By Kevin Meyer
I had a warm feeling in my heart a few months ago when I heard about the Philips fluorescent lighting plant in Sparta, Tennessee winning an Industry Week "Best Plants" award.
You see, for the first five years of my career I made light bulbs, albeit for competitor Sylvania, at plants in Boston, Kentucky, and Puerto Rico. It's an old industry, one recently whacked by both new technologies such as LEDs and the green movement, not to mention cheap (in more ways than one) offshore products. I remember my days on a noisy production floor with gas and even hydrogen fires, high speed equipment grabbing the neck ties we were required to wear at the time, bowls of liquid nitrogen placed in front of fans on our desks to keep our work area at a reasonable temperature in summer. I learned a lot about manufacturing, labor relations, equipment maintenance, and dealing with unions.
Philips in Sparta seemed to be dealing with change and competition the right way: by leveraging lean improvements.
The plant has been manufacturing lights since coming to Sparta in 1963 and has withstood the challenge of foreign competition, becoming noted for its ability to re-invent itself.
The plant lobby gives testimony to the changes: Just last year, the plant received the Jim Alford Award for their effective use of state training funds, as well as the Industry Week Top 10 award. The plant was also named “Philips Best Plant” and “Most Improved Safety Plant” for 2009. In September, the plant was selected as the “Best Lean Manufacturing” plant through a Philips competition among North American factories. In that same competition, the plant garnered “Best Culture” and “People’s Choice” awards as well.
Great job! Unfortunately Philips management somehow sees things differently.
The Philips plant in Sparta, TN, the area's largest employer, announced today that it will be closing its doors in early 2012.
“It doesn't take more than a few minutes inside Philips Professional Luminaires' plant in Sparta, Tenn., before the deep, distant rumble of its massive stamping presses resonate in one's ears and bones. As Dave Uhrik, Philips Sparta's plant manager, jokes, that rumbling is the sweet sound of money being printed.”
But today, at 2 p.m., the rumbling stopped, while 271 employees gathered to hear what seemed to be a shocking message for the much-decorated plant: the Philips Sparta manufacturing operation will be closing. According to employees who heard the message this afternoon, the plant will not be closing immediately, but within the next 17 months.
Well obviously there must be a valid reason, such as the industry completely coming to a stop, or some other galactic catatrophe, right?
Silvie Casanova, spokesperson for Philips Lighting, says that it was a business decision that has “no reflection on performance at the plant.” Citing a move to “new technologies,” Casanova said that a slump in the construction market and “a multitude of factors” played a role in the decision.
The product is slated to move to “several different facilities in North America” according to Casanova, who acknowledged that Mexico could be an option, though she was unable to confirm that.
Philips will be working with state and local officials for job placement and training, according to Casanova.
So… I guess "no reflection on performance" really says it all. It was yet another decision completely disconnected from business reality, probably driven by traditional accountants claiming that it somehow made sense to move to Mexico. Build a new plant, hire a couple hundred new people at a cheaper wage, train them, deal with initial quality issues. Somehow that is cheaper than preserving the knowledge, creativity, and experience of a couple hundred existing employees at a 46 year-old facility that has reinvented itself.
Amazing how that there accounting stuff works! What was the value of that experience again? And where is that on a balance sheet and P&L?
Philips' brand promise is "Sense and Simplicity."
Really? How pathetic.
Grigore says
These things will change in the following decade! China, India, Mexico, or other countries won’t look that good on a paper and anything that will count will be the performance. That performance that Philips try to get rid off!
Sam Hoskins says
The sad, sad, bad thing about this is after 10 years have passed all of that local manufacturing knowledge will be gone and Sparta probably will have little to offer new ventures. I have seen the same in my area in southern Illinois. Manufacturing has all but departed and the workforce loses their skills.
You are right, Kevin. It is pathetic.
Lisa Belcher says
Hey Kevin, we in the Danville KY area have just been told that our Philips plant will be closing in February 2011 for the same reason “new technology”. We have a large group of people that are just shy of retiring with full benefits. Is this the same in Sparta? We need a contact down there, can you provide us one?
Richard Silkey says
According to the media job loss is now slowed to a trickle. Manufacturing orders are up. We are moving forward with the recovery! Does anyone understand the disconnect with reality? I guess that flute I hear playing in the back ground is really not the pied piper after all!
Chet Frame says
If the desired outcome of good lean manufacturing is that you do more with less and you have worked the process for twenty years or more and you have a well developed workforce, then you will find that you have things you no longer need. In Juarez, Chihuahua, this same group had three plants that are now in 60% of one plant, still making the products and shipping to meet customer demand in a rather lean way. In Wisconsin, they shuttered a plant and kept two running.
Their customers have changed. The industry has changed. The competition has changed. Sylvania is a brand owned by Osram which is owned by Siemens. Did Sylvania announce its intentions to its workforce fifteen months in advance?
Lamps that once lasted six months now last two years. New technology is creating new lamps that will last for several years and use thirty percent of the power. We will need to manufacture fewer lamps in the future. How do we do that and not waste resources like trained humans?
Kevin says
Chet,
If you extend that mentality then you are resigned to just letting businesses fade away. Sure there aren’t businesses making oxcarts anymore – they evolved or faded away. That’s the job of leadership – grow the business, don’t let it fade away. So one of the corollaries of lean manufacturing is to use the newfound efficiency and productivity to grow the business – be it by gaining market share or by entering new markets. I would consider it sad if a Philips or Osram manager was sitting around going “oh well, fluorescents and incandescents are fading away” instead of “what else can we be doing?”
Hard? Yes. Impossible? No, good companies do it every day.
Mike says
I worked for Emerson Climate Technologies back in the 90’s. The design of the electrical components and new radical compressor technology surpassed industry standards and propelled this product long into the future. Unfortunately a plant was built in Mexico and there went the jobs. Those left behind spent more time reworking the poor quality defective motors from the Mexican plant. These people were let down, now without a paycheck (or little unemployment) there is virtually no spending in this town. Small business has left with the exception of Wal-Mart and citywide budgets are being slashed to dangerous levels of service. It’s bad when this happens to a community, but even worse chances are slim to none a business will ever replace the jobs lost in this town.
Mildred Young says
I work at the Sparta plant. We all want to know what can we do when there are no manufacturing jobs are left. It is as if they built us up to tear us down. We believe their intentions were to sell from the moment of buy. Dollar signs are all they see.