An iPhone Made in the USA? That’s Just Idealism
Apple (NASDAQ:AAPL) chief executive Tim Cook’s comments that he would like one long-term goal of the company to be moving product manufacturing back to the U.S. may be more idealistic than realistic.
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Sources from the upstream supply chain told Digitimes that the proposal was almost impossible to achieve at the moment since Apple’s supply chain was firmly entrenched in Asia. Transport costs if the company decided to conduct assembly in the U.S. would turn out to be unreasonably high. “The entire supply chain is in China now,” the New York Times quoted one former high-ranking Apple executive in one article in January. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
Another problematic cost factor would be the salaries of employees, as U.S. wage rates are much higher than in those countries that currently produce for Apple. According to the NYT report, manufacturing analysts have estimated that paying American wages would add up to $65 to each iPhone’s expense. While that may not be huge figure for a company like Apple by itself, its executives firmly believe that overseas factories and workers provide “flexibility, diligence, and industrial skills” that “have so outpaced their American counterparts that ‘Made in the U.S.A.’ is no longer a viable option for most Apple products,” the NYT writes.
Foxconn, Apple’s largest manufacturing partner, is headquartered in China but has several other factories around Asia, Eastern Europe, Mexico, and Brazil, where it assembles almost 40 percent of the world’s consumer electronics for companies such as Amazon (NASDAQ:AMZN), Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ), Motorola (NASDAQ:GOOG), Nintendo, Nokia (NYSE:NOK), Samsung, and Sony (NYSE:SNE).