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Brazilian billionaire wants Apple manufacturing contract

Eike BatistaAppleInsider reports that Brazilian billionare Eike Batista, who made his $27 billion fortune in the mining industry, is trying to convince Apple to have its products made in Brazil rather than by Foxconn in Shenzhen, China. He is currently constructing the Port of Acu in southern Brazil -- a $1.6 billion construction project -- encompassing 90 square miles of available space that he hopes will lure companies to Brazil for product assembly. If Apple doesn't bite, Mr. Batista says he is going to try to lure BMW to his new development instead.

Apple has been using Foxconn as its product manufacturer for years, but a series of suicides by plant workers earlier this year lead to a cut in overtime hours and increased wages, which Apple itself was rumored (and Foxconn formally denied) to be subsidizing.

Foxconn, part of Taiwan-based parent company Hon Hai, recently reported that it will be raising manufacturing prices, directly affecting Apple's costs. Not sure what that means for product prices next year, but Mr. Batista could be approaching Apple at a time it might be willing to talk about developing a new manufacturing plan. If that's the case, we wish him luck.



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AppleInsider reports that Brazilian billionare Eike Batista, who made his $27 billion fortune in the mining industry, is trying to convince...
 

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S.Z.

Why can not Apple build their own assy. plants in China?

December 20 2010 at 10:06 AM Report abuse rate up rate down Reply
Felipe

Eike is a opportunist, billionaires are like that. I'm from BraSil (yes we use S here) and I can see clearly that the Apple operation here are very sloppy.
The cause of that is that importation taxes are very high and importation processes here are very, very, very, corrupt. Even if you want to do all by the book in some point you gonna need to pay bribes to "untie" the importation.
Because of that Apple stay away from Brasil, no Apple Stores here. Actually the Rio de Janeiro mayor send a personal letter to Jobs asking for a Apple Store there for the Football World Cup a couple of year from now, Jobs reply "no way, the taxes and importation processes is prohibitive."
This Eike guy, literally owns ports, docs and figuratively, owns the costumes officials, so he is in very special position to import parts and "facilitate" the Apple operation.
So, the idea is not to export to USA or elsewhere, the idea is assembly here to fully explore the domestic sales.
I really don't think Apple, mostly Jobs, ever do business with these guy.
ps: sorry for the bad english writing.

November 21 2010 at 9:28 PM Report abuse rate up rate down Reply
Igor Grimaldi

He did not want to build a factory, he wants to build an assembly plant, he will import some products of Foxcom of China and will buy another part of Foxcom of São Paulo (Brazil) and will build Apple products, decreasing about 52% of prices of Apple products in Brazil, and it can export to all countries of Latin America + Portugal and Mexico without adding any other tax. I think it really is a good idea, and who knows Eike knows, he knows money. The facilities of the Port of Acu which will cost $ 1.6 billion, but it will have several large companies like GE, Hyundai, Samsung, LG, BMW ... etc.

November 18 2010 at 8:00 PM Report abuse rate up rate down Reply
Matheus

I'm from Brazil and what is being reported here is that he wants to build ANOTHER assembly plant here and not replace Foxconn.

There's no way to compete with the cost of the chinese slave wages. It's just a way to cut the prices of apple products in Brazil (the world's most expensive).

November 18 2010 at 12:15 PM Report abuse rate up rate down Reply
2 replies to Matheus's comment
Rodrigo Fante

Just so everyone can compare, the minimum wage down in Brazil for 2011 is about $330, low, but still much higher then the chinese one, so it doesn't make sense to build a factory there to export products to the world, but it does make sense to build a small factory is because Brazil offers extensive tax breaks if you manufacture locally, so they could sell for less in Brazil and increase their market share there and of course Apple's profits.

November 18 2010 at 4:02 PM Report abuse rate up rate down Reply
Matheus

In addiction, importing taxes and local retailers profit (there are no apple stores here), practically doubles the price.

November 18 2010 at 4:28 PM Report abuse rate up rate down Reply
Richard

For a guy who managed to make $27 billion, he's remarkably ignorant. Apple doesn't build factories! They outsource production to others.

On the other hand, he could have just tossed Apple's name in knowing sights like TUAW will give him a lot of publicity, even if the basic premise is nonsense.

November 18 2010 at 9:50 AM Report abuse rate up rate down Reply
2 replies to Richard's comment
Digaos

Humm... I don't think he is trying to convince apple to build a factory, but rather outsource the production so he can invest money building the factory itself.

With 1.6 billion investment it's pretty clear that he is building the factory himself.

November 18 2010 at 10:14 AM Report abuse rate up rate down Reply
Digaos

By the way, I'm not sure what basic premise is nonsense to you.

Foxconn has an assembly line in Brazil and there are talks about Apple having some of its products assembled in Brazil for quite some time.

The reason why Apple could do that is to lower their prices in Brazil, a country that offers extensive tax breaks if you manufacture locally.

Just ask Dell, HP and others that have their products made in Brazil. With a population of almost 200 M and a growing economy, it's not a bad idea to spend some extra cash in labour if you get it back in sales.

November 18 2010 at 10:24 AM Report abuse rate up rate down Reply
Andrew

I think it's good move to take some jobs from China and move them elsewhere, in fact, I agree Andre, seems like bringing to the US would be the best thing. It would help employment issues, build up another industry, and show Apple as an "American" company, not just a company with a base of operations in America. And yes, they certainly afford US wages.

November 18 2010 at 9:05 AM Report abuse rate up rate down Reply
2 replies to Andrew's comment
tony d

Not to harp on this but, seriously even at the Federal minimum wage I can't see it being a competitive move. Don't get me wrong I'm all for keeping manufacturing jobs here in America (I make union wages at major US company so I understand the issue) but we need to be realistic. Apple, and almost every other manufacture needs to make a profit. Moving work here will reduce that. Its kind of like the genie is out of the bottle thing, once they move overseas its over. Just ask anyone in the textile or shoe business.

November 18 2010 at 2:09 PM Report abuse rate up rate down Reply
Andrew

True... but they have billions (!) in cash, they can afford it.....

November 18 2010 at 3:05 PM Report abuse rate up rate down Reply
droslovinia

Karim, do you think with that brain, or is it just on loan? And what does that have to do with this story?

Speaking of the story, wouldn't it make sense for Apple to diversify their supply chain? And while nobody seems to be hiring as many Americans as we'd like these days, there's a big building or two in North Carolina that argues for Apple's having at least SOME interest in doing so.

November 18 2010 at 8:49 AM Report abuse rate up rate down Reply
Andre

Yea I guess companies like Apple can only survive paying slave wages. But hey, the iPhone 4 was "Designed in California", so they are truly the red white and blue American company they make themselves appear to me.

November 17 2010 at 11:24 PM Report abuse rate up rate down Reply
1 reply to Andre's comment
ben

No one makes anything in America anymore. Let's not pretend otherwise.

November 18 2010 at 4:20 AM Report abuse rate up rate down Reply
Andre

What about America? That would be a surprise. Instead of just taking our money, they could give some of it back in the form of employment.

November 17 2010 at 10:07 PM Report abuse rate up rate down Reply
2 replies to Andre's comment
wvu212

they can't afford U.S. wages.

November 17 2010 at 10:27 PM Report abuse rate up rate down Reply
tony d

Yeah its a good idea if you want to pay like a grand for an iPod.

November 18 2010 at 2:01 PM Report abuse rate up rate down Reply
tonyunreal

Good luck outbidding the Chinese...

November 17 2010 at 9:51 PM Report abuse rate up rate down Reply
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