Last fall, we pondered whether Apple could start building iPads and iPhones in the U.S. Our conclusion was, YES, Apple could indeed start assembling products in the U.S.
Some key points:
1. Labor costs are not the key factor. As Michele Nash-Hoff (President of ElectroFab) and Curtis Ellis (of the American Jobs Alliance) have explained, labor is a small part (probably less than 10 percent) of Apple’s cost of manufacturing, far less than capital equipment and components. With wages rising in China, and U.S. manufacturing workers actually being far more productive, the labor cost differential become very small.
2. Apple is the rare product that competes on quality, not price. While it may or may not cost more in total to assemble iPads in the U.S., Apple is not competing against dozens of similar products. And so, retail price is not the key criteria because consumers are already buying iPads due to their unique quality and attributes, not “low sticker price.”
3. Thanks to high productivity and top quality, U.S. manufacturing offers its own cost-savings and benefits. U.S. manufacturers are recognized as being the most productive, efficient, and safe in the world. A state-of-the-art U.S. manufacturing facility would offer its own cost savings by virtue of its incredibly productive and streamlined assembly processes.
Okay, so why are we analyzing the Apple production process today? Because Apple CEO Tim Cook was quoted this week at an All Things Digital Conference as saying he’d like to see his company make more components, and possibly assemble them, in the U.S.
Specifically, Cook said:
“There are things that can be done in the U.S., not just for the U.S. market but that can be exported for the world…On the assembly piece, could that be done in the U.S.? I hope so, again, one day.”
There are stumbling blocks to a possible reshoring of Apple products, though. Andrew Nusca at Between the Lines says that American companies can always “go overseas for greater flexibility, lower price and sheer speed.” He also cites the potential shortage of skilled high-tech workers in the U.S. who can tackle the logistical and competitive needs of such competitive, state-of-the-art production.
But these are battles worth fighting. For starters, a high-tech facility COULD produce in the manner required by Apple for rapid market response. And as for worker skills needed in such a high-tech industry, the Alliance for American Maufacturing (AAM) has repeatedly urged that the U.S. needs to prioritize such training in order to compete successfully in the 21st Century.
All of this is a battle worth fighting, and a very necessary one if the U.S. is to maintain a solid middle class economy. Apple can do it, and so can the U.S. The question is who will take the big step first?