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Apple CEO Tim Cook On Apple's US Manufacturing Move
We mentioned a few days back the "Assembled in America" tag showing up on some models of Apple's iMac. Nerval's Lobster points out that in a new interview with Bloomberg Businessweek, Apple CEO Tim Cook offered some details on what that means: "'Next year we are going to bring some production to the U.S. on the Mac,' Cook told the magazine. '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.' He also had comments about Android and current litigation against Samsung and others."
It may reduce their margins (minutely), but it will give them an immediate response to any allegations of massive offshoring of labor or anti-American sentiment. It's a relatively small investment for them that could pay tremendous returns. Smart, Apple, very smart.
If they bring "some" jobs back to the States.
If the jobs come back to the States, certain politicians will owe Apple.
If they are owed by the Government they can call in the favor.
If they can get some political influence on their problems with Android and Samsung, it will benefit them.
If they can get political action against Android and Samsung it will increase their revenue.
Later on Apple can find an emergency that forces them to off shore their production again.
If your cynical.
Can feel better that they pay so much more for their goodies than everybody else. Although I sense a price hike in their future.
This needs to be a principled move because shareholders are going to complain greatly about any margin erosion for the sake of patriotism.
Not just a good PR move, but also one that protects IP from Chinese industrial espionage.
They don't say that. They've always said something like "Designed In California".
Apparently some have already started saying "Assembled in USA" ... before that it was Made in China
The AAPL drop was most likely caused by trading firms requiring higher margins on large AAPL buyers - because some idiot bought a million shares right before an earnings release, the stock went south a bit, and he tried to claim he entered an extra zero wrongly... he's going to jail for about 20 years now.
Today is the first day the Made in USA is really mainstream news, and the stock is up a bit.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
http://www.reuters.com/article/2011/08/01/us-foxconn-robots-idUSTRE77016B20110801
No Assembly jobs, just robot repair and janitors.
Meh, their stock keeps falling
Oh really?
Still time to buy in cheap before the Cook interview gets wider coverage, and people realize once again the stock P/E is far lower than other tech stocks...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
They didn't pay a dividend as promised ...
They pay *regular* dividends. They did not announce a *special* dividend to get around the upcoming tax increases that will go into effect on Jan 1. When did they promise to do so?
Manufacturing in China is getting more expensive and North America is becoming more competitive. The tax rate on repatriating money made outside of the US also makes manufacturing in the US more advantageous.
This sounds like another case of The Insourcing Boom. Companies are finally seeing at the total cost of outsourcing. Cook mentioned that Apple already has to make some parts in the US and pay to ship them out to the manufacturing plants overseas, and that's only one of the common costs.
The interview doesn't go into a lot of details on Apple's move to US manufacturing, but a big part of the outsourcing cost is what you lose when you separate your product development from the manufacturing process. This comment from Tim Cook speaks to that:
I'm guessing this move to insource is not philanthropic, it's a smart business decision in the long run, just like General Electric's.
Honest question.
Again, another idiotic post that is simply incorrect. I have over boxes for Apple products within 20 feet of me, and not a single one claims the product was made in the US.
Why are you spreading lies?
The share value was not tied to this (or just to this report) There are other silly reasons out there which apparently fed this.. People continue to be short sighted and to be honest, these market fluctuations are normal and if people worry over these dips, then they should not own stock. Those who invest for the long term are quite fine with such things as stocks always fluctuate.
Instead of focusing on the minor issues, analysts should keep in mind how much profit margin Apple has on everything they sell compared to other manufacturers. Look at the PC market. Apple has always focused on high quality and high margins. They have never been interested in the low margin purchasers and it has worked well for them. Look at smart phones and tablets and it's the same thing. I'd rather have stock in a company with a healthy profit margin than one which cuts it so low that they need to count on volume of sales to make it worth while. This makes for a far healthier company. If company A's margins are super low and a competing product hits the shelves which is superior and customers flock to that instead, Company A will suffer greatly.
Apple is the new Microsoft, but only because Microsoft is no longer relevant.
Don't know something? Look it up. Still don't know? Then ask.
If they can get political action against Android and Samsung it will increase their revenue.
How?
If you're thinking that by eliminating Android tablets Apple's revenue will pick up, that may not be the case. I don't think it's a zero sum game - in other words a sale of an Android device doesn't mean a lost sale for Apple or vice versa. Eventually, Apple's sales growth will decline because everyone who wants an Apple tablet will have one and Apple's new sales are going to be for folks who want to upgrade.
Here are your options:
1. Manufacturing in the USA, with manufacturing using robots, creating low thousands of well-paid jobs for Americans.
2. Manufacturing in China using hundreds of thousands of low-paid Chinese jobs.
3. Manufacturing in the USA without robots, but with hundreds of thousands of minimum-wage part-time jobs--and all Apple products increase in price by 30%.
Apple is currently doing #2 and transitioning to #1. Are you really upset that they didn't pick #3?
. . . and it provides me with the excuse I need to switch over the an iPhone at the start of my next contract, given that the iPhone has significantly better HTML5/Canvas performance than the Android.
Foxconn won't be able to be quite as horrible in the US, but it is a Foxconn plant and conditions will still be horrible. Even so, this is proof that corporations respond to publicity and pressure.
"Substantial" pretty much reflects the amount of technology, manufacturing and production facilities the USA has lost over the last decade or so to off-shoring (and moved to China, India, Korea and Taiwan).
I'll be watching to see if Apple re-starts the furnaces in Pittsburgh to mold all it's aluminum cases.
Join the Slashcott! Feb 10 thru Feb 17!
As the news of the Made in the US concept spread, AAPL lost $30 billion in market capitalization.
To put $30B in context Apple's stock lost 6%. The "Made in USA" story was not really cited in the mainstream financial press. One of the things that were cited was a report claiming that orders for components that go into devices are down, suggesting they are slowing manufacturing of devices. Also cited were changes in margin rules for owning Apple stock.
This is getting more complex.
"Designed in California, manufactured in China, assembled in Texas, marketed in California, budgeted in New York...."
They are the most valuable company in history. With over $100billion in cash reserves. They are not hurting for anything.
What makes you think that just because your boxes do not have it that none do? That is kinda the point of 'some'. In fact: example.
2011
"Reporters Charles Duhigg and Keith Bradsher begin their lengthy piece with an unsettling anecdote set at a 2011 dinner for Silicon Valley big wigs that was attended by President Obama. At one point the president asked the late Steve Jobs why Apple couldn’t bring back to America the tens of thousands of jobs it had outsourced, mostly to Asia, where its iPads, iPhones and other products are engineered and assembled.
“Those jobs aren’t coming back,” Apple’s CEO reportedly replied. End of discussion.
According to Duhigg and Bradsher, Apple’s brass believes the American worker, besides earning too much money for his or her labor, just doesn’t possess “the flexibility, diligence and industrial skills of foreign workers.” Last week Frying Pan News writer Jon Zerolnick described the “flexibility” of Apple’s subcontracted Chinese workers, with their 34-hour shifts and 12-foot by 12-foot dormitories, and their skill at sliding into coffin-sized beds at night. Victorian Manchester was a worker’s paradise by comparison."
2012
"'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.'"
"If any question why we died, Tell them because our fathers lied."
Reading between the lines, doesn't this really mean that Apple will be "assembling" their products in the U.S. using Asian components in an Asian owned factory (Foxconn) on U.S. soil?
We are now a competitive labor market for third world slave wages! That is one way to bring jobs back to America.
Exactly. Stuffing the Mac in a box doesn't mean it's Made in America. I see the BS all the time, and when you look inside the package, China is written all over it.
-- By all means let's be open-minded, but not so open-minded that our brains drop out.
No it means they UPS a little Asian kid as part of your new iDevice. After you unbox him he pulls out the soldiering iron and assembles it before your eyes. Kind of like the French how they send some guy over to your table when you're at the restaurant to flambe crepes.
ANNNNND still cheaper than hiring Americans!
Thanks for spamming. Or do you think what you have to say is so important that it needs to be pasted up multiple times?
"Made on Earth"
<xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
Wow, I'm good with this. It may be a PR move, but it's one a find myself surprisingly happy about. I may consider actually buying (a new) one now.
They are the most valuable company in history.
No, they're not ... they're the most valuable company in term of market capitalization and ignoring inflation.
Bone white has always been a dominating aspect of most of their products.
It may reduce their margins (minutely), but it will give them an immediate response to any allegations of massive offshoring of labor or anti-American sentiment.
Actually with the volumes Apple does they can automate the heck out of things so their margins probably won't be affected much. The biggest challenges are getting the components to the assembly plant for reasonable cost as well as flexibility but again, Apple is a big enough player that they are in a reasonable position to make that happen. Tim Cook being a supply chain guy I'm sure understands this well. US manufacturing is very competitive unless there is a very high percentage of labor cost in the product, particularly if it is unskilled labor or if the competition enjoys subsidies US companies do not.
Not in history, in present day yes. You factor in inflation and its still quite shy of MS's reign.
1) So what if it's a PR move? It's still a good move for Americans - no matter what.
2) So what if it's a Foxconn factory? Of course it will be one - Apple is NOT a manufacturing company, but they do work *very* closely with their manufacturers.
3) So what if it's a mostly robotic factory? This IS the future of manufacturing in all countries - accept it, and accept that even robotic factories are better than none for the local economy.
Seriously, how are so many of you trying to spin this negatively? And why?
An even bigger better reason not to get within a million miles of apple crap.
Maybe this will finally knock the final nail in the coffin lid.
H8rz gotta H8!
As the news of the Made in the US concept spread, AAPL lost $30 billion in market capitalization.
This needs to be a principled move because shareholders are going to complain greatly about any margin erosion for the sake of patriotism.
Are you serious?
One of the weapons used in the patent wars is to block imports of infringing products. If the [allegedly] infringing products are built in the US[of]A, then they can't be blocked from import very well, can they?
Gives them a tactical advantage...
It is probably a 0.0001% factor in today's movement.
In retrospect I can see how my post might have read as there being a connection, but I agree with you - they are totally separate things.
The movement is because people suddenly woke up and realized Apple still has waiting lists for almost every product, a ton of cash, and some competitors are not doing as well as expected.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It's a move to help keep their products from being restricted from import if/when they ever lose an IP lawsuit.
Apple could demand better adherence to US standards in the Foxconn plants making their products.
Apple is doing this, they already demanded less overtime of workers and better enforcement of restrictions against child labor. And then they brought in an independent firm to audit this happening and asked FoxConn to allow them access.
The real question is, why is NO other company doing this.
Things are obviously not perfect at FoxConn but Apple is trying to make them better, in a way that anyone can keep track of. No other company is providing any kind of visibility into these issues.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That's not a photo of a box, it's on the back of the respective iMac. ;)
this sig is useless
Some new iMacs are labeled as 'Made in USA'
This lie again? Why are you misleading people?
An “Assembled in USA” claim requires a product’s “last substantial transformation” happen in the United States even if the components of a product are manufactured overseas. However, this requires more than a “screwdriver” assembly of the parts at the end of the process. For Apple to be putting “Assembled in USA” labels on some new iMacs, the company is claiming that it’s doing more than slapping together components into a finished whole.
- http://www.digitaltrends.com/computing/does-assembled-in-usa-mean-anything-for-apple/
Disclosure, I'm not from Detroit, but it would be a huge boon to an economy that's already manufacturing based.
My bet on which line will be "Made in the USA" is the revamped Mac Pro due out next year. First, the numbers are far smaller than that for iPads or iPhones. requiring less capital investment. Second, they're not as challenging to assemble. Third, the added labor cost will be a smaller percentage of these more expensive units.
Some mornings it's hardly worth chewing through the restraints to get out of bed.
The article specifically says that these won't be "assembly only" factories, but will do other manufacturing as well. It's a short article, you should read it before commenting.
Foxconn isn't a Chinese company.
for manufacturing. Well its still a parasite of a company.
Hey look that serial rapist is going to church now. We'll good for him maybe we can bring him to dinner now.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
Thing is, 'Made in the USA' is a marketing term, along with buzzwords like 'Proudly', 'Union', etc...
"Insourcing" means that you're not doing it to be patriotic. It means you're doing it because it makes sense on the balance sheet. It's cheaper to do the work here.
It doesn't even have to be a 'made' product - telephone support is a constant service, and the tendency to 'in-source' the work from where it was 'outsourced' to India a decade ago has been around for the last five years.
Made in the USA tends to imply a product that has always been made here - now often restricted to building materials, food, and such. 'Insourced' tends to mean that it used to be made overseas, and is now made(at least partially) here in the USA.
Terminology can be as specific as you make it - warm vs hot, cool vs cold. SNAFU vs FUBAR. Snow, flurries, hail, sleet, blizzard, all describe somewhat similar meteorological conditions that are actually very different. In this case 'Made in the USA' is less accurate than 'in-sourcing'. Heck, 'insourcing' could refer to BMW bringing some production home in Germany.
I don't read AC A human right
you know America is plural, dont confuse America with the USA because all the following nations are included in the Americas
Canada
Mexico
United States
Belize
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Panama
Antigua
Bahamas
Barbados
Cuba
Dominica
Dominican Republic
Grenada
Haiti
Jamaica
Saint Kitts/ Nevis
Saint Lucia
Saint Vincent
Trinidad/Tobago
Argentina
Bolivia
Brazil
Chile
Columbia
Ecuador
French Guiana
Guyana
Paraguay
Peru
Suriname
Uruguay
Venezuela
Politics is Treachery, Religion is Brainwashing
trades jobs are also needed as well and higher education is not just degrees it's tech / trades as well.
Manufacturing Production Certificate at the Community College level.
http://goforward.harpercollege.edu/academics/areas/manufacturing/mpc.php
What's your point? The jobs aren't coming back.
Foxconn employs hundreds of thousands of Chinese workers just on behalf of Apple, and I'd be surprised if this new US operation employed even one thousand Americans. Mostly because this is a small plant that will only be producing certain models of Macs, not huge volumes of iphones or ipads. And also because it will no doubt be more heavily automated than the Chinese plants.
My guess is that there will be 200-500 manufacturing jobs at this plant, with maybe double or triple that in secondary jobs.
It's not altruistic, and it's not just Apple. The Atlantic had an article recently about how a lot of companies (e.g. GM) are doing the same thing, for two reasons: (a) Chinese wages have been rising at about 18% per year since 2000, (b) oil is very pricey now, meaning shipping stuff over from China is more expensive. So, yeah, Apple aren't doing this because they've suddenly discovered patriotism. This is based on a cold cost calculation, just like the original decision to move their manufacturing to China. Not that there's anything wrong with that, but the spin they're trying to put on this is more than a little disingenuous.
Guess they want to follow Lenovo's lead ... Of course, Lenovo is a Chinese company who is going to be manufacturing some of their products in the US, I like that even better than the US company who is moving a few things back to the US.
+++ATH0 NO CARRIER
Isn't this just a hedge against a potential ITSC ruling banning the import of Apple products? If they are assembled in the U.S. the ban would not apply to their US production line.
Part of Apple's charm was the unveiling of the products. Recently, Apple products are regular leaked before their unveiling. The leaks usually happen overseas. A US manufacturing supply chain would dramatically decrease these leaks.
do I smell FUD? A better article to link to would have been to someone trying to investigative reporting on this. Like, you know hanging outside the Elk Grove facility and asking someone:
http://www.bizjournals.com/sacramento/print-edition/2012/09/07/headcount-rising-apple-elk-grove-campus.html?page=all
What incentive would apple have in claiming something was "Assembled in America" if there isn't a realistic portion of assembly work being done here? They already have the entire world knowing that their flagship products are wholly a Chinese product and the press, the customers and the investors all don't mind that one bit. Even if they're only assembling 10% of the system in America, they're one of the few tech companies that can say they're bucking the trend, and that's meaningful. /before the fandroids jump on me, yes Google did this too with Nexus Q
assembled in america = mexico factories
Bring all manufacturing to the US, hire UAW workers for $75/hr, refuse to utilize any and all automation and grind out a shitty product that costs 3x what it does now and has a 20% field failure rate.
Option #5 is let Obama build nationalized factories and hire eleventy million civil servants to do that work. In 40 years they'll be making 7 iPads a day.
Import tariffs on parts versus fully assembled electronics. They've realized it would be cheaper to bring in the parts and pay Americans to assemble them here. Its a cost saving move for them because of the high retail value of their imported devices.
Maybe they think that they still lose less than by letting their Asian manufacturers copy their technology.
EXACTLY. Already been happening; this was part of the reason for the move to China. In the race against machines, man has to lower his quality of life and push harder to compete. As history has shown, man eventually loses to the machine in the long term every time. Chinese are cheap human resources that are highly adaptable with far less upfront costs than automation and perform close enough to the machines for many tasks. Our CEOs never viewed human resources as people like themselves so switching them out for human cogs that were cheaper and more disposable was not a problem for them. Neither is the slow transition to machines.
Increasing workforce and decreasing labor demand = big trouble
Democracy Now! - uncensored, anti-establishment news
Not everyone is capable of (or wants) higher education, some people just missed the boat, others like immigrants will take the opportunity to improve their children's station.
Why the fuss about pinpointing immigrants? They're no different from the guy down the street with an equally low profile.
..that's what you are. A company issuing shares must at one point either pay dividends or buy back some of their shares, otherwise IT IS A SCAM. There have been plenty of this type of companies around, they are dead now and their management have lined their pockets to the detriment of the owners and the economy as a whole.
Would you give me a dollar if you knew you would never, ever get that dollar plus interest back ???
We can discuss all day what a "proper" interest rate is and when it is due, but if we start to claim that no interest at all is OK, then you are basically advocating theft.
Apple is a very mature company sitting on tons of cash and they now have to give money back to investors, exactly the way they got money which was invested in GM, AT&T, IBM and mom's coffee shop in the 1970s and 1980s. Whether they use dividends or share buybacks is just a detail in this discussion.
At one point we all have to grow up and be proper members of the capitalist system or relocate to North Korea and enjoy the happiness of communism. According to latest reports, even they started to fudge their way into capitalism.
Their screens are still assembled in Asia.
So is their memory.
So is their cpu.
etc. etc.
So what does "Assembled in the USA" actually mean?
If Pandora's box is destined to be opened, *I* want to be the one to open it.
Whether they create low paying factory jobs or high paying engineering jobs they are doing you guys (in the U.S.) a favour: they create jobs. And this is something you need right now.
So yes, I own more Apple devices than I probably need, I think their products are great for work and leisure, and probably I am a "fanboy" or "iSheep", but I have to say, that any American (U.S. American) who criticizes this move is a total moron.
Is this a marketing move? Maybe a touch of it. But from a company who provides good products, being virtually the ONLY company caring for producing more environmentally friendly products (unibody vs pvc and many others) I can imagine that they care for their own country a tidbit.
PS: I would tax the CRAP out of companies who outsource everything in favour of higher profits. You should support your own country's people where ever you are. ...
Just my 2c
They don't say that.
Apparently some have already started saying "Assembled in USA"
You are awesome.
Again, another idiotic post that is simply incorrect. I have over boxes for Apple products within 20 feet of me, and not a single one claims the product was made in the US.
Why are you spreading lies?
I don't see how it's idiotic.
http://apple.slashdot.org/story/12/12/03/2124209/some-apple-imacs-assembled-in-america
"Some Apple iMacs assembled in America"
Assembled. Made. Whatever. That wasn't the point.
The point was that they said "in America" but this news post made me wonder whatever they made that claim before the changed had already happened.
Lame-ass AC. If you are going to claim someone is an idiot do so under your own name.
And wtf are "over boxes"?
Over NINE THOUSAND boxes?
Assembled or made doesn't make much difference to me and the question was whatever they maybe was going to assemble them in the USA but had already started typing assembled in the USA in some cases.
But it's hard communicating with Apple zealots. The force are weak^Wdead in them.
Since the South knows the same kinds of "know your place" slavery that is only ratcheted up in China, one can only expect that they won't go anywhere that a worker has the advantage.
Now if Foxconn would manufacture somewhere outside the South and Southern-aligned states(such as ALEC-controlled Michigan and Indiana) and choose the North/Northeast(excluding Michigan and Indiana) as well as the West Coast - it would provide a nice rejoinder to
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Not as long as Snyder's running the state.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
I recall news from when Cook became CEO that his focus was Apple's supply chain.
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Capecce? Pesce means "fish" in Italian. Capisce is the expression you're looking for.
manufactured in China
Actually, I think most of the manufacturing is not in China, but in other countries, including the US.
Dilbert RSS feed
"The real question is, why is NO other company doing this."
and:
"Things are obviously not perfect at FoxConn but Apple is trying to make them better, in a way that anyone can keep track of. No other company is providing any kind of visibility into these issues."
Well, except they are:
http://www.bbc.co.uk/news/business-20491086
Sorry to burst your (reality distortion) bubble.
Short term fluctuations of "market capitalization" oughtn't influence any business decisions nor be interpreted as rational responses to them.
Millions long for immortality who do not know what to do with themselves on a rainy Sunday afternoon. -- Susan Ertz
A company's stock price is driven by its worth.
No. The assets that a company owns may help define a floor for its stock price but its price is heavily influence by expectations of future earnings.
Would I rather buy stock of a company that is doubling and tripling its worth, ...
Note that this is an example of price being heavily influenced by expected future earnings.
Such growth is temporary. During such high growth phases it is common to not offer a dividend. However as a company moves from a "growth" phase to a "value" phase such increases in stock price stop. A company will typically offer a dividend to help compensate for this and help keep the stock attractive. Note that by attractive the company is thinking in terms of a large number of investors and these investors are not necessarily the same as before. Some investors prefer growth phase companies, high reward high risk, and others prefer value companies, low reward low risk.
... or a stock that is offering dividends but actually dropping the value of the company?
The value of the company is not dropping. Dividends typically come out profits. In Apple's case they merely slow the growth of the the cash horde by a small amount.
There's a lot of clamouring (as there always has been) for companies to stop hiding funds overseas.
What if a move is made in the tax code that actually penalizes sending jobs overseas?
We've got a LOT of protectionist yahoos in Congress, and probably going to have more in four years.
If nothing else, this move can serve as a valid test case of if manufacturing can return. Instead of rhetoric and speculation, we're going to have some evidence either way.
"Made in the USA" sells -- if they can sell it at a profit, then others will do the same. Not that GM or Chrysler really make anything in the US anymore, or a profit :)
All Samsung has done is ONE audit, and done nothing like what Apple has done as far as telling suppliers they must meet certain labor standards.
Sorry to burst your bubble that let you rationalize using a device built by slave labor who is doing nothing to improve working conditions, but you really can't get off that easily.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Apple is doing that to protect it's brand
Possibly (I don't think so), but even if that is true WHO CARES. The end result is the same, workers being treated better.
Shouldn't other companies ALSO want to protect a brand as well?
"There is more worth loving than we have strength to love." - Brian Jay Stanley