Posted on 01/20/2016 7:17:05 AM PST by newgeezer
The Republican presidential frontrunner's vow to get Apple to "build their damn computers and things in this country" would lead to unrealistically high costs for you.
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Donald Trump's plan to "make America great again" may include getting you to fork over a whole lot more money for your next iPhone.
After all, that would be the logical progression from the Republican presidential frontrunner's latest bold (crazy?) promise: Getting Apple to start manufacturing its products in the US instead of China.
"We're going to get Apple to build their damn computers and things in this country instead of in other countries," Trump said in a speech on Monday at Liberty University in Virginia.
Trump's rhetoric is designed to appeal to a base of voters who are struggling to find jobs in the US. Apple, the world's most valuable company with a market capitalization of $534 billion, designs its best-selling iPhone, iPad tablets and Mac computers in the US but relies on partners in China and Chinese factory workers to assemble almost all of them (one model of the Mac is made in the US). But how much would it cost to build those "damn things" in the US? Even a rough calculation of the basic costs shows it's an unfeasible option, leading to an iPhone with a potentially jaw-dropping price tag.
To keep things simple, let's just look at the wages of workers tasked with assembling an iPhone. A worker at Chinese manufacturing giant Foxconn gets paid roughly $400 a month before overtime, according to the New York Times.
Now assume Apple goes the economic route and places a manufacturing plant in Wyoming or Georgia, which happen to have the country's lowest minimum wage at $5.15 an hour. Working eight hours a day, five days a week, a US worker would make $824 a month, or more than double the Chinese worker. If Apple were to employ someone in its home state of California, where the minimum wage is $9 an hour, the monthly pay is $1,400, or more than triple the Foxconn worker.
Assume you have a pool of workers skilled enough to handle the task (you don't) and then assume those workers will work for minimum wage (they won't). After awhile, things don't add up.
While there are a number of other factors that go into an iPhone, including the components, shipping, marketing and research and development, doubling the labor costs could significantly hike up the price of an iPhone. The starting price of Apple's marquee iPhone 6S is $650 -- would you be willing to pay for the phone if it was $1,300? Or more?
"Twice as much is conservative," Carolina Milanesi, an analyst at Kantar Worldpanel, said about the price hike of an iPhone if it were manufactured in the US.
At another point, Trump proposed a 35 percent tax on products built outside of the US. So at a minimum, that would mean your next iPhone could start at $877.50.
Apple declined to comment on Trump's comments and didn't want to get into the potential math of bringing phone manufacturing back to the US.
Trump's comments ignore the fact that Apple did invest $100 million to manufacture the Mac Pro in the US. It also buys some of its components from US companies, including Intel's chip for its Mac computers. The company said earlier this month that it believes it has created 1.9 million jobs in the US through the creation of the app economy around the iPhone and its other products.
Even Apple, with its $200 billion-plus stockpile of cash, couldn't afford to build a phone in the US at a reasonable price. Making a more expensive, "Made in the USA" product isn't an option, especially as consumers start to wise up about how much they're spending on their phones. Every day, decent, low-cost alternative phones are cropping up.
So chalk it up to another wild, impossible-to-deliver-upon claim by Trump. But that's part of his appeal, right?
Abolish the minimum wage.
I’d rather pay more than have it made in China. It’s actually blackmail, either we pay more for a product or we give our money, jobs, and economy to China. Prices would even out, would have to if Apple wants to stay in business.
And though I’m not feeling the Bern, it would be ok if Apple didn’t make such a wide margin of profit if they were manufacturing here.
This is simply not correct. The final assembly is a very small part of the cost of an iPhone. Another CNET article estimated this cost at about $20. So if it doubled, about $20 would be added to the costs.
Iphone is put together with slave wages. What do they pay a person a day in the Chinese factory $5 a day.
Then it comes here and they slap 100 times that on the price tag? No wonder Apple has 100 billion in cash.
We need jobs back, nobody can tell me that if Apple paid $50 dollars per phone more it would make the price go up that much, it would just be a minor blip in the selling price of the phone. Its called eating some of the cost.
It’s hard to compete against countries that use what basically amounts to slave labor. These asian workers have no special skills. That is not a free market. Tariffs will help equalize or bring jobs back to U.S. Cost may go up to a market rate, but more jobs drive more tax revenue allowing decreases in tax rates. Unfortunately the US has the opposite problem with artificially high wages thanks to minimum wage on union rule.
You forgot shipping.
The current wage at the Foxcom iPhone assembly plant is $3.25 an hour. So they get $26 a day plus overtime.
Naturally, everything they buy is much cheaper than here, too.
Your Apple will cost more, and your brother-in-law will get a job, get off your couch, and get his own place.
No it wouldn’t. Apple has massive margins and a tariff would just eat a tiny bit of their profits.
Apple is under price pressure in a competitive market and if they could raise their price they would have. Companies can’t just raise their price whenever they want.
Roll back environmental regulations to the late seventies levels.
Where are the guts of the IPhone made? Does anyone have a list?
People who argue that wages determine prices are basically subscribing to the labor theory of value, which no one believes any more but some Marxists.
Prices are set by supply, demand and marginal cost.
“Trump’s rhetoric is designed to appeal to a base of voters who are struggling to find jobs in the US.”
The author doesn’t really look ‘big picture’. Trade deficits (extraordinarily large ones) hurt everybody, not just the unemployed.
“Assume you have a pool of workers skilled enough to handle the task (you don’t)”
Let me get this straight. The author thinks we’re too stoooopid to build phones in the US. He has unwittingly tapped into Trump’s appeal - he has a ‘can do’ attitude and doesn’t think the American people are morons, like most politicians.
Hogwash.
The price would probably be no more than $50 more. Not double.
I don’t think a $675 iPhone would have less sales than a $625 iPhone if iPhone competitors also made their phones in America.
The $50 difference is huge only when Apple is competing with Samsung
I think the taxes, EPA, regulations are what drive business away. I don’t think Apple would balk at their phone, ipad etc costing alittle more to manufacture. Plus with more people working they would sell more.
I just cannot wait to see how trump forces Apple to do this.
Just like Halliburton and a myriad of other American corporations they will just pull up stakes, box the joint up and move headquarters overseas. Tons have already moved to Switzerland, Caymens and other countries.
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