Should Apple’s iPhones Be Made in the USA?
From the looks of things so far, it seems that most of the tech world is doing its best to ignore Donald Trump’s would-be candidacy for the U.S. presidency. (There are plenty of Trump-blocking Chrome extensions to support that theory.) But a remark that Trump made during a recent campaign speech has actually gotten the tech world talking about an interesting topic: should Apple start making its best-selling devices in the United States? Trump wasn’t really talking about a way for Apple to fix its biggest supply chain issues, or even taking into account the reality of Apple’s production process, but if you indulge in the thought experiment, it’s interesting to consider the difference that an American-made iPhone could make.
Of course, Trump brought up the topic in the manner — equal parts incendiary and incomprehensible — that has defined most of his declarations so far. As Dean Takahashi reports for VentureBeat, Trump announced that if he were elected president, he would force California-based Apple to “build its damn computers in this country instead of other countries.” We can’t go further without acknowledging that no, of course a president can’t force a company to manufacture its products in the United States. As Takahashi notes, Trump was short on specifics, and didn’t say anything else about Apple during the speech. He did, however, promise to charge companies like Ford a tax if they don’t build their plants in the U.S.
Given the great success that Apple has found in partnering with manufacturers like Foxconn in China, it sounds like a dumb idea for the company to move its manufacturing process stateside. But Takahashi notes that he actually called on Apple to “bring manufacturing back to the U.S.” in 2012, when President Obama asked then-chief-executive Steve Jobs what it would take for Apple to manufacture the iPhone in the United States. Among Apple’s answers to the question of why it didn’t make its products in the U.S. was the lack of engineering talent in the country. Apple said it would take approximately nine months to recruit engineers for a large factory, compared to just 15 days in China.
But Apple could benefit by building a factory in the United States. Such a factory would improve the quality of life for the company’s U.S.-based engineers and China, who would no longer need to fly to China to inspect manufacturing lines or work through problems via late-night phone calls. The company could better protect the secrecy of the details of its upcoming products — which leak regularly from the Chinese supply chain — and it wouldn’t have to support jobs in a country where its goods are routinely pirated.
Apple could also more closely monitor compliance with labor and environmental laws, and it would lower its shipping costs, which would help close the gap between the cost of manufacturing in the United States versus manufacturing in China. And manufacturing in the U.S. would bring major economic benefits to a country that’s a ravenous consumer of Apple’s products. It’s been reported that the creation of just 1,000 new manufacturing jobs also creates about 5,712 other jobs. Apple is already responsible for what Takahashi characterizes as a “huge amount of job creation” in the United States.
But not everyone agrees with Takahashi’s assessment of the situation. As Nicholas Deleon reports for Motherboard, IHS analyst Wayne Lam thinks that “it would be kind of nutty” to ship components from Asia to the United States for assembly. As Deleon notes, Trump didn’t specify whether he would force Apple simply to assemble its iPhones, for instance, in the United States, or whether he would force Apple to assemble its iPhones in the United States made solely of American-made parts, which “would likely be impossible without upending the current global supply chain for electronics.”
Motherboard also spoke to Kyle Wiens, chief executive of repair firm iFixit, to figure out what a U.S.-assembled iPhone might cost consumers. Wiens estimated that such an iPhone would probably cost about $50 more than one assembled in China, a markup that would be necessary not least because most Chinese manufacturing employees earn just above minimum wage. Even if customers were willing to pay the extra $50 for an iPhone, upending the current manufacturing and supply chain to build a U.S. workforce the scale of what Apple already has access to in China would be an extremely expensive strategy, one that’s a lot more complicated than politicians like Trump would have you believe.
As Kate Knibbs reports for Gizmodo, Trump’s remarks on outsourcing were especially “unanchored to reality” — a reality in which “iPhone production hotbed” Foxconn also produces devices for American companies Amazon, Google, and Microsoft. A president doesn’t have the ability to prevent a company from outsourcing, and while he or she could advocate for legislation that tries to prevent outsourcing, doing so would necessitate championing laws that fundamentally alter the state of free trade.
Apple and other tech companies outsource not only to maximize profits, but to take advantage of Asian supply chains that are much, much larger than those in the United States. Forcing Apple to manufacture the iPhone or its others devices in the United States would involve both penalizing the company so harshly that it would make financial sense to change its manufacturing model and somehow helping U.S. manufacturing catch up with China — something that doesn’t make for as attractive a sound bite as a line about forcing Apple to make the iPhone in the United States.