#054 / 2004

Ikea store, Richmomd, BC


Wood chips vs. microchips

Students amassing huge debts to fast-track their careers in computer science may be stunned to hear that the richest person in the world makes furniture - not computers. According to the Swedish weekly business magazine Veckans Affarer, Ikea founder Ingvar Kamprad is now richer than Bill Gates (source). Kamprad's fortune is worth $72 billion CAD (Forbes magazines lists $62 billion CAD as the net worth for Gates).

Since the introduction of the microprocessor, high-tech and other service industries have been touted as the most lucrative income-generators for the new millennium. In many Canadian cities, a by-product of this philosophy has been the reckless sell-off of downtown industrial lands for the development of condos and software sweatshops at the expense of traditional manufacturing facilities. Despite the obvious relationship between the amount a country produces and its prosperity that is evident in European countries, North America buys into the myth that we can be more by making less.

The absurbity of this situation has reached the point where one right-of-centre Vancouver politician is fighting to maintain industrial lands for working-class jobs. In a recent Vancouver Sun column about preserving industrial land in city centres, Vancouver city councillor Sam Sullivan (of the business-supported Non Partisan Association) stated, "There is value to having start-up [industrial] incubators in the city. You've got lawyers, financial people coming and going all the time. There are a lot of interactions happening."

Ingavar Kamprad always understood the importance of local/home production. Although the Ikea empire is comprised of several legal entities in different countries, many of the production and design decisions are still made in the outskirts of Älmhult, Sweden, where the first Ikea store opened in 1958. In fact, 40 technicians are employed there to set up the photo-shoot displays for the annual catalogue that is distributed free in 23 languages to 145 million homes worldwide (source).

Since opening its first North American store in Richmond, BC, in 1976, Ikea has expanded its Canadian presence to 12 stores. In Dartmouth, Nova Scotia, Ikea operated Swedwood Canada Ltd., a furniture manufacturing company. In July 2004, with the assistance of a loan of $1 million from Nova Scotia Business Inc., Tommy Holmers (past president and CEO of Swedwood) purchased Swedwood from Ikea and renamed it Scanwood Canada Ltd. The company employs 215 people in its plant on a site that has more than doubled in size to its current eight acres of land since opening in 1986.

Kamprad has proven that manufacturing useful, well-designed products can generate real, measurable wealth for the individual and a country. Students chasing the millionaire dream should consider learning about wood chips instead of microchips - they and Canada could be the richer for it.

2003 Ikea facts

  • No PVC content in its furniture
  • $20.2 billion CAD global sales
  • 200+ stores in 30+ countries
  • 347,567,000 store visitors worldwide
  • 27 distribution centres worldwide

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