Cost for Apple to bring iPhone assembly to USA: $4.2 billion per year

“There’s several different ways that we can try to measure how much it would cost Apple to assemble the iPhone in the US,” Tim Worstall reports for Forbes. “You know, that reshoring of manufacturing that so many insist good and loyal American companies should do.”

“The most obvious answer is that it would simply be impossible: Foxconn, Pegatron and others employ several hundred thousand people across China to assemble Apple’s iKit and there’s just no possible method of getting that sort of scale in the US,” Worstall reports. “Not in any reasonable timescale at least.”

“A second approach could be to look simply at what the extra labour costs would be of assembling in the US,” Worstall reports. “The third way would be to look at the total extra costs Apple would have to pay and that gives us a very high figure of $4.2 billion [per year, $3.6 billion of which would be payable to Uncle Sam].”

Read more in the full article here.

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68 Comments

    1. Great answer. Although I would imagine that in China, fully robotic manufacturing would be banned or heavily taxed, as it would put so many people out of the job.
      In the US though, it will be the norm.

      Look for a rumor in the future about Apple not ramping production and analysts freaking out. Surprise! We produced 10 million of these in the US without any leaks to the press.

      1. Oh but the corporate tax from what I read is 35%. According to the Article Link.

        “If they were to bring this into the US it would have to pay the US corporate income tax of 35% minus the 2% already paid: which is why they don’t do it.”

        1. It is not just corporate tax, there are many other laws they would have to comply with. The “golden state”, California, has lost a huge number of companies who have moved out of state simply because they got tired of the goofy regulations they keep tripping over there. Other states who are much more business friendly have benefitted. It is not easy to move however. Without confidence they will be left alone, businesses just feel safer staying away. California is paying a heavy price for their anti-business stance. If I was Apple, I would stay away too.

          1. Right. Business-friendly states like Texas, where such laws as safety regulations are routinely ignored resulting in catastrophe. Like the explosions that nearly wiped out that small town several weeks ago.

    2. R2D2 -Agreed.

      It has to be robots for two reasons. First, you can’t find 1/2 million Americans (the approximate number of Foxconn employees assembling iDevices) willing to work 50-hour weeks assembling iPhones.  Second, $4.2 billion paid to 500,000 workers is $8400 per year for each .  US workers don’t work for $4.20 an hour.

        1. Do you have any grown children, Thomas? In your wildest dreams can you see any of them working on an assembly line in clean-room garb for 8 to 10 hours per day assembling iPhone components? Have you seen that picture of the young Chinese girls sitting in a straight line as far as the eye can see mechanically laboring on either side of a conveyor belt with no iPods in their ears, no gum in their mouths, and little joy and creativity in their hearts? Are our children ready for that kind of labor, day after day, year after year, Thomas? I think not. Perhaps a hundred years ago, but not today.

      1. Many are focusing on labor cost, making it out to be a “the Chinese work long hours for no money” thing.
        However wage isn’t really the big stumbling block to american production, the government is. The quote:

        “Apple would have to pay and that gives us a very high figure of $4.2 billion [per year, $3.6 billion of which would be payable to Uncle Sam”

        … 3.6 of the 4.3 billion dollars directly to uncle sam speaks volumes about why it is increasingly difficult (robots or not) for large companies to keep production in the US.

    1. You’re an idiot. American cars can compete with the best in the world. It was more management greed and disregard that caused poor quality in car manufacturing. Cars in the 70’s were rust buckets due to cheap steal from China.

      1. Cars in the 70’s were rust buckets? You’re way off bas, dude!! You’re the idiot!! Cars in the 80’s and 90’s were made of much more thinner metal than cars of the 70’s, which in turn rusted extremely quick.

          1. The 60s and early 70s were american steel. Most of the 70s was mexican steel from what I read.

            The 1972 chevy truck I had was a far heavier and better built truck than the 1973 which was the first year of the redesigned truck GM would continue to make until the 1988 model year.

      2. I had a string of FOUR P.O.S. American cars that were built in the ’80s when I first started driving and they left me with a bad taste for American cars. Once I got out of college in the ’90s I started buying Toyota and have never looked back. Some of the new Fords do look nice but I’m gun shy as hell about paying $30K+ for something that may not last much past the life of the loan.

        1. Well I just traded in my Jeep Wrangler in my 2001 Jeep Wrangler a little over a year ago. It had 200,000 miles on it. Everything in it still worked. I love my 2012 Wrangler, I had it custom built out of the Toledo, Ohio plant. The quality is impeccable. There’s quite a bit more of innovation and quality that’s been added even since 2001. I think the American manufacturers have gotten it and have adjusted to the new world market. I’m on my third Jeep, I love them. I think it’s foolish to not have a second look with fresh eyes towards American built vehicles. Besides, it’s the patriotic thing to do.

          1. I have been driving Jeeps since 1986 and using Apple products since 1979.
            I bought the Call of Duty Black Ops Wrangler (my first Wrangler) and I expect it to last another 20 years.
            I had a Jeep Comanche truck that had over 273,000 when I sold it, best truck I have ever had or driven.
            Don’t let anyone say that the US can’t make durable goods anymore.
            I remember a time when all Apple computers were made here.

        2. You have likely still been buying American made cars then.

          Toyota has been making the Corolla in the US since 1986, the Camry since 1988. They started truck production in the US back in 1991.

          The issues with US manufacturers (in my opinion) had more to do with laziness and complacency from the top down. I had several US made vehicles in the 80s and 90s and agree they were crap. Every Chevy I had ended up with rattles and plastic parts falling off.

          The bankruptcy of GM was the best thing for the company. Look at the vehicles they are producing now vs. back then. Its night and day.

          1. Actually, none of my Toyotas were made in the U.S. Van, Previa, and now 2006 Scion xB were all made in Japan. And the Land Cruiser is still made in Japan. Sad to say but the Japanese-made Toyotas hold up better than the ones made by our workers. 🙁

        1. I own both a Toyota Prius and a 2013 Ford Fusion hybrid . I much prefer driving the Fusion and the fuel economies are very similar. And the Fusion pairs up nicely with my iPhone.

            1. Sync is the worst part of the Fusion. But I use it to the minimum. Either USB mode or bluetooth to connect with my iphone works pretty good most of the time..

              I purposely avoided the sync navigation and do not use it for other car controls to avoid that nightmare.

            1. I said I drive both a Prius and a Fusion Hybrid. The Prius was there first, I give them credit, but the Fusion vastly improves the driving experience. The Prius interior is all plasticy, the Fusion is better appointed and the battery more powerful.

      3. Not sure how old you are but US wasn’t importing steel from China in the 70’s. Nixon visited in 1972. Relations were normalized in 1978. My made in Germany 67 VW was a rust bucket.

    2. The onslaught of Japanese imports has pushed the US to manufacture better quality cars. By most accounts (JD Powers, Consumer Reports), US quality lags slightly behind current Japanese makes, but is equivalent to Japanese cars of just a few years ago.

  1. Chump Change for Apple.

    There are other reasons for Apple to ‘repatriate’ their manufacturing here, not related to reasons of patriotism or altruism. Some of those reasons are also beyond the scope of this forum, and a bit complicated to discuss; but if Apple is paying attention to certain macro economic trends, and I hope they do, it would make good economic sense for Apple to move manufacturing back to the US, before “oil shortages” causes all hell breaks loose in China. And BTW with Robots: Not Gonna Happen in the Long Term.

    1. Yes Chump Change for Apple.
      How about you? Would you pay $1,000 for iPhone instead of $685 or so for iPhone. Must have a lot of loose change in your pocket.
      More over the US labor market is not ready to take over such an effort of efficiency

      1. I’ve seen all good people turn their heads each day so satisfied I’m on my waaay … 🙂

        Prog rock references aside, you hit on themes why it will not happen. Union labor will greatly drive up the cost and efficiency for them is as elusive as a cat and water.

        I’ll add a another reason: the political/tax element will likely increase, year over year, with no end in sight …

  2. That would be chump change for Apple. After all they’re going to manufacture the new Mac Pro in the good old USA. they could at least move some of it back to the US. No countries workers are more productive or work harder than the American worker. We’re seeing more and more on-shoring because of things like transport costs, speed of delivery, productivity and states offering tax breaks and other incentives. We trusted Samsung with a bunch of manufacturing, and how much money was lost over American IP being ripped off. Plus the Chinese are demanding higher wages, shorter work weeks, paid vacations, etc. same thing in India. Let’s get Anerica working again, we deserve it.

      1. Okay, break down $4b+ into a feasible plan.

        $50k/y for 80k employees is $4b all by itself. Then you have facilities and sister support industries. How many years to build up? So maybe not 100s billion. But to suggest $4-4.7 billion will do it means they have no clue what it takes.

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