How the US Lost Out On iPhone Work 1303
Hugh Pickens writes "Not long ago, Apple boasted that its products were made in America. Today, almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year are manufactured overseas. 'It isn't just that workers are cheaper abroad,' write Charles Duhig and Keith Bradsher. 'Rather, Apple's executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have outpaced their American counterparts so much that "Made in the U.S.A." is no longer a viable option for most Apple products.' Apple executives say that going overseas, at this point, is their only option and recount the time Apple redesigned the iPhone's screen at the last minute, forcing an assembly line overhaul. A foreman immediately roused 8,000 workers inside the company's dormitories, and then each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. 'The speed and flexibility is breathtaking,' says one Apple executive. 'There's no American plant that can match that.' Apple's success has benefited the U.S. economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. But ultimately, Apple executives say curing unemployment is not Apple's job. 'We don't have an obligation to solve America's problems. Our only obligation is making the best product possible.'"
Perhaps that needs to be forced onto Apple (Score:5, Interesting)
But ultimately, Apple executives say curing unemployment is not Apple's job. 'We don't have an obligation to solve America's problems. Our only obligation is making the best product possible.'"
If Apple had no other option, they would still be able to make high-quality products with large-scale US labor. A tariff based on worker freedom that punishes the practices of China et al while it rewards the practices of the US and EU with tax deals would go a long way.
The only good thing to do is to make it not only Apple's obligation, but everyone's obligation that sells in the US.
Break it down (Score:1, Interesting)
Looking at the things that enabled the production flexibility, I imagined what would happen if an American company sought those abilities, and to each one, either the government or a union would have not only said "no" but "Hell no."
As to the logistics of mega factories and mega industrial zones with hundreds of other related manufacturing facilities located close together .... environmentalists and, again, the government would be saying "Hell no."
It's funny. Communists in China get it done, while Communists in America prevent it from being done.
Re:No, the US has too much freedom for Apple. (Score:4, Interesting)
at five times the cost?
Made in the usa means more expensive and lower quality on mass produced goods. On short runs, or one offs the standard is higher but if you need more than 1 million units a quarter USA labor just isn't a good value.
Just remember not many will buy a $3,000 smart phone. Just remember when Apple announced the iPad at $499 every company on the market that was doing the same thing had to shelve all their designs and start over as they were expecting a $999 tablet.
Besides the USA is Capitalism. Capitalism means to exploit the workers for the least amount possible. I don't know why people have such a hard time understanding that Capitalism working means the workers get screwed. it isn't useful to have happy employees.
Re:Yeah...but (Score:5, Interesting)
Yeah... because when you are unemployed and have no money (and the housing market sucks) it's so SUPER easy to move to a place with jobs! Gosh, why didn't people think of that. We could have solved this problem years ago and have a 0% unemployment rate!
I am Filipino Systems Engineer, over the last decade I have moved within 4 european countries, and 6 different cities because that is where the job is, so when I hear statement like this, i laugh at your first world problems and excuses.
Re:Yeah...but (Score:0, Interesting)
Maybe the same people saying that corporations should just hand over their wealth should be less of a bunch of dicks themselves by not eating up shit made in China and sold at WalMart? Maybe these same people can refuse to buy non-essential items made elsewhere and force companies to ship jobs back home? But, oh no, they're Americans, goddamnit! And if they need to buy every Pixar film they will even if it's made in China! Forget the mortgage, forget the unemployed. We need more smartphones and blu-ray players!
Re:Yeah...but (Score:4, Interesting)
Re:What you left out... (Score:4, Interesting)
Is it? My grandparents were subsistence farmers living in China who never had more than $25 USD, now they live in an apartment. My grandfather says he was much happier living of the land. Now he is just waiting to die.
Im a dual citizen USA & China living in the USA.
Trickle Down (Score:5, Interesting)
One of my customers provides a chip used several of apple's products as well as other phones and products. They were a spin off of TI engineers and products that TI did not want anymore. They designed the chip had the chip manufactured overseas and tested them here.
We built 3 testers for them to final test and package the chips, which we build in less than 3 months the first one. Then we not only built it but ran the production on that machine for 6 months 24 hours a day seven days a week. While we built two additional machines. There are only two of us in our company. I think Americans can step up, in fact I know they can.
After our customer was firmly entrenched with apple due to our support, they needed to start shipping millions of chips per month. They also had a new management team, who did not care if we helped get them off the ground, and did not even let us bid on the equipment and they intended to do the testing in Korea due to being closer to the final product. They also said the new vendor could build the machines for 1/3 the price. I told them bull shit. I have spend quite a bit of time in asia and while it could be made cheaper if they would be buying in larger volume something was wrong with what they were quoted.
Well after about a year we found out it cost just as much for each machine as we had been quoting, but they were buying 20 of them at a time. We would have loved and been able to hire at least 10 people if we had been able to compete. Then we found out not only were they building the machines, they were running the machines and getting paid per part for the testing. Wow, we could have had at least 20 more jobs there, and I would have matched the Korean price too.
What It real truth is, that companies like Apple, and my customer supplying parts to apple like, is they don't have to directly supervise people. It is so much easier for them just to be a engineering and marketing company and not worry at all about any "Production" at all. They feel that they are supporting "Talented Engineers" here.
The other problem is for companies like our small company cant compete with Asian companies as they have a better infrastructure for expansion. Here we have venture capitalist who are looking for the quick buck. Just try and go out and get say 10 million to expand your operation even if you have a contract in your hand for 20 million per year. Just the blood suckers who want it all back within two years AND own half your company will be interested. Pretty darn sad it really is that way.
Re:So, to translate: (Score:5, Interesting)
Only temporarily most likely. The U.S. had company towns and indentured-servitude working conditions as well, at the beginning of its large-scale industrialization in the 1880s. It also had dozens of riots, mass unionization drives, etc., in the same decade, for not coincidental reasons.
China may delay the backlash longer because its authoritarian state suppresses workers' dissent, but I doubt they can maintain those kinds of conditions for that long.
Re:Perhaps that needs to be forced onto Apple (Score:5, Interesting)
Notice that that's working in Brazil: Foxconn is building a manufacturing facility in Brazil to build Apple products for the Brazilian market locally, in order to avoid tariffs.
Re:Yeah...but (Score:5, Interesting)
Living costs are also much lower in China.
This is true. Now, the following...
And are you saying that there isn't a single job available in the US, not even in industries that aren't directly what you want to do or that require lots of manual hard work? People just don't want to do them if it doesn't interest them, isn't available where they happen to live or there's prejudices and "I'm too good for that job" against the work (ie., working as a burger flipper or a stripper).
... that's one hell of a strawman. How the hell did you get there from the post you were replying to.
For starters, are you suggesting that being a stripper is a viable job alternative? What kind of mind could possibly suggest that as an example?
Also, from your posts it is obvious that you have never worked a burger flipping job and have to depend on it completely. I worked minimum wage jobs when I came to America, and I've climbed, by studying and hard work, to where I am now (pretty at the upper middle class bracket.) I can tell you that you simply cannot live at a hamburger flipping salary. How? You cannot even pay rent with that. People who have those jobs (and I know because I've been there) have to lump themselves together with relatives or friends and edge a meager existence.
The greatest insult of all is that in this great country so many people cannot afford the most basic of medical care. Jesus Christ, my country of origin is the second poorest in the western hemisphere, and the average city dweller has basic medical access more readily available and affordable than his/her American counterpart. How can we explain that????
That is the greatest flaw and immorality of all the ones we have to deal with nowadays. I couldn't afford medical care when I worked at McDonald's and Home Depot (not if I wanted to pay the rent or have more than a pair of underwear, or, you know, eat... even when I was at McDonald's ), and that was a while ago when cost of life was less.
TODAY, there are simply no jobs out there, even if you are looking for a flipping burger job. I mean, c'mon, even places like McDonald's and Starbucks you see franchises cutting people off and/or telling them "sorry guys, we can't keep you full time anymore, all we can do is give you 30-35 hours." That's how bad it is right now.
To suggest to tell people "go get a burger flipping" job indicates you are completely detached to the current realities, or you simply do not give a fuck and prefer to make shit up just to create an argument to fight for on the interweebz.
Re:The arrogance of the executive (Score:5, Interesting)
The executive class of these companies have been farming out more and more work to China. They do so under the arrogant premise that the manufacturing can be done without learning the original design work. Already fair parts of the design work have been taken over by Chinese companies.
The arrogant part is in thinking that we are the only ones that can come up with a good design, that we can create 'intellectual property' and make profits solely off of that.
I think it's simpler than that... read the bit about yanking workers out of bed at Midnight and having thousands of units produced by morning. Why put up with arrogant workers who think they can sleep until the sun comes up, spend weekends and holidays with their families, and require more than a week's notice to relocate to another town? The "party line" is that China has strict labor laws that would forbid such things, but wink, wink, we can do it if it gets your business.
The United States did this after WWII, and the arrogant Europeans mostly bought our stuff, in part because their countries were decimated, and also in part because Americans worked a little bit harder and cheaper than the Europeans were willing to. China is taking it to the next level, and it's a level I wouldn't want to follow them to. It's very seductive to business, if the U.S. wants to recapture domestic production, we're going to have to do what the Germans do and start paying 3 and 4x as much for our domestically made appliances and be happy doing it because they're of superior quality and using them benefits our countrymen.
Or, we can kiss a couple of million of our children goodbye after 10th grade and ship them off to "trade University" where they'll live, learn and work in a world competitive environment for the next 30-40 years, doing whatever they're told on a moment's notice and getting 2 weeks per year of liberty - like being in the army, but without people shooting at you, and with much lower retirement benefits.
In the "bleeding edge" emerging electronics tech world, Mr. Jobs may have been right, those jobs are gone. If you want ideas transformed from an executive decision to new designs in the hands of millions of consumers in less than 6 months, there's not time for everyone in that supply chain to watch their kids at soccer practice.
Why Chinese goods are cheap (Score:5, Interesting)
Did you ever read the reason Chinese goods are cheap because China manipulates their currency? I'm sure you all have. But have you ever though about what that really means? For instance why don't we just manipulate our currency more and make our good cheaper? And what does manipulate even mean?
The manipulation they are talking about is inflation. The Chinese government creates money faster than we do. But what is the effect of this? When governments create money they rarely hand it out equally to all of their citizens. They create money in order to pay for things or reward their political friends with free loans, grants, or bailouts. But where does the wealth go? Since no wealth is generated by inflation it transfers wealth from those that create real wealth to those that get the inflated money. So what the Chinese government does is impoverish it's people by stealing their wealth in the form of inflation at a much higher rate than the US government does.
What is the solution? A tariff doesn't work. All it does it tax the US consumers and gives that money to the government. With more tax revenue the US government has to borrow and print less which creates a stronger dollar. This makes Chinese goods even cheaper. No the only solution is to embrace it. Let the US consumers keep buying Chinese until the people there get a clue and overthrow their government. Think about it why should the Chinese people work so hard for so many hours for so little reward? They will wake up eventually and you will see China fall apart like the Soviets.
Mod points! (Score:3, Interesting)
Is it? My grandparents were subsistence farmers living in China who never had more than $25 USD, now they live in an apartment. My grandfather says he was much happier living of the land. Now he is just waiting to die.
Im a dual citizen USA & China living in the USA.
I hope I had mod points for you. I just saw 'Last Train Home' last night, by Lixin Fan. It shows exactly what you describe: a subsistence level in the countryside, but an independent life for people living in small communities, rather isolated but often in beautiful surroundings. Then the brutish city life of the factory worker, which is indeed a form of indented servitude, and widespread desperation among those who have hoped to better their life in that way.
Re:No, the US has too much freedom for Apple. (Score:5, Interesting)
It's a temporary situation. All the manufacturing demand is already creating a rise in wages in China and other countries. Long term, wages in the US will fall and they'll rise in China until they eventually meet in the middle.
Or you could also take the reverse view that the US and western Europe are the abberation. Most of the world lives in deplorable conditions. Working in a factory in China would be a step up for them. And if you took these manufacturing jobs out of China, what would those people do? They work in these factories because that's the best option they have.
If you really wanted to change things, here's what you do: start a social security type program that gives everyone an investment account. Can't take out capital, but you can receive dividends. You won't see results immediately, but after 50 years, you'll have an entirely different social and economic landscape.
Re:Yeah...but (Score:3, Interesting)
Yep, we were brought up being told that if we go to school and work hard, we will move up. It's just not true anymore.
Another concern for professionals is that if you accept a job outside your field for a few years just to pay the rent, it will not look good on your résumé. You may find yourself unable to find work in your field ever again. If you compromise and take a survival-level job that makes all your previous efforts for naught, then what's the point of surviving?
Re:So, to translate: (Score:4, Interesting)
I agree that's true, but it's partly counterbalanced by a different attitude to business as well. In the US, taking on the industrialists in the late 19th century was controversial because it was seen as potentially intruding on free markets, etc. But in China there is no real deep-seated concern for the rights of industrialists, and the interests of stability, "harmonious development", etc. are considered higher. So I think it's comparatively much easier for the government to decide to throw a few industrialists under the bus, if the government feels it's convenient to do so in the interests of social harmony.
Flexibility, Diligence and Industrial Skills (Score:5, Interesting)
Western workers have those too, it's just that, since we're not starving to death we're not willing to work 80 hour weeks for a pittance and accept orders unquestioningly.
We like to have a decent standard of living, to work on interesting things, to have our expert scientific and engineering judgment respected by our managers, to take pride in our work, to make quality products that people want to buy and to be able to learn and grow.
FTFA: A foreman immediately roused 8,000 workers inside the companyâ(TM)s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames.
I have a wife, a son and a life. You will not catch me living in a company dormitory at some PHB's beck and call 24hours a day just to be able to make some VP in the USA another bonus this quarter. These Chinese people are only doing this because they have to, for now. In a few more years as their standard of living goes up, and they realise how badly they are being exploited, it will stop.
I've just left HCL having been transferred there from Xerox last year as part of a global outsourcing deal where Ursula, Wim and Mark did a "partnership" with HCL to "leverage" there huge global talent pool or something. 600 out of the 3600 permanent engineers were transferred (the rest may follow soon). We were told it wasn't about outsourcing and that we'd have thousands of extra motivated and empowered people to help us accelerate the delivery of our projects, so we all went home and put our updated CVs on the job boards.
It was just as well, because what really happened was that much of the existing work was taken away to us with very little time and resource being put into Knowledge Transfer. Lo and behold, these "passionate and empowered" super-humans from the sub-continent are struggling to deliver anything.
The outsourcing companies run on this hubris-fueled delusion that they sell to western CEOs that western staff are fat, lazy and stupid and that their staff are intelligent and "motivated." What they actually do is to employ vast armies of fresh graduates (with absolutely no professional experience) at rock-bottom salaries and ship a few them over for a few months at a time (as long as they can get away with on the cheapest work permit) to "acquire knowledge." Of course, these poor young people are under enormous pressure to take on years of knowledge in a few weeks. Then they often go back to India (or wherever) with that knowledge and get put on a different project. The original project gets shipped offshore and work stops because no one knows how to do it.
This is why outsourcing to places like India gets a bad name: the Indians (or wherever) aren't stupid or lazy, they're just young, inexperienced and being badly exploited. 25-year-old guys are being given the work of mature teams with decades of experience.
Rotten Apple Avarice (Score:5, Interesting)
The Apple execs are akin to the 1800s plantation owners in that they claim without slavery they can't produce the products the market demands. How many of these dormitory workers are able to afford any of Apple's products? Whenever workers are unable to afford the products they produce themselves it leads to an unsustainable economy. Our country learned that during the Great Depression but our generation has forgotten all the lessons from that experience. Of course the global economy has been floated some time by currency manipulation by both China and the US but once those parlor games no longer work the reality of the true economy will reveal itself.
China is still a communist nation; what would happen to Apple if some sort of conflict erupts between the US and China and China either implements a US embargo or nationalizes Apples manufactures for the good of the Chinese party? Certainly the Apple execs have thought about this and have made certain that they get compensated regardless.
The ironic thing is that Apple claims they have no responsibility to help solve the US economic and unemployment problems while at the same time they donate millions to candidates and lobbyists to protect and promote their own special interests, drowning out the voice of everyday Americans. This is like when the Madoffs of the corporate world who spend their whole lives combating regulations and "government interference" are interviewed after a huge fraud is exposed and the first words out of their mouths are "It may be unethical but it is not illegal".
As Socrates wrote long ago:
"I tell you that virtue is not given by money, but that from virtue comes money and every other good, public and private."
Total Bullshit (Score:5, Interesting)
Just show them old pictures of Willow Run. A B-24 every 30 minutes. 50,000 workers and 13 megawatts of electricity to run the place.
And then there was Oak Ridge. So big they ran out of copper and had to borrow 14,000 tons of silver from the Treasury. 75,000 workers + absolute SOTA nuclear tech at the same time.
For aluminum and Oak Ridge the TVA had 12 hydroelectric plants under construction at the same time. Bigger total capacity than Three Gorges and built 70 years ago in 1/5 the time it took to build Three Gorges. It is the development model the Chinese used for the Three Gorges project.
Boeing's Everett WA aircraft assembly plant is the largest building in the world. 400 million cu ft. I guess somebody forgot to tell them that you can't do that in America.
America can't do it = stupid. America is still the largest manufacturing nation on the planet. And it uses only 8% of it's work force to do it.
Re:No, the US has too much freedom for Apple. (Score:5, Interesting)
Long term, wages in the US will fall and they'll rise in China until they eventually meet in the middle.
Most of the world lives in deplorable conditions.
There goes everything our (great) grandparents fought for...
Welcome to: The race to the bottom. Get used to it (Score:5, Interesting)
This isn't just Apple, it is every manufacturer of almost everything you own.
There is an excellent documentary called "China Blue" that follows a young girl from her village, to a work dormitory producing jeans.
http://video.pbs.org/video/1488092077/ [pbs.org]
In a world of economic, regulatory and political disparity, this is what Global Capitalism generates. The locations willing to offer the lowest wages and the least protection to workers, get the work.
It the the golden times, from the late 1940's into the 1950's America enjoyed a massive competitive head start with most of the rest of the world being bombed into oblivion, and needing to rebuild. This was sustained for some time longer by staying ahead of the technology curve, and only outsourcing lower tech commodity work.
But the world has shifted. There will be no golden times for the USA in our lifetimes. Our competition is no longer recovering, we are no longer ahead of the technology curve. We outsourced the technology and the engineering. It doesn't take long for our contractors to become our competition when they are the ones designing to hardware and software anyway. Did we think them reliant on our brilliant executive management?
People can point fingers at "evil" right wing politicians, "evil" left wing politicians, "evil" corporations or "evil" unions. But in the end, that is trivia to occupy us while Rome burns.
We are in a race to the bottom and it has significant momentum, so you better get used to it.
Re:No, the US has too much freedom for Apple. (Score:5, Interesting)
Capitalism offers the single motivation of profit. All other motivations must be supplied from outside the marketplace: respect for basic human dignity, restraint of fraud, control of pollution, respect for labor laws, etc... People bring these 'non-profit' motivations with them when working for companies, and we call it psychotic when companies (or CEOs) don't respect such motivations.
Apple is arguing that the profit motive gives them 'no choice' but to manufacture in China, dismissing all other motivations. They leave it to the apologists to argue that the working conditions are fair. Apple then adjusts their demands on Foxconn when the people buying their products are bothered by Apples actions.
They let the profit motive guide their actions, balancing it against all 'non-profit' motivations, to maximize profit.
Re:Yeah...but (Score:5, Interesting)
Re:Yeah...but (Score:4, Interesting)
He did what he had to.
He's not a better person than most, he's the same as most. He accepts his position, a slave to capital. Family and friends take a back seat to a wage.
I'm not saying it was a bad decision or he shouldn't have done it. It does however prove that the squeeze on the working man has worked as so many of us are willing to leave friends and family behind for temporary economic stability.
I'm guilty of it too. I'm looking for a job all over my country (and the world), I will have to leave my friends and family too if a job comes up. Not because i'm a better person, because i'm desperate. I don't have kids, i'm not on the council waiting list, i've never claimed benefits before. I'm not eligible for financial support as a result of the aforementioned.
My bank balance is near 0, I could sell what little stuff I have left but all that would do is hinder my efforts. Sell my car, tools and other equipment, to be even more unemployable. That is what I will be facing soon.
The ability to go to a job interview or a meal a day.
I however have been extremely fortunate so far to have friends and family who are willing to supply a floor, couch or other to sleep on in these hard times. Other people are not so fortunate.
tldr: Moving across country away from where you want to be for a job isn't a noble thing, it's desperation and the only option so many.
Re: Yeah...but (Score:5, Interesting)
Want to raise a family on $24,000 a year?
What if I can't do any work that's worth more than $24,000 a year? What does "want" have to do with it then? People with very low skills, and people who have very little value to offer anyone, can't expect to always get what they want.
If we don't allow low wage jobs, then low skilled people can't get work at all.
And for some other people, an entry level job is an opportunity for them to learn new skills, to increase their value, and eventually get a higher paying job. Prohibiting low wage jobs is a way to stop this before it can even get started.
Re: Yeah...but (Score:5, Interesting)
Most of them.
Sure people would immigrate, but they would settle and stay in one place for awhile. They might "move west" for greater opportunity at some point but even that would lead to people putting down new roots.
This idea that you are some sort of corporate nomad that moves every 3 years at the behest of your employer is a very new thing.
Society simply didn't have the means to be that nomadic. Moving was no trivial matter. You might not even survive the process.
Despite trying to resist the whole corporate nomad thing, I have still managed to live and work in more places than the previous 10 generations of my American ancestors combined.
The tech simply did not support those kinds of shenanigans.
Re: Yeah...but (Score:4, Interesting)
That sure is a lot of complaining with zero ideas on how to solve anything.
Yours seems to be a common attitude: "No we can't".
Can we build a better factory? Unions say: "No we can't."
Can we get cheaper energy? Environmentalists say: "No we can't."
Can we cut the cost of our insurance? Lawyers say: "No we can't."
Can we educate our children? The teachers union says: "No we can't."
Can we cut local taxes? The government unions say: "No we can't."
Can we cut crime in the neighborhoods? Community organizers say: "No we can't."
Can we improve anything? Slashdot says: "No we can't."