of "Made in America"

Great article about why less products are “Made in America”. Parts of the article expand upon a meeting of Silicon Valley bigwigs in the Steve Jobs biography.

Why Apple says it can’t build an iPhone in the US

Agree? Disagree? Any thoughts on changing this situation.

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

It certainly speaks volumes about how Apple works … and how they are willing to treat their workers. Hopefully these hapless Asians were allowed to use the bathroom facility between the occasional biscuit and tea. We can probably say with some certainty, that the 96 hours were non-stop, and that the wages paid reflected no “overtime” benefit.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

For the most part I think it’s more a matter of the work force not wanting to work factory jobs than it is training them; many now considered it menial, akin to agricultural harvesting (and there’s nothing wrong with ag jobs).

There is a mentality that if one isn’t using a computer, in a “white collar” environment, it’s not acceptable work. Too bad for us.

An example: Three years ago Pacific Gas & Electric (PG&E) established a paid apprenticeship program, with a local community college, to train young men and women to learn electrician and millwright skills to ensure that their Diablo Canyon Nuclear Power Plant would have a “supply” of skilled maintenance technicians to maintain the plant (where the average employee age is now 47) . The cost to the “students”: three year investment to acquire an Engineer-in-Training certificate, while employed full time at union-wage scale (roughly $50K + overtime paid), with on-the-job training in lieu of going to class every day, and guaranteed placement upon completion. Three people applied for the program … so the program was dropped.

I’m anxious to read the article. I was thinking of this earlier though.

I researched a vacuum plating supplier in North America a few years ago. From what I can gather there is only one and they specialize in the auto industry. If you don’t want 100k + parts plated or have a $100 million account, they aren’t interested. They basically told me to go play with kids my own age when I asked for a quote.

In China, there are ten on the same street in the same town.

Where do you want to source as a manufacturer?

Was talking to a co-worker about a similar issue, the Thai floods and the affect of the hard drive market shortage. They said they saw a few articles talking about major manufacturers moving their operations back to the US just so they could have some closer control if something extreme happened. Even if that meant higher manufacturing costs.

They said they saw a few articles talking about major manufacturers moving their operations back to the US just so they could have some closer control if something extreme happened. Even if that meant higher manufacturing costs.

It’s what Americans have forgotten. Manufactured goods may cost more when made here, but the money stays here, gets re-spent here, and contributes to local businesses, schools, and community programs. Reduced transportation fees and local “control” are side benefits.

Convincing “us” that paying more, will pay back more in the future, is going to be a tough slog.

This comment in the NYT article makes me angry:

Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.

I hate the emphasis that the only reason you are in business is to provide shareholder value. Local (Australian) banks have made record profits and are shedding staff to only to maintain those profits, not because they are struggling, and to add insult to injury, the staff losing their jobs have to train the new offshore employees:

Where does the money go? Where do the increased profits go? If you destroy jobs in the short term then people wont be able to buy your services in the long term- unemployed families don’t tend to have a mortgage.

Investors want a return, but not every industry is going to give you the golden egg of super profits. Some industries don’t make as much as others- fact. My rose tinted dream is to have people who are in a certain industry work there because they like that industry, they like what they make and do, not because they want to add a few percentage points to a quarterly return.

There was a TV ad here a few years ago to “buy local”, it showed a two dollar coin being spent in the local shops, buying local products, then being spent again in another local business buying more local stuff and so on. I think 80% of every dollar spent in a community stays in the community.

this is a large complicated issue and it is a false argument that we just can’t manufacture anything anymore in North America.

Partly, the oft repeated rebuttal is correct: the media dumbing down to single issue in single sentence paragraphs an otherwise complex multivariate issue.

About 2/3’s down the article, Corning executive says (underline by me):

Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “> The consumer electronics business has become an Asian business> . As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”

Fleshed out slightly it should say “the high-volume low-margin highly competetive consumer electronics business…”. Today in North America numerous companies are profitably engaged in local design and manufacturing of low(er) volume high-margin products, most of industry specific market such as medical. This sector has been robust for decades, and seems to still be so.

It is true that high-volume low-margin highly competitive market businesses always follow the lowest possible dollar, hence China and India outsource, there is no other successful method yet developed, except a monopoly. However, it’s not always successful, it is not indicative of the entire manufacturing industry, and it is not a panacea for otherwise poorly managed or problematic companies.

It is sexy and saleable to write, unfortunately predictably and repetitivly, about Apple, Amazon and RIM, GM and Chrysler, not so much about Fluke, Smiths, Applied Bio or Boston Scientific, or other smaller non-household recognizable names.

SME, small and medium business, is often mentioned as the real driver and / or salvation of the economy: highest employment, most opportunity. It’s never mentioned that it also includes a reasonably healthy manufacturing sector servicing our local design and manufacturing companies.

And then, just to get a dig in at Apple, perhaps if your product development team isn’t required to make a major design change 6 weeks before product launch the argument for raising your 8,000 captive employees from their sleep might not be required.

just to get a dig in at Apple, perhaps if your product development team isn’t required to make a major design change 6 weeks before product launch the argument for raising your 8,000 captive employees from their sleep might not be required.

An old saw: “An emergency on your part, does not, necessarily, constitute and emergency on my part.”

But over the next 5 years China will focus on manufacturing for their own market and not do international markets. Wen Jiabao has already stated this as government policy so i do not understand why the West is ignoring it. There is no easy substitute for China over the past 20 years (kind of like oil it is a non-renewable resource). I have been speaking to US manufacturers that they need to figure out the Made in USA thing again, but not based on old models. There will not be one factory with 20,000 workers. instead there will be 200 factories with 100 workers. Government policy also needs to change because politicians look for one hit wonders in the form of setting up big factories. I understand why they do it but it is not valid.

Tim: I’ve already seen some construction oriented factories in China changing their pricing strategy to be more domestic-oriented (ie raising prices for exports, keeping the price low for domestic buyers). By construction oriented I mean products which are used in production: lighting, plumbing, electrics, etc.

How many here own products made by companies that do exactly what this discussion is about? How many buy the more expensive domestic made product (if there is one)?

How many of us design products that will be replaced in a year or two?

How many folks here ditched their 3G phone for a 4G?

I used to think that if you did not employ the people who might actually buy your product, no one would be able to buy it. Yes they will. In west Michigan Electrolux left a plant in a small town. What an uproar it caused. They still sell that brand at the Mejiers and Wal-Mart, so locals are still buying them.

Curtis-Mathis was the last US TV manufacturer, high quality sets, no one bought them, instead we all bought the inexpensive TV.

Although I would rather have everything made here in the US, so every penny stays in the US, I am the minority. People want the new cheap thing, big companies know it, and do whatever they can to get your money out of your pocket, because they know the 99% wants the latest thing, and could care less where it is made.

Design departments exist to fulfill that end need. We are promoting all the things we see wrong, except in rare cases.
We recognize the problem, what would you suggest is done? Will you make that first step? No new computer until yours actually burns out? Fewer software upgrades? A phone that is more than 3 years old? One pair of shoes for all seasons? No toys for your pets? The less you buy from those companies and the more you buy from the US companies is the only thing that will change the market.

I doubt China will turn away all the money of the offshore markets, they will always go where the money goes.

Perhaps Made in America actually means made here, to a specific design principle, for a specific reason.

Nothing wrong with that.

Could you imagine a supplier saying that to Apple? I am picturing objects flying into the wall in Cupertino at such insolence.

You all love your iPhone 4’s right? How much would you be willing to pay for it if it was made in the US? I have to say that the $1000 I paid for my iPad 1 was about the max I could justify.

Shaw … the “emergency” quip is from an old poster often seen hanging in independent automobile repair shops here in the States.

$500 would exceed what I am willing to pay for any cellphone, by a factor of a five.

My favorite value/performance purchase of 2011 was a Nokia 1280. 30$ new, made in China, gladly would have paid 60$ for it made in the US.

Once upon a time! growing up in India, Made in USA meant value and quality, a rare possession but all I see now is mostly Made in China,India, etc/…I feel sad for those Chinese workers who had to work so hard and long hours while big Mr. jobs made billions.

I think Apple’s products are good design but overpriced dope. I won’t pay $500 for something that gets outdated in a year. It definitely hurts to see the same half or even quarter priced the next year as new version are introduced. Same goes to any other portable electronics.

Two quotes I saw today after Apple’s enormous Q1 report:

  1. #Apple nears incredible milestone, coming just shy of $100 billion in cash on hand. Hoard is worth more than all but 52 companies on Earth.

  2. Apple’s profits ($13 billion) exceeded Google’s entire revenue ($10.6 billion).

You don’t get that by overspending on ANYTHING.

People always talk about paying double for something made in the good ol USA. But when I see record profits from a company like Apple, the first thing I think is “that is the difference between a living wage in the US and in China”.

They are in essence taking the labor savings and applying it directly to their margin.

I’m also amazed (ok, maybe not amazed, how about ashamed) that we’ve built into our mfg jobs a ton of overhead regarding labor rights and environmental issues and then failed to export those ethics along with the jobs.

And per the earlier, if given the choice, I buy the most local thing I can. If you care about a local economy, the worst thing you can do is buy it off the 'net, much worse than some national retail corp. Amazon is a effective company, but it will be our downfall.

Profit = Means of production + labor value

In other words, the profit derives from the surplus labor value: the exploitation of labor.

That’s Marx in a nut shell.

Many people will gladly pay high price for products made in USA/Europe if those products carry a famous brand name and values. Take Ferrari for example, a recession-proof company that actually has to limit production to maintain brand status.

I know this example was from a niche market, but this might actually be the way to go for US and EU based companys.
Like someone said earlier, 200 factories with 100 employees each instead of 1 megafactory with 10k staff.

Trying to compete with Asia in mainstream markets where number one USP is price is nonsense.

Apple just combines both elements. Hipster design savy approach combined with cheap mass production.
There are other cheaper alternatives out there but they have still managed to achieve incredible success.

Imagine if Apple spent a paltry 5-10% of their gigantic cash horde on building a completely automated factory in the US. Intel spends about $4 billion on a chip factory, and a decent sized car factory is less than a billion. For $10 billion, you could build something epic.

Imagine what an advantage that would give them in terms of brand image, unique manufacturing capabilities that their competitors couldn’t access, time to market, secrecy, and everything else. For even less money, they could try it as a pilot project with a smaller, less critical product like the iPod or AppleTV. Maybe it works, maybe it doesn’t. Even building a couple million iPod Shuffles in the US would give them a huge PR boost.

What the hell else are they going to do with all that money? For how much “vision” they are credited with having, they sure seem very shortsighted sometimes.