25 years after I began teaching that cheap labor is not a factor in international trade, New York Times gets around to saying the same thing. Let's go through their article:
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
***As long as we insist on capitalism, instead of free markets.***
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
***The small import company I worked for in 1980 earned $156,000 per employee... quite good, but because of USA tax and regulation policy, those companies no longer exist.***
However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.
***Our country is in trouble because we have submitted to utter idiots that do not understand that a company hires the people necessary to get the job done. That is what Apple has done. No more No less.***
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s.
***And the United States government made sure that our economy failed.***
Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
***It is where electronics are made. ***
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.
“If it’s the pinnacle of capitalism, we should be worried.”
***Well, it is the pinnacle of government intervention, which is a part of capitalism.***
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
***Betsey costs taxpayers hundreds of thousands of dollars per year, plus a astonishing pension to come, and she hasn’t the slightest idea about work and business. It was never the case that business owners thought in the terms she imagines. ***
Companies and other economists say that notion is naïve.
***But she will never lose her job.***
Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
***Now we are getting to it, our management vs their management. Our management assumes entitlements that other management world wide understands they must earn. USA management costs too much to do too much.***
Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.
***Apple makes products for consumers, not comments for newspapers. People buying apple products do not want to pay for executives who waste resources talking to newspapers.***
They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.
***Exactly. Unemployment is the result of failed government policies, which all fail, because they all miss the point. It is freedom, not regulation, that makes for such as Apple computer.***
In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.
***Yes, then came the taxes and regulations that Prop 13 and tax avoidance and money laundering that followed. Roll back taxes and regulations and government to 1980 and you’ll see manufacturing come back home, but to an unappreciative public, one in six of whom buys food with food stamps.***
In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple.
***They writer still cannot state it correctly. Note the internal contradiction: went to Asia for cheap/did not go to Asia for cheap. This writer is not disciplined. Which is it? Did they go for cheap, or not? “But that wasn’t driving Apple.” Finally. Right. What I have been saying for 25 years.***
For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.
***Now you are getting it, but not only technology companies, but toys, and clothes and everything else. ***
For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.
***O yes, we can, but we will not. USA is now about war, torture, usury, detention and other awful things. We cannot compete because of election fraud, we can no longer vote the people in office who would get government to back off and allow the free market to restore USA.***
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory.
***Yes, the US Govt does this for Boeing, Microsoft, GE, etc. If the US Govt did not crush entrepreneurs, then no doubt someone would have figured out how to cut glass and make money in USA.***
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.
***Bingo.***
It is hard to estimate how much more it would cost to build iPhones in the United States.
***Only if you have no idea how to cost out products.***
However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
***Nonsense, the management costs would sink Apple. And we’d have nothing, as we have nothing in medicine, autos, clothes, so many other industries. the problem is not labor, it is the host of regulations, pure nonsensical in fact, that USA management must attend to.***
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies.
***No, it would require transforming the USA economic polity, something that will not happen, because of the election fraud in USA.***
Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
***Chinese managers are freer than USA managers.***
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
***Freight is cheap, the problem is management.***
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”
***Right, but we cannot have change in economic polity in USA. USA business is war, and financing war. Nothing else.***
There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.
After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.
***Your government policies at work.***
Paydays for Apple
As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts.
***Apple provides far more value than all those states combined.***
The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.
***B O R I N G ***
After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs.
***It has never occurred to him to start a business, like Steve Jobs once did.***
On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.
Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple.
***Doesn’t matter.. she produces more and lives better on that money. If your reason for being is making war, what does it matter which way you suffer for your criminality?***
What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.
In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs.
***All nonsense industries, made up and subsidized by the people who brought us the Chevy Volt. We ain’t getting out of this, because we are not willing to end election fraud.***
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