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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.
+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.
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.
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.