From the NYT’s article “How the U.S. Lost Out on iPhone Work“:
But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
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Apple executives say that going overseas, at this point, is their only option. 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.”
The US will never be able to compete with substance wages and a disempowered class of workers, regardless of which country these workers live in. Historically we’ve competed by not competing against these workers. Through subsidies and tariffs we protected both markets and workers and created the largest middle class the world has ever seen. It’s only because of this enormous middle class with its buying power that we’ve been able to consume products like the iPhone.
The word tariff appears zero times in the NYT article. As long as we accept the fallacy that US labor has to be thrown into a global labor pool that fights over subsistence wages, we’re not going to get anywhere.
More on this from Yves Smith at Naked Capitalism:
The authors fail to tell you what this means: changing a production design that late in the game is bad management, period. It’s the sort of stunt you see in a craft manufacturing business like the movie industry, not in one that deals with factory production. But the flexible near slave Chinese workers bailed out Apple’s ass.
Nor does it frame another section properly. Here Jobs has a more logical, if still daunting demand: he wants a phone with a glass screen that won’t scratch, since phones get shoved in pockets with keys and coins. But part of his ask was still unreasonable: “I want a glass screen, and I want it perfect in six weeks.”
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So basically, the Chinese funded a completely non-economical glass R&D facility IN ANTICIPATION of getting the Apple order. There is no way anyone would build a factory like that unless the money was close to free. It already had glass samples in stock! The “some subsidies trickled down” sounds way too innocent. It sounds more like someone recognized the importance of Apple as a marquee customer, and whether the push came from the officialdom or businessmen with the right connections in high places, it doesn’t really matter. This project smells of having serious government backing. How can private businesses anywhere compete with that?
Tags: trade
