NYT: How U.S. Lost Out on iPhone Work

[Newsjock]

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html
(very long: 4,585 words)

... 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.

... “Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

... “We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

[abelenkpe]

1. We need global labor unions

to combat global corporations. Unions that ensure that workers make a living wage and provide work in every community where those same products are for sale.

[Bonhomme Richard]

37. +1. n/t

[onehandle]

2. A few companies who's products are made in the same factories as the iPhone:

Acer Inc. (Taiwan)
Amazon.com (United States)
In 2011, Amazon and Foxconn formed a joint-design manufacturing company. The move was meant to produce an Amazon branded smartphone sometime in 2012.
Apple Inc. (United States)
ASRock (Taiwan)
Asus (Taiwan)
Barnes & Noble (United States)
Cisco (United States)
Dell (United States)
EVGA Corporation (United States)
Hewlett-Packard (United States)
Intel (United States)
IBM (United States)
Lenovo (China)
Logitech (Switzerland)
Microsoft (United States)
MSI (Taiwan)
Motorola (United States)
Netgear (United States)
Nintendo (Japan)
Nokia (Finland)
Panasonic (Japan)
Philips (Netherlands)
Samsung (South Korea)
Sharp (Japan)
Sony Ericsson (Japan/Sweden)
Toshiba (Japan)
Vizio (United States)

All electronics, be it in your computer, your phone, your car, or even your refrigerator, are overwhelmingly made in China.

Wish it was otherwise.

[alfredo]

31. How much of our military electronics have Chinese chips?

[boppers]

39. Depends on the weapons system.

In some cases, they're not even genuine chips.

http://www.allgov.com/US_and_the_World/ViewNews/Counterfeit_Computer_Chips_from_China_Compromised_US_Military_Equipment_111109

[alfredo]

48. Outsourcing can be a huge security risk.

[dipsydoodle]

3. Its not just profits

Products sell for the price that people are willing to pay. Given that iPhones are effectively given away on airtime agreements what labour rates did you have mind if production was USA ? In other words the model doesn't work.

[whathehell]

5. Of course it is..

Americans are some of the most productive workers in the world...Some say "the" most productive.

Certainly, they work longer hours and take far fewer vacation days than Europeans, on the whole, who

average about five vacation weeks a year...Americans average about two to three at most.

In return, of course, they tend to expect things like a First World Wage, a safe and humane work environment, and the right to

organize. None of those things, it seems, were to Mr. Jobs' liking...He detested unions.


The labor conditions in Foxconn in China, where Apple products are made, are such standing for TWELVE hours a day is expected..

Foxconn became famous in 2010 for having fourteen workers commit suicide by jumping out of company windows...The company responded by putting NETS outside of the windows.


http://www.telegraph.co.uk/finance/china-business/7773011/A-look-inside-the-Foxconn-suicide-factory.html

http://search.yahoo.com/search;_ylt=AvomgZnWTiiP7kE8kDKhILh52PAI?p=foxconn+suicidal&fr=my-myy-s&toggle=1&cop=&ei=UTF-8

[dipsydoodle]

7. I'm not defending the situation

Just saying there's no point in making anything on your home base if its too dear to sell. You also can't necessarily draw comparisons against different countries China in this example won't reach your wage levels until, if ever, they've got your standard of living.

[whathehell]

13. Well, that's encouraging, at least, but tell me, how do you feel about industry in the UK?

"You also can't necessarily draw comparisons against different countries China in this example won't reach your wage levels until, if ever, they've got your standard of living"

Due in large part to the offshoring of our manufacturing jobs, China's standards of living are going up, while ours are going

down...

Just yesterday, President Obama just made note of a "rising middle class in China" the other day in announcing new US tourism

incentives.

The point is, if you PAY people more, they will be able to AFFORD more.

[dipsydoodle]

14. Yours are going down while there's are going up

but the two remain miles apart.

UK has dwindled into mainly service industries over the years.

[whathehell]

18. So?....Is there any benefit

for us in our trading places?

I have no problem with their gaining a middle class, but not at our expense.

You say that the UK "has dwindled into mainly service industries over the years"...Are you

happy with that situation?...It sounds a lot like the US and I'm

certainly not happy with ours.

[alfredo]

21. Foxconn's suicide rate is in line with the suicide rate throughout China

I think Foxconn employs around 400,000 workers. The suicide rate for China is around 22 per 100,000 per year. Those are 2010 WHO figures.

[whathehell]

27. Could that be because working conditions all over the country are similar?

Even if that's not the case, by it's own admission, fourteen workplace suicides

in one year aren't exactly "usual"...These suicides, stacked up against

indisputably awful working conditions have drawn international attention.

Face it -- China's not big on human rights.

[alfredo]

30. China has never been a shining beacon of freedom. Capitalism is

Just another tool of oppression.

I remember when Nixon opened China. I had a great feeling of dread. I knew they would accelerated the destruction of our environment. Capitalism and it's handmaiden consumerism, is a suicide pact.

[AdHocSolver]

12. A couple of decades ago, that high-tech manufacturing was concentrated in the US.

Then the multinational corporations shipped that high-tech know-how to low wage countries.

I worked for some of the companies that did that.

The main reason for concentrating high-tech manufacturing in one area is to maintain monopolistic control over technology so as to prevent competition from "upstarts".

With computers, the internet, and automation, most products can be manufactured in many places. In fact, distributed manufacturing is far superior economically since one need not incur shipping costs of raw materials and finished products. Local production also is better for the environment since it "distributes", and thus reduces, the negative effects of pollution.

Even more importantly, distributed manufacturing provides jobs for people, and prevents monopolistic control of the world's economies.

[joshcryer]

22. Yep, and this "skilled labor" claptrap is BS.

Assembly line work is fascinating because you train one human being to do one task, and do it really well, they'll do it, and be very very good at it. This is a person who doesn't even need to have a higher education, or even be literate. If we were to manufacture electronics here using automation, we could get out of this cycle of slave labor.

I don't buy the whole "skilled labor" argument.

OK sorry, third time I've said that in this thread.

[whathehell]

28. Yes, it is...

and you can say it one more time, Joshcryer.

I can't believe all the Free Market, sweat shop apologists here.

[whathehell]

25. I did "read the article", dear

and I still don't "buy it"...Sorry.

[JNelson6563]

49. I understand that's only here though.

From what I understand (and I may misunderstand this so if anyone knows differently, please correct me!) in Europe they don't have free phone with contract nonsense (or even the practically free, wildly expensive otherwise phones either). You pay full price for the phone and can switch carriers at will.

I like that model better.

Julie

[dipsydoodle]

50. In the UK you can chose.

Either free phone, that's almost any phone which exists , with a contract inclusive of so many minutes and so much download or buy the phone and either contract too or pay as you go. I've currently got a pair of Galaxys , one for me and one for daughter, on contract where the phones were free and become mine at contract end. I've got a drawer full from previous contracts.......lol. Thereafter I can either do the same again with new phones or put the current ones onto pay as you go whatever.

For comparison , when there was no choice, back in 1987 , I had a fixed phone in my car. The phone cost c. £2500 and minutes were charged simply according to monthly usage.

[JNelson6563]

51. That sounds more like our system than I thought it was.

Thanks for the info.

Julie

[whathehell]

4. Usual reason?...US workers have the "nerve" to want unions and/or a 1st world wage?

Jobs hated unions...So much so, that many members of the Disney Board he sat on,

asked for him to be kicked off.


"... “We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

Such a lovely sentiment...It's why Americans of that calibre should lose their citizenship and have to pay TARIFFS to sell their stuff over

here.

[boppers]

40. Disney reference please?

All I've been able to find in the last ten minutes isn't about unions in general, but hiring/firing policies of a single type of union (repeatedly quoted, Jobs complaining about schools supposedly unable to fire poorly performing teachers), which I can't see as being relevant to being on the board of Disney.

[whathehell]

41. Here ya go...

http://www.appleinsider.com/articles/11/03/22/labor_union_votes_against_steve_jobs_reelection_to_disney_board.html

[boppers]

43. That's not about Jobs on labor, that's about labor on Jobs.

It's also about getting rid of a guy for being deathly sick.

Not really what I think of when I think of "labor", but maybe that's the message being intentionally sent.

[whathehell]

46. Believe what you want

or do your own research.

Thom Hartmann talked about Jobs' sentiments on Labor and its effect

on the union members of the Disney Board shortly after Jobs' death.

[tridim]

6. Slave labor = more profits.

The CEO's and stockholders win, everyone else loses.

U.S.A! U.S.A!

[newblewtoo]

8. Does anyone wonder why this is so?

Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

I am no fan of Apple. But, before I retired in 2005, it was becoming increasingly difficult to find enough math qualified people that wanted to go into a manufacturing career. Lots of people wanted to take the pay which ranged from $17-25 per hour but most couldn't pass a simple math requirement of about 9th grade algebra.

[whathehell]

15. Nope...It Sounds like typical corporate BS "reason" for hiring younger, cheaper and/or foreign

"The company’s analysts had forecast it would take as long as nine months to find that many math qualified people

that wanted to go into a manufacturing career."

Really?...Excuse me if I'm cynical about that -- US companies have been caught ON TAPE, "teaching"

H.R. Employees how to skirt/break our Employment laws, so that they can "insource" foreigners on H1-B Visas.

As former Secretary of Labor, Robert Reich was quoted as saying in "America: Who Stole the Dream",

by Pulitzer prize winners Barlett and Steele, "The whole system is fraught with abuse".


If it IS true, than perhaps the government shouldn't be UNDER-FUNDING public education the way

they've been for the last 30 years.

[joshcryer]

23. It's not so, it's a made up stat.

You train a group of 12 to set up a way to assemble a component, then you perfect it. That group of 12 goes on to train another group of 12. You can do this in the 10 days that they had been tasked by Foxconn. They're making this stat up because you really don't need to have highly skilled laborers to assemble components, any components, for that matter.

[alarimer]

29. Bullshit

They couldn't find enough engineers AT THE WAGES THEY WERE WILLING TO PAY, which was shit, for someone with a Masters or PHD in engineering.

[AdHocSolver]

10. To help the US economy, only the products sold in the US need to be made here.

It is the debt created by the importation of manufactured products from low wage countries that hurts the U.S. economy.

Americans don't benefit by importing cheaply made products because, in most cases, the importer does NOT pass along the savings to the US consumer.

A lot of electronic products are run using embedded computer chips. The cost of manufacturing a cell phone that costs $150.00 is little more (if any more) than the phone that costs $30.00. The difference in operation and features depends upon the software that is loaded into the computer chip. The software development costs are the same for both. It all depends on which features are enabled for a particular phone. The same holds true for many types of electronics.

That said, it doesn't follow that Americans should be gouged economically to ensure that corporations like Apple make unseemly profits.

The only reason that corporations can cheat the American people is because trade agreements such as NAFTA, and organizations such as the WTO, the IMF, the World Bank, and the Federal Reserve ensure that no American companies who want to manufacture in the US employing American workers can compete with the multinational corporations such as the outsourcing Apple corporation.

[Bonhomme Richard]

11. I think it's time for a global minimum wage. n/t

[whathehell]

16. Of course...Multi-nationals get away with this sort of thing by the poor around the world.

[SnakeEyes]

35. How much?

[Bonhomme Richard]

36. How about a percentage of what the principals make. The point is starting a dialog.

The principals of a manufacturing company that pays it's employees $10.00/day don't make $20K/year. They are making six and seven figure incomes, the difference is that the employees take the hit for company profit. I am sick of using the going local rate as an excuse to pay people next to nothing. But hey, they are used to living in boxes is not a satisfactory answer.
In essence, those countries that draw offshore business because labor is so cheap are actually subsidizing those companies on the back of it's labor force.

[marmar]

17. Apple is a multinational corporate psychopath, just like the rest of them......

..... yet people will fight to defend its "honor".

[whathehell]

19. Yup...and I fail to see why

they would deserve more "honor". That's crap.

[Blue_Tires]

34. +1

[joshcryer]

20. I call total BS on Apple's claim that they need "skilled labor."

This is rote manufacturing, put someone on a training cubicle for one week, they will freaking know the task that is assigned to them with incredible accuracy. This is China using the tried and true assembly line method pioneered by people like Ford. It does not require skilled labor.

[boppers]

44. Careful. Next thing you know:

You'll have the UAW claiming that putting a tire on a car is a skill,
the SEIU claiming that changing sheets is a skill,
the NEA claiming that teaching is a skill,
..and god knows how many miners claiming that swinging a pick is a skill.

So, think about this carefully: What does "skill" mean to you? And do those workers need protection from exploitation?

[joshcryer]

45. Well, I've done assembly line manufacturing.

Last edited Mon Jan 23, 2012, 03:36 AM - Edit history (1)

And I've done it without the cover of a union. You're blessed and lucky to get a union, but we shouldn't conflate the two concepts. A little 10 year old kid can take something apart, and reassemble it with fair success (they won't get it exactly right). Now, have that same 10 year old put one screw in one specific hole in one specific part of a component. I guarantee you that after only a shirt time of training, that same 10 year old kid will have 99% or higher success rate.

Thus mass assembly was born.

Skill is the ability to use one's knowledge effectively and readily in execution or performance. I assure you that same 10 year old couldn't assemble a component if it was handed to them completely unassembled, they would very likely have a very hard time even getting it 20% right. Hand a kid a set of LEGOs and they will spend hours assembling random stuff. Hand a kid a preassembled object made of LEGOs, break it up, and they will not be able to reassemble it. Give the kid the simple instructions, and they'll be able to assemble it in no time flat. After the kid assembles it a few dozen times, they will be able to assemble the entire object from memory (within reason).

You do not need "skilled labor" to assemble anything. You just need good methods (and OK trainers). Outside of that, anyone can learn and perform the tasks, from the age of 11 to the age of 111.

edit: to clarify, since I reread your post, and I came to understand it better; skilled labor is labor that is already trained to execute some task, yes, putting a tire on requires skill, but that skill on its face is easily learned. The skill is even easier to learn if 6 people do the task, with 5 dedicated to removing and replacing the lug nuts and a 6th dedicated to removing and replacing the tire.

To mass assemble any component does not require skilled labor, the whole point of the mass manufacture assembly line process is to train one person, and train them to do one or a few tasks very well. When you first enter an assembly line job you are unskilled, you do not know what the task is or how to perform that task. Depending on the task (say, polishing the surface of iPhones) it could be difficult or easy. As it stands now mass assembly in the US doesn't necessarily work that way. If you look at GM and how they manufacture cars, employees are not tasked with one or a few tasks, their tasks can take up to an hour to perform, they do a lot, and are paid proportionately for it. One person in such a job is really doing the task of 10 people (I've seen documentaries showing how cars are manufactured in these places, and I think this is an honest observation). For the manufacturer, theoretically they're getting more labor out of the job than they would if they divided it up to 10 people, proportionately to pay. In that vein union workers for GM are doing a whole lot more per object than Chinese workers.

This does result in skilled labor, either way. For the Chinese, the skill is adding a few components to an iPhone, a very few components, they are not assembling entire iPhones there. But to say it requires skilled labor beforehand is just an outright corporate lie. You might be able to make a weak argument that you cannot hire people in the United States unless they have a skilled background, but even with the regulations in place I find that patently false, nonsensical, at best. You could hire above minimum wage workers to do the same job, and they wouldn't even need a high school diploma. Once upon a time companies like GM hired a half million people. We could easily do that again, mostly unlearned, unskilled labor, and things would be fine. But American workers would need minimum wage, which is 10-20x what these Chinese employees make. They'd need regular breaks, which these Chinese workers don't get. They'd need OSHA safety training courses, which again these Chinese workers don't get. And that's why it's exploitive, we have in place pro-worker mechanisms to make life easier, China, not so much.

[nilram]

24. After reading the article, here's what I wanted to post on their site ...

(But the comments link wasn't working, perhaps because I'm not subscribing...) My comments may not make sense unless you read the article. In fact, even if you do read the article, I won't guarantee they make sense...


Yes, we don't have the speed and flexibility to revamp a manufacturing process by rousting 8,000 workers from the company dormitories. Maybe because we made slavery illegal many years ago?

What if, instead of saying "we must make this product perfect in six weeks," Mr. Jobs said, "we must delay shipment so we can make this product perfect"? Would the company profits be far behind where it is now? Would the market share of the iPhone be changed from what it is now? I don't think so, not at all.

Jennifer Rigoni --

“What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

Any plant in Detroit could find 3,000 people overnight. But why do you think they have to live in dorms, Ms Rigoni? Why?

“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”

Maybe if we want US economic supremacy to return, we should return to an era of slavery. Should we?

Maybe we should require that the entities to which our government gives corporate personhood treat ALL their employees like people and not like slaves? Even those entities they hire through third parties?

[AdHocSolver]

42. Microsoft is notorious for missing product launch dates.

It doesn't seem to have hurt their profits or their market share.

In fact, many of us in software development believed that they purposely announced "vaporware" to "discourage" the public from buying competitors' software until Microsoft actually had product to ship.

Moreover, why should consumers be more concerned about how much profit Apple (or any corporation ) makes as compared to how they may be abusing their workers to get that profit? I have never felt obligated to be concerned about the profitability of any one company.

[GeorgeGist]

32. Did you know ...

that if you hold your tongue and say Apple, it sounds like Asshole.

[roseBudd]

33. The issue is the model, the model changed from please the customer to maximize sahreholder value

and Bain Capital mainstreamed it

http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/

The Dumbest Idea In The World: Maximizing Shareholder Value

In today’s paradoxical world of maximizing shareholder value, which Jack Welch himself has called “the dumbest idea in the world”, the situation is the reverse. CEOs and their top managers have massive incentives to focus most of their attentions on the expectations market, rather than the real job of running the company producing real products and services.

The “real market,” Martin explains, is the world in which factories are built, products are designed and produced, real products and services are bought and sold, revenues are earned, expenses are paid, and real dollars of profit show up on the bottom line. That is the world that executives control—at least to some extent.

The expectations market is the world in which shares in companies are traded between investors—in other words, the stock market. In this market, investors assess the real market activities of a company today and, on the basis of that assessment, form expectations as to how the company is likely to perform in the future. The consensus view of all investors and potential investors as to expectations of future performance shapes the stock price of the company.

[nilram]

38. BEST tweet on this --

From @GSElevator:

#1: AAPL says the US doesn't have workers w/ the skills to make iPhones. #2: It takes a lot of skill to survive on 70¢ an hour.