“Would Apple investors tolerate lower profit margins to help rebuild manufacturing businesses in the U.S.? Hardly,” Philip Van Doorn writes for MarketWatch. “Might American shoppers be willing to pay higher prices to spur the opening of more tool and die factories in the U.S.? It would be a very tough sell.”
“These points illustrate why Apple Inc. CEO Tim Cook oversimplified the situation when saying a shortage of ‘vocational kind of skills’ at home has led the company to have most of its products made by an estimated (by CBS) one million workers in China,” Van Doorn writes. “During an interview on ’60 Minutes’ Sunday, Charlie Rose pressed Tim Cook on this issue. Following his comments on a shortage of skills in the U.S. and the ‘focus’ of other countries’ educational systems on vocational training, Cook said, ‘you can take every tool and die maker in the U.S. and probably put them in a room that we’re currently sitting in. In China, you would have to have multiple football fields.'”
“Cook was referring to the small number of manufacturers in the U.S. capable of turning out a variety of finished high-tech goods,” Van Doorn writes. “The real problem is that it is so difficult for tool and die makers to turn a profit.”
Read more in the full article here.
MacDailyNews Take: If you can’t compete, change the game.
Tool and die makers are not plentiful in the U.S. because the U.S. economy is at a different place than places where such businesses can turn a profit. Therefore, you don’t waste money, time, and energy trying to turn out more machinists in the U.S. Unless you want to hand out even more food stamps. This isn’t the 1950s. You train people for the future, not the past. You train people for the types of jobs that profitable companies in your country need filled for the foreseeable future.
Tim Cook likely “oversimplified” things because he was attempting to explain something to Charlie Rose.
There used to be many tool and die makers all through the Midwest US. Then America decided it did not like “manufacturing” because it upsets people who don’t like energy being used to build things. And a different US industry was created – the Envrironmental and Regulatory Harassment Industry. This industry exists to make life very difficult for Americans trying to make products in America. This industry prides itself on using every tactic available to prevent American industry from even existing. This is the new American Idea.
Talk about over-simplification. No industry “exists to make life very difficult for Americans trying to make products in America.” It really doesn’t.
The EPA, OSHA, and essentially all of the Nanny State regulatory bureaucracies are an industry unto themselves. I once spoke to a fellow who invented the receptacle USB charger for iPhones/Android devices. He applied for a patent and started manufacturing in the USA. He got out one run of his patented product with all the approvals necessary, When he found it was selling like hotcakes, he found that to produce ANOTHER run of the exact same product, he had to go through the entire approval process all over again, but now his product was on the market. Knock-offs of his patented designs were coming in from China which required no approvals from anyone. It took EIGHT MONTHS for the inventor to get all the required approvals to get back into production. By the time he could get back into production, the market was saturated with the knock-offs. The only way he could even hope to compete was to move his manufacturing to China. By doing so, he also would no longer have to meet the regulatory approval processor. His newer design was going to be built by FoxConn in China. He was laying off his entire production staff.
“Then America decided it did not like “manufacturing” because it upsets people who don’t like energy being used to build things.”
This has to be one of the stupidest comments I’ve seen in some time.
Actually you just don’t have any idea of what the truth is because you see everything through leftist politics. What I stated is reality as confirmed by Swordmaker, a very knowledgeable person.
Too true
Kent is one of MDN’s resident (and all too vocal) idiots. And, I might point out, he remains anonymous.
respectfully MDN, you’re wrong.
Experienced Tool and Die makers earn $50-80K a year and at many places now receive “signing bonuses”.
Any tool and die person is in demand and has a good job.
Now, the mom and pop shops, they don’t survive because they can’t compete with the big companies.
Cook is right, not enough tool and die makers in voc-tech.
I know a tool and die maker that’s turning a profit and their biggest problem is finding replacements for their aging talent. Of the talent they DO get, many don’t want to or are unable to work the highly complex machinery in order to get work done.
I’ve built molds and hired mold makers for plastic parts. The “old days” of Deckel pantographs are gone.
The work now requires intense training in the CAM software and the setup of the multitude of automatic machining devices and their setup and CMM measuring tools.
The most common tooling & molding that moved overseas was the non-critical easy, inexpensive consumer products & products that required a lot of hand work in both tooling and assembly. Those inexpensive consumer products may never come back to the US in my opinion.
The higher tech. critical molded parts will likely stay in the US as long as the assembly costs are low. Many products have less than a dollar in plastic costs and many dollars in assembly labor. Those are the products that will likely to remain in low labor cost countries.
With better product design for automation (DFA) and enough volume, there will be good reason for products to return to manufacturing in the US. Eliminating all the coordination, quality control, shipping, duties and delays of foreign manufacturing can improve delivery times with less inventory.
Amerikans are too fat and lazy.
“Amerikans are too fat and lazy.”
You nailed it. Tim Cook avoided to say that. If he said what you said, the press and media are going to grill him to the bones. He would be in BIG TROUBLE.
Americans are too smart.
Better to let the innumerable, endless slog of easily-controlled Chicom minions do the grunt work for pennies on the dollar and die from the resultant pollution by age 50. Luckily, there’s always 1000 more to replace every one that keels over from COPD, lung cancer, etc.
When you say “Amerikans [sic] are fat and lazy”, you come across as an idiot. Generalising a population of over 300 million people is, well, idiotic.
America remains the economic superpower of the world, certainly not because ‘Americans are lazy’, but because they apparently know how to work hard.
I am not an American, but have lived in America long enough to know that stereotypes are idiotic and dangerous, and that one should be very careful when throwing them around.
Americans also spend the most on healthcare & have more health issues than most citizens of other developed nations. Maybe you should stop working so much & live a little.
And as for being the economic superpower, China is literally on your tail. If Tim Cook’s comments are any indication, China will soon be Apple’s biggest market, & possibly for many other major brands as well
As I said, I’m not an American, so your answer is directed to others and not me.
Your comment regarding health care spending has some value and there is certainly something to be said about the American’s mindset as it relates to the government-mandated, single-payer health care system. No matter how efficient it obviously is (from other developed, as well as developing nations’ examples), majority of Americans seem to refuse to consider it.
And yes, China is clearly very close to America as an economic superpower, but that doesn’t bear any relevance on American success as an economic super power. Global economy is NOT a zero-sum game (in other words, for China to grow, America must regress). China has plenty of room to grow, as does America and the rest of the world. Without doubt, Chinese economy will very soon overtake American, but that doesn’t really mean much for America, other than a great business opportunity.
Agreed. I’ve been in the US for over 20 years. It took me a few years to realize that the States is made up of a very diverse group of people. It is not really surprising given the vast size of the country.
There is good and bad here but just like any other country including the UK where I originate from.
We suffer from a combination of vast country and half-vast leadership. Vast gives us the problems associated with long distances, for example high-speed rail is very tough. Half-vast keeps us from embracing our real problems due to posturing and power-seeking politicians who only want to be sure they get elected, the country and its citizens be damned.
Aspirational goals for every parent are that his/her children finish college and find jobs that don’t require manual labour. This is true across cultures, in the developed, as well as developing world, and is usually one of the benchmarks of the standard of living. Corollary to it is also that such jobs usually earn more than those requiring some manual labour.
Those manufactuing jobs have no business returning to America. Much like strawberry-picking jobs, which literally no educated American would be caught dead doing, such manufacturing jobs are just as unappealing. These jobs belong to the places which currently are (developmentally) where America was 60 – 70 years ago (transition from agrarian to industrial nation).
The path of development seems rather typical. Societies emerge from the middle ages with population surviving predominantly on the subsistence farming. With the industrial revolution, population then slowly shifts to the manufacturing jobs, taking the necessary training to do them. As the society continues to develop, highest-value (best pay, least health hazard) work becomes service industry. Most developed nations have the highest concentration of their work force in the service industry; if there is still manufacturing, it is largely specialised and automated.
Once China reaches this developed status, and once its workforce advances up, above the manufacturing job, there will likely emerge (from subsistence farming) a next country or region to fill the manufacturing need. Perhaps it will be sub-Saharan Africa, perhaps some other country/region. This process will continue, and Americans should be happy they no longer need those manufacturing jobs.
I have just taken a job in Saudi Arabia teaching mechatronics to the Saudis. This is a nation who are used to handouts and I would doubt that I have seen more than 1 Saudi out of 1000 who holds a meaningful productive job. The unemployment rate amongst the 18 to 35 year olds is around 90% and the vast majority (all of it) of any work is done by expat Bangladeshis, Indians, Afghanis, and Arabic Africans. The Saudi law requires that 40% of all employees of any company be Saudi. The result: most ‘jobs’ are security, fire fighters, bureaucrats and ‘managers’. Because companies must hire Saudis, the easiest thing to do is to pad the payroll with Saudis who are designated as ‘managers’ and they get their own expat ‘advisor’ to do their work for them.
This is where the US of A is headed if they don’t start working again. The so called lower level jobs need to be filled or else immigrants will be brought in to do the jobs that need to be done and the ‘well fed’ Yankees will hope to be the ‘bosses’.
Your example is very much an outlier. Saudi Arabia is sitting on gold and is simply pumping out as much as it needs to support their lifestyle. They don’t need to hold productive jobs; their revenue stream is a consequence of geological luck, rather than skill and hard work.
Americans don’t have such luxury, so they actually work for a living. In fact, statistical data shows that Americans put in more working hours than any other developed nation. As a consequence, America is the strongest single economy in the world, and per-capita income is among the highest in the world. The country has long ago transitioned from agrarian to industrial, and is well into its transition from industrial to service, which explains its position at or near the top of economic scales.
There may be a day in the future when most, if not all manufacturing work has left America. That doesn’t mean that the country will become the land of incompetent lazy idiots; it means that, if the natural economic development and progression continues, it will become a country of highly trained experts, doing the work that can only be done by such highly trained experts (and getting paid correspondingly well), and paying the less-trained to do the work that doesn’t require such expert training.
Welcome to home of the Golgafrinchans!
There’s definitely truth to what you say but there’s also one problem;
Let’s say eventually all nations reach developed status per your scenario. Who will manufacture the products that people buy and the food that people eat? Because in that scenario, if no one is doing the “lower level” work, there may not be any products to buy or any food to eat?
Yes, there is that problem, and eventually, once the last undeveloped region has gone through the same developmental path (agrarian -> industrial -> service), the planet may hit a wall. There are two simple answers to this problem:
1. Cost of manufacturing labour will gradually increase, reflecting the supply/demand balance, increasing (gradually) the cost of manufactured goods and food;
2. Cost of manufacturing will continuously decrease as automation continues to reduce the amount of human labour required.
The intersection of these two trends will define the trend of the net cost of manufactured goods. It may well continue to increase (i.e. savings from automation might not completely offset increases in cost of labour due to shortage), but it will not be a sudden surprise. The economies of the world will be able to deal with it by the time it comes; it may take more than 100 years before all the manufacturing disappears from China and Latin America, let alone Africa (after it first starts appearing there). We may well be much more seriously hit with the consequences of climate change by then…
Apple sells high end products by designing them in California and having them manufactured in Asia. That’s how they make good margins and are able to invest in the future.
They have avoided the race to the bottom since they do not care about market share. Instead they focus on profit share and working on how they can improve on existing devices or create brand new markets.
That’s why they are the biggest company in the world.
I’m glad Tim said what he did. Not every one is cut out for computer science and software engineering. Or even mechanical engineering. We need more people that know specific trades.
As much as I agree with you, that’s the Catch-22 isn’t it. We need to graduate more people that know specific trades, OTOH, what is the employment outlook for such grads?
Eric Schmidt is a tool who should die.