I don’t believe this claim. Apple CEO Tim Cook claims there are not enough skilled tool and die makers. I say that’s balooney.
Check out my post on my other blog, Smoothspan for more.
I don’t see how we can build stealth fighters, nuclear submarines, and all manner of other things in the aerospace and defense industries yet it is impossible to make iPhones here.
Do you agree with my counter arguments or is Apple right?
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It’s not just that it’s much cheaper to manufacture over there. It’s also that most American’s won’t (or can’t) pay $1500 dollars (or whatever) for a phone.
It’s not just Apple though. I think you’d be hard pressed to find ANY consumer electronics manufactured in this country. Specialized and niche electronics that ARE assembled here still probably have most of their sub-assemblies, and all of their components manufactured in Asia.
Americans don’t like to admit it, but our lifestyle is entirely dependent on cheap labor from exploited workers. Whether it’s food produced by migrant farm labor, or cheap electronics from China, or clothes from a sweatshop, we live comfortably because US industry will gladly exploit cheap foreign labor as long as Americans will keep buying. Problem is, we traded away our jobs, and now we’re running out of money. Our educational system is deteriorating, and we have less and less to offer the global market.
So you’re saying we could build the phones but then they’d cost $1500?
I believe they’d cost more, but I don’t believe they’d cost that much more. Estimates I’ve seen suggest more in the neighborhood of 30%, but that it would be even less difference for high quality products.
Consider a Haimer 3D Taster. Buy a German original here for $425’ish. Buy a super cheap Chinese knock off for $160’ish. Sounds like $1500 phone territory, no? But, I’ve seen both and the $160 3D Taster wouldn’t stand up to Apple’s quality standards, so the difference would be much closer. At least 2x. Now it’s $320 for the knock off and $425 for the German original.
That’s a number we could contemplate paying. With enough automation (fewer jobs created, granted), those numbers get much closer together still, maybe equal.
BTW, Tim Cook claims most of the electronic components in Apple’s products are being manufactured here and not in Asia. More reality distortion?
This is a very simple question which is very complex to answer. This goes beyond labor values.
First Apple design most of its products in the US, and probably other worlwide site. This is where the real differentiator is, this is also where the added value is.
Apple products are made of myriad of component sourced from everywhere. Some are made in the US, some in Israel, some in Europe etc… Because they use what fit their needs.
Retina screen where an Apple idea, but other vendor work.
Final word is that finance plays a role here also. Apple is segmented across the world for tax optimization. Bring back fab to US and their tax will rise sharply…
We live now in a very complex world (signed from a French men working for US company with colleagues all accross the world…).
It is not only jobs that are going away. The biggest problem is know how and expertise are being given away, You can bring jobs back or move them somewhere else. But the people you gave your know how to become your competition.
Several years back while flying to China I talked to a guy from some company located in MN. They stopped production in the USA and moved it to China. It almost bankrupted the company. The company they contracted to make their air tools learned their know how, begun making very similar product in another factory they owned and was selling them cheaper. They then smarted up and hired a local guy to deal with the manufacturers. No single manufacturer makes more than one or two parts. Then they ship it to India where it is assembled. He said it is a big logistic and quality control headache and it doesn’t save nearly as much money they were hoping to save.
Well Apple is opening a new office in US to make fixtures and molds and most likely transfer an knowlwdge to China for the production. From what if heard Apple has a big problem in China with quality and consistency of fixtures/molds so they’ve had to setup up there efforts in US to help.
John, that’s really interesting to hear that they plan to make the fixtures and molds here. That implies there are plenty of skilled machinists available, just not enough button pushers for the machines.
Thanks,
BW
Apple could manufacture here without a huge cost differential. The problem isn’t the cost of making machined parts, it’s the cost of assembly.
In order to be cost competitive here, assembly and packaging would have to be highly automated. Having to redo or come up with new automation for every product every 12 to 18 months is extremely difficult and expensive compared to low wage manual assembly.
I think the cheap, labor intensive, manual assembly, enables Apple to be nimble which is one of their competitive advantages.