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Apple's 2007 iPhone story shows problems bringing jobs to US

updated 05:35 pm EST, Sat January 21, 2012

Apple story shows China flexibility over US

Newly uncovered details behind Apple's original iPhone launch have underscored the reasons why manufacturing jobs aren't likely to return to the US in large numbers. Referring to Apple's well-known decision to switch from plastic to glass for the original iPhone's touchscreen, the New York Times understood that Jobs was furious the iPhone couldn't be put in a pocket with keys and avoid display scratches. The only way to get scratch-resistant glass in a timely way was to go to Foxconn's plants in Shenzhen, where Apple from a sudden midnight notice could have them producing 10,000 units a day with the updated model inside of 96 hours.

"There's no American plant that can match that," an anonymous, one-time Apple executive said.

The glass itself, while manufactured by Corning in Kentucky, needed a cutting plant to produce finished products. In China, a government-subsidized plant was not only waiting for the deal but had started expanding in anticipation. It could field employees 24 hours a day and had ready-made samples.

Officially, Apple has disputed the story of the midnight production start, arguing that its own regulations demanded worker timecards that would physically prevent staff from working at odd hours and at such short notice. Employees dispute this, however. Outside of the report, it's been a common belief that Chinese contract factories often sanitize their behavior when they expect an audit from a foreign company to minimize the perceived violations.

While Apple's transition between 2002 and 2004 to offshore manufacturing was partly dictated by lower labor costs, it's now understood that then-COO and now CEO Tim Cook wanted the adaptability and rapid turnaround of the part chain. Whole "cities" of factories like Foxconn's are not only physically close but can make production changes within hours, including part swaps and increased production. Recent Apple supply manager Jennifer Rigoni explained that Foxconn could hire 3,000 workers overnight, something impossible to do in the US; sheer population differences mean that even high-skill workers are easier to find.

Despite stereotypes, Apple isn't alone in making such supply choices. Amazon, Dell, HP, Motorola, Nintendo, Nokia, Samsung, and Sony all source from Foxconn, while other companies in the area often have similar long hours and low pay. Many of those who boycott Apple would in many cases also have to give up the Android and Windows devices they own.

Apple, for its part, has echoed opinions of many companies that the education and skills needed for domestic manufacturing aren't present, whether or not supply chain efficiencies make sense. During the well-known dinner President Obama hosted last year with Jobs and other technology luminaries present, Jobs said he wasn't worried about the US' future but had wanted active solutions, such as active support for training more US-based engineers.

The pronouncements would cast doubts on a new proposal by Republican presidential candidate Rick Santorum that would be aimed at trying to lure manufacturing jobs from companies like Apple back to the US. He seized on an idea popular among the political right of giving a tax holiday to repatriate revenue as long as it was invested in US industry. While numerous companies have complained of steep taxes they might have to pay to bring revenue back, the tax break would mostly affect the factories and the wages, not the training and supply chain issues.



By Electronista Staff
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Comments

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +8

    Build Apple products in the US?

    If Apple were to build products in the US, they would need to 1) design all their products such that 2) they can be built on 100% robotic assembly lines. Total automation is the only way Apple could afford to build their products in the US.

    The net job increase in the US would thus be near-zero. It might be worth it to save the shipping costs of products destined for the US and other areas of the world. But China is a huge market, and sales of Apple products in China will soon exceed those sold in any other country. So building products there would still be cost-effective for the Chinese market.

  1. Orbifold

    Fresh-Faced Recruit

    Joined: Aug 2010

    +4

    Not all bad

    In this case China was losing money to provide just in case capability, a US factory could have produced it with a reasonable preparation time. Average factory wage in China is now $3.50 an hour up from $0.50 ten years ago. The "China price" was unbeatable but now Chinese manufacturing companies are outsourcing for lower wages and US companies are onshoring to save time and money on shipping and to save money on domestic natural gas.

  1. mr100percent

    Forum Regular

    Joined: Dec 1999

    +9

    Steve's biography

    Steve Jobs said in his biography:

    Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. “You can’t find that many in America to hire,” he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. “If you could educate these engineers,” he said, “we could move more manufacturing plants here.” The argument made a strong impression on the president. Two or three times over the next month he told his aides, “We’ve got to find ways to train those 30,000 manufacturing engineers that Jobs told us about.”

  1. nm3

    Fresh-Faced Recruit

    Joined: Nov 2011

    +7

    USA can't compete on this level

    It's not smart to try to compete with the chinese (or anyone else in the world on basic labor). We'll never have that back, because our standard of living is so much higher. If we went green and built batteries or solar panels, eventually, they'd be built in China. Where we need to compete is on our strengths: innovation, engineering, logistics, management. The iPhone did create a lot of jobs in the USA, look at all the apps that are making money! If you're sucked into the notion that we'll be able to bring back these basic manufacturing jobs back to the USA (like tightening a s**** or putting a case in an assembly line), you're dreaming. Focus on what no one can beat us on and grow that market

  1. MXBrando

    Fresh-Faced Recruit

    Joined: Sep 2011

    +11

    Credit where it's due

    "Newly discovered details" means you read the New York Times article and "aggregated" it. You should have acknowledged that openly. A one word hyperlink is insufficient attribution.

    I'm beginning to worry about MacNN and its cousins. You seem to be taking a page from Business Insider's ethics book. Not that they have one, mind you.

  1. Glasspusher

    Fresh-Faced Recruit

    Joined: Oct 2000

    +2

    Fremont California

    Apple Iici computers used to be built in a factory in the East Bay, in Fremont California...

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