David Barboza, New York Times:
The state-of-the-art facility was built several years ago to serve a single global exporter: Apple, now the world’s most valuable company and one of China’s largest retailers.
The well-choreographed customs routine is part of a hidden bounty of perks, tax breaks and subsidies in China that supports the world’s biggest iPhone factory, according to confidential government records reviewed by The New York Times, as well as more than 100 interviews with factory workers, logistics handlers, truck drivers, tax specialists and current and former Apple executives. The package of sweeteners and incentives, worth billions of dollars, is central to the production of the iPhone, Apple’s best-selling and most profitable product.
And:
It all centers on Zhengzhou, a city of six million people in an impoverished region of China. Running at full tilt, the factory here, owned and operated by Apple’s manufacturing partner Foxconn, can produce 500,000 iPhones a day. Locals now refer to Zhengzhou as “iPhone City.”
This is a terrific read, focusing on China’s financial incentives that help keep Foxconn’s costs low and, in turn, lower the cost of building the iPhone.
At the heart of the article is the question of Apple’s manufacturing future, given this:
President-elect Donald J. Trump has vowed to bring down the full force of the government on American companies that move jobs overseas, threatening punitive tariffs on the goods they sell back at home. Apple has been a frequent target of Mr. Trump, who said during the campaign that he would get the technology company to “build their damn computers and things in this country.”
Trump has repeatedly promised an Executive Order to put a 5% tariff on all imported goods, with the possibility of more tariffs specifically aimed at companies like Apple who do the vast majority of their manufacturing overseas.
Note that Foxconn is a Taiwanese company, headquartered in Taipei. Zhengzhou is in central China, near the Huang He (Yellow River). Taiwan’s relationship with China and the economic uncertainties of tariffs add great complexity to this equation.
So Apple has it’s facilities overseas with thousands of trained staffers they cannot get in the US and will be “punished” by higher import taxes when selling in the US? As a result, the iPhones will be more expensive in the US and less people (especially those with poorly paid jobs) will be able to buy them? People will buy cheaper products from overseas (China and Korea), thereby triggering a downward spiral of unskilled labor, unemployment and poverty – in the US.
Does not not sound clever to me. At least from a businessman point of view – unless I missed something.
Yes, President Trump will fix everything. /s
I wonder if Trump plans to impose the same tariffs on his own companies? Doubtful.
“The entire supply chain is in China now,” a former high-ranking Apple executive told the Times. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
http://ped30.com/2016/01/19/what-donald-trump-doesnt-know-about-apple-could-fill-a-stadium/
The manufacturing output of the US is currently near record highs with refined oil, pharmaceuticals, airplanes, and cars as the largest items. Manufacturing jobs have dropped mainly due to efficiency and automation, accounting for 75-85% of the losses. However facts are rare in political campaigns, especially in 2016.
Anyone know exactly how many countries Apple sells the iPhone in? But a tariff in the US is supposed to bring manufacturing “back” to the US? Fuck off, Trump.
Trump Tower was made with Chinese steel.
Never forget that.
Manufacturing in the US will rely mostly on robots in the near future anyway. Why? Because the cost of labor in the US is very high compared to, say, China. So the net job gain in the US, even with protectionist tariffs, would be negligible.
Just do a search for this sentence: “Technavio predicts labor cost savings achieved by replacing humans with robots in the US will reach over 21% by 2020.”
Not only that. I can order custom-machined parts and printed circuits in China that are cheaper and will be delivered earlier at high quality. That’s right – delivered earlier despite the ocean that separates China from NA. This goes beyond electromechanical manufacturing. This is true for synthetic chemistry and contract software.
Technavio …. lol
That sounds great. BTW: do you know that we Germans are good at fairy tales as well? 🙂