Does Apple underestimate American manufacturing?

Discussion in 'Off Topic' started by capt jerk sparrow, Mar 20, 2012.

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  1. capt jerk sparrow

    capt jerk sparrow Notebook Geek

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    I don't know much about these issues, but it always burns me when I hear about this company doing so well, while still supporting a country known for its human rights and labor abuses, and widely predicted as the next global superpower.

    Is this company underestimating the benefit of American manufacturing? If you read what they say, it tends to come down to infrastructure issues, not having the flexibility, the trained workers etc. But that doesn't seem like a valid excuse when you're of the richest companies in the world, these are the companies that should be building the said infrastructure, who the hell else is going to do it. It's especially egregious with the job crisis here and impending economic doom.

    If apple were to make some bold decisions with its pile of cash, it would certainly hurt in the short term, but nationalism itself can't be overestimated-- there is something people covet about having the best product made in their own country.

    I'm not hiding my naivete, but there has to be a better situation than the one they choose. I don't personally care about apple products, I don't own any, but I find it perplexing all the same.
     
  2. Greg

    Greg Notebook Nobel Laureate

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    Just posting some facts that might aid in this discussion. Last month Foxconn announced they were increasing wages to $350/mo (in some cases, higher). At 80 hours per week (big guess) that puts labor costs at just about $1.10 per hour.

    US workers in an assembly plant would conceivably make between $15-30 per hour. Benefits are undoubtedly better than what China's Foxconn provides, so that's going to be additional overhead. To achieve cost parity with China they'd have to be 30-35x more efficient or manufacturing plants would have to increase automation to keep the number of employees down.

    Another fun note. Some estimates place the labor cost of each iPad at $8. If that's true then somewhere around 7-8 hours of manual labor is involved per iPad (big assumption here) and that's just in the assembly lines (there's additional facilities in Korea that I'm not sure what their function is). If you moved assembly from China to the US and it still took 8 hours per iPad to produce costs would go up from ~$8 to ~$120-240 per iPad.

    Not saying it's right. I'm just saying it's cheap.
     
  3. whitrzac

    whitrzac The orange end is cold...

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    There is a reason they have a 'pile of cash' ;)


    Before companies moved to china, sweatshops/forced labor/etc were much more common in the US.



    Someone always has to be the 'low man' on the totem pole. Africa or South America is next...
     
  4. capt jerk sparrow

    capt jerk sparrow Notebook Geek

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    I know when you look at labor cost numbers like those, you're sort of taken aback, but I think the central point here is that what you sow today you reap tomorrow. What is really more important, somewhat affordable designer computer products, or job infrastructure? I don't assume they'd just continue on their course as a company; they would have to be different, with drastic restructuring, kind of like starting over again. But they're starting to plateau anyway, the ipad seems like their most "intuitive" product in awhile, and that's still a vanity product of limited use, in my opinion.
     
  5. millermagic

    millermagic Rockin the pinktop

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    Any business is going to have profits as priority #1 ... if that wasn't the case, they would cease to exist.

    With that said, I"m willing to be that Americans could manufacture the iPad and Apple could still make money - just not as much

    There's also the problem that the manufacturing base just isn't here; we have no current ability to manufacture stuff - especially electronics. The investment would be HUGE to get started manufacturing this stuff.
     
  6. Greg

    Greg Notebook Nobel Laureate

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    I read somewhere an argument in favor of low cost manufacturing outsourcing, basically summed it up to say that any third world economy that wants to mature into something even approaching the quality of life you see in the 'first world' economies they have to start somewhere to jump start wages and quality of life. This kind of manufacturing is exactly that kind of jump start. The article also mentioned that eventually these sorts of jobs will leave China as their economy improves, and will move to (most likely) other Asian or African labor markets.

    Not right, but maybe it's a necessary yet painful step towards an improved Chinese economy? Not sure if I buy the article but I'll see if I can find the link...
     
  7. capt jerk sparrow

    capt jerk sparrow Notebook Geek

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    Well of course it makes sense for China, but how much sense does it make for the US?

    That will be the case anyway, since capitalism is based on a model of unlimited growth in a finite world. It may not be the best choice from a narrow profit point of view, but arguably it would be the best choice long-term.
     
  8. Kyle

    Kyle JVC SZ2000 Dual-Driver Headphones

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    Americans, namely those who hold Apple shares have decided that its better to make $$$ by using cheap labor and shady conditions rather than invest in USA.

    Remember that Apple is a public company. If the public really cared about their home country, they would put their money and shares behind it. But that doesnt happen. Like politicians, they say one thing and do another.
    It is the same in every country.
     
  9. 2.0

    2.0 Former NBR Macro-Mod®

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    Actually, most shareholders have no idea. The majority don't read a balance sheet, the quarterly reports, analyst reports, or even a prospectus.

    Add to that, most shareholders own Apple stock through a mutual fund or via a 401K.

    Now, you do have some major shareholders who would and do condone the use of cheaper labor and consider it the duty of the company to seek out ever cheaper ways of doing things. They file this under maximizing shareholder value. And they would sue Apple if they did otherwise based on those grounds.

    I don't know what you're trying to imply here.
     
  10. Kyle

    Kyle JVC SZ2000 Dual-Driver Headphones

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    I was just saying that most people cannot be bothered to care about anything other than $$$.
    This also applies to your "most shareholders have no idea" comment. What you are essentially implying is that so long as the $$$ comes, people cannot be bothered to find out where it comes from.

    I agree.
     
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