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  • NYT Article Highlights How U.S. Lost Out on iPhone Manufacturing Work



    Apple and their overseas production operations have come under considerable heat in the last few years. However, a new article in the New York Times brings to light why Apple, more or less, is forced to manufacture their products in China and other countries.

    The piece is nothing short of enlightening, but trying to summarize the seven-page opus would be a disservice to Charles Duhigg and Keith Bradsher’s reporting efforts.

    However, the big take aways are:

    • The only place Apple could manufacture products is China, and it isn’t just because of the cost. The Chinese governement subisidized the building of factory cities where companies and manufactures could hire legions of workers (3,000) and engineers (8,700) to live in dorms in a day. This same process would take nearly nine-months in the U.S.
    • The most prescient example of this given in the article is Steve Job’s order to make the iPhone’s screen unscatchable. Jobs refused to sell a phone that people would carry in their pocket under the constant fear of having the screen scratch. So six weeks before the devices release he ordered his “lieutenants” into in office and told them to figure out to make the glass scratch proof, and have it ready in a month. This scale of manufacturing simply wouldn’t be possible in the U.S. under those time constraints.

    After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

    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.
    For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit? — NYT

    • Academic and manufacturing analysts estimate that because labor is such a small part of manufacturing Apple’s devices that paying American workers would add roughly $65 to each iPhone’s end cost.
    • Apple’s A4 and A5 processors are manufactured by Samsung. In Texas. By Americans.


    An enormous amount of information is packed in the article about the regulations, laws, and government postulating that caused the U.S. to lose out on Apple manufacturing, but the message is clear: labor costs equal a small part in the much larger logistical equation that is Apple’s iDevice supply chain.

    Source: The New York Times [via 9to5Mac]
    This article was originally published in forum thread: NYT Article Highlights How U.S. Lost out on iPhone Manufacturing Work started by Phillip Swanson View original post
    Comments 46 Comments
    1. PatrickGSR94's Avatar
      PatrickGSR94 -
      Quote Originally Posted by Aerocare View Post
      The iPhone was designed and created in the USA so it should be manufactured in the USA no matter how much it costs outside of the USA. I don't complain about anything designed or created in other countries because if they created them then they get to enjoy the lower prices over there. For example if I want to buy a Mercedes Benz it'll cost me more here than in Germany. I don't mind that because they put the money into design and development. They should get the benefits.
      By that same token of logic, all automakers should only manufacture their cars in their own country of origin. Yet MANY foreign automakers now have manufacturing plants here in the US and North America. There are many Toyota plants here in this country now, one of which just opened and started production just 90 minutes from me. And Mercedes Benz has a plant just a few hours' drive from me. Nissan also has a plant less than 3 hours drive from me. All of these are in the state of Mississippi and Alabama. There are tens of thousands of Americans employed by foreign automakers in plants located right here in this country. So would you rather have those jobs just pack up and leave this country?

      I was just at the local annual auto show yesterday, and all the Toyotas there had stickers listing the amount of content originating in the US and in Japan. Most cars (Camrys especially) had at least 75% of their parts originating in the US, with only about 10% from Japan. The exception was the Camry SE, with more transmission parts from Japan, and the Camry Hybrid, with most of its parts coming from Japan.

      Of course, some say that the cars actually BUILT in Japan have some degree of a higher quality over cars built here, but that's another discussion...
    1. 2Jaze's Avatar
      2Jaze -
      Quote Originally Posted by richardjs View Post
      you have people b1tching and whining about paying $0.99 for an app and you think they'll be happy to shell out another $65 for their device? everyone's a patriot until they have to pay for it.
      EXACTLY. People complain about paying for apps and most notably on this site, Cydia apps and tweaks....you have issues with giving hard working freelance devs $3 for coding their asses off on their free time to provide improvements to your iDevice, but you'll gladly shell out more cash for an already expensive iPhone "in the name of American jobs?"

      Jay-Z said it best: We don't believe you, you need more people.
    1. Aerocare's Avatar
      Aerocare -
      Quote Originally Posted by PatrickGSR94 View Post
      By that same token of logic, all automakers should only manufacture their cars in their own country of origin. Yet MANY foreign automakers now have manufacturing plants here in the US and North America. There are many Toyota plants here in this country now, one of which just opened and started production just 90 minutes from me. And Mercedes Benz has a plant just a few hours' drive from me. Nissan also has a plant less than 3 hours drive from me. All of these are in the state of Mississippi and Alabama. There are tens of thousands of Americans employed by foreign automakers in plants located right here in this country. So would you rather have those jobs just pack up and leave this country?

      I was just at the local annual auto show yesterday, and all the Toyotas there had stickers listing the amount of content originating in the US and in Japan. Most cars (Camrys especially) had at least 75% of their parts originating in the US, with only about 10% from Japan. The exception was the Camry SE, with more transmission parts from Japan, and the Camry Hybrid, with most of its parts coming from Japan.

      Of course, some say that the cars actually BUILT in Japan have some degree of a higher quality over cars built here, but that's another discussion...
      Read what you quoted me and you'll realize you made my point, thanks. That quote was a reply to someone who said if the iPhone were made here it would be a lot more expensive for other countries. I said who cares? Those auto makers aren't building those cars here in USA due to the kindness of their hearts. They do it so their product is cheaper to sell to Americans. Just like those auto makers moved part of their production to the USA to make it cheaper for Americans so did Apple where they moved some production to Brazil to be able to sell to Brazilians cheaper than having to pay almost 50% in import taxes. Again, IT'S ALL ABOUT THE MONEY !!

      Quote Originally Posted by mr117 View Post
      Teachers know how to teach. However, one of the biggest problems is, I'm sorry to say, cultural. Parents and students don't always see the use of education and hard work. Students would rather text in class than listen to a lesson. Mass media and the dream of instant riches has replaced the whole Horatio Alger concept of making it on your own.

      What I'm saying is that many American students fail to learn because they don't try.
      I'm a teacher also and I approve this message !!

      I was being sarcastic when I told him it was the system's fault. Look how when he was called out he took the time to do it right. You hit the nail on the head, it's the parents fault and the student's own fault too for taking the easy way out. You should see a resume I received where many of the words were written like if he were sending a text! Are you kidding me? I emailed him and told him if he took short cuts on his resume and didn't have time to write a few more letters to complete the words on his resume then I can't trust him to not take short cuts during his job performance.
    1. richardjs's Avatar
      richardjs -
      Another thing I've been thinking about. Unions. They are in it for the benefit of THE WORKER. Not the unemployed. The worker benefites from higher pay, benefits and a HUGE number of restrictions and regulations that apply pressure and cost the employers A LOT of money. Just putting it out there as a
      South African living with 50% unemployment, that I think it would FAR benefit the POPULATION of ANY country to support the families of 150 people at $10 an hour than 100 people at $15. The unions still perform service, and protect more people ultimately. And I think that 50 extra people would lighten the load too, theoretically.
      When the ARE NO JOBS, people take what they can get and don't b1tch as much. I'm on the front line here, every day.
      However, this argument has MANY holes in it and is ultimately a debate about socialism vs capitalism. I cant see the last line I'm typing [cos there's a bug in the modmyi iOS app and its covered by the "Open Advanced Options" bar] so I'll drop it there. Something to think about. just mixing it up a bit.

      Oh, and it may be designed in the US and made in China.....cheaper that way.....blah blah blah, but it might interest you to know that they are paying $500 for a 16gig 4S over there and cash price here in SA is about $1000. Now your $65 increase becomes $150 for the rest of the world.
    1. metaserph's Avatar
      metaserph -
      Quote Originally Posted by mr117 View Post
      "Production of this size and scale could never be possible in America" Of course it could. It just stopped being possible after WW 2 when we began to enter the post-industrialized phase of our existence.

      "Don't worry it's not your fault it's the education system who failed you." I'm a teacher (albeit in special education) I went to California schools in the 1950s and 60s. The educational system would be fine without politicians trying to look good to voters and admins trying to look good to politicians. Teachers know how to teach. However, one of the biggest problems is, I'm sorry to say, cultural. Parents and students don't always see the use of education and hard work. Students would rather text in class than listen to a lesson. Mass media and the dream of instant riches has replaced the whole Horatio Alger concept of making it on your own.

      What I'm saying is that many American students fail to learn because they don't try. It's easy to blame the EPA or the educational system or the unions or the Chinese or... but at some point America needs to take a good look at itself and realize what is going on. That's why there are mirrors.
      Bro, you hit it dead on the head. Hopefully soon, we will look in the mirror and not be scared to stand for principles. But that's another forum, it would never end. But damn, head on.
    1. mr117's Avatar
      mr117 -
      Those plants are non-union. Not saying that is good or bad, just saying.