Should Apple Make Its Products In The U.S.?

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Foxconn Factory

The New York Times on Sunday published a provocative piece asking whether Apple has an obligation to make its products at home in the U.S.

The article describes how, in 2007, just before the iPhone hit stores, Steve Jobs angrily discovered that its screen was easily scratched. He ordered the plastic screens be immediately replaced with scratch-proof glass ones.

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.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The Times notes that General Motors in its heyday employed 400,000 U.S. workers. Apple employs 43,000 people in the United States and 20,000 overseas. An additional 700,000 workers build and assemble Apple’s products, mostly in China.

The main reason is pretty obvious: cheap labor. But it’s also noted that in China, there’s the hustle to wake a shift of workers at midnight to get started on glass screens. In addition, the entire supply chain is there, so if a plant needs one million screws, there’s a screw factory a block away. And there are many other factors, including the Chinese government’s willingness to invest heavily in industry, which allows plants to be built on spec.

But one theme keeps recurring: a better supply of well-educated workers.

When Apple looked at building an iPhone plant in the U.S., it couldn’t find enough engineers to oversee the production lines:

Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

In the piece, an anonymous Apple executive says the company “shouldn’t be criticized for using Chinese workers” because “the U.S. has stopped producing people with the skills we need.”

Indeed, in Walter Isaacson’s biography of Jobs, there’s a description of a conversation he had with President Barack Obama during dinner in Silicon Valley. Obama asked Jobs what it would take to make Apple’s products in the U.S.; Jobs replied that it wasn’t cheap labor or government regulation, but a lack of skilled labor.

Jobs told Obama that the country needed more trained engineers, especially those from overseas who get degrees in the U.S. but are forced to leave after graduation.

Obama replied that the immigration reform bill was tied up in Congress, which annoyed Jobs. He later told Isaacson: “The president is very smart, but he kept explaining to us reasons why things can’t get done… It infuriates me.”

The outsourcing question is a complex one, and as the Times piece notes, there are many factors, including exploitive worker conditions.

Still, Apple’s revenue topped $108 billion — more than the state budgets of Michigan, New Jersey and Massachusetts combined. The estimated additional cost of making an iPhone in the U.S. is only $65.

Apple’s products are designed and marketed in America. When the company is enjoying unprecedented financial success, does it have a moral obligation to put that money to work at home?