For many years, SCI Systems Inc. employees joked that when Olin B. King drove to work, most of the company's senior executives were in the car with him.
That's because King wore several hats-mostly at the same time-as SCI's founder, chairman, chief executive, chief financial officer, chief information officer, and vice president of facilities.
Now King, widely considered the father of the contract electronics manufacturing industry, is retiring from his post after 35 years.
The former engineer turned entrepreneur has been credited with helping create a $90 billion industry. In June, he will be leaving a company that is expected to generate $10 billion in sales next year.
In preparation for his retirement, King has sold a third of his 6 million shares of SCI stock, he revealed last week.
With 31,000 employees at 37 manufacturing plants scattered across the globe, and several competent senior executives in place, King said the time is right for his departure. In the past 12 months, SCI has hired a chief financial officer, chief operations officer, chief information officer, and senior supply-chain manager to replace the person who used to do it all.
"It was efficient and low cost," King said of his early decision to perform several tasks at once. "We've outgrown that now."
The small company that started from the basement of King's home-Space Craft Inc.-aimed to become a private contractor working on satellites for NASA.
But when the government agency in the mid-1970s turned away from satellites toward Apollo space missions, King turned toward his own mission of saving and transforming his business by persuading vertically integrated manufacturers to outsource.
"I've been thrown out of a lot of places," King recalled. "It was not socially acceptable to tell a manufacturer to give up his manufacturing."
Eventually, a major OEM did. IBM Corp. in 1975 tapped SCI to build computer subassemblies. That big break led to other lucrative contracts, enabling SCI to be the first CEM to stretch its manufacturing capabilities to such places as Guadalajara, Mexico; Scotland; Singapore; and the Middle East.
"King's was the first company to outsource build-to-order manufacturing," said Roger Norberg, an analyst at Chase H&Q in Minneapolis. "High-volume BTO copies the Dell [Computer] model. King was definitely the driver in that market."
SCI went hard after the PC market, manufacturing printed-circuit boards and system assemblies. This did have a downside, according to some analysts.
"They were so busy with sales from PC customers [for many years] that they didn't jump on opportunities like Cisco Systems," said Tony Boase, an analyst at A.G. Edwards & Sons Inc. in St. Louis.
In fact, some in the industry-while acknowledging the accomplishments of SCI under King's reign-have criticized him for "micro-managing."
King's tight focus on PCs put SCI on a slower growth track than some of its major rivals, according to industry observers. SCI for several years was the CEM industry's revenue leader, until replaced at the top by Solectron Corp., which expanded through OEM divestitures and acquisitions and a more diverse customer mix, they said.
"SCI watched Solectron pass them by," said one analyst. "King didn't have the bandwith or trust his management team to buy certain businesses."
For example, when International Computer Ltd., based in the United Kingdom, was attempting to sell a subsidiary in December 1996, CEM Celestica Inc. was more aggressive about trying to acquire it, the analyst recalled.
"King didn't send a team. He sent himself. Celestica got [the $550 million] property, Design to Distribution Ltd.," he said.
Last year, however, SCI took one of several recent steps toward greater diversification by signing a $1.5 billion contract to build boards and systems for Canadian telecom giant Nortel Networks Corp.
Will King's legacy and SCI's future be safe in the hands of his successor and the company's current president and chief executive, A. Eugene Sapp Jr.? King handed Sapp the chief executive role at the end of fiscal 1999, and now has named him chairman.
"Sapp will do well. He's been in training for 30 years," joked Bob Anastasi, director of research at Raymond James & Co. in St. Petersburg, Fla. "Few people have his grooming."
Said Herve Francois, an analyst at Credit Suisse First Boston in New York, "Sapp's been working to improve SCI's image from being a PC box maker to [attract] telecom customers. He's a good manager to replace King. He can run the ship on his own and lay a foundation with the new managers," he said.