“Listening to the analysts on the business channels, you’d think Apple’s future is based on things like iPhone maps functionality or the success of the iPad mini. They’re wrong,” T. Lee Wylie writes for InformationWeek. “Apple, as well as most companies producing consumer-oriented products in China, have a much larger problem looming: Will they be able to produce their products to meet market demand?”
“Boston Consulting Group released a paper last year titled, ‘Made in America, Again,’ in which it made the case that China will lose its low-cost manufacturing position by 2015. BCG’s analysis shows a 15% to 20% annual increase in labor costs in China, as well as continued appreciation of the yuan, further eroding the country’s cost advantage. Trans-ocean freight costs will continue to rise. China’s economic advantage is quickly evaporating,” Wylie writes. “When the crisis becomes obvious, manufacturers will scramble to find a new home to produce their products. Most will simply search for the next location with low labor costs and nonexistent environmental and labor laws. Apple will choose a different route.”
Wylie writes, “This is where Tim Cook comes into the picture. Cook’s skill set is unique among CEOs of high-tech consumer product manufacturing companies. A master of logistics, he’s credited with reengineering Apple’s supply chain to increase profit margins while allowing for more flexibility to produce new products and make changes on the fly. His educational background in industrial engineering, coupled with an MBA, provides him with a toolbox the average CEO doesn’t have… The pundits and experts wanted the next CEO of Apple to be just like Steve Jobs, who was always ahead of the pundits and experts. Perhaps Jobs looked into the future and saw the challenges and opportunities that Apple faces. Keenly aware that Apple had grown into a large and complex company, Jobs knew better than anyone what skills the next CEO would require. And he groomed Tim Cook for the job.”
Read the full article – highly recommended – here.
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