville to design evening-based degree programs, so employees could work full-time and go to college at night. Additionally, SCI offered first line supervisor training and other courses via its National Management Association chapter, and would pay for job-related training on a case-by-case basis. In short, those willing to put in the time to tap the training options could gain skills that opened the door to far greater opportunity than they’d had when they were hired. It was a pathway to the American Dream funded by sweat equity, not taxpayer dollars.
Everyone who worked at SCI has at least one Olin King story, some good, some bad. Some will remember him for his Type A management style, which he labeled “distributed autocracy.” Others will remember him as a truly ruthless competitor on projects strategic to SCI. Yet others will remember his involvement at the community and state level. I will remember him as a man who opened the door to opportunity for any employee willing to put in the hours to take it. SCI paid for my master’s degree, and I often wonder if my life would be nearly as comfortable if I hadn’t earned a graduate degree and developed a “no excuses” work ethic in the Olin King School of Hard Knocks. I suspect many others feel the same way. RIP, Olin King.