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Source for 35 cents an hour where Apple admitted it? And I mean other than The Onion article where they make 31 cents an hour and work a 35 hour workday.
I guess you've never heard of taxes. Look at what Fluke pays for assembly work... it's not minimum wage. Then you've got 7.5% for payroll taxes, unemployment and workers comp, benefits.
I have tons of extremely well built Chinese "crap." My Lenovo laptop is solid, I have industrial electronics stuff made in China that's top notch, my Denon AV equipment is made in China. Of course, none of that was really cheap. The iPhone I wouldn't call crap either, especially compared with the last cell phones we made here. Talk about crap. Those things broke all the time.
You ignore that the big cost isn't labor, it's that the Chinese are simply better at making iPhones.
Steve Jobs answered just this question when he said even if he wanted to its not possible.Perhaps one bright horizon is that energy both natural gas and crude may gain us some competitive edge in the future;just depending.Perhaps we also may see as we always have a shift to making things which are more innovative as we always have. I don't see us becoming that competitive in basic screwdriver assembly. In fact I see less since we are going to see deep cuts in defense spending much of which goes to domestic production. That is a huge amount we are likely to see disappear to a large degree.
The liability issue alone could be worth it to manufacture products in the United States. Look at Mattel, 9.75 million toys recalled in 2007 and a class action lawsuit in the works. If any of these children have health problems in the future that can be traced to lead paint from Mattel toys, I predict thousands of future lawsuits against Mattel. In the end it could end up costing Mattel a lot more in lawsuit then they were saving with lower Chinese labor costs.
Of course they would be profitable, but that's not the point. The point is: could they be competitive in a global capitalistic market. And the answer is no.
In modern-day capitalism, the attractiveness of your financial performance depends on investors' relative risk-adjusted options. If your company returned $2 a share in earnings, that's cool - but if your competitor is making $2.25 a share with higher free cash flow at a similar cost of capital, then that $2 is not so good anymore. If everyone else is making $1.75 taking on the same or more risk, then your $2 suddenly looks really great. In Markowitz portfolio theory terms, investors want to pick assets that are on the efficient frontier, i.e., the greatest risk-reward combinations, depending on their risk appetite. Efficient capital and asset markets have significantly reduced frictions for investors and firms, enabling them to fluidly construct their "location" on the efficient frontier a wide array of competing alternatives. All of this means that investments will flow to those areas that offer the greatest risk-adjusted return. Part of that equation means to decrease your expenses to the minimum necessary level and optimize your capital investments for the greatest future return on your sales.
So with all that said, companies that elect to take on higher costs than their competition are only hurting themselves, and the capital markets don't reward that; they punish it.
If corporate jobs are to come back to America on a large scale, they need to do so on a competitive basis, not just an altruistic one.
Source for 35 cents an hour where Apple admitted it? And I mean other than The Onion article where they make 31 cents an hour and work a 35 hour workday.
I guess you've never heard of taxes. Look at what Fluke pays for assembly work... it's not minimum wage. Then you've got 7.5% for payroll taxes, unemployment and workers comp, benefits.
I have tons of extremely well built Chinese "crap." My Lenovo laptop is solid, I have industrial electronics stuff made in China that's top notch, my Denon AV equipment is made in China. Of course, none of that was really cheap. The iPhone I wouldn't call crap either, especially compared with the last cell phones we made here. Talk about crap. Those things broke all the time.
You ignore that the big cost isn't labor, it's that the Chinese are simply better at making iPhones.
Three sources, it was in my local newspaper, on Apple's website, and on yahoo news.
I already took that into consideration. Did you not consider the costs Apple already incurs from shipping and importing, plus what they have to pay to the Chinese government? But just to humor you, lets say they did hire 300,000$ and paid them $7.25. Now, once you figure in taxes, workers comp, and insurance, that actually comes to about $13. This is over 40 hours per week, every week of the year. That's 8.112 Billion. So what would be the average cost to the consumer? Well, Appl could absord it and still bring in close to 20 billion just in flat our profit...perhaps more once you remove the expenses they pay for all of their presense in China. Let's say instead however, they pass on 1% to customers. That's $7.37 average per product, though it'd probably be spread out more evenly based on price of item.
Oh, and yeah...it is crap...I've never seen anything before that get's outdated after 6 months. What is the difference between Iphone 4 and Iphone 4S? Siri? What about the Ipad and Ipad 2? Guess the good business thing today is build something that gets a lot of attention, and then a few monthes later come out with something that is basically the same with one or two differences and stick an even bigger price tag too.
I feel pretty secure in the point I've made. They can bring jobs back to America. Of course it will likely cost them 1/4 of their profit...yet no one currently working would have to take a pay cut, and the company would still be making money. Of course, what is the likely hood of them doing this? Corporate greed reins supreme, and why be limited to 20 billion profit when they can support China and the impoverishment of it's people while doing nothing for our unemployment...
I always marvel at the assumption of some American's as to their notion that there really is an "us", the corporate structure as it relates to globalism seems to be a continuing mystery to most. Whether it's a corporation in Europe, Japan, or the US, one thing remains constant, that is the fact that multi national corporations are just that. There is no "us" as in a combination of citizenry and government/business relations. This notion has been the underlying drive in the attempt by oil companies operating in the Bakken fields of north America, they want to make American's believe that the oil is somehow "American oil" when in fact all oil is sold on world markets wherein the highest bidder takes the oil.
This same notion of an "us" in all things American has caused people in the US to believe that they can somehow compete within this view of global economics. Globalism is NOT about labor cost differentials, it stands as a testimony to the advancement of an old idea, economic superiority, the real goal of multi national corporations. Labor cost is just one of many facets the globalist seeks to mitigate through the establishment of a worldwide network of corporate/government relations. Any laws that regulate are seen by capital managers as an uninvited intrusion on their assumed turf of superior economic strategies, it is their dream to own nothing and control everything, in that paradigm they are able to escape the responsibility of ownership while taking all the profit. This is why the world still suffers from a very noticeable imbalance of wealth despite the many years of global manufacturing and agricultural spread.
I'd like to be a bit more optimistic here but the truth of the globalist's goals dictate a much poorer America in the future, the multinationals are now opening new consumer markets and expanding existing markets around the world in an attempt to discount the damage they have brought to the American consumer economy. We are becoming economically irrelevant in a world where we once dominated the consumer market. Today the Chinese and southeast Asian's are beginning to flex their buying power muscles, but it may be a short lived phenomenon as their own realization of just how interconnected we really are hits home, the funny money of the western nations won't be worth a damn when the entire world experiences the inevitable crash of the western consumer markets. Here at home though....The band plays on.
Simple answer... Some work has become cheaper and more adventitious to do here in the states, while other work is better off done in cheap labor countries. In general, products which require tighter quality control standards is better done here in the States. It used to be that it was fine if 50% of the parts were good coming from China. Just pay an American to sort through the good and bad parts here in the states. Perhaps have someone here fix the fixable mistakes, like with dies for the stamping plants and such. These days, oil prices are challenging that strategy, along with more current corporate business strategies.
The JIT (just in time) manufacturing movement has become the order of the day for many businesses. For many reasons, many businesses prefer to have their parts or products manufactured on an as need basis. This works perfectly for American manufacturers, who can make the parts in a few days and have it in the hot little hands of the customer by the end of the week. It is more expensive, but fits in line with the current business strategy. When it comes to things like Iphones, which seem to have an endless demand, it's more profitable to just have the Chinese manufacture and assemble endless orders of them and send them here. No matter how many they produce, there will be an endless demand waiting to buy.
Working on the floor at a large job shop, the largest order I will see for a specific part is around 40,000. The customer will renew such an order about 3 times a year. In three shifts, operators will produce about 1000 per day of that part. Running 6 days, it will take around 6 weeks to fulfill the order for each contract, plus a day to set the machine up. Dealing with China, the customer would have to deal with the long turn around time, the difficulty in predicting the anticipated scrap (which will be much more unpredictable and a much higher % on average), the turn around time in reordering, the other endless supply in BS dealing in China... It just doesn't work for a company who is concerned about potential declines in demand for the product.
Also consider what happens if a customer doesn't have the required parts for a product... Many assembly lines cost in the millions in interest, labor/health insurance for workers, etc. Holding them up because parts are not available could very well sink many mid sized businesses, or ipe out potential profits at least. For the amount they could POTENTIALLY save dealing with Chinese suppliers, it's not worth the risk. I believe John Deere looses around 1 million a day for most assembly lines that are not producing. There are many reasons they have most of their work done here in the states. They can count on the work being done right, and delivered on time. It is not worth gambling on Chinese manufacturers.
I could go on and on about why some do and some don't offshore, and why many are reshoring. Many made bets on Chinese manufacturing. Some got rich, and some lost big. Many are reshoring these days because they realize it's a better strategy. Offshoring works for some, and not for others. For many companies, made in the USA is much more favorable for the business strategy. In theory, it would be most favorable to have the work done in cheap labor countries like China. In the real world, it just doesn't work out that way for many.
Interestingly, I had a discussion with the foreman for my shop yestrday that fits into this discussion. We were discussing the costs of the tools we have in our toolboxes for the work we do. Precession measuring equipment for the most part, that cost between $200-$1000 dollars a piece. I said, I certainly can't believe that the average Chinese worker has these tools at their disposal. His response was, and the companies wonder why they have so many quality issues with Chinese made parts???
The corporate tax rate in the United States is 35%.
The corporate tax rate in the EU and elsewhere is now roughly half that. And you want to know why corporates have sent so much off shore?
I remember reading an interview with a tech CEO (I think it was Andy Grove of Intel) who was discussing how much it cost to build a new plant in the United States versus overseas. By the time you add up all the regulations, permitting, taxation, licensing, etc. etc. etc., It was roughly $1 billion more before the plant start spitting out the first chips -- and only 1/10th of the price difference was in salary. I really wish I could find the article.
Gotta pay for the military industrial complex somehow...
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