You don’t deserve to assemble an iPhone!

This weekend’s article in the New York Times about why Apple doesn’t manufacture its products in this country has generated a huge amount of discussion.  The not so subtle message expressed in the article is that Apple would make iPhones and iPads in this country if Americans weren’t so inept at manufacturing things. My favorite quote from an Apple executive in the article is “We shouldn’t be criticized for using Chinese workers. The U.S. has stopped producing people with the skills we need.”  This quote begs the question, what skills are needed by Apple’s contractor Foxconn to produce iPhones, iPads and other Apple products?  The answer might surprise you.

If you are like me, I figured that Apple actually hired contractors like Foxconn to manufacture its products in China.  If that was the case, the statement by the former high-ranking Apple executive quoted in the Times article would make sense; “The entire supply chain is in China now.  You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”  That situation would be really handy if Foxconn actually made Apple’s iPhones and iPads from scratch in China.  But actually they don’t.  In fact, Chinese workers simply put together parts and components manufactured outside the glorious People’s Republic, contributing only about $9.00 of labor cost to each iPhone, about 3.6% of the total manufacturing cost.  But hey, if a former high-ranking Apple executive says the entire Apple supply chain is in China now, it must be true right?  Aren’t reporters supposed to check those kind of claims?

The “skills”mentioned by the former Apple executive seem to be (1) a willingness to routinely work 70 hours a week, (2) a willingness to stand for 8 hours at a time, and (3) a willingness to do mind numbingly repetitive tasks.  Those “skills” are available in China at a very low hourly cost because there is a huge labor force that is desperate for work.  But those “skills” are also available here, but you would have to pay people a lot more to do that kind of work.  Yet people do that kind of work in this country.  They are called electrical and electronic equipment assemblers and they make about $13.00 an hour.  If Apple hired a subcontractor in this country to assemble iPads and iPhones in this country, these American electrical and electronic assemblers would cheerfully assemble Apple’s products.  And according to the Times article, “various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.”  In a previous post, I estimated that manufacturing iPads in this country and selling them for the same price as those produced by Foxconn in China would cut Apple’s profit margin from 55% to 39%.  Gee, a 39% markup.  I wonder if Apple could survive?  You know, I kinda think they would.

But according to the writers of the Times piece, “building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies.”  Man, that is a lot to have to do to make cell phones in this country.  Have you tried transforming the national and global economies?  I did last weekend and my back is still killing me.  In all seriousness, the reason these economies would need to be transformed is because Apple and their ilk made a business decision to have its products assembled by contractors like Foxconn in Asia because it was cheaper; “A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85.”

Now Apple is in the business of making money and they made a business decision to move their production facilities from California where Mr. Saragoza worked to Foxconn’s facilities in China.  While we can debate whether that decision was a good one, a patriotic one or a moral one, it was clearly a logical one from a business standpoint.  And it has worked out really well for Apple’s bottom line.  What bothers me about the Times article is the suggestion that Apple made its decision to move overseas because America is simply not up to the task of producing things anymore, rather than because Apple reasonably determined that they could make a higher profit margin by doing so.  American manufacturers produce a lot of products that a far more complex than iPhones and they do so at a profit.  If Apple wants to make more money by hiring a firm like Foxconn to produce its products abroad, so be it.  But to argue that American manufacturers and American workers are simply not up the “challenge” of spending 9 hours assembling disparate subassemblies into an iPhone is silly.

About Simply American LLC

I live in Seattle and love telling stories about Americans, the places where they work and the things that they make. I have just published a book, Simply American, encouraging Americans to purchase American made products; the book can be ordered at
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9 Responses to You don’t deserve to assemble an iPhone!

  1. Janet says:

    well said, and your President agrees…..

  2. Occupy Apple. The company treats its workers poorly and sits on billions of dollars. I don’t look at my iMac with the same kind of fan mentality I had once I learned how many Foxconn employees work unlimited hours for nearly no pay, commit suicide, have all kinds of health problems.

    I don’t mind a profit motive, but you have to treat employees that are working for your contractor as human beings. Apple fails at this part of the social contract. And it is worse than other tech companies. As you say– they all take advantage of people starving for work. Any work.

    It was interesting to read your review of that NYT story, because I didn’t pick up that American workers would add $65 to the cost of an iPhone. That would take too much out of the $80 billion in cash they have to justify. But I expected a higher figure.

    Thanks for the story.

  3. The Social Critic says:

    Thank you for the timely piece on a subject that promises to take on more importance as our economy continues to lose ground. I came in on the NYT article on Apple and the middle class squeeze too late to post a comment but I’ve been wading through the 700+ comments ever since. Boy am I incensed!

    First off, Apple is not correct about the entire supply chain residing overseas. There is a large Foxconn facility in Southern California, for starters! Moreover, I would bet that the time zone differences, airline tickets, cost of drop-shipping and the freight costs associated with overseas production offset the wage savings considerably. For reasons of environment and economy, Apple needs to do what the auto manufacturers have done: build plants in the various “target markets” rather than ship by boat, train and airplane to far-flung locals worldwide. If far more complex automobiles can be produced by US factory workers — and believe me with all the relays, wiring and selenoids the modern auto is both a machine and a high-tech computer — than iPads and iPhones most certainly can be made here too. Apple, after all, admitted that the labor force we apparently lack in the US consists of people who have less than a college degree!

    Second, Apple hasn’t done its market research. There is a months-old discussion going strong at Amazon concerning NOT-made-in China appliances, and hundreds of people are sharing their tips for buying vintage (old school American quality) and modern appliances and electrics built in European and Japan, which cost far more than what you can purchase at Walmart, to be sure, but for which those who buy this way swear is a better return on the money in the form of considerably better build quality and product longevity. For all those who think Chinese-made products are better products one need only read product reviews on Amazon and Epinions to learn that even the lowly coffemaker, with its Third World origin, inspires much hate. Complaints about poor product longevity is a common refrain and yet, the NYT comments were populated with people arguing that Chinese take greater pride in their work. I don’t find it particularly intelligent to make generalizations good or bad to entire ethnic groups. There are people in every society who take pride in their work — and those that do not. It’s not intellectually honest to broad-brush assumptions because they are just that: assumptions.

    I remember an Asian friend in school telling me once that Asians resent the perception and the pressure to be the academic brains. Asians have their share of lazy and unintelligent people, but people with disadvantages and disabilities are frequently shunned in Asian culture as much, if not more, than they are anywhere else. Being human is about sharing 99 percent of everything in common. It’s sad and bizarre to see Americans comment on how little Americans want to work. My spouse is under-employed thanks to a business closure in 2008, and this time last year worked an all-night job as a 1099 subcontractor of a subcontractor of a subcontractor — how’s that for “efficient” with so many firms taking their cut in the deal? — to install new data cabling and network equipment in an APPLE STORE. And there are scores of people who read the part about Chinese’ factory workers waking at midnight to work a shift who think Americans will never do that? Ask any medical resident! Ask any night-shift radio host. Ask a graveyard security guard. Ask the night nurse! Talk to a police officer on swing shift! For that matter, in the wake of all the layoffs ask any newspaper reporter what type of hours they keep!

    Personally, I recall back in high school and college working at a series of retail stores where not one but several Asian business owners insisted on paying under the table to evade taxes. Over a 15-year period starting at the tender age of 14, I also worked for a number of large corporations, one of which is a company that sells inexpensive Chinese-made shoes nationwide. There was a policy of writing up employees for not finishing an impossible amount of work before closing each night, which in turn caused everyone from the store manager to the lowest employee to work up till midnight off the clock seven days a week to catch up “or else”. The company knew that their policy contributed to labor violations but they did nothing about it. In fact, the company had a tendency to hire minorities, in the seemingly racist assumption that minorities are more willing to take abuse and less likely to know their rights. To say that Americans’ don’t want to work hard and are accustomed to being treated like kings and queens — oblivious to the fact that the union movement even at its height represented only a small fraction of the US workforce — is naive and sanctimonious. Labor violations happen all the time. And you can bet that if the laws are ignored here, there are underage children, workers who are fired for taking sick leave, denial of bathroom breaks and any other number of other human rights abuses going on in Third World factories.

    Therein lies the most telling and tragic aspect of reading the NYT comment section: Too many of us are quick to point out in our elitist way that an agriculture life — the reason any of us anywhere has a bite to eat — is inferior to the repetition and repetitive strain wear-and-tear of life on the factory floor, sleeping in the factory dorm, eating in a factory cafeteria in which there are too few seats to get off one’s feet even on a break. Is self-made country living and farming really the worst lot in life? The “peasants” in the countryside live in harmony with the seasons, sun up and sun down. When do the overworked 24/7 factory workers visit family or watch their children, if they can marry under such conditions at all, grow up? Mother nature may be cruel but at least under her laws families that stay together and work together have a better chance of survival. Industrialization turns that truism on its head. It divides. It conquers. It mechanizes and distances human relationships. City dwellers, ask yourself: How well do you know your neighbor next door? Two doors away? On the other block? And so you see my point: Industrialization may favor human proximity but it is hardly the same as community! (Ask the Amish if they have a horrible agrarian life earning their own keep, with high suicide, divorce and drop-out rates to show for it!)

    Fourth, the NYT comments I’ve read miss the duplicitous nature of Steve Jobs comment that if only “government” (we taxpayers) would help train more engineers more jobs might return to the US. Three things stand out: If we take Jobs’ comment to heart, it negates the larger argument that the supply chain limits here are impossible to overcome and posits instead that it is a deficit in qualified workers. Apple executives either mean what they say about the US being logistically unfit or they don’t! Second, what Apple is calling an “engineer” is little more than a peasant with a high-school education. Try passing yourself off as an engineer here in the US without an advanced degree! In fact, we won’t hire you for nearly any job these days without more education than the average Chinese! Third and more ironic, everyone seems to have missed the juxtaposition of the American ex-Apple “engineer” who was laid off from Apple’s shuttered Elk Grove, CA facility alongside Jobs’ claim that more engineers are in demand here! If Apple didn’t need one of their *existing* engineers, and if the reason this fellow was given for his layoff had to do purely with the overseas factory being more cost-efficient, than there’s our answer: No market for US engineers! Who can blame the smart kids coming up who choose not to go into so-called STEM careers (science, technology, engineering, math)? Susan Hockfield, president of MIT, Bill Gates of Microsoft and the late Jobs, of Apple, push the US government to ramp up H1B visas for even cheaper labor within the US, which is a slap in the pocketbook to any engineering student who leaves an American university with 100K in debt for a supposedly in-demand occupation for which American executives and university leaders alike unabashedly prefer someone earn $25,000 per year for the effort, while living 4 up to a Silicon Valley apartment — unwilling to complain about their poor wages in fear of deportation. Most of the NYT posters missed both the irony and the connection: That “9 months” Apple referred to to hire additional “engineers” corresponds to how long it takes to process foreign-worker H1B visa applications! It’s utterly transparent!

    Sadder still is that many Americans seem to enjoy America bashing, saying we don’t have the education or work ethic to compete. My response to that is “speak for yourself”. Stereotypes only further the economic and cultural divides: Unemployed Caucasian Americans won’t mow lawns, pick fruit or clean hotels — that job is for Latinos. (Never mind that increasing numbers of Latinos and Hispanics are Americans too and don’t take any better to the “manual labor” stereotype than American Asians appreciate academic generalizations.). The pigeon-holing goes on and on: Americans won’t work in factories, that job is for Asians abroad. And there are the rosy but deadly assumptions too. Here’s one of them: The American economy will survive the loss of manufacturing along with all other manner of middle class job because, while we are apparently under-educated and unmotivated, we’re paradoxically entrenched as the world’s creative class! (For those who are betting America’s flat-earth future on our visionaries, I say “Good luck — as if it is possible to ‘own’ a monopoly on creativity!”)

    In part, I blame the entertainment media for putting out sitcom after sitcom in which the “man of the house” acts like an overgrown child, couch potato or an over-sexed teenager. Even the hit “The Office” involves a bunch of stereotypical morons, and “Mad Men” is nothing more than a soap operatic toast to our swaggering past. Hollywood cliches aside, Americans take the fewest vacation days and remain among the most productive in the world — YES! We put in long hours and boast high rates of higher education. (Ask yourself why the foreign students are clamoring to get into OUR institutions of higher learning!) Anyone who has looked at the hundreds of miles of clogged LA freeways would not question our willingness to work. (Besides, how can we not? You gotta eat!) And yet, increasingly, few of us can maintain steady employment *through no fault of our own* precisely because, as Apple and others so blatantly admit, corporations owe no one — not even consumers in the very market where they profit most from their wares!

    Here’s the bottom line: If we reap a socialist future in which the only way to keep scores of impoverished Americans out of the street is through taxpayer-funded services and inordinate taxes on the “jobs creators” it will be for lack of vision and common sense. We engage in political infighting rather than to create a clear industrial policy and we downplay unfair trade practices very real role in stagnating wages and the diminishing buying power of our dollar. At the personal level, voters’ inability to grasp that not all “free trade” is a square deal is slowing the realization and prioritization, even on the part of the OWS and Tea Party crowd, that underlying much of our economic crisis and debt is bad POLICY and the unholy union of corporation and state (classical fascism). If education in the US has failed, it has failed those who excuse an unsustainable economic path, with their naive claims that something other than widespread poverty will fill the jobs-loss vacuum. We must come to terms with the reality that until we reform how elections are funded and how politicians are unduly lobbied by corporations that have more clout and voice than actual individuals, what is good for Main Street will become increasingly distant and divorced from what works on Wall Street (and at the global level). Globalization is best served by a stronger emphasis on localization and diversification, just as the human body is best served by billions of microcosmic cells instead of a single, giant Amoeba to run a plethora of vital higher-level functions.

    To the group of the shockingly obtuse, I add ivy-league American MBAs and CEOs who don’t perceive their employees as their customers and advertisers in the way that Henry Ford understood that his employees would be his products’ chief promoters were they compensated well enough to purchase the products they were building. Additionally, I am also calling it on the pessimistic American who parrots the corporate-media-elitist propaganda that our best days are behind us. Globalization is an experiment. We’re at half time and it’s not too late to engage in the next quarter of the game with renewed strategy and intelligence on how to compete with a team of foreigners who are playing under grossly different conditions. Trading globally is not about to change, but transferring our wealth — and ultimately, too, the “creative class” that for the time being prefers to reside here — is a direct consequence of an ELECTED political class too weak-willed to upset the dysfunctional international apple cart. Those who recall the story of Jacob and Esau should ask themselves what character America portrays. The good news here is that for all the change we’ve witnessed these past 30 years globalization represents, even now, a relatively brief period in our history. Let’s get our game face on before it’s too late.

    • daves says:

      Thoughtful and well-written. I agree with most of what you have written. Possibly the biggest problem of all is that corporate managers and executives use the excuse that they must act in the stockholders’ best interest to rationalize outsourcing, off-shoring, etc. They don’t feel nearly as beholden to their employees or country as they should. And in the case of Apple and many others like them, it is an excuse to ignore those things and not have to deal with the “how much is enough?” issue. The almighty dollar rules, and those who know how to best get it rise to the top of the ranks. Unfortunately they are often also less concerned about employees, country, loyalty, etc., and they end up running companies that then take on their traits. I have two big problems with Apple, and unfortunately with Steve Jobs as well, as the buck stopped with him on these issues.

      First, Apple uses fiduciary responsibility to shareholders (like countless other companies) as an excuse to minimize their expenses regardless of how. Yet Jobs was a notorious opponent of giving a dividend. Even before he died the company was sitting on a war chest of what – $70,000,000,000? Yet he refused to give any of that money back to the shareholders that enabled Apple to get where it is? That is slightly south of major hypocrisy.

      Second, along the same lines – and this has been noted before, but never addressed sufficiently by Apple or Jobs – how did Apple start their turnaround? With the good AOL’s Big Brother Superbowl commercial. They were the face of independence and freedom, and the Microsofts and HPs and IBMs were evil dictators. Yet they now have the most tightly-controlled product lines, dictate terms to their “partners” and sell out their own country fore most tightly controlled and stringent

      • daves says:

        (sorry, fat-fingered typing above – here is the rest…)

        …dictate terms to their “partners”, and basically sell out their own country-men/women to maximize their already-incredible profit margins with foreign labor.

        There is quite simply no way to legitimize or justify these things. Apple, as a corporate entity, is probably the most hypocritical company there is. There are many, but Apple is at the top of that heap as well.

    • daves says:

      One last comment – and I almost hate to bring it up here – but Henry Ford is a bad example to use. You are exactly right that he started off the way you described, but at the end of his tenure over his company he became very much removed and isolated from the realities of what was occurring in his factories, and he took very bad advice from very unscrupulous executives – things his younger self would have abhorred – leading to awful labor practices and working conditions for his work force.

  4. You can’t expect Apple to actually tell the truth, when they know they are in the wrong, making money hand over fist at the expense of

  5. You can’t expect Apple to tell the truth, when they know they are in the wrong, making money hand over fist at the expense of American manufacturing, jobs and its future. You don’t often think of Apple as a big Multi-National corporation without a conscience, but they are. -Jack A

  6. Pingback: Apple, the Flag and the ‘China Problem’ « The Social Critic's Guide to Life

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