Apple CEO Tim Cook On Apple's US Manufacturing Move

We mentioned a few days back the "Assembled in America" tag showing up on some models of Apple's iMac. Nerval's Lobster points out that in a new interview with Bloomberg Businessweek, Apple CEO Tim Cook offered some details on what that means: "'Next year we are going to bring some production to the U.S. on the Mac,' Cook told the magazine. 'We've been working on this for a long time, and we were getting closer to it. It will happen in 2013. We're really proud of it. We could have quickly maybe done just assembly, but it's broader because we wanted to do something more substantial.' He also had comments about Android and current litigation against Samsung and others."

Smart PR move

[Anonymous Coward]

It may reduce their margins (minutely), but it will give them an immediate response to any allegations of massive offshoring of labor or anti-American sentiment. It's a relatively small investment for them that could pay tremendous returns. Smart, Apple, very smart.

This is good news! Good for Apple.

[sdsucks]

1) So what if it's a PR move? It's still a good move for Americans - no matter what.
2) So what if it's a Foxconn factory? Of course it will be one - Apple is NOT a manufacturing company, but they do work *very* closely with their manufacturers.
3) So what if it's a mostly robotic factory? This IS the future of manufacturing in all countries - accept it, and accept that even robotic factories are better than none for the local economy.

Seriously, how are so many of you trying to spin this negatively? And why?

Re:What would you have preferred to see?

[tlhIngan]

Your choices all have the same outcome. It is not the number of american jobs that is important to the economy, it is the number of american jobs that provide a livable wage.

In a robotic plant, most of the workers are the ones who box things up at the end of the process. Usually the minimum qualifications are a high school diploma, if that. How is that a well paying job?

Unless Apple intends to pay a livable wage to its employees at these plant(s), which would mean either a significant price hike in products or a reduction in profits, all they are doing is pandering to the populus notion of buy American.

Well, manufacturing is an unskilled job for the most part. In fact, factory jobs tend to be some of the worst around because they're utterly dull, boring and uninspiring work putting tab A into slot B and doing so in 750 milliseconds or less.

Other unskilled jobs include janitorial, housekeeping, etc. These are unskilled because anyone who graduates high school has all the requisite knowledge and skill to actually perform them, and they pay low because well, anyone who walks off the street can do it.

Robotic factories require far more skilled labor - you have to have technicians who can repair the robots, highly paid engineers who have to figure out how to make the product manufacturable by robots, supervisors to handle robot emegencies (and to manage human-robot interactions), engineers or techs to program the robots, etc. These require specialized training and as such, are much higher paying jobs. But of course there are far less of them - a robot tech can service multiple robots each work shift, likewise a manufacturing engineer designs the whole thing out before production begins, etc.

It's why the average American is far more productive than their Chinese counterpart - you cannot simply move manufacturing from China to the US without redesigning your product around that fact. Because all that happens is you're replacing low-skill jobs in China with low-skill jobs in the US (most of which would actually be fulfilled by illegal immigrants and such - just like in other low skill jobs).

Apple probably will pay just over minimum wage, because really, that's all the job demands. Unless you think putting stuff in boxes demands more pay than flipping burgers, cleaning toilets or other stuff.

And knowing Apple, if you're making tons of the stuff, they probably won't have a human hand touching it - just robots all the way into sealing the box. The only humans in the actual line are probably there to keep it going - receiving parts into inventory and stocking the part carriers for the robots, and shipping out the finished pallets of product.

Re:May be related?

[master5o1]

But are the robots made by robots made in the USA?

Not just PR

[mschaffer]

It's a move to help keep their products from being restricted from import if/when they ever lose an IP lawsuit.

Re:What dividend promise?

[perpenso]

Yes because they are so short of cash they need to conserve it right?

Promising such a dividend, such a dividend being a reasonable thing to do, and speculators expecting such a dividend by year end to avoid a tax increase are entirely different things.

Besides, such a cash horde helped them get through a bad *decade* in the past. If they were not so fiscally conservative they might not be here now. Plus they are in the position of being able to make massive strategic purchases or investments without going into debt. That puts them in a pretty strong position with respect to whatever comes "next". The engineer in me likes to see such flexibility and options rather than managing according to wall street expectations and norms.

Re:What would you have preferred to see?

[AmiMoJo]

Right, but the problem is that the minimum wage is too low because people can't live reasonably on it. That leads them to do two jobs with no time left to look after the kids, or to be dependent on benefits/tax credits to survive, and to have little disposable income to drive consumer spending.

There will always be unskilled jobs and people without marketable skills to fill them, but we need those jobs to offer a viable life to the employee or society breaks.

Re:What would you have preferred to see?

[swillden]

If you increase the minimum wage you may increase the income of some people, but you'll decrease the income of many as well -- to zero. There are two mechanisms that make this true.

First, an absolute one: If the marginal income to the business for employing a worker (what they business can take in by selling the results of that worker's efforts) is less than the minimum wage, then it makes more sense for the business to forego both the income and the expense, since they're a net negative. This isn't all that common, at least not where our current minimum wages are set, but it does happen. In particular, people who have some disabilities, particularly mental capacity, are often made completely unemployable by minimum wages. The more you increase the minimum wage, though, the more people you'll put out of work because the labor they're capable of just isn't worth the wage. Another common solution is to replace the workers with illegals which can be hired for less than minimum wage because they don't dare turn their bosses in for violating the wage laws.

Second, an incremental one: Raising the cost of labor reduces profitability. If it's too low, then it makes sense for the owners to take the money they have invested in the business and put it into another one that produces a better return, which results in 100% unemployment for that company's employees. A more common choice is to take action to restore profitability. There are basically two options: increase prices or increase productivity. Increasing prices is only possible if the competition is doing the same thing... and in the short term that is probably what would happen, but only for a while because some competitor would decide to invest in increased productivity instead. Increasing productivity generally involves one of two possibilities, making workers more productive by increasing their skills, or making them more productive by increasing automation, which usually means doing both. Both, however, tend to change the jobs that were formerly unskilled minimum-wage jobs into jobs requiring skilled labor -- and, even more importantly, they result in needing fewer workers to achieve the same output. End result: Some percentage of the minimum wage workers will lose their jobs. It's not uncommon that all of them lose their jobs. That's what's happening here: Apple is basically firing the low-wage Chinese workers currently producing their devices and replacing them with a much smaller number of highly-paid workers plus lots of machines.

The fact is that numerous studies in many countries around the world have shown time and again that minimum wages have the opposite of the intended effect. Increasing the price of labor reduces the demand for labor, which creates a labor surplus. It's no accident that the countries that have the highest minimum wages and the strongest job security laws have the highest unemployment rates. Economic theory says that's what you should expect, and in fact it's exactly what happens.

Another problem with notion of a "living wage" is that it's generally discussed at a level necessary to provide for a family, but hardly anyone making minimum wage has a family. I can't find the links right now, but IIRC, 90+% of minimum wage earners are less than 25 years of age, and very few of those people have families. The median income for 25-34 year-olds is over 50K, over three times the minimum wage, and for 35-44 year-olds it's over 60K, 4X minimum wage. The vast majority of people who have families to support make far more than the minimum wage already -- which makes sense, because they've had years of work to accumulate skills which make them more valuable to employers.

The good thing is that increasing the minimum wage probably won't hurt families much, because their earners are already above that. Well, it might hurt them a little if it increases the cost of stuff they buy. The bad thing is that increasing minimum wage will put some younger people out of work, making it harder for the