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Rumor: Apple to switch to automated battery assembly for this year's 'iPhone 6'

post #1 of 51
Thread Starter 
Batteries for Apple's next-generation iPhone may be assembled on fully automated production lines in China, rather than through manual labor, a new rumor out of the Far East claims.

iPhone 5s Teardown
Source: iFixit


Alleged details on Apple's manufacturing process for the company's anticipated "iPhone 6" were shared on Monday by DigiTimes, a Taiwanese publication with a notorious reputation for being the source of bogus Apple-related rumors. However, in the case of its latest story, there is a precedent, as Apple already relies heavily on automation, rather than worker-driven manual assembly, for its made-in-America Mac Pro and iMac desktops.

The anticipated move by Apple is said to be driven by increasing cost of minimum wage in China. Younger workers are also said to be avoiding jobs in the manufacturing industry, leading to labor shortages and high turnover.

While automated production lines would allow Apple to move manufacturing wherever the company pleases, Monday's report said it's unlikely that iPhone assembly would be moved from China, as most other component supply partners are still based out of the Far East.

Batteries in Apple's next-generation devices have been the subject of much speculation in recent months, after it was revealed that Apple executives have held discussions with electric car maker Tesla. Tesla's forthcoming mega battery factory in the U.S. has been seen by some as a potential partnership opportunity between the two forward thinking companies.
post #2 of 51
Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.
post #3 of 51
Whilst I empathise with the sentiment of your reply, I suspect the picture is far more complicated than your reply suggests:
The working conditions in a battery factory could be horrid, no place for the emerging middle classes, or are you suggesting cheep labour?
Hand made might make the product too expensive, and therefor reduced sales, and therefor employment.
Automated would improve the chances of production heading back west, to the political delight of many on this forum.
And lastly I can't help but wonder how much a totally handmade iPhone or ipad would cost?
More than I could afford I suspect!
post #4 of 51
Horses and buggies were trolled the same way.

1frown.gif

Anyone know where I can get seat covers for my Datsun?
post #5 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

/sarcasm Maybe if they just increased minimum wage to $100/hr then everyone would be rich! /sarcasm. labor, like any other input, is an expense. Would you expect apple to continue paying the same cost for an iPhone display if they found a manufacturer with a new process that could produce the same or better quality for significantly less money? If apple could some how build some massive plant that would automate the production of every component and then automate the assembly of an iPhone, the actual cost of the device would be significantly reduced and as a result the end user price would likely fall giving apple a significant competitive advantage. Yes I'm sure it would impact Foxconn significantly but I'm sure they could adapt their manufacturing prowess to other electronic devices. However this is not of Apple's (or it's shareholders) concern.

-PopinFRESH
post #6 of 51
Quote:
Originally Posted by PopinFRESH View Post

/sarcasm Maybe if they just increased minimum wage to $100/hr then everyone would be rich! /sarcasm. labor, like any other input, is an expense. Would you expect apple to continue paying the same cost for an iPhone display if they found a manufacturer with a new process that could produce the same or better quality for significantly less money? If apple could some how build some massive plant that would automate the production of every component and then automate the assembly of an iPhone, the actual cost of the device would be significantly reduced and as a result the end user price would likely fall giving apple a significant competitive advantage. Yes I'm sure it would impact Foxconn significantly but I'm sure they could adapt their manufacturing prowess to other electronic devices. However this is not of Apple's (or it's shareholders) concern.

-PopinFRESH
Well put
post #7 of 51
For those of us with iPhones, the real issue isn't whether the battery assembly is automated. It's just how hard the manual battery replacement will be. Are this busy little robots smearing lots of ticky-tacky on these batteries as they install them or are the batteries snapped in and easily replaced?

As Apple adds more services that earn subscription money from those who use its products (i.e. streaming music and TV), it becomes more and more important for Apple to keep their gadgets working by making sure they're passed along to a second or third user. Easy battery replacement is the key to that.
post #8 of 51
Quote:
Originally Posted by Slicksim View Post

Whilst I empathise with the sentiment of your reply, I suspect the picture is far more complicated than your reply suggests:
The working conditions in a battery factory could be horrid, no place for the emerging middle classes, or are you suggesting cheep labour?
Hand made might make the product too expensive, and therefor reduced sales, and therefor employment.
Automated would improve the chances of production heading back west, to the political delight of many on this forum.
And lastly I can't help but wonder how much a totally handmade iPhone or ipad would cost?
More than I could afford I suspect!
Do you think that Apple would pass the savings on to customers? No, this is to make the investors happy. Business 101: hogs get slaughtered. How any company can look at trimming their workforce down as a good thing is a selfish way to scam the system. If consumers don't have jobs, everything goes down the drain. If you're a business leader, you have a responsibility to the society you serve.
post #9 of 51
Quote:
Originally Posted by PopinFRESH View Post

/sarcasm Maybe if they just increased minimum wage to $100/hr then everyone would be rich! /sarcasm. labor, like any other input, is an expense. Would you expect apple to continue paying the same cost for an iPhone display if they found a manufacturer with a new process that could produce the same or better quality for significantly less money? If apple could some how build some massive plant that would automate the production of every component and then automate the assembly of an iPhone, the actual cost of the device would be significantly reduced and as a result the end user price would likely fall giving apple a significant competitive advantage. Yes I'm sure it would impact Foxconn significantly but I'm sure they could adapt their manufacturing prowess to other electronic devices. However this is not of Apple's (or it's shareholders) concern.

-PopinFRESH
It's not about making everyone rich, it's about getting money back into the hands of those who spend it. The stronger the cycle, the more money works for us. The longer the dollar sits at the top, the weaker the market becomes. If minimum wage was put up to $100, believe me those businesses complaining about spending so much on labor wouldn't be hurting when they see their revenue rise exponentially now that people can buy things again. ($100 is extreme of course, just using it to make a point).
post #10 of 51
Quote:
Originally Posted by AjbDtc826 View Post


Do you think that Apple would pass the savings on to customers? No, this is to make the investors happy. Business 101: hogs get slaughtered. How any company can look at trimming their workforce down as a good thing is a selfish way to scam the system. If consumers don't have jobs, everything goes down the drain. If you're a business leader, you have a responsibility to the society you serve.

Wrong. You legally have a responsibility to your shareholders to make sound business decisions to help the company profit.

Help! I'm trapped in a white dungeon of amazing precision and impeccable tolerances!

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Help! I'm trapped in a white dungeon of amazing precision and impeccable tolerances!

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post #11 of 51
Yes, let's bring back the traffic cops, the wheel barrows, wells for water, outhouses, etc...and get rid of automation.
post #12 of 51
I'd love to live in your world when customers can afford to keep you in business without a decent paying job, my friend. Do yourself a favor and just pick up any newspaper from the past 5 years and let me know how your strategy's working.

Even Jobs told Obama that if he didn't start bringing factories back to the States to employ more of us he'd be sunk. But what does he know?
post #13 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

So, what to do with those poor souls who think work is such a burden, who yet think they're still "entitled" to the "good life." Their pipe dream is to have it all without working for any of it. For those who are able to work but who yet somehow abhor it, they cry for shorter hours and higher wages so they can "have a life" outside of work. And of course they cry when they get replaced by a machine which doesn't cry or complain or cost nearly as much as their "benefits" would cost their employer.

 

I woudn't cry too much about automation, though, because it helps those potential employers stay in business and produce more and better products, because their employees who love their work and their jobs are freed up to do the more important and creative work which machines will never be able to do.

 

What's the message? Learn to love work as it IS your life. Learn to do the work that is in demand, instead of lying around and moaning about there not being any jobs.

Daniel Swanson

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Daniel Swanson

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post #14 of 51
Quote:
Originally Posted by Inkling View Post

For those of us with iPhones, the real issue isn't whether the battery assembly is automated. It's just how hard the manual battery replacement will be. Are this busy little robots smearing lots of ticky-tacky on these batteries as they install them or are the batteries snapped in and easily replaced?

As Apple adds more services that earn subscription money from those who use its products (i.e. streaming music and TV), it becomes more and more important for Apple to keep their gadgets working by making sure they're passed along to a second or third user. Easy battery replacement is the key to that.

It's ludicrous to expect to want to keep an iPhone for more than the three years an Apple Care warranty affords. Let Apple worry about replacing the battery or repairing/replacing the phone until then. In the mean time, replaceable batteries are obviously NOT worth the effort to: design them into the phone in the first place at the cost of added space for the connectors, added weight, greater customers support costs, more potential customer dissatisfaction, etc.

 

It's not a mere marketing ploy to that older hardware becomes obsolete in the face of advancing software and features as well as advancing hardware features, as well.

 

Move on, pal. You're stuck in the '90s.

Daniel Swanson

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Daniel Swanson

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post #15 of 51
Quote:
Originally Posted by AjbDtc826 View Post

I'd love to live in your world when customers can afford to keep you in business without a decent paying job, my friend. Do yourself a favor and just pick up any newspaper from the past 5 years and let me know how your strategy's working.

Even Jobs told Obama that if he didn't start bringing factories back to the States to employ more of us he'd be sunk. But what does he know?

There are plenty of jobs available to those who can prepare themselves for them and for those who love to work. It's ATTITUDES like yours that need to be changed. Change them now! It's YOUR responsibility!

Daniel Swanson

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Daniel Swanson

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post #16 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

 

Such is life and economics my friend.  Since the first loom rendered the hand weaver unemployed hundreds of years ago.  And yet, look how high your standard of living is now.  Would you be where you are if that first loom and every other new technology that raised productivity was junked because society didn't want all those hand weavers to lose their jobs?

post #17 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

You can't automate everything, only things that are repetitive, mechanical, algorithmic. 


I think in the future people will look back and simply not understand why we had people doing such repetitive tasks, for them it will be obvious that anything repetitive is done by a machine.

post #18 of 51
Quote:
Originally Posted by AjbDtc826 View Post


Do you think that Apple would pass the savings on to customers? No, this is to make the investors happy. Business 101: hogs get slaughtered. How any company can look at trimming their workforce down as a good thing is a selfish way to scam the system. If consumers don't have jobs, everything goes down the drain. If you're a business leader, you have a responsibility to the society you serve.

Apple isn't automating to save money. They do it to increase production. The automation of jobs that CAN be automated is actually a humanitarian thing as it relieves humans of the drudgery of those tasks. Whining over lost jobs betrays your own lethargy or unwillingness to learn to do better, more challenging and enjoyable work.

Daniel Swanson

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Daniel Swanson

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post #19 of 51
Quote:
Originally Posted by DanielSW View Post

There are plenty of jobs available to those who can prepare themselves for them and for those who love to work. It's ATTITUDES like yours that need to be changed. Change them now! It's YOUR responsibility!
Okay so if everyone were to gets PhD's, who's making your burger at McD's? Who's picking up your trash twice a week. And wait a minute, where are all the jobs coming from to employ all these PhD's?

Everyone here can keep arguing on the side of big business until YOU get laid off. Hope all that time you've invested with your employers is worth it when they turn their back you- the ones who actually get the job done for them- when they have to fill more pockets upstairs. Have fun explaining to your kids why you're taking a lower level job making half as much just to get by.
post #20 of 51

I stopped reading after Digitimes.

 

:D

post #21 of 51
Quote:
Originally Posted by AjbDtc826 View Post


It's not about making everyone rich, it's about getting money back into the hands of those who spend it. The stronger the cycle, the more money works for us. The longer the dollar sits at the top, the weaker the market becomes. If minimum wage was put up to $100, believe me those businesses complaining about spending so much on labor wouldn't be hurting when they see their revenue rise exponentially now that people can buy things again. ($100 is extreme of course, just using it to make a point).

Not quite. Minimum wage is a price floor. 

Labor being left to establish equilibrium would result in the wage being P3 and the amount of people willing to work for that wage and the amount of jobs employers are willing to offer at that wage are equal (30). Setting the minimum wage at P4, which is higher than the natural wage, would result in More people wanting to work for that wage (Qs), however the amount of jobs employers are willing to provide at that wage is reduced (Qd). In this example that would mean 40 people would be willing to work for the price at P4, but employers would only offer 20 positions. So you would have surplus labor, also known as unemployment. The only instance this would not hold true is if the price floor (minimum wage) is below the natural price at equilibrium, at which point the minimum wage is pointless. Businesses would not be thrilled at seeing their revenue rising exponentially because so is their expense. Their profit would not be rising, and those people now making $100/hr can't buy any more iDevices than they could previously making $8/hr because the price of an iPhone after paying $100/hr for labor would would be $100,000 (I'm not willing to do the actual math to illustrate the point. The point is that Apple would face either shutting their doors because it would not be cost effective to produce the devices with the added expense (not a likely scenario), or increasing the price of the product to match the increase in marginal cost, thus making the device more expensive. This is also known as inflation.

 

Your argument is based on the assumption that the money in the companies bank account is shoved in some untouchable hole doing nothing. When in actuality that money is intact still circulating in the economy. Apple (nor any other company) shoves their money under a (very large) mattress. They invest that equity, either in themselves as R&D, in other companies either through acquisitions or or simple investments, or they leave it in the bank. In all of those scenarios that money is used for paying for expenses of those other entities (such as labor, or materials). In the case of just letting it sit in the bank, the minimum reserve for US federally insured banks is ~10%, which means that out of $100 deposited the bank is going to loan out as close to $90 of it for things like business loans, car loans, house loans, etc.

 

The  point is that unless a company built a warehouse to simply stuff cash in, your premiss is invalid.

 

-PopinFRESH

post #22 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

 

And in the same breath, people like you will attack and vilify Apple for employing "slave workers", etc, in China. I remember the solution that all these people proposed to get rid of "slavery" is "automation" They can't fucking win, can they?

 

Apple's purpose isn't to "help the world's economies". They DO do that, based solely on the success of their products, stores, and number of employees they employ directly or indirectly- but that's not going to be Apple's core motivation for every business decision. 

 

Quote:
 This is BS. What's really taking Apple so long with all of these things? The "mystique" isn't cute, as soon as a leak gets out the competition is all over it with crap products. And before anyone comes at me with the "at least they do it right" argument, no they haven't come out with ANYTHING lately that didn't have absurd QC issues. Apple, stop playing games and just release the stuff already. Your bugs aren't worked out until it hits the market anyway.

 

What an incredible lack of any kind of objectivity. Amazing how all these products with "absurd" QC issues are getting such stellar reviews, eh? Must be a miracle or something. But, your solution to QC issues is to "release more stuff already", and to defend again crap products they should shit out their own crap products even faster, right? Brilliant, you're quite the incredible problem-solver. The fact that you can't understand why "things take long" shows that you really have no idea how product development works. I'm glad that Apple doesn't just spit things out to satisfy ADHD people like you who while bitching about QC, demands products even faster. I'll trust their philosophy, which has propelled them to the most successful company on the planet, to arm-chair critics like you that offer nothing but naive and superficial attacks. You should definitely apply as an Apple software developer- you seem to have it completely figured out, with "make it perfect and make it faster". Or hell, why not the CEO Job? I predict Cook would voluntarily step down when he sees the depths of your insights. 

post #23 of 51
Quote:
Originally Posted by AjbDtc826 View Post


Okay so if everyone were to gets PhD's, who's making your burger at McD's? Who's picking up your trash twice a week. And wait a minute, where are all the jobs coming from to employ all these PhD's?

Everyone here can keep arguing on the side of big business until YOU get laid off. Hope all that time you've invested with your employers is worth it when they turn their back you- the ones who actually get the job done for them- when they have to fill more pockets upstairs. Have fun explaining to your kids why you're taking a lower level job making half as much just to get by.

You sound like you have a mentality that will always keep you on the bottom rung. You neglect the risk people like Steve jobs take investing everything they have to bring into existence an idea they've had. I'm sure you are right and all those factory workers in china have an equal aptitude, aversion to risk, and drive as Steve did. Surely had Steve, nor the other lowly minds at Apple "upstairs" like Ive, not invented the things they did, those factory workers definitely would have come up with the iPhone. You seem to forget looking up from the bottom that without those people up there running a successful business there would be no job for you to "actually" do.

 

-PopinFRESH

post #24 of 51
Originally Posted by AjbDtc826 View Post
I'd love to live in your world when customers can afford to keep you in business without a decent paying job, my friend. Do yourself a favor and just pick up any newspaper from the past 5 years and let me know how your strategy's working.

 

It’d be nice if you had any idea what you were discussing here. You don’t, however.

 

I say automate it entirely.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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post #25 of 51
Quote:
Originally Posted by Tallest Skil View Post
 

 

It’d be nice if you had any idea what you were discussing here. You don’t, however.

 

I say automate it entirely.

I can't believe it, but I've actually agreed with you on I think the last three things I've seen you post on Tallest Skil. Ha ha. I think you might actually have half a brain yet! :)

 

-PopinFRESH

post #26 of 51
Originally Posted by PopinFRESH View Post
I think you might actually have half a brain yet! :)

 

Good to get validation from a third party that the memory loss hasn’t completely ruined the person I once was.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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post #27 of 51
Noobs (above...and no, not referring to TS)... -headslap-!

As usual, stopped reading at "DigiTimes".

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #28 of 51

Disregarding that this rumor comes from the slimy digitimes for a moment, more automation is a good thing.

 

Remove humans from the equation completely, who needs them? Robots don't strike last I checked, and I don't think that robots are advanced enough yet to commit suicide. And they can probably work robots 24 hours a day. More robots, less humans is where things should be heading.

post #29 of 51
Quote:
Originally Posted by AjbDtc826 View Post

Sure, let's make more people unemployed. Hell, let's automate everything and let everyone be unemployed! Then people can REALLY have time to buy products with the money they don't have. That's really going to help the world's economies right there.

So if (through some miracle) you managed a company, you would do all of the following:

1. pay your lowest-skilled employees (mailroom, janitorial, parking attendants, etc.) significantly more than minimum (and market) wages.

2. prohibit all your employees from using labor-saving devices.  No vacuum cleaners for the cleaning crews; no computers for anyone, etc.

3. be happy to be paying more to each employee and having more employees who are less productive.

 

As a result, your products or services will either be more expensive or your return on investment would be well below the market.  So you wouldn't be managing that company very long.

 

It might work in North Korea or Cuba though.  Those examplars of happy society.

post #30 of 51

OK, lets get one thing straight.

 

Battery Production today are already or nearly fully automated.

 

So there is zero news.

 

Now if you like, you can continue to discuss about labour cost etc or what so ever.

post #31 of 51
Quote:
Originally Posted by malax View Post

So if (through some miracle) you managed a company, you would do all of the following:
1. pay your lowest-skilled employees (mailroom, janitorial, parking attendants, etc.) significantly more than minimum (and market) wages.
2. prohibit all your employees from using labor-saving devices.  No vacuum cleaners for the cleaning crews; no computers for anyone, etc.
3. be happy to be paying more to each employee and having more employees who are less productive.

As a result, your products or services will either be more expensive or your return on investment would be well below the market.  So you wouldn't be managing that company very long.

It might work in North Korea or Cuba though.  Those examplars of happy society.

No, it would have to work across the board for all companies or it'll be a winner-takes-all scenario. The idea of keeping costs as low as possible works for small businesses but cripples a community that depends on it. Ie, what would happen to Pittsburgh if they had robots in the mines? But it would be on a much bigger scale. Like I said, it's a different type of responsibility. I would have used Detroit as an example but unfortunately they had some greedy brass on the union side.
post #32 of 51
Originally Posted by AppleInsider View Post
... Monday's report said it's unlikely that iPhone assembly would be moved from China, as most other component supply partners are still based out of the Far East.

 

Not to get too deep into cultural stereotypes here, but when's the last time you ever saw a "Made in India" label?

I wonder if India is even capable of producing high-quality electronics components or tech products.

 

 

Originally Posted by AppleInsider View Post
Tesla's forthcoming mega battery factory in the U.S. has been seen by some as a potential partnership opportunity between the two forward thinking companies.
 

A U.S. battery factory is almost an imperative for Tesla.  I believe the majority of their sales are in the U.S.  And trans-Pacific shipping costs must be huge for heavy items like car batteries.

 

Apple may or may not benefit as much from a U.S. battery factory.  It depends on where final assembly is done.  If it's done in China, then Apple would have to ship batteries across the Pacific for final iPhone etc. assembly, then pay for that same weight again when the products are shipped back here and around the world for sale.  Also, the relative U.S. vs. China vs. rest-of-world sales need to be factored in to determine how many batteries should be produced in the U.S. (if any.)

 

It may not look like Apple needs to be concerned with battery shipment weights.  Jean-Louis Gassee has estimated that Tesla and Apple will ship about the same tonnage of batteries this year:

 

http://www.mondaynote.com/tag/tesla/

 

That's 21,000 metric tons (or 23,100 U.S. "short" tons).

Sent from my iPhone Simulator

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Sent from my iPhone Simulator

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post #33 of 51

AjbDtc826, as much as I can respect the thought behind 'don't automate jobs, let people do those jobs' there are some very real benefits to automating technical jobs such as battery assembly.  Machines are much more capable of producing consistent parts and with higher precision.  This can lead to higher quality parts and allow for advancements that wouldn't have been possible with human assembly.

post #34 of 51

Are those collar stays?

post #35 of 51
Quote:
Originally Posted by ksec View Post

OK, lets get one thing straight.

Battery Production today are already or nearly fully automated.

So there is zero news.

Now if you like, you can continue to discuss about labour cost etc or what so ever.

You are spot on. Apple released a video of their automated battery production a few YEARS back. Look for it in YouTube. Apple moved to this method of battery fabrication because they wanted to make special shapped batteries to fit a bigger battery into an odd-shapped space. When I saw this story it was confusing since Apple has been doing this for years.

As for the loss of labor issues, who do you suppose is making the automated equipment and robots? Elves and fairies???
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #36 of 51
Quote:
Originally Posted by PopinFRESH View Post
 

Not quite. Minimum wage is a price floor. 

Labor being left to establish equilibrium would result in the wage being P3 and the amount of people willing to work for that wage and the amount of jobs employers are willing to offer at that wage are equal (30). Setting the minimum wage at P4, which is higher than the natural wage, would result in More people wanting to work for that wage (Qs), however the amount of jobs employers are willing to provide at that wage is reduced (Qd). In this example that would mean 40 people would be willing to work for the price at P4, but employers would only offer 20 positions. So you would have surplus labor, also known as unemployment. The only instance this would not hold true is if the price floor (minimum wage) is below the natural price at equilibrium, at which point the minimum wage is pointless. Businesses would not be thrilled at seeing their revenue rising exponentially because so is their expense. Their profit would not be rising, and those people now making $100/hr can't buy any more iDevices than they could previously making $8/hr because the price of an iPhone after paying $100/hr for labor would would be $100,000 (I'm not willing to do the actual math to illustrate the point. The point is that Apple would face either shutting their doors because it would not be cost effective to produce the devices with the added expense (not a likely scenario), or increasing the price of the product to match the increase in marginal cost, thus making the device more expensive. This is also known as inflation.

 

 

 

This is standard textbook, but it’s wrong. Labour isn’t like other commodities, as in mass markets labour is also your  demand. There can be a demand famine if the price of labour is cut. And companies employ on demand for their products, not just labour costs.

 

To see this imagine a factory A which produces 100,000 widgets a week, employing 100 employees. To simplify the mathematics all employees are equally good and all produce 1000 widgets. 

 

There is a recession, and the company A subsequently can sell only 50,000 widgets a week. So it only needs 50 workers. It therefore lays off 50 workers. Now, according to standard theory the company would employ 100 workers again if the existing employees would half their wages. However if you look at the demand side, you can see that this sacrifice just wouldn’t work. If the workers take a wage cut the company will just make more profit with the same 50 workers. It doesn’t need 100 workers. Full stop.

 

It gets worse, lets say the reason this company is in trouble is because other companies had to lay off workers, and those workers are now not buying this companies products at the same rate, because they took wage cuts or were unemployed. Similarly the 50 newly unemployed from Company A and the 50 who have taken wage cuts were buying other companies products, but now can’t; you can see a positive reducing feedback loop happens.

 

 If all the workers across all factories assume the standard theory is correct and continue to drop their wages to “clear the market”, a continual feedback makes everybody including the employed poorer, everybody dropping their wages or getting made redundant, companies firing people,demand reduced everywhere else,  workers reducing their wages to compensate - being standard theory aware -  and on, and on. Until everybody is made redundant..


Edited by asdasd - 3/24/14 at 3:46pm
I wanted dsadsa bit it was taken.
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I wanted dsadsa bit it was taken.
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post #37 of 51
The other thing is you get far more real and decent economic activity with demand side rather than supply side incentives. Give people more money and they buy, give companies more tax cuts on profits and they hoard or at best make often stupid investments. Give banks more money and they throw it around like caviar at a Russian billionaire’s wedding.

 



Sure the extra money the companies make often goes into a bank, but that isn’t much different from printing money. If you believe supply side is important, QE is for you - but the kind of right wingers who support tax cuts for businesses don’t like printing money, but both go into banks, and into—— well sometimes into people’s pockets, more likely into accelerated asset prices. Which is where we are now, and apparently is where we can only be with the modern economy. The supply side, low business taxes and the cheapness of money, that used to see house prices reach insane levels, but now sees assets like 20 million revenue companies sell for a few billions.
Edited by asdasd - 3/24/14 at 5:36pm
I wanted dsadsa bit it was taken.
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I wanted dsadsa bit it was taken.
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post #38 of 51
Quote:
Originally Posted by asdasd View Post
 

 

 

This is standard textbook, but it’s wrong. Labour isn’t like other commodities, as in mass markets labour is also your  demand. There can be a demand famine if the price of labour is cut. And companies employ on demand for their products, not just labour costs.

 

To see this imagine a factory A which produces 100,000 widgets a week, employing 100 employees. To simplify the mathematics all employees are equally good and all produce 1000 widgets. 

 

There is a recession, and the company A subsequently can sell only 50,000 widgets a week. So it only needs 50 workers. It therefore lays off 50 workers. Now, according to standard theory the company would employ 100 workers again if the existing employees would half their wages. However if you look at the demand side, you can see that this sacrifice just wouldn’t work. If the workers take a wage cut the company will just make more profit with the same 50 workers. It doesn’t need 100 workers. Full stop.

 

It gets worse, lets say the reason this company is in trouble is because other companies had to lay off workers, and those workers are now not buying this companies products at the same rate, because they took wage cuts or were unemployed. Similarly the 50 newly unemployed from Company A and the 50 who have taken wage cuts were buying other companies products, but now can’t; you can see a positive reducing feedback loop happens.

 

 If all the workers across all factories assume the standard theory is correct and continue to drop their wages to “clear the market”, a continual feedback makes everybody including the employed poorer, everybody dropping their wages or getting made redundant, companies firing people,demand reduced everywhere else,  workers reducing their wages to compensate - being standard theory aware -  and on, and on. Until everybody is made redundant..

 

 

Quote:
Originally Posted by asdasd View Post
 

The other thing is you get far more real and decent economic activity with demand side rather than supply side incentives. Give people more money and they buy, give companies more tax cuts on profits and they hoard or at best make often stupid investments. Given bank more money and they throw it around like caviar at a Russian billionaire’s wedding.

 

Sure the extra money the companies make often goes into a bank, but that isn’t much different from printing money. If you believe supply side is important, QE is for you - but the kind of right wingers who support tax cuts for businesses don’t like printing money, but both go into banks, and into—— well sometimes into people’s pockets, more likely into accelerated asset prices. Which is where we are now, and apparently is where we can only be with the modern economy. The supply side, the cheapness of money, used to see house prices reach insane levels, and now sees  assets like the 20 million revenue companies sell for a few billions.

 

You obviously ignored the second paragraph in which you quoted me. You tried to assume a single commodity market with simple math and then felicitously assume away reality. A recession is a symptom not an economic shock. You can't just plop your fictitious economy into a recession and assume the result as fact. The thing about dealing with simple math you wanted to use is that you can only deal in a single snapshot in time. A free market will maintain equilibrium indefinitely until it is impacted by an economic shock. The topic of this article is an example of such an economic shock. A recession is not an economic shock, it's a result of an economic shock, a symptom.

 

In your last post I quoted, you make an erroneous statement about supply side vs demand side incentives (which would also be economic shocks) and then fail miserably trying to justify your point of view. "Give people more money and they buy", what do they buy and exactly how is that materially different than what the companies (you obviously hate) buy?  "Give companies more tax cuts on profits"? Profits are not taxed, Income before interest and taxes are what is taxed. Profit/loss is what is left over after subtracting all expenses including interest and taxes from income. Obviously companies are irrational and only "hoard or at best make often stupid investments" unlike people who buy (what do they buy again?).

 

I'd continue but your last paragraph jumps around so incoherently It would be a waste of my time trying to parse your delusions and I have to go do that thing you clearly hate, try to make a profit.

 

-PopinFRESH

P.S. I love the lead in, obviously you know more than those stupid economists who write text books.
Edited by PopinFRESH - 3/24/14 at 6:23pm
post #39 of 51
Quote:
Originally Posted by Macky the Macky View Post


You are spot on. Apple released a video of their automated battery production a few YEARS back. Look for it in YouTube. Apple moved to this method of battery fabrication because they wanted to make special shapped batteries to fit a bigger battery into an odd-shapped space. When I saw this story it was confusing since Apple has been doing this for years.

As for the loss of labor issues, who do you suppose is making the automated equipment and robots? Elves and fairies???


And it isn't just Apple, it is the industry as a whole has long moved to fully automated production.

That is why i said Elon's so called Giga battery plants doesn't makes sense. There are NO economy of scale here. We have literally reach it.

post #40 of 51
Quote:
Originally Posted by SockRolid View Post
 

 

Not to get too deep into cultural stereotypes here, but when's the last time you ever saw a "Made in India" label?

I wonder if India is even capable of producing high-quality electronics components or tech products.

 

 

A U.S. battery factory is almost an imperative for Tesla.  I believe the majority of their sales are in the U.S.  And trans-Pacific shipping costs must be huge for heavy items like car batteries.

 

 

Coincidentally I noticed a Made in India "label" yesterday--on an iron manhole cover.  This boggles my mind.  They must weigh 50 pounds each and it's cost effective to bring them from India to the US?  Most of the cost must be in the shipping.  So if that makes sense, then shipping a battery that is worth 100 times more might very well make economic sense.

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