Why Apple's products are 'Designed in California' but 'Assembled in China'
Look at the back of your iPhone, or your iPad, or on the bottom of your Mac. You'll see the following words embossed somewhere: "Designed by Apple in California. Assembled in China." Many Americans, all the way up to the President himself, have wondered why Apple has outsourced virtually all of its manufacturing overseas. At a dinner with several top US technology executives last year, President Obama asked Steve Jobs flat out what it would take to bring those jobs back to the US. According to Jobs, there's simply no way for it to happen.
Why not? Why can't iPhones, iPads, and all the rest of Apple's magic gadgets be built in the States? More generally, why can't more US-based consumer electronics and computer companies do their manufacturing work domestically, helping to create American jobs and boost the struggling economy?
The New York Times asked that question, and after an extremely well-researched report involving interviews with both former and current executives at Apple, the answer the Times found is both simple and chilling: iPhones aren't made in America because they just can't be. The infrastructure and labor force doesn't exist at the levels necessary to support Apple's operations -- it's not even close.
The Chinese factory where most iPhones reach final assembly employs 230,000 workers. I just asked Siri how many cities in the US have a population higher than that, and the answer was a mere 83 cities -- and that's total population, not workforce. With an average labor force of around 65 percent of the population, only 50 US cities are large enough to provide that kind of labor pool... and even in the biggest US city of them all, New York, 230,000 people still amounts to almost three percent of the city's entire population. Can you imagine three out of every hundred New Yorkers on an assembly line, cranking out iPhones every day?
Over the past couple of years, we have heard a great deal concerning working conditions at factories owned by Foxconn. The Chinese manufacturing company is responsible for assembling consumer electronics for most of the major vendors out there, including Apple. Around a fourth of those 230,000 people live in company-owned dorms or barracks right on factory property; that's almost 60,000 people living and working at the factory. Many of the people at "Foxconn City" work six days a week, twelve hours a day, and they earn less than US$17 per day. It may sound inhumane by American standards, but these jobs are in high demand in China -- so much so that Jennifer Rigoni, former worldwide supply demand manager for Apple, told the New York Times that Foxconn "could hire 3,000 people overnight."
Those are just a couple examples of how the scale, speed, and efficiency of Chinese manufacturing outstrips anything the US is currently capable of. But the Times' report is full of more evidence, and it's damning. Even though the 200,000 assembly-line workers putting part A into slot B could potentially be classified as unskilled labor, the 8700 industrial engineers overseeing the process can't be -- and according to the Times, finding that many qualified engineers in the States would take nine months. Chinese manufacturers found them all in 15 days.
With the notable exception of the A5 processor, most of the components used to make the iPhone are also manufactured overseas, many of them within a relatively short distance of the final assembly plant. Shipping those components to any potential US-based factories would incur greater costs, and even worse from Apple's perspective, manufacturing delays.
Traditional defenses of outsourcing of manufacturing jobs have revolved around cost. "It costs more money to build in America," the reasoning goes; "You have to pay your workers more, you have to pay benefits, insurance, higher taxes. Everything costs more." Since companies want to make a profit, that added cost inevitably gets passed on to the consumer in inflated prices for goods.
To exaggerate the point, many have claimed that an American-manufactured iPhone would cost thousands of dollars. It turns out that's hyperbole; according to the New York Times, the increased cost of paying American wages to workers would add $65 to the cost of an iPhone. The other costs, added together, probably wouldn't drive the unsubsidized price of a 16 GB iPhone 4S over US$1000. But the dollar cost of manufacturing in America isn't the biggest issue that's driving Apple's decision to outsource manufacturing to China. Instead, it's about who can build the greatest number of iPhones within the shortest period of time, all while remaining flexible and instantaneously adaptable to Apple's needs. According to one current Apple executive, "The US has stopped producing people with the skills we need."
The Times provides a telling example from the early days of the iPhone, before it ever hit the market. It's hard to believe now, but originally the iPhone's screen was going to be made from the same scratch-prone plastic that graced the fronts of its contemporaneous iPod models. In mid-2007, just over a month before the iPhone was scheduled to hit stores for the first time ever, Jobs realized the folly of using that plastic when the screen of the iPhone prototype he was carrying in his jeans pocket had accumulated dozens of scratches. "I won't sell a product that gets scratched. I want a glass screen, and I want it perfect in six weeks."
Anyone who knows how Jobs worked knows that he wasn't bluffing -- if the iPhone didn't meet his standards, it wouldn't go on sale, period. Six months of anticipation had driven demand for the first iPhone into a frenzy, so Apple knew it was going to have to crank them out as quickly as possible. But the last-second change to what was arguably one of the iPhone's most central components meant initiating the kind of mad scramble that simply wouldn't be possible in US manufacturing. Apple would have been an industry laughingstock for as long as it took to overcome the manufacturing delay. Instead, what might have taken months to transpire in the US took place in six short weeks; Apple sourced a virtually scratchproof glass from Corning, and Chinese factories rapidly managed to integrate it into the existing iPhone design.
As it's an American company reaping unprecedented financial rewards, many Americans have lamented the fact that the rewards coming back into America are so comparatively meager. Apple employs 43,000 people in the United States, less than a fifth the number of contractor employees assembling iPhones at one Chinese factory. One could argue that Apple's success has come at the expense of the American manufacturing workforce, but if the New York Times' report is anything to go by, it seems the workforce Apple would have needed in America never existed to begin with.
Share
Look at the back of your iPhone, or your iPad, or on the bottom of your Mac. You'll see the following words embossed somewhere: "Designed...
Add a Comment
"Around a fourth of those 230,000 people live in company-owned dorms or barracks right on factory property; that's almost 60,000 people living and working at the factory. Many of the people at "Foxconn City" work six days a week, twelve hours a day, and they earn less than US$17 per day."
"According to one current Apple executive, "The US has stopped producing people with the skills we need."
What Apple need is industrial slavery. That's what they found in China. It's not the people with the skills that apple needs.
I say tax the hell out of companies that have manufacturing overseas. Make it law that Americans buy only goods made in USA.
:-)
Really? You should run for office.
February 18 2012 at 12:14 PM Report abuse Permalink rate up rate down ReplyMaybe we don't need so many Iphones and Ipads. Apple could make however many the local workforce could produce. Americans think they need all these toys just because the guy nextdoor has one. I thought about buying an iPad and then decided it wouldn't have much effect on my quality of life. Re-arrange the work flow here - China figured out how to do it.
February 08 2012 at 10:09 AM Report abuse Permalink rate up rate down Reply
Seedypoet
What is this? More corporate propaganda?
This article doesn't take into account the fact the Chinese method for industrial manufacturing was built around
the idea of taking advantage of such a huge workforce, instead of automating most tasks like a U.S. facility would. After all, integrating automation into the design scheme costs more in the short run than just adding a few more thousand underpaid workers to the operations.
Supposedly, this info comes from a hghly researched source. Obviously, the reseach standards of the New York Times has become woefully inadequate.
Only 83 cities with a total population over 230K? If that's based on citizens, okay.
Let me check your Siri's findings, . . .
http://www.screencast.com/t/dbePXp9u9r
Okay. She's good.
Chinese workers have 1/3 the productivity of US workers (production per unit of GDP), so you would technically only need 77,000 Americans to do the same job. Also, I would take issue with what Apple's definition of an engineer is. I think far more Chinese than Americans know how to plug a CAD drawing into a plastic injection machine, but how many can design an original product from scratch? Chinese engineers (with bachelors degrees) I know often do not know how to do more than view a 3D drawing, let alone make changes or improvements.
Probably China's greatest asset (besides cheap labor) is the fact that South Korean/Taiwanese/Japanese suppliers are all right in the neighborhood. It might be a much bigger pain logistically speaking to manage that in the US. Of course, that might motivate Apple to find local producers of those items as well...
Anyway, globalization is inevitable. Nothing to get worked up about, just worry about making the next big product the world must have.
We can create more US jobs by giving free patent right to US manufacturers.
For example, candidate for California state senate Steven Kays is using this jobs platform to create California high tech jobs. Kays is also an electronics inventor. www.KaysForSenate.com
California Innovation Institute 707 428-5000 is giving away over 1000 inventions with free patent rights to local manufacturers.
It is time to both invent and manufacture in the US. Candidate for California state senate Steven Kays is using this platform to create California jobs. Kays is also an electronics inventor. www.KaysForSenate.com
January 31 2012 at 10:09 PM Report abuse Permalink rate up rate down Reply
RichDee
This is the most pathetic excuse I ever heard…to say that America simply cannot handle the assembly of Apple products, or any other product for that matter. The utter nonsense that one needs a quarter of a million workers to assemble these products only caters to a pre-Industrial Revolution mindset. It’s deplorably archaic.
That Henry Ford could manage to pump out fully manufactured and assembled Model Ts in the matter of hours over a hundred years ago not only validates that America can assemble these products faster with technology on our side, but also underscores the BS that it is simply impossible. “Simply impossible” is the lame expression that all other countries on earth love to use as well as some unPatriotic American CEOs, but that is NOT the motto of true patriotic Americans that would make sure these products are made in the USA.
And with the near Depression that America is in right now, it is also BS that we don’t have laborers willing to work in a factory. Not every American is CEO material, and once Americans get back to that realistic mindset will these blue collar workers finally get jobs again!
This entire article is nauseating! Wake up America!
Amazing to see the comments all over the place... China is a communist country that uses their people as slaves selling them off to work for whoever pays the government. It is easy to feel sorry for the Chinese people as they are NOT smarter or stronger than the people of the USA. The people of the USA have earned their freedom and have continued to remain free. The people of China are NOT able to organize and stand against their own government and that is why the people of the USA can have their electronics made for approx 25% less due to the criminally cheap labor used to build the devices. It is pathetic to read the comments of the obviously young and/or naive who speak to the business aspect forgetting the human component involved entirely. Do you really think a company or anyone that is willing to make money off of the backs of slave labour in a communist country cares about you? Where will the companies like this be when you need help with something? This is business and nothing else, so the next question is if you owned the business do you care how your company makes money? Is it ok to make money off of a little suffering? A Lot? Where do you draw the line? Do you think slavery should be brought back to the USA? Should the USA become a communist country and beat down its people to a point that other countries say that it is a good thing for you to make $17 a day and live in a dorm room with 8 strangers? If you believe for a second that this is an example of Chinese superiority you are so far off it is ridiculous! If China is superior why do the people of China literally kill themselves trying to get out and make it to the USA? Why do so many people from other countries including China come to the USA to get a Higher Education if our Educational system is so bad? The Companies that outsource to China make money, the Chinese government makes money, they steal the technology and rip off everything, nothing original comes from China anymore... It is a sad country and we should never envy it or wish our country to be more like it as there is nothing to like? It is sad to see fellow Americans believing that what is happening is ok or even a good thing. I am sad for the people of China but it is "The Peoples Republic of China" so maybe it is time they stand up for themselves. There is no incentive for the USA Corporations making money off of the slave labour to encourage them to do so or they would lose the benefits of being able to look the other way and pretend it is all ok. If Apple wanted to be a friendly company they would employ people locally in the countries where they sell their products. Imagine the pride of the people in every country being able to purchase what they make, as well as the benefits that come along with such an endeavor. Apple needs to realize they are now on everyones radar and we know they can make a difference, the profits are too big for people to continue to look the other way... Welcome to the Global Economy!
January 25 2012 at 2:24 AM Report abuse Permalink rate up rate down ReplyDeals of the Day
more deals- Acoustic Research Digital Photo Frame with iPod Dock for $50 + free shipping
- Apple iPhone 4 8GB for Verizon, AT&T, or Sprint for $50 + pickup at Best Buy
- Unlocked iPhone 4S 16GB for GSM (AT&T, T-Mobile) for $619 + free shipping
- Apple iMac Core i7 Quad 3.4GHz 27" w/ 24GB RAM, 2TB HDD for $2,677 + $29 s&h
- Used Apple Magic Mouse for $36 + $4 s&h
- Skullcandy Riot Earbud Headphones for $10 + free shipping
Software Updates
more updatesFeatured Stories
more stories
Popular Stories
TUAW (or The Unofficial Apple Weblog) is a website devoted to tips, reviews, news, analysis and opinion on everything Apple.
121 Comments