i-Device Manufacturing Unprofitable To China 320
N!NJA writes "One of my favorite facts of this past year was the proof that China makes almost nothing out of assembling Apple's iPads and iPhones. From the article: 'If you want lots of jobs and lots of high paying jobs then you’re not going to find them in manufacturing. They’re where the money is, in the design, the software and the retailing of the products, not the physical making of them. Manufacturing is just so, you know, 20th century.'"
Why only iDevices? (Score:5, Insightful)
As you can see the two largest inputs are materials and Apple’s own profit margin. Despite the machine being assembled in China it’s still true that the value of that labour is trivial: 2% or so of the cost of the machine.
So what? It's not like iPads and iPhones are the only devices they're making. In fact, China, Taiwan, Japan, Thailand and other Asian countries are making almost all of electronics in the whole world. They might only profit 2% of every device, but the sheer scale of the whole manufacturing industry more than makes up for that.
Besides, Apple's devices are notoriously known for having huge profit margin going to Apple, without actual technical or manufacturing reasons for that. It is, however, only true for Apple as every other manufacturer is actually also working on really thin profit margins. When taking into account every electronics company and not just Apple, this makes the Chinese manufacturers share comparatively much larger. Comparing it to Apple tells absolutely nothing.
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Haven't you figured it out?
Mentioning iAnything causes Nerd Rage.
Nerd Rage brings page views. Lots and lots of them.
Page views bring profit!
Who cares if the summaries are misleading or don't tell the whole story?
Re:Why only iDevices? (Score:5, Insightful)
No, the study explains that they studied Apple devices because 1: they're "iconic" and 2: they do offer strong data that argues against what the authors say are commonly believed myths of benefits from manufacturing jobs lost by the US to China.
There's a good argument against this study, in that Apple's electronics are "iconic" but not the majority of sales even in their own markets, precisely because of the lower margins and more commodified products in the Android share of the market that better fits the Chinese manufacturing model.
But to argue that you'd have to read the study. Instead you'd rather whine about nerd rage, Apple envy, and some made-up conspiracy to get page views. Congratulations! You're a self parody.
Re:Why only iDevices? (Score:5, Funny)
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But to argue that you'd have to read the study. Instead you'd rather whine about nerd rage, Apple envy, and some made-up conspiracy to get page views.
That an organization will further its own profits when it knows with confidence that there will be no penalty or backlash is emphatically not a conspiracy theory. In fact Slashdot's point of view could very well be that they are merely tailoring their service to meet the demands of what their users want to read.
In fact this particular brand of profiteering happens often enough to have its own specific term: yellow journalism [wikipedia.org]. It is not difficult to find more examples of the theme. This common, well-do
Re:Why only iDevices? (Score:5, Funny)
Haven't you figured it out?
Mentioning iAnything causes Nerd Rage.
Nerd Rage brings page views. Lots and lots of them.
Page views bring profit!
Who cares if the summaries are misleading or don't tell the whole story?
You mean iNerd, don't you?
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Market share (Score:5, Insightful)
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I see lots of the cheap part but don't see much of the "raise prices " part. What prices have been raised?
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It does appear that China is trying to corner the market for rare earth metals. However, this is different from making things below cost to drive out the competition. It appears that they are buying up all of the mines and producers and restricting supply and raising prices without going through the "make things cheap and run the competition out of business" part.
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the sheer scale of the whole manufacturing industry more than makes up for that
Err, I assume you're saying this in a Machiavellian, free market pirate sort of way (i.e., worth it for the manufacturing contractors), since volume production is a really crooked way to make money. Workers operating on razor thin profit margins don't make any more in a volume based system unless they multiply their workload. It also does a piss poor job of ensuring the economic security of a region in the normal way: wages are spread so thinly that they can hardly be entered back into the economy except i
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Sure, the numbers work out, but the Walmart business model is only good for the Waltons: no one else.
And the consumers of mass-produced goods, whose dollar goes a lot further and hence can consume* far more than they would otherwise be able to. Those consumers at Wal-Mart tend to be lower-class where even modest savings go a long way -- estimates are that discounters are 3-5% cheaper, amounting to billions in savings for the poor every year.
I mean, have you ever actually visited a corner shop in a poor neighborhood? Those places get away with highway robbery prices -- 30% above even normal grocery shops an
Profit as a Ratio, and as an Absolute value (Score:5, Interesting)
So what? It's not like iPads and iPhones are the only devices they're making. In fact, China, Taiwan, Japan, Thailand and other Asian countries are making almost all of electronics in the whole world. They might only profit 2% of every device, but the sheer scale of the whole manufacturing industry more than makes up for that.
There's an appropriate quote by TSMC Chairman Morris Chang [forbes.com]: "You Americans measure profitability by a ratio. There’s a problem with that. No banks accept deposits denominated in ratios. The way we measure profitability is in 'tons of money'. You use the return on assets ratio if cash is scarce. But if there is actually a lot of cash, then that is causing you to economize on something that is abundant."
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Correct - capital is overly abundant in China because the government has essentially been printing money to fuel economic growth. The problem is that this encourages massive amounts of malinvestment - Chinese companies doing things that are ultimately unprofitable simply to grow for its own sake. Well not just for its own sake - really, to generate more jobs, which gives the executives clout with the local party/government officials, allows them to extract political favors and raise their own pay because
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2% of profit is somewhat distorted (Score:3)
They might only profit 2% of every device, but the sheer scale of the whole manufacturing industry more than makes up for that.
That 2% figure is somewhat distorted. Here's something from a researcher at the same university as the other authors. Basically the 2% doesn't reflect currency manipulation that artificially deflates the numbers by 40%, it doesn't reflect externalized costs like pollution, it doesn't reflect governments supports like *free* factories, etc.
http://www.americanthinker.com/2011/09/china_trade_policy_and_the_fallacy_of_idea-land.html [americanthinker.com]
Re:Apple basically is the tablet market. (Score:5, Insightful)
Post summary:
I don't like Apple products and personally have no need for a tablet, therefore anyone who does is an inferior human.
Re:Apple basically is the tablet market. (Score:5, Interesting)
Post summary: I don't like Apple products and personally have no need for a tablet, therefore anyone who does is an inferior human.
I'd also add that it is an excellent example of false consensus effect [wikipedia.org] whereby a person tends to overestimate how much other people agree with him or her. I don't have a use for X therefor no one could possibly have a use for X. Which is probably more accurately, "I don't think I have a use for X.." because the poster appears to have never used a tablet in a business setting.
At my prior employer all employees at tablets. They are the perfect device to bring to a meeting, especially if you are trying to go paperless. Notebooks and netbooks are bulky and not as good at some task (such as checking your calendar to set up a follow-up meeting.. while standing). I tended to go to all meetings or people's desks when chatting (work related) with my tablet and log book in hand (both the same size). That way I had all references I needed. I never had to head back to my desk to check something, or lay down a computer on their desk, open it, hunch over the desk or find a chair... a tablet is just better for some things. Now that I'm a consultant I use it to track my work and pretty much use it exclusively on planes (my 13" computer fits on my lap, but is nearly impossible to both type on and see the screen at the same time).
Tablets work for me, they worked for my coworker but they won't necessarily work for everyone. It's hard to accurately decide if they will work in a business situation without mass adoption though.
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Re:Apple basically is the tablet market. (Score:5, Insightful)
Yet another geek, who has little to no understanding about consumer demand. If the tablet trend was purely due to 'Apple Fanatics', then those fanatics would have bought their tablets and that would have been the end of it, yet almost every PC manufacturer on the planet is struggling to produce their own tablet. There is obviously a huge market and demand for devices like these. Simply claiming there is no logical reason for demand for these tablets because YOU don't see a need doesn't mean these don't meet a need in those consumers that buy them. Even sadder that you trolled out the treasured 'Apple Fanatics' and 'status symbol' buzzwords and of course were rewarded with an Insightful for it.
PC's have been trending towards simple email/web/media devices for years. The 'need' consumers see in a simple device that meets all of those wants, and is portable, has a small footprint, and easy to use, and you seriously don't see why people want tablets? I have to assume the disconnect between geeks and the regular 'joe user' is the fact that geeks are typically always power users and tablets simply don't fit the bill for that type of user, but for the vast majority of today's computing users, a tablet fits their needs perfectly for casual browsing, email, listening to music, and playing the occasional game.
Claiming the only reason for Apple's success is due to it's 'gullible' users may also get you an insightful mod, but it falls far from the truth. Apple and Linux users are shown to be far less gullible than Windows users, better educated, and tech savvy. There's a reason Apple has been number one in consumer satisfaction for something like the last decade. Their shit works, it's good quality, and people don't have to fuck with it all the time. Those are powerful draws to a casual user who browses the web, checks email, listens to music, and plays the occasional time-waster game while waiting for a doctors appointment or whatnot.
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Every other manufacturer's tablet isn't fun to use, has poor application support, and poor battery life. The iPad works well for lots of normal people and is affordable (but not cheap).
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It's true, if I have 500 dollars to throw away on a tablet I'd rather have an iPad. If, however, someone made something just as good for maybe 2 or 3 hundred dollars I'd opt for that instead. Unfortunately, all the tablets I see for 2 or 3 hundred are sadly lacking. The next best thing I've seen is the smaller Nook tablet from B&N and I may actually get one of those. The screen is very good and for the money it's hard to beat. If I had to have a 10" tablet though I don't see anything in the same le
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Would you compare two cars if one cost $20,000 and the other cost $50,000 as the same class of cars? I seriously dou
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Re:Apple basically is the tablet market. (Score:4, Informative)
There is no substitute for ForeFlight on an iPad. I'm not carrying a laptop in the cockpit to view charts, and it saves me hundreds of dollars a year compared to paper charts. You go fly a plane with a smart phone and a netbook in your lap and tell me that it's better.
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Actually, netbook form-factor are much more comfortable while lying down or sitting straight, as evidenced by tablet stands and lap-desks made for those cases.
Tablets are most comfortable form-factor while standing/walking, which is why they were used by doctors, for example, even before tablet boom, and while squatting on the toilet - which is a big part of tablet usage today.
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That's supposed to make us feel good? (Score:4, Insightful)
We go from "solid jobs have gone to China" to "there are no jobs, enjoy irrelevance." Yay?
Well this will be true when the robots get better (Score:5, Insightful)
China's cheap labor advantage is only sustainable as long as their factory assembly workers are still more dextrous, faster, and cheaper than the prevailing robotics technology of the day.
That is still the case, but for how much longer?
Re:That's supposed to make us feel good? (Score:5, Insightful)
Know anybody in the business of delivering milk or ice door-to-door? Know any fullers, coopers or blacksmiths? Those used to be considered solid jobs as well. Dynamic economies constantly create and destroy entire categories of jobs. Why be upset when manufacturing high-tech devices is no longer something that can be profitably done?
A need to rethink economics for post-scarcity (Score:5, Insightful)
With modern production methods, as well as trends like environmentalism, here is a need for less and less jobs overall as productivity goes up and demand grows more slowly than productivity.
While thing were different in hunter-gatherer times, the rise of agriculture and industrialism led to a lot of work (because there was less land to support each person and expectations also rose). But then productivity continues to improve exponentially.
Here are some examples. Five year old kids used to have to work in mines 200 years ago. Now they are sent to "school" often until their mid twenties or even longer. Work weeks used to be 80+ hours per week. Now work weeks are 35-40 hours plus paid vacations. People used to work until they died. Now in Europe many retire in their mid-fifties and live and eat and play for another three decades. People in their mid-twenties used to be the backbone of the economy. Now many educated 20-somethings in Europe have no jobs (and are rioting over that regularly like in Greece).
Agriculture has gone from 90% of the workforce to 2% or so over the last two hundred years in the USA. US manufacturing went from around 35% to 16% over the past fifty years, while still making the same or more amount of stuff and at higher quality. That number continues downward.
With computers and robotics (especially vision systems), more and more service jobs will come user the same pressures. We need to rethink our economics to account for this. For ideas on that, see writings by Marshall Brain, Martin Ford, or stuff on my website (essentially, a basic income of social security and medicare for all, an improved gift economy like Wikipeida and the blogosphere and GNU/Linux and Freecycle, improved subsistence like with 3D printers and agricultural robots, and better democratic resource-based planning).
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Sadly, I have to agree that the issue you raise is a big potential problem (especially that those with power and wealth often use that first and foremost to preserve their relative privilege), and it is very much what the USA is already struggling through. For example, real wages have been essentially flat in the USA for the past thirty to forty years, while productivity has doubled or tripled and the money has gone to the workers not as wages but as loans:
http://www.capitalismhitsthefan.com/ [capitalismhitsthefan.com]
Re:That's supposed to make us feel good? (Score:5, Interesting)
Several reasons:
1) The aforementioned industries took decades to wind down. These days a manufacturer can up an leave in a matter of months, leaving the workforce no time to retrain, and which can decimate entire towns which for decades had been relying on that one manufacturer. And all because that manufacturer can produce their device for a dollar less.
2) The aforementioned industries didn't take a degree costing tens if not hundreds of thousands of dollars to get. Typically it was on the job training, for which you got paid.
The nature of capitalism requires a pyramid of people - the highest earners at the top, the lower wages at the bottom. If you ship all the lower wage jobs overs seas your system collapses.
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More or less, yeah. The jobs went to China because they were already irrelevant. Skilled producers always manage to out-produce unskilled ones, and we've reached the point where very little that you want can be produced by unskilled hands.
The only thing left to produce is "intellectual" property, which (as Slashdot readers continually remind us) has no value, precisely because it doesn't take much work to spread far and wide. The goal has always been to reduce the number of hours needed to survive, and we
Splendid News (Score:3)
I feel better about my Chinese assembled devices purchases.
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Why? The company finding this unprofitable is still taking the money and spending it on (Chinese) parts and labor. This revelation makes no difference to the trade deficit.
There is a reason (Score:3)
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Nor for the profit, according to the study.
So what is the reason, as you say there is one?
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I think it's for the profit. The Chinese companies aren't able to make the carriers' profit, nor Apple's. I suppose they're not able to make the Korean or Japanese profit off memory, touchscreen and other cutting-edge components, or they would be. So they're profiting where they can: the manufacturing.
It's a small profit, but that's all they can get. The electronics assembly labor market is global and evidently the most extremely competitive part of the entire supply chain.
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Must be the goodness of their hearts then.
Re:There is a reason (Score:5, Insightful)
Jobs. China still has on the order of 600 million subsistence-level peasants. Leaving those people in that state while a smaller number get comparatively richer working in the cities at manufacturing, construction, and related jobs is highly unstable. The government doesn't care about profits; it cares about creating enough jobs to continually employ more peasants.
Re:There is a reason (Score:4, Insightful)
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Earth is getting saturated (Score:3, Insightful)
Earth is getting saturated. Soon only India will be left as cheap labor. Soon after that, with markets like China, EU and the US, the Indians will be in the same position the Chinese are in now.
Will there ever be an expanding economy when there is no cheap labor left?
Re:Earth is getting saturated (Score:5, Insightful)
Yes. We had an expanding economy between WWII and 1975 and people were actually getting paid to do the work.
Doesn't work anymore (Score:4, Interesting)
The big question is: by whom where they paid?
Simple answer: by the employers they work for. That means that those employers had the money (by making a tidy profit) to actually pay their employees. How did they get that money? By selling loads of stuff. To whom? To consumers that got a lot of money by working...
The big drive behind all this was the rampant growth of the population in those periods.
Compare that to the current situation: population growth is stagnant (we're talking about people with money to spend, of course), which means a declining amount of purchases. Less money to be made by companies, so also less money to spend on employees. Which leads to even less spending.
The whole problem about our economic situation is that our economy is based on (rapid, maybe even exponential) growth. Once that stops, you can expect severe cutbacks. The housing bubble is not the reason for the recession, it helped to postpone it for a couple of years.
Watch this: The most important video you'll ever see [youtube.com] for a good explanation.
Re:Doesn't work anymore (Score:4, Insightful)
Actually, you guys are missing a crucial element: between WWII and the 60s, America got rich rebuilding Europe. They weren't just selling loads of stuff to consumers, they were selling loads of stuff to a bombed-out continent full of more people. After Europe was rebuilt and didn't need America so much any more, things started going south in the US.
Re:Doesn't work anymore (Score:5, Informative)
That video by Albert Bartlett is misleading because it ignores how more people leads to more innovation -- like developing solar panels or fusion energy to replace fossil fuels, or developing space habitats to make more land for humans.
But I agree with you about the economic issues as far as our current financial system. Both the housing bubble and the college bubble helped push back a problem related to rising productivity but flat real wages related to wealth concentration.
http://www.capitalismhitsthefan.com/ [capitalismhitsthefan.com]
http://www.globalresearch.ca/index.php?context=va&aid=5494 [globalresearch.ca]
As I outline on my site ( http://www.pdfernhout.net/ [pdfernhout.net] ), mainstream economics assumes infinite demand (or at least, that demand will grow as fast or faster than productivity). But that assumption is becoming invalid, and so all of mainstream economics is suffering through a divide-by-zero error which most economists won't admit.
See also:
http://www.responsiblefinance.ch/appeal/ [responsiblefinance.ch]
A fairly straight-forward solution is a "basic income", but there are other approaches and we will likely see a mix of them.
Re:Earth is getting saturated (Score:4, Interesting)
The question is whether or not it will contract back to where it would have been had it not been for pumping up the economy for loans first. Just today I read an article about the wages offered in Spain and Italy now (source [google.com], in Norwegian so via Google Translate) and you practically can't get permanent employment anymore. They're being forced into intern or temp contracts which make minimum wage or less with little to no benefits.
A salary of 1,000 euros a month is about to become an unattainable dream.
That's $1300/mo or $15-16k/year, I think a minimum wage job in the US is around $10-14k/year. He was offered a 1-year contract for half that, $7-8k/year working 10 hour days. Another woman with a master degree says she makes 300 euro = less than $400 a month and yet:
Among the 30 in our class, I am among those who make the best career.
They can pretend what they want with the GNP figures but Europe is experiencing a really bad crunch now for those that haven't already got a permanent position - those are quite well protected, unlike in the US but the rest is going to hell. Same with the US, a lot of people aren't in the unemployment records simply because they're either trying to study their way through the crisis, have given up or don't get more benefits so they don't count in the statistics. And in a really bad crunch where the government should be trying to fire up the economy they're almost broke - in case of Greece, Portugal and Ireland really broke - and have to hit the brakes hard for a double crunch. I don't think we're at the bottom yet, it will get worse before it gets better.
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Will there ever be an expanding economy when there is no cheap labor left?
There are always robots, which is the final end game for most of this stuff. But with no manufacturing staff left, your purchasing base goes into the toilet.
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Yes, we're going tO enslave aliens
Re:Earth is getting saturated (Score:4, Interesting)
Soon only India will be left as cheap labor.
I can verify that some machine tool parts I have recent received were stamped as made in India. No punchline, none of that. For real.
Quality, fit, finish, were all about the same as Chinese, in other words, technically meets the bare minimum, but not much more.
Specifically some brazed carbide metal lathe cutting tools, and I believe a quick change toolpost for a lathe. I've heard they're starting to import Indian endmills (the thing that looks like a drill bit used in a milling machine).
Indian manufacturing is apparently coming soon to a walmart near you? They do have the advantage of at least theoretically knowing English, and China is beginning its first real industrial slowdown/crisis, so it'll be interesting to see if India ascends.
I remember, heck, I have stuff in my basement, from when imported machine tool components mean Polish as in Poland. Just after the berlin wall fell era, early 90s you couldn't buy an imported endmill that wasn't from Poland, or so it seemed at the time. Eastern Europe may yet rise again, possibly.
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I've seen plenty of stainless-steel wares made in India; it seems to be a specialty of theirs. SS plates, cups, bathroom accessories, etc. I've been told that's what they use for dinnerware over there, rather than glass and ceramic like we do. Don't have to worry about it breaking if you drop it.
One big problem I've heard about with India, however, is its customs, that it's a giant PITA to import anything into the country (like eval boards to do software development on) or out of the country (like manufa
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When a star trek replicator is invented all manufacturing and agriculture will cease to exist. There will be no jobs required because there will be no scarcity. It doesn't make you poorer in real terms. People will be creative doing all types of design and art because that is what they want to do.
The thing I always wonder about in such a world is how to allocate the few limiting resources left like personal performances. I guess a holodeck is close but if people really want to see someone in person what cou
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Keep on dreaming. Such technology, though I don't doubt that it's physically possible somehow, is far, far beyond today's technology. You're talking about manipulating things at an atomic or molecular level, and in a way that's somehow more efficient and faster than just making it the old-fashioned way. Even with replicators, there's a giant factor you're missing: energy. It takes energy to do such things, and in fact if early versions require enormous amounts of energy to make simple things, then they'
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Re:Earth is getting saturated (Score:4, Insightful)
India? No, they are at the same state as China. China did it with GE, Walmart, Apple, Cisco, etc. India did it with Microsoft, Google, IBM, Accenture, Capgemini, etc.
India is probably a bit ahead of China in progress. China is facing a major shift in its people's behavior, makeup, wealth, demands, and political orientation. India has basically passed or doesn't have the same issues. Don't misunderstand me, they both still have a long way to go, just that India is ahead.
You want the next cheap labor? Look to where China is looking to meet their people's changing demand ... Africa. Even though the US provides more aid to Africa than any other country, African nations respect and look toward China more cause they feel their future is with them. It's a changing world.
Re:Earth is getting saturated (Score:4, Insightful)
A third of the world subsists on less than a dollar a day. Our grandchildren will be long dead before there's "no cheap labor left". India isn't particularly cheap, by the way. Most of the manufacturing leaving China is going to places like Indonesia, Vietnam, the Philippines, and Guatemala. And then there's Africa, in which a whole lot of places are untouched by anything resembling economic development.
Anyway, you proceed from a false assumption, which is that cheap labor drives an expanding economy. If that were true the world economy would have stalled with the end of slavery, which was ubiquitous well into the 19th century. Expensive labor means consumers with money to spend on cars and flat-screen televisions, as well as savings to invest in new ventures.
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Foxconn is Taiwanese.
Re:Earth is getting saturated (Score:4, Insightful)
Well - I'd somewhat agree with this - but you've missed a bit out.
The above wages part is true - for china.
In the 'west' - we are at the moment living off the investment our grandfathers and great-grandfathers put in.
We have good sewers, good infrastructure, and the tip of the pyramid of an economy.
Most of the rest of the pyramid - the 'boring low-paid' jobs have been outsourced to china.
When chinas middle class gets going in a big way - and becomes a sizeable chunk of the population, suddenly exporting to the 'west' becomes a whole lot less important.
At this point we have major, major problems.
Chinese demand for resources goes up, as everyone wants a nice car and fridge and house.
We have little to export to china, as we have little manufacturing, and their firms are upskilling, and improving in quality.
Commodity prices go way up globally.
The lack of competitive exports means that foreign trade earnings goes way down, especially as fake-manufacturing companies like Apple get overtaken in the market by cheaper, shinier devices sold, designed, and with all the profit remaining in china.
Expect to see the price of Chinese goods _vastly_ shooting up, along with a weakening dollar/pound/euro, horrible fuel price inflation (which is one reason we should be decarbonising now!), and the west attempting to rebuild a manufacturing industry with almost no existing base.
Expect all social promises to be broken.
You (or if you're lucky, your children) are not getting the pension they thought they were, or if they do, it'll buy a bare fraction of what it did.
Article fails to account for a few things (Score:5, Insightful)
One of my favorite facts of this past year was the proof that China makes almost nothing out of assembling Apple's iPads and iPhones. From the article: 'If you want lots of jobs and lots of high paying jobs then youâ(TM)re not going to find them in manufacturing. Theyâ(TM)re where the money is, in the design, the software and the retailing of the products, not the physical making of them.
Sounds like someone that justifies few jobs versus the large amount of jobless.
The things that person fails to account for would be currency manipulation, government ownership of business, lack of freedom for those who do that manufacturing work, and less-than-honest accounting that is prevalent in China. Correct for those, then one can cut through the author's
If you want lots of high-paying jobs in the US and EU, kill every single guest worker program (fraud-ridden at any level), get rid of the ability to use length of unemployment (or employment) as a direct or indirect means of discriminating against the unemployed, and get rid of the tax and benefit dodges with second-class forms of labor (e.g. contractors, consultants). Finally, make it harder to not hire US citizens, within the US by making any tax cut follow the worker and is dependent on the length of time.
A correction (Score:2)
Oops, meant:
The things that person fails to account for would be currency manipulation, government ownership of business, lack of freedom for those who do that manufacturing work, and less-than-honest accounting that is prevalent in China. Correct for those, then one can cut through the author's bullshit that they call "fact"
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I agree with you on all of those jobs policies, whether your criticism of Chinese Communism or of America's capitalism (or rather its anti-laborism).
But how does that undercut the conclusions of the study or its Forbes presenter? The study says that the system gives the vast majority of profits to US business (Apple, iPhone carriers, and a little to other US ecosystem members). All of which is enabled by the economic policies you criticize. I'd say that reforming those policies to honest accounting (and pre
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Actually it doesn't! Here is what it (the study, not the Forbes story) does say:
So, s
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Isn't this because... (Score:3)
Re:Isn't this because... (Score:5, Funny)
Your comment fails because...
It calls for the use of common sense.
Please try again.
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Or how about making them in the US - in factories located north of the Mason-Dixon line and east of the Mississippi River? Keep your $50 increase and they'd still make a profit.
The problem also is that it'd not only be profitable common sense, but that it goes against two other, incorrect orthodoxies:
1) If you manufacture in the US, that is the region you avoid.
2) Manufacturing in the US makes any product's price jump into the stratosphere.
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the workers are paid like crap? You can't make a lot of money when you're paying a few cents to a dollar /hr. Raise their wages, add $50 bucks to the cost of iCrap and suddenly China's probably not doing so bad.
Raise their wages...add $50 to the cost of iCrap and BINGO ...problem solved...NO MORE iCRAP...you're a fucking genius.
Doesn't look trivial to me (Score:2)
Their chart says Chinese labor earns 2% of each iPad sold, so about $10 per device. There have been millions of devices sold. Are we now claiming that fifty million dollars is trivial? And since it's such a small portion, Apple could easily double or even triple the wages without a major impact to their profit margin. And don't forget, that's just the iPad. Throw in the iPhones and the iPods, not to mention all the non-Apple devices. And then you have to account for all the support jobs... people who
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If labor is 2% of the cost then they are doing pretty good when you compared to other areas.
Consider that labor gets less than a dollar for a pair of $150 Air jordans. It just to be less than $.50, but who knows that those stats are now.
Re: (Score:2)
Why manufacturing is important (Score:3)
Wrong.
The claim that we should abandon manufacturing and concentrate on "high value" jobs, like design and engineering is nonsense. The reason manufacturing is important is because it creates additional jobs beyond just those involved in a particular product. For example, the Samsung plant in Texas which created "only" 1100 jobs. What about all the machinery in that plant? It didn't magically appear out of nowhere. Someone had to design and build it. That's more jobs. Other companies supplied the steel, plastic and electronics that went into creating that machinery. That's more jobs. Other companies supplied those steel, plastic and electronics companies with various raw materials and equipment. That's more jobs.
China gets the know-how, USA gets the dependency (Score:5, Interesting)
The past couple decades have involved China trading a lot of cheap labor in exchange for Western technical know-how. China knows most of what there is to know by now about making gadgets. Eventually China could just create money for its own economy (by credit or printing it) and it could sell to internal markets and raise its material standard of living a lot. Export driven economies only have big value if you need imports. Although it is true that China does import stuff, so it will need to replace some of that with internal import replacing approaches, like Jane Jacobs wrote about (like solar energy instead of oil, or composites instead of metals) -- but aside from US food products, much raw materials come from other than the USA (like Australia or soon Africa). Although there remains a strategic military advantage for China in having Chinese products everywhere in the USA, so they may still do some of that. For example, most ascorbic acid (Vitamin C) in the USA comes from China. How much of it is really inspected? When is the last time you had something with extra vitamin C? That makes the USA's health very dependent on Chinese good will, as just one of many, many examples. Eastern minds typically grow up playing "Go", which teaches a very different way of "winning" (by encirclement) than Western Chess. Granted, the cost of this is that the average Chinese citizen has suffered a lower material standard of living for this sort of foreign policy (a cost that does not show up as "military" spending).
2% profit is bad?? (Score:5, Insightful)
Works fine for groceries and many other companies. its all about volume. Sounds like capitalism is really starting to take root over there, at least the 'greed' component of it.
Sure thing. (Score:2)
Then let's not manufacture anything then. Let's all be designers. Because, you know, all these devices are going to magic themselves into existence.
Such is the logic of pointy-haired-bosses.
--
BMO
It's about Factory Jobs (Score:5, Insightful)
Every industrialized country has gone through this phase where subsistence farmers abandon their farms for difficult factory jobs. They don't like the factory jobs, but they like it better than subsistence farming.
They save a little bit of money, and produce children who wind up becoming educated and form the middle class.
To say that China's not profiting from these assembly plants is taking a very short-term view.
thoughts (Score:5, Interesting)
I'm not an economist, but the matter of "who's paying whom" seems significant when it comes to manufacturing jobs. Usually the money is flowing in from the outside. On the aggregate, then, that would seem to enrich the country doing the manufacturing. Obviously if you could train your entire populace to do something more lucrative (say, design) and then have your trading partners outsource that work to your country then you'd rake in even more money. However, one wonders whether that's feasible given the inherent variance in human ability. There will almost always be some portion of the population which, for whatever reason (lack of inherent ability, lack of education, poor choices, etc.) are unable to do much beyond manufacturing or other unskilled labor. For this group to be actively engaged in manufacturing seems like a "win" compared to, say, having them all be unemployed or performing some unskilled task (other than manufacturing) where the compensation comes from domestic sources (e.g. working as a maid).
When it comes to the U.S., I've always felt like it should endeavor to compete at all levels of the labor spectrum. Currently it is not competitive in sectors like manufacturing because the cost of unskilled labor is simply too high relative to countries like China. That's something that could potentially be addressed via government intervention (possibly in the form of wage subsidies). As it stands, the U.S. has basically "punted" on manufacturing. It seeks to employ its labor solely in white collar pursuits and servicing its own (very high) domestic consumption. Instead of assembling electronics, the unskilled in the United States flip burgers, work in retail, clean houses, work as nannies, etc. Basically they meet the demand of a highly consumer-driven economy. When that consumption dips, however, such as happened during the recent recession, you see massive job losses (and these concentrated among those with lower incomes).
Truth check (Score:3)
Let's look at the issue from the other end: top down. If it's true that China doesn't make net revenue manufacturing stuff for the US, then the overall trade balance between the US and China would be neutral. But it's not, to the tune of $2e11 per year.
Verdict: argument is false.
Manufacturing is for Machines, not People! (Score:3)
A properly designed assembly line uses humans as supervisors and QA persons, not machines
I've worked on the old kind, where I actually manhandled truck rims, and it was an insanely expensive way to make them. The same time, Honda opened its assembly line for the old 305 twin engine: no humans did work! They made sure the machines worked properly.
If course, you needed to locate those lines where there were good (if expensive) machine designers, engineers and repairmen. For Honda, that meant the home islands. For certain other companies, it now means the USA and Canada.
--dave
Profitable Enough to China (Score:2)
There's a good argument against this study's conclusions, in that Apple's electronics are "iconic" but not the majority of sales even in their own markets, precisely because of the lower margins and more commodified products in the Android share of the market that better fits the Chinese manufacturing model. The study probably has very different numbers for the overall market in which Apple's products compete but fail to win.
This situation is of course is exactly the same as has always been the case with Ap
"Dumping" and why it's bad (Score:3)
We know that selling things at or below their cost is an aggressive and even offensive tactic. We counter these tactics locally by making them illegal. We counter these tactics internationally through the use of tariffs and import banning. It's interesting that for the moment, these methods only apply to finished and unfinished goods.
Costs of labor are subjective and relative at the very least and impossible to prove at the worst. Some people might say "this is a self-correcting" thing where eventually, the expenses will require increasing prices for labor. But I don't think that's the case in places like China and surrounding areas. In any case, the purpose of this "dumping" is to make it so attractive to outsource labor that local labor facilities and locations are abandoned. Once the buyers are hooked and have no other alternatives, they are then free to charge any price they wish after the competition is starved.
As usual, these people miss the point. (Score:2)
Throughout history there has never been money in being the laborer in mass production, except in modern U.S. and Europe, where those jobs are facing extinction. The money has always been in the non-labor side of things. I'm not talking about shareholders and executives, I'm talking about shift managers, QC managers, engineers, accountants, etc. A 1300 employee factory is going to have at least 1000 laborers and 300 non-laborers. This is why China has a booming middle-class and the U.S. has a shriveling
The WORKERS make a WAGE. (Score:2)
There is a dramatic difference between "job" and "no job", especially when you want to "buy stuff".
Thanks, National Association of Manufacturers .... (Score:2)
Don't see the story. (Score:2)
In addition, "materials" is not the same unit of measure as the country-derived components or "distribution and retail". One would need to decompose these missing parts as well
steaming pile of self-hate (Score:3)
The decline of the USA is in no small part due to them having outsourced so much manufacturing elsewhere. It creates dependencies of various kinds and is more of a brain-drain than the financial idiots realise. Seriously, these are the "finance gurus" who have brought us the economic crisis - do we really listen to them for wisdom?
Design and innovation does not require much manpower. It provides jobs for thousands, but not for millions. Manufacturing feeds many more families, and supports many more people with technical know-how. Every company that has outsourced essential parts of its production chain has learnt painful lessons. Not necessarily so painful that it was all a bad idea - outsourcing can be profitable and the right approach. But like all the business "wisdoms" of the past 50 years, its advantages have been over-hyped and its shortcomings understated.
And, most importantly, business economics and macro economics are not the same thing and don't follow the same rules, and what is good in one context is not necessarily good in the other.
How does this help us get more jobs? (Score:4, Interesting)
Let us assume the article is correct? So how does this help any industrialized nation?
The US has 300,000,000 people.
Apple employes 60,000 people... many of whom work in retail. Apple is perhaps the most successful innovative company right now.
I personally have great frustration with those who simply tout this 'high-end' job. The 'creative class' and all that crap. Okay great, there are these good jobs in innovation. I work in the field. I get it. But there's not enough to sustain 300,000,000 Americans.
There's only room so many innovative companies doing smartphones or consoles or operating systems or solar panels ... or whatever. Do you know what is special about design jobs? They only need a relatively small number of people do the design.
As other nations become prosperous, you'll have billions of reasonably educated people competing for these design jobs.
Right now, one might argue Silicon Valley is the epicenter of innovation. Great. And that operates in a state with about 35 000 000 people and an 11% unemployment rate.
Even assuming we had a super amazing education system in California that generated brilliant people capable of doing work... silicon valley is not hiring 3 500 000 people. Heck, I'm pretty sure we saw layoffs at many firms in the news. Some companies are hiring of course... in the thousands perhaps.
My point... innovation is great. It generates a few jobs. It makes some people rich. But it doesn't do crap for the 95% of the population. As a result, we shouldn't be so concerned with the innovation economy or any of that.
Small countries with a few million people like Singapore or Sweden can try and sustain their economies off of innovation, but any large nation... be it the US or China or India will never be able to.
The private sector of these countries will be composed of manufacturing, farming, call-centers, service workers... If you can't design an economic system to work for them, it won't.
Stop living in your little bubble in academia or silicon valley with this religious belief in growth and innovation...
and start looking at the numbers.
Manufacturing is NOT about the money (Score:5, Insightful)
Combine that with the fact that China is massively building up their military AND showing that they are ALL TOO HAPPY to use them, well, China's cold war with the west is in full swing while the fools around the west buy the BS.
No, it is slavery. (Score:2)
Why else would China give freedom for multinationals, but not give it to regular, unconnected individuals?
Re:IOW (Score:5, Insightful)
The carriers make more. The study showed that the #1 profit share goes to iPhone telcom carriers (AT&T) over a 2 year contract. Which is why the carrier subsidizes the phone, paying Apple directly.
My main takeaway from the article was that carriers must be forced to unbundle phones from network access, to stop oppressing the consumer. Carriers should continue to subsidize upfront HW costs under a longterm payoff contract, but it must not be mandatory (or prohibitively expensive to avoid) for anyone who wants their own phone to buy access to any mobile network, at the same cost rate as a bundled phone does. Just like desktop Internet and voice service. Forcing the unbundling would do for competition, pricing and innovation what the forced unbundling of AT&T (still the one!) did starting in the 1980s, and what the inhibitions of bundling PCs with an ISP did for the Internet.
Re: (Score:3, Informative)
Re: (Score:2)
I get unlimited talk text and data for $40 month in the US. I can't believe people are suckered into $100 month contracts by a free phone.
Re: (Score:2)
Re: (Score:2)
Actually it is Simple Mobile which resells TMobile service so coverage is the same as TMobile.
For $50 month you can get the same thing directly from ATT Or TMobile.
I see no reason to spend 2x just to get a "free" phone. I'm not that stupid.
DevelpeR (Score:2)