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Establishing US assembly lines would be 'highly difficult' for Apple

post #1 of 69
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Though Apple Chief Executive Tim Cook said this week he'd like his company's products to be made in the U.S., a new report suggests the roadblocks might be too great for Apple to overcome, at least in the short term.

Unnamed sources in Apple's upstream supply chain indicated to DigiTimes that moving production lines of Apple products to the U.S. would be a "highly difficult" task for the company in the near future. Almost all of Apple's products are currently assembled in Asia before they are shipped to the rest of the world.

Even if Apple did decide to conduct assembly in America, the cost to transport components would likely be too high for Apple to bear, the report said. And higher wage rates in the U.S. would also increase costs for Apple.

"Since moving a supply chain from one place to another takes time, while enterprises are mainly concerned about costs, if there is no profitability in moving, the related upstream component makers are unlikely to follow Apple in moving to the U.S.," the report said.

Almost all of the components Apple utilizes in its products are built in China, proximity to those component suppliers provides more than just cost savings. The New York Times noted in a profile on Apple's supply chain in January that there are a plethora of highly skilled workers, which offers "breathtaking" speed and flexibility that could not be matched by an American plant.

Cook was asked about the prospect of building Apple products in America during an interview at the D10 conference earlier this week, where AppleInsider was in attendance. Cook said he would like for Apple to begin building products in America as it once did.

Tim Cook at Foxconn
Apple CEO Tim Cook tours an iPhone production line at a Foxconn plant in Zhengzhou, China, in March.


Cook did note that the custom-made ARM processors for the iPhone and iPad are built in the U.S., in Austin Texas, while Corning's Gorilla Glass used on the iPhone is made in Kentucky.

"There's an intense focus on the final assembly. Could that be done in the U.S.? I sure hope so," Cook said. "But look, how many tool-and-die makers do you know in America? I could ask them, nationwide, to come here tonight and we couldn't fill [a few hundred seats in] this room."

While most of Apple's assembly remains in Asia, a limited number of devices have been produced by the company through its manufacturing partner, Foxconn, in Brazil. The Brazilian government granted Foxconn a series of tax breaks to incentivize production of devices like the iPhone and iPad in their country. So far, devices built in Brazil have only been sold by Apple in that country.
post #2 of 69
The U.S. needs to create an industrial zone exempt from minimum wage laws and anti-business bureaucracy. That would bring manufacturers back.

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post #3 of 69
Quote:

Establishing US assembly lines would be 'highly difficult' for any company, regardless of industry

 

… Right?

 

I don't see Apple doing US assembly until it can be done completely by robots with humans simply loading and unloading completed products and components, respectively. Hire humans to oversee the lines and repair the robots. Plant powered by solar and biogas.


But that's multiple decades off. So far off that it's impossible to actually envision.


Quote:
Originally Posted by jd_in_sb View Post
The U.S. needs to create an industrial zone exempt from minimum wage laws…
 

Not sure I like that. Not sure that seems right.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #4 of 69
Quote:
Originally Posted by Tallest Skil View Post

… Right?

I don't see Apple doing US assembly until it can be done completely by robots with humans simply loading and unloading completed products and components, respectively. Hire humans to oversee the lines and repair the robots. Plant powered by solar and biogas.


As has been explained previously, that only addresses a very small part of the problem. That does absolutely nothing about tax laws, environmental, health and safety laws, infrastructure, etc.
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post #5 of 69

I'm sure he could find more than enough unemployed tool and die makers to fill the room.  It is a dieing trade though as the US labor costs are way higher than those in developing countries.

post #6 of 69
Quote:
Originally Posted by AppleInsider View Post

Cook did note that the custom-made ARM processors for the iPhone and iPad are built in the U.S., in Austin Texas, while Corning's Gorilla Glass used on the iPhone is made in Kentucky.
 

 

Sadly, even that isn't 100% true.  Like Intel, who make the majority of their high end silicon in fabs in the US, the finished wafers are shipped off to Asia for sawing, bonding and packaging, so the first time there is a completely finished chip, it's in Asia.

 

I just can't see this happening at any point.  Transportation of all the stuff they need to the US would be incredibly expensive.

post #7 of 69
no way that this will happen for reason stated in the Article and that IMO a 10 Billion dollar investment would be required... with no payback on the Horizon...
while American's are "patriotic" they also want to "live free" not as in freedom, but as in free and cheap products...
thus there are very few americans outside of those that are in the military, that would pay an extra 100 dollars for an iPhone. (if you want to gauge how many people would be buying the iPhone look up the number of people that bought it at full price when it was first introduced, the first generation iPhone, meaning no subsidies!..). and even if they were made in the US they would still be made in China, thus people would import from China for cheaper iPhone.

also (unions, gov) they could block the components being shipped to the US they could cause a strike at the Apple plants ; leakage of secret information All these things would prevent the phone from being sold in the US.

the late Steve Jobs was correct when he said " those jobs are gone and never coming back "

instead of Apple making the first American made phone why don't we have Google or Motorola or Nokia or Samsung make the first American made phone and let them pave the way to see if Americans will actually buy an American phone over the Chinese made phone.

TL;DR...if everybody wants an American-made phone ...then lets get the other phone companies making an American phone and if it takes off...then Apple will follow suit and make their own manufacturing plant in the US... it is a Win-Win situation for america!...
post #8 of 69

Does anyone know the rule regarding which location gets used in 'Made in xxxx'? Is there a certain percentage of assembly/production that needs to occur in a certain location? I wonder if simply applying the back panel (thus, final assembly), for example, here in California would allow Apple to print 'Designed and Made in California' on the back? 

 

There'd definitely be a certain cachet in that. Maybe a 'California' line with palm trees on the back panel and arugula in the box. 

post #9 of 69
Quote:
Originally Posted by jd_in_sb View Post

The U.S. needs to create an industrial zone exempt from minimum wage laws and anti-business bureaucracy. That would bring manufacturers back.

 

Are you volunteering to work for less than minimum wage?  Are you willing to take up the slack for the infrastructure demands that a low-wage workforce puts on its community?

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post #10 of 69
Quote:
Originally Posted by jd_in_sb View Post

The U.S. needs to create an industrial zone exempt from minimum wage laws and anti-business bureaucracy. That would bring manufacturers back.

A new state: Dickensia

post #11 of 69

I wish you guys who keep dreaming about it, stop dreaming of the return of low value added, low wage, low tech assembly jobs to the U.S.  iPhone and iPad assembly, unless it is completely automated as one poster said, will never ever come back to the United States.  The productivity of a single worker in such an operation just is not going to be enough to justify paying him or her a living wage.  Anyone who seeks the return of those types of assembly jobs is in effect wishing that we become a third world country.

 

This is not to say that we don't need more manufacturing jobs over here.  We do, but not mass component assembly.

post #12 of 69

If they did this in the US:

 

1. They'd have to deal with unions.

2. They'd have to pay much, much more per hour, plus benefits, and unemployment.

3. Deal with some people that have a sense of self-entitlement.

4. People unwilling to leave the concerns of their personal lives at home.

 

The harsh conditions in China make for a very cheap, streamlined production environment.  People accustomed to those conditions work more efficiently.  Americans would not.

post #13 of 69

Didn't Jobs address this a little more directly, saying the time for the US to manufacture this stuff "has passed" or something similar, and that China's just too good at making quality stuff?

 

Here we go:

http://www.catholic.org/technology/story.php?id=44500

 

Quote:
LOS ANGELES, CA (Catholic Online) - President Obama asked, "What would it take to make iPhones in the United States? Why can't that work come home?"

According to another dinner guest, and Job's reply was blunt. "Those jobs aren't coming back."

 

I greatly prefer Jobs' direct, no pipe dream assessment.

post #14 of 69

Not gonna happen.

 

And I also bet that the majority of the people who whine about wanting manufacturing in the USA wouldn't spend significantly more for any product made in the USA. Talk is cheap, but in the end, money talks, and these whiners are full of shit, not to mention extremely unrealistic and not very knowledgable about running a global corporation.

post #15 of 69

When most of the production and assembly of an iPad (or whatever) is an entirely automated process, then maybe. Kind of defeats the purpose but western (read middle class - world wide) consumers are hardly willing to pay enough for their products so that workers would get the kind of wages and benefits they would expect to earn themselves, no matter where those workers live and work. Sad but true. 

post #16 of 69
Quote:
Originally Posted by macinthe408 View Post

Does anyone know the rule regarding which location gets used in 'Made in xxxx'? Is there a certain percentage of assembly/production that needs to occur in a certain location? I wonder if simply applying the back panel (thus, final assembly), for example, here in California would allow Apple to print 'Designed and Made in California' on the back? 

It's based on percentage of value. At one time, the standard was 75%, but that no longer applies - the line is not very well defined.
http://en.wikipedia.org/wiki/Made_in_the_USA
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post #17 of 69

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Edited by kellya74u - 7/24/13 at 10:02am
post #18 of 69
Quote:
Originally Posted by tjwal View Post

I'm sure he could find more than enough unemployed tool and die makers to fill the room.  It is a dieing trade though as the US labor costs are way higher than those in developing countries.

Tool and die makers are a dieing trade but I think you meant it's a dying trade.
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post #19 of 69
Labor really isn't a meaningful part of the equation. Tax treatment for major capital investment is the initial sticking point (sales tax, depreciation, property taxes, etc), followed closely by time to market. Environmental regulations come in, but are generally addressable. The environmental side isn't dumping toxic chemicals into the river issues, it is things like standby diesel generator exhaust concerns, on-site pre-treatment of sewage before it is discharged into the municipal system, and a lot of the penalties involved for minor infractions.

A simple example in California is the fact that CARB and AQMD are internally funded by fines and filing fees. These aren't small organizations and aside from their own operating costs they impose 10-50x the effort onto manufacturers, facility owners, and engineers.

I've been in manufacturing facilities in Los Angeles that don't cater to defense, aerospace, or drugs; they generally employ very few people. One site that makes special castings went from 300 employees down to around 20 through improved process and automation, and this is generally where things are headed. They are apparently headed that way in China too.

A more realistic goal is to increase the amount of finishing work done on things like the chips, and to marry displays and glass here, to create incremental improvements. The problem still remains that for a company like Apple, they want to pick best-of-breed suppliers for a given product, so you still have the logistic challenges of shipping products back and forth.
post #20 of 69

I am surprised at his ignorance? There are thousands of tool and die "shops" in the US

 

And on, it is not a dying trade. It is the basis of any number of industries from simple plastic injection molding to building nuclear aircraft carriers.

post #21 of 69
Quote:
Originally Posted by Tallest Skil View Post

 

I don't see Apple doing US assembly until it can be done completely by robots with humans simply loading and unloading completed products and components, respectively. Hire humans to oversee the lines and repair the robots. Plant powered by solar and biogas.


 

 

 

Robot not = flexible; at least as they are today.  Until there is real AI, nothing is as flexible as a human being.

post #22 of 69
Quote:
Originally Posted by kellya74u View Post

yeah, bash the US union workers who wanted living wage so the they could buy  home & a car, support their family, pay US & state taxes, & put money into a retirement system so they wouldn't be a burden to society later on (no government money needed nor accepted). However, since everyone wants to pay $400 for a $1200 TV, they feel US workers are too overpaid. US businesses tried to compete by eliminating pensions & healthcare for workers (working employees part time), but still can't compete. Unless we can get US workers to accept pay so low they they want to jump off buildings to relieve the stress of their existence and/or send their children to the factories, it ain't gonna happen. It will never happen in California where state laws & taxes have driven businesses out of the State. The few who remain, are being taxed out of existance to make the difference. The turnaround requires an individual committment to purchase US goods at a real, fair price or US infrastructure will continue to collapse. US people re making themselves poor. Let others buy the cheap goods. Make Apple stuff in the US & I will pay the higher price...for its actual value.

Incredible how no one bashes executive compensation, how some companies are extremely top heavy. How much is RIM paying its execs to run it into the ground? Millions? I could achieve the same effect for much less. GM was busy building Hummers while Toyota was building Prius', and who pays for such ineptitude? The lowly auto worker not the dumbass execs with their heads up their asses.
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post #23 of 69
Quote:
Originally Posted by Avonord View Post
Robot not = flexible; at least as they are today.  Until there is real AI, nothing is as flexible as a human being.

 

Really? Can we not make a machine to assemble an iPhone? I look at some of these teardowns of Apple products and think to myself that there's no way a human hand could have assembled some of these parts.

 

And does anyone know how the Apple Remote is made? Ah, answered my own question. It's astounding how this thing is done!

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #24 of 69
Quote:
Originally Posted by jd_in_sb View Post

The U.S. needs to create an industrial zone exempt from minimum wage laws and anti-business bureaucracy. That would bring manufacturers back.

What would be the point of that? Bring a piece of China to the US?

 

The US resembles a first-world country within a third-world country close enough.

post #25 of 69

There is no way the US could muster the breadth and extent of human capital that Asia can. 

post #26 of 69

Transportation is more expensive, there are not enough manufacturers of this or that, and, if you look at other companies like GM, AA, and so on, you'll see the big, actually huge, problem with employee's costs.

 

So, it doesn't matter how much you would "like to" do something. In the end, if it costs 80% more to do the same thing, you simply won't.

 

Infrastructure can be improved, taxes dollars could go to that instead of wars or bailouts for companies that don't give a damn (quality issues with some bailed out companies have been driving me insane).

 

However, people will not want their salary or way of working affected. That will only be possible again when China's work force start to ask for more benefits, better salaries and so on.

 

Once those two are in line, makers will come back.

 

People want to come back, thus why this question arises every now and then. It is just not possible. Would you like to pay $100 more for your iPhone just to have it made in America? How about the competition? Would they do the same? That is history, already happened, the main reason why these factories moved there in the first place.

post #27 of 69
Quote:
Originally Posted by jd_in_sb View Post

The U.S. needs to create an industrial zone exempt from minimum wage laws and anti-business bureaucracy. That would bring manufacturers back.

Absolutely not.

Minimum wage in this country is already poverty. It's hardly a living wage, which is the kind of manufacturing jobs we need here.

What will bring manufacturing jobs back is if we set tariffs on imported products based on the wages paid to manufacture those products. If a company pays $1/hour in China, add a tax equivalent of 6.25/hour to the product upon import (and increase that tax as the minimum wage here increases). It won't hurt products manufactured in living wage countries like Germany or Japan at all, but it will quickly become no more profitable to manufacture in China than it is here.

We do need to streamline some of the bureaucracy, but not at the expense of safety, environment, or union labor.
post #28 of 69

There are a few US industries that do quite well in exporting to the Far East including China. One such industry segment is private universities. They export high tech knowledge. That knowledge is then used to compete with the US. The universities are making tons of money off of tuition and housing for foreign students but at what cost to our technological superiority? 

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post #29 of 69
Quote:
Originally Posted by DrDoppio View Post

What would be the point of that? Bring a piece of China to the US?

 

Yes. There is a huge market for low-cost manufacturing and most of it goes to China. If the U.S. really wants this business (as oppose to just wishful thinking) then laws will need to change. If the U.S. does not want low-cost manufacturing jobs, that is fine too, don't change anything. I am not for or against low-cost manufacturing coming to the U.S. I am just saying if people want it to really happen then laws will need to change.

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post #30 of 69
Quote:
Originally Posted by jd_in_sb View Post

 

Yes. There is a huge market for low-cost manufacturing and most of it goes to China. If the U.S. really wants this business (as oppose to just wishful thinking) then laws will need to change. If the U.S. does not want low-cost manufacturing jobs, that is fine too, don't change anything. I am not for or against low-cost manufacturing coming to the U.S. I am just saying if people want it to really happen then laws will need to change.

You say "if the U.S. really wants this business", and then you say "if people want". I think that you mean a specific, very small group of people in both cases, which cannot be identified with "the U.S."

post #31 of 69
Quote:
Originally Posted by Tallest Skil View Post

 

Really? Can we not make a machine to assemble an iPhone? I look at some of these teardowns of Apple products and think to myself that there's no way a human hand could have assembled some of these parts.

 

But the design is changed every year.  Can the robot hardware or its software keep up?

post #32 of 69
Quote:
Originally Posted by quinney View Post

A new state: Dickensia

 

That attitude is precisely why manufacturing will NEVER return to the United States. It's getting to the point that people see they can make more money by sitting on their butts on welfare than to work at a job. But as the old saying goes "The problem with Socialism is that you eventually run out of other people's money." See Greece for confirmation of that tidbit.

 

So Atlas shrugged and dropped what he was holding up.

post #33 of 69
Quote:
Originally Posted by Avonord View Post
But the design is changed every year.  Can the robot hardware or its software keep up?


But it isn't changed every year. I'm certain hardware and software can keep up, as it's the same hardware needed and just new instruction patterns written.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #34 of 69
Quote:
Originally Posted by AppleInsider View Post

Even if Apple did decide to conduct assembly in America, the cost to transport components would likely be too high for Apple to bear, the report said.

 

The logistics are the deal breakers here.  It's more efficient to ship fully-assembled products from Asia to end-users and Apple Stores around the world.  Because most of the components are made in Asia.  And the component makers are moving their factories closer to the final assembly plants for even greater efficiency.

 

Yes, Corning makes the glass panels for iPhone and iPad in Harrisburg, Kentucky.  And yes, the Samsung chip fab that makes the A5X chip is in Austin, Texas.  But overall it would cost too much to ship components to the US.  It has to be done by air, therefore the cargo has to be high value, which means fully-assembled and packaged units.

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post #35 of 69

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Edited by kellya74u - 7/24/13 at 9:44am
post #36 of 69
Quote:
Originally Posted by Tallest Skil View Post


But it isn't changed every year. I'm certain hardware and software can keep up, as it's the same hardware needed and just new instruction patterns written.

Ah, well if you're certain, then I'm SHOCKED that phones aren't already assembled this way!  You should probably arrange a meeting with the CEO to let him know how to do it.

post #37 of 69
Quote:
Originally Posted by cameronj View Post
Ah, well if you're certain, then I'm SHOCKED that phones aren't already assembled this way!  You should probably arrange a meeting with the CEO to let him know how to do it.

 

Nice. I'm certain initial operations setup cost has nothing to do with it at all. 

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #38 of 69
Quote:
Originally Posted by Tallest Skil View Post

 

Nice. I'm certain initial operations setup cost has nothing to do with it at all. 

You're certain of a lot of things considering you're a forum moderator and not paid for manufacturing expertise!

post #39 of 69
Cook left something out.
It would be highly difficult for Apple to create American jobs and still make profit hand-over-fist.
Apple would have to follow the same employee and environmental protections that countless other profitable companies follow. Apple has shown itself to be pretty good at avoiding taxes, in part because of taxpayer subsidies.
post #40 of 69
Quote:
Originally Posted by cameronj View Post
You're certain of a lot of things considering you're a forum moderator and not paid for manufacturing expertise!

 

Care to explain why I'm wrong, then, instead of just saying, "No, you're wrong." I don't imagine there's any way to actually bring back jobs, but we ought to be thinking of actual ideas rather than shooting each other in the foot.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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