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Apple Pledges $1 Billion Toward Creating Manufacturing Jobs In US (cnbc.com)
Apple announced today plans to create a $1 billion fund to promote creation of advanced manufacturing jobs in the U.S. Cook told CNBC in an interview that Apple will announce the first investment later in May. CNBC reports: "By doing that, we can be the ripple in the pond. Because if we can create many manufacturing jobs around, those manufacturing jobs create more jobs around them because you have a service industry that builds up around them," the CEO said. Apple has already created two million jobs in the United States, and Cook showed no signs of shrinking the tech giant's reach. "A lot of people ask me, 'Do you think it's a company's job to create jobs?' and my response is [that] a company should have values because a company is a collection of people. And people should have values, so by extension, a company should. And one of the things you do is give back," Cook said. "So how do you give back? We give back through our work in the environment, in running the company on renewable energy. We give back in job creation."
Most Apple products are the most difficult to recycle. By design.
Not to mention the wasteful packaging...
This issue is a bit more complicated than you think.
1 billion USD is a large sum. Is it because they fear president Trump's wrath? Or is it part of a deal that involves bringing back tax-free some cash from offshore?
Those $Bs of jobs will go poof as soon as the Qualcomm battle is over.
The Qualcomm battle will drag on for years and years. Most assembly is done with robots, and it doesn't matter much where those robots are parked. The days of cheap labor in China are ending. The Chinese leadership knows this, and they are trying to shift their economy more toward services and domestic consumption, and away from exporting labor intensive goods.
2 million jobs? So apple is claiming to be responsible for almost 1.5% of US employment? sounds like bullshit marketing speak to me
Part of what has made Apple successful in Asian manufacturing has been low wages coupled with conditions that favor the employer. Workers do not have overtime, do not have a lot of other protections. Some workers seem to essentially be prisoner to the company town, living on company grounds in company dormitories, shopping in company stores, eating in company cafeterias. That sort of thing is generally unacceptable in the United States.
American wages, even wages for manufacturing, are probably too high if the products are still priced roughly where they are now combined with the amount of manual labor used to individually assemble devices like phones and tablets. This means the alternative to all of this is automating as much manufacturing as possible. It may mean paying a manufacturing engineer a couple hundred thousand a year to work with designers to adapt designs to machine-manufacturable products, such that humans barely if at all touch the actual products being built- humans will be more likely to work on the factory itself, reconfiguring for new products or maintaining the machinery so that it keeps on producing units.
The effects of manufacturing will not be as strongly felt as they used to be. Sure some workers will still be employed at the factory, and arguably those employees might even be higher paid due to the technical work of maintaining the machinery, but the total number of workers won't be enough to support whole communities like it used to, and due to the technical nature of what work there is, the jobs are more likely to go to existing urban areas rather than rejuvenating rural towns. If the manufacturing was labor-intensive and unskilled then of course it would make sense to consider towns where wages could be lower, but that won't be as much a factor in this era.
Nevertheless I would like to see manufacturing come back; some jobs are better than no jobs, and higher paying jobs are good when the wages are fair for the kind of abilities the work requires.
We'll just have to see what happens.
Do not look into laser with remaining eye.
If Apple would just pay their taxes and stop hiding money in foreign countries, this would be a moot point. They are of course not alone or entirely at fault for taking advantage of loopholes bought and paid for by corporations, but the point remains.
errr....umm...*whooosh* *whoosh* Is this thing on ?
How about giving back an actual pro laptop with something truly innovative, instead of that silly touch bar? How about giving back the MagSafe power adapter? How about giving back a laptop with a variety of useful ports?
How about giving back an honest-to-goodness pro desktop?
#DeleteChrome
I wonder how many dozens of American manufacturing workers are required to operate a $1 billion automated factory.
They did pay the taxes they were obligated to pay (sales taxes, wage taxes etc). Why would you want to pay an extra 35% if you don't have to? You don't take the standard $9-12k deduction on your Federal taxes?
Custom electronics and digital signage for your business: www.evcircuits.com
...to offer to bring back a tiny, tiny fraction of the vast sum they've avoided paying a cent in taxes on so they can get some good PR and hope we ignore the rest of the money they've stolen from the US public. (And make no mistake, tax evasion is just another form of theft, with the victim being society.)
I wonder how many dozens of American manufacturing workers are required to operate a $1 billion automated factory.
Not as many as people think they might. When John Deere opened a new factory, they had 10,000 applications for 800 positions.
There is no indication this has anything to do with Trump.
As mentioned in the comments above yours, it's likely automation in some areas is at a point that it negates the benefit of cheaper labor costs in China and they get to avoid the complications of setting up there and pretend they're heroes (as Trump and his supporters do whenever a single new job is announced in the US, unlike when they complained constantly when the same was happening to a far greater extent during Obama's administration).
everyone can wonder why American corporations keep getting their asses handed to them by more pragmatic approaches made by foreign companies
Like Volkswagen? BP? Toshiba? FIFA? Olympus? Tesco? MG Rover? Parmalat? Barclays?
lucm, indeed.
It's impossible to compete with someone that will work 80+ hours a week for peanuts
Sure it's possible. Just work 90+ hours for peanuts.
...to offer to bring back a tiny, tiny fraction of the vast sum they've avoided paying a cent in taxes on so they can get some good PR and hope we ignore the rest of the money they've stolen from the US public. (And make no mistake, tax evasion is just another form of theft, with the victim being society.)
I'm no fan of our current global tax system and the wealth distortions it has created. But going around trying to label companies/people legally minimising their tax 'thieves' is not much different from the RIAA moral police style anti-piracy campaigns. It's childish, and discredits serious arguments.
Firstly, almost every western country's tax system is based on self declaration. We don't have tax inspectors hovering over every transaction you make, with the big eye in the sky then sending you a bill at the end of the year. You go about your business, and at the end of the year, you report to the government what tax you think you owe. In the vast majority of cases, the government does not challenge your assessment. It is an honesty based system (albeit with stiff penalties if you abuse it) and it tends to work pretty well. By claiming that all these billions or dollars are being stolen, you are insinuating that the integrity of the system has broken down. This is dangerous, because the next step then is to crack down on these phantom tax cheats, by doing things like banning cash, and having your bank account data fed directly to the IRS. Obviously this would have no impact on what Apple and Google etc are doing, because the IRS already knows what they are doing. All you have done is given the government a populous excuse to invade our lives further.
Secondly, company tax is nowhere near as big a moral issue as you think it is. Fiduciary duty means that a company is limited in its ability to live it up on income like an individual can (and perks like staff parties, corporate jets, are generally deductible anyway, so company tax is irrelevant). Net profits must ultimately be either distributed to shareholders or re-invested in productive activities. Saving them just delays this, but unless you save them forever, the company must ultimately 'consume' the profits by distribution to shareholders or investment.
If it re-invests the profits, then almost always it can claim the tax back over time through depreciation. In other words, it might earn $10000 of profit, pay $2000 of tax, spend the resulting $8000 to buy a machine, but over the next five years claim back $2000/5 in tax credits due to the depreciation of the capital asset. Ultimately the taxman gets no tax on the profits, but the company has to lend the taxman the tax for five years. For small and medium sized businesses trying to grow off cashflow, this is really stupid. If the machine they wanted cost $10000, then they would have to borrow $2000 to lend onward to the taxman for five years. Indeed, many small businesses have to do just this, which is why most countries have generous capital allowances to prevent such pointless cashflow disruption.
Alternately, if it distributes the profits to shareholders, the shareholders pay tax on the dividends against their individual income. You might notice a potential issue with this - distributed profits get taxed twice. A company could make the $10000 of profit, pay $2000 of tax, and then pays $8000 to a shareholder. The shareholder might then pay $2500 of tax on that, resulting in a net dividend of $5500 arriving in the shareholder's account. Of the $10000 the company made from a profit on selling widgets, barely half gets to the owners. People in partnerships (as opposed to limited companies) don't have this problem, which puts companies at a big disadvantage (even if you think such a punitive effective tax rate is okay). This is why almost every country has various tax credit systems or lower dividend tax rates to prevent this issue.
Now where I agree with you there is a problem is in the loopholes that develop when you start tryin
Yup. Or restate the headline this way: "Company with 250 billion in cash assets decides to invest 0.4% in domestic economy!"
I have nothing against people from other countries trying to get a better job in the US than they can get in their native land. That makes complete sense to me.
But to me the fundamental problem is that while the means has that nice side effect - using foreign labor that gives non-US citizens better economic options - the end goal by the companies using H1B is to decrease industry-wide labor costs. Instead of a $60,000 annual cost job opening being filled by a $60,000 annual cost American or alternately by hiring a $45,000 annual cost American and training him or her until they can do the $60,000 job and collect the $60,000 pay, the companies can use a $45,000 imported worker.
Or to put it in more snarky terms: supply and demand is wonderful when it works in favor of the executives and majority shareholders. When supply and demand works in favor of the workers, it's a terrible problem and lawmakers need to be bribed until they create a fix.
Wasn't that same argument the basis of the infamous "Citizens United" decision, that corporations are collections of people, and that corporations have the same rights as individuals in many respects?
Interesting.
Ken
I don't mind if manufacturing comes back to the US in the form of automated factories.
Those factories still need bodies to keep them going. Someone has to build the factory, network it, install the machines, and keep them going.
Also, someone is delivering raw materials to the factory, and someone is shipping finished goods away from the factory.
Those factories are also tax ratables that help offset the cost of police, fire, and public education.
If automation is an unavoidable trend, I'd rather it be here than there.
The problem comes when you have $3.20/hr labor versus $21/hr labor--although the worldwide data suggests a manufacturing job in the United States actually carries a cost of $78/hr.
I use pants as a model. Given the number of pants imported, their price at import, their price at retail (average $14.56), and the price of shipping (40-foot shipping container from China imports for under $1,300 with 20,000 pairs of pants, or 6.5 cents per pair), I came up with some numbers.
Those numbers start with $6.12 for the pants when they land in an American port; $6.055 of Chinese labor at $3.20/hr; and 1.89 hours of Chinese labor from the cotton farming and dying to the construction of the pants themselves, assuming 100% of all of that is done in China (frequently, it's Indian cotton).
From there, you can run some numbers. Benefits are said to be 25%-40%, but I used 18%; payroll taxes are 6.4% (6.2% OASDI, 0.2% medicaid). Let's assume Americans build the same product, as building a different product would change the cost and the economics--a shoddier product would cost less and replace more-frequently, while a sturdier product would cost more and replace less-frequently; either of these could ultimately cost less or more in total, e.g. a sturdier product could last 1.5x as long and cost 2x as more, thus is a loss, or it could cost 1.5x as much and last 2x as long, thus is a gain. Mind you, a sturdier product could also be built in China for cheaper, and would result in the same direct comparison model as below.
At $8.25/hr minimum wage using American-grown, American-woven, American-died cotton, you're looking at $10.36/hr, or pants that cost $27.02 more per pair--that $14.56 becomes $41.58. That means the minimum-wage worker must work 5.04 hours instead of 1.76 hours--an extra 3.28 hours of work--to afford a pair of pants. The median $54,000/year household must work 1.54 hours instead of 0.54 hours--an extra 1 hour. Pants retail for roughly 2.86 times the price, hence why people have to work 2.86x as long to earn wages to buy a pair.
Note that this means the factory workers themselves are less-capable of buying pants. If we use a direct model of people simply buying fewer pairs of pants, we lose retail, shipping, and other service and support jobs; and we create jobs in manufacture of pants.
At minimum-wage with 18% benefits overhead and a total cost of $10.36/hr, Americans can afford to purchase 68,632,996 pairs of pants rather than 196,000,000. Long story short, by producing all Chinese pants in the United States, you create 59,898 American factory jobs and lose 53,910 shipping, retail, and other supporting jobs. That's a net creation of 5,988 American jobs.
As you can imagine, the break-even point is rather low. It's somewhere around $20/hr of total cost, or an $18/hr wage. Net-zero job creation. Above that, you lose jobs.
Imagine what it looks like at $78/hr, the actual average cost of manufacturing in America. (That number shocked me, because I thought it was ~$21/hr wage, plus taxes and benefits.)
At $78/hr, you're looking at an increase in the price of trousers from $14.56/pair to $155.86. A minimum-wage worker must now work 18.9 hours and spend nearly half a week's pre-tax income on a pair of pants; the median American income provides this in only 5.77 hours of work. Pants cost 10.7x as much.
So we import about 196,000,000 pairs of trousers at a cost of $1,197,391,000. They retail for $2,853,760,000. At $155.86 per pair, Americans can afford to purchase 18,309,765 pairs of trousers or 9.3% as many using their same income. The total theoretical new jobs are 171,056 out of 320,000,000 Americans, or 0.053%; there is no economic argument that "the money stays in America" or that "the manufacturer workers will make up the difference".
Because literally 99.94% of the country is buying less, fewer things are sold, and less shipping and retailing goes on, and jobs go away; plus those people ca
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