According to Isaacson's Jobs on page 546, Jobs claims that "Apple had 700,000 factory workers employed in China, and that was because it needed 30,000 engineers on-site to support those workers. 'You can't find that many in America to hire.' "
So the author of the blog makes a good point there are other reasons besides cheap labor to make China an attractive place to manufacture.
Now 700,000 workers at $400 a month would be $280 million a month or $3.3 trillion.
If that is around 3% of total costs Apple would sell about $10 trillion a month or $120 trillion a year. Actually they sell about $60 Billion.
If labor is 3% of total costs then raw materials would be 97% of the product. Does an ipod have that much raw material? And how much of the raw material price is labor? Somebody has to mine it. I would assume that some of the components are made by suppliers who also have labor costs and while they may not have been made in China they were probably not made in the USA.
Nothing seems to add up.
There must be an error somewhere. I don't know where but it would be interesting to find out.
Chipmonk, Obviously, you are angry about something but that has not entitled you to disregard the facts in my blog or resort to name-calling to drive home your point. I suggest you read the article again. I am not a shrill for China or anyone. I stated the fact, which is simply that Western manufacturing executives continue to say they outsource to China because of the low-cost factor. My position was, and is, that this is patently false. China is not receiving the outsourced manufacturing contracts because its labor costs are so much lower. There's a lot more at play here.
As to your point about Western journalists who "have been given some automony" to express their opinion, I agree the United States is a better location to practice my profession than China. I have had the opportunity to live in and work in China. I have also had the pleasure of living and working in Africa and Europe and can tell you I am happy to be living and working in Good Old USA.
The issues you raised about the United States and China's growing military threat are valid but that's not for the pages of EBN although we would gladly discuss it here if they pertain to the businesses we cover and the global economy in which they operate. However, my article focused on what I believe is the disingenous argument by some that they manufacture in China because its labor costs are so much lower. Please take up your argument with these folks rather than the scribes who simply analyze the situation and try to lift the veil off the pretensions.
In the past, I had written about the cost of the China job transfers. You couldn't possibly be as adamant as I have been in warning about the cost to our society of the wholesale transfer of manufacturing from the West to China. And, I've seen the effects from both ends. I saw it in the transformation of the Chinese hinterland and the decimation of American cities. Please see "Stop Gorging on China". This article was written almost one year ago. In the follow up to the latest article you were so incensed about, I gave my reasons as to why the West has moved manufacturing to China. You may want to check out "Why We Manufacture in China".
Finally, you are obviously educated enough to determine my origin. Yes, you are right. I was born a Nigerian and I am proud of it. Today, I am an American. I am equally proud of it and would give my life to this country that has given me so much. I assume you were born American (pardon me if this is not correct) and your anger about what is happening to our country is perhaps justified though obviously jaundiced.
Unlike you and unlike my children who were also born in the U.S., I swore an oath to the United States of America. I read the words before taking the oath and I stand by the allegiance I have sworn to the United States of America. It took sweat and hard work and complying with the laws of this great country and more than 15 years of legal residence before I became a US citizen. So, Sir, don't cast aspersions on my allegiance or throw puerile words in my face about being an African or Nigerian. I know who I am and I am proud of everything I am.
Let's discuss the issues rather than personalities and please curb the nonsensical name calling. You talked about the profits that China makes from the production of iPhones. Check out the profits Apple Inc. has made from making and selling iPhones. The company has more than $80 billion in cash and a market value higher than any other publicly-traded company. Foxconn, it's contract manufacturing partner, has no such funds in the bank.
Unlike you, I believe the best is ahead for the United States, its citizens and businesses. First, though, we must stop frightening ourselves that the end has come because some businesses have relocated operations to China.
As an Editor in the West, you are perhaps given some autonomy to express your opinions which is why I felt it necessary to challenge your piece which revealed an utter lack of balance or any effort to go beyond the superficial and turned it into pro-China propaganda that even the Communist Party of China could not have dared to fling.
Because of China's size, nuclear arsenal and the outsized ambitions of the Communist Party that want to retain control, outsourcing to China is very different from getting PCBs made in HK or buying cars / chips from Japan. The profit that China makes in assembling shoes or i-phones gets turned into Missiles pointed at the US.
For every dollar saved by a US consumer in buying products mfg.ed in China, the US as a whole ends up paying 3x more due to higher defense budget needed to counter an aggressive China, higher unemployment and lower tax revenues here, higher cost of raw materials like oil & food, not to mention the outsourcers, who make out like Bandits, lobbying the politicians on both sides of the aisle to keep letting them carry on this suicidal trade under the guise of "free market" etc.,.
The $ 300 billion per year US trade deficit w/ China due to outsourcing is 2 % of US GDP. Multiplied by the 3x factor this becomes comparable to the current Unemployment rate. Added over the last 15 years, for which China has gotten away with this level of asymmetric trade, it becomes comparable to the current US defcit of $ 15 trillion. The numbers above should convince anyone that the cumulative effects of asymmetric trade with China driven by the powerful in the US and the consequent concentration of wealth in the hands of a few ( the 1 % ) is the principal reason behind the current economic difficulties in the US.
I do not know where you are based or who is your paymaster, but please realise that China could hardly have pulled off what it did w/o the sympathizers / beneficiaries ( whose outsourcing of mfg to China saves the Consumer 10 % but triples the profit for themselves ). It is they who have systematically misled the US population for the last quarter century to commit slow suicide by giving various preferential treatments to the still Communist / forever Imperialist China. like educating them for free and then transferring technology, thus dissipating US competitive advantages.
Have you by chance ever watched the movie " The Manchurian Candidate ", a B/W number starring Frank Sinatra from the early 1960s ? It was about a GI who had been captured by the Chinese in the Korean War and then brain - washed to carry out political assasinations after they returned him to the US. The movie was released just before the JFK assasination and then for obvious reasons had to be pulled out of circulation.
On reading your absolutely disgusting pro - China propaganda piece I almost felt that "MC" needs to be updated now to " The Nigerian Candidate " !
P.S. : You should talk to your fellow Africans as to what they have to swallow as a pre - condition for Chinese investments.
@Chipmonk, I appreciate your taking the time to comment on the article. As to the charge of writing an article that is "so intellectually deficient," as you charge, I plead guilty. I used to write another blog a long time ago called the Ojo-Mojo Tech Report and took a lot of flak for my opinion from people who disagreed with me strongly in some cases. Eventually, though, they let me be after I added the following to the end of each article:
DISCLAIMER: THE VIEWS EXPRESSED IN THIS BLOG ARE THOSE OF THE AUTHOR ALONE WHO PROMISES TO BASE HIS SOMETIMES BIASED, POSSIBLY IGNORANT, OCCASIONALLY IRRELEVANT BUT ABSOLUTELY STIMULATING THOUGHTS ON VERIFIABLE FACTS ALONE. ANY COMMENTS SHOULD BE SENT TO THE AUTHOR AT BOLAJI.OJO@UBM.COM.
I loved your comment Chipmunk, but as you can see from the above disclaimer, I have no illusions about my intellect!
I always hope people will kid along with me. It's my way of coping! I can't take myself seriously, since I know myself so well. Thanks for your patience and understanding. (Thanks to everyone for those things.)
@Rich Krajewski, I wouldn't have you any other way. Your sarcasm is well used and. for the discerning, the message is often crystal clear. So, don't explain yourself please. I prefer your sarcasm to name calling. Plus it's refreshing and teaches us not to take ourselves too seriously.
I guess I should clarify how one shows respect for an idea or article by making fun of it! Perhaps what I mean is that, first off, one respects another's right to express an idea. The idea itself is shown respect by consideration and discussion. Sometimes the discussion can attempt to become persuasive, rather than neutral regarding the acceptance of the idea. Persuasion can involve parody and sarcasm. Even if the idea is attacked, I believe that the idea nevertheless is accorded respect by its dissection in these forums. (Kind of like a Native American expressing respect to the spirit of the prey just before he shoots an arrow at the prey!)
"Had I not found Bolaji's article so intellectually deficient, I would have...."
By my reckoning, one thing the article is not is intellecutally deficient. It is strongly opinionated, but he gives his reasons, which I respect, but which I nevertheless challenge in my own way (usually by parody or sarcasm). However, I have to admit that parody is by nature unfair (it only highlights certain aspects of the other person's argument, which you then knock down), but in the spirit of goodwill and mutual entertainment, I practice it as a way to explore issues. I do learn from Bolaji's articles, and I suppose that I'm always hoping someone will teach me more by knocking down the arguments I make (even if they counter me sarcastically--as long as it's done comically and in good nature, I can enjoy laughing at my own foibles and logical errors that are brought out by someone else's argument).
I can understand your anger if you've been displaced by our trade policy with China. I've felt enormous, disruptive harm from the lowering of barriers. But I wouldn't blame Bolaji for it. In fact, I'd praise him for being provocative and getting people to think about the issue in a new way. (Though I still like to kid if I can get away with it.)
Had I not found Bolaji's article so intellectually deficient, I would have charged him as being a Trojan Horse working for China and Outsourcing interests in the West placed as an Editor to spread hopelessness and fatalism to his western audience
Thanks for the post Bolaji. Outsourcing is the biggest reason for the things made in china are lower in price compared to those made outside of china. They have enough infrastructure and technical staff to meet the price requirements.
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Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
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Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.