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.