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A Tiny Screw Shows Why iPhones Won't Be 'Assembled in USA' (nytimes.com)
An anonymous reader shares a report: Despite a trade war between the United States and China and past admonishments from President Trump "to start building their damn computers and things in this country," Apple is unlikely to bring its manufacturing closer to home. A tiny screw illustrates why. [Editor's note: the link may be paywalled; alternative source.]
In 2012, Apple's chief executive, Timothy D. Cook, went on prime-time television to announce that Apple would make a Mac computer in the United States. It would be the first Apple product in years to be manufactured by American workers, and the top-of-the-line Mac Pro would come with an unusual inscription: "Assembled in USA." But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws, according to three people who worked on the project and spoke on the condition of anonymity because of confidentiality agreements.
In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not. Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple's manufacturing contractor was relying on could produce at most 1,000 screws a day. The screw shortage was one of several problems that postponed sales of the computer for months, the people who worked on the project said. By the time the computer was ready for mass production, Apple had ordered screws from China.
In 2012, Apple's chief executive, Timothy D. Cook, went on prime-time television to announce that Apple would make a Mac computer in the United States. It would be the first Apple product in years to be manufactured by American workers, and the top-of-the-line Mac Pro would come with an unusual inscription: "Assembled in USA." But when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws, according to three people who worked on the project and spoke on the condition of anonymity because of confidentiality agreements.
In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not. Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple's manufacturing contractor was relying on could produce at most 1,000 screws a day. The screw shortage was one of several problems that postponed sales of the computer for months, the people who worked on the project said. By the time the computer was ready for mass production, Apple had ordered screws from China.
Try screws that look like a Star of David. Standard Torx, less prone to stripping than (+) or (-) screws, yet a set of bits can be bought cheaply. i.e. not "tamperproof" shit.
Maybe if the US doesn't have enough capacity, Apple could take some of the billions of dollars in cash, and ... invest it in US factories? I'm pretty sure if they invested that money in the US, then they'd be employing more US workers, who could... afford to buy an Apple device. I know it's cliche to suggest that investing in your home country actually benefits the country and your own company, but it's true.
http://github.com/gbook/nidb
A 20 man shop producing 1,000 screws a day?
Figure an average hourly wage of $20/hr that's $400 in labor per hour over an 8 hour shift that's $3200 cost in labor per day. At least. I'm skipping land leases, building lease/rent, material cost, etc.
If you're kicking out 1000 screws and it takes you $3200 in labor that's $3.20 cents per screw.
I"m either missing something, the article is full of crap, or this place was kicking out 8" long bolts made out of some really hardened steel with excellent QA looking for defects... and then Apple tried getting them to make tiny tiny screws?
Nope, nothing makes sense.
China didn't start out with multiple vendors to provide the hardware. They grew it over time.
Manufacturing in the US is sustainable and it doesn't have be for slave wages either. It takes automation and time to ramp up suppliers. But, this can't happen over night. Apple knows that.
No, but that's not the whole picture. As pointed out in TFA, the supplier got rid of a press that could have made them because there wasn't enough demand when competing with cheaper overseas suppliers; the supplier switched to higher value small production runs to stay in business. In order for a company to invest in the machinery they need to be relatively certain they will make a profit and their investment will pay off. High volume commodity parts isn't a safe bet in most cases. Apple or whomever could shutdown a line or go elsewhere to save some money and the company would be stuck with an expensive non-producing piece of equipment.
And those screws? They can get the material from China overnight. The connections are still there. Apple just doesn't know them because they lost connection with their own supply chain.
Reading TFA it seems Apple outsourced work to Flextronics and for whatever reason they messed up the supply chain.
I'm a consultant - I convert gibberish into cash-flow.
Ding ding ding, finally someone who understands the issue.
If we are to bring back manufacturing to the US, we have to start somewhere. Companies who have large volume and specialty requirements probably won't be the first ones leading this, there are way too many dependencies to make this happen. We need some smaller companies with more mainstream needs to lead the way.
+1.
The best and brightest would have to be completely foolish to go into manufacturing in the USA today. Similarly since most remaining manufacturing left behind is of niche nature, don't expect that the supply chain will all be here waiting for your order to show up.
Apple in particular is a VERY demanding customer, and will pull shit like expecting tens of thousands of sample chips built to their oddball specification, for free, just to be considered for an eventual slot in their designs. Their vendors have to go WAAAAY out on a limb by pre-purchasing materials and equipment on the hope that they win. Fail to compete? Bankruptcy. Fail to win? Bankruptcy.
One of the more obvious ones was the sapphire manufacturer that tooled up to be a phone glass supplier, and was driven out of business when they only got a fraction of the expected business. Many more cases of critically wounded companies abound without the same headlines.
So I have no sympathy for Apple in particular when they don't have manufacturers lining up to produce some artisinal screw on demand.
Look, there's a chicken-and-egg thing going on here. I'm sure that back when electronic devices were made in the U.S.A., there were plenty of local custom screw manufacturers to support them - or else companies made do without custom screws. Now that the entire supply chain has moved offshore, it's going to be hard to move any of it back.
But maybe if Apple really wanted to have a "Made in the U.S.A." model, they might have reconsidered using some crazy custom screw in the first place. Sure, in mobile handsets, where every nanometer counts in squeezing stuff in, maybe a custom screw really matters. But on a desktop computer? Really? I'm guessing that even in the good old days when Apple built all of its stuff in the US, they didn't have a practical option to use custom parts for such trivial functions as are performed by a screw. It's a screw, folks. The only reason to customize it is to prevent access to whatever it's holding together without a special tool built for that screw. Make do, Apple. If you really want to build in the US, build what today's supply chain can support. And grow the supply chain - just like you did in China, where there were no custom screw factories either back in the day...
You don't have crazy man Steve Jobs to answer to any more, so you don't need to "keep changing the specs on short notice" to please him. Get your priorities straight and, if you decided that building in the US is the right thing, figure out what you need to do to make it happen.
Posted from my Android phone. Oh, I can change this? There, that's better...
This is correct. Americans commonly have a mental picture of illiterate workers toiling on dirt floors making "cheap Chinese goods". That is not modern Chinese manufacturing and the preconception is one of our big blind spots.
Here's an example.
https://www.youtube.com/watch?...
This company makes beautiful multi-color silk-screened multi-layer through-hole plated PCBs for cheaper than I can buy bare copper plate board to etch them myself.
When I want to go to production I can have the boards shipped directly to an assembler there and I get finished machine assembled, soldered, and tested boards for less than the cost of shipping everything here and assembling it myself.
Add to this that cheap laptops are often unmaintainable pieces of shit...
I work with a non-profit, and while we don't buy $3k laptops, we will only buy "Business Grade" laptops for our operations. They last longer, are easier to maintain, and are consistent making the job of our IT department that much easier. Basically for each generation of laptop I have in circulation, I have one software build for them (including drivers etc...). Instead of costing $500 per unit, they cost us $1500 or so, but over the 4 or 5 year lifespan of the laptop, it's worth it.
...si hoc legere nimium eruditionis habes...
We absolutely did outsource manufacturing.
And in 15 years, China will be outsourcing all those things to Africa.
there are still reasons to buy a $3k laptop
Not really.
I recently had one of our users ask for a Macbook that, with the specs they were requesting, was over $3000.
I then quoted her a Dell Precision Mobile that had better specs, including a more-powerful video card. It also had room for additional hard-drives (or replacement of the existing standard M.2 NVMe drive), removable/expandable RAM, a higher-resolution 4K display ("Retina" isn't 4K) and all the ports she'd need so no dongle-hell. Oh, and she could get an OEM docking station for $140.
She could spend more, get an even MORE powerful CPU, more RAM, more SSD, whatever, and STILL be well below the ridiculous $3K luxury cost of the over-priced and under-powered MacBook.
The demanding apps she uses are available on Windows, and would run better on the more-powerful hardware. The only reason for over-spending +$2K for the MacBook would be a stubborn refusal to learn the radically different process how to move the mouse and click on the Adobe Premiere icon in Windows vs. on a Mac.
I'm hardly a Windows fanboy (I use Linux), but pragmatically the Dells are far superior options. Mac computers are over-priced status-symbol luxury items that have no place in a business or enterprise. They don't play well with corporate networks, they are virtually unserviceable, totally non-upgradeable now, have built-in 2-3 year obsolescence due to the glued-in batteries, and on the whole are a stupid waste of money. It never ceases to amaze me how many mindless Apple zealots will stubbornly defend the abhorrent company who continuously screws them over more and more with each generation, and can't make a quality product without serious manufacturing flaws to save their life (there's the anti-reflective coating issue on the displays, the recent SSD recall on 13" Macbook Pros, the only computer ever to have a systemic HDD cable failure, the GPU failures in pretty much every generation of their products going back years, SMD chips not being properly soldered to the motherboard requiring a rubber shim so the case presses them against the motherboard harder, the failing keyboard that we're getting flooded with, and so on).
One of the more obvious ones was the sapphire manufacturer that tooled up to be a phone glass supplier, and was driven out of business when they only got a fraction of the expected business.
While I don't disagree with your overarching point, the way you describe it is not what happened. That sapphire manufacturer bankrupted itself by overpromising and underdelivering on a contract that they bet the company on. Simple as that. Apple not only upheld its end of the agreement with that manufacturer, it went above and beyond what was contractually required. It was only after months of missed deadlines and delays that Apple finally refused to fund the failed initiative any further, which ended up being a lose-lose for everyone involved, since the manufacturer went bankrupt and Apple only got back a small fraction of what they put in.
More or less, Apple wanted sapphires that could be used for iPhone displays, presumably for the following year's iPhone. They went to the manufacturer and offered to front the manufacturer a large sum of money (for the capital expense involved with buying furnaces and other equipment) if the manufacturer agreed to ramp up production according to a rather aggressive timetable, with additional funding coming in stages as the manufacturer hit various milestones. Pretty standard stuff. As a nice bonus, there was the promise of a massive purchase order if the manufacturer succeeded in fully ramping up.
After the manufacturer failed to produce just one sapphire boule to spec by the original deadline, Apple could have pulled out, but they didn't. Instead, the timetable was renegotiated and Apple agreed to fund the next stage of development. The manufacturer eventually produced a boule to spec, but then they couldn't hit the yield levels they had promised with the revised timetable. Once again, Apple could have pulled out, but they didn't. They negotiated a revised-revised timetable and funded the next stage of development, though there was apparently a rather stern warning this time (the manufacturer is quoted in bankruptcy court proceedings as claiming that an Apple exec told them it was "time to put on your big boy pants"). After the manufacturer failed to meet yield milestones according to the revised-revised timetable, Apple refused to fund it any further. There was no hope that production could ramp up in time for their uses, so they put the final nail in the coffin.
At that point, the manufacturer was sunk. They had bet the company on receiving the purchase order so that they could repay the money that Apple had fronted them. Without the purchase order, they had no hope of repaying Apple, so the company went bankrupt and Apple ended up being the owner of a large building (which they turned into a data center) and a lot of sapphire furnaces that they didn't have a clue how to use. Again, it was a lose-lose for everyone involved, despite Apple going above and beyond what they had originally agreed to do. If the original timetable was too aggressive, the manufacturer could have simply said "no" and the whole situation could have been avoided, but instead they bet the company on something that they couldn't deliver.
While Apple is a very demanding customer, and they do indeed make insane demands, the only ones obligated to accede to insane demands are the ones who agreed to fulfill those insane demands. No one is forcing companies to get into bed with Apple, and if yours is the only one in the world with the know-how to do what's being asked, you shouldn't agree to terms that you can't keep, and you certainly shouldn't bet the company on it. That's just bad business.