SOUTHERN CALIFORNIA JOB MARKET: WORKING INTO THE NEXT CENTURY : OPTIONS : MAKING IT IN MANUFACTURING : Experience at Running a Factory Is Increasingly Good Training for Running a Company

A young business school graduate who wants to run the manufacturing operations of a Fortune 500 corporation in the next century ought to go to work for a Japanese auto maker today, says one of America’s top executive recruiters.

To become chairman? Forget the finance and marketing routes, he says: Manufacturing is a new route to the top.

“We have just begun to see a resurgence in the demand for manufacturing executives,” said Morgan H. Harris Jr., head of Southern California and the Pacific Basin for Korn/Ferry International. “The Japanese challenge to this country in terms of quality control has been to the manufacturing sector what Sputnik was to the high-tech sector. It woke us up: We were behind.”

Indeed, America’s smokestack industries are huffing and puffing their way toward the millennium with renewed strength. Total sales of the Fortune 500, a list of the nation’s largest industrial concerns, climbed 9% last year to $1.88 trillion--up from $1.72 trillion the year before and higher than the previous record of $1.81 trillion set in 1985.

The companies are getting more powerful, ironically, by growing smaller and more efficient. And according to the government, the only real employment growth in U.S. manufacturing companies over the remainder of the century will be in white-collar jobs, not assembly-line jobs.

Specifically, while employment at U.S. factories is expected to drop by 0.3% over the next 12 years, output is expected to increase 2.3% a year, according to the U.S. Bureau of Labor Statistics. Only five of the country’s 79 industries making durable goods are not expected to experience output gains; the lagging industries are railroad equipment manufacturers and the makers of steel and other metals.

Managers and engineers will be the force behind that productivity growth. Although manufacturing is projected to lose a total of 834,000 jobs between 1986 and 2000, the Bureau of Labor Statistics projects that there will be an increase of 258,000 engineering, scientific and technical positions at manufacturing companies and 85,000 more managerial jobs.

Korn/Ferry has seen it start already. In the first quarter of this year, 12% of its placements of senior executives across America were at manufacturing companies, up from 8% in the first quarter of last year. “Downsizing and a weaker dollar . . . have stimulated the demand for top-level executives who can continue to improve productivity,” said the company’s president, Richard M. Ferry.

Harris sees the renewed interest in factory management as a sequel to the big demand for marketing and finance specialists during the postwar era. “Extremely high growth rates in the 1950s and ‘60s obscured a lot of sloppy management,” he said. “People who really know how to run several plants at once effectively are going to be the stars in the next decade, the next CEOs.”

Not everyone wants to run a factory, however, and there are plenty of jobs available at manufacturing companies for people with financial skills.

Cost accountants, for instance, appear to be in demand by manufacturers hiring middle managers. Bob Woodall, group manager for the Los Angeles office of Management Recruiters, said his company’s survey of 2,500 employers last November found an expectation of a 20% to 32% growth in hiring for middle management jobs at manufacturing companies. Primarily, he said, the companies are looking for candidates “who saved their companies dollars through procedure changes.”

That is particularly true at Southern California’s many aerospace manufacturers. “People who have general accounting knowledge and can communicate the needs of the government’s paper work to their employers are very hot right now,” said John Ormsby, president of Robert Half of Southern California. “The major aerospace companies desperately want people with skills in determining the right price for their products so profit potential can be tracked properly.”

Another hot discipline at manufacturing concerns: credit managers, the people who help arrange credit for customers so they can buy a company’s products.

The globalization of business is making the job extremely complicated. Instead of promoting employees from the collection desk, manufacturers who want to sell overseas are hiring experienced lenders from banks. “It’s getting to be a far more sophisticated climate,” Ormsby said. “Companies are trying to move away from making intuitive decisions . . . toward employees who are facile at using computers and can analyze Eurodollar equivalencies, arrange letters of credit and develop complex payment methods.”

Still, the American dream is to run the place. Firms like Korn/Ferry are often called upon to recruit candidates for the top job. Here is Harris’ dream resume for a vice president of manufacturing at a Fortune 500 company:

- Undergraduate degree in mechanical or electrical engineering.

- A “class” master’s degree in business administration, such as one from MIT or Stanford. (“Business schools are very trendy,” he says. “Manufacturing Management 10A could soon be as hot as Investment Banking 10A was last year.”)

- Start in a management trainee program at a company like Nissan or General Electric and work up to running a significant plant, such as one where the output has a wholesale value greater than $10 million. (“Most of those guys out of business school want to go run something right away, but I want them to get back to basics,” Harris said. “I want them to know every inch of that plant: be as good at quality control as their best quality control people and be as good at assembly-line management as their best foreman. Make that plant the most efficiently run plant in the system.”)

- Be promoted to multi-unit manufacturing management. (“Running four or five plants tests a person’s ability to delegate and recruit and and do all those things management is about,” Harris said. “He should know how to walk through a plant and because of his hands-on experience be able to judge it quickly and have five or six major cost-saving suggestions.”)

After a person has run five plants successfully over a five-year period, Harris said, he or she is a polished candidate to be manufacturing vice president somewhere. (“That’s where we run into him, hopefully, and suggest him for a job at a $500-million company,” the recruiter said.)

And then? After going in at more than $150,000 plus a big equity package, Harris said, the ideal person “really turns their new employer’s operation around from a productivity point of view and builds people in their own image as he or she did at his previous company.” The person opens new plants and they are all efficient; he or she also acquires an appreciation of finance and marketing along the way, and understands that products have to paid for and sold as well as made.

“Now he’s a candidate for president,” Harris said. “That is the new route to the top through manufacturing that didn’t used to be there.”

There are a few companies in each industry worth special notice among first-time management job seekers, Harris said. In auto making, he suggested consideration of Honda’s plant in Marysville, Ohio; Sony’s plant in La Jolla, and Nissan’s plant in New Smyrna, Tenn. “These are three places where Americans are learning Japanese manufacturing techniques, and those managers are going to be picked off,” he said.

It will be easier to find such fast lanes at drug companies than at auto makers--and possibly faster yet in service companies, not manufacturers. Of the 21 million jobs that will be added to the U.S. economy by the next century, 20 million will be in service firms, like banks and department store chains.

Here are some more general trends foreseen by the government in six manufacturing industries:

- Transportation equipment. The so-called birth dearth is expected to have a profound effect on the auto industry, causing a severe decline in the number of first-time car buyers that will not be offset by the rise in the number of older people who will be buying more expensive cars.

Employment in the auto industry is expected to fall to 749,000 jobs in the year 2000 from 865,000 in 1986. At the same time, investment in new plants and robotics is expected to cause output to rise 3.2%. (Harris’ suggestions for management trainees: Nissan, Honda or Nummi, GM’s joint venture with Toyota.)

The aircraft industry, one of the biggest employers in Southern California, is expected to decline to 274,000 jobs in 2000 from the 1986 level of 339,000 jobs. One big cause, according to the Bureau of Labor Statistics: a sharp decline in Department of Defense purchases. (Harris’ pick: Hughes Aircraft.)

- Primary and fabricated metals. Employment at companies that make steel and iron slipped the most among manufacturers between 1979 and 1986, according to government figures, and there is little rebound in sight despite the abandonment of old mills and the construction of more efficient ones. Employment is projected to decline 2.2% a year through the rest of the century as the use of plastics and composites in such things as aircraft and machinery grows and cheaper imports continue to flood in despite the drop in the value of the dollar. (Harris’ pick: Magma Copper.)

- Computers and office equipment. A powerful expansion in consumer demand is expected to boost employment by 85,000 jobs between 1986 and 2000, to 503,000. The government says growth will be accented by a very strong shift from production jobs to research and development positions. (Harris’ pick: Digital Equipment and Hewlett Packard. “The trainee program at IBM is so rigid that its people are often unfit to work for other companies,” he said.)

- Food products. Reflecting the slowdown in population growth, output of food is expected to grow slowly. Overall, factories making food will lose 161,000 jobs between 1986 and 2000, though there will be some strong niches: workers will be making more canned, dried and frozen foods, and the ranks of people making meat products will grow by 10,000. (Harris’ pick: Pepsico.)

- Apparel and textiles. The expected rise in personal income is good news for apparel companies overall but not for people who hope to work in the industry. The rapid rise of automation in mills and a sharp increase in imports is expected to cut 158,000 jobs between 1986 and 2000, to 763,000. (Harris’ pick: Warnaco.)

- Chemicals. The expanding numbers of elderly in the country are expected to be a boon to the drug and pharmaceutical industry. Output is expected to grow 4% a year and employment is expected to increase by 17,000 to 224,000 in the year 2000.

Employment in other parts of the industry--such as makers of plastics and specialty resins--is expected to fall despite strong productivity increases because of increased automation and engineering advances. (Harris’ pick: the petrochemical arm of any big oil company, particularly Shell, Phillips or Exxon.)

While factories currently hire about a fifth of the U.S. work force, by 2000 less than a sixth of U.S. workers will be involved in making things. Manufacturing production, on the other hand, is projected to remain steady.

“Nobody thinks we are going to provide the bulk of jobs in the future due to the pressure to reduce costs,” said Jerry Jasinowski, chief economist at the National Assn. of Manufacturers. “Even though there are still so many jobs in manufacturing because it is so labor intensive.”