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Apple CEO Tim Cook On Apple's US Manufacturing Move 266

Posted by timothy
from the tim-who?-oh-yeah dept.
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."
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Apple CEO Tim Cook On Apple's US Manufacturing Move

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  • Smart PR move (Score:5, Insightful)

    by Anonymous Coward on Thursday December 06, 2012 @12:33PM (#42204693)
    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.
    • Re:Smart PR move (Score:5, Informative)

      by Dupple (1016592) on Thursday December 06, 2012 @12:36PM (#42204725)
      • http://www.reuters.com/article/2011/08/01/us-foxconn-robots-idUSTRE77016B20110801 [reuters.com]

        No Assembly jobs, just robot repair and janitors.

        • by Brannon (221550) on Thursday December 06, 2012 @12:59PM (#42205095)

          Here are your options:

          1. Manufacturing in the USA, with manufacturing using robots, creating low thousands of well-paid jobs for Americans.

          2. Manufacturing in China using hundreds of thousands of low-paid Chinese jobs.

          3. Manufacturing in the USA without robots, but with hundreds of thousands of minimum-wage part-time jobs--and all Apple products increase in price by 30%.

          Apple is currently doing #2 and transitioning to #1. Are you really upset that they didn't pick #3?

          • by Dcnjoe60 (682885) on Thursday December 06, 2012 @01:18PM (#42205347)

            Here are your options:

            1. Manufacturing in the USA, with manufacturing using robots, creating low thousands of well-paid jobs for Americans.

            2. Manufacturing in China using hundreds of thousands of low-paid Chinese jobs.

            3. Manufacturing in the USA without robots, but with hundreds of thousands of minimum-wage part-time jobs--and all Apple products increase in price by 30%.

            Apple is currently doing #2 and transitioning to #1. Are you really upset that they didn't pick #3?

            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.

            • by Anonymous Coward on Thursday December 06, 2012 @01:26PM (#42205465)

              > Usually the minimum qualifications are a high school diploma,
              You will need at least some jobs like that. Not everyone is capable of (or wants) higher education, some people just missed the boat, others like immigrants will take the opportunity to improve their children's station.

              Not everyone without an advanced degree can work in fast food joints, so #1 still gives you a boost to entry-level US jobs as well as a spectrum of jobs up the pay scale including design. manufacturing, engineering, maintenance and so on.

            • by tlhIngan (30335) <slashdotNO@SPAMworf.net> on Thursday December 06, 2012 @01:35PM (#42205541)

              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.

              • by Dcnjoe60 (682885) on Thursday December 06, 2012 @02:03PM (#42205815)

                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.

                There was a time, not too long ago, that anybody who graduated high school had all the requisite knowledge and skill to actually do almost any job, even start and run their own business, like Microsoft.

                Back in the day, most business leaders, even , weren't college educated, but instead rose through the ranks to get to their position (with the exception of maybe medicine and engineering). Today, you spend $100,000 to get a degree so you can work in an entry level position. A generation or two ago, you just graduated high school for the entry level position and somebody with a college degree want into a junior management or mid-level position.

                Face. it, most work fits in the category of being unskilled and monotonous. We just don't like to think about it wheny it applies to our own field.

                • by Cabriel (803429)

                  There was a time, not too long ago, that anybody who graduated high school had all the requisite knowledge and skill to actually do almost any job, even start and run their own business, like Microsoft.

                  This is just stupid. There are still kids fresh out of high school with the ability to start their own companies. There are kids who haven't even finished high school who are taking masters-level courses (I am friends with one). Making the assertion that anyone is capable of starting and continuing a successful business just because they had one thing in common with Bill Gates doesn't mean they had everything else necessary to be as successful as Bill Gates.

                  Some kids have the knowledge and ability. Most did

                • by Kjella (173770)

                  Today, you spend $100,000 to get a degree so you can work in an entry level position. A generation or two ago, you just graduated high school for the entry level position and somebody with a college degree want into a junior management or mid-level position. Face. it, most work fits in the category of being unskilled and monotonous. We just don't like to think about it when it applies to our own field.

                  A generation or two ago most jobs were simpler. No, I'm serious a lot more jobs have moved into the "skilled and monotonous" category. Let's take for example being a lumberjack, not that many years ago it was mostly manual labor with axe and saw. Even after you got decent chain saws, it was a lot of hard labor. Today most logging is done with lots of machinery like feller bunchers, harvesters, forwarders and other heavy machinery. You can't just get into one of these and work it, you have to learn it. Of co

              • by Firethorn (177587)

                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.

                Depends on the position. As you just noted, 'manufacturing' in the USA tends to be second order - less doing the actual assembly and more maintaining the lines and robots that do the assembly. Robot maintainer is still a skilled job that demands better pay, and it's easily justified by the increased production that robots allow.

                Sure, there will be some minimally skilled janitorial jobs that will probably receive close to minimum wage. Still, I support the importation of as many skilled jobs in highly aut

              • by AmiMoJo (196126) * <mojo@@@world3...net> on Thursday December 06, 2012 @02:14PM (#42205945) Homepage

                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.

                • by radish (98371)

                  The problem is that if you increase minimum wage you create an upward pressure on all wages to maintain differentiation (why should someone with a degree working as a programmer get paid the same as an unskilled burger flipper? what's the incentive to get the education?). That just creates inflation and you're back where you started.

                  I don't have a great solution, but I'm a little concerned by assumption that you should be able to raise a family on minimum wage. That doesn't seem sustainable to me. I certain

                  • by AmiMoJo (196126) *

                    If you don't pay a living wage at the bottom end you just end up paying the same amount through tax breaks and benefits like subsidised rent. The only difference is that instead of the employer paying and the amount being transparent to everyone the government (i.e. you via tax) pays and the amount is hard to calculate and varies by circumstance.

                    I agree that people should live within their means. However I think you have to accept that we will always need people to collect the bins, mop the floors, flip the

            • by Firethorn (177587)

              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?

              Isn't final packaging also normally robotic? Putting something in a box isn't hard to automate, and from what I've seen of modern packaging it'd be hard for manual workers to do. Lots of nitpicky little folds and things fitting exactly into slots. That's just using boxes, not fused clamshells.

              As the ACs mention, you have the maintenance and adjustment of the robots, and that's a skilled job that justifies a 'living wage'.

              US manufacturing has grown every decade, even as it's experienced a shedding of jobs

            • by Solandri (704621)

              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.

              You're not thinking into this deeply enough. The goal isn't a livable wage. The goal is increased productivity per person. A livable wage is a consequence of that goal - higher productivity per person means increased standard of living and higher wages.

              In a robotic plant, most of the workers are the ones who box things up at the en

            • by dave562 (969951)

              The important thing is that they are jobs, period. The employees are being paid, but more importantly the company is paying payroll taxes. Every job created is one less person on welfare. "Living wage" is good and all, but let's be honest with ourselves. Even a "poor" person in America has a higher standard of living than a large portion of the world enjoys.

        • by perpenso (1613749)

          Assembly jobs, just robot repair and janitors.

          Even if so it still keeps more of the revenue in the US, less trade deficit.

          Plus where are those robots made, maybe they are US made?

          • by Dcnjoe60 (682885)

            Assembly jobs, just robot repair and janitors.

            Even if so it still keeps more of the revenue in the US, less trade deficit.

            Plus where are those robots made, maybe they are US made?

            No, if the company is owned by Foxconn then the revenues leave the US. Unless all iP*d manufacturing moved here, it won't have much of a measurable impact on the trade deficit and no, most assembly line robots are not manufactured in the US, either.

        • by Synerg1y (2169962)
          Robot repair job > assembly job in just about every aspect?

          I'd argue higher QC standards too, but apple hasn't really had a problem with that from a hardware standpoint.
      • Foxconn won't be able to be quite as horrible in the US, but it is a Foxconn plant and conditions will still be horrible. Even so, this is proof that corporations respond to publicity and pressure.
        • by micheas (231635)

          ... this is proof that corporations respond to publicity and pressure.

          Either that or customers like apple are concerned about import bans in the patent war and want to not be importing into the large markets.

          Yes, I am cynical.

      • by forand (530402)

        This is not certain, furthermore, I see no reason to condemn Foxconn(any manufacturer) more than Apple(any design company using said manufacturer). Apple could demand better adherence to US standards in the Foxconn plants making their products. Foxconn could just buck the local trend and treat their worker better than their rivals. Why does neither Foxconn nor Apple do this? Money. Foxconn can't do it and survive and Apple wants to maintain their 30% profit margin on their products.

        However when you move th

        • Apple is doing this (Score:5, Interesting)

          by SuperKendall (25149) on Thursday December 06, 2012 @01:46PM (#42205683)

          Apple could demand better adherence to US standards in the Foxconn plants making their products.

          Apple is doing this, they already demanded less overtime of workers and better enforcement of restrictions against child labor. And then they brought in an independent firm to audit this happening and asked FoxConn to allow them access.

          The real question is, why is NO other company doing this.

          Things are obviously not perfect at FoxConn but Apple is trying to make them better, in a way that anyone can keep track of. No other company is providing any kind of visibility into these issues.

          • by the_B0fh (208483)

            Why are you bring facts to this debate? Come on, you're supposed to just spout talking points about why Foxconn sucks (Fox that cons you?? WTF?!)

            And why Apple sucks because Apple uses Foxconn.

            And we will ignore the fact that nearly every other major brand's electronics also come out of Foxconn factories (or other similar outsourced manufacturers).

            Come on man, keep up with the times - bitching about what you imagine Apple to be abusing is the theme of the day!

      • Why does that matter? It means more US workers will have jobs, and foxconn will still have to pay US taxes for the work done here. Still a win all around.

        • Why does that matter? It means more US workers will have jobs, and foxconn will still have to pay US taxes for the work done here. Still a win all around.

          It's never a win in the eyes of a hater.

    • 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.

      Actually with the volumes Apple does they can automate the heck out of things so their margins probably won't be affected much. The biggest challenges are getting the components to the assembly plant for reasonable cost as well as flexibility but again, Apple is a big enough player that they are in a reasonable position to make that happen. Tim Cook being a supply chain guy I'm sure understands this well. US manufacturing is very competitive unless there is a very high percentage of labor cost in the pro

    • Not just PR (Score:4, Insightful)

      by mschaffer (97223) on Thursday December 06, 2012 @01:46PM (#42205681)

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

    • by Synerg1y (2169962)
      Sounds like a PR move to me, with all the bad press they've generated lately, they must be desperate for some good PR. Besides that foxconn plant in China seems cursed, can't blame them for wanting to get away from that mess.
  • Re: PR Move (Score:4, Interesting)

    by hawks5999 (588198) on Thursday December 06, 2012 @12:39PM (#42204759)
    If this is a PR move, it's costly. As the news of the Made in the US concept spread, AAPL lost $30 billion in market capitalization.

    This needs to be a principled move because shareholders are going to complain greatly about any margin erosion for the sake of patriotism.

    • The AAPL drop was most likely caused by trading firms requiring higher margins on large AAPL buyers - because some idiot bought a million shares right before an earnings release, the stock went south a bit, and he tried to claim he entered an extra zero wrongly... he's going to jail for about 20 years now.

      Today is the first day the Made in USA is really mainstream news, and the stock is up a bit.

      • some idiot bought a million shares right before an earnings release, the stock went south a bit, and he tried to claim he entered an extra zero wrongly... he's going to jail for about 20 years now.

        Wait, what?

        Since when are people imprisoned (I hope he's not awaiting trial for 20 years) for executing stupid trades?

    • As the news of the Made in the US concept spread, AAPL lost $30 billion in market capitalization.

      To put $30B in context Apple's stock lost 6%. The "Made in USA" story was not really cited in the mainstream financial press. One of the things that were cited was a report claiming that orders for components that go into devices are down, suggesting they are slowing manufacturing of devices. Also cited were changes in margin rules for owning Apple stock.

      • by mosb1000 (710161)

        Also, a lot of companies are offering special dividends right now. When investors learned that AAPL wouldn't be, a lot of people took their money out of AAPL to capitalize on the trend. They'll likely buy it back up at the end of the year.

    • by Hentes (2461350)

      Maybe they think that they still lose less than by letting their Asian manufacturers copy their technology.

  • China not as cheap (Score:4, Interesting)

    by bhlowe (1803290) on Thursday December 06, 2012 @12:47PM (#42204899)
    Manufacturing in China is getting more expensive and North America is becoming more competitive. The tax rate on repatriating money made outside of the US also makes manufacturing in the US more advantageous.
    • by mosb1000 (710161)

      The tax rate on repatriating money made outside of the US also makes manufacturing in the US more advantageous.

      No it doesn't. You only have to pay the difference in tax rates when repatriating money. Apple has to pay the US corporate tax rate on profits made in the US, but not on profits made in other countries, unless they want to bring the money back here and spend it here. Producing the products here will have basically no effect on the tax rates they pay.

      • by bhlowe (1803290)
        That is what I was referring to-- bringing the money back here. Piles of money overseas is a problem for a lot of tech companies. One way to address the "problem" is to build in N. America.
        • by mosb1000 (710161)

          No, it's not. You have to pay the taxes where the money was made, not where the products were made. So if they build them here, and sell them overseas, they'll still have to pay the US tax to repatriate the money the same way they do now.

  • This sounds like another case of The Insourcing Boom [theatlantic.com]. Companies are finally seeing at the total cost of outsourcing. Cook mentioned that Apple already has to make some parts in the US and pay to ship them out to the manufacturing plants overseas, and that's only one of the common costs.

    The interview doesn't go into a lot of details on Apple's move to US manufacturing, but a big part of the outsourcing cost is what you lose when you separate your product development from the manufacturing process. This comme

    • Yeah, more companies are starting to "in source". Fucking hideous, stupid, useless, meaningless, nonsense term. Its called "Made in the USA", stop acting like that's a bad word (or phrase). This is good news though. Apparently the capitolization of Asia was a great success.
      • It's not a bad word (or phrase), it's just inadequately descriptive. Similar things are happening (to lesser a extent, due to the economy) in Western Europe. It's more of a generic move to reverse some of the "outsourcing" of the last 20 years; hence "insourcing". this particular article is about returning to the "made in the USA" label, but the overall trend is global, and thus larger than just the US.

      • Thing is, 'Made in the USA' is a marketing term, along with buzzwords like 'Proudly', 'Union', etc...

        "Insourcing" means that you're not doing it to be patriotic. It means you're doing it because it makes sense on the balance sheet. It's cheaper to do the work here.

        It doesn't even have to be a 'made' product - telephone support is a constant service, and the tendency to 'in-source' the work from where it was 'outsourced' to India a decade ago has been around for the last five years.

        Made in the USA tends to

  • "Substantial" pretty much reflects the amount of technology, manufacturing and production facilities the USA has lost over the last decade or so to off-shoring (and moved to China, India, Korea and Taiwan).

    I'll be watching to see if Apple re-starts the furnaces in Pittsburgh to mold all it's aluminum cases.

    • Making the aluminum cases in the U.S. makes very little sense, since the U.S. has very small reserves of aluminum ore. It makes more sense to manufacture the aluminum parts close to where the aluminum is mined than it does to ship the ore somewhere else to refine it and manufacture the parts. I do not know enough about the process after the aluminum is refined to know whether it makes sense (cost, energy usage, quality of workmanship in the finished product, and probably a few other factors into that equati
      • by h4rr4r (612664)

        I thought the ore was shipped to a place with cheap power via rail or some other cheap transport mechanism. Are there places with access to cheap power and substantial amount of bauxite mining?

      • by mosb1000 (710161)

        The US is one of the world's top producers of Aluminum. You don't know what you're talking about.

        • According Wikipedia the U.S. produced 30,000 tonnes of bauxite in 2010 compared with Australia which produced 68,400,000 tonnes.
  • We are now a competitive labor market for third world slave wages! That is one way to bring jobs back to America.

    • by Firethorn (177587)

      It's more like the costs for shipping and china/Indian wages have increased to the point, combined with shipping delays, increased stock expense(you have to keep an extra month or two of stock around between shipping and staging from China to the USA) that making the stuff in the USA using sufficient automation to compensate for the increased wage cost.

      China:
      High shipping, low labor, low automation.
      USA
      Lower shipping, high labor, high automation to compensate for the high labor.

      A US robotic plant can literal

  • by sdsucks (1161899) on Thursday December 06, 2012 @01:25PM (#42205441)

    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?

    • by Uberbah (647458)

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

      Hatebois have an addiction to Hatorade....

    • by Hatta (162192)

      3) So what if it's a mostly robotic factory? This IS the future of manufacturing in all countries - accept it

      It is the future, but how is this future compatible with capitalism? When things are so efficient that we only need a small fraction of the population to fill the needs of everyone, how does that economy work? What do the displaced workers do? Not everyone can have a high tech job designing robots.

      Robotic factories would be a great idea in an economy that follows the principle "from each according

      • by ugen (93902)

        It doesn't. There is no way to scale classic economy where every person is required to provide some sort of "labor" in exchange for goods and services he needs, not anymore. We are at a point where needs of entire humanity can and will be served by ever decreasing amount of labor.
        The only options are:
        1. Reduce total number of people to match that required for production, more or less. That'd be great - but difficult to do politically (except if contraceptives became mandatory part of cheap food and beer).
        2.

        • by Hatta (162192)

          1. Reduce total number of people to match that required for production, more or less. That'd be great - but difficult to do politically (except if contraceptives became mandatory part of cheap food and beer).

          That won't work. The fewer people you have, the less production you need. If you can sustain 10 billion people with the labor of 10 million, then you'll be able to sustain 10 million people with the labor of 10 thousand.

      • EXACTLY. Already been happening; this was part of the reason for the move to China. In the race against machines, man has to lower his quality of life and push harder to compete. As history has shown, man eventually loses to the machine in the long term every time. Chinese are cheap human resources that are highly adaptable with far less upfront costs than automation and perform close enough to the machines for many tasks. Our CEOs never viewed human resources as people like themselves so switching them

  • My bet on which line will be "Made in the USA" is the revamped Mac Pro due out next year. First, the numbers are far smaller than that for iPads or iPhones. requiring less capital investment. Second, they're not as challenging to assemble. Third, the added labor cost will be a smaller percentage of these more expensive units.
    • by geek (5680)

      Second, they're not as challenging to assemble.

      Until Jon Ive whips out his glue gun and decides to make them "thin"

      I think Ive has lost his touch.

  • by future assassin (639396) on Thursday December 06, 2012 @02:27PM (#42206081) Homepage

    for manufacturing. Well its still a parasite of a company.

    Hey look that serial rapist is going to church now. We'll good for him maybe we can bring him to dinner now.

  • It's not altruistic, and it's not just Apple. The Atlantic [theatlantic.com] had an article recently about how a lot of companies (e.g. GM) are doing the same thing, for two reasons: (a) Chinese wages have been rising at about 18% per year since 2000, (b) oil is very pricey now, meaning shipping stuff over from China is more expensive. So, yeah, Apple aren't doing this because they've suddenly discovered patriotism. This is based on a cold cost calculation, just like the original decision to move their manufacturing to Chin
  • Guess they want to follow Lenovo's lead ... Of course, Lenovo is a Chinese company who is going to be manufacturing some of their products in the US, I like that even better than the US company who is moving a few things back to the US.
  • Bring all manufacturing to the US, hire UAW workers for $75/hr, refuse to utilize any and all automation and grind out a shitty product that costs 3x what it does now and has a 20% field failure rate.

    Option #5 is let Obama build nationalized factories and hire eleventy million civil servants to do that work. In 40 years they'll be making 7 iPads a day.

Murphy's Law, that brash proletarian restatement of Godel's Theorem. -- Thomas Pynchon, "Gravity's Rainbow"

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