Shouldn't industrial-strength age taxes suit Apple just fine? With lower fixed costs than a car or airplane maker, and higher margins, wouldn't digital-age taxes be proportionally higher?
Skilled workers, not lower salaries, were the lure that brought Apple to China, according to Tim Cook. In a soft-ball interview with US news magazine 60 Minutes, Cook said “China put an enormous focus on manufacturing. In what we would call … vocational kind of skills.” That focus paid off: the CEO said “you can take every …
They are. It's becoming the only way to recruit enough staff and stop high turnover levels. Chinese pay rates are often on par with usa assembly workers.
Foxconn may have the largest robot fleet in the world but it would need a couple of orders of magnitude growth to replace people.
Until you factor in the cost of accommodation, that is. Those dorms don't look terribly appealing (especially if, like me, you're used to your space), but mean the average Chinese worker saves most of what they earn. It's not a terrible deal (though the hours might be).
Then he's not really looking Stateside, is he? Tool and die making and machining in general is making a large comeback here in the States. The rising prices in China and the comparatively low quality is driving things here. Several companies I'm aware of are doing "apprentice" programs. They pay well and the kids who are going into it have found a niche that in the long term should be a good choice fir them.
So, when Apple sets up a factory in India, it'll be because there are no more skilled workers in China then ?
Although local wage rates have been rising in China, the significant and possibly permanent slowdown in Chinese fixed asset formation is already forcing The Party to reduce the exchange rate to try and stimulate foreign demand. With the developed world mired in debt, and emerging markets hit hard by he commodities and energy contraction, it isn't clear that exporting deflation will do what The Party want (of maintaining employment and preventing social unrest), but it will stop the bleed of jobs to other emerging markets, particularly for anything that needs both reliable infrastructure and fairly cheap labour (so all large scale and tech manufacturing).
Absolute Horse crap...I know of plenty of underemployed skilled American tool and die makers who could do that work. They've been looking for similar positions to back when they were in the auto industry, for the past 20 years. If only someone would build a new factory in this country instead of going overseas. But then they might lose 1/10 of 1% more money in wages than in automation.
Tim Cook is a lying, conniving, asswipe.
Its like pre-Snowden security. Everyone knows they are lying, but they still pretend and will continue to do so until someone dumps internal memos on pastebin.
Apple likes to dual-source so the India move is expected. Its is about keeping supplier-competition alive. Apparently suppliers in China have been consolidating behind the scenes and not telling anyone. Cost is not really an issue for them, though they do like to keep the logistics lean - so lean in fact that I've needed a PC twice now and would have bought a Mac, but the Apple store simply had no stock of the spec I wanted and I wasn't willing to wait for several weeks while they made it, so they lost the business. Meh.
As far as worker locations go, its probably important to think of these companies as not being American. That's what the money indicates. The management may be American and in Apple's case the design is, but they point of going multi-national is to insulate yourself from government influence and taxation.
Its workforce flexibility that is the main issue when you are manufacturing at the scale Apple requires. If iPhones needed to be produced in roughly equal numbers every week of the year, no problem, but that's not how it happens. They need much higher volumes around the launch of a new iPhone, and once that initial surge of demand is met slowly decreasing to a low point in July before they start ramping up production of the next model.
US labor laws make that really impractical - should Foxconn USA (or Apple, for those who think Apple should directly employ these people) employ workers 12 months out of the year to meet peak demand that occurs only 3-4 months of the year? Or lay many of them off most of the year, requiring them to collect less money via unemployment checks - which due to the high unemployment taxes their employer would pay would almost amount to employing their year round?
These are fairly skilled jobs for manufacturing. They may not to the level of a tool and die maker, but they are a lot closer to that than they are to say a retail sales associate. Places like Walmart can hire part time staff over the holiday when they hit their peak need for employees, but that's not practical for these more skilled electronics assembly and test positions. Even if it was people would whine about how Apple is screwing these poor employees by only signing them up for 3 to 4 month contracts, leaving them jobless once the peak demand for the next year's iPhone has passed.
China has so much manufacturing they are able to absorb this, the US manufacturing labor market cannot.
.... especially after you desertified your local industry offshoring everything you could - because it was cheaper for you, meaning higher margins because street prices didn't change so much...
And maybe money are funneled abroad because there are also more skilled bank workers there, especially those used to help some companies to hide their money in tax havens?
But just wait Huawei and the like become fashionable brands... and you may regret you no longer have the capabililty of building anything in the US (and it is true for Europe too...). Just ask Germany about its (once) powerful photographic industry.... and what is left after Japan learnt to build cameras and lenses.
.. and you still need to add a lens, usually.
Leica survives as a maker of "absurdly expensive" gear for a niche of aficionados. Zeiss too stil makes very expensive niche lenses (without AF), but no longer makes cameras (its last attempt, the Zeiss Ikon film rangefinder, was discontinued), aiming its lenses to Canon/Nikon/Sony users looking for the "ultimate quality" - and corresponding prices. But their market share is small - Canon has about 40%, Nikon 35%, Sony 12% - a few years ago Leica was aiming for 1% of the market... moreover the top player also cover the high-end market with specific models and lenses (very expensive as well). They built the brand reputation on those model, and use it to sell more consumer ones.
But Leica and Zeiss at least maintained enough very highly skilled workers and high-end plants in Germany that could deliver the "made in Germany" brand/quality for those willingly to pay for it, albeit a niche. Germany has still an excellent manufacturing capability in mechanics and optics, thanks to less offshoring initiatives - could US say the same?
"Skilled workers, not lower salaries, were the lure that brought Apple to China"
I've seen some of the "skilled workers"; and the qualifications, experience, skills and work ethic are generally not on a par with those in the West. It was always the cost of that labour that was the driving force.
That cost is rising; it's easier for people such as Apple to stay where they are for the moment, but at some point, they are going to look again and find cheaper workers elsewhere. Count on it.
However, that doesn't go down well at home; so of course, the CEO has to maintain this fiction of "better workers" elsewhere, to keep the shareholders happy.
In China and similar places, you can hire people, selecting who's able to perform as required for the shifts you need, and easily fire anybody who can't keep up with the schedules you set - worn out workers can be easily replaced - it's a dream for (bad) capitalism, which found its paradise in a state the likes to call itself "communist", a perfect example of "Animals' Farm". Don't know if there ever will be a Chinese Dickens - or if he can escape a "re-education camp".
Also, far less rules to obey for plants security and pollution, and that's another big source of savings. And what about health and retirment plans?
But you're right, Foxconn is already planning to shift some production to India, where more "skilled workers" could be found... now that Chinese "skills" are being transferred to requesting better work conditions...
This is Apple you are talking about. The Macolytes would believe anything they say and no amount of facts or proof can change their mind. I really and truly believe that if Apple sold a robot that only punched you hard in the head every morning the Macolytes would buy it and swear it is the best robot ever and even better than movie robots.
"I really and truly believe that if Apple sold a robot that only punched you hard in the head every morning the Macolytes would buy it and swear it is the best robot ever"
Well, it certainly couldn't be worse than what's currently available.
Never bet against human ingenuity. No matter how unlikely the concept, someone has at least built a poorly working prototype.
"However, that doesn't go down well at home; so of course, the CEO has to maintain this fiction of "better workers" elsewhere, to keep the shareholders happy."
You're missing something quite important here - most shareholders, US and others, generally don't care too much how a company goes about its business, so long as they get a good return for investing their hard-earned in Apple (or anyone else's) shares - and once they're no longer happy real live people can lose their jobs - ask someone who works at Toshiba..
Apple's board, along with that of any other publicly owned company, have a legal duty to maximize returns to shareholders, not propping up the US (or any other) economy on the larger scale - it is you, the consumer, that holds the accountability for doing that ie., next time you want consumer electronics, buy locally made, regardless of quality, price or features. If you can't find such an item, then go without and jump up and down until someone does start making what you want locally.
It is not big business that has driven off-shoring and out-sourcing - it's end consumers who demand the latest shiny-shiny with more features and a lower price than last month's model, combined with investors who want ever bigger returns on their money - and very often they're the same person.
After all the tech companies have set up in South Sudan or refugee camps in Jordan (because of their tool and die skills of course) where will be left for them to go. Oooh, just had a thought, the US of course, there'll be plenty of low paid or unemployed people there by then. (I'd put a joke alert icon on this, but on second thoughts it's not really a joke, is it)?
Wait - you didn't think that all Apple's one million Chinese workers are illiterate peasants fresh in from the paddy fields did you?
Many years ago Steve Jobs explained to Obama that he needed about 30,000 skilled engineer types (ref WA's biography). He needed engineers to build and run the plants and China had them available.
If it was unskilled workers only which were needed then the USA has tens of millions of unskilled, uneducated workers prepared to work for peanuts - no problem - but it had nowhere near enough skilled workers.
China has worked hard for a long time to improve state education *for all* - and has especially worked hard to train technical personnel.
The US of A has catastrophically missed it's chance here. I get the impression that the ruling elites in the USA are stuck in the plantation owner mentality of the 18th century - i.e. an extremely rich elite exploiting unskilled workers.
So in the 21st century the USA has a too large a percentage of unskilled and poorly educated population being kept in place by a justice system which seems to border on institutionalised slavery - whereas China has increased its skilled population for decades.
The result is that China now has all of the USA's money - which must surely mean that the USA as a country is unsustainable.
Sadly, I don't see the USA changing anytime soon - and I fear it will only be by a cataclysmic failure that their system of governance will change.
(Bootnote - I'm no Apple fanboy (not owning a single Apple device) - but give them credit for doing a hard thing and being a manufacturer. We're told all the time that manufacturing and exporting is good for a country).
Sure, it also needed 30,000 cheap engineers (a number that looks a bit too large...), cheap workers to build cheaper plants on cheap land, cheap workers to run them.
It is true China underwent a large modernization project (just like Japan did before WWII), and having highly "motivated" people and a very selective education system, it can easily find the best people for a given job - people who will also learn quickly the technology you're transferring to them... China has a different idea of slavery - they don't need poorly educated people, they need just to let them know they can't change the system, and any attempt will be punished - after all they also have many people not trained engineering, but in gun and tank handling... they don't need to be smarth, just faithful to the Party...
But why Cook & C. don't advocate for a better, more inclusive education system in the US (albeit selective)? Why they don't create and fund the school and universities needed, like better capitalists before them did? Why in the US studying becomes more and more expensive, with the risk of being available only to rich students, or requiring large debts hard to repay? It's because it ensure those already at the top of the social ladder risk less to be challenged by new competitors? So better to offshore them? Apple is not a manufacturer - it's a designer and maybe a software house. Foxconn & C. are the manufacturer, and the risk is one day they'll know enough to get rid of Apple (and Dell and HP and etc. etc.).... more even so if they have good engineers.
RE the request for 30,000 engineers:
'Jobs told Mr. Obama that Apple employs 700,000 factory workers in China because it can't find the 30,000 engineers in the U.S. that it needs on site at its plants. "If you could educate these engineers," he said at the dinner, "we could move more manufacturing jobs here."'
I agree that the USA should work towards universal, good quality state education - it would be good for them as a country. I know it's stating the obvious but a country with a better educated population is going to make more money - which I think is why I think the USA is getting more into debt all the time. And Cook may well advocate improving education - I just don't see it happening anytime soon. (President Trump might prove me wrong - ya never know).
And I think you need to be careful when comparing human rights records and personal freedom between China and the USA. The USA has far, far higher incarceration rates (please Google this is you need the details). They've framed people and locked them up in solitary confinement for forty years for daring to ask for better conditions, locked people up for 23 years even though they knew someone else had been convicted for the crime, etc etc etc. Sadly these cases are just the tip of a planet sized iceberg of suffering.
At least good education is available to all in China. And as for the ability to change the system my point is that the current US governance system is designed to keep the status quo - i.e. a very rich elite trying to keep society inherently unfair. My point is that this may only be changed by cataclysmic events - and the country running out of money might just cause such events.
"If you could educate these engineers," he said at the dinner, "we could move more manufacturing jobs here."'
Allow me to translate that into English:
"If" is a big word, it's not only not our job to educate these engineers, it's not our business to do it either.
We have to wait for school leavers to take it upon themselves to choose that particular field. This way, we don't have to worry about if or when any local engineers will magically appear locally. But that will never happen anyway, because school leavers are smart enough to know, by the time they choose their new vocation, it will be too late, because the lack of 30,000 engineers would have been filled with chinese.
So, Apple gets to go to china - exactly liked they planned in the first place - and everyone else gets to go to hell. So there.
Errr...why are you giving Apple credit for being a manufacturer? They don't employ the people in China who make their stuff, they contract the manufacturing out to Foxconn who employs those workers. Apple is no different in this respect than almost every other consumer electronics OEMs who do not directly employ the people but contract it out. Look at all the consumer electronics gear in your house from your wireless router to your laptop, chances are half of it was made in China by Foxconn.
People go into Apple stores, or go onto Apple's website, and order Apple branded products, which are supported by Apple, and run software written by Apple, and link to Apple on-line services and pay their money to ... yep ... you guessed it ... Apple. Who manage all the advertising, selling, buying, inventory, shipping, etc etc - and this is all carried out worldwide.
Turns out they have to outsource most of their manufacturing from the US to China - that's the point that Cook was making - they are forced to do so because of the lack of skilled workers in the US - that was the whole point of the article.
"Turns out they have to outsource most of their manufacturing from the US to China - that's the point that Cook was making - they are forced to do so because of the lack of skilled workers in the US - that was the whole point of the article."
Which is a lie. Whatever training they're giving the Chinese workers, if they gave that same training any American that was otherwise capable would easily be doing the job.
Thanks for the stat, ecofeco. Wow...85%! And that's why they have workforce flexibility, they have so many employees that pulling some of them off iPhone production when the "new iPhone" peak is past and production slows down to a mere 3 million a week in the summer they have a lot of other stuff they can have them doing.
"If it was unskilled workers only which were needed then the USA has tens of millions of unskilled, uneducated workers prepared to work for peanuts - no problem - but it had nowhere near enough skilled workers."
Nonsense. The USA has 15,000,000 STEM grad citizens but only 5,000,000 STEM-related jobs. The USA already has THREE TIMES the number of workers for these jobs as is needed, but is still importing labor at a rapid rate. Such that nearly 25% of all IT being done today in the USA is being done by H-1B visa holders. Don't tell me that and offshoring has any basis on lack of skills or available workers. A free labor market should have a rise in wages for desired labor skills, followed by an influx of new workers to that field as others train to meet the demand (seeking those higher wages). At which point the wages regulate. But this artificial mucking about with the labor force (by deflating jobs by offshoring, and inflating local labor pool by inshoring workers) resulted in IT wages not even beating inflation during the 2000-2010 decade! And this, despite IT unemployment being less than 3% (many having vacated the profession after being dumped on their heads).
Tim Cook willing accepted $800 Million in annual compensation for using Chinese slaves to produce Apple products sold in the U.S, UK and elsewhere. Even when human rights investigators proved children were working in these Chinese factories, Apple down-played these violations of law. Then Apple had the audacity to shift some of it's production to a new Chinese slave operated factory to try and hide it from investigators. Just one of Apple's Chinese suppliers has over a million slaves working in their factories.
I'm willing to bet that non-Apple phone you have was also made by Foxconn in the same plant that Apple uses. Except Foxconn has to treat its employees better than Samsung or get chewed out by their largest customer (not Samsung.)
Google tried the "made-in-Texas" phone recently. How did that work out?
Has anyone noticed how the unions have been battling it out with Boeing for the past few decades Boeing engineers and management "shoot for the moon" and design a fantastic aircraft on money that could have gone towards bolstering their profit margins and stock price. Instead, they invested it in their future. Then, the factory goes on strike.
Did anyone wonder why Boeing only performs the final assembly in Washington State from parts made around the world?
You have to admit that Detroit water pump tooling experience is not going to translate well to a leading edge cellphone. No one is going to move to Sunnyvale for less than $100K a year. Or, endure the pressures of a leading tech firm without thinking about unionizing and going on strike.
In the end, its Walmart's fault. We have no one to blame but ourselves.
"...In the end, its Walmart's fault. We have no one to blame but ourselves."
I don't think so.
In Sept of 2010, Senate Republicans blocked a Democratic bill on Tuesday to end tax deductions enjoyed by companies that close their U.S. plants and move overseas.
Well you could bring some of that tax money back onshore to help pay for the infrastructure and schooling for these mythical tool and die makers you couldn't find.
US manufacturing has/had plenty of well trained and skilled tool and die makers, they just don't want to live in dormitories and work for Chinese wages.
I watched your "interview" last night Mr. Cook, and you have sold your last Apple device in my family.
And yes I know he won't lose any sleep over me and mine not buying his products, but I also support and recommend or not recommend tech to many people.
Have an upvote!
Cook is in cahoots with Obama, they want to blame the "lack of skilled workers" on anyone but themselves. When in fact that clown has already had 8 years to do something besides roll his eyes and bluster. The Dummycrats had their time and wasted it all.
Hopefully Republicans can shove that "Common Core" and "multicultural studies" vomit up his kiester.
A return to REAL education (Math Science) might be more realistic, rather than the current high school/college indoctrination into various forms of social misbehavior.
Dummycrats sure had a great idea, let's encourage our children, under the guise of education; to be the very antithesis of their parents belief structure. This poison starts in grade school and continues through college, leaving its adherents unable to work, unable to think, unable to act, EXCEPT in a truly spoiled brat entitled way. It breaks down the family unit and leaves these children without a moral compass. What better way to promote atheism and communism? Those are the specific goals of our so called educators and politicians! So they can create a new pool of feckless, helpless leeches to vote for them and suck on the proverbial teats of government. To me, it smacks of the re-education camps of China, Russia and North Korea.
Lets make everyone the same ala Madeleine L'Engles novels in the "Wrinkle in time" series written in 1963 that railed against conformity (prophetic this happened at a time when all this PC conformity was just beginning to take hold of colleges and schools everywhere).
We can all live in the same house, open the same door and play at the same time with the same ball, wear the same style and color clothes and say the same things.
Isn't FUN to be the same as everyone else and give up all independent thoughts and actions and ideals? If you conform, you don't even have to think anymore.
Doesn't that sound like a MAC-o-lyte to you?
You also give up the best parts of humanity, you are no longer exceptional as you aren't allowed to be better than anyone else. This is a farce and an outright lie of progressives. Humans should always strive to be better, otherwise humanity is doomed and progressivism/liberalism are the cause of our downfall.
Do you really think that if Apple (and Google, and Intel, and Microsoft and all the other tech companies with billions of cash sitting overseas) brought the money home and paid taxes on it that it would somehow magically go to infrastructure and schooling?
We are already spending more than we make, so tax revenue is not a limiting factor on how much we spend - and certainly not on what we spend it on. If we had more tax revenue the congressmen who vote against higher spending on infrastructure and education aren't going to change their tune.
When my daughter, material science engineer, was interviewing for a job, tech companies on the left coast like INTEL and TESLA had their pick and many newbie engineers were disappointed in not getting a site interview.
As for Mister Cook's comment about tool and die makers, he must not have considered the mitten shape peninsula that is Michigan. But then again when again when was the last time Mr. Cook was in fly over zone America (i.e. the Midwest).
And another thing:
What motivates the US employee? Retiring early or a fancy McMansion, either one.
What motivates a Chinese employee? Moving their entire family to North America, where the air and water are cleaner and food is more plentiful.
Hm... Which mindset do you want assembling the fancy devices your group spent millions to develop? Joe6pack with huge fingers and ADHD who has to go pick his offspring up from school everytime his progeny sneezes?
Never mind most chinese workers are happy to assemble gadgets for Foxconn because it beats sitting on a farm somewhere wondering where their next meal is coming from, or why is the air always a brownish color. Take your pick.
I notice that nearly no one is defending the USA education system. I'm sure Tim Cook believe what he said. Apple is moving more assembly to this country, but there is still a long ways to go. I believe there is a lot more reasons behind Apple continuing to use China for production. Our infrastructure in this country has hardly changed in decades. Our school system still needs a lot of help. We have a lot to do to get those Apple jobs in the USA.
Make work pay.
No ... really.
Remember when Microsoft started the big offshoring push many years ago? Stating that they could not find enough "skilled tech workers in the US" ? It's all about money don't let lying Cook fool you.
Also Carly Fiorina, the QUEEN of OFFSHORING has the gaul to say that the "US needs to keep more jobs in the US". REALLY?? You were the one that made a business out of it at HP. Another liar.
Biting the hand that feeds IT © 1998–2021