Apple can afford to make iPhone in U.S., say researchers

“In recent years, Apple’s success has prompted scrutiny of everything from its environmental practices to the treatment of its workers in Asia. Others, meanwhile, opine that Apple should build more of its popular products in the U.S., given that it has approximately $97 billion in cash,” Adario Strange reports for PC Magazine.

“Prior to his death, Steve Jobs reportedly told President Barack Obama that that was not feasible. “Those jobs aren’t coming back,” the Apple co-founder said. But a group of researchers argue in a new paper that Apple is capable of returning its manufacturing operations to American shores,” Strange reports. “‘If Apple were willing to accept lower margins and the 8 hours of assembly labor on the iPhone were on-shore and paid at U.S. rates, Apple would still have a gross margin of nearly 50 percent,’ researchers concluded.”

Strange reports, “The 25-page paper, titled “Apple Business Model: Financialization across the Pacific,” was constructed by a research group at The University of Manchester’s Center for Research on Socio-Cultural Change… [It] was written by researchers Dr. Adam Leaver, Professor Karel Williams, Julie Froud, and Sukhdev Johal.”

Read more in the full article here.

MacDailyNews Take: This quartet is something, but to call them “researchers” is pushing it. The problem isn’t the economics, the problems are the Amercian worker vs. the foreign worker, education, geography, and scale – all of which seem to have been left out of their “research.”

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.

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.Charles Duhigg and Keith Bradsher, The New York Times, January 21, 2012

A study by Analysis Group found that Apple has directly or indirectly created 304,000 U.S. jobs. These jobs — spread across all 50 states — include thousands of jobs in numerous industries, from the people who create components for our products to the people who build the planes and trucks that carry them to our customers. For example, this figure also includes workers in Texas who manufacture processors for iOS products, Corning employees in Kentucky and New York who create the majority of the glass for iPhone, and FedEx and UPS employees. Together with the 210,000 iOS jobs generated by the app economy, these 304,000 jobs make a total of 514,000 U.S. jobs created or supported by Apple.

More info: 514,000 U.S. jobs created thanks to Apple Inc.

[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]

Related articles:
Economists weigh in on Apple’s U.S. job creation claims – March 5, 2012
514,000 U.S. jobs created thanks to Apple Inc. – March 2, 2012
Launched by Apple, ‘App Economy’ has created 466,000 jobs in the U.S. alone since 2008 – February 7, 2012
Apple and the American economy – January 24, 2012
Apple, Steve Jobs, Obama, America and a squeezed middle class – January 21, 2012
Apple’s real market value: How many U.S. jobs it creates – November 21, 2011
iOS developer salaries skyrocket – November 9, 2011
How many U.S. jobs has Apple’s iPod created? – July 8, 2011

76 Comments

  1. I agree! Apple should move some of its manufacturing to the U.S., not out of some sort of obligation, but because it makes good business sense. If Apple can pay American employees, then those employees have money to spend, which they might conceivably spend on Apple products. What money they don’t spend on Apple, they will spend on other local businesses, and _they_ might spend their money on Apple products. Or those businesses will spend money with businesses who spend their money on Apple products. It simply contributes to creating a market that will demand Apple products all around.

    1. Next time, read the MacDailyNews Take before you comment, and we won’t all think that you’re a total moron.

      “Superior Being” was referencing people like you in his comment below, right average American?

      An average American is below-average just about everywhere else.

        1. You disagree that it’s easier to find a massively larger pool of labor in China? Are you kidding me?

          A moron would be insulted by you being grouped with him.

          1. I didn’t say that. But Apple still needs customers. Cutting your expenses doesn’t do you a damn bit of good if you cut your customer base (and thus, your revenues) along with them.

            1. JD I applaud your civility. I wish more commenters would do the same. Disagreement doesn’t call for insults. That is the worst form of debate. I disagree with Eric’s premise, but that doesn’t mean he should be immediately called a moron.

        2. If Apple had American factories, it would be a law suit factory to support the legasl industry. Sex discrimination, swxual harassment, unfair promotion policies, wage hour violations, ADA etc. Wall mart 100 times over. Not because Apple is doing it but because of the big bank account and the high visibility.

      1. You’ve touched on a part of the analysis that isn’t mentioned, but probably would be when all other “high profile” issues have been addressed. Since the rest of the supply chain is in Asia, there’d be more carbon foot print for shipping due to the discontinuous supply chain. Even now there is no mention of the airline fuel spent shipping gorilla glass from the US to China, nor that of flying finished goods back. I’m not one who is overly bothered by these elements, I’m just noting that once the high profile issue of “foreign factories” would/could get knocked off by using “domestic factories” the headline grabbers would turn to the next (and newly created) issue of fossil fuel consumption in the pursuit of profits.

    2. Eric, you gotta love academics.

      This report is weak in so many areas, that it should have been allowed to see the light of day.

      To begin with, the highly educated US workforce the authors refer to, aren’t educated in the disciplines Apple, and any other manufacturer, needs. Those would be engineering. US engineering schools are among the best (if not the best) in the world, but over half their student bodies come from outside the US. the US graduates more lawyers each year, than it does engineers.

      Foxconn requires hundreds of thousands of workers, in one place. Even with unemployment near 10%, there aren’t enough qualified US workers to satisfy that need.

      US corporate tax rates are the highest in the world. Because Apple manufactures offshore (predominantly China), it’s effective tax rate is about 25%. If manufacturing was done in the US that rate would go up 50%.

      Then there is the infrastructure issue. Nearly all of Apple’s vendors have a manufacturing, or warehouse, presence within minutes of Foxconn’s Apple assembly lines. We have nothing remotely as efficient here in the US.

      Then there is the scale of overreaching governmental regulations that exist in the US, then there are all those lawyers drooling over the chance to bring a class action against firms with the deep pockets of an Apple. If Apple manufactured in the US you could reasonably expect the number of suits to double.

      No. Apple cannot manufacture in the US. We’d have to unwind 50 years of anti-business legislation and deference to the liberal arts degree before that could happen.

      1. One other thing. Apple doesn’t do manufacturing and hasn’t for a long time. Any of the contract manufactures with a US presence can go to Apple with a proposal and if they can make there case TC might consider it.

        An interesting experiment would to hire a numerb of US employees and send them to China to see how they would cope in a iPhone production line.

        An acecdote, I have a former client who needed a job and signed onto a Cruise Line in Honolulu an an unskilled crew job (bus boy, I think). ((Most of the service crew is Asian or East European). He lasted 2 weeks. Too many hours, not enough tips on top of $12 hour wage.

    3. I’ve got a better idea. Let’s ship a bunch of unemployed, lazy, fat Americans over to China and put them on the production line.

      With all that hard work and the rice and veggie diet, they would be in good shape or dead.

      A win, win.

    4. It doesn’t work that way. Not even close. What you’re talking about is an allocation of resources based on little more than preference. Resources must be allocated based on real world economic realities, whether for the individual, the business, or the macro economy. That people don’t understand this is probably one small reason why manufacturing must be located elsewhere.

  2. If you’re in America all you need to do is open your eyes and look around.

    A bunch of obese pigs and sows who know more about the Kardashians that they know about basic math and science and who know exactly who’s on DWTS, but who have no idea who’s on the Supreme Court. Americans no longer know who and what ideals made their once-great, now rapidly-declining country the land of opportunity.

    Food stamp usage increases 70% under Obama – U.S. Congressional Budget Office, April 19, 2012

    1. Completely agree. I’ve seen kids coming out of high school and entering college that don’t know how to spell or perform simple math functions like making change at a cash register. The U.S. education system was one of the best in the world, now it’s a pathetic remnant and all anyone cares about and votes on anymore is whether two individuals of the same sex should be allowed to publicly acknowledge their devotion to each other.

      What a waste this country has become.

    2. OT: Politics ahoy!

      Schizophrenic today Superior Being?

      Americans no longer know who and what ideals made their once-great, now rapidly-declining country the land of opportunity.

      YES. My favorite example is the Tea Party tards elected to the House of Representatives who read the US Constitution on their first day in 2011 then proceeded to perpetrate new laws that blatantly BROKE our Constitution. Infinite DUH Factor!

      But then you point out:

      Food stamp usage increases 70% under Obama – U.S. Congressional Budget Office, April 19, 2012

      Because why? Because we’re in the worst economic DEPRESSION since the 1930s. Because why? Because the Clinton and Bush administrations relaxed regulations that allowed financial criminal behavior. Wall Street screwed everyone. The bank system screwed everyone. The real estate business screwed everyone. The Corporate Oligarchy as a whole screwed everyone! And DARN! Screw over a country’s financial system long enough and the bottom falls out.

      So DUH, EBT (aka Food Stamp) demands rocketed. Why the hell wouldn’t they? Obama is just another Corporate Oligarchy puppet. But put the blame where it belongs! The dummy INHERITED this economic catastrophe. Be honest or be stupid.

    3. “Superior Being,” why do you insist on incorporating anti-Obama statistics in most of your posts, even if they have little or nothing to do with the Apple-related subject of the forum? Any why do you insist in taking most things out of context in an attempt to make your assertions seem stronger?

      You do realize that a major economic collapse was already ramping up *before* President Obama took office, don’t you? And it follows that a near-Depression combined with two lengthy and highly expensive wars and a European economic crisis might tend to increase the number of U.S. citizens seeking federal assistance? Or is that too darn complex and logical for you?

  3. The real question is: Why would they want??? Way too many policies that do not work in their favor; way too many, and too high, taxes: unions; too many government agencies…
    There is no up side to producing in USA….

  4. We amuricans don’t want job of Apple. We like china makeng all stuf. If Appul make stuf in amurica, why when china love make stuf? We amuricans dont apprecate havang jewbs and want china to doo it fore us! us americuns stoopid and dont de serv my factoree jewb. Dont take my bunk Appel I love puting the chip in the iPad these amerukan stoopid.

    1. Only an idiot shoots the messenger when he doesn’t like the message.

      Direct your ire towards the authors of the so-called study, who forgot that the workers and the system (dorms, huge scale, flexibility, ability to move quickly) that Apple needs simply do not exist in the U.S.A.

  5. Apple (and indeed others) could afford to do a lot of things, but they’re businesses, they’re out to make money. Whilst they may have moral/ethical duties to give workers decent conditions, they’re not obliged to do things just because it would be nice.

  6. Why is an American job/life more important than anyone else’s? The minute Apple does this with a hit to their margins and profitability is the minute I consider selling my shares.

      1. My profitability is more important than the difference between an American and anyone else, which is zero. Idiot.

        Companies exist to make money, and they do so by pursuing economic advantages. This leads to global efficiency. Why should the US be expected to manufacture when there are countries far better and cheaper?

        1. Your profitability is important to YOU and you alone. Unemployed americans desperate for work outnumber YOU. Your profitability does not seem more important to me personally. Apple is an US company, and as such should act like a patriotic one by keeping jobs in America rather than outsourcing them to other countries when it’s possible. There’s no difference between an American employee and others agreed.

          What country do you live in, btw?

          1. As a shareholder, my profitability is more important to Apple than giving a job to an American. Clearly I’m right – look what Apple is doing to maximize their earnings, and rightfully so.

            Apple was founded in the US but it’s a global company with global investors and users. Why shouldn’t they employ whoever they want to to satisfy their shareholders and at the same time get as much product into the hands of as many people as possible?

            Do you honestly think an American assembly line would be nearly as efficient as a Chinese one? Have you ever lived or worked outside of the US? You’d be surprised how lazy people are in comparison to Asian countries.

            1. It astounds me how many people seem to think you can achieve profitability in a company without customers. So you move your manufacturing to China. Good for you, you saved on costs and you increased productivity. But if no one in America can afford to buy the things your new Chinese workers are making, you’ve shot yourself in the foot. You can’t just keep cutting your way to profitability. You need to increase your customer base as well, or you won’t have any money coming in, either. Henry Ford recognized this. Why have we forgotten it?

            2. Eric,

              You continue to argue that lowest-wage manufacturing jobs would be beneficial to the US, without any data to support it. Common sense tells us that it would be foolish to spend so much to educate all those American children, only to offer them manufacturing jobs later. Not to mention that those jobs wouldn’t make them enough money to be able to afford the very iPhones they’re making.

              It astounds me how you can argue that nobody in America can afford to buy the iPhones made in China, but presumably, they WOULD be able to afford them if they were made in America.

              Apple has been making hardware in China for over ten years. Those years clearly coincide with Apple’s astounding market share growth. It is clear that there is no lack of customers in America. After all, Apple is NOT the only employer in the world. All those Americans are actually working much better jobs than a lousy, low-level manufacturing job (building iPhones).

            3. Hey, I don’t necessarily want a low wage job either. But let’s look at history here. The middle class did decline when union manufacturing jobs left the country. (You want to see how it started? Go watch “Roger & Me.”) Now rail against unions all you want, but unions allowed there to be a customer base in this country, which is what allows companies like Apple to thrive. And if someone’s dream job isn’t a manufacturing job, at least having the manufacturing job would allow them to pursue that dream job without having to worry about starving or being evicted, which is what having _no_ job would result in. Yes, there are plenty of other companies who shipped jobs out of the country, but someone’s got to take the initiative, and this would be a great opportunity for Apple to show some leadership in the labor space, which is something they do so well in the technology space.

            4. Eric,

              I disagree, and your argument doesn’t hold water. As manufacturing jobs were leaving America, they were being replaced by other, less menial, better paying service jobs (call centres, for example). You argue that manufacturing jobs that left overseas created armies of unemployed and unemployable people. While today’s unemployment rate is near an all-time high, this was caused ENTIRELY by the global economic collapse, and America fared considerably better with respect to the unemployment, compared to many (if not most) other developed economies. And none of those unemployed saw their jobs exported to China (or elsewhere); they lost them because their companies went under (in the biggest recession since the Depression).

              We can easily argue that, thanks to the cheap Chinese labour, Apple is able to make extremely cheap iPhones and iPods, which are thus affordable for large swaths of middle- or lower-middle class in America, and the commerce generated by millions of iPhones, iPads and iPods (plus Macs) sold in America creates many more jobs (not to mention revenue) than any possible return of manufacturing jobs, at the expense of much higher retail prices, could bring.

              America will NEVER go back to making consumer electronics. It is a waste of a well-trained workforce. Americans can (and do) certainly do better than assembling electronic gadgets for 8 hours a day.

  7. It’s not just about cheap labor. It’s about the value (i.e., productivity) you get for it. Seriously, where will Apple find tens or even hundreds of thousands of 18~25 year olds in one geographical location in the US to sit down and and work on an assembly line doing the most repetitive and monotonous tasks you can think of for minimum wage? Better to flip burgers or sell shoes at the local mall to use that money for partying on weekends. It’s just not going to happen.

    1. RE: “Seriously, where will Apple find tens or even hundreds of thousands of 18~25 year olds in one geographical location in the US to sit down and and work on an assembly line doing the most repetitive and monotonous tasks you can think of for minimum wage?”

      The Chicagoland area.. currently it’s very feasible (lol!)

    2. That sounds like towards the end of “The Big One,” where Phil Knight said that if he could find people willing to work at a manufacturing plant in Flint, he would build a plant in Flint. Michael Moore found people willing to work at a manufacturing plant in Flint. It was never built.

      1. There is a difference between finding people who say they are willing to work, and finding people who actually are willing to work.

        In the first case all you need to do is ask people and and take their reply at face value. In the latter case, it is somewhat more difficult because, as anyone who hires people knows, you can’t take people at their word.

        Guess which type Michael Moore found?

          1. I have worked in HR and you would be amazed at the low quality of potential employees. Too many people just don’t value education. The unemployed of Flint who were used to their very cushy and overpaid auto industry jobs aren’t qualified to do what Nike needs. Or Apple. And if you told them what they would have to do in the job, they would stay on welfare.

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