In early December, Apple CEO Tim Cook finally confirmed that one of the existing Mac lines would indeed be exclusively manufactured in the United States early next year during his interview with NBC's Brian Williams. The idea of bringing Apple's outsourced production back to the States has been a growing rumor since November and mixed responses have risen since Cook's announcement.
Cook however, is proud to be apart of this expanding insourcing (reshoring) trend, telling multiple news outlets that it's extremely vital to bring jobs back to the United States. He points out since January Apple has already created 600,000 jobs in the States. These jobs vary from research and development to assembly production and marketing. Apple currently has data centers in North Carolina, Nevada and Oregon and is expecting to build a new centers in Texas this month. Cook notes that Apple was forced to consider alternative venues for production after criticism from the global community still emerged regarding the alarming suicide rates seen at their plants in China, which notably are still run by Foxconn. With such success seen in insourcing back to the United States , why doesn't Apple leave China completely and begin manufacturing everything from home?
Cook simply responded "it's not about price , but rather the lack of skills". Surprisingly, Cook and many other businesses who have production abroad feel that the United States education system is failing to produce enough people with the skills needed for modern manufacturing production processes. He also notes that the consumer electronic market is not as large in the United States as many people think. Harry Moser, head of the Chicago based Reshoring Initiative , seconds Cook's claim that American workers are far behind in terms of modern manufacturing production. Moser believes the United States should stick to what they are efficiently trained in when it comes to manufacturing and notes that other countries will continue to dominate high tech production in terms of manufacturing processes this year. He further states that the U.S. won't be able to make a dent in this high tech market , at least not enough to balance the trade deficit.
With all this being said what truly is the future of manufacturing in the U.S.? We further explored this idea earlier in the course by posing the bigger question, if the overall goal is to create jobs in the United States , why produce at home? I can see Cook agreeing that the flexibility and quick feedback loops obtained from consumers domestically would be appealing to produce in the States, but would he maybe argue that the labor force might actually be less productive at home due to the fact that they are lacking the skills demanded to compete within the modern manufacturing production processes? Does China have a comparative advantage in producing these modern high tech goods? These are questions I think are good to ponder , especially with insourcing growing in popularity. Regardless of what one thinks, no one can deny that recent data points to manufacturing at home as an increasing trend.
I think this article is very interesting. I follow Apple very closely and happen to know that this isn't the only example of re-shoring jobs. Just a few weeks ago Foxconn was discovered to have laid off some workers and it looks like some production of popular products like the iPhone is returning to the US. While this does mean higher labor costs, like you pointed out and an article we read for class mentioned, having facilities in the US will likely allow Apple to retain a more educated work force and allow them quicker response time for new products. The company's stock has really taken a beating over the last few months and these measures are some that investors believe could increase competitiveness. What an interesting connection to class.
ReplyDeleteCan it be that that education alone is not the only factor which is contributing to the low supply of workers who have the skills necessary to fill these manufacturing positions? Can the cost of getting these skills be less beneficial when comparing the amount of time and money one would have to invest in acquiring these skills and getting a wage that is not high enough to warrant the investment in the first place? Can the volatility associated with manufacturing jobs also have some effect on why people chose not to invest in skills in manufacturing? When I see many companies make a claim that we have a deficit of a particular class of labor for a particular job, I have to also take into account the wages they offer for such position.
ReplyDeleteI agree with Cook the the US education is far behind other countries. But I ultimately believe that their main reason why Apple is not moving entirely to the US is because of wages and costs. The company is spending $100 million on the US manufacturing initiative. It would be far to expensive to move all production to the states and frankly, not worth it. Even though these jobs may help improve the economy and the money spent to establishing these plants will be pumped into the economy, but is it worth it in the long run?
ReplyDeleteApple has done a good job at bringing jobs back to the United States. Not only have they increased production, they focus on insourcing all technical support jobs, which sets them apart from their competitors. I agree with Elena that cost is the driving factor for not bringing all production jobs back to the US. If jobs were coming back, I have no doubt that technical training programs would be started.
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