Apple will invest $100 million to bring Mac production back to the US next year

http://thenextweb.com/apple/2012/12/06/apple-will-invest-100-million-to-bring-mac-production-back-to-the-us-next-year-says-tim-cook/

by alinzainescu • 14 years ago

448 183 14 years ago

thenextweb.com

mjpa• 14 years ago

"where we want people to copy us" - presumably so they have more people to sue?

ianshward2• 14 years ago

Yes, very interesting. This was my first thought, unfortunately.

ianshward2• 14 years ago

Well, sue, but more generally, have better legal control over supply relationships.

nicholassmith• 14 years ago

I thought it was more a tongue in cheek "this is what other companies should copy from us" rather than anything else.

rmrfrmrf• 14 years ago

Why shouldn't Apple protect its intellectual property? The game is what it is until Congress changes it, not Apple.

charliepark• 14 years ago

One possibility is that they know they can dominate the supply chain so effectively, they can make more per unit than a competitor could if they (the competitor) followed suit.

Similar to when Gmail came out and people were blown away that they offered 100MB of storage, and everyone (Yahoo, Hotmail) had to step up despite their far larger userbase. Then, when they finally matched Google, Google raised their cap to 1GB.

In this case, manufacturers will have to work hard to match Apple's bring-mfg-to-the-US actions, but won't even be on the same playing field, since Apple's worked so hard to maximize the efficiency of their supply chain.

stbullard• 14 years ago

No. In the BusinessWeek interview this quote is pulled from [1], it's clear he's referring to wanting other companies to emulate Apple's increased transparency in supplier relationships and working conditions. In a follow-up question, he says:

"Our transparency in supplier responsibility is an example of recognizing that the more transparent we are, the bigger difference we would make. We want to be as innovative with supply responsibility as we are with our products. That’s a high bar. The more transparent we are, the more it’s in the public space. The more it’s in the public space, the more other companies will decide to do something similar. And the more everybody does it, the better everything gets.

It’s a recognition that we need to be supersecretive in one part about our products and our road maps. But there are other areas where we will be completely transparent so we can make the biggest difference."

[1] http://www.businessweek.com/printer/articles/85170-tim-cooks...

CrLf• 14 years ago

Mac desktops or also laptops? If it's only about the desktops, I suspect that they are preparing to lower the volumes below what's economical to build in China.

mikereedell• 14 years ago

Or the the rising wages in China means that building a fully automated line isn't as cost-prohibitive as it was in the past. And with states/cities throwing tax incentives at companies it doesn't matter where the automated line is so long as it can be integrated into the supply chain easily.

It's likely a combination of lower volume, like you state, cheaper automation, rising wages and some political incentives like tax breaks, etc.

axx• 14 years ago

I bet it'll be the next Mac Pro. Low quantity, highly priced.

pretoriusB• 14 years ago

>Or the the rising wages in China means that building a fully automated line isn't as cost-prohibitive as it was in the past.

The wages don't play much role in it.

There is an article about the last Apple US factory, back when they used to make stuff here, and the guys managing it explain that it wasn't the wages that drove them to China (the extra cost would be negligible in a product's price, like a few extra dollars compared to a $500 price tag), but the economies of scale, with supplier factories for glass, metal, SSDs, parts, etc being literally next door to your factory, something that wasn't true in the US.

davej• 14 years ago

It will almost certainly be the iMac. They already assemble and build some of their 21.5" iMacs in the U.S.

chrisdevereux• 14 years ago

> We decided being more transparent about some things is great—not that we were not transparent at all before, but we’ve stepped it up in places where we think we can make a bigger difference, where we want people to copy us

I'm willing to bet that the reason they're doing this is exactly the opposite. Integrating their last-stage manufacturing would be a great way of squashing those pesky product leaks from contractors.

Wonder if this is the first step towards a move across all products. It'd make sense to start with a relatively low-volume, high-margin product like the Mac.

blinkingled• 14 years ago

>great way of squashing those pesky product leaks from contractors

They will still not be doing the manufacturing themselves - so there will still be contractors just that they will be a new set of US based contractors that can be better controlled because they are based in US vs China.

Maascamp2• 14 years ago

> “We decided being more transparent about some things is great..."

Ironically the rest of his statements and the article as a whole are extremely vague. $100MM at Apple scale doesn't seem like very much and since (from the article) they won't be doing it themselves I'd love to hear more about where that money is going.

TheCondor• 14 years ago

And yet that is a pile of money..

There are a handful of companies that do this work, they will partner with them, my bet is Foxconn as they already work with them. Build a facility and Foxconn will do what it does, with Americans in America. As an American, I think this is good, I wonder how successful it will be but I hope it works out well.

There are a lot of negative comments. From what Tim said it sounds like it is motivated by a desire to do some good, not just more profit. Maybe that is BS, if you can successfully do this, it knocks a few days off the time from order to delivery and that's also a huge edge. I can also see wanting to not give China so much control. I don't see it being devious though.

Maascamp2• 14 years ago

I certainly wasn't trying to imply Apple is being devious by any means. I really am just curious as to where that money will go.

eitally2• 14 years ago

http://americawhatwentwrong.org/story/as-apple-grew-american...

http://news.cnet.com/Apple-may-outsource-iMacs/2100-1001_3-2...

Sanmina (recently dropped the SCI from its name) still owns that plant in Fountain, CO. I could imagine it might be a big PR win for Apple if they revived what used to be their flagship factory in the US.

makomk• 14 years ago

Vague or outright misleading. The "engine for the iPhone and iPad" is indeed made in the US... by Apple arch-rival Samsung.

Samuel_Michon• 14 years ago

How is that misleading, it provides work to people in the US. A case can be made that the factory wouldn't be there if it weren't for Apple's business:

"The A5 processor - the brain in the iPhone 4S and iPad 2 - is now made in a sprawling 1.6 million square feet factory in Austin owned by Korean electronics giant Samsung Electronics, according to people familiar with the operation. One of the few major components to be sourced from within the United States, the A5 processor is built by Samsung in a newly constructed $3.6 billion non-memory chip production line that reached full production in early December."

http://www.reuters.com/article/2011/12/16/us-apple-samsung-i...

rymith2• 14 years ago

This is what I want to see. I really think the reliance on Asia as a centre for manufacturing is a mistake in the long run.

camus• 14 years ago

better than nothing, but most of the components will still be produced in China, Mac will be merely assembled in US factories.

icebraining2• 14 years ago

That's not what Cook said; he said they want to do something "more substantial" than assembly.

rymith2• 14 years ago

You don't start an application by having a finished product on the first day. Let Apple run with this, and we can check in in a year and see where they intend to take this. It's premature for us to glean anything off of this right now.

RyanMcGreal• 14 years ago

Direct link to the Bloomberg interview:

http://www.businessweek.com/printer/articles/85170-tim-cooks...

joe-mccann• 14 years ago

Also to be read as, "Apple to invest 0.38% of 2011's total profit to bring Mac production to the US next year"

tribeofone2• 14 years ago

OR, you could read it as "Apple to invest 0.1% of its total cash in reserve to bring Mac production to the US next year"

DannyBee4• 14 years ago

As a slight sidetrack, Apple doesn't have that much cash in reserve. They have short term investments and long term investments.

Articles you read that claim they have 100 billion (or whatever) in cash are seriously confused about how cash and cash equivalents work.

From their latest 10k:

Cash and cash equivalents $ 10,746

Short-term marketable securities $ 18,383

Long-term marketable securities $ 92,122

(this is in millions)

Long term marketable securities are basically those things that they would likely take a significant hit on if they had to actually convert to cash in a reasonable period of time.

So how does this really compare to other companies?

Let's look at google.

As of September 30, 2012, Google had:

Cash and cash equivalents: $ 16,260

Short term marketable securities:$ 29,464

Whoops. It turns out google has more actual cash than apple, and more combined short term securities + cash. Just not as much in long term investment securities.

In short: Apple doesn't really have some amazing amount of cash.

numeral_two• 14 years ago

LOL that was my first thought, interested by all the other discussion about how they move money, financial engineering is such a bizarre subject.

cllns2• 14 years ago

Interesting considering that less than 2 years ago Mr. Jobs said: "those jobs aren't coming back" to Mr. Obama.

[1] http://www.heraldtribune.com/article/20120123/ARTICLE/301239...

rwbt• 14 years ago

To be fair, he talked about iPhone assembly jobs. Not Mac assembly jobs.

sterna• 14 years ago

Maybe less than two years ago, otherwise he would need to have superhuman powers :)

cllns2• 14 years ago

Good catch :)

icebraining2• 14 years ago

Most probably aren't. Even in China, where wages are much lower than in the US, Foxconn wants to automate half the jobs at the plants within three years.

shimon_e• 14 years ago

Manufacturing is coming back in the form of new jobs. The jobs that the Chinese are having are becoming extinct. Product labels use to be stuck by hand in China even in mass production. Long gone are those days!

Mordor• 14 years ago

Just one word: inward-looking

felipe• 14 years ago

I suspect Apple will replicate what they are already doing in Brazil, where Foxconn locally built a factory to manufacture specific Apple products to the local market.

Note two things: 1. I suspect this would be a Foxconn factory, not Apple (note how Tim Cook says "we'll be working with people"); 2. The total investment of the Foxconn factory in Brazil was 5 times bigger, so I suspect that Apple's $100m would cover only a fraction of the total investment required to build a factory in the US.

Regardless, that's good news for the American worker.

janesvilleseo• 14 years ago

I guess then this story from April 1st turns out to be true after all.

http://techcrunch.com/2012/04/01/foxconn-plans-new-iowa-plan...

sparkie• 14 years ago

They don't need to replicate what they're doing in Brazil if it's still more economical to manufacture in China. The difference with Brazil is a whopping 60% import tax on pretty much anything, which would make an iPad cost about 1,000 USD minimum if they didn't make them locally.

rohansingh• 14 years ago

This really reminds me of The Alantic article this month entitled "The Insourcing Boom": http://www.theatlantic.com/magazine/archive/2012/12/the-inso...

The idea being that manufacturing was pushed abroad due to the appeal of cheaper labor, without a deep consideration of hidden costs or the overall context of such a transition.

GE, which is featured extensively in the article, actually managed to reduce manufacturing costs by bringing the fabrication of a water heater and other appliances back to American shores — largely due to the faster loop and better communication between designers, engineers, and laborers who all speak the same language and are in the same factory.

alanctgardner2• 14 years ago

HN discussion on that article: http://news.ycombinator.com/item?id=4873542

thedaveoflife2• 14 years ago

Also due perhaps to real wages in the US declining to the point where cost/benefit calculations of US based production facilities are finally starting to add up for some manufacturers.

matthavener• 14 years ago

And wages increasing in China

matwood6• 14 years ago

Manufacturing leaving the US in mass was always a myth. The jobs went away because of automation. In some cases the cheap labor offshore was still cheaper than automation, but like most technology automation continues to get cheaper every year while cost of labor goes up.

As automation gets cheaper I expect more and more manufacturing that really did move to not just come back to the US, but also new manufacturing to set up shop. Shipping costs are expensive and it only makes sense to be as close to your customers as possible. The one exception to this trend will be manufacturing that is inherently 'dirty.' Those will continue to be overseas until countries like China decide that destroying their environment for a short term gain isn't a very good long term strategy.

yummyfajitas• 14 years ago

Wages have not declined.

http://research.stlouisfed.org/fred2/series/ECIWAG

MetalMASK• 14 years ago

also the wages of skilled worker in China, India, Vietnam, .etc skyrockets during the last 2 years.

gtirloni• 14 years ago

The same greed that sent jobs overseas is now bringing them back. The difference is now the US companies will run a huge PR campaign saying they doing this because care about America, blah, blah, blah.

crag• 14 years ago

It's also about sustainability. It cost money/resources to ship product assembled in China. Lots of money.

astrodust2• 14 years ago

Especially when you're Apple and you ship everything by plane.

Wingman4l7• 14 years ago

There's also this piece from Wired, from their March 2011 issue:

http://www.wired.com/magazine/2011/02/ff_madeinamerica/

Made in America: Small Businesses Buck the Offshoring Trend

htf• 14 years ago

I wonder how much this move was precipitated by Google's purchase of Motorola. Google produced each generation of nexus phone with a different manufacturer. This allows Google to learn the best practices of each of them. But eventually Google will produce the nexus devices themselves through their Motorola facilities, allowing them to iterate fast and produce cheaply. Apple sees this coming and figures out they also need to produce their devices in-house.

RobAtticus• 14 years ago

There's been 4 generations of Nexus phones with 3 manufacturers (HTC, 2x Samsung, LG). It seems like a bit of a leap to say that Google is learning the best practices of each and then will eventually use Motorola.

Not saying it can't or won't happen, just that you seem to be passing off your conjecture as something that's inevitable.

ivanb• 14 years ago

Theory: they want to do it to be bailed out when bad times come, Just like Ford or GE,

freehunter• 14 years ago

Fun fact: Ford didn't receive money from the Troubled Asset Relief Program bailout. They restructured rather than take te money.

patmcguire• 14 years ago

Yeah, and they took out a loan on their logo. Unfortunately, Ford is in worse shape now than GM and Chrysler because they didn't get a reset button to fix every problem - the lost by winning.

mathattack2• 14 years ago

I can't imagine that Apple thinks of being bailed out. Companies at their peak don't think that way. Hubris is nothing else. Firms don't admit to it until they're in way over their head.

ck2• 14 years ago

I am going to guess those shifts will be 29 hours or less per person.

DonnyV• 14 years ago

Does this mean that the US is going to be the dumping ground for manufacturing? Waste? Low slave wages?

notdrunkatall• 14 years ago

It's happening. Wages are rising elsewhere, while US wages remain stagnant, thus making domestic manufacturing for high-end goods more profitable than manufacturing elsewhere again. I've been predicting an eventual return of manufacturing to the USA for years now. It'll be a slow process, but it will inevitably happen - the only questions are when and how long.

brudgers2• 14 years ago

In terms of investment in manufacturing, $100 million is chump change. Fabs are an order of magnitude or more greater. The amount is approximately that required for a middling "power center" shopping development. Or constructing a handful of Apple stores.

Not to be cynical, but I suspect that local, state and federal tax subsidies will yield a positive ROI on the $100 million. This looks like pure PR.

eitally2• 14 years ago

You're only partially correct. Apple doesn't need a fab. Apple needs a systems integrator like Foxconn and it's MUCH cheaper (order of magnitude max) to setup an assembly plant than a fab. But yes, I suspect subsidies would make even a $100m investment profitable.

brudgers2• 14 years ago

I was using chip fabs as a point of comparison in regards to the scale of Apple's investment. It was chosen because HN readers are more likely to be familiar with the cost of such manufacturing plants than, for example, those associated with automotive manufacturing.

I agree that Apple doesn't need a fab. It doesn't need a manufacturing facility in the U.S. either.

makmanalp• 14 years ago

Thanks for saying this. Apple had a quarterly net profit of 8.2 billion.

http://www.apple.com/pr/library/2012/10/25Apple-Reports-Four...

Quarterly. Net. Profit. That's less than 1% of their pure profit reinvested in the US. Ignoring the credits and subsidies they will get. Cry me a river.

wheelerwj• 14 years ago

Thank you for saying this. If you look at Apples stock today, its up $10 a share, or $10 BILLION dollars in market cap just because they are going to make a shitty $100 million dollar investment. Why are the people so impressed with this?

guywithabike• 14 years ago

What makes you think today's minor fluctuation in price (still down from yesterday's open) is in any way connected with this announcement?

padseeker• 14 years ago

This is good news - Now if we could just get Apple to pay taxes. I hope the comment from brudgers saying it is a PR move is wrong, but my cynical side things he is right.

tobylane• 14 years ago

Possible side effect: Change in business privacy? Say Foxconn are the contractor, a product leak in the factory's first year might be a lot more chase-able than one in China, but also a lot more inevitable. Will there be robot-only zones for the private parts, or more lawsuits?

dbul• 14 years ago

The "working with people" comment makes me wonder if they are working with Rethink Robotics.[1] That would be an even more interesting take on this shift.

[1] http://spectrum.ieee.org/robotics/industrial-robots/rethink-...

programminggeek• 14 years ago

Well, once robotics takes over a large portion of Foxconn, it won't make as much sense to hire low wage employees overseas, thus why not have the robots building/assembling the products as close to the consumer as possible?

Apple spends a lot of shipping too, so I'm sure it's a balancing act between cost of labor/automation/shipping.

astrodust2• 14 years ago

Apple's original Macintosh line was extremely automated. This wouldn't be a first for Apple, much as everyone would presume. (http://thenextweb.com/apple/2012/10/02/steve-jobs-designed-a...)

protomyth• 14 years ago

NeXT was know for robotic plants also http://money.cnn.com/magazines/fortune/fortune_archive/1990/... http://www.nytimes.com/1990/12/24/business/all-next-inc-s-pl...

mathattack2• 14 years ago

Sounds like a break from Steve Jobs. http://www.politico.com/politico44/2012/01/obama-spars-with-...

I suspect this is to combat negative PR from their overseas subcontractors.

ssapkota• 14 years ago

Certainly the mainstream - design focus of apple is switching.

anilali• 14 years ago

Apple might be doing this to get contracts from US gov't(local/national/military). One of the requirements for doing business with US gov't is to manufacture these device in US.

robomartin• 14 years ago

The only way I can see this making sense is if it is an assembly plant rather than a real chips-to-finished-product factory.

Why?

The advantage you have in these cities (almost literally) in China dedicated to manufacturing is that almost the entire supply chain is local and very finely tuned. This is particularly true for operations that might do work for companies like Apple.

The PCB manufacturers, assemblers, chip makers, connector manufacturers, LED manufacturers, display manufactures, plastics and sheet-metal manufacturers and more, are all centrally located. If not, they are within the proximal geographic regions.

The same is true of qualified workers. Need 100,000 assemblers in a hurry? No problem. Technicians, engineers, managers, etc. Lots of them and easy to hire within days of your requirement.

In sharp contrast to this, the supply chain anywhere in the US is most-definitely not localized and highly fragmented. Virtually nothing you are going to use in electronics manufacturing is made in the US. That means that rather than your LEDs being a few hours away by truck they are three weeks away by boat --from China.

In terms of mechanical components, such as screws, well, yes, they are available in the US, of course. The problem is that they will cost more. No question about it. Because our industry, due to the need to survive, has had to focus on market segments that can pay a premium (military, medical, etc.) you can pay through your teeth to get anything made here. That's just the truth.

In terms of machining and bending metal or injecting plastics, well, it depends. If you are dealing with a unionized operation, forget it. Costs will be ridiculous. Plastics, in very large quantities, can be reasonable here. Punching and bending metal or machining metal could be plausible at a very large scale and with a very finely tuned factory.

Let's not add regulatory and tax issues to the pile.

Because of all of this and a few more data points from first-hand experience manufacturing in the US, my guess is that Apple is going to simply import pre-fabricated modules assemblies and parts. They'll have US workers bolt them together and test the finished product. You can slap a "Assembled in the US" (and maybe even "Made in the US" sticker on it and feel good about it.

Remember what Steve Jobs told Obama about manufacturing jobs coming back to the US. I don't think anything significant enough has changed since then to invalidate his statement.

markkanof• 14 years ago

Steve Jobs, like many other corporate leaders was always fine with making broad forward looking statements based on Apple's position right now. He would then have a complete and immediate turn around once Apple was ready to do something. I'm not criticizing, it's a smart strategy. All I'm saying is that we shouldn't look to the past words of Steve Jobs as a guide for the future.

Shivetya• 14 years ago

I am in the camp that it is a product like the Mac Pro. A product which has a large number of user customizations combined with low sales volumes that effectively removes it from common mass production methods.

Oh I am quite sure you can bound up the chassis, power supply, and perhaps the main board, and ship it off for final assembly here and still be labeled as made here.

rdl2• 14 years ago

Yeah, Mac Pro is ideal for this. It has low enough sales volumes that Apple could even make it in Cupertino.

I wonder if having a high end American made machine would win them specific contracts (vs other vendors, or vs a Chinese made iMac) -- either Buy American or security considerations.

I'd be happy paying 5-10% premium on the Mac Pro for US production from the motherboard up. I trust Intel. Knowing the provenance of the other chips would be nice too.

redwood• 14 years ago

That seems true, but it could be that Jobs was speaking at a time when changes were happening that are coming to fruition now. For example New York state has invested heavily in semiconductor fabs upstate

coob• 14 years ago

> The only way I can see this making sense is if it is an assembly plant rather than a real chips-to-finished-product factory.

Quote from the interview:

And next year we are going to bring some production to the U.S. on the Mac. We’ve been working on this for a long time, and we were getting closer to it.

It will happen in 2013. We’re really proud of it. We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial.

Note: more than just assembly. This doesn't mean everything is going to be made on one place, but it does mean more than just slapping a case on.

justincormack• 14 years ago

I wouldn't be surprised if it was not a high value product like the announced new Mac Pro. Probably not just assembly but also making many parts. Its low volume, perhaps semi custom, and much of the demand is in the US.

sodomizer• 14 years ago

The thing that no one's mentioning in these press releases that should be discussed: robotics.

Moving a plant here doesn't equate to moving manufacturing jobs here. The traditional fear of manufacturing in the USA has been high cost of labor including possible strikes.

If plants are able to replace bulk labor with robots, and have the rest of their labor be engineering-type roles, they'll have no problem moving here.

But it won't bring thousands of jobs, maybe hundreds, although they will be better paid.

joering2• 14 years ago

Its TL;DR for me. Could anyone enlighten me if this means their profit margin will drop and price will remain, or that their profit margin will remain intact and price will raise?

It has to be one OR another...

mhd• 14 years ago

Any plans for Ireland? They used to assemble Macs there, too. I'm sure Cork could use the work.

jrockway• 14 years ago

This success of this move will come down to how good the US is at manufacturing proprietary screws with weird heads and battery adhesive that's really sticky.

tpatke• 14 years ago

I assume this is because Tim Cook is bowing to political pressure where Steve Jobs refused. Remember when Steve Jobs said, "Those jobs aren’t coming back" [1]? The question is - why now?

Hacker News discussion [2].

[1] http://www.nytimes.com/2012/01/22/business/apple-america-and...

[2] http://news.ycombinator.com/item?id=3494389

danilocampos2• 14 years ago

I wouldn't be so sure. Jobs was notorious for taking public, absolutist positions and later changing his mind.

(cf < 10 inch tablets, Intel chips, etc)

devcpp• 14 years ago

That's not "political pressure", is it?

jonny_eh• 14 years ago

Jobs changed his minds on tablet sizes? I thought he went to his death thinking they nailed it with the original iPad size.

verisimilitude• 14 years ago

But didn't Jobs always absolutely shoot down an idea, until he changed his mind by completely committing to it?

drgath• 14 years ago

> "We’ve been working on this for a long time, and we were getting closer to it."

That to me implies it's been in the works for longer than Cook has been in charge.

adpowers• 14 years ago

The jobs manufacturing iPhone/iPad/iPod aren't coming back, but I could see Apple bringing the manufacturing of computers (especially desktops) to the US.

For one, the computers have a higher BOM and price, so an increase in manufacturing costs takes a smaller share of the total profit. Plus they only make 5 million computers a quarter, compared to 41 million iPhones+iPads.

iDevices are released on an annual schedule, which means delays are extremely costly (especially if they are timed for the holidays). This requires a very tight supply chain. It isn't as big a deal if the iMac slips by a month.

Finally, the market for iDevices is extremely competitive compared to desktops. Execution matters way more for iDevices and a lot more money is on the line. It is easy to experiment with iMacs because there is much less pressure in that market segment.

qdog• 14 years ago

It's not clear to me iPhone/iPad/iPod won't come back at some point. The news that Foxconn has started replacing workers with machinery means the labor cost portion of manufacturing is going to go down, regardless of geographical location. Robots in China aren't going to be any cheaper than Robots in the US, I don't think.

Of course, the number of people required will be a lot lower, so the number of jobs brought in likely won't be that large.

I've heard the supply chain argument a lot, so it might take a while, but the original reason for outsourcing, ie: low labor costs, is eventually going to go away.

imissmyjuno• 14 years ago

all you sem to be saying is that "Apple can do it" though. Juat because they can doesn't mean they should. Given that they're a for-profit corporation, I'm betting on some kind of financial incentive.

alaskamiller3• 14 years ago

Steve thought on 10 year timeframes.

Tim thinks in 1 year timeframes.

hnriot• 14 years ago

Can we stop this hero worship please. We're all adults here and while Steve Jobs was clearly a great leader of Apple, we don't need the constant Steve-was-god rhetoric.

taligent• 14 years ago

I would watch Steve's Stanford commencement speech if I were you. In it he talked about only being able to 'connecting the dots' in his life looking backwards not forwards. This idea that he planned his time at Apple is just revisionist delusion on your part.

That said there is nothing wrong with Apple thinking more short term.

mmariani• 14 years ago

Wrong.

Watch the Jobs/Gates interview at '07 D5. He clearly stated he couldn't predict more than five years in this industry. Though, being able to see through five years ahead is quite a feat which he pulled often.

SkyMarshal• 14 years ago

Do you know that for a fact? Never heard that before...

encoderer• 14 years ago

The times are right now.

Manufacturing in the country seems to have bottomed out a few years ago. Since 2008 several big manufacturers have been bringing jobs back from overseas.

The plain truth is that outsourcing was probably done too fast, by too many companies. There are a lot of reasons for the new in-sourcing:

1. Chinese wages climb every year. 2. American wages especially in unionized workforces have declined as unions allow for lower starting pay. 3. Oil has gotten more expensive -- ships use oil. 4. American natural gas has gotten much cheaper -- many factories use natural gas energy. 5. Companies have better QC and time to market when producing locally.

Not all jobs will come back. Nor should they. But it's definitely happening.

hkmurakami4• 14 years ago

There are also IP theft issues, and (while this doesn't apply to Apple) the burden of having to set up join ventures in China in partnership with a local firm where the foreign company has less than 50% ownership of said joint venture.

In such a "partnership" (if you can really call it that), there is a constant struggle between the Chinese and the non-Chinese owners of the venture where the Chinese counterpart is trying to absorb knowhow as fast as possible while the foreign firm tries to maintain their technological leadership over their partner so that they don't get marginalized. Perhaps the benefit of such a contentious relationship has been eroded enough from higher wages and other costs that firms have started to migrate their operations back home.

IheartApplesDix• 14 years ago

I'd also like to point out that 100 million is a pittance of an investment for such a dramatic move for such a large company. It's really a no-brainier at that price.

wiremine• 14 years ago

A few thoughts:

* Odds are _those_ jobs _aren't_ coming back, these are probably some sort of _new_ type of job. Given Cook's operations background, I wouldn't be surprised if Apple is leveraging their cash/think different attitude to try improving the efficiency of US based work forces. It doesn't seem like Cook's style to give away a competitive advantages for the sake PR. Apple's NPS (Net Promoter Score) is already extremely high. However, if he can shave a few more dollars off assembly, that protects Apple's margins, and that feels like a very Apple-like move.

* If Apple were to leverage new manufacturing methodologies, and they have been working on that for a few years, they _would_ spin it for maximum PR. That makes them looks good, and focuses the store on job creation, not supply chain improvements. I don't think it is coincidence Cook spoke to both NBC and Bloomberg in the same news cycle.

* That said: if Cook is being altruistic... So what? Apple has tens of billions of dollars in the bank. If they wants to spend $100M on PR, I'm sure the people reaping the rewards won't care.

tripzilch2• 14 years ago

> if Cook is being altruistic... So what? Apple has tens of billions of dollars in the bank. If they wants to spend $100M on PR, I'm sure the people reaping the rewards won't care.

Stockholders will care. No way he's just being altruistic. Your other ideas are much more likely.

morley• 14 years ago

This topic is covered in the Isaacson biography; Isaacson's recounting doesn't paint Jobs so black-and-white on the issue. the excerpt:

Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. “You can’t find that many in America to hire,” he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. “If you could educate these engineers,” he said, “we could move more manufacturing plants here.” The argument made a strong impression on the president. Two or three times over the next month he told his aides, “We’ve got to find ways to train those 30,000 manufacturing engineers that Jobs told us about.”

Isaacson, Walter (2011-10-24). Steve Jobs (p. 546). Simon & Schuster, Inc.. Kindle Edition.

specialp• 14 years ago

I think they will be making product chasis and frames in the USA. Think about it.. If suddenly there was another uprising at some contractor in China they would not be making Apple products, they would be making commodity parts like motherboards and memory that are simply components. People would identify their Mac mini or iMac as being made in the USA and some parts from China in it.

Also there probably is not much savings going on by making these parts in China. The expensive part would be if you were making your own motherboards and chips in the USA. Apple does not need to do it, and gets good PR in the process.

pinwale• 14 years ago

> The expensive part would be if you were making your own motherboards and chips in the USA

Apple already sources the A5, A5X, & A6 chips from a Samsung factory in Austin, Texas.

jjcm• 14 years ago

What extent of the production will be here though? Are they just assembling motherboards, chassis, and displays all together that have came from overseas? I don't think Apple would be so willing to give up the advantage of having all of the tightly knit infrastructure available in China just for political reasons.

Raz0rblade2• 14 years ago

this is a very small amount of money for a company like apple so is it seriously, or just some strange tax jump ?

Raz0rblade2• 14 years ago

this is a small amount of money for a company as Apple. might likely be a tax evasion maneuver

forgotAgain• 14 years ago

Probably caused by a number of factors:

- upcoming changes in tax laws that remove the incentive to move jobs overseas

- IP protection. Its finally sunk in that their Chinese suppliers feed any engineering info straight to the local government.

- increasing jingoism in the United States

- realization that their current line of creating "good American jobs" through their retail chain is falling apart.

- the shine from all of the "good jobs" they created with their NC data center is wearing off.

$100 million is really chump change for this kind of investment for a company like Apple. It's about what Cook made from his first year as Apple CEO.

esalazar• 14 years ago

What American Macintosh Factories Looked Like Last Time Apple Built Them Here http://gizmodo.com/5966278/what-american-macintosh-factories...

Steko• 14 years ago

I'm sure there are multiple reasons for this move and labor costs are almost certainly the biggest factor. But one aspect that I haven't seen discussed but which may be relevant is that companies increasingly turn to the ITC as a patent enforcement lever. The ITC is a US agency which can effect import bans of products found to infringe. Obviously a great workaround to an otherwise crippling import ban decision would be having a US based assembly network.

Now the big arena is mobile and this announcement is about Mac lines but it's not hard to believe that this is a tip of the iceberg investment and that Apple might increasingly move to a system of using Foxconn's non-China factories around the world. Apple is partly financing the Brazil plant for Foxconn IIRC.

Another aspect that hasn't been discussed is the opening around the world of rare earth mines (reopening in the case of the California mine). Part of the reason "those jobs [weren't] coming back" was because China's rare earth's monopoly increasingly was reserved for Chinese made products.

robbfitzsimmons• 14 years ago

The most interesting part to me here is the MSN butterfly on the video. Microsoft has a YouTube competitor - who knew?

hayksaakian• 14 years ago

Just an attempt to distract from the daily horrors at Apple's Chinese production line.

rdl2• 14 years ago

I wonder if Apple could build a factory somewhere touristy in the US (California, or maybe near Disney World, or something), designed specifically for tours (like the BMW factory and European Delivery center), and make enough from tourism (either cash or "brand value") to overcome the costs of production in the US.

I'd pay $20 to see the modern equivalent of the NeXT factory for 30 minutes, from an overhead viewing gallery.

Obviously Apple wouldn't want to reveal trade secrets, but I don't think there's much secret about how Apple produces the desktop and laptop products.

djisjke• 14 years ago

A factory/museum would be awesome

conradholmes• 14 years ago

my mac pro was assembled in the usa

pebb• 14 years ago

So this is the reason Apple stock plunged 7% yesterday...

Apple will invest $100 million to bring Mac production back to the US next year

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