Design Con 2015

Apple's Manufacturing Move

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Gene Weiner
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Apple's Reshoring Move
Gene Weiner   12/7/2012 2:16:59 PM
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It is a good business decision and most likely part of a complex larger strategy between Apple and its major supply chain. Minimum labor rates and social costs in China where most of Apple's products are assembled by Foxconn (Hon Hai)  have been increasing annually for years. Labor unrest and suicides at Foxconn has gained international notoriety during recent times. Foxconn's new manufacturing facilities under construction in Chengdu are reported to sport 10 foot high fences around the roofs (to prevent leaps by workers?). America remains one of Apple's biggest markets. Foxconn has announced that it is working on plans with M.I.T. to "help train Americans" in manufacturing technologies. They note that the American engineers would have the opportunity to learn Chinese during their training periods in Taiwan/China. As Sherlock might have said, 'Methinks the game is afoot".

Wale Bakare
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Re: Apple's Reshoring Move
Wale Bakare   12/10/2012 10:40:23 AM
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>>America remains one of Apple's biggest markets. Foxconn has announced that it is working on plans with M.I.T. to "help train Americans" in manufacturing technologies.<<

I think US and/or North America markets will forever be largest base for Apple's products. And for Apple to maintain that - NOT DESIGNED IN US, MANUFACTURED IN CHINA. Rather, people would love to have both - DESIGNED & MANUFACTURED IN US.

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/10/2012 6:31:08 PM
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An old wise executive I used to know likes to say "You can do good by doing good". I am not sure if this was original to this gentleman Pasquale Pictorio, formerly CEO of STMicroelectronics, but the reality is that Apple could do worse than move some manufacturing to the US at a time it is being pounded in the press for what's happening at plants in China that make products for it.

Ariella
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Re: Apple's Reshoring Move
Ariella   12/11/2012 11:58:06 AM
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We appear to be a somewhat cynical lot. The top choice is "to liminate negative PR," followd by "to save cost." Less than 20% consider it "a patriotic move to create US jobs."

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/11/2012 5:57:03 PM
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Ariella, To remove that air of cynicism, I could change my vote to say it was a "patriotic decision" by Apple to rescue the US economy (thank goodness they didn't announce this before the US presidential elections!). However, I would be deceiving myself because the reality is that this is a purely business decision. Removing the negative cloud is a business decision.

Ariella
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Re: Apple's Reshoring Move
Ariella   12/11/2012 7:01:55 PM
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@Bolaji I'm sure you're right about that.  Ultimately, businesses decide on a direction based on what they believe will benefit their bottom line. Neowin notes that while there's been quite a bit of buzz generated by Apple's announcement, the fact is that HP has American factories at work already:

This week, HP quietly posted word on its website that it already assembles many of its PCs in the U.S. That includes all of its workstations in a factory in Indiana, as well as 36 percent of its business desktop PCs. HP servers are made in Houston, Texas. HP says, "In 2012, we expect to assemble 2.9 million PC units in the United States."

News.com reports that even some of HP's business EliteBook laptops are assembled in North America, although there's no specific city or state named by HP. And what about consumer PCs? Tony Prophet, senior vice president of operations at HP, states, "We're marginally moving even some consumer PC [assembly] back to North America. Doing less of that in China."

 

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/12/2012 6:31:30 AM
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My next headline: Back in Vogue: Made in the US.

Ariella
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Re: Apple's Reshoring Move
Ariella   12/12/2012 8:25:06 AM
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@Bolaji looking forward to it!

Mr. Roques
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Re: Apple's Reshoring Move
Mr. Roques   12/14/2012 3:53:36 PM
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I can't imagine what would happen if at some point Apple is forced to have, in the same market, Macs built in China and in the US... and people start choosing one over the other (based on a different quality or perceived quality).

_hm
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Re: Apple's Reshoring Move
_hm   12/29/2012 8:32:39 AM
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We will get high quality engineered products. I will eagerly look forward to long life Made in USA products.

Wale Bakare
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Re: Apple's Reshoring Move
Wale Bakare   12/30/2012 7:00:09 AM
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>>We will get high quality engineered products<<

Has Apple once ever produced/manufactured low quality products since it became 'top brand' name in the world? Be it made in India or made in China Apple's iproducts - Apple is known as Apple simply  because its electronics designs are often on the edge. Moving its Mac back to the US for me according to their importance: (1) nothing can be described like that than creation of more jobs in the US (2) to cancel out negative image.

 

 

Wale Bakare
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Re: Apple's Reshoring Move
Wale Bakare   12/14/2012 5:38:02 PM
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>>followed by "to save cost."<<

May be if 1 to 10 reasons are reshuffled, i think moving its manufacturing to US for cost saving would rank lowest, the reverse is the case for manufacturing in China.

tech4people
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Re: Apple's Reshoring Move
tech4people   12/25/2012 2:28:20 PM
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Wale,

I doubt it that Wages in Manufacturing jobs in the US are much-much higher Than in China today.

Regards

Ashish.

tech4people
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Re: Apple's Reshoring Move
tech4people   12/25/2012 1:40:32 PM
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Bolaji,

You sure this was the main reason why Apple decided to make this Move?

I don't think so.

Rather I feel it has more to do with cutting Risk in their Supply Chain[Putting All your eggs in one basket as you put it] & also to cope with rising Wage Pressure in China.

While in America,Wage Pressure is practically non-existent[Thanks to severe unemployment];Chinese Employment numbers are much better so they are much more easily able to demand(&recieve) Higher wages.

Its really amazing today most Entry Level Grads in the US are ready to work at Wages which are very-very close to Mid-level Managers in the Leading Outsourcing countries Globally.

This stuff is extremely critical and can't be discounted.

Regards

Ahsish.

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/28/2012 7:52:24 AM
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1 saves

I see some merit in your reasoning but we are talking about the post-Jobs Apple here. Look at many of the moves Tim Cook has made and you'll see a tendency not to ignore the public, suppliers, etc. Jobs made it clear he didn't care much what most people outside the company thought and that often included Apple customers.

More relevant to your argument, though, is the fact that Apple is merely moving a fraction of production back to the US. A supply chain that was designed without the redundancy that you talked about cannot be simply retooled to add assurance and guarantees of production continuity by tacking on PC assembly. That's all that will be done at this plant and the move also came at a time of heightened interest in whether US-headquartered companies care at all about high unemployment numbers at home.

Apple long made the case that it is creating and has created directly or indirectly hundreds of thousands of jobs in the US. That position is not holding water anymore when most eyes are focused on manufacturing jobs and the company is touting design engineering or Apple Store customer service positions.

Even if I am being cynical, Apple is killing two birds with one stone here and that's great PR, if you asked me.

Himanshugupta
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Re: Apple's Reshoring Move
Himanshugupta   12/28/2012 1:35:31 PM
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Bolaji, although i am not sure whether Apple needed positive PR but for sure this year has not been great for Apple. A very big loss of Jobs and then lots of negative PR (foxconn, maps, Samsung legal fight). So, your point of killing two birds with one shot has some weight. Though the number of direct job that Apple will create will not be that significant but they have been hailed as patriotic and putting pressure on others to follow suit.  

tech4people
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Re: Apple's Reshoring Move
tech4people   12/29/2012 5:10:46 AM
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Bolaji,

I agree.

Its a great move in more ways than one!

At the same time one can hopefully see this is a beggining of the reversal of a long-term trend?

Ashish.

Susan Fourtané
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A patriotic move?
Susan Fourtané   12/29/2012 3:07:35 PM
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Ashish, 

I'm wondering about this, and I thought maybe you have an answer for it. 

Is there such a thing as "a patriotic move" in business? 

-Susan 

Hospice_Houngbo
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Re: A patriotic move?
Hospice_Houngbo   12/29/2012 8:25:17 PM
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@SF,

"Is there such a thing as "a patriotic move" in business?"

I think so. But this is not the case with Apple. Besides, it has decided to move just "some Mac PC" in the US. Not its whole manufacturing facilities or plants.

Susan Fourtané
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Re: A patriotic move?
Susan Fourtané   12/30/2012 4:18:33 AM
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HH, 

I believe there is no such thing as a patriotic move. That's why I am interested in knowing about this option from the poll, and why people have voted for it.

What is the reason that makes them think Apple's manufacturing move is a "patriotic move"?

Why do you think there is such thing as a "patriotic move", for instance? Do you have an example?

Business is business. A business is only going to do what is good for the business. If Apple is moving part of its Mac manufacturing to the US there is a reason for that, and that reason only concerns business, and Apple's benefit.

Not even Nokia thought it twice when it saw the convenience of moving its manufacturing plants elsewhere. And you know how important Nokia was (not sure if still is) for the Finns. Do you see my point? Business is business. There is no poetry or patriotism in it. 

-Susan  

Wale Bakare
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Re: A patriotic move?
Wale Bakare   12/30/2012 7:25:25 AM
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>>There is no poetry or patriotism in it <<

Susan, have you any banking experience? Or are you an investor?

Susan Fourtané
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Re: A patriotic move?
Susan Fourtané   12/30/2012 8:21:00 AM
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Why, Wale? Are you suggesting there is poetry in it?

 

Wale Bakare
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Re: A patriotic move?
Wale Bakare   1/1/2013 6:11:48 AM
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Few weeks back i watched a BBC's reality TV show - Dragon's Den. One of the investors told an aspiring enterpreneur who came to pitch his business said, 'investors will always think of recouping their money and making profits' irrespective of any circumstance.

 

 

Ariella
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Re: A patriotic move?
Ariella   1/1/2013 1:16:41 PM
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@Wale yes, that's integral to the capitalistic model.

Wale Bakare
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Re: A patriotic move?
Wale Bakare   1/1/2013 6:36:37 PM
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@Ariella, that mindset is actually helping company's sustainability, fight competitor(s) and that also keep managers on their toes against reckless spending.

Susan Fourtané
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Re: A patriotic move?
Susan Fourtané   1/2/2013 10:13:21 AM
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Wale, 

"'investors will always think of recouping their money and making profits' irrespective of any circumstance."

Is that why you asked me if I had experience in banking or investing? :) I think it's just pure business logic. Business is business and it will always be business. 

-Susan 

Anna young
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Re: A patriotic move?
Anna young   12/31/2012 9:09:53 PM
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I agree with your analysis. I don't think there is a patriotic motives involved when it comes to Apple. It is simply a business strategy. As indicated by majority votes, I being one, it may well be a business strategy to eliminate negative PR. It's not clear now, but will with time.

Susan Fourtané
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Re: A patriotic move?
Susan Fourtané   1/2/2013 10:09:43 AM
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Thanks, Anna.

Then why the option in the poll? I believe it's a business startegy, but not precisely connected with PR. 

-Susan

tech4people
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Re: A patriotic move?
tech4people   12/30/2012 6:48:01 AM
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Susan

The Short Answer is NO.

There is no such thing as a patriotic move in Business(I am talking about a move which happens in the abscence of any Subsidies or Taxbreaks of any kind).

Only a fool will try to get emotional and stick around in a failing Economic System in the name of Love of One's country.

Its not how entrepreneurs think!

Hope this helps.

Ashish.

Susan Fourtané
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Re: A patriotic move?
Susan Fourtané   12/30/2012 8:32:19 AM
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Thanks, Ashish. Yes, it helps. 

That's what I thought. (Read my comments to HH below) Maybe I have to Bolaji why this "patriotic move" came up as an option in the poll. I would now like to know what the ones who voted for it say about this. 

-Susan 

Hospice_Houngbo
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Re: Apple's Reshoring Move
Hospice_Houngbo   12/29/2012 8:38:15 PM
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@tech4people,

"At the same time one can hopefully see this is a begining of the reversal of a long-term trend?"

It is too soon to start rejoicing because that is not enough to revive US economy. I would like to see how far Apple can go to help bring back more jobs to the US. 

Adeniji Kayode
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Production Synthesizer
Re: Apple's Reshoring Move
Adeniji Kayode   12/14/2012 1:35:03 PM
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@Wale'

I agree with you on that, that will just make people to think more of quality and reliability of Apple product

Anna young
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Re: Apple's Reshoring Move
Anna young   12/14/2012 5:22:21 PM
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Wale, "Designed and Manufactured in the USA" hmmm! Good thoughts. I believe Apple's move is strategic and I applaud that. But can it really design and manufacture in the USA?  Apple's executive said "the US has stopped producing the people with the skills we need" In spite of kick starting  training, I think America is at present unable to match the scale of production Apple demands from its china assembly plant.

Wale Bakare
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A Real Valuable Design
Wale Bakare   12/14/2012 6:10:27 PM
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>>But can it really design and manufacture in the USA?<<

Why not? I could recollect in the 90s when Nokia phone dominates world markets. They were 3 types of Nokia phones then -  (1) Made in Finland (2) Made in UK (3) Made in China. The most sought after among the 3 makes was made in Finland.

Anna young
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Re: A Real Valuable Design
Anna young   12/15/2012 3:37:53 AM
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I didn't rule out the possibility of design and assembly in the USA. I'm sure it may eventually happen at some point and over a period of years. The point is at present, America still lacks the skill required to encourage the scale, speed and efficiency Apple placed on its Chinese manufacturing. Apple's strategy is about who can build the greatest number of item in a shortest period.

tech4people
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Re: A Real Valuable Design
tech4people   12/25/2012 2:58:01 AM
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Anna,

I disagree.

Most High-Tech Manufacturing today is starting to get heavily automated.

In that sceanario it hardly matters whether the plant is based in the US or in China[costs will be similar].

The way I see it,the bigger issue for any manufacturer should be location to markets[As close as possible] and other surrounding infrastructure(including Taxbreaks and Cheap Electricity).

Regards

Ashish.

Bolaji Ojo
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Re: A Real Valuable Design
Bolaji Ojo   12/28/2012 7:54:28 AM
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Not to mention Apple sells more than 50 percent of its products nowadays outside the US nowadays. It may be based in the US but it is a global company.

tech4people
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Re: A Real Valuable Design
tech4people   12/25/2012 3:10:42 AM
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Wale,

Yeah I remember that time exactly!

What do you feel will be the end result if such a Manufacturing Distinction actually happens?

Will the US Manufactured PC outsell the Chinese Product(inspite of Being say 10%-15% costlier???)

Sure could most definitely be the case(if You ask me).

But then eventually word does spread around about the quality or lack of it around different manufacturing centres.

And then the Consumer finally decides.

Regards

Ashish.

 

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/10/2012 6:28:04 PM
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Gene, I absolutely agree Apple's decision makes business sense. The fallout from its engagements in China and the impact on its public image have taken a toll on the company although this may not be so easily seen considering its roaring sales. The smartest executives know how to anticipate the wind of change and make sure they are ready for it. Apple may not move most manufacturing out of China but it does seem in my opinion to make sense that it shouldn't have all its eggs in one basket.

 

Bolaji Ojo
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Re: Apple's Reshoring Move
Bolaji Ojo   12/10/2012 6:28:19 PM
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Gene, I absolutely agree Apple's decision makes business sense. The fallout from its engagements in China and the impact on its public image have taken a toll on the company although this may not be so easily seen considering its roaring sales. The smartest executives know how to anticipate the wind of change and make sure they are ready for it. Apple may not move most manufacturing out of China but it does seem in my opinion to make sense that it shouldn't have all its eggs in one basket.

Anna young
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Re: Apple's Business Strategy
Anna young   12/14/2012 10:23:59 AM
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  Perfect timing for Apple to "eliminate Negative PR". Apple's move to return some of its manufacturing business to the USA will certainly add to the continued manufacturing growth witnessed in the USA. The manufacturing sectors have been reported to lead American economy out of the recession. Profits generated from reshoring manufacturing companies alone in 2011 is reported to have increased by 25%. I don't think the likes of Apple would like to miss out. Apple has the clout to make the difference at a time when negative press coverage about the companies activities heightened. Good move!

Nemos
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A patriotic move ?
Nemos   12/15/2012 4:46:22 PM
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Although it is a nice thought "A patriotic move to create US jobs" the timing is not justified because US economy it is much better as it was before 2 years ago, so why now instead of 2 years before ? 

 

Clairvoyant
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Re: A patriotic move ?
Clairvoyant   12/23/2012 10:53:18 AM
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I would say it's because of pressure put on Apple to move some manufacturing back to the US. Who knows what kind of deals may be going on in the background between say the government and Apple.

Wale Bakare
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Re: A patriotic move ?
Wale Bakare   12/23/2012 3:21:44 PM
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@Clairvoyant, i cant disagree with you on that. It may actually be the way the game has been played closely to the public. But how would Apple's investors perceived the move --- higher wages, taxation and other operating costs? Would the move not impact on the payment of dividends? No matter what, I cant see reasons why the likes of Apple & co not create more jobs especially in US.  Yet a good news to supply chain sector though.

tech4people
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Re: A patriotic move ?
tech4people   12/25/2012 2:54:47 AM
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Wale,

It all depends which country you are comparing the US to.

If you mean China;I don't think there is much difference in Either Wages or Taxes between the US and China today.

The major thing that lot of people in the US miss is that because Unemployment today is so High in America;Employers have major bargaining power when it comes to Wages[And nobody accedes to collective action clauses] ;also most States Offer a lot of Taxbreaks as well as other related Infrastructure[Like Trained Manpower,Cheap Electricity,Promotions,etc] for really good and competitive rates.

Lets not forget its not just about Cheaper labor today.

The Surrounding Infrastruture and also the High Price of Crude Oil (and relatively cheap price of Natural Gas in America) are also very significant factors.

Regards

Ashish.

Himanshugupta
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Re: A patriotic move ?
Himanshugupta   12/28/2012 1:41:03 PM
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@Clairoyant, i do not think Apple needs to prove that they are patriotic as its a global company now. But there must be some government incentives. This move has bear fruits as Foxconn and TSMC are planning to put some manufacturing units in USA to attract Apple and other companies.

Clairvoyant
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Re: A patriotic move ?
Clairvoyant   12/29/2012 7:54:17 PM
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Himanshugupta, as per the polls, it seems that most people are thinking that Apple is moving some manufacturing to the US because of PR.

Hospice_Houngbo
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Re: A patriotic move ?
Hospice_Houngbo   12/29/2012 8:33:26 PM
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@Clairvoyant,

It is likely that PR is the most "probable" reason even if Apple folk will not agree with that. In a year or so, we will find out if that is a smart move or not.

Susan Fourtané
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Re: A patriotic move ?
Susan Fourtané   12/30/2012 4:27:31 AM
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HH, 

I believe this manufacturing move is just a test. I also believe we can speculate all what we want, but only Apple knows the real reason. It all smells like a test. Manufacturing only a part of the Macs in the US is not going to hurt Apple if the test --whatever they are testing-- doesn't work. 

-Susan 

Himanshugupta
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Re: A patriotic move ?
Himanshugupta   12/30/2012 3:16:58 AM
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Clairvoyant, this poll shows our perception based on what we read or hear or logical thinking. The real reason perhaps we will never know. There might be combination of differnet reasons not covered in this poll.



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