Posted on 12/31/2015 8:11:22 AM PST by Lorianne
Tim Cook has come out about a real truth of the decline in manufacturing. What he omitted however, is that no one will manufacture in the U.S. unless they absolutely have to due to a 38% corporate tax rate.
On 60 Minutes Sunday, Charlie Rose asked Apple CEO Tim Cook about his company’s manufacturing practices in China. Cook said the decision to use Chinese manufacturing has nothing to do with American workers demanding higher wages. He said it was because the Chinese have more skill.
“Let me be clear,†Cook told Rose, “China put an enormous focus on manufacturing in what you and I would call vocational skills. The U.S., over time, began to stop having as many vocational skills.
(Excerpt) Read more at thechinamoneyreport.com ...
China used to have an absolute monarchy. You could call today's China an absolute oligarchy. The Chinese emperor used to grant imperial monopolies. Chinese oligarchs now grant monopolies via state-owned enterprises. Before the economic reforms of the late 70's, state-owned enterprises used to have production growth targets; now they have profit growth targets. China might be called a capitalist absolute oligarchy.
That would also be a good way of looking at it, but there are not that many of the operations now that are state-owned. Many are privately owned. I have not researched whether these companies are allowed to own the land their plants and factories are sitting on, or are just on longterm leases. Of course, there is always the chance they could be nationalized tomorrow. . . but then Obama nationalized Chrysler and General Motors here in the United States, totally by-passing the bankruptcy laws and process, and nobody blinked.
I am referring to telecom, oil, mineral resources, power, water, auto and some hi tech (Huawei, ZTE) companies. The list does go on. As of 2011, SOE's accounted for about about 1/3 of Chinese business activity.
Nazis made great weapons USING SLAVES!
The fact is labor is tiny tiny part of the retail price of an I-phone and Apple is blowing smoke up your ass and you puffing it out of your nose.
The data I provided is relevant and only 2 years old. You can break down each component and you will find that labor is a tiny tiny part of that price also. For instance the screens. You could research it and find that labor is probably 2-3% per screen. A tiny fraction.
The fact is the I-phone could be made in the USA and the retail price differential would hardly be noticed by the consumer.
I am a fan of Apple products but the way they conduct business is reprehensible IMO, but I still buy their products, MAc s and i-phones.
It is still legal to off shore and our duty free markets are spread wide open like women being raped being held down by the gloBULList corporations.
Go Trump, go!
Ridiculous. I’m not wanting to kill them off because they are exploited.
I’m wanting to take care of Americans first. And we have far too many unemployed.
If China wants to sell to our market, then they can use the funds they get to buy our products instead of our equities and debt. And if they refuse to do so, then it’s their own fault if we raise the import tariffs and they starve.
I am going to call BS on your owning Apple products, central_va. It has been my experience that anyone who talks like you about Apple will not buy their products. . . especially when you claim to own one of their iPhones, but cannot spell the name of it, consistently spelling it "I-phone." Every single time I run into that, the person claiming such ownership is doing so to give them credit for their FUD they are spinning and pushing around. It doesn't work. It shows they really don't know what they are talking about because they don't even own the product they are talking about. Frankly, you say it too often for you to be believable at all.
I told you I am educated as an ECONOMIST and I am not spewing anything I pulled out my nose that was blown up my ass from Apple. I've been a CEO and know what I am talking about in economics and accounting, especially in microeconomics. YOU obviously do not. I am basing what I am telling you from sources other than Apple and from my own experience with product production. I have a background that includes production accounting, so I can call BS on your claims all day long with the knowledge and authority to do so. You spout idiotic claims and I WILL NOT LET IDIOCY STAND, central_va. Ergo, you are standing there with your head in your hands.
You don't have a clue when you say idiotic things such as "The fact is the I-phone (sic) could be made in the USA and the retail price differential would hardly be noticed by the consumer."
I assure you the consumer would most certainly notice. It is NOT just the labor costs that would be added but the cost factor of all the load of regulations on top of those labor costs. In addition, there is the fact that we simply do not have the infrastructure to facilitate the just-in-time delivery necessary for such assembly from multiple parts coming from all over the world. If you have to have warehouse storage of parts you increase costs and added labor costs to manage and move those parts. More increases in the final price to consumers. Shipping to and from the United States to other countries is three to four times more expensive than shipping to and from China due to port fees and union labor contracts. This means higher prices for iPhones regardless of where they are sold and that means that they are less competitive against all other smartphones that are made in China that don't have all these additional costs that YOU don't even think exist.
Now, let's talk taxation. It is not just the wages paid to the workers. For every $100 a US business pays an employee, the business also has historically had to pay approximately $30 to $40 in additional fees and taxes to the government and benefit programs. I haven't figured it lately, but with Obambicare, it's probably more like $50 to $60 now. In some risky areas of work, the worker's compensation alone can be one-for-one equal to the pay.
How about plant and equipment, central_va? Apple has $225 Billion invested in the equipment it has provided for the contractors which does NOT include buildings, only tools. CnC machines for carving aluminum billets into frames, computer controlled lathes, milling machines, drill presses, electronic component placing robots, etc. 225 billion dollars worth in China. . . which would have to be moved to facilities in the US which are not built, prepped to accept them, do not have power routed to them, and need to be producing product non-stop. What would be the cost to acquire building lots and then erect these factories, central_va? What would the added costs of property taxes be, which I assure you would be added to the costs of the iPhones, iPads, Macbook computers, etc. now being built in the USA, which YOU claim the price increases wouldn't be noticeable. Once those facilities are built, including access roads, and improvements for the communities where they will be located, they require property management, guarding, etc. (I might mention those costs being an expense of the contract assembler, were shared with 500 or so OTHER customers of the contract customer, not solely the obligation of Apple.) Apple builds their server farms in the USA and although they are not too heavy in employment as an assembly plant would be, each of them took about two years from application for permits to breaking ground and then another two years to complete and $2 BILLION to build.
Since Apple has to keep it's China operation still going while preparing to move back to the US, each plant will cost probably MORE than $200 Billion for plant and state of the art equipment to replace what Apple already has access to in China and elsewhere. After all, Apple only paid for the specialty tools they needed in China, not the already existing tools provided by the contract assemblers. Land and buildings are much more expensive over here. . . as are construction labor. Steve Jobs presented the request for permits for their new headquarters six months before he died in 2011. Apple has been building on that facility since six months after he died. . . and won't complete THAT facility until the end of 2016. FOUR YEARS and it's only going to cost about $300 million. All that investment has to be amortized into the cost of the new iPhones, iPads, computers, etc. And YOU say the consumers won't notice the increases in costs.
Everything you spout out in your posts shows you are a know-nothing about doing business in the US and putting up with business regulations and the requirements of living under those regs. Did you NOT pay any attention to the story I told you about the business with the USB power outlets? Apparently not. Apparently you missed the important fact that that imported CHINESE product could be SOLD RETAIL for less than it COST to MAKE the USA version in this country. That made it totally uneconomical to even try to compete with a product made in the USA. He could not have sold a single one produced here. His only selling point would have been "Made in the USA" and that is simply not good enough in an era where Amazon is succeeding and the Mom-and-Pop stores are going under despite the personal service they can provide.
That outlet product had only about 20 parts to build and assemble and sold for under $30. The iPhones have over 2,000 parts that go into the final product. I don't know how many steps are involved in the labor necessary to manufacture it. . . but UBS and CNBC are just guessing what assembling it costs Apple, they really do not know anything about that. Apple isn't telling and neither is FoxConn nor Pegatron, Apple's main assemblers. By the way, China is not the only country where Apple assembles iPhones. They are assembled in China, Brazil, Ireland, and Indonesia, IIRC.
I once discussed the packaging Apple uses with their iPhones with a major packaging manufacturer in the USA. He was in awe of the quality and fit. I asked him what his company would have to charge to produce the packaging in quantity in the US. He said he wouldn't even want to touch such a complex package for under $25 - $30 a unit, even in huge numbers. He said if they produced millions they might get them down to $20 - $22, but it would be difficult.
As I told you, you don't have a clue what you are talking about. I am sure I am missing a lot in this short treatise off the top of my head. . . but it should give anyone a brief understanding it is NOT just labor costs.
I own three i-phones(family) a mac book and an I-mac which I am using right now. I have a windows box for work.
Huawei is not one of the State owned enterprises. It is a publicly traded corporation on their stock exchange founded by Ren Zhengfei, a former deputy director of the People's Liberation Army engineering corp. I believe there is probably a very close relationship with the government. . . but the corporation is public. It has formed partnerships with 3Com, Siemens, Motorola, Nokia and Symantec. Huawei looks independent from the accounting. Perhaps it is more akin to Halliburton, just having a lot of large government contracts.
ZTE looks like it might be in partnership with the Chinese Aerospace ministry. So that one probably is a SOE.
Yup, those are the ones I was pretty much thinking about. I notice Huawei is not among the "H" category.
This CEO is a real douche bag and I sold all my apple stock years ago.
What planet is this CEO ass wipe from? He insults Americans and but wants them to buy their products....
I think most Hollyweird actors are douche bags too, but if the movie is good I will still watch it.
BS . . . or you would spell the names of your computer correctly. It's iMac, not I-mac. The only people who misspell the names of Apple products as you do are TROLLS who do not use the products. You do it consistently. There is no such thing as an I-mac.
I might believe you if you take a screen shot of your "About This Mac" pane showing what version of OS X you are using. . . etc. Like this one from my MacBook:
But I doubt you will.
Ok ignorance, I made a screen shot but I have no idea how to print it out. I guess it is a gif somewhere...
I just found out my Sony Vio laptop is actually a Sony Vaio. I have had it for 10 years.
Just sayin’. :)
Can you tell me how to post a gif file? I have no public web server to server up a gif file.
That is better and consistent. Thank you.
I am not happy with Tim Cook in all things either. But I also understand exactly what he said and the truth of what has happened to American workers and our manufacturing sector. It was done deliberately by the liberals in our government and labor unions. In most ways, you and I are on the same page.
But, central_va, the reason I have spent so much time with you is that before we can FIX something, we have to understand what we have to fix.
That is why Tim Cook said what he said. He spoke the truth and as hard as it is to hear, it is true. We cannot go on sweeping it under the rug.
As Lorraine and I have been saying our schools have completely de-emphasized the manual arts in favor of college track education which does no service to students who are NOT capable of or not interested in college level work. I saw it happening back in the mid-sixties when the high-school counselors were pressuring all their students to become teachers. The result was we got a glut of mediocre teachers.
Then liberals got elected and de-funded music, band and orchestra, art, shop classes, woodworking, electronics, metalworking, auto mechanics, heating and air-conditioning, home-economics, cooking classes, everything except college prep classes. . . and said everyone should go to college. It was strange but the only place you could find any of the manual arts classes was in continuation high schools. . . where you had to get kicked out of regular high school and/or drop out and try to get into the limited spaces at a continuation school to take those type of classes.
Yet many of these fields actually paid MORE than a bachelor of arts will pay.
The fact is ALL the other CEOs of tech companies use the same manufacturing contractors but WON'T tell us why. Tim Cook is honest about it. He is ALSO the only one who has tried to bring home some of those jobs with the iMacs and Mac Pro manufacture and assembly to Elk Grove, CA, and Austin, Texas, respectively. He has said he wants to bring home more. . . and he is outlining why he cannot do what he wants to do.
I have outlined some of the other reasons that stand in the way. . . and why the jobs were forced out. They are almost insurmountable.
I think that Tim Cook should keep his mouth shut on LGBT topics and just manage Apple. . . just as I think that some Hollywood types should keep their opinions to themselves and just sing and act. Every time they open their mouths outside their fields of talent they make fools of themselves, Cook included.
However, in this area, Cook is right.
Next time when you post on an Apple thread, spell the names of Apple products correctly and you won't be thought a troll. OK?
And, as we all know, the Republicans are doing their best to stop it. /sarc
It’s a lesser evil. No matter what...And stuff.
< img src="http://i63.tinypic.com/2eewxs2.jpg" width="600" / >
So did you upload to tinypic.com?
What are you trying to prove here?
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