Tim Cook announces plans to manufacture Mac computers in USA

No bull.


Interesting, the title on the Rock Center video says, “Apple CEO announces entire line of Macs to be made in America.”

Was just reading that too. Very interesting. Psyched to see where that goes. Google did it with the Nexus. Now Apple. This is how these things start…

I take all of this with a bit of a grain of salt. 90% of the components Apple (and everyone in the electronics industry) uses are still made by other companies in Asia, so the real question is are they just going to use this as PR where they machine a few bits and sandwich it all together and print a “Made in USA” sticker on it.

This is my favorite bit of design news in the past several months. I know Apple can push their Chinese factories into more or less doing whatever they dream up with materials, form, construction, etc. But I have a feeling that they’ll really be able to push manufacturing boundaries here on US soil, exciting times.

Even if it is just assembly it is something though no?

When I read the first post the first thing I thought was, Made = Assembled. But I agree, assembly is something that will get low skilled workers more employment opportunity in the US. Unfortunately there’s a surplus of skilled and/or educated people out of work as well that assembly jobs just won’t fulfill, but hopefully this is a nod to the first step in “bringing it all back home” and not just a PR move.

Cook made clear it’s more than just final assembly. They are putting in a decent investment into this. When you look at the guts of an iMac from that other thread, apart from the display there isn’t much in there we couldn’t make in this country pretty easily. We already do a lot of chip fabrication. We can certainly machine aluminum parts and injection mold a few plastic bits. Probably don’t even need a human on the assembly line until it gets to final QC and loading into the carton.

Structurally I don’t see a requirement to move production closer to the biggest market. The supply chain and the logistics are as efficient as it gets now. Perhaps in the future there will be something needed to have the manufacturing close, customization or the next step in manufacturing that they wish to keep tighter control over.

Most likely however they are moving the manufacturing/assembly to the US to counter the storm of criticism that started last year.

Either way, it is a great thing to see. Hopefully will re-spawn all of the part supply companies as well.

  1. People don’t realize how little labor is involved in electronics. Here is one of the fastest growing companies in Canada: http://www.aeicm.com/ August Electronics Inc. in Alberta. It’s one of a number of contract electronics manufacturers that I’ve seen pop up in the US and Canada the last 3-5 years. It’s basically capital investment. Similar to injection molding, you basically need 1-2 people to feed a bunch of machines with components. Everything else is automated. Maybe a little more QC at the end.

  2. Mexico manufacturers a lot of computers, TVs, cell phones. I’m sure it is mostly assembly, but still. From my experience, most of those facilities are pretty light on manual labor too.

  3. Tim Cook’s expertise is logistics. I’m sure that this will save Apple money. There will be significant tax advantages in terms of avoiding tariffs and getting tax credits. I don’t see anything altruistic or patriotic. It’s a smart business move.

There really isn’t much of a choice. The Chinese government has stated that the new goal is to move manufacturing from externally focused to internally focused. Whether Chinese manufacturers really want to do this or not, it has been stated by the government as THE goal so anyone who does not follow the line will find it difficult doing business. So the US really has to figure out how to bring manufacturing back, because really there is no choice.

That’s true too. I know in the ventilation industry, costs have risen because the gov’t mandates that a certain amount of capacity is for the Chinese market only. It’s squeezed how much is available for export.

We’ll see in other categories. Talking to plumbing manufacturers, everyone is at 50% capacity because the US construction market is so soft.

Interesting article in Forbes.

Good read.

Our business units actually have a mixed strategy, some focus heavily on Asian manufactured, and ODM assisted manufacturing whereas others focus on domestic/internal engineering and manufacturing. (Both in the US and Asia).

I think the biggest argument against the ODM model is the fact that although you may get a “Cheaper” price, the added costs of communication, addressing quality issues, and rework due to the low quality of some of the engineering talent means you may break even at the end of the day.

The most they will be able to tout is ‘Assembled in the USA’ and then they may well have to state the percentage of components sourced from the USA as well.

Unfortunately, due to the previous decade’s incentives to move large scale manufacturing off shore, I think most manufacturers are going to slowly transition into Taiwan, Vietnam and elsewhere before making serious efforts to return to the States.

The problem with Taiwan is their labor rate is too high to make sense of the cross ocean transport costs. With Vietnam they have already been raising rates over the past several years so this is short term also.

The interesting thing is the automation discussion. Will manufacturing come back to the US without adding any significant jobs? Will lights out factories be the norm?

Great article - Why Apple And GE Are Bringing Back Manufacturing

This article on the core front page a few weeks ago also shows the secondary and tertiary benefits of manufacturing locally, the money recirculates in the local economy:

A local ‘chamber of commerce’ style TV ad from a few years ago followed a 2$ coin, showing how if it is spent here, the local economy benefits: you buy something from the shop down the road, he then buys a coffee from a neighbouring shop, the coffee shop then buys supplies from the factory you work at etc.

I found this study that puts a dollar value to buying locally, which I expect correlates a lot to manufacturing locally:

”In a study comparing the economic impact of ten Andersonville businesses and their chain competitors, it was found that:

Locally-owned businesses generate a substantial Local Premium in enhanced economic impact.

For every $100 in consumer spending with a local firm, $68 remains in the Chicago economy.

For every $100 in consumer spending with a chain firm, $43 remains in the Chicago economy.

For every square foot occupied by a local firm, local economic impact is $179.

For every square foot occupied by a chain firm, local economic impact is $105.”

If final assembly and all packaging is currently done overseas, and the majority of the customers are in North America, it certainly makes logistic and shipping cost sense to do final assembly here. The smaller components will still be made overseas but larger unwieldy parts like the curved stand for iMacs and displays can be made in the USA near the final assembly location. Should allow for a better JIT assembly line, less standing inventory (not that Apple has a problem with that), and the opportunity to ship less air overseas. With the tighter packaging on iPads, the laptops, and phones it makes less sense.

So, I’d imagine the iMacs and whatever the next gen Mac Pro might be (if they continue) would be good candidates for US fabrication and assembly.

Do they build the factory near the UPS or FedEx shipping centers?

I think it’s also about curbing the loss of institutional knowledge…or the recognition that separating the designing and the making is often a bad idea if you want to continue to know how to make things. This is a good story about the GE Appliance Park that hit on this point: