11 ms·

Tim Cook: Apple products aren’t made in China because it’s cheaper

21 points by pavornyoh 11y ago

orionblastar 11y ago
The USA used to have skilled factory workers until jobs went overseas for factories. Now almost nobody studies how to work in a factory because of lack of available jobs in the USA. If you want to bring back the jobs to the USA you have to get more people to study how to work in a factory again.
- twoodfin 11y ago
  The US still has a large number (~12M) of largely skilled manufacturing jobs, and manufactures more product (~$2T) by $ value than anywhere else in the world but China. It just needs fewer workers per $ produced than it used to. There's nothing about either of those trends that's unfortunate.
  - jacquesm 11y ago
    And neither is unfixable, it will however impact cost and that's why I think that Tim Cook is not entirely honest here. You can get all this done locally, the skills are there. But those skills are expensive because the same skill level person in the US has a different pay than the person in China. Eventually that advantage will erode and then the locusts will move to the next available third world economy (likely India, or maybe even Africa).
    - twoodfin 11y ago
      But those skills are expensive because the same skill level person in the US has a different pay than the person in China. I don't think that's true, or at least, not true for the vast majority of workers. A typical US manufacturing worker is an order of magnitude more productive (a good, if imperfect, proxy for skill) than a Chinese one, and if anything is underpaid for the value they provide. China just has massively more labor available.
    - VinzO 11y ago
      Many companies are moving already to countries like Cambodia or Vietnam because China has become "too expensive".
- simonh 11y ago
  How many Americans actually want to go back to a low-cost assembly based manufacturing economy? I'm a Brit and recently had a rather weird experience as a friend of mine waxed lyrical on the one hand about how Britain needs more honest manufacturing jobs because that's how wealth is created, while also talking up how great his Son's private school is and that he's got a fund set aside for the boy's University education, probably in the arts. It was more than a little surreal. The fact is UK manufacturing is actually doing pretty well. It accounts for 12% of the country's output compared to a high of 25%, and has mainly migrated into higher value engineering and design. So yes it's a lot lower than during the 70s proportionately, but they are predominantly much, much better jobs. What we should be doing is what my friend is actually doing versus what he was advocating. Educating and investing our way into a higher value economy.
  - norea-armozel 11y ago
    If I knew there was a future in manufacturing I wouldn't had bothered with college except to grow my knowledge for its own sake. Factory work that pays well enough to take care of my bills and leave with more than enough to save up for things is IMO better than risking it all in a college degree that may be worthless due to shifts in career news hype.
venning 11y ago
> "I mean, you can take every tool and die maker in the United States and probably put them in a room that we’re currently sitting in." Don't know how big that room is, but you could probably fill it with the toll and die makers in my extended family and their coworkers. I get his argument, even if I don't buy it, but that's just an insulting remark.
- steve19 11y ago
  It's a ridiculous soundbite which I am sure was devised by a PR hack. There are probably enough US tool makers with YouTube channels to fill a room! (I subscribe to many of them) If he were honest it's probably because China is cheaper but also because it's much easier. They can order a product, at crazy high volumes, and let the Chinese figure out how to scale. And afterwards there is no bad press when workers are fired.
  - jacquesm 11y ago
    NL is a lot smaller than the US (17 M vs 300+M inhabitants). We have 100's of tool-and-diemakers here, I think Cook will need a slightly larger room for the US ones. But I can see why he doesn't actually know about this, tool-and-die makers are not exactly hobnobbing with the jet-set. And don't forget that tool-and-diemaking is a specialization from being a machinist and you could probably find quite a few of those and train them to become tool-and-diemakers. The (much harder) sub-discipline is the one of moldmaker, and of those too there are (still) quite a few.
    - rimantas 11y ago
      Cook being the one who fine-tuned Apple's operations to perfection I think he knows a lot about the things he talks about.
      - forgottenpass 11y ago
        Cook being a public face of Apple, I think he makes deceptive public statements to protect Apple, regardless of what he knows.
samfisher83 11y ago
A lot of manufacturing capabilities have moved. I am engineer not even mechanical, but occasionally I will have to make prototypes. Maybe it wouldn't be super pretty, but if I had six weeks I think I could become proficient enough to make a pretty good units. These aren't super complicated parts, but does require soldering, box cuttings, wire routing etc.
fivesigma 11y ago
Nice PR misdirection, Tim. Apple is the kind of company that will skimp on updating base storage to 32GB on their €650 smartphone because it might reduce their margins by 0.001% (number pulled out of my behind but you get the idea). It certainly IS because it's cheaper.
- syllogism 11y ago
  What? The base storage is low to get you to buy the upgrade. Cost is irrelevant.
  - johnchristopher 11y ago
    Of course cost is relevant. It's all about the cost in the end.
jacquesm 11y ago
"We are outsourcing because people outsourced in the past to the point that we can no longer do things properly here." The only way to fix a trend gone wrong is to reverse the trend, not to compound it.
- Jgrubb 11y ago
  Exactly what I was thinking, and wouldn't it be a PR master stroke to start the repatriation of the US's manufacturing sector?
  - rimantas 11y ago
    They do manufacture Mac Pro in US.
    - jacquesm 11y ago
      They assemble it in the US. But the mb is made by Foxconn iirc.
- mariusmg 11y ago
  And Apple is perhaps the only US company which can afford to reverse the trend. They can afford to "sacrifice" a few billion dollars for this. But they won't do it. Their investors want to get richer not help USA. Underage child labor FTW, right Apple ?
  - rimantas 11y ago
    Cut the crap. Apple makes Mac Pro in US. They also are also taking social responsibility seriously.
    - angry-hacker 11y ago
      What social responsibility? By hiring homophobic and women hater Dr. Dre? - money talks. Of course, at the same time preaching gay marriage, because it benefits them. They don't give a shit about responsibility, only money, take off your Apple glasses.
shellmayr 11y ago
“That is total political crap,” Cook fired back. He said he’d “love to bring it home” but doesn’t because “it would cost me 40%... and I don’t think that’s a reasonable thing to do. This is a tax code, Charlie, that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.” I'm a little insulted by the fact that Cook thinks it's up to him to decide whether or not his company should be paying taxes. Obviously they've found a loophole, but his phrasing suggests he's doing it for the greater good. Maybe if Apple and similar huge companies actually paid those 40% (I doubt it's that high a percentage) to government, public school could get more funding, etc. and the US wouldn't need as much philanthropy.
- aikah 11y ago
  > I'm a little insulted by the fact that Cook thinks it's up to him to decide whether or not his company should be paying taxes This is not that uncommon among affluent people to think that they shouldn't pay taxes,in fact they have the money to set up schemes in order to not pay any.
  - jjtheblunt 11y ago
    That's naive: they did pay taxes already, on earnings in the countries of the earnings, and are saying that, for example, the Brazilian company Apple Brazil, paid up on Brazilian income tax for work done by Brazilians in Brazil, should not then pay 40% more to the United States for work done in Brazil.
    - genmon 11y ago
      It's not about paying 40% more -- tax already paid to foreign governments is deducted. So the total tax is 40%, with any tax not paid to foreign governments going to the US government when the profit is repatriated.
- atirip 11y ago
  Talk to your government, vote, make things happen. Thats up to you. If the government established a law, Apple and others would pay or course. On the other hand, if compaies paid more then required, management would be sued by shareholders to oblivion. Want to change that too? Vote, make things happen.
glastra 11y ago
The submission title is a bit misleading. First I read it as "the reason Apple products aren't made in China is because that would be cheaper". Perhaps rephrasing to "Apple products are made in China not because it's cheaper" would be less ambiguous.
onion2k 11y ago
Apple couldn't move their manufacturing out of China even if they wanted to. As soon as they started making motions that they're going to the Chinese government would slap a levy or a ban on the export of some key material component in order to protect their manufacturing industry. Foxconn employs more than a million people, and there are many times that number once you include the whole supply chain. No government is going to let a significant part of that leave their country.
- mcphage 11y ago
  > No government is going to let a significant part of that leave their country. Well... the US did, which is why we're in the situation we did.
carsongross 11y ago
“The U.S., over time, began to stop having as many vocational kind of skills,” Over time... Just happened... As if this wasn't a concerted effort on the part of american-based multi-nationals to move the entire supply chain to cheap-labor, non-existent environmental control countries. They wanted to arbitrage the consumption power of salaries in the west by not supporting them out of profits, but rather out of debt. REEEEEEEEEEEEEEEE

21 points by pavornyoh 11y ago

The USA used to have skilled factory workers until jobs went overseas for factories. Now almost nobody studies how to work in a factory because of lack of available jobs in the USA. If you want to bring back the jobs to the USA you have to get more people to study how to work in a factory again.

twoodfin 11y ago
The US still has a large number (~12M) of largely skilled manufacturing jobs, and manufactures more product (~$2T) by $ value than anywhere else in the world but China. It just needs fewer workers per $ produced than it used to. There's nothing about either of those trends that's unfortunate.
- jacquesm 11y ago
  And neither is unfixable, it will however impact cost and that's why I think that Tim Cook is not entirely honest here. You can get all this done locally, the skills are there. But those skills are expensive because the same skill level person in the US has a different pay than the person in China. Eventually that advantage will erode and then the locusts will move to the next available third world economy (likely India, or maybe even Africa).
  - twoodfin 11y ago
    But those skills are expensive because the same skill level person in the US has a different pay than the person in China. I don't think that's true, or at least, not true for the vast majority of workers. A typical US manufacturing worker is an order of magnitude more productive (a good, if imperfect, proxy for skill) than a Chinese one, and if anything is underpaid for the value they provide. China just has massively more labor available.
  - VinzO 11y ago
    Many companies are moving already to countries like Cambodia or Vietnam because China has become "too expensive".
simonh 11y ago
How many Americans actually want to go back to a low-cost assembly based manufacturing economy? I'm a Brit and recently had a rather weird experience as a friend of mine waxed lyrical on the one hand about how Britain needs more honest manufacturing jobs because that's how wealth is created, while also talking up how great his Son's private school is and that he's got a fund set aside for the boy's University education, probably in the arts. It was more than a little surreal. The fact is UK manufacturing is actually doing pretty well. It accounts for 12% of the country's output compared to a high of 25%, and has mainly migrated into higher value engineering and design. So yes it's a lot lower than during the 70s proportionately, but they are predominantly much, much better jobs. What we should be doing is what my friend is actually doing versus what he was advocating. Educating and investing our way into a higher value economy.
- norea-armozel 11y ago
  If I knew there was a future in manufacturing I wouldn't had bothered with college except to grow my knowledge for its own sake. Factory work that pays well enough to take care of my bills and leave with more than enough to save up for things is IMO better than risking it all in a college degree that may be worthless due to shifts in career news hype.

venning 11y ago

> "I mean, you can take every tool and die maker in the United States and probably put them in a room that we’re currently sitting in." Don't know how big that room is, but you could probably fill it with the toll and die makers in my extended family and their coworkers. I get his argument, even if I don't buy it, but that's just an insulting remark.

steve19 11y ago
It's a ridiculous soundbite which I am sure was devised by a PR hack. There are probably enough US tool makers with YouTube channels to fill a room! (I subscribe to many of them) If he were honest it's probably because China is cheaper but also because it's much easier. They can order a product, at crazy high volumes, and let the Chinese figure out how to scale. And afterwards there is no bad press when workers are fired.
- jacquesm 11y ago
  NL is a lot smaller than the US (17 M vs 300+M inhabitants). We have 100's of tool-and-diemakers here, I think Cook will need a slightly larger room for the US ones. But I can see why he doesn't actually know about this, tool-and-die makers are not exactly hobnobbing with the jet-set. And don't forget that tool-and-diemaking is a specialization from being a machinist and you could probably find quite a few of those and train them to become tool-and-diemakers. The (much harder) sub-discipline is the one of moldmaker, and of those too there are (still) quite a few.
  - rimantas 11y ago
    Cook being the one who fine-tuned Apple's operations to perfection I think he knows a lot about the things he talks about.
    - forgottenpass 11y ago
      Cook being a public face of Apple, I think he makes deceptive public statements to protect Apple, regardless of what he knows.

samfisher83 11y ago

A lot of manufacturing capabilities have moved. I am engineer not even mechanical, but occasionally I will have to make prototypes. Maybe it wouldn't be super pretty, but if I had six weeks I think I could become proficient enough to make a pretty good units. These aren't super complicated parts, but does require soldering, box cuttings, wire routing etc.

fivesigma 11y ago

Nice PR misdirection, Tim. Apple is the kind of company that will skimp on updating base storage to 32GB on their €650 smartphone because it might reduce their margins by 0.001% (number pulled out of my behind but you get the idea). It certainly IS because it's cheaper.

syllogism 11y ago
What? The base storage is low to get you to buy the upgrade. Cost is irrelevant.
- johnchristopher 11y ago
  Of course cost is relevant. It's all about the cost in the end.

jacquesm 11y ago

"We are outsourcing because people outsourced in the past to the point that we can no longer do things properly here." The only way to fix a trend gone wrong is to reverse the trend, not to compound it.

Jgrubb 11y ago
Exactly what I was thinking, and wouldn't it be a PR master stroke to start the repatriation of the US's manufacturing sector?
- rimantas 11y ago
  They do manufacture Mac Pro in US.
  - jacquesm 11y ago
    They assemble it in the US. But the mb is made by Foxconn iirc.
mariusmg 11y ago
And Apple is perhaps the only US company which can afford to reverse the trend. They can afford to "sacrifice" a few billion dollars for this. But they won't do it. Their investors want to get richer not help USA. Underage child labor FTW, right Apple ?
- rimantas 11y ago
  Cut the crap. Apple makes Mac Pro in US. They also are also taking social responsibility seriously.
  - angry-hacker 11y ago
    What social responsibility? By hiring homophobic and women hater Dr. Dre? - money talks. Of course, at the same time preaching gay marriage, because it benefits them. They don't give a shit about responsibility, only money, take off your Apple glasses.

shellmayr 11y ago

“That is total political crap,” Cook fired back. He said he’d “love to bring it home” but doesn’t because “it would cost me 40%... and I don’t think that’s a reasonable thing to do. This is a tax code, Charlie, that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.” I'm a little insulted by the fact that Cook thinks it's up to him to decide whether or not his company should be paying taxes. Obviously they've found a loophole, but his phrasing suggests he's doing it for the greater good. Maybe if Apple and similar huge companies actually paid those 40% (I doubt it's that high a percentage) to government, public school could get more funding, etc. and the US wouldn't need as much philanthropy.

aikah 11y ago
> I'm a little insulted by the fact that Cook thinks it's up to him to decide whether or not his company should be paying taxes This is not that uncommon among affluent people to think that they shouldn't pay taxes,in fact they have the money to set up schemes in order to not pay any.
- jjtheblunt 11y ago
  That's naive: they did pay taxes already, on earnings in the countries of the earnings, and are saying that, for example, the Brazilian company Apple Brazil, paid up on Brazilian income tax for work done by Brazilians in Brazil, should not then pay 40% more to the United States for work done in Brazil.
  - genmon 11y ago
    It's not about paying 40% more -- tax already paid to foreign governments is deducted. So the total tax is 40%, with any tax not paid to foreign governments going to the US government when the profit is repatriated.
atirip 11y ago
Talk to your government, vote, make things happen. Thats up to you. If the government established a law, Apple and others would pay or course. On the other hand, if compaies paid more then required, management would be sued by shareholders to oblivion. Want to change that too? Vote, make things happen.

glastra 11y ago

The submission title is a bit misleading. First I read it as "the reason Apple products aren't made in China is because that would be cheaper". Perhaps rephrasing to "Apple products are made in China not because it's cheaper" would be less ambiguous.

onion2k 11y ago

Apple couldn't move their manufacturing out of China even if they wanted to. As soon as they started making motions that they're going to the Chinese government would slap a levy or a ban on the export of some key material component in order to protect their manufacturing industry. Foxconn employs more than a million people, and there are many times that number once you include the whole supply chain. No government is going to let a significant part of that leave their country.

mcphage 11y ago
> No government is going to let a significant part of that leave their country. Well... the US did, which is why we're in the situation we did.

carsongross 11y ago

“The U.S., over time, began to stop having as many vocational kind of skills,” Over time... Just happened... As if this wasn't a concerted effort on the part of american-based multi-nationals to move the entire supply chain to cheap-labor, non-existent environmental control countries. They wanted to arbitrage the consumption power of salaries in the west by not supporting them out of profits, but rather out of debt. REEEEEEEEEEEEEEEE