back to article USA! USa! Udia! India! India! Apple nudges iPhone production base

Apple has agreed to open a new iPhone assembly factory in India. Officials in the nation say Apple will spin up factories in the Karnataka province. "We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April," information technology and biotechnology minister Priyank Kharge …

  1. GrapeBunch
    Headmaster

    Law of Karna

    "the Karnataka province"

    Karnataka is one of the 29 states of India. Canada has provinces, Australia and India have states. Here, let me use that in some sentences:

    I'll have chile con karna takaway, and you'll pay for it.

    There is no breaking the Eternal Law of Karna. 't'aka trumps all other Laws.

  2. Notas Badoff

    I'm at the wrong end of the telescope

    I had been mulling over something repeatedly read, about how some manufacturing or assembly is moving back to first-world countries because of shipping. Hadn't really understood this, until unloading the clothes washer this morning, with its proud "made in <homeland>" label.

    When the size of a widget exceeds some factor of profit margin it will be much smarter to move the assembly, perhaps some of the manufacturing, of the widget closer to the market area. But if the size is 'small', go Laotian.

    Cross-ocean shipping something that is 20,000 to a container can be justified even at low margins. A different widget at 200 to a container would need stunning margins.

    So the wall-to-wall carpet will likely be manufactured locally. The furniture will be shipped knocked-down and assembled locally. The house will be mostly manufactured locally. Only the concrete driveway will be (proudly!) manufactured and assembled locally.

    The electronics are from Asia. The artwork is from Italy. Only the paperwork and weather will forever be local. (sigh)

    1. Blank Reg Silver badge

      Re: I'm at the wrong end of the telescope

      And if you make it even more expensive to ship you can bring back more jobs, however low quality those jobs might be.

      The crap fuel that those container ships burn is unbelievably bad for the environment. You could place a very large environmental fee for any ships docking in your country that don't meet some minimum exhaust emissions regulations. Whether through compliance or non-compliance shipping costs will rise.

      But when the orange idiot in chief thinks the EPA is bad for business its unlikely that such an idea will go anywhere.

      1. pffut

        Re: I'm at the wrong end of the telescope

        > The crap fuel that those container ships burn is unbelievably bad for the environment.

        True, but the ship's emission's are spread out over so many units that the distribution the last miles to the end user by truck is likely to have a bigger impact...

        1. bombastic bob Silver badge
          Devil

          Re: I'm at the wrong end of the telescope

          "the ship's emission's are spread out over so many units"

          'above minimum detectability' implies "the solution to pollution is dilution"

          you'd be surprised just how often this is done. To meet local sewer regulations, for example, you cannot have detectable "whatever" above "some limit". So let's say a nuclear chemistry lab in a college decides that having TWO storage tanks instead of one means you can pump 'n' gallons from tank 'a', mix with fresh water from the tap, then test to make sure it's "below some limit", then DISCHARGE IT INTO THE SEWER, which is just fine and dandy, environmentally friendly, 'green' etc.. Rinse, repeat until tank 'a' is empty. This is the real world, folks! Idealism goes out the door when your college's nuclear chemistry lab needs to empty its tank.

          But (aside from radioactive isotopes) it's typical for 'the bugs' to eat whatever garbage that gets thrown into the environment, within limits. So long as it stays below a level where it causes actual harm, anyway.

          /me also points that ships in international waters can (and no doubt, regularly do) dump their sewage tanks right into the ocean. just sayin'.

          And in some places, they used to dump it right into the HARBOR. Olongopo was one such place...

    2. The Man Who Fell To Earth Silver badge
      Alert

      Re: I'm at the wrong end of the telescope

      It is incredibly cheap to ship stuff by container ship. Half a dozen years ago we shipped a couple of containers full of equipment from the US east coast to China and it ran about $10k. For a large volume producer, one would expect even lower rates.

    3. inmypjs Silver badge

      Re: I'm at the wrong end of the telescope

      "is moving back to first-world countries because of shipping"

      Shipping is pretty trivial. Even heavy low cost stuff like supermarket brands of bubble bath are shipped from China.

      I remember reading a list of reasons why a company set up manufacturing in china and not the US with labour costs being towards the bottom. The only one I really remember was them being told by the local water supplier that in times of drought their supply would be restricted before the local golf course was.

      That's the kind of shit Trump needs to be fixing.

    4. Anonymous Coward
      Anonymous Coward

      Re: I'm at the wrong end of the telescope

      "So the wall-to-wall carpet will likely be manufactured locally. "

      Sorry to break your example, but it's a really bad one.

      Many of the UK carpet manufactures off-shored to South Africa, New Zealand and Australia. Maybe not your cheap poly ones, but certainly your high quality wool based ones.

      Often it's far cheaper to ship a finished product than ship all the raw materials required to make it. In this case, the wool, which is extremely bulky in raw format is far more expensive to ship than the finished article.

      There are plenty of reverse examples, where perhaps the most expensive component is cheaply sourced locally. Think orange juice from concentrate. Ship the concentrate in large vats, add water locally and sell on.

  3. redpawn

    This will work

    as long as Trump doesn't piss off China and India simultaneously or go full protectionist. Roll the dice and take your chances Apple.

    1. Michael Thibault

      Re: This will work

      Yes, there's the risk of finding a Brahma in the China shop, but when you consider that Apple's expected to begin production in mere months, you might be wondering if they've taken to building those assembly plants in shipping containers--just in case. 'Twould be a smart move, anyway.

    2. Mark 85 Silver badge

      Re: This will work

      I think this is a smart move on Apple's part to second source things. After watching the way new administration feels about China, I'd be nervous if my only source was in China. At least they didn't go to Mexico for second source. No telling how that will turn out.

      1. MrDamage Silver badge

        Re: This will work

        It would depend on if the wall had rounded corners, wouldn't it?

  4. maffski

    Make in India

    This has been on the cards for a while, and it's nothing to do with manufacturing phones for export.

    India has put large tariffs on imported phones (among other things), but not on the components to assemble phones, to prompt companies like Apple to assemble phones for sale in India within India.

    In fact, Apple already do this in Brazil to bypass import tariffs. The Brazilian factory produces just enough phones for local demand and they are the most expensive iPhones money can buy. Unfortunately all the components are shipped in and the local workers assemble them at a few dollars a phone, so it hasn't created a 'technology supply chain' like the Brazilians hoped.

    The last thing America needs to 'ring iPhone manufacturing the US.

  5. Doctor Syntax Silver badge

    assemble phones for sale in India within India.

    In fact, Apple already do this in Brazil to bypass import tariffs. The Brazilian factory produces just enough phones for local demand and they are the most expensive iPhones money can buy.

    And a US assembly plant could operate on exactly the same basis.

    If the market has a tariff wall round it and a small local plant employing as few people as possible can make the product cheaper than importing it through the wall then that's what will happen. It won't create many local jobs and it will result in the product being more expensive there; locals will be looking enviously at their neighbours.

    In general, especially when taxes and tariffs are involved multinationals are able to rearrange their business to optimise outcomes for themselves when things change. The new optimum may be very different to what the government and those who voted for it intended. Your tax schedules, votes etc are only one factor in what happens. You do get what you voted for; it's just not what you thought it would be.

  6. Dwarf Silver badge

    Breaking news - there's a world outside of 'Merica. For the rest of us we don't care where the devices are made - since there is a global economy. If 'Mercian stuff is really the best, then it would be the most popular and people would buy it from there anyhow.

    The fact that other countries can make things more cost effectively and we can pay less for its and have more money for other stuff can only be a good thing for everyone - this includes the developing countries and our own pockets.

    Competition is good, it keeps people on their toes.

    1. Anonymous Coward
      Anonymous Coward

      Until it's your job to be offshored...

    2. bep

      On the other hand

      "Breaking news - there's a world outside of 'Merica. For the rest of us we don't care where the devices are made - since there is a global economy.."

      Actually a survey published just today suggests that over 90% of Australians do care where things are made. This apparently self-defeating attitude is explainable because it's impossible for people to appreciate how much something would have cost if it was made here, they don't experience that so it has little impact. They forget how much TVs used to cost compared to what they cost now, and so on. On the other hand the local car industry is just about to shut down completely and I'm yet to see a convincing argument that this has made cars much cheaper; it's very hard to prove either way since there are so many assumptions required. Accurately describing an alternate past is almost as hard as predicting the future.

      1. MrDamage Silver badge

        Re: On the other hand

        The aussie car industry was doomed to fail due to the poor quality that was being pumped out.

        How many decades did the falcon/fairmont/fairlane issue with the screaming fan belt go on for?

        How many decades did the commodore issue of taillights last about 3 months before one, or both blew, go on for?

        Smart aussies soon realised that subsidising an alleged "aussie" manufacturer that pumped out pieces of shit that lasted half as long, and cost twice the price of a Hyundai, wasn't viable. We wanted value for money, and the "aussie" companies just weren't cutting it.

        The only thing we really care about when it comes to manufacturing location is food, especially seafood.

        We'd like to buy locally made clothes, but bugger all affordable clobber is made here any more.

        We do look at the labels, but mainly so we can avoid the "dodgy" cheap crap, and settle for the "meh" cheap crap.

        1. Anonymous Coward
          Anonymous Coward

          Re: On the other hand

          "The aussie car industry was doomed to fail due to the poor quality that was being pumped out."

          "The UK car industry was doomed to fail due to the poor quality that was being pumped out."

          That was easy.

    3. LDS Silver badge

      "Competition is good, it keeps people on their toes."

      *Fair* competition is good. Competition based on lots of workers with no rights and paid with peanuts is fair competition? When you will be too with no rights and paid with peanuts, anyway. the competition will be fair again....

      1. Anonymous Coward
        Anonymous Coward

        Re: "Competition is good, it keeps people on their toes."

        Doesn't the US have some of the most lax hire / fire rules going, i.e. none.

  7. Bluenose

    Being a cynic

    I don't suppose that Apple are moving to India on the hope that Donald is less likely to hit on them there where he has financial interests than say a country where Donald doesn't have financial interests?

  8. Martin an gof Silver badge

    For the rest of us we don't care where the devices are made - since there is a global economy. If 'Mercian stuff is really the best, then it would be the most popular and people would buy it from there anyhow.

    I think it's a bit more complicated than that. To an extent you are correct, and you are absolutely correct that competition is good and keeps people on their toes. You only have to look at industries where competition is poor to realise that even cost isn't the only factor - quality can suffer even if prices are still high.

    However, I don't think you're quite right to say that people will buy "the best" regardless of cost. There are certainly a few people who do that, for various values of "best" which are not exclusively down to exquisite manufacturing quality control but may also include environmental impacts, ethical employment practices, even vegetarian credentials, but the bulk of the population (I'm guessing) considers price above everything else, except for a very few select products, of which the iPhone is probably one.

    This is why people still buy Danish bacon in the UK despite UK welfare standards being higher - it makes UK bacon (generally) more expensive. It's why people buy Dacias instead of the equivalent Renault model, and fly EasiJet instead of Lufthansa, and it's why Dyson moved his factory out of the UK.

    In other words, given two equivalent products (let's say 500G of smoked back bacon), most people won't even look for the little red tractor on the packet in Morissons - all the packets look the same and all the bacon looks the same, but some packets are slightly cheaper. Get those. As you say, "we don't care where the [stuff] is made".

    People like Trump see this, and see that the only way out since a large part of the cost of home-manufactured things is higher worker welfare standards; i.e. better wages and the average UK or US worker couldn't even afford to travel to work for the sorts of daily wages some eastern-hemisphere workers are paid, is to make imported goods as expensive as home-produced ones. This leads inevitably to tariffs.

    Tariffs are why Welsh lamb producers are worried about Theresa May's apparent support for a "hard" brexit; the only thing that makes many people buy Welsh lamb in the UK and in Europe is that the EU has a big import duty on New Zealand lamb. Take that away and NZ lamb becomes so much cheaper than Welsh lamb that the market will probably collapse - just look at what happened to Welsh lamb producers in the 1970s before this tariff was introduced. On top of that, chances are that the import tariff that catches NZ lamb going into the EU will now catch Welsh lamb going into the EU and you have a doubling of the effect.

    I really don't like the fact that Marks & Spencer now makes their underwear in Thailand (or somewhere similar - I can't remember) and the factory near where I used to live near Worksop closed as a result. I find it amazing that they can now sell such items in the shops for the same price I used to pay for "seconds" at the factory shop, but I can't deny that having twice as many pairs of socks available makes keeping on top of the washing easier!

    Sorry, rambling...

    M.

    1. Lars Silver badge
      Coat

      "UK welfare standards being higher". Lets hope that will be true after Brexit too. This article is not totally sure about it.

      https://www.theguardian.com/commentisfree/2016/apr/27/brexit-disastrous-britains-farm-animals-eu-laws-cruel

      "Brexit would be disastrous for Britain’s farm animals"

      "EU laws currently protect British animals from cruel farming practices. With these removed their lives would be incalculably worse"

      "If post-Brexit business lobbyists call for the relaxation of rules that protect farm animals, the Tories may well listen."

      Many ifs but better look out.

      1. SkippyBing

        '"UK welfare standards being higher". Lets hope that will be true after Brexit too. This article is not totally sure about it.'

        Wait, the Guardian is saying something negative about Brexit, well that's a first </sarcasm>

        As our animal welfare laws are currently more stringent than those mandated by the EU (generally there's bound to be the odd exception) it's hard to see how leaving would change that as business lobbyists have failed to get them lowered to the EU standard despite 40 odd years to work at it.

  9. Anonymous Coward
    Anonymous Coward

    Tarriffs

    OK - politicians want to put up tariffs to create local jobs. Local jobs are created in small numbers, but costs and product prices go up. Customers then complain about prices going up. Who wants to take the bet that those very same politicians are nowhere to be seen when it comes to explaining, clearly and logically (using facts only, not spin) exactly why prices go up?

  10. This post has been deleted by its author

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