Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Summary: The iPhone is manufactured in China and in a very detailed and well-researched report the New York Times explains how it is not primarily due to the higher cost of labor in the U.S.
If you have an iPhone you have likely noted the small text on the back that states, "Designed by Apple in California. Assembled in China." In the past Apple made all their products in the USA, but that is no longer possible today due to several factors detailed in an excellent New York Times article published on Saturday.
The New York Times article is based on interviews with more than three dozen current and former Apple employees and contractors, economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.
In typical government fashion, statements are made without understanding the real problem when they see companies actually making a healthy profit. Betsey Stevenson, the chief economist at the Labor Department until last September stated, "Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice. That’s disappeared. Profits and efficiency have trumped generosity.” Seriously? Does the Labor Department really think making statements like this will help encourage companies to try to find ways to bring jobs back to the U.S.? Maybe the U.S. government should take a leadership role in encouraging more people to embrace engineering as a major or to increase the skills for manufacturing workers.
Your first thought may be that Apple can't manufacture iPhones in the U.S. due to the labor costs, but as the article points out the major costs are associated with parts and supply chains. It was also interesting to read that China can provide engineers at a scale that the US simply cannot support in a timely fashion. About 8,700 engineers were needed for the iPhone and it took just 15 days to get those engineers in China while it would take as long as nine months for that to happen in the U.S.
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Talkback
It is all about labor cost.
And never forget, the investment money that builds factories in anticipation of getting business, that all comes from the Chinese government. US companies are essentially selling out to the People's Republic when they accept that "largesse." And it's a Faustian bargain as companies like Whirlpool and GE have found out. Once the Chinese learned to design as well as manufacture, they have begun attacking and overcoming their erstwhile employers. Just like the Japanese did to Zenith, RCA, and Magnavox 40 years ago. History repeats itself.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
2-year degree graduates != 4-year graduates
Well stated, Terry. I'd like to add to your comments: Our high school graduates are NOTHING like chinese college kids. Our kids have a 40-60% chance of needing remedial classes just to be ready to perform at a low college level. In some colleges, drop out rates are high (don't get me started on HS dropouts). When our 4 year Bachelor-degree engineer finally graduates, he simply isn't on the same level as they are after just High-School in many Taiwanese and Chinese schools. Never mind colleges. There is a real education gap, and it is only getting worse every year. The longer we squabble about whether dinosaurs are 100,000,000 years or 5,000 years old, the more we allow our kids to be classified as autistic and in need of more powerful sedatives, the more we push our kids into those "highly lucrative" (sarcastic) careers in the drum band, the tuba class, the clay-pot making class, and soccer/football teams, the more we will find ourselves with fewer and fewer jobs and more and more debt.
The math is shockingly simple. And yet, apparently, from our legislators on down to the cleaning lady at the end of the day ... none of us are doing our homework.
Agreed
Look at some of the classes offered? Gay studies, art history, etc. I won't go on, it could fill this forum. Really?! Our taxpayer dollars are actually funding this, students are actually allowed to take on government guaranteed non-forgivable debt to study this garbage?
Now maybe I offend saying that, but if you want to learn subjects like the above go to a library, or bookstore, or use the internet and become the worlds expert in it on your own dollar and time. Just don't ask us to waste valuable resources and taxpayer dollars that could be used to teach subjects that we actually need to remain competitive.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Another way to look at it: if you are one in a million here in the US there are about 350 of you. If you are one in a million in China there are about 1350 of you.
Also, the Chinese are like we used to be in education. They realize that not everyone will go on to the next level and they only allow those who excel to go on to the next level; you aren't simply passed on. This allows for excellence in a lower level of education. Think about it this way: when you were in school, how many of your classmates got bad grades or acted up in class but were passed on anyway? You know, the ones who just caused trouble and were teachers' headaches. Now think about how much more you would have learned without those "students" in the class. That's what's going on in China and many other countries, but NOT in the US.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
"None of us is doing our homework"...
BTW: The reason why so many kids get labeled with whatever disease is so the drug industry can keep itself propped up - especially as more generic medications come in to supplant their brand name goods. That doesn't mean ASDs and other issues don't exist, and for some issues it takes TIME to get the whole picture. Today's shrinks would rather be quick to judge, dope kids up, and then tell them to exercise for 5 hours straight if they gain 30 pounds because the medication's most notorious side-effect kicked in...
I don't disagree with some of your other points, however... there are education gaps, but I propose we look at politicians and what they pimp, especially if they try to say how great we'll be as a "service economy"...
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
There is value in history.
For, not knowing it, one might accidentally repeat it.
And those who know it - and this is the worst part - might dare to resist history from repeating itself.
No, I'm not a history major (mine are in management, programming, and graphic design), but I wouldn't summarily throw out history majors, which reminds me:
What do we apply real value to? What is valued and encouraged?
Think about that for a while, and with luck you might find one of the ulterior meanings behind my little comments...
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
That's all I've got to say. Apart from what I've said to others, since some factors are tangentially relevant... sorry to make people think outside the box today, I'm having a bad hair day...
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
It's ironic how you're ripping on esoteric subjects like gay studies or art history, given that this is a post about Apple ... a company founded by a college dropout who famously stated that taking a course in calligraphy was one of the few useful things he learned at school. Some people assemble things ... that other people dreamed up.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Our higher-end university system is more robust because it's not solely about local solutions. Universities get funding from all over. There is no way a university could survive and thrive if all it's funding and students were local.
Lastly, the students in China don't grow up to be well rounded students or adults. The creativity and out of the box thinking is still something US students and workers do better than just about anyone else in the world. It's one of the main reasons that China sends their best and brightest to study at US universities.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Lets not forget lack of any real environmental controls or labor laws.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
*bingo*
There is more than one facet to the whole of the issue...
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Okay, that is making some sense. And even adds weight to some of Steve Jobs' old rants.
But Japan improved. The quality of products made in China is still, well, subpar...
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
Could not have said it better myself. One large point that is left out in the article is the cost of government regulation creating the iPhone. A couple of months before the original iPhone was to be released, Steve Jobs noticed a huge flaw. He was carrying it in his pocket when he noticed that the glass had scratched rubbing up against his keys. He immediately sought a solution and found one with Corning Glass. He went back to his engineers and told them to halt production and to start over with the new glass, which Corning could supply. The rest is history. The point to the story is that Jobs knew and most successful manufactures know; is that would have take at least another year of environmental impact studies, permits, and the rest of the red tape that our government could have thrown at them. I am not implying that we should pollute our environment; but in most cases we put the cart before the horse. The government will make you prove that what you are doing is compliant environmentally, labor law wise, and whatever other standards they find; instead of punishing Apple if they had actually broken the regulations. The other problem with these regulations are that they are just that regulations and not laws; so not only will they vary wildly from Presidential administration to another, but they are not set in stone laws and that have the backing of the people having been duly created by our elected representatives. You are also spot on about education system. Not only are specialized degrees drowned in unnecessary classes (my wife is finishing her degree in Early Childhood education and had to take a class in the History of World Music dating back to ancient civilizations and monks); but your point about vocational and trade schools is just awesome and to the point! I work in the automotive field, I manage the parts departments for a Nissan and Hyundai dealer as well as being our onsite IT. A modern automotive technician can name his salary. Good ones make $30 or a lot more an hour, easily. Why is that? Supply and demand. Our country has fostered this false notion that every child should have a college degree, why? You should see some of the people that I work with or have interviewed for jobs that either have a college degree or in school to get theirs. When I was in college, I am 43, we were taught subjects outside of our major; but it was professional development. We taught proper dress attire for work and interviews, the importance of promptness, and how a good work ethic can help to separate you from your peers (teaching that you are in COMPETITION with others for that job or promotion); all of these are sadly lacking in today's institutes of higher learning. I have a good friend who has a degree in Electrical Engineering and owns his own highly successful company; he has told me that when he hires people, all that a degree shows him is that they may have the ability to learn their job, but maybe not. Some of his best employees are ones that work in a degree position without a degree; because they are hungry and eager to learn and show a good work ethic.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
But, on the other hand, without regulations you get situations like in China Foxconn's plant where they switched form using rubbing alcohol to clean that glass screen you're referring to to a toxic chemical because it evaporated quicker so the workers could clean more devices in the same amount of time.
No regulations allow Foxconn to have their workers do 12 hour shifts of manual labor that is very repetitive that results in a whole host of issues for workers. The description from the NYT article paints the working environment there equivalent to minimum security facility in the US. That's what no or weak regulations open the door to.
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs
the biggest customer of the fortune 500s is the US government, I wonder what the difference is. Remove the federal government out of the equation and most, if not all the big corporations including IBM, MICROSOFT, ORACLE, etc. will bite the dust. And don't forget, that all the technology wonders that we are enjoying now were financed by federal grants to these big companies. None of them spent their own money to finance basic research on something that ROI is a big question mark...
How do you say "Apple" in Chinese?
Pretty soon Apple products WILL NOT be designed in California!
The only thing that will remain in the U.S.A. is the "shareholder" meetings!
RE: Why aren't iPhones assembled in the U.S.? It's not due to labor costs