Apple wants to make products in U.S., but that’s not so easy
http://www.cnet.com/news/apple-wants-to-make-products-in-u-s-but-thats-not-so-easy/
Let’s make the iPhone in the good ol’ U. S. of A. Who’s with me?
There are few Americans who don’t like the idea of an all-American iPhone, iPad or MacBook. “Designed in California,” sure — but why not made there, too?
During the D: All Things Digital conference this week, Apple chief executive Tim Cook suggested that he wanted his celebrated tech company to make more components, and perhaps assemble them, here in the U.S.
But it’s not that easy.
Cook knows it. As a longtime operations guy, there are probably few things the man knows better than a supply chain. When he says the semiconductor industry is good in the U.S., it’s good. When he says there aren’t high-tech manufacturing skills in the U.S., he’s probably right. But actions speak louder than words, and there are good reasons why Apple no longer makes its millions upon millions of products stateside — because it just doesn’t make good business sense otherwise.
We’ve seen this film before. Before founder Steve Jobs died, he made headlines for the same reason, as the national economy crumbled beneath Apple.
Here’s an excerpt from a New York Times report in January:
It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
The reason: there’s a very real tradeoff between what’s good for workers and what’s good for business. When push comes to shove, business wins — which is why Apple’s American employees enjoy comparatively nice perks while employees of its supply chain partners live in 8,000-strong dormitories, ready to be woken up at midnight to start a 12-hour shift making new parts for an iPhone that received last-minute design changes from California.
Imagine trying to do the same with an American worker. Unions would never stand for it, obviously, and chances are the rest of the family unit wouldn’t, either.
My point is not to illustrate the benefits and drawbacks of unions, or even what’s fair; rather, I’m trying to illustrate a landscape in which American companies can go overseas for greater flexibility, lower price and sheer speed. So long as there are nations in this world willing to do work others aren’t, outsourcing will exist. In the capitalist system, businesses can’t win in the free market unless they exploit every advantage.
There’s a reason Apple, and GE, and many other well-regarded American companies keep most of their money offshore: so long as there’s a cheaper alternative, it will be taken. There is no morality in money-making, even if there’s still plenty to be made.
(Speaking of GE, that company has run into similar issues — though for refrigerators and turbines, not computers.)
That’s not to say things aren’t changing. GE CEO Jeff Immelt has said that the U.S. is becoming more competitive as American firms, tired of decades of deterioration, snap to attention. Wages in the U.S. are still elevated — good for individuals but bad for business — but the skills, flexibility and speed are catching up.