Why Apple is bringing manufacturing back to the United States

“Today’s news from Tim Cook that Apple is bringing some Mac manufacturing from China back to the United States is encouraging for the first reason you’ll think of: it’s a tentative move to disengage from appalling labor practices at the company’s Chinese contractor, Foxconn, that tether anyone who owns an iPhone back to the developing world economy heart of darkness,” John McQuaid writes for Forbes. “But what does it mean for the American economy? For years, we’ve been told that the migration of manufacturing offshore is an economic inevitability, the result of ironclad laws of trade, labor and capital. Steve Jobs himself said of the China offshoring: ‘Those jobs aren’t coming back.'”

“It’s not clear yet what Apple’s reasoning is for making Macs in the U.S., but its a good bet that, for a company obsessed with design and quality control, proximity and the ability to manage every aspect of the manufacturing process will yield economic benefits,” McQuaid writes. “The U.S. is never going to be the manufacturing powerhouse it once was. (Or rather, manufacturing will never employ the numbers it once did.) But perhaps we’re not doomed to a McDonald’s-and-Starbucks economy either.”

Read more in the full article here.

MacDailyNews Take: The ultimate goal is what Steve Jobs always wanted all along: Automated assembly via robotics.

They don’t sleep, they don’t strike or make demands, they don’t jump off buildings or die in dust fires, most of them don’t even need the lights on. They just make what you program them to make, the same way every time, with quality control that no human line can ever match.

“I’m as proud of the factory as I am of the computer.” – Steve Jobs, February 1990

Related article:
Apple CEO Tim Cook announces plans to manufacture Macs in USA; says TV is ‘area of intense interest’ inside Apple – December 6, 2012


      1. The fact is that the “fiscal cliff” is a made up term by the W Fed appointee Bernanke. Scary sounding isn’t it?

        I can’t wait till we go over it. It will be a glorious day, ending the W tax cuts we couldn’t afford after his 2 endless wars ran up the deficit.

        Remember? he inherited a surplus from Clinton and left with a huge deficit? Fitting that the real culprits are the ones to name the ensuing ‘crisis” isn’t it?

  1. Apple’s ultimate goal is to integrate the electronics more and more until very few “chips” are inside an iPhone and at that point the iPhone can be assembled by robots for most tasks, meaning that Apple can put an assembly plant where the markets are located.

    They know they have to be ready for the day when China has “a problem”. China suddenly stopped shipping rare earth minerals earlier this year because of a political decision. Apple knows iPhone production could be disrupted easily.

    CEOs get paid to look ahead 5-10 years.

    1. Getting rare earth minerals is simply an economic issue. The are all over the sea floor if China doesn’t want to share their supply we can get them ourselves, it’s only a measure of cost.

      As far as calling them “rare earth” anything above iron on the periodic table including gold came from a supernova explosion. It would be more accurate to call them “rare stardust”.

      1. We just need to draft robo-tuna to collect rare earths from the sea. Might as well enlist them to collect plastic debris that’s disintegrating into toxic fish food as well.

  2. Once again we see that Tim Cook does not have a clue. CEOs are saying that with the bad economy and lack of demand, they will not be hiring. Furthermore, the uncertainty of Congress makes it an impossible time to hire. Finally, economists are saying the public will pull back from spending because because of the belief of higher taxes and the fiscal cliff next year.

    Of course, wait a minute. Apple has over 100 billion in cash and growing. People are buying innovative Apple products with kids only wanting iPads for Christmas. In fact, the only demand problem Apple has is that sometimes it cannot keep up with demand. People have not pulled back from spending on Apple now and don’t plan to cut back in the future.

    Maybe it’s other CEOs and economists that do not have a clue.

        1. I did. Saying ““Once again we see that Tim Cook does not have a clue” is not helping the discussion.
          The point I wanted to make is that CEOs like Cook know stuff that us laymen will only get to known much later. Its only the opening statement I was questioning.

            1. Why, yes; I can fell much better now that I’ve scattered pillows about the castle.

              Oh. On the topic, I pretty much think Jack is right. But then we have to be careful. There’s no place for irony on the interwebs; it just clogs up the pipes. So maybe that first paragraph was too much for a goodly number of “readers.” SO I’d add them to the that list of “other CEOs and economists that do not have a clue.”

  3. I expect there will be a Teamsters or AFL-CIO union shop. That will be the only way to insure Apple does not exploit the American worker. The SEIU union should organize the retail workers, who are definitely exploited by Apple. Tim Cook gets paid a lot more than the store employees and that is not air. Now is the season to spread the wealth around. No more Apple paying its executives more than the proletariat.

      1. It is fitting that the working man be organized at Apple, given the US is now led by a Marxist. Fidel, Che, Hugo, Bloomberg, Ortega, Stalin, Obama. We no longer have to hang our heads in shame. The workers of the world have united. We have a man of the people in the White House. Except, he leaves for a four week Hawaii vacation soon, then off to Egypt to see the new version of women’s rights on display there.

        1. Must be hard to remember in your little world that the President was just reelected, and in a race that wasn’t even all that close. And is Obama a Marist or a Radical Muslim. I can’t quite remember.

          Look bonehead: the stock market is way up. Corporate profits are way up. CEO pay is way up. Taxes are at a 30-year low. Unemployment is at a four-year low. Home prices and home building are both up,

          Yep, it’s clear the Current Occupant is hell-bent on destroying America. What a putz.

  4. Apple probably has three major reasons to move some manufacturing back to the US.

    1. Diversify. As someone above mentioned, they don’t want all their manufacturing eggs in one company and country.
    2. Closer coordination between designers and the factory. Apple can’t keep making those precision products with parts fitting together perfectly, unless the designers are in the factory once in a while to see how everything works.
    3. PR. Nothing could get Apple more positive press then actually bringing some manufacturing back to the US from China.

    That’s what I call a trifecta.

    Cook may not be Steve Jobs. Instead he bring a different set of strengths to Apple. Strengths which are valuable at this point in Apple’s life.

    1. Number one is the most important, Apple has to protect itself and have many places around the globe just in case. CPU Chips, LCD Screens, and Mac Pro’s can be be made in the US, and Europe, Apple doesn’t have to leave China just diversify enough to protect itself.

    2. Agreed, these are some of the motivators. The next step is to examine their product line and look for which products are “friendly” to the style of US manufacturing. That generally means automation is maximized and touch labor is minimized…and the ramifications of that are (simplistically) parts that can go through pik-n-place machines for assembly **AND** a product that has a longer shelf life **AND** for which there isn’t a huge initial surge of consumer demand – – – that’s what points to the iMac as the first candidate.

  5. “Today’s news from Tim Cook that Apple is bringing some Mac manufacturing from China back to the United States is encouraging for the first reason you’ll think of: it’s a tentative move to disengage from appalling labor practices at the company’s Chinese contractor, Foxconn, that tether anyone who owns an iPhone back to the developing world economy heart of darkness,” John McQuaid writes for Forbes.

    Oh really? That’s not the first I think of, and I certainly carry no guilt when I pick up my iPhone. Working at Foxconn is not “the heart of darkness” John McQuaid, you pompous, mealy-brained buffoon! Maybe you or I wouldn’t want to work there, in comparison to jobs we have, but there are millions of very poor Chinese that line up for the opportunity to raise their standard of living with a job at Foxconn.

    1. Great posting. I also point out that the greatest two exports from the US are democracy and free enterprise. When the US pulls out of a country, they no longer have influence there and once a great principle is implanted, it is very difficult to take it away from people.

      The US should keep outsourcing jobs to developing nations and potentially hostile nations to continue the move to world wide democracy. Peace is hugely less costly than war or preparing for war. High principles endure and mankind’s progress is a given.

        1. I am sorry that you don’t see the ‘good’ in the United States and all democratic notions. If you think that your own government is flawed, it was elected by a majority and just because your favourite political party lost does not mean that democracy is a bad thing.

  6. When I first read the title I was expecting Apple would slowly make the transition away from China to halt the various instances where Chinese would make counterfeit Apple products.

    I’m not certain, but Obama might get what he always wanted. But, then again, if they do decide to use robotics as opposed to labored, which is very likely in our current situation, Obama is getting what he wants, but not necessarily in the way he had in mind.

  7. MDN take: “The ultimate goal is what Steve Jobs always wanted all along: Automated assembly via robotics.”

    The factory will certainly be highly automated – just like the NeXT factory was, only more so. That means not too many jobs. But someone has to make the *robots*, so that’s a few more jobs.

    1. And someone has to build the factory, maintain the robots, manage the logistics of supplies and finished products. This would bring a lot if jobs besides just factory workers. Those incidentals will be a boon to whatever location is lucky enough to have a factory regardless who or what is doing the manufacturing inside.

  8. I have a theory.
    Apple’s margins are the envy of the industry. If Apple creates Made In America buzz competitors will be forced to follow suit.

    But: Their margins are razor thin by comparison, and moving manufacturing to the US will do them more harm than good, giving Apple a one-two punch.
    1. Patriotic PR.
    2. Easily absorbed higher costs that competitors can’t afford.
    Well done Mr. C.

    I have another theory.
    The town is a bunch of false fronts and he ran over there real fast.
    Oops, sorry, MST3K moment….

    1. @JeanLuc: good point regarding how this brings some pressure to bear on the Windows PC market – –

      – – you reminded me of a conversation that I had at a family friend’s funeral a year ago: one of the nephews now works for one of these companies (four letters, begins with a “D”) and I asked him about the domestic-vs-China production cost question. His response indicated some cynicism in the real economics of the equasion, saying that the company’s official line on the ‘cost savings’ claim was around $20 / unit, but that he believed that there were a lot of hidden costs that didn’t show up on the official ledger.

      What a lot of it really probably comes down to is that the cost of an overseas worker is less because there’s less interventional regulation for worker’s rights, working conditions, pollution standards, etc. Of course, there’s also a lot higher corruption and political graft too – – which all probably nets out to around the $20/unit number that he mentioned.

      IMO, the very broad issue regarding this entire topic of ‘where the jobs are’ goes back 100 years to Henry Ford and the production line for the Model T: Ford understood that in order to sell cars, he also needed to create his own customer base who could afford to buy his product. That’s what’s missing from US Manufacturing today.


  9. re: MDN take: “They don’t sleep, they don’t strike or make demands, they don’t jump off buildings or die in dust fires…”

    And they won’t never, ever develop egos and try to take over the world. Promise!

  10. Tax! Cook is doing a deal with Obama. He will spend the $100b of offshore funds on building USA industry in exchange for a tax break on bring home the billions offshore with no tax paid. Obama meet with Cook recently on how to get the economy moving. Cooks answer is bringing manufacturing to the USA if he gets a tax break. As a act of good faith an iMac line is being built, next move is Obamas.

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