Have you ever wondered where it all started? Who was the first company to suggest they could help take away the headaches and overheads associated with manufacturing? And what was their motivation in doing so?
It's unlikely any of these questions will come up in your local pub quiz. And if they do, you might want to find another place to relax and unwind. But, if you work in electronics manufacturing services and are curious to know how it all began, then the answer is Olin King and SCI Systems.
Blog post by Barry Hochfelder neatly sums up the key points. How contract manufacturing evolved from the Space Age to the Digital Age. Link
Contract manufacturing didn’t just start with the outsourcing rush to China to build seemingly less expensive products: it can be traced to the dawn of the Space Age, starting with the birth of SCI Systems.
A Huntsville, AL, businessman, Olin King, founded Space Craft in 1961 to build satellites and communications gear for NASA, the U.S. Navy and other governmental agencies. When NASA funding dried up in the mid-1970s, King took advantage of relationships forged with OEMs while working on the space programs.
“King knew he had all those capabilities — equipment capacity, people, and systems — so he went to companies like IBM and said, ‘let me build for you,’” said Ron Keith, founder of Riverwood Solutions, a Texas-based supply chain consultancy and managed services company. IBM agreed. In a 2005 interview, King, who died in 2012 at age 78, explained how it worked.
“They came to us with a box of 150 parts and some drawings and asked us to build it,” King said, according to AL.com. “So we did. Then they brought 500 more and we built that, but they still wouldn’t tell us what it was. Then they asked for 1,000 more, and we said ‘OK, but here’s some things we did to improve it.’ That turned into the IBM PC1.”
King later changed his company’s name to SCI Systems. It was acquired by Sanmina, in 2001 for about $6 billion. SCI was named the world’s largest electronics subcontractor in 1984. By 1989, Keith says, that term had become contract manufacturer (CM). By 1999, he adds, there were more than 3,000 CMs in the world serving a growing $58 billion electronics market.