The real reasons for offshore outsourcing of manufacturing become clearer
This is a seminal article and one that western companies and governments should study. The general assumption is that manufacturing work is outsourced overseas due to lower wages. Not so.
How the U.S. Lost Out on iPhone Work | NY Times
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
This story developed following a question last year from President Obama to Steve Jobs. The backstory is that Apple has 40,000 employees in the US and up to 700,000 people worldwide engaged in making Apple products. This in contrast to the US Auto sector, or GE, that each had at one time several hundred thousand US workers.
Obama to Jobs:
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
It begs the question. Why does someone not try to build a manufacturing facility in the US that goes head to head with the Foxconns of the East? To say it cannot be done is too easy an answer.