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it could not be labor cost. many of those product is highly automated. living wage in many area could not be that much impact to the profit. is it because the US does not have knowledge how to manufacture thing from the designed to the final product?.
You really think Apple doesn't consider wages when deciding to manufacture in China? It does have an impact on profit..
The profit margin on Apples products is huge..I think something like 40%...how much of that do you think is because they use cheap Chinese labor?.. Apple's stock would not be nearly as high if their profit margin was lower.
FoxConn (the company Apple uses in China to manufacture their products) employs millions of people
Actually, the CEO of Intel gave a very interesting interview three or four years ago. The upshot was that if a plant costs a billion per year to operate overseas, the same plant costs two billion to operate in the United States, and only 10% of those additional costs are in labor. Higher taxes and more regulations were the culprits.
The other thing to consider is that the United States has the second highest corporate taxes in the industrial world, second only to Japan. And Japan's industry and government are wedded so tightly and corruptly that one can play games there that one cannot play in the States. The United States corporate tax rate is well north of 33%, the next highest corporate tax rate belongs to Sweden, a full 10% lower.
So not only is it a labor and regulatory cost, but it means a huge windfall if one sets up a corporation overseas and keeps the profits over there. Even now, American corporations are sitting on untold billions in profits overseas that they simply do not want to bring home lest the government skim a third right off the top.
Also many Japanese and foreign cars are actually made in the US despite popular beliefs.
A good reason for that is transportation costs. It costs a good deal less to make a Honda in Alabama and send it via rail to California than make the same Honda in Japan and ship it across the Pacific. What's more there are other costs in larger goods, such as opportunity costs.
For example, the furniture manufacturing biz is quickly exiting China. Part of that has to do with the fact that labor costs have been rising by double digits. So Indonesia and Vietnam are suddenly becoming the go-to for manufacturers. More importantly, the shipping costs not only add to product expense, but create a much longer cycle from order to delivery.
If you buy mid-level and up in furniture and it has to be made in China, you will have to wait roughly 16 weeks for it to arrive, 14 if it's moving at a blistering pace. Meanwhile, American factories can deliver the same piece of furniture in less than 25% of the time. And don't even think of ordering anything around the Chinese New Year. Finally, if there are any dings or dent in the furniture after being shipped halfway around the world (A very frequent occurrence), then you are out a lot of money.
Electronics are actually the best thing to manufacture cost-effectively in China because the transportation costs are not large at all per unit. Simply load 100,000 iPods or 35,000 iBooks on a FedEx plane and the unit shipping costs are negligible. You can't say the same for air freighting a dozen dining room suits or a similar number of Odysseys.
A large reason Apple produces its goods in China is the prevalence of engineers and because Chinese factories are made to be able to easily change things. US factories problems is in order to make changes, often requieres a new factory. We saw that we the advantage of foreign auto makers factories over domestic.
A large reason Apple produces its goods in China is the prevalence of engineers and because Chinese factories are made to be able to easily change things. US factories problems is in order to make changes, often requieres a new factory. We saw that we the advantage of foreign auto makers factories over domestic.
There's a reason we always get failing grades on infrastructure...
We're too busy blowing our cash on pointless wars over seas...
Instead of putting the nation to work with great public works projects (which do actually spur the economy) like last time we had a huge financial crisis, we gave all the money to banks who only turned around and bought bank treasuries with it.
07-02-2013, 09:24 AM
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n/a posts
Quote:
There is a myth that "things aren't made in the U.S anymore" but it's not really true.
This.
Sometimes it makes sense to manufacture overseas, like when you need to stamp the Apple logo out of a million or so iPads and need someone to file the edges. There are other times when it makes sense to build in the US, like manufacturing big, heavy items or really complicated parts with important IP behind them. The point at which manufacturing in the US makes sense seems to be trending in favor of US workers - whereas before we saw cars and computer chips being manufactured in the US, now we see companies like Apple and Lenovo building factories to assemble final products in the US.
There is a the tax structure, but there is also the liability structure. If you hurt a worker's feelings in the USA he sues for millions of dollars.
Also the cost of insurance (which is mandatory for all your workers) and the cost of retirement programs.
The bottom line is that American workers have priced themselves out of the job market.
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