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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.'"
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How the US Lost Out On iPhone Work

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  • by QuietLagoon ( 813062 ) on Sunday January 22, 2012 @09:32AM (#38780307)

    Apple executives say that going overseas, at this point, is their only option

    It is a self-fulfilling prophesy. The jobs were initially shipped overseas due to the cheap workforce. Then the overseas workforce built up their skills because those skills were in demand and being used, meanwhile the skills of American workers atrophied because no company wanted to use them. The overseas manufacturing facilities were heavily invested in because that is where the cheap sweat-shop labor was, and still is. Do you know the working conditions at these factories are so bad that the companies install suicide nets [] around the building to catch the workers trying to commit suicide by jumping off the roof? Do you know that the workers in those factories are required to sleep 8 to 10 people in a dorm room, and they are not allowed to talk or socialize with their roommates?

    Now it is at the point that manufacturing in the US has been neglected for so long, that to catchup and compete is a daunting task. And no company wants to make the investment in American people and manufacturing infrastructure anymore.

    The Apple execs are being very self-serving in their rationalizations for abandoning the American worker. They are just trying to paint a smiley face on a sad situation.

    In reality it is the American companies that neglected the American workforce and manufacturing infrastructure for cheap overseas labor. Then the American companies invested in the overseas workforce.

  • by sethstorm ( 512897 ) on Sunday January 22, 2012 @09:38AM (#38780341) Homepage

    ...instead of coming up with something nobody would pay.

    Instead of $499, you'd get something more like $519-529.

    Instead of $699, you'd get something more like $729-749.

    The US is more than capable of the volume, just that business has to be given no alternative.

  • by LordCrank ( 74800 ) on Sunday January 22, 2012 @09:40AM (#38780361)

    The savings from using Chinese labor is actually estimated at 23%: []

  • Re:Yeah...but (Score:3, Informative)

    by PeeAitchPee ( 712652 ) on Sunday January 22, 2012 @09:46AM (#38780419)
    No true. Millions of Mexicans come here illegally every year and do just this. It's not a problem with western people, it's a problem with entitled Americans and our keeping-up-with-the-Jonses cultural mindset.
  • by andy1307 ( 656570 ) on Sunday January 22, 2012 @09:49AM (#38780431)
    TFA says moving production to the US would add 65$ to labor costs.
  • by tepples ( 727027 ) <tepples@gm a i l . c om> on Sunday January 22, 2012 @09:59AM (#38780535) Homepage Journal

    I give at most five years before we see Chinese brand names taking the place of our familiar brand names on our store shelves.

    Let me guess: these brands will sound something like Acer, AOpen, ASUS, BenQ, CyberLink, Gigabyte, GWS, Haier, HTC, Huawei, Lenovo, LiteOn, Realtek, Thermaltake, Transcend, VIA, and Vtech. All these companies are based in PRC or ROC.

  • by Anonymous Coward on Sunday January 22, 2012 @09:59AM (#38780537)

    RTFA: "various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward."

  • Re:Yeah...but (Score:5, Informative)

    by dmr001 ( 103373 ) on Sunday January 22, 2012 @10:02AM (#38780553)
    In terms of economic output per worker, American workers really are the most productive in the world (even the TFA cites $400,000/y/worker at Apple). See [], which also notes that part of this is due to US worker's long hours - Norway has the most productive workers per hours worked.
  • Re:Seriously? (Score:5, Informative)

    by moortak ( 1273582 ) on Sunday January 22, 2012 @10:03AM (#38780559)
    Because they don't mention pay just miserable working conditions.
  • Re:Yeah...but (Score:5, Informative)

    by LynnwoodRooster ( 966895 ) on Sunday January 22, 2012 @10:38AM (#38780843) Journal
    Minimum wage in Shenzhen is 1500 RMB per month [], or about $1.20 per hour. In terms of purchase power, it's about the same as $9/hour in the US.
  • Re:Yeah...but (Score:5, Informative)

    by the eric conspiracy ( 20178 ) on Sunday January 22, 2012 @11:10AM (#38781143)

    Not only are American workers the most productive in the world, but the US is still the world's largest manufacturing nation based on economic output. And to top it off we do it with only 8% of the workforce. Crank that up to 25% or so and the US would out produce the rest of the world combined. Like it did during WWII.

    Norway? You have got to be kidding me. The entire country of Norway has the population of Minnesota, one of the smaller US states.

    To get that level of productivity a US manufacturing job has a skill level requirement far greater than in China. And heavy automation. In China automation has far less impact mostly because of the low wages it doesn't pay. So they have to have 8000 to glue on faceplates. In the US that would be about a 100 person operation.

  • Re: Yeah...but (Score:5, Informative)

    by AngryDeuce ( 2205124 ) on Sunday January 22, 2012 @11:36AM (#38781343)

    Sub-Zero/Wolf Appliance here in Wisconsin did similar. A few years ago, the owner called a company-wide meeting and told everyone they could either take a 20% pay cut or they would get laid off. When the employees balked, the owner told them he would just fire them all and move the plant to Kentucky. Understandably, this scared people to death, what with mortgages and all. When employees started looking for ways to cut costs without having to cut their salaries that much (and found some) and presented them to the owner, he basically said "This isn't about money; the economy is soft right now, and I'm going to use this opportunity to increase my profit margin by cutting your wages. Don't like it, there's the door."

    There have been some businesses that truly have been hit hard by this economy, but there are some real slimeball fuckheads that are basically just extorting the fact that people are desperate for work and will do almost anything to keep their jobs. If the minimum wage were gone tomorrow, we'd all be making illegal immigrant strawberry-picking slave wages, and we're supposed to cut taxes on "the job creators"? Please.

  • by BasilBrush ( 643681 ) on Sunday January 22, 2012 @12:05PM (#38781573)

    If you RTFA the main argument isn't price that's the main advantage of Chinese manufacturing. To Apple it's flexibility and speed that are the main advantages.

  • by houghi ( 78078 ) on Sunday January 22, 2012 @12:07PM (#38781601)

    You think the US workers have freedom? Wow. They are afraid to take holidays so they can't get fired. At the same time my company gives me 30+ days payed holidays at 38 hour working weeks. Over time is frowned upon and when I am sick, I can get healthy without the need to sell meth as it is already payed for.

    You keep using that word freedom over there but I don't think it means what you think it means.

    The thing this is about is price and profit. Cheaper production will mean cheaper and thus easier to sell. More units means more profit. They rather sell 2.000.000 with a 1USD profit then 1 with a 1.000.000USD profit.

  • You'll get neither (Score:5, Informative)

    by rsilvergun ( 571051 ) on Sunday January 22, 2012 @12:38PM (#38781917)
    You won't get healthcare or freedom. You'll be crushed under the jackboots of capitalist thugs. Just like those iPhone workers who aren't allowed to talk among themselves.

    Oh, as for treatment: that works great for a broken bone. Try getting Chemotherapy so that your cancer goes into remission. Or try getting dental care so that your tooth infection doesn't spread to your brain and kill you. In America, if you get sick, better die quick.

    And they're working on that whole 'Just drive down to the hospital and they WILL treat you' stuff anyway. Public emergency rooms are massively overcrowded. Instead of building more or expanding the current ones I'm seeing privately run urgent care centers crop up. They're private. They WON'T treat you. They'll tell you to go to the overcrowded public ones. The 1% are way ahead of you.
  • Re:Yeah...but (Score:5, Informative)

    by Balthisar ( 649688 ) on Sunday January 22, 2012 @12:45PM (#38781989) Homepage

    Sigh. Right-to-work isn't at all the same as at-will. My state -- Michigan -- is a union-shop state, but also an at-will state. They have no bearing on each other, and have nothing at all common in law.

    Right-to-work means (only) that non-members don't have to pay union dues. In a union-shop state, you *still* have the right not to join a union -- you're still stuck paying union dues (actually, an "agency fee" which is slightly less than the union dues). Unions can still thrive and prosper and protect their works in right-to-work states, and a lot of them do so.

    At-will only applies to non-contract employment in at-will states. If you have a union and you have a contract with the appropriate language, then you're not an at-will employee, even in at at-will state.

  • by Skreems ( 598317 ) on Sunday January 22, 2012 @01:04PM (#38782159) Homepage
    Uh... they most certainly do not go to Apple stockholders. Apple doesn't pay dividends. They go into Apple's ridiculously oversized war chest, and toward R&D that ends up generating more exploitative profit centers.

    Any money that stockholders make comes from selling their stock, which means it comes from the next sucker to buy it, NOT the money that Apple is pulling in from sales.
  • by Animats ( 122034 ) on Sunday January 22, 2012 @02:02PM (#38782715) Homepage

    A big part of the problem isn't working conditions. It's loss of supplier infrastructure. The article mentions "The screw factory is down the street". That's typical of major manufacturing centers. Pittsburgh, Detroit, and Trenton ("Trenton makes, the world takes") used to be like that - if you needed some part for your product, there was a local supplier.

    The US is no longer set up like that. With good roads and reliable delivery, manufacturing of parts was consolidated. You can order screws from Amazon's "small parts" unit and resistors from Digi-Key, and get them in a day. But that's for prototyping. If you need to talk to the suppliers about a production item, they're all over the country, and often too big to talk to you about a custom item. This matters for consumer electronics, where cost reduction involves using the minimal custom part for the job, not the off-the-shelf part which costs more.

    The Internet has had an effect on this - companies don't answer the phone any more. Many don't answer e-mails. You can order stock items on line, and fill out forms.

Syntactic sugar causes cancer of the semicolon. -- Epigrams in Programming, ACM SIGPLAN Sept. 1982