Article: Recording Record Profits, Apple Must Manufacture in USA

[IlluminatedSage]

Here is a link to my article at Peace, Love & Apple Pie on Why Apple needs to bring back some manufacturing to the United States.

Hope you all like it. I try to have some good Tech coverage.


Recording Record Profits, Apple Must Manufacture in USA
http://www.peaceloveapplepie.com/apple-must-manufacture-in-usa/

 

[*LTD*]

Why Apple needs to bring back some manufacturing to the United States.

So . . . why?

Has the average American worker suddenly become more globally competitive overnight?

What is Apple's incentive? THIS is the ONLY question that matters.

 

[snberk103]

A few points about article. It is well written and logically structured. I only skimmed it, but I only caught one typo (look for 'tought')

However. While you mention the quote from the NY Times about how it wasn't the cost of labour that gives China it's edge in attracting the assembly jobs, but the flexibility in creating supply chains and the flexibility of the factories - you don't really address the issue. Your article talks about how China bent over backwards to create a factory for Gorilla glass. In contrast, compare that to a story on the MacRumours front page where Apple's campus in Austin wants to expand, but the various levels of government can't agree on what level of incentives to provide.

Your article also ignores the statements that in China can recruit several hundred low-level engineers in a matter of days, if not hours. Basically, engineers with a technical college diploma. While in the US it would take them weeks if not months to recruit those numbers in a community where they could also afford the land. So.... while Apple may be able to recruit those engineers in LA or NY .... could they afford the real estate to locate a factory there? And in places where they can afford to locate a factory, are there enough engineers who already live there or who would move - at their own expense?

Many parts of an Apple device are in fact manufactured in the US.... primarily chips. It's the assembly that is happening in China. Nonetheless, a lot of spin-off supplier benefits are in the US.

And finally.... just because they can... why should they? One of the reasons the US was able to become so rich was by opening up other countries to American trade. Often those countries were reluctant to give up their own domestic manufacturing in exchange for American imports, and the US would bully or even use force to open them up to "free trade". Free Trade is Free Trade - and the USA can't just decide to change the rules because it is now being out-compteted. Learn to compete... don't close the gates.

 

[kdarling]

I would point out that Samsung says one of the main reasons they built their chip factories in Austin Texas, is because of the quantity of talent available from the local University of Texas Engineering School.

However, I don't believe the need for "hundreds of engineers" at Foxconn.

I think it was more like the need at the time to satisfy Steve Jobs' desire for instant re-manufacturing whenever he wanted a last minute change.

 

[entatlrg]

Unions killed that idea 50+ years ago. The average North American worker is longer interested in working as hard as factory workers do in China.

 

[noisycats]

I would point out that Samsung says one of the main reasons they built their chip factories in Austin Texas, is because of the quantity of talent available from the local University of Texas Engineering School.

However, I don't believe the need for "hundreds of engineers" at Foxconn.

I think it was more like the need at the time to satisfy Steve Jobs' desire for instant re-manufacturing whenever he wanted a last minute change.

I think the 'hundreds of engineers' needed is directly related to the tens of thousand of assembly line workers that Foxconn has employed. The more I read, the more I am convinced those of us in the "western world" cannot conceive the scale of production needed to produce these devices.

250k employees in one factory?!! That is a small city by our standards--where, hypothetically speaking, every man, woman, and child is employed in one facility.

I honestly think we don't understand nor comprehend.

 

[kdarling]

250k employees in one factory?!! That is a small city by our standards--where, hypothetically speaking, every man, woman, and child is employed in one facility.

There used to be that many auto workers in Detroit.

I spent over a year in Korea and China. People are plentiful and cheap. It was not unusual to see a single shovel being powered by three men (one on the handle, two with ropes to help lift).

The biggest reason Foxconn currently needs people is because they're not using robots... yet. Everything is done by hand.

In the USA, a factory like that would be far more modern, with better air filtering (no dust under the screens), tighter assembly control (robots, not thousands of hands), and better QC (automated 3D circuit board X-ray analysis) so customers wouldn't have to return as many units for exchange.

 

[Heilage]

No thanks. I wouldn't like a Mac with a badly drawn penis and the words "Jim-Bob was here" on the inside of my bottom case, and even paying more for it.


(For those of you that didn't get that, it's a reference to some old British car manufacturing oddities)

 

[IlluminatedSage]

Thanks for the feedback.
I am going to upgrade a few areas and fix the typos.

Much appreciated.

 

[smoledman]

Apple is a very greedy company. Now suddenly they won't open an Austin campus because they won't get some tax break? Come on Apple, you've got $111 billion in the bank and you're haggling over a few million.

 

[snberk103]

Apple is a very greedy company. Now suddenly they won't open an Austin campus because they won't get some tax break? Come on Apple, you've got $111 billion in the bank and you're haggling over a few million.

Corporations, by law, are supposed to be greedy. They have a fiduciary duty to return maximum benefits for their shareholders. Though, for societal reasons, exceptions can be made for registered charities. But - for the directors of a corporation to tell its shareholders that it decided to pay more for a service simply because it had too much money is sure way to get personally sued, and tossed off the board. Unless - the shareholders have given the board a mandate to do so. Which they (the shareholders), and they alone, can do.

 

[*LTD*]

Apple is a very greedy company. Now suddenly they won't open an Austin campus because they won't get some tax break? Come on Apple, you've got $111 billion in the bank and you're haggling over a few million.

Corporations that operate on profit don't exist as charities. It isn't Apple's job to provide people with jobs or to stimulate the local economy.

 

[snberk103]

Corporations that operate on profit don't exist as charities. It isn't Apple's job to provide people with jobs or to stimulate the local economy.

I agree.... but to be fair.... the shareholders can in fact vote at an AGM to have the corporation take actions that may not be the most profitable for the bottom line.

So, until that happens - folks (like smoledman) shouldn't blame the executive team at Apple, blame the shareholders... many many of whom are just ordinary folk living in Texas, among other places.

 

[kdarling]

Corporations, by law, are supposed to be greedy. They have a fiduciary duty to return maximum benefits for their shareholders.

By that definition, Apple should share all its profits with its shareholders.

But - for the directors of a corporation to tell its shareholders that it decided to pay more for a service simply because it had too much money is sure way to get personally sued, and tossed off the board. Unless - the shareholders have given the board a mandate to do so. Which they (the shareholders), and they alone, can do.

Again, using that idea, Apple should not be paying its top brass multi-million dollar bonuses, building an expensive spaceship campus, or giving away so many replacement items.

The reality is that stingy greed is not all that makes a company valuable. Compassion, customer care, developer pride, employee happiness and all sorts of other things including, yes, contributing to the containing community, state and nation, count as well.

Corporations that operate on profit don't exist as charities. It isn't Apple's job to provide people with jobs or to stimulate the local economy.

Nor is it the job of the people in a city to shoulder extra tax burden as charity for Apple.

Is this the way that today's generation thinks? Greed, self, me first?

 

[snberk103]

By that definition, Apple should share all its profits with its shareholders.

I believe the shareholders can in fact vote to have the company pay a dividend (a return of profits).

Again, using that idea, Apple should not be paying its top brass multi-million dollar bonuses, building an expensive spaceship campus, or giving away so many replacement items.

There is always a tension between what the shareholders as a collective group may want and what the management team.... as elected by the shareholders .... may want. With Apple the shareholders have given the management team great latitude to make decisions that they feel are in the best interests of the company, for the long term.

The reality is that stingy greed is not all that makes a company valuable.

Not saying it is... and I haven't expressed an opinion on how I think things should be done. Just pointing out that the environment that Apple operates in (often a legislated environment) prevents Apple from doing many of the things that some people are wishing for. It is simply not possible for Apple to say "We have too much money, lets spend it without regard to the long-term consequences".

Compassion, customer care, developer pride, employee happiness and all sorts of other things including, yes, contributing to the containing community, state and nation, count as well.

Yes, they do... to a point. Apple is now matching employee donations to charities, and is expanding that program to more and more classes of employees and internationally. Apple's facilities are also trying to be 'green'. To a point. They could do more, of course. But what sets me off the people who simply say Apple can afford it. Corporations don't work that way.

Nor is it the job of the people in a city to shoulder extra tax burden as charity for Apple.

Then they can decide to not offer the tax incentives. If the burden is to high, no one is making them accept the Apple offer to expand.

Is this the way that today's generation thinks? Greed, self, me first?

Well, yeah.. actually I think they do. But I'm from a previous generation so I can say that....

 

[kdarling]

It is simply not possible for Apple to say "We have too much money, lets spend it without regard to the long-term consequences".

That might be true for other companies, but we're talking about Apple:

You know, the company that had a CEO who swore eternal vengeance on a competing software maker, and declared that he would "spend every penny of Apple's billions" if he had to, to destroy them.

Yes, they do... to a point. Apple is now matching employee donations to charities, and is expanding that program to more and more classes of employees and internationally. Apple's facilities are also trying to be 'green'. To a point. They could do more, of course.

They can do a LOT more, and many other corporations that answer to shareholders have been doing so for decades.

Heck, I looked it up and even Samsung has donated more towards American educational needs, handicapped kids, etc. It's a bit sad that Samsung has invested in more community service projects in America than Apple.

The only reason that Apple has not been like that for a long while, is because Steve Jobs had a personal fear of his company being cash poor, and he stopped such things when he came back. Tim Cook is more normal and is bringing Apple into line with the rest of corporate America.

But what sets me off the people who simply say Apple can afford it. Corporations don't work that way. Then they can decide to not offer the tax incentives. If the burden is to high, no one is making them accept the Apple offer to expand.

I agree that no one is forcing Austin to take Apple, which is exactly why they're pushing back.

Regards.

 

[thewitt]

Again, another article from someone who just doesn't get it.

Why don't some of you go to work in manufacturing before you write about it as if you are an expert.

I wish Econ 101 was actually taught by someone who had run a real and successful business and not simply read from a book written by another teacher who has never had to make a living manufacturing something.

Manufacturing jobs such as we see at Faxconn have left the US for good. The cost of living in the US is simply too high to support the low labor rates needed for menial labor assembly tasks.

Robots are not the answer. As much as you might think automation is the key, it's a HUGE capital investment that would never be recovered - even at Apple's profit margins.

People are much better at electronic assembly tasks than robots. Many have tried, all have failed.

Move along people. There is nothing to see here.

 

[*LTD*]

The only reason that Apple has not been like that for a long while, is because Steve Jobs had a personal fear of his company being cash poor, and he stopped such things when he came back.

Which not only saved Apple, but made them Masters of the tech Industry, having outclassed everyone in just ten years.

A CEO's #1 job is to create value for shareholders. Not improve the collective lot of the local citizenry, not help schools, not run charities. That's up to citizens themselves and their government. If companies do that it's gravy, and nothing more. It's a nice thing, but to treat it as some sort of expectation is lunacy.

Come back down to earth already.

 

[kdarling]

Robots are not the answer. As much as you might think automation is the key, it's a HUGE capital investment that would never be recovered - even at Apple's profit margins.

Apparently Foxconn thinks robots are a partial answer, even with their comparatively tiny profit margins and labor costs.

Foxconn to rely more on robots; could use 1 million in 3 years - Reuters

 

[thewitt]

We shall see. I've been in manufacturing for nearly 30 years and have yet to see a successful deployment of electronic assembly robots on any sort of large scale, flexible manufacturing line.

 

[Dr McKay]

You think the european audience who already pay bloated prices will be happy with a price jump. Because to us, Apple products are being made in a different foreign country.

 

[maflynn]

I am sadden by the fact that manufacturing jobs have left the US, but the same thing can be said about Europe as well.

Not are we unable to compete with the wages being paid, i.e., US workers get a lot more $$, but the flexibility that the off shore workers have, over US.

Also, consider this, we offer Apple tax advantages to move/keep jobs here and people start screaming about how unfair that is. So they move the jobs off shore and people scream how unfair that is. Apple can't win, they try to work with local governments to keep jobs but are lambasted. Don't you think foreign governments have offered apple a lot of incentives to move factories off shore - of course. Jobs mean putting money the local economies.

 

[IlluminatedSage]

Thanks for your advice all.

I know many people believe that corporate profits are the #1 objective, but i honestly remember the days when Apple made goods in the US, not merely designed and programmed them.

When you examine tax avoidance and where modern corporations have ended up going... it is mighty sad.

Look for Occupy Wall St May Day protests to show a solid reason for why MADE IN THE USA ought to become a priority again.


http://www.peaceloveapplepie.com/apple-must-manufacture-in-usa/

----------

You think the european audience who already pay bloated prices will be happy with a price jump. Because to us, Apple products are being made in a different foreign country.

actually Apple used to assemble and make some units in Ireland. ie Mac Pro towers and mid range towers.

Yes, Europe ought to get some manufacturing as well.

 

[*LTD*]

Thanks for your advice all.

I know many people believe that corporate profits are the #1 objective, but i honestly remember the days when Apple made goods in the US, not merely designed and programmed them.

When you examine tax avoidance and where modern corporations have ended up going... it is mighty sad.

Look for Occupy Wall St May Day protests to show a solid reason for why MADE IN THE USA ought to become a priority again.

So what's Apple's incentive?

You still haven't stated any.

Look for Occupy Wall St May Day protests to show a solid reason for why MADE IN THE USA ought to become a priority again.

What reason would that be?

When you examine tax avoidance and where modern corporations have ended up going... it is mighty sad.

And this is the fault of corporations, how?

Apple is playing be the existing rules. Rules that have been implemented *by government.*

 

[sviato]

Just from reading the headline I know the idea is ridiculous