Market Currents
Might iPhones one day be manufactured in the U.S.? If someone 30 years ago told you Japanese...
-
Sunday, August 5, 2012, 8:08 AM ETMight iPhones one day be manufactured in the U.S.? If someone 30 years ago told you Japanese auto manufacturers would now have such a large production footprint here, would you have believed them? "The U.S. has a long history of demanding that companies build here if they want to sell here," says a former Reagan official who helped start the process of Japan moving to the States. "If Apple or Congress wanted to make the valuable parts of the iPhone in America, it wouldn't be hard."
Other date
TECH ETFs IN FOCUS
Latest Tech Articles
This news story has 23 comments:
We need to stop trying to get back to manufacturing. It's low skill, low margin work with high switching costs, and productivity gains will continue to reduce the number of people it employs.
We need to START educating and training our population so that they can take advantage of the millions of jobs out there that companies can't seem to find qualified applicants for.
Apprentice schools should be a viable and respectable choice for students to pursue a career in welding, automotive work, electrical work, etc. The only issue is that society sad brainwashed these kids to equate manual labor with low status. In my father's day, some of the most respected men where those who did an honest day's work at the shipyard.
A shift needs to happen in the education system which allows for those students who would excel in such settings to be allowed pursue such a career, rather than being forced into a higher educational system which it is almost impossible to graduate or even find a job. The opportunity cost of those 4 years could be better spent learning a trade.
But how likely is this?
But for the record, there is nothing at all wrong with trade schools, nor is there anything wrong with directing the less academically inclined students toward these paths. Add in a little business skill and those kids could end up running their own businesses and making a very nice living, providing real value unlike some industries (*cough* financial services).
We have to realize that not everyone can be Bill Gates, Steve Jobs, or Warren Buffett, nor can everyone trade stocks for a living.
We NEED real businesses that provide real value behind those stocks, or nothing works.
The reality is that some people won't ever make it past construction worker, but those people can still add a lot of value and shouldn't be hung out to dry in downturns.
However, that sounds somewhat like a bad word that has recently been demonized by the rabid right:
"From each according to his ability, to each according to his need"...
So good luck selling that idea after the PACs buy the elections. :)
Perhaps students should be required to leave high school with some discernible skill such as writing code, laying brick, baking cakes, etc. But these options won't be available until a seismic change in our society's perception of "worth."
I do disagree with your last statement - the notion that every member of society should be propped up. Perhaps I lean a little top much towards the Austrian School of thought - but I feel the government should play no part in subsidizing the lifestyles of its constituents in downturns, rich or poor.
"but those people can still add a lot of value and shouldn't be hung out to dry in downturns."
And just what exactly do you mean by this statement?
> lifestyles of its constituents in downturns, rich or poor.
Perhaps not the (unnecessarily lavish) "lifestyles", but what about the "lives" (i.e., subsistence)?
You heard me: reasonable social safety nets.
I shouldn't be surprised anymore by the degree of cognitive dissonance most of you maintain, but sometimes I still am.
You're basically saying, on the one hand, "We need people who can do Trade X! All you high school kids, go learn how to do Trade X! Forget college, just be an employee in Trade X!"
Then on the other hand, "But if Trade X goes away...too bad, you should have planned for retooling your career that like your Harvard MBA professors told you! What? You didn't get a college degree? Wow, that was stupid of you! Oh well, suckers, you make your own choices!"
Face it: Blue collar workers can't shift gears as easy as white collar workers.
It's easy for most finance people to just jump on other investment vehicles: just stop leeching off of one industry and start leeching off of another. It's easy (or at least, common) for most programmers and engineers to keep up with their ever-changing fields: much of this training is even paid by employers. Etc, etc, etc.
But, to use simplistic metaphor, what does a door man do when the doors start to open themselves? What does someone who makes Widget A do when A isn't needed anymore and Widget B is now all the rage?
What do you do with construction workers when a 3D printer can basically print a house? (http://invent.ge/NVUGKu)
Back in the days before globalization, companies handled this. The contract was often something like, "If you always do a good job, you'll always have a good job" (IBM)...and maybe that's far too utopian these days, but perhaps the new contract is "If you always do a good job, you'll always be able to get a good job" (through frequent retraining and other education).
Not so today. "Sorry fella, we have shareholders to think about! Here's your pink slip!"
Certainly existing safety nets like unemployment are far from optimal as implemented today. For example, people should be required to do something or learn something for those UE paychecks (perhaps with liberal leave policies for actual job hunting activities).
We have to either:
1) retrain displaced workers to be productive again,
2) throw them to wolves and accept a growing mass of displaced workers which will one day blow up in our faces, or
3) recognize the gradual reduction in the need for full employment (discussed fairly clearly here: http://bit.ly/NiLdba).
I'm guessing you two (emburns and my good buddy wyo) favor #2. :)
Everyone is entitled to their opinion, but perhaps we should look at the whole chess board, rather than just our own piece? Food for thought.
to force companies to manufacture in the US in order to sell in the US
this is a failed idea and leads to lower productivity, lower growth and lower pay - the main proponents are in Argentina and Venezuela
most of the value in an iPhone is generated in the US - in the software, the apps, the design, the retail, the marketing, the glass
the components and the assembly are a small part of the value chain
it is a nonsense to think that forcing these jobs back to the US at $2 per hour is a good thing - only a fool would believe and if you somehow could force them back and force the company to pay $10 to $15 per hour - the outcome would be obvious - say good bye to the high paying jobs that actually are here that relate to this
this is the folly of the anti-outsourcing crowd - companies arrange their supply chains to compete and the result is an efficient growing company with often higher paying and sustainable jobs in the US where the comparative advantage is a higher skilled more productive workforce.
the car industry is a shining example of what happens when productivity and proximity trump labor cost - the jobs come back by themselves without some fool bureaucrat having to intervene. albeit they are non-unionized and generally in right to work states which in and of itself is indicative of the drag that Obama and organized labor create
E is for Economic Efficiency and Productivity - the only thing that underpins long run sustainable growth
E
There is your answer. There was no outcry for Japan to build cars here. There was no outcry to make t-shirts here. And there will be no outcry to make Iphones here.
Americans in general are conditioned to use price as a primary driver in their consumer decisions. As long as that is the case we'll keep buying the cheapest stuff and it will be made in the cheapest location. I generally try to buy American - but I think I'm in about the 3% of the population that actually checks to see where something is made. And thats just the way it is.
Labor costs, or even semi-skilled labor are other issues. While Foxconn workers sign a waiver that allows them to work excessive hours under tough conditions, that sort of concession between employers and workers is simply not possible in the U.S. So it's not the labor cost, but the yield potential. It would not be possible to produce as many iPhones a day in the U.S. as in China. Those long lines of people waiting to work at Foxconn is something that will not be duplicated in the U.S.
THINK it can be duplicated, but tomorrow, there would be numerous investigations and law suits against it.
WHY put up with that hassle?
This reminds me about a few articles on the Financial Times discussing competitiveness. While the focus was on Europe, especially Greece, the idea put forward by politicians was reducing labor costs to increase competitiveness. What that fails to consider is that workers spend money in all economies. If labor cost went to zero, an economy will not improve. So low cost labor is not the answer to competitiveness, despite what some politicians might suggest.
As for money-X commenting on corporate taxes, there are some things you are missing alright. The fact is that not one single business will ever pay a single dime in taxes, ever. Corporations do not pay tax, nor do they earn income. People make money and people pay taxes. So when you have an overreaching gov't taxing any corporation you end up causing three basic results. 1). Employees of the company see lower salaries, less benefits, less paid time off like vacations or medical, and less profit sharing or bonuses. 2) Shareholders see decreased dividends and less stock splits or less share value increases or more likely a decrease. 3) The customers pay more for the product, with Google that would translate to either less new software available for free and/or more ads per page or even a hidden cost service providers would pass onto customers if Google ended up having to sign deals with them to access their servers. Highly unlikely but a business is in business to make money, not pay it to scumbags in Congress who will not spend it wisely, will spend it on things we disagree on, and will skim a hefty portion off the top for themselves doing nothing but arm twisting. This gov't does not need more in tax revenue, they need to quit spending on things that should not be spent on. So much corruption in all sectors is because of the legislation and it all starts in DC.But back to taxes on corporations. So hopefully now you understand that a tax laid upon business is really a tax on the people, either in the company or out of it or both. These taxes are also known as hidden taxes. We don't get charged directly for them but we pay them all the same. So now do you think taxing businesses is good for the country(Congress) and the people? Or maybe just good for Congress?
Some have commented on manufacturing the iPhone here and I think that would be great but we also would have to be willing to pay double or triple what they cost now. Until we get free trade agreements that equate to the US not being bitch slapped by the Congress for the Chinese to send their products here for less than we can send ours to them, manufacturing will not come back here for small durable goods or non durables for sure. It costs about ten cents a baseball hat to be made there and about three bucks here, both the same quality. Who do you think the purchaser will buy from? Where the profit margin is higher.