Foxconn chairman raises uncertainties over building displays for Apple in USA

Posted:
in General Discussion
Apple manufacturing partner Foxconn has yet to decide whether or not to proceed with plans to jointly invest in a $7 billion facility in the U.S., with Chairman Terry Gou expressing concerns over government incentives, supply chain issues, and a shortage of skilled labor in the country.




Speaking at an event commencing the construction of a new display panel production facility in southern China, Chairman Gou revealed he had returned from a visit to Washington, D.C., reports Nikkei, though it was not confirmed whether he had met officials in the Trump administration.

Gou questioned whether government officials were capable of attracting foreign investors in a short timeframe. Major projects, such as the proposed Apple-Foxconn facility that relies heavily on investment from overseas, could be put at risk if the government is considered by investors as too slow to be helpful in completing such deals.

"I am concerned as to whether the U.S. can resolve all the investment issues in only a few months' time," said Gou. "Does the U.S. offer incentive programs for foreign investors? They'll need to pass bills first, and we'll need to wait for American authorities to make a decision first."
"I am concerned as to whether the U.S. can resolve all the investment issues in only a few months' time" - Foxconn chairman Terry Gou
Gou also claimed the U.S. lacked the supply chains and skilled labor required for display panel production, which would be the main focus of the proposed facility. A lack of a skilled workforce and the inability to acquire materials would give the U.S. a considerable disadvantage when attempting to attract investment, whereas China's existing manufacturing industries already have the supply chains and the eager workforce in place.

Despite the drastically different manufacturing environments, Gou is still keen to work with both the United States and China for production, and does not wish to "see a trade war happen" between the two. "I am not willing to choose between [the U.S. and China], why should I give up on any market?"

The chairman does still hope the "top two economies in the world" can work together peacefully. "I can forsee that the two will eventually work together to grow [their] economies and deliver beneficial outcome for many. If they don't, then everyone will be losers."

The Apple-Foxconn facility in the U.S. is believed to potentially create between 30,000 and 50,000 jobs, with the higher cost of production thought to be a better option than paying to import display panels from China. A second molding plant is also on the cards, with Pennsylvania thought to be a possible location for the facility.

The talks of increased manufacturing in the U.S. is likely to be a response to campaign promises of President Donald Trump, to increase domestic job opportunities by driving companies to manufacture goods in the country, including Apple. Part of the campaign involved threats to make it more expensive for companies to import their goods from abroad, including Mexico and China, while also hinting at concessions on land and electricity, as well as tax, to encourage home-grown production efforts.

Other Apple suppliers have also expressed an interest in bringing manufacturing to the United States, because of Trump's policies. Sharp, owned by Foxconn, and chip maker Taiwan Semiconductor Manufacturing Co (TSMC) have also been linked to potential manufacturing investments.
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Comments

  • Reply 1 of 32
    Lol @ the notion of the USA lacking "skilled labor"
    when they were hiring children off the street for a long time. 

    I Smell fear. How dare the USA bring back a product economy that benefits its people!
    tallest skil
  • Reply 2 of 32
    melgrossmelgross Posts: 30,166member
    To be correct, much of what we're reading about manufacturing coming to the USA was being discussed for years. So sure, the publicity of Trump's statements is being used, but in reality, Gou has been talking about this possibility for at least three years, and has equivocated about it for the same reasons he's now giving, as well as lawsuits he's worried about here.

    the main reason why some manufacturing has been coming back here, as well as new manufacturing, is pretty simple. As costs rise in China faster than they are here, manufacturers are looking at a way to broaden their manufacturing base out of the country. In fact, a major Chinese auto manufacturer is building a plant here to manufacture cars to sell here, for the first time, but to also ship back to China. This plant was planned back two years ago, and is being built. I assume that Trump will take credit for it.
    edited March 2017 apple jockeySpamSandwich
  • Reply 3 of 32
    sandorsandor Posts: 404member
    Lol @ the notion of the USA lacking "skilled labor"
    when they were hiring children off the street for a long time. 

    I Smell fear. How dare the USA bring back a product economy that benefits its people!

    Its not fear, it is the boots-on-the-ground realization that the current administration is full of hot air, and has no real plan to fill the gap of skilled labor.


    existing US-based manufacturers told Trump the same thing.
    it isn't a lack of jobs, it is a lack of skilled labor to fill the vacant jobs that exist.


    The US failed the menial laborers of 20th century factories, they simply laid them off & provided no opportunity to re-train for the skilled factory workers needed in 21st century factories.

    we have known it for some time as well. there are jobs open in US manufacturing, but no one to fill them.

    http://www.industryweek.com/skilled-workers
    http://www.gereports.com/post/115317859023/a-shortage-of-skilled-workers-threatens-manufacturings-r/
    http://www.scdigest.com/ONTARGET/13-11-06-3.PHP?cid=7555
    http://www.cnbc.com/2015/07/20/survey-shows-growing-us-shortage-of-skilled-labor.html
    http://usatoday30.usatoday.com/news/opinion/forum/story/2012-07-02/public-private-manufacuting/56005466/1
    https://www.washingtonpost.com/business/economy/us-manufacturing-sees-shortage-of-skilled-factory-workers/2012/02/17/gIQAo0MLOR_story.html
    http://www.nytimes.com/2010/07/02/business/economy/02manufacturing.html

    Chalk it up to one more thing where the current administration focused on rhetoric rather than solutions.
    "we need to ban muslim immigrants"  ***except from the countries where the terrorists & $$ came from, because of financial interests. S____ Ar___.
    "two state, one state, whichever one both sides like"
    "no one knew how complex healthcare is"
    "we need to increase US manufacturing"

    edited March 2017 apple jockeyjony0
  • Reply 4 of 32
    asdasdasdasd Posts: 4,881member
    sandor said:
    Lol @ the notion of the USA lacking "skilled labor"
    when they were hiring children off the street for a long time. 

    I Smell fear. How dare the USA bring back a product economy that benefits its people!

    Its not fear, it is the boots-on-the-ground realization that the current administration is full of hot air, and has no real plan to fill the gap of skilled labor.


    existing US-based manufacturers told Trump the same thing.
    it isn't a lack of jobs, it is a lack of skilled labor to fill the vacant jobs that exist.


    The US failed the menial laborers of 20th century factories, they simply laid them off & provided no opportunity to re-train for the skilled factory workers needed in 21st century factories.

    we have known it for some time as well. there are jobs open in US manufacturing, but no one to fill them.

    http://www.industryweek.com/skilled-workers
    http://www.gereports.com/post/115317859023/a-shortage-of-skilled-workers-threatens-manufacturings-r/
    http://www.scdigest.com/ONTARGET/13-11-06-3.PHP?cid=7555
    http://www.cnbc.com/2015/07/20/survey-shows-growing-us-shortage-of-skilled-labor.html
    http://usatoday30.usatoday.com/news/opinion/forum/story/2012-07-02/public-private-manufacuting/56005466/1
    https://www.washingtonpost.com/business/economy/us-manufacturing-sees-shortage-of-skilled-factory-workers/2012/02/17/gIQAo0MLOR_story.html
    http://www.nytimes.com/2010/07/02/business/economy/02manufacturing.html

    Chalk it up to one more thing where the current administration focused on rhetoric rather than solutions.
    "we need to ban muslim immigrants"  ***except from the countries where the previous foreign-born terrorist came from, because of financial interests
    "two state, one state, whichever one both sides like"
    "no one knew how complex healthcare is"
    "we need to increase US manufacturing"

    I am no fan of trump but this lack of skilled labour is hardly caused by his regime. A population of 300 m plus with supposedly the best technical universities  and technical institutions in the world should find it easy enough to adapt within a few years though, right? in the meantime bring in skilled immigrants. 

    If previous regimes had in fact invested in the kind of technical education needed, rather than spending too much, arguably, on gender studies. 
  • Reply 5 of 32
    ronnronn Posts: 235member
    The US can't compete with China and other nations that pay extreme lowly wages and have horrible working conditions (many of those conditions that violate local labor laws). The sheer size of their skilled force and the portability of that force gives them a huge advantage that can't be duplicated in the US.

    This problem has been long in the making and we are too shortsighted in our responses. When our educational systems need to be fined tuned, they are being undermined and hampered.
    apple jockeysatchmo99
  • Reply 6 of 32
    mtbnutmtbnut Posts: 181member
    So coal miners can't be retrained to assemble displays at Foxconn Appalachia? 

    I'll gladly pay $3,000 for a 19" LCD display just to subsidize the higher pay and benefits American workers will demand. 

    CAN I GET A USA!! USA!! GO TRUMP!!! HIGH GIVE?! 

    Anyone? 

    ...crickets...
    edited March 2017
  • Reply 7 of 32
    sandorsandor Posts: 404member
    asdasd said:
    sandor said:
    Lol @ the notion of the USA lacking "skilled labor"
    when they were hiring children off the street for a long time. 

    I Smell fear. How dare the USA bring back a product economy that benefits its people!

    Its not fear, it is the boots-on-the-ground realization that the current administration is full of hot air, and has no real plan to fill the gap of skilled labor.


    existing US-based manufacturers told Trump the same thing.
    it isn't a lack of jobs, it is a lack of skilled labor to fill the vacant jobs that exist.


    The US failed the menial laborers of 20th century factories, they simply laid them off & provided no opportunity to re-train for the skilled factory workers needed in 21st century factories.

    we have known it for some time as well. there are jobs open in US manufacturing, but no one to fill them.

    http://www.industryweek.com/skilled-workers
    http://www.gereports.com/post/115317859023/a-shortage-of-skilled-workers-threatens-manufacturings-r/
    http://www.scdigest.com/ONTARGET/13-11-06-3.PHP?cid=7555
    http://www.cnbc.com/2015/07/20/survey-shows-growing-us-shortage-of-skilled-labor.html
    http://usatoday30.usatoday.com/news/opinion/forum/story/2012-07-02/public-private-manufacuting/56005466/1
    https://www.washingtonpost.com/business/economy/us-manufacturing-sees-shortage-of-skilled-factory-workers/2012/02/17/gIQAo0MLOR_story.html
    http://www.nytimes.com/2010/07/02/business/economy/02manufacturing.html

    Chalk it up to one more thing where the current administration focused on rhetoric rather than solutions.
    "we need to ban muslim immigrants"  ***except from the countries where the previous foreign-born terrorist came from, because of financial interests
    "two state, one state, whichever one both sides like"
    "no one knew how complex healthcare is"
    "we need to increase US manufacturing"

    I am no fan of trump but this lack of skilled labour is hardly caused by his regime. A population of 300 m plus with supposedly the best technical universities  and technical institutions in the world should find it easy enough to adapt within a few years though, right? in the meantime bring in skilled immigrants. 

    If previous regimes had in fact invested in the kind of technical education needed, rather than spending too much, arguably, on gender studies. 

    i definitely agree that re-training of manufacturing laborers has been completely ignored from Reagan on. Trickle down economics, NAFTA, eroding of public school systems, they all focus on extreme cost-cutting in the short term, and in no way reward long-term re-training type programs.

    The GI bill allowing so many WWII vets to get post-high school training is a huge part of what made that generation able to out-earn and out-produce their parents. 
    Then the baby boomers get shafted with nothing but stock price-driven cost cutting, expense saving methods of streamlining matched to automation of the late-20th century and a blatant lack of governmental investment into any kind of worker-driven legislation.
    Even a raise in the federal minimum wage for full time workers can give the disappearing middle class the cushion to advance their own abilities via edu and tech training.

    It is definitely a multi-decade cascade effect leading to rampant unfilled jobs in the 21st century US manufacturing sector.


    But previous White Houses have simply chosen to overlook it/remain mum, this White House has made its battle cry is "We Have the Answers!"
    but their lack of actual answers is a smack-in-the-face wake up call.


    edited March 2017 apple jockey
  • Reply 8 of 32
    asdasdasdasd Posts: 4,881member
    mtbnut said:
    So coal miners can't be retrained to assemble displays at Foxconn Appalachia? 

    I'll gladly pay $3,000 for a 19" LCD display just to subsidize the higher pay and benefits American workers will demand. 

    CAN I GET A USA!! USA!! GO TRUMP!!! HIGH GIVE?! 

    Anyone? 

    ...crickets...
    You are over estimating the cost of labour in higher priced items. 
    ronnmarcusj0015
  • Reply 9 of 32
    asdasdasdasd Posts: 4,881member
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    apple jockeymarcusj0015
  • Reply 10 of 32
    quadra 610quadra 610 Posts: 6,729member
    The workforce that Foxconn could put together in a week in China would take months in the US. Not even mentioning wages here. 
    jony0
  • Reply 11 of 32
    sandorsandor Posts: 404member
    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 

    Or, if you want to follow Foxconn's take on it, in new factories, those jobs will simply be replaced by robots.

    It is interesting to read about Foxconn's automation - if you look between the lines, there are even jobs that the Chinese won't do now (and those, therefore, are the ones Foxconn has been looking to fill with robots first)

    http://www.theverge.com/2016/12/30/14128870/foxconn-robots-automation-apple-iphone-china-manufacturing

    edited March 2017
  • Reply 12 of 32
    flaneurflaneur Posts: 4,432member
    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    And that supply chain has been building since the 1960s, with the famous "Japanese transistor radio." I bought my first reel-to-reel tape recorder, a Sony, in 1966. There was literally nothing made in the US to compare to it. Sony, Toshiba and Yamaha destroyed the US stereo receiver business by the end of the decade.

    Somewhere in there, American color TV manufacturing, which was always a joke because of the need to make the sets look like furniture, started to die in the face of Trinitrons, Sharps, Panasonics, etc.

    The Asian supply chain is now more than two human generations old,, and it representa an enormous reservoir of engineering and mass production expertise. 

    America threw it away 50 years ago, mostly out of sloth, distraction and stupidity. The time to act was when the country was eating itself up over an immoral war against anticolonialism in Southeast Asia, while Japan's government was actively supporting R&D in electronics. Then Taiwan and Korea joined in. The same thing happened in the auto industry.

    Afterthought: not all is lost, obviously. Silicon Valley represents —especially Apple — a new post-industrial direction of some kind where the stock in trade is knowledge, both human and artificial. I take it that this developed firstmost in the US because of its tradition of free and liberal thought, along with the cultural ferment provided by lots of immigration and general loose cultural movement. Hopefully we can keep that up.

    edited March 2017 sandorasdasdjony0badmonk
  • Reply 13 of 32
    flaneurflaneur Posts: 4,432member
    melgross said:
    To be correct, much of what we're reading about manufacturing coming to the USA was being discussed for years. So sure, the publicity of Trump's statements is being used, but in reality, Gou has been talking about this possibility for at least three years, and has equivocated about it for the same reasons he's now giving, as well as lawsuits he's worried about here.

    the main reason why some manufacturing has been coming back here, as well as new manufacturing, is pretty simple. As costs rise in China faster than they are here, manufacturers are looking at a way to broaden their manufacturing base out of the country. In fact, a major Chinese auto manufacturer is building a plant here to manufacture cars to sell here, for the first time, but to also ship back to China. This plant was planned back two years ago, and is being built. I assume that Trump will take credit for it.
    Yep, the story here is throwing too much emphasis on the Trump effect, in my opinion. Here's a story from 2012 about Foxconn's US big-screen dreams:

    http://www.techradar.com/news/television/foxconn-rumored-to-be-planning-us-factory-1111258

    I figure that shipping large displays on the ocean is crazy enough to make a US facility seem reasonable. Presumably the glass is one thing the US can actually supply.



  • Reply 14 of 32
    melgrossmelgross Posts: 30,166member
    ronn said:
    The US can't compete with China and other nations that pay extreme lowly wages and have horrible working conditions (many of those conditions that violate local labor laws). The sheer size of their skilled force and the portability of that force gives them a huge advantage that can't be duplicated in the US.

    This problem has been long in the making and we are too shortsighted in our responses. When our educational systems need to be fined tuned, they are being undermined and hampered.
    The cost to manufacture many items in China began to equal the cost here by the end of 2015. It's a myth that factory workers there are paid a couple of dollars a day. Wages in China have been rising in many sectors by about 10-20% per YEAR! The estimated size of the middle class in China is between, depending on how you measure it, 350 and 500 million. Benefits have increased as well. While it's true that enforcement is fairly lax, the bigger manufacturers have been increasing payouts by large amounts. And enforcement here is lax as well.

    one major reason for this is because wages and benefits outside of manufacturing, and out of the manufacturing centers, have been rising at substantial rates as well. As a result, Chinese manufacturers are running out of labor as many go back to their homes in the hinterlands, and new workers are staying there.

    chinese manufacturers are seeking cheaper places to manufacturer, and are moving to lower cost countries such as Vietnam. They are also coming here, as time and shipping are a big factor.
    edited March 2017
  • Reply 15 of 32
    SpamSandwichSpamSandwich Posts: 28,371member
    ronn said:
    The US can't compete with China and other nations that pay extreme lowly wages and have horrible working conditions (many of those conditions that violate local labor laws). The sheer size of their skilled force and the portability of that force gives them a huge advantage that can't be duplicated in the US.

    This problem has been long in the making and we are too shortsighted in our responses. When our educational systems need to be fined tuned, they are being undermined and hampered.
    One thing that would help US competitiveness would be a Federal Minimum Wage of zero. A minimum wage at the Federal level (not the state level, mind you) is surely an unconstitutional imposition of an arbitrary wage on US businesses. The Federal government has no constitutional authority to dictate wages. This is something I'd like for the SCOTUS to revisit, specifically, the case of United States v. Darby—312 U.S. 100 (1941) and have this abomination overturned. Arbitrary wage floors prevent unskilled workers from getting a foot in the door and have contributed to widespread joblessness among the young, especially among so-called minority youth. Wages can only be determined fairly via negotiation and with the pressures of market forces coming into play.
    edited March 2017
  • Reply 16 of 32
    melgrossmelgross Posts: 30,166member
    flaneur said:
    melgross said:
    To be correct, much of what we're reading about manufacturing coming to the USA was being discussed for years. So sure, the publicity of Trump's statements is being used, but in reality, Gou has been talking about this possibility for at least three years, and has equivocated about it for the same reasons he's now giving, as well as lawsuits he's worried about here.

    the main reason why some manufacturing has been coming back here, as well as new manufacturing, is pretty simple. As costs rise in China faster than they are here, manufacturers are looking at a way to broaden their manufacturing base out of the country. In fact, a major Chinese auto manufacturer is building a plant here to manufacture cars to sell here, for the first time, but to also ship back to China. This plant was planned back two years ago, and is being built. I assume that Trump will take credit for it.
    Yep, the story here is throwing too much emphasis on the Trump effect, in my opinion. Here's a story from 2012 about Foxconn's US big-screen dreams:

    http://www.techradar.com/news/television/foxconn-rumored-to-be-planning-us-factory-1111258

    I figure that shipping large displays on the ocean is crazy enough to make a US facility seem reasonable. Presumably the glass is one thing the US can actually supply.



    Most people know nothing about manufacturing. They think that it's science fiction, where the hero invents a new weapon on Monday, and by Friday it's in the hands of all the armed forces.

    it can take a year just to plan a new plant. Then getting all the permits, ensuring the power, sewage, roads, etc. takes time as well. Then they've got to build it. Look at how long it's taking to,build Apple's new campus. It won't take that long, but it can take at least a year, and more often 18 months to two years. Then the machinery needs to be installed, tested, and pilot production testing commences. Only after all of that, which includes employee training, can the early testing of actual product begin. Then begins fine tuning.

    i'm not including negotiations with country, and possibly city authorities over whether the plant will be allowed at all, where, when, and how construction will affect current populations. You don't just plop a plant down anywhere. Studies are needed to see whether proper workers are available, and environmental studies need to be done as well.

    so if we see manufacturer's saying that they will have a plant up in a year, or even two, it has nothing to do with Trump, because they were planned at least a year ago, maybe more. One last thing. Many major manufacturing facilities need custom modified equipment, and those orders are put in a year or two before the equipment is needed for installation. There's a very big, and long chain of events that have to take place before a plant is working.

    Glass is an interesting example. Corning makes gorilla glass. But they make sheets. Those sheets get shipped to China, where a company (Lens Technology) cuts them up for phones and tablets, cuts the holes with lasers and polishes the edges. They do that for Apple, and some others. Why doesn't Corning do that? Because they don't want to!
    edited March 2017
  • Reply 17 of 32
    melgrossmelgross Posts: 30,166member

    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    Ok, so let's get this right. In China, where their phones are assembled, Foxconn and others don't have an assembly line of 60 people working on these phones. I really don't know why you would guess any of this, because that all you've done, is guess. These iPhone assembly lines have 100,000 people on them, and there are several of those lines. Foxconn has said that they have about 400,000 people assembling iPhones. Those people, earn about $6 an hour, excluding benefits. Assembly value of iPhones is about $9 per phone.

    the biggest problem here, is that we won't get people to work the way they do in third world countries (and the way they won't work there in too many more years).

    they have hundreds of thousands of people moving hundreds of miles from their homes to live in barracks, where they have a single size bed, a locker at the foot of that bed, and a locker on the wall above the bed. They buy from the company store (just the way the song goes "Sold My Soul to the Company Store"), and stay there for 6 months to two years, sending money home to their families.

    factories used to work that way here too, but not anymore. There is no way an American worker, or for that matter, workers from any developed country, would live that kind of life. It just isn't going to happen. Forget the costs. If it comes here, it will be done with factories that are totally automated, giving us almost no new Jobs.
    edited March 2017
  • Reply 18 of 32
    SpamSandwichSpamSandwich Posts: 28,371member
    melgross said:

    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    Ok, so let's get this right. In China, where their phones are assembled, Foxconn and others don't have an assembly line of 60 people working on these phones. I really don't know why you would guess any of this, because that all you've done, is guess. These iPhone assembly lines have 100,000 people on them, and there are several of those lines. Foxconn has said that they have about 400,000 people assembling iPhones. Those people, earn about $6 an hour, excluding benefits. Assembly value of iPhones is about $9 per phone.

    the biggest problem here, is that we won't get people to work the way they do in third world countries (and the way they won't work there in too many more years).

    they have hundreds of thousands of people moving hundreds of miles from their homes to live in barracks, where they have a single size bed, a locker at the foot of that bed, and a locker on the wall above the bed. They buy from the company store (just the way the song goes "Sold My Soul to the Company Store"), and stay there for 6 months to two years, sending money home to their families.

    factories used to work that way here too, but not anymore. There is no way an American worker, or for that matter, workers from any developed country, would live that kind of life. It just isn't going to happen. Forget the costs. If it comes here, it will be done with factories that are totally automated, giving us almost no new Jobs.
    Agree for the most part. What may come back to the US are more logistics jobs, management jobs, automated factory maintenance jobs, and so on, much of which are higher paying positions.
    edited March 2017
  • Reply 19 of 32
    melgrossmelgross Posts: 30,166member
    melgross said:

    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    Ok, so let's get this right. In China, where their phones are assembled, Foxconn and others don't have an assembly line of 60 people working on these phones. I really don't know why you would guess any of this, because that all you've done, is guess. These iPhone assembly lines have 100,000 people on them, and there are several of those lines. Foxconn has said that they have about 400,000 people assembling iPhones. Those people, earn about $6 an hour, excluding benefits. Assembly value of iPhones is about $9 per phone.

    the biggest problem here, is that we won't get people to work the way they do in third world countries (and the way they won't work there in too many more years).

    they have hundreds of thousands of people moving hundreds of miles from their homes to live in barracks, where they have a single size bed, a locker at the foot of that bed, and a locker on the wall above the bed. They buy from the company store (just the way the song goes "Sold My Soul to the Company Store"), and stay there for 6 months to two years, sending money home to their families.

    factories used to work that way here too, but not anymore. There is no way an American worker, or for that matter, workers from any developed country, would live that kind of life. It just isn't going to happen. Forget the costs. If it comes here, it will be done with factories that are totally automated, giving us almost no new Jobs.
    Agree for the most part. What may come back to the US are more logistics jobs, management jobs, automated factory maintenance jobs, and so on, much of which are higher paying positions.
    What I'm amazed at is how people are so easily snookered into believing that it's trade deals that are eliminating jobs here. While a few jobs are lost, jobs are also created.

    but by far, most manufacturing jobs lost here are from automation. When there used to be 900 people welding auto chassis, noW there are robots, and 50 workers maintaining those robots. Where 1,000 people used to paint cars, now robots do that too, with 75 people maintaining these lines.

    what do people expect? Every time we hear that productivity has risen, it's because automation has allowed more product with the same number of jobs, or fewer jobs. But we're expected to believe that productivity increases are always GOOD.

    back when productivity inrcreases were a result of minor increases in efficiency, and sales increased faster than population, productivity increases were essential to increase wages, benefits and overall economic health. That's because most product categories were new, and most people didn't have those products. But now, productivity increases are squeezed out of production in all areas. There's no real squeezing left to do. But automation is increasing productivity beyond what population increases can absorb. That means fewer workers, because the number of population increases isn't enough to cover increased production, because people already have those products, and so sales increases are more dependent on population increases and replacement.

    we see manufacturers building small increases in product, and where markets are saturated, such as we're seeing in smartphones, lowering costs is paramount. So now, automation replaces workers instead of just being additive. That's where jobs are going, not overseas. Well, some are going, but not as many as one may think.

    so, while you're right, as higher end jobs are needed, there are just a small number of those jobs when compared to the jobs lost. And while I'm willing to take the hit for not sounding egalitarian here, not everyone is capable of getting the education, or training, to do those Jobs. I've got two friends, one an ex cop, another an ex train driver, both of whom tried college for a year and dropped out. If you knew them, you'd know why. Both voted for Trump, by the way, and both will suffer from that vote, but they don't know that quite yet.
    edited March 2017
  • Reply 20 of 32
    asdasdasdasd Posts: 4,881member
    melgross said:

    asdasd said:
    Take an iPhone for instance. Let's say that an assembly line in China has 60 people earning $2 an hour. Let's say the line produces 60 iPhones an hour (deliberately low balling here to simply the maths). 

    So the labour cost of assembly of an iPhone is $2. 

    Moving to the US and paying $12 an hour increases the labour cost per iPhone by $10. However this is likely a huge over estimate because 60 phones per hour is ludicrously small. If it were 600 an hour the cost increase would be from $.2 to $1.2 or $1. 

    And you could invest in machinery to reduce that further. 

    For low end items these figures matter. Apple could absorb it. 

    The real issue is the supply chain. It's mostly in Asia. 
    Ok, so let's get this right. In China, where their phones are assembled, Foxconn and others don't have an assembly line of 60 people working on these phones. I really don't know why you would guess any of this, because that all you've done, is guess. These iPhone assembly lines have 100,000 people on them, and there are several of those lines. Foxconn has said that they have about 400,000 people assembling iPhones. Those people, earn about $6 an hour, excluding benefits. Assembly value of iPhones is about $9 per phone.

    the biggest problem here, is that we won't get people to work the way they do in third world countries (and the way they won't work there in too many more years).

    they have hundreds of thousands of people moving hundreds of miles from their homes to live in barracks, where they have a single size bed, a locker at the foot of that bed, and a locker on the wall above the bed. They buy from the company store (just the way the song goes "Sold My Soul to the Company Store"), and stay there for 6 months to two years, sending money home to their families.

    factories used to work that way here too, but not anymore. There is no way an American worker, or for that matter, workers from any developed country, would live that kind of life. It just isn't going to happen. Forget the costs. If it comes here, it will be done with factories that are totally automated, giving us almost no new Jobs.
    For Christ's sake. I was using 60 people producing 60 iPhones an hour (ie one each) as an example of how, even in that extremely unlikely case of one per worker per hour, increasing the wages are not that significant relative to the component costs of the iPhone . I was clear about that. 

    If the production is higher than the per unit costs are lower. I also said that. 

    So American workers in minimum wage (or higher) could produce iPhones with little effect on Apples margins. 

    Aa for whether they will stay in barracks? Why would they have to? They will be earning enough to rent somewhere (the factories won't be in expensive cities).

     That said if I were offered a place when younger with free (or cheap) housing and food I might have taken it. And of course that's exactly what people who join the army or are oil workers often do. 


    marcusj0015
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