This is an excellent article, and perhaps it will win one of David Brooks’s Sidney Awards, excerpt:
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
…Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
Most of all, I like how the article shows that some Chinese economic advantages result from scale, speed, flexibility, and the supply chain, more than just from lower wages per se. I believe we need a rethink of the current importance of economies of scale and scope, and what they actually consist of.
← Previous Comments
A couple of points. First, if the U.S. is so ill suited for manufacturing, why do we still have more than 11 million people in the manufacturing sector? Second, if Apple needs to be in China because it needs all the inputs for the iPhone and iPad to be close at hand, why are 95% of the parts that are in an iPhone and iPad manufactured in nations other than China? iPhones and iPads are not “manufactured in China”, they are assembled in China with parts manufactured elsewhere. That is why Foxconn can move a large share of its iPad production to Brazil; iPads can be assembled almost anywhere. iPhones and iPads could be assembled in this country by electronics assemblers making over $13.00 an hour. Of course to keep the price of the iPad the same, Apple would need to cut its margin from 55% to 38%. If you are interested in this question, please visit my blog at simply-american.net and find the article “Comparing Apples to Apples.” Tim Worstall of Forbes.com wrote a piece on that post that is also interesting to read; you can find it at http://www.forbes.com/sites/timworstall/2011/12/18/if-apple-onshored-ipad-production-it-would-create-67000-american-manufacturing-jobs/. If Apple wants to assemble iPads in China and Brazil so it can make more money, so be it. But they should be honest about their reason for locating their facilities in those countries.
In what alternate reality is there “forced unionization” in the US? Our unionization rates are uncommonly low for a developed nation, and manufacturing companies like Toyota have no problem siting factories here that are not plagued by excessive union follies.
I think the more interesting insight is that this method is no sustainable. Ultimately either political changes or prosperity will change the availability of these sort of workers and this concept doesn’t scale to other countries. This is akin to the industrial revolution. The very success of it ensures that it won’t last. If I were a venture capitalist I’d be looking for someone who could replicate the brute force Chinese approach with a combination of software and robotics.
Very rneevalt to a meeting I attended last night. I’m gonna link to this from an invitation-only Facebook group so you won’t be able to check it out, but basically it’s the focal point for planning a start-up community newspaper in deepest south-east England.
THrkVn jhxfilvjwvtj
3vak70 csezjelqjpmk
← Previous Comments
Comments on this entry are closed.