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?
But isn’t Trump in a better position to understand policy and ramifications than any other candidate in this race?
Others get in and have to take their advisors advice as gospel because they have zero knowledge of finance. I can’t imagine Trump would want to fail in this area because of his reputation.
I value Trump’s experience and expertise in business. However, I think his position on tariffs is based on emotions rather than analysis.
That’s only if Apple continues to keep its huge profit margin. They’d be forced to stop raking it in to keep the company going.
Just like other American companies.
BS. The iPhone would increase maybe $10-$20 from its $650 price tag.
Apple would simply take less profit; you know, the $200 billion cash reserves they brag about, all the while also bragging about how they use cheap Chinese labor to get it.
So yes, Apple will make iPhones locally, but that isn't going to translate into a million new hires.
The iPhone is already very expensive.
Cut the ceo pay to help reduce costs.
http://money.cnn.com/2015/01/23/technology/tim-cook-pay/
Tim Cook’s Total Pay For 2014 Was Over $100 Million
http://www.businessinsider.com/heres-how-tim-cook-raked-in-over-100-million-in-2014-2015-1
I worry what Donald Trump will do as president. He and Ted Cruz are the best running but I do not like their support for the cheap labor express. Trump panders to everyone including corrupt people like the clintons so no surprise he supports bribing people. It is wrong of course. I wish we had better people running things instead of the crooks we do in too many areas.
ECON 101
The smartphone market is maturing, it reaches a point where most smartphones will be “good enough” for a good period of time.
“The smartphone market is maturing, it reaches a point where most smartphones will be “good enough†for a good period of time.”
That may be true, and a good reason why Apple may reduce the price of the iPhone in the future. But it is irrelevant to whether lower CEO pay would cause Apple to reduce it’s prices, as some people claimed. It won’t.
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