Originally published at: How Tim Cook Steered Apple to New Heights… and Dependence on China - TidBITS
Bloomberg Businessweek has explored Tim Cook’s tenure at Apple, with insights on how he’s made the company more profitable and dominant—but also more reliant on China—than ever.
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It would be better if production was moved from Red China to Foxconn’s factories on Taiwan. Of course their attempt to build a factory in these United States floundered and is behind schedule, so it isn’t realistic to expect they could build Apple products here.
Would it make a difference if Foxconn was building and running the US factory? Given the problem of unqualified employees, would increasing the use of robots make a difference to doing Apple’s manufacturing in the US (but that would reduce the aim of employing more Americans)?
I went to China in 1976 and those days we had supervised tours that included visiting factories which were rather underwhelming. But I was with a bunch of industrial CEOs and collectively they were upbeat about getting products manufactured in China. In hindsight they saw the potential whereas I was not wholly convinced.
Between the higher labor costs here and the lack of the underlying parts infrastructure the price would be considerably higher. Like it or not…these devices don’t have a steady demand…for a fall launch they need maximum production from July or so through Feb or so when demand starts to slow. That means more workers for part of the year…and this isn’t to speak ill of either our labor laws or unionized labor…but the combination of those two make a variable sized workforce not something easily achieved here if it is possible at all. The support infrastructure for the assembly lines…parts, vendors, etc…is another huge problem as it just doesn’t really exist here…and a big reason for that is back to labor supply, demand, and cost.
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I am trying my best to avoid bringing politics into this discussion. There are huge problems with factories that Foxconn already built in the US but never staffed:
Definitely agree. Look at the problems Foxconn is having getting their first factory (Wisconsin) up and running in these United States. That is why I said it would not be realistic to expect Apple to build here. Also, based on my experience with automobiles built in these United States, the quality would not be as good as it is now.
It’s a problem, for sure. Does anyone know of high tech manufacturing successes in the US that could perhaps be used as a model?
Dell still builds some servers in Austin; everything else happens in factories in other countries. I think HP still does some assembly in the US.
Perhaps the biggest reason Steve Jobs hired Tim Cook was the supply chain he engineered for Compaq. He not only re-engineered Apple’s supply chain, he limited and focused Apple’s product line, and successfully oversaw the development and delivery of a host of new products, services and upgrades. IIRC, an important component of this strategy was shutting down Apple’s inefficient and problematic factories in the US. When it comes to manufacturing, I’m not qualified to second guess Tim.
Something else just dawned on me about manufacturing in China. That country is, by far, the biggest miner of silicon, producing 4,500,000 tons a year. The US is #4 at 320,000.
Foxcon saves a lot of money by manufacturing near the source of silicon. If Apple wanted to manufacture chips here, it would have to pay the cost of shipping raw materials to the US, as well as higher manufacturing costs.
Well, a few years ago, I would have said Boeing, but not so much now.
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