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Foxconn plans to assemble Apple's iPad in Brazil by end of November

post #1 of 54
4/12/11 at 10:50am
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Apple's manufacturing partner Foxconn is reportedly considering a $12 billion investment in new facilities in Brazil, and also apparently plans to begin building iPad units in South America by this November.

Foxconn, which assembles iPhones and iPads for Apple, is said by Brazil's president to be considering the $12 billion commitment toward new facilities, according to Retuers. President Dilma Rousseff said in a visit to Beijing that the Brazilian government is reviewing Foxconn's proposed plans.

Separately, Brazil's science and technology minister also said that Foxconn plans to begin assembling Apple's iPad at plants in Brazil by the end of November. The assembly would apparently take place at existing facilities, and would not be a part of the proposed $12 billion investment.

However, since Apple is a major partner of Foxconn, any investment from Foxconn in Brazil would likely have a future impact on the assembly of Apple products.

Talk of Apple products being assembled in Brazil gained traction late last year, when the eighth richest man in the world attempted to convince the iPad maker to assemble its products in the South American country. Eike Batista was looking to court businesses like Apple to fill in 90 square miles of space at the Port of Acu.

Foxconn's assembly factories in China have been the subject of much criticism, and Apple was even forced to make a public statement last year after a number of suicides occurred at the main Foxconn plant in Shenzhen, China.

Apple conducts an annual audit of its overseas partners and their factories. This year, that audit found one facility in the Far East that employed 42 underage workers, prompting Apple to terminate business with the facility.
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post #2 of 54
4/12/11 at 11:04am
Interesting. I wonder what the average cost to manufacture and assemble in Brazil versus China would be... Surely Brazil is not cheaper in this respect. Maybe this is being done to avoid import tariffs, or because the Brazilians are offering partial or full ownership of the facility in exchange for the move? The last piece of the puzzle for Apple is to own the manufacturing process.

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post #3 of 54
4/12/11 at 11:10am
Quote:
Originally Posted by SpamSandwich View Post

Interesting. I wonder what the average cost to manufacture and assemble in Brazil versus China would be... Surely Brazil is not cheaper in this respect. Maybe this is being done to avoid import tariffs, or because the Brazilians are offering partial or full ownership of the facility in exchange for the move? The last piece of the puzzle for Apple is to own the manufacturing process.

I seem to recall reading something about a Brazilian billionaire trying to entice manufacturing of Apple gear there a few months back.
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post #4 of 54
4/12/11 at 11:21am
Quote:
Originally Posted by digitalclips View Post

I seem to recall reading something about a Brazilian billionaire trying to entice manufacturing of Apple gear there a few months back.

Eike Batista mentioned in this article.

I hope it happens since there is a huge underage worker problem in Brasil, mostly in agriculture but since Apple has a very low tolerance for such practices it may begin to decrease the prevalence in other industries as well.

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post #5 of 54
4/12/11 at 11:26am
Asia, South America, Africa, Eastern Europe, ... I don't really care where they build it but they need another factory since iPad orders are still backlogged.
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post #6 of 54
4/12/11 at 11:26am
Quote:
Originally Posted by SpamSandwich View Post

Interesting. I wonder what the average cost to manufacture and assemble in Brazil versus China would be... Surely Brazil is not cheaper in this respect. Maybe this is being done to avoid import tariffs, or because the Brazilians are offering partial or full ownership of the facility in exchange for the move? The last piece of the puzzle for Apple is to own the manufacturing process.

Probably a combo of shipping costs, tariffs, perhaps also cuts offered to bring in jobs and simply just spreading things out to avoid another tsunami etc screwing with all their business by cutting off outgoing shipments from the area.
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post #7 of 54
4/12/11 at 11:29am
Apple needs to bring the manufacturing back to the new Canada/US Superstate (see RCC). The 'Henry Ford Rule' of economics is sustainable - unlike the collapsing Wall Street experiment.
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post #8 of 54
4/12/11 at 11:37am
Great, cut down more of the rain forest, that's WAY better than paying underage workers who would likely otherwise starve...
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post #9 of 54
4/12/11 at 11:41am
Maybe Brazil can make me an iPad 2 without this damn light-leak issue.
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post #10 of 54
4/12/11 at 11:42am
I may be wrong but I believe that a company which doesn't manufacture in Brazil has to pay some huge tariff to sell there, hence, Apple products aren't sold in Brazil. Brazil is one of several rapidly growing markets (referred to as the BRIC countries... Brazil, Russia, India and China). Apple has staked a lot on China, just opened a store in Moscow and this move should allow them to start marketing in Brazil. That would be a big deal. Maybe someone in Brazil can confirm?
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post #11 of 54
4/12/11 at 11:43am
Quote:
Originally Posted by Mode View Post

Apple needs to bring the manufacturing back to the new Canada/US Superstate (see RCC). The 'Henry Ford Rule' of economics is sustainable - unlike the collapsing Wall Street experiment.

Not until some Amercian firm starts making the components, like that screen, within this superstate.
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post #12 of 54
4/12/11 at 11:46am
Quote:
Originally Posted by ascii View Post

Asia, South America, Africa, Eastern Europe, ... I don't really care where they build it but they need another factory since iPad orders are still backlogged.

The problem may not be assembly, it may well be the ability to buy some part(s). You can only assemble as fast as your weakest supplier can supply. Since apple pushes so many limits it may not be a problem they can just throw money at.
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post #13 of 54
4/12/11 at 11:47am
Quote:
Originally Posted by Mode View Post

Apple needs to bring the manufacturing back to the new Canada/US Superstate (see RCC). The 'Henry Ford Rule' of economics is sustainable - unlike the collapsing Wall Street experiment.

The day Foxconn finds the labour in the US sufficiently cheap enough will longer after it will matter for the American way of life.


Quote:
Originally Posted by alienzed View Post

Great, cut down more of the rain forest, that's WAY better than paying underage workers who would likely otherwise starve...

According to Wikipedia "The climate in ItajaÃ* is humid in winter and dry in summer. In summer temperatures can reach 40°C (Temperature reached in 2009) and in winter they can get as low as 4°C. That doesnÂt seem like a rain forest climate to me.

If that doesnÂt convince you check out the coordinates of ItajaÃ*.

Â

http://toolserver.org/~geohack/geoha...40_W_type:city
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post #14 of 54
4/12/11 at 11:47am
Why in Brazil? Why not here in the US? We need the jobs here.
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post #15 of 54
4/12/11 at 11:54am
Quote:
Originally Posted by All Day Breakfast View Post

I may be wrong but I believe that a company which doesn't manufacture in Brazil has to pay some huge tariff to sell there, hence, Apple products aren't sold in Brazil. Brazil is one of several rapidly growing markets (referred to as the BRIC countries... Brazil, Russia, India and China). Apple has staked a lot on China, just opened a store in Moscow and this move should allow them to start marketing in Brazil. That would be a big deal. Maybe someone in Brazil can confirm?

Apple products are sold here in Brazil, through autorized resellers and the Apple Online Store (http://store.apple.com/br). After iPhone 3G, Apple products have become a lot more common here but are still expensive.

The Brazilian government is offering a 9,25% reduction in some taxes to attract tablet makers - that includes Samsung and Motorola.

We also hope that with this move Apple products will get cheaper for us - they are talking about assembling iPads here, but that also can include iPhones/iPods and Macs in the (near) future.
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post #16 of 54
4/12/11 at 11:56am
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Originally Posted by nkalu View Post

Why in Brazil? Why not here in the US? We need the jobs here.

Do we need the low-paying assembly jobs that are assembling iPads?
We're talking a couple dollars a day here, keep in mind.
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post #17 of 54
4/12/11 at 12:01pm
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Originally Posted by alienzed View Post

Great, cut down more of the rain forest, that's WAY better than paying underage workers who would likely otherwise starve...

The Amazon rain forest is way far from JundiaÃ*/SP, where the Foxconn facility is - ~1800miles.
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post #18 of 54
4/12/11 at 12:02pm
Quote:
Originally Posted by rhyde View Post

Do we need the low-paying assembly jobs that are assembling iPads?
We're talking a couple dollars a day here, keep in mind.

Legal minimum wage in Brasil is about $2 USD per hour, € 1.4 per hour

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post #19 of 54
4/12/11 at 12:03pm
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Originally Posted by nkalu View Post

Why in Brazil? Why not here in the US? We need the jobs here.

That's how Steve started: him & Woz assembled Apple I's by hand in his parent's garage. That was Apple's first assembly line. Later, Macs were designed and assembled in California, as were the original NeXT cubes.
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post #20 of 54
4/12/11 at 12:03pm
Quote:
Originally Posted by rhyde View Post

Do we need the low-paying assembly jobs that are assembling iPads?
We're talking a couple dollars a day here, keep in mind.

Yeah the reason they're not made here is because it would increase the production cost a good bit. I'd be willing to pay, say, $50 more for an iPad that was assembled in the U.S., but I don't know how many other people are.
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post #21 of 54
4/12/11 at 12:11pm
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Originally Posted by Suddenly Newton View Post

That's how Steve started: him & Woz assembled Apple I's by hand in his parent's garage. That was Apple's first assembly line. Later, Macs were designed and assembled in California, as were the original NeXT cubes.

I can’t find the video of the NeXT Computer automated factory that was built in the US. I think it used to be on YouTube.


edit: There we go: http://www.youtube.com/watch?v=qb7foG1rtlA
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post #22 of 54
4/12/11 at 12:22pm
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Originally Posted by charlituna View Post

Probably a combo of shipping costs, ...

I don't think shipping costs have anything to do with it. They are pretty much the same everywhere and distance makes no difference anymore.

For instance if they wanted to save shipping on the iPad from China, they wouldn't ship all the international orders to the USA first, they would ship them to the countries they are going to sell them in instead.
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post #23 of 54
4/12/11 at 12:23pm
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Originally Posted by Freshmaker View Post

... I'd be willing to pay, say, $50 more for an iPad that was assembled in the U.S., but I don't know how many other people are.

Definitely not those of us that don't live in the USA or give a crap about "made in the USA."
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post #24 of 54
4/12/11 at 12:24pm
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Originally Posted by nkalu View Post

Why in Brazil? Why not here in the US? We need the jobs here.

Those jobs are gone. We are a global economy now.
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post #25 of 54
4/12/11 at 12:30pm
Quote:
Originally Posted by nkalu View Post

Why in Brazil? Why not here in the US? We need the jobs here.

Chinese factory workers get about $130 a month. I suspect these Brazilian workers wouldn't get much more.

Even at minimum wage, American workers would get about $1250 a month without any benefits whatsoever. On that $1250 a month, Apple's got to pay the employer share of social security and Medicare, probably about another $100. And I'm sure they'd come in for tons of criticism if they didn't pay benefits. If they pay for healthcare, you're talking at least another $500 per month, so now it's $1850 per month per worker and that doesn't include the capital costs of building the factory, local real estate taxes, etc.

So the question is, are we willing to pay far more for Apple products if they were made in the U.S.? I think we're not, because when it really comes down to it, we want everything for the lowest possible cost no matter what the ramifications and since the advent of Chinese manufacturing, we've gotten used to impossibly inexpensive prices: $23 CD-ROM drives, $40 DVD players, $8 USB key drives, $79 printers (even if subsidized by expensive replacement ink), etc. And while people have been willing to pay the so-called "Apple Tax", there are limits.

I think Apple's response would be that while they don't have manufacturing in the U.S., they do have plenty of other quality jobs. According to Wikipedia, as of September 2010, Apple employed about 46,000 full-time workers worldwide. I suspect at least 32,000 of those are in the U.S.
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post #26 of 54
4/12/11 at 12:47pm
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Originally Posted by zoetmb View Post

So the question is, are we willing to pay far more for Apple products if they were made in the U.S.? I think we're not, because when it really comes down to it, we want everything for the lowest possible cost no matter what the ramifications

The long term effects of sending all of our high-tech and industrial manufacturing overseas is something that most US citizens and certainly the government has ignored for the sake of short term economic advantages. Right now China and the US are on mostly agreeable terms, but things can change pretty quickly under certain circumstances. If China all of a sudden cut off our supply of chips, components, rare earth, metals, etc. the US would not have the means to even produce the shoelaces on a soldier's boot.

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post #27 of 54
4/12/11 at 1:16pm
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Originally Posted by All Day Breakfast View Post

I may be wrong but I believe that a company which doesn't manufacture in Brazil has to pay some huge tariff to sell there, hence, Apple products aren't sold in Brazil. Brazil is one of several rapidly growing markets (referred to as the BRIC countries... Brazil, Russia, India and China). Apple has staked a lot on China, just opened a store in Moscow and this move should allow them to start marketing in Brazil. That would be a big deal. Maybe someone in Brazil can confirm?

Yes, you are correct. Brazil has hi taxes for hi tech products like computers, etc that are no manufactured locally. However, the country has a per capita income of $11,000 with pop of 190M. It is nice market. Except labor costs are higher with stronger unions than, China and productivity is nowhere close to Mainland China.

Anyway, the assembly of Apple products just adds a few dollars of value. THe $$$ is the components and I have read that the stuff come in the past from companies based all over the world, including Germany, Taiwan, Korea, etc.

I imagine, there must be strategic reasons for this move.
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post #28 of 54
4/12/11 at 1:28pm
Quote:
Originally Posted by solipsism View Post

The day Foxconn finds the labour in the US sufficiently cheap enough will longer after it will matter for the American way of life.



According to Wikipedia "The climate in ItajaÃ* is humid in winter and dry in summer. In summer temperatures can reach 40°C (Temperature reached in 2009) and in winter they can get as low as 4°C.” That doesn’t seem like a rain forest climate to me.

If that doesn’t convince you check out the coordinates of ItajaÃ*.

•

http://toolserver.org/~geohack/geoha...40_W_type:city

Actually, "rain forest" is determined by the annual rainfall amounts in a forested area. You are probably thinking of a "tropical rain forest..."
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post #29 of 54
4/12/11 at 1:32pm
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Originally Posted by Bageljoey View Post

Actually, "rain forest" is determined by the annual rainfall amounts in a forested area. You are probably thinking of a "tropical rain forest..."

Mea culpa, I concede to your point. Maybe the rainfall is high enough despite the dry Summers.

Judging by this map it looks like the port city would be included: http://1.bp.blogspot.com/_YpwHUq6Vuf...forest-map.JPG
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post #30 of 54
4/12/11 at 1:40pm
Quote:
Originally Posted by zoetmb View Post

Chinese factory workers get about $130 a month. I suspect these Brazilian workers wouldn't get much more.

Quote:
Originally Posted by rhyde View Post

Do we need the low-paying assembly jobs that are assembling iPads?
We're talking a couple dollars a day here, keep in mind.

The minimum wage here in Brazil is about US$340, almost triple China's.

Quote:
Originally Posted by All Day Breakfast View Post

I may be wrong but I believe that a company which doesn't manufacture in Brazil has to pay some huge tariff to sell there, hence, Apple products aren't sold in Brazil. Brazil is one of several rapidly growing markets (referred to as the BRIC countries... Brazil, Russia, India and China). Apple has staked a lot on China, just opened a store in Moscow and this move should allow them to start marketing in Brazil. That would be a big deal. Maybe someone in Brazil can confirm?

Yes, you are probably right. Some of the extra costs of producing in Brazil vs. China may be offset by Apple penetrating without heavy tariffs in this rapidly expanding market, not only in Brazil, but the rest of South America, which is in the process of integrating into a common market. That is besides diversifying operational risks and reducing reliance on China, currently the US' main economic antagonist.
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post #31 of 54
4/12/11 at 2:00pm
On the topic of US manufacturing vs. other countries. I don't think anyone in the US has a lot to be concerned about:

Despite China's might, U.S. factories maintain edge:

Quote:
Yet America remains by far the No. 1 manufacturing country. It out-produces No. 2 China by more than 40 percent. U.S. manufacturers cranked out nearly $1.7 trillion in goods in 2009, according to the United Nations.

The story of American factories essentially boils down to this: They've managed to make more goods with fewer workers.

The United States has lost nearly 8 million factory jobs since manufacturing employment peaked at 19.6 million in mid-1979. U.S. manufacturers have placed near the top of world rankings in productivity gains over the past three decades.

That higher productivity has meant a leaner manufacturing force that's capitalized on efficiency.

And this productivity (and capital investment per worker) is important...because wages track with productivity: higher productivity translates into higher wages.


Factories in decline? It's OK, services will do nicely:

Quote:
The United States alone produces roughly 20% of all the world's manufactured goods. We may not make many toys or cell phones any more, but we do make most of the world's artificial knees and hips, medical scanners and jet aircraft. Those sound like good jobs to me.

Manufacturing fetishists also ignore the fact that many factory jobs were actually not very good jobs at all.

Quote:
Those jobs may have offered a fairly good wage for a low-skilled position, but they were dull, dirty, sometimes dangerous and had very little chance for advancement.

The service jobs the worriers dismiss as "hamburger flipping" actually offer better wages, better working conditions and much greater opportunity than assembly line work.

I wonder how many of the worriers want their children to grow up to tighten bolts in a factory instead of going to university and getting a job in the service sector?

The worrier's core error is the idea that manufacturing makes "real wealth" while service jobs only move things around.

This is simply wrong. There's nothing less real about service jobs.

It is also important to note that while slipping hamburgers, serving coffee at Starbucks and cutting hair are service jobs...so are writing and designing things like software, cars, iPads, etc....and sales, marketing and advertising...and medical professions...etc.

Quote:
This isn't the first time people have made a fetish of one particular industry and tried to stop the economy from evolving in strange new ways. At the beginning of the Industrial Revolution a group of proto-economists known as the Physiocrats took agriculture as their fetish.

They claimed that real wealth only came from working the land and that the new rage for making things was diverting people from the one true economic activity.


The bottom line? While the US doesn't manufactur lower values items like iPods, iPads, iPhones (not to mention a whole raft of other much lower value items like gift shop trinkets and baubles...clothing, etc.) it does manufacture a ton of very high value items. And the fact that people in the US are freed from manufacturing these lower value items, they are freed to do other, more valuable, things. And, eventually, even as all people strive to escape manufacturing these lower value items, automation will replace them and free them to do other things that are more important.

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post #32 of 54
4/12/11 at 2:12pm
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Originally Posted by MJ1970 View Post

On the topic of US manufacturing vs. other countries. I don't think anyone in the US has a lot to be concerned about:

And this productivity (and capital investment per worker) is important...because wages track with productivity: higher productivity translates into higher wages.

It is also important to note that while slipping hamburgers, serving coffee at Starbucks and cutting hair are service jobs...so are writing and designing things like software, cars, iPads, etc....and sales, marketing and advertising...and medical professions...etc.

The bottom line? While the US doesn't manufactur lower values items like iPods, iPads, iPhones (not to mention a whole raft of other much lower value items like gift shop trinkets and baubles...clothing, etc.) it does manufacture a ton of very high value items. And the fact that people in the US are freed from manufacturing these lower value items, they are freed to do other, more valuable, things. And, eventually, even as all people strive to escape manufacturing these lower value items, automation will replace them and free them to do other things that are more important.

Up until a a couple decades ago the USA was completely self sufficient with the exception of oil, but even oil we have lots of. My concern is that we have exported our high tech base. You don't have any service jobs if you don't have silicon chips and LCD screens so we are teetering on the edge of complete dependency on the China, They already own all of our dept. People say we can't afford to manufacture in the US. I say we can't afford not to.

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post #33 of 54
4/12/11 at 2:21pm
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Originally Posted by mstone View Post

Up until a a couple decades ago the USA was completely self sufficient with the exception of oil, but even oil we have lots of.

Not really true. But even it is...the road to greater inter-dependency is a good road to travel. The road to complete self-sufficiency is the road to poverty.


Quote:
Originally Posted by mstone View Post

My concern is that we have exported our high tech base.

I would say you have very little real reason to be concerned about this.


Quote:
Originally Posted by mstone View Post

so we are teetering on the edge of complete dependency on the China,

This is highly doubtful and tad hyperbolic.


Quote:
Originally Posted by mstone View Post

They already own all of our dept.

No they don't.

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post #34 of 54
4/12/11 at 2:29pm
Quote:
They already own all of our dept.


Quote:
Originally Posted by MJ1970 View Post

No they don't.


Every other point you make is your opinion vs. mine except this point which you are correct. China is third with $1154.7 billion of our debt.

#2 is US Government Bond holders and #1 is the US Federal Reserve. They'll always be #1 and #2 because they can print money.


http://www.treasury.gov/resource-cen...uments/mfh.txt

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post #35 of 54
4/12/11 at 2:34pm
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Originally Posted by mstone View Post

Every other point you make is your opinion vs. mine

Perhaps...but it is an informed opinion.

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post #36 of 54
4/12/11 at 2:38pm
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Originally Posted by MJ1970 View Post

Perhaps...but it is an informed opinion.

More like brainwashed.

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post #37 of 54
4/12/11 at 2:40pm
Quote:
Originally Posted by mstone View Post

More like brainwashed.

Really?

What makes you say that?

What makes you think that my opinion is the result of brainwashing while yours, presumably, is not? Is it because my opinion is different from yours?

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post #38 of 54
4/12/11 at 2:46pm
Quote:
Originally Posted by MJ1970 View Post

Really?

What makes you say that?

What makes you think that my opinion is the result of brainwashing while yours, presumably, is not? Is it because my opinion is different from yours?

Maybe I was brainwashed too. We are philosophically polar opposites.

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post #39 of 54
4/12/11 at 2:50pm
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Originally Posted by mstone View Post

Maybe I was brainwashed too. We are philosophically polar opposites.

That might be. Still, you might pause before assuming that someone who is philosophically the polar opposite of yourself is "brainwashed." This sort of thing tends to shut down open discussion. I have not assumed that you are brainwashed, but I do think you might not be as fully informed on some aspects of these issues as you could be.

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post #40 of 54
4/12/11 at 2:54pm
Quote:
Originally Posted by charlituna View Post

Probably a combo of shipping costs, tariffs, perhaps also cuts offered to bring in jobs and simply just spreading things out to avoid another tsunami etc screwing with all their business by cutting off outgoing shipments from the area.

Found a little more info... This is basically Foxconn setting up shop in Brazil, has little to do with Apple other than it will be Apple product manufactured. The real beneficiary would be Foxconn.

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