6 ms·

Very insightful. It corrected a lot of incorrect information I had on this issues. 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor

by pcurve 4y ago

Very insightful. It corrected a lot of incorrect information I had on this issues. 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. 2. Sales in China peaked in 2015-6 in terms of percentage of revenue for Apple 3. Despite the move, analysts predict 80% of Apple products will still be made in China by 2025.

rapsey 4y ago
> 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. Only by US standards. You can pay that much for a factory worker in eastern/south Europe. The US is a huge outlier regarding salaries compared to practically anywhere else.
- rocgf 4y ago
  > The US is a huge outlier regarding salaries compared to practically anywhere else. That is obviously not true, unless you exclude a lot of countries from "anywhere else".
  - rapsey 4y ago
    Ok name the countries.
    - jamesdgb 4y ago
      All the countries in the EU: https://en.wikipedia.org/wiki/List_of_European_Union_member_states_by_minimum_wage https://en.wikipedia.org/wiki/List_of_European_Union_member_...
      - sgjohnson 4y ago
        This is completely factually wrong.
      - Nimitz14 4y ago
        Why don't you take a look at your link. Americans earn much more.
    - alistairSH 4y ago
      Belgium. Denmark. Sweden. Germany. All relatively competitive with US on an hourly basis.
      - deleted 4y ago
        [deleted]
      - slaw 4y ago
        Local grocery in Seattle is hiring, $26/hour. From what I read on hackernews is like entry software engineer job in Sweden.
        alistairSH 4y ago
        €32.8* > $27.77 :shrug: * Euro zone, EU is less https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220328-1 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/d... https://tradingeconomics.com/united-states/wages https://tradingeconomics.com/united-states/wages
        slaw 4y ago
        One is labor cost the other is wage. Two different although related metrics.
        sgjohnson 4y ago
        Cost of living between Seattle and Stockholm is also probably comparable… But to be fair, US software engineer salaries are super high compared to everywhere except Switzerland. However there’s still no way in hell a grocery store anywhere in Europe is going to pay someone $26/h.
    - pdabbadabba 4y ago
      It might be an exaggeration to say that the U.S. is a huge outlier. I suppose that's subjective. But it certainly looks like an outlier in this summary of average wages of OECD countries: https://data.oecd.org/earnwage/average-wages.htm https://data.oecd.org/earnwage/average-wages.htm Average wages in the U.S. are, in fact, the highest among all OECD countries--and much higher than all but a few very small countries (Luxembourg, Switzerland, and Iceland). I wonder, though, how well this holds up if you look at the lower quintiles of the income distribution in each country--i.e., if you compare poorer workers instead of average workers. I would not be surprised if the bottom quintile earners in the U.S. make less than their counterparts in the EU, and perhaps elsewhere. Edit: OECD also provides average earnings by activity and if you look at average earnings in "industry," the U.S. is, indeed, far from the top, with many countries in Eastern Europe ranking quite highly. Of course, that could just as easily be an effect of the types of industry located in each country, more than anything. You may still need to pay an American far more to build an iPhone than a Slovenian, which is a question I don't think this data meaningfully addresses. https://data.oecd.org/earnwage/employee-compensation-by-activity.htm#indicator-chart https://data.oecd.org/earnwage/employee-compensation-by-acti...
      - deleted 4y ago
        [deleted]
    - rocgf 4y ago
      There are too many to name, it's basically the entire developed world, which is basically NA, Western Europe, Australia, Japan, South Korea. Not saying the US is not more expensive, but it's not a "huge outlier" by any means.
- Bayart 4y ago
  > You can pay that much for a factory worker in eastern/south Europe You'd be well bellow the gross average everywhere in the EU, even the poorest countries. Outside of the EU you might have a shot in Albania or Moldova, but you'd lack all the infrastructure and stability you'd need for large scale manufacturing.
  - rapsey 4y ago
    A factory worker is living on minimum wage. Nowhere near average.
    - nmarinov 4y ago
      They don't seem to be minimum wage workers in China[1] and India[2]. And are in fact much closer to median than minimum. Europe's minimum wages are much higher in comparison[3]. [1]https://en.wikipedia.org/wiki/Minimum_wage_in_China https://en.wikipedia.org/wiki/Minimum_wage_in_China [2]https://www.india-briefing.com/news/guide-minimum-wage-india-2022-19406.html/ https://www.india-briefing.com/news/guide-minimum-wage-india... [3]https://en.wikipedia.org/wiki/List_of_European_countries_by_minimum_wage#Minimum_wages_by_country_2 https://en.wikipedia.org/wiki/List_of_European_countries_by_...
      - rapsey 4y ago
        I don't understand your point. Google says Chinese manufacturing jobs pay $11k per year in 2020. This is a salary level of a south/east European factory worker.
        michpoch 4y ago
        That's the salary. Now, you have employers costs, which will be much higher in socialistic countries in EU.
        marcus_holmes 4y ago
        not so much - US employees need very expensive employer-provided health insurance. In the EU that's covered by taxes instead. I couldn't find a direct comparison (hard because it varies by state & country), but it seems to be a wash: https://topsourceworldwide.com/international-salaries/ https://topsourceworldwide.com/international-salaries/ note that China is 40% of salary as a payroll tax, which tops the list.
- jamesdgb 4y ago
  From an European perspective labour in the US is cheaper
- baybal2 4y ago
- narag 4y ago
  You can pay that much for a factory worker in eastern/south Europe. I don't know about eastern Europe. In Spain, we are in the south, you can't pay 530 per month. Legal minimum salary is around double that number, then you need to add SS (30 to 40% of that) and just FYI, there's no way people will work in a factory for minimum wage anyway, so think of 2k for entry positions.
- shagie 4y ago
  The issue isn't entirely "how much you pay someone" but also a significant bit of "the supply chain for all of the parts are entirely within the city." That supply chain part was traditionally a strong draw for electronics manufacturing to be done in China as you can get parts from down the street rather than the next city or state or country over.
stickfigure 4y ago
> Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. The interesting question the article didn't answer is "how much labor goes into making an iphone?" The economics are very different if labor is 10% of the cost vs 70% of the cost.
etempleton 4y ago
I think at one point Steve Jobs had responded to a question on the topic of manufacturing location that the issue with moving manufacturing out of China, and specifically bringing more manufacturing back to the United States, had little to do with the cost of labor and more to do with the logistics networks. Building something as complex as an iPhone at scale and cost is basically impossible to do in the United States or really anywhere else right now.
UltraViolence 4y ago
The kicker is that Apple has made itself too dependent on Chinese suppliers. It has outsourced much of the development of components and has lost in-house know-how on how to recreate those parts if a fall-out were to occur. This is all according to Apple's "Don't leave money on the table" mantra where they want increasing profits year after year. In the end, it'll hurt them...bad.

by pcurve 4y ago

rapsey 4y ago

> 1. Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. Only by US standards. You can pay that much for a factory worker in eastern/south Europe. The US is a huge outlier regarding salaries compared to practically anywhere else.

rocgf 4y ago
> The US is a huge outlier regarding salaries compared to practically anywhere else. That is obviously not true, unless you exclude a lot of countries from "anywhere else".
- rapsey 4y ago
  Ok name the countries.
  - jamesdgb 4y ago
    All the countries in the EU: https://en.wikipedia.org/wiki/List_of_European_Union_member_states_by_minimum_wage https://en.wikipedia.org/wiki/List_of_European_Union_member_...
    - sgjohnson 4y ago
      This is completely factually wrong.
    - Nimitz14 4y ago
      Why don't you take a look at your link. Americans earn much more.
  - alistairSH 4y ago
    Belgium. Denmark. Sweden. Germany. All relatively competitive with US on an hourly basis.
    - deleted 4y ago
      [deleted]
    - slaw 4y ago
      Local grocery in Seattle is hiring, $26/hour. From what I read on hackernews is like entry software engineer job in Sweden.
      - alistairSH 4y ago
        €32.8* > $27.77 :shrug: * Euro zone, EU is less https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220328-1 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/d... https://tradingeconomics.com/united-states/wages https://tradingeconomics.com/united-states/wages
        slaw 4y ago
        One is labor cost the other is wage. Two different although related metrics.
      - sgjohnson 4y ago
        Cost of living between Seattle and Stockholm is also probably comparable… But to be fair, US software engineer salaries are super high compared to everywhere except Switzerland. However there’s still no way in hell a grocery store anywhere in Europe is going to pay someone $26/h.
  - pdabbadabba 4y ago
    It might be an exaggeration to say that the U.S. is a huge outlier. I suppose that's subjective. But it certainly looks like an outlier in this summary of average wages of OECD countries: https://data.oecd.org/earnwage/average-wages.htm https://data.oecd.org/earnwage/average-wages.htm Average wages in the U.S. are, in fact, the highest among all OECD countries--and much higher than all but a few very small countries (Luxembourg, Switzerland, and Iceland). I wonder, though, how well this holds up if you look at the lower quintiles of the income distribution in each country--i.e., if you compare poorer workers instead of average workers. I would not be surprised if the bottom quintile earners in the U.S. make less than their counterparts in the EU, and perhaps elsewhere. Edit: OECD also provides average earnings by activity and if you look at average earnings in "industry," the U.S. is, indeed, far from the top, with many countries in Eastern Europe ranking quite highly. Of course, that could just as easily be an effect of the types of industry located in each country, more than anything. You may still need to pay an American far more to build an iPhone than a Slovenian, which is a question I don't think this data meaningfully addresses. https://data.oecd.org/earnwage/employee-compensation-by-activity.htm#indicator-chart https://data.oecd.org/earnwage/employee-compensation-by-acti...
    - deleted 4y ago
      [deleted]
  - rocgf 4y ago
    There are too many to name, it's basically the entire developed world, which is basically NA, Western Europe, Australia, Japan, South Korea. Not saying the US is not more expensive, but it's not a "huge outlier" by any means.
Bayart 4y ago
> You can pay that much for a factory worker in eastern/south Europe You'd be well bellow the gross average everywhere in the EU, even the poorest countries. Outside of the EU you might have a shot in Albania or Moldova, but you'd lack all the infrastructure and stability you'd need for large scale manufacturing.
- rapsey 4y ago
  A factory worker is living on minimum wage. Nowhere near average.
  - nmarinov 4y ago
    They don't seem to be minimum wage workers in China[1] and India[2]. And are in fact much closer to median than minimum. Europe's minimum wages are much higher in comparison[3]. [1]https://en.wikipedia.org/wiki/Minimum_wage_in_China https://en.wikipedia.org/wiki/Minimum_wage_in_China [2]https://www.india-briefing.com/news/guide-minimum-wage-india-2022-19406.html/ https://www.india-briefing.com/news/guide-minimum-wage-india... [3]https://en.wikipedia.org/wiki/List_of_European_countries_by_minimum_wage#Minimum_wages_by_country_2 https://en.wikipedia.org/wiki/List_of_European_countries_by_...
    - rapsey 4y ago
      I don't understand your point. Google says Chinese manufacturing jobs pay $11k per year in 2020. This is a salary level of a south/east European factory worker.
      - michpoch 4y ago
        That's the salary. Now, you have employers costs, which will be much higher in socialistic countries in EU.
        marcus_holmes 4y ago
        not so much - US employees need very expensive employer-provided health insurance. In the EU that's covered by taxes instead. I couldn't find a direct comparison (hard because it varies by state & country), but it seems to be a wash: https://topsourceworldwide.com/international-salaries/ https://topsourceworldwide.com/international-salaries/ note that China is 40% of salary as a payroll tax, which tops the list.
jamesdgb 4y ago
From an European perspective labour in the US is cheaper
baybal2 4y ago
narag 4y ago
You can pay that much for a factory worker in eastern/south Europe. I don't know about eastern Europe. In Spain, we are in the south, you can't pay 530 per month. Legal minimum salary is around double that number, then you need to add SS (30 to 40% of that) and just FYI, there's no way people will work in a factory for minimum wage anyway, so think of 2k for entry positions.
shagie 4y ago
The issue isn't entirely "how much you pay someone" but also a significant bit of "the supply chain for all of the parts are entirely within the city." That supply chain part was traditionally a strong draw for electronics manufacturing to be done in China as you can get parts from down the street rather than the next city or state or country over.

stickfigure 4y ago

> Labor cost is an issue but at 530 per month as of 2020 Chinese mfr labor is still relatively cheap and only twice as expensive as India. The interesting question the article didn't answer is "how much labor goes into making an iphone?" The economics are very different if labor is 10% of the cost vs 70% of the cost.

etempleton 4y ago

I think at one point Steve Jobs had responded to a question on the topic of manufacturing location that the issue with moving manufacturing out of China, and specifically bringing more manufacturing back to the United States, had little to do with the cost of labor and more to do with the logistics networks. Building something as complex as an iPhone at scale and cost is basically impossible to do in the United States or really anywhere else right now.

UltraViolence 4y ago

The kicker is that Apple has made itself too dependent on Chinese suppliers. It has outsourced much of the development of components and has lost in-house know-how on how to recreate those parts if a fall-out were to occur. This is all according to Apple's "Don't leave money on the table" mantra where they want increasing profits year after year. In the end, it'll hurt them...bad.