A Reality of Outsourcing

[Just_Believe18]

Through the perspective of Apple, Inc.

How the U.S. Lost Out on iPhone Work
http://www.nytimes.com/2012/01/22/b...queezed-middle-class.html?_r=2&pagewanted=all

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

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.

Please take the time to read the article, particularly the section on how manufacturing overseas works in the factory cities of FoxxConn. What are your thoughts? Perceptions? Are we not spending enough time talking about the solutions? If there are solutions, what are they?

How do you balance the massive requirements of a continually growing tech. industry between growing the economy in the United States and meeting global demand?

 

[JayHawk]

The answer is in the article.

I was going to quote it but I dont want to violate the amount of an article that can be directly quoted.

Basically either through worker devotion or lack of human rights Apple could change a product and be making 10,000 new improved copies 96 hours after the change arrived. ALL based off workers living in dormitories on the factory campus.

The world is diametrically different in China and other Pacific Rim nations.

SO from a capitalism standard there is no way you can beat that flexibility, quality and cost.

When all of China and Pac Rim has better paying jobs than the US then manufacturing will come this direction again. However that wont happen in your lifetime JB.

The only thing that will alter this path is if some American developed paradigm shifting innovation is created in America and then requires our skills to continue. I believe that is what will occur in the realm of energy production.

 

[JB3]

Through the perspective of Apple, Inc.

How the U.S. Lost Out on iPhone Work
http://www.nytimes.com/2012/01/22/b...queezed-middle-class.html?_r=2&pagewanted=all


Please take the time to read the article, particularly the section on how manufacturing overseas works in the factory cities of FoxxConn. What are your thoughts? Perceptions? Are we not spending enough time talking about the solutions? If there are solutions, what are they?

How do you balance the massive requirements of a continually growing tech. industry between growing the economy in the United States and meeting global demand?

It depends what the priorities are. If your priority is simply bringing the jobs back, all it would take is a cut in the minimum wage and the city/factory paradigm that China currently uses, and those items can be produced here.

As long as people care (as they should I might add) about having a living wage or something close to it, those jobs will never come back. As long as unions have a monopoly in the manufacturing sector, those jobs will never come back. And as long as raw materials and factories to process them remain overseas, and companies refuse to consider moving them, those jobs will never come back.

Ever.

 

[Just_Believe18]

^ This issue goes far beyond placing blame on unions as you're talking about a wage and working environment that is so radically different than the United States.

As mentioned in the article, if the labor practices in China were to be brought here, you would be producing an impoverished labor force here in the United States that doesn't even exist. There is a standard of living here in the U.S. In the factories of FoxxConn, labor is housed in dormitories where workers are roused to work 12 hour days, 6 days a week. Their wages aren't even comparable to a minimum wage standard of living. So by eliminating the "union monopoly" in the manufacturing sector, is this the kind of labor practice you're advocating for people? McDonalds employees are given better.

 

[JayHawk]

No I don't think he advocates that practice but clearly points (as do you) to the idea that it is impossible to have that type of manufacturing work accomplished in America.

 

[Just_Believe18]

^ So a discussion of solutions would be to take labor out of the equation. There is no such thing as a post-developed nation with that kind of a work force.

 

[JayHawk]

Right but that is the crux. Until there are no third world skilled labor markets there is no solution.

Since that requires more energy and clean water than this earth can produce to make all it's inhabitants first world it will never happen.

 

[Just_Believe18]

^ I believe there are solutions to changing the economy in the United States for the better. Despite its debt crisis, Europe, and other industrialized nations do provide a more stable and higher standard of living for its citizens than we do.

There is a level of specialized manufacturing that is worth pursuing. We can still corner the markets on providing specialized parts and functions to technology products and green energy. Which is why the Chinese government is investing billions into green energy so they can someday corner the market globally.

 

[JayHawk]

Right but we are experiencing a similar debt crisis and yet our lack of a socialized system will see us recover much earlier than Europe.

The specialized technology we will have to corner is not a gleam in the eye of anyone in the manufacturing industry currently.

This would be so much easier to discuss in bed each night.... wait that was my outside voice...

 

[maxpowr9]

No joke, the factory conditions in China now are literally like the industrial revolution in the US during the mid-to-late-1800s.

The reason we will never see these outsourced jobs returned is ironically due to the lack of regulation on international business law.

 

[JB3]

^ I believe there are solutions to changing the economy in the United States for the better. Despite its debt crisis, Europe, and other industrialized nations do provide a more stable and higher standard of living for its citizens than we do.

There is a level of specialized manufacturing that is worth pursuing. We can still corner the markets on providing specialized parts and functions to technology products and green energy. Which is why the Chinese government is investing billions into green energy so they can someday corner the market globally.

You'll encounter the exact problems we're having here with the technology sector. Labor is too expensive and margins are too tight for these types of industries to thrive in the US.

Frankly, the only way we will ever get those jobs back is if we force China to compete fairly in the global economy. Until they do, any attempt to force these jobs back into the US will be a waste of time and money.

 

[JB3]

^ This issue goes far beyond placing blame on unions as you're talking about a wage and working environment that is so radically different than the United States.

As mentioned in the article, if the labor practices in China were to be brought here, you would be producing an impoverished labor force here in the United States that doesn't even exist. There is a standard of living here in the U.S. In the factories of FoxxConn, labor is housed in dormitories where workers are roused to work 12 hour days, 6 days a week. Their wages aren't even comparable to a minimum wage standard of living. So by eliminating the "union monopoly" in the manufacturing sector, is this the kind of labor practice you're advocating for people? McDonalds employees are given better.

Did you actually read my post all the way through? I clearly said that people should care about having the right to a living wage, and that the conditions of these factories in China would be unacceptable to even the most impoverished americans.

What my post was more about is that we have multiple entrenched interests, most of which are necessary, that the Chinese and other 2nd world and 3rd world countries do not have. Until those other nations also have those interests, there is no way we can begin to recover the jobs lost to them.

 

[gewhite3]

I think this says a hell of a lot about what type of company Apple is. They turn $400,000 profit for each employee working for them. Made 180 billion last year (I think, I didn't refer back to the article to check my number) and they bitch and whine that it would take 9 months to hire the engineering work-force here to do the same job that China could do more quickly. On another note, I think 180 million is plenty of money to build your own factories right here in the US. I always heard Steve Jobs was a big prick anyway.....he wanted a glass screen in 6 weeks and the USA couldn't do it that fast, so he looked elsewhere. He has the right to do that, of course, but some things take time.

To some people and companies, the almighty dollar wins out over anything else.........Pity really.

 

[palemale]

It depends what the priorities are. If your priority is simply bringing the jobs back, all it would take is a cut in the minimum wage and the city/factory paradigm that China currently uses, and those items can be produced here.

As long as people care (as they should I might add) about having a living wage or something close to it, those jobs will never come back. As long as unions have a monopoly in the manufacturing sector, those jobs will never come back. And as long as raw materials and factories to process them remain overseas, and companies refuse to consider moving them, those jobs will never come back.

Ever.

According to the Bureau of Labor Statistics, only 11.6% of manufacturing workers in 2010 were represented by unions. http://www.bls.gov/news.release/pdf/union2.pdf (p. 7). How is that a monopoly?

 

[JayHawk]

Well palemale according to unionist the effects of the union raise the benefits to workers across the board. That and a lot of the labor law was enacted because of union sponsored lobbyist.

That is not to say a living wage and good benefits are not necessary nor is it saying that we should ask our citizens to forfeit those benefits to compete. What it is saying is that the jobs won't return because our standards are higher and so we cannot compete. So what solution do you think will bring us forward? innovative technology? Paradigm shifting ideals? Technical training to improve those folks who would normally fill minimally skilled manufacturing jobs?

 

[andysayshi]

I think this says a hell of a lot about what type of company Apple is. They turn $400,000 profit for each employee working for them. Made 180 billion last year (I think, I didn't refer back to the article to check my number) and they bitch and whine that it would take 9 months to hire the engineering work-force here to do the same job that China could do more quickly. On another note, I think 180 million is plenty of money to build your own factories right here in the US. I always heard Steve Jobs was a big prick anyway.....he wanted a glass screen in 6 weeks and the USA couldn't do it that fast, so he looked elsewhere. He has the right to do that, of course, but some things take time.

To some people and companies, the almighty dollar wins out over anything else.........Pity really.

Fact check: Apple have a current annual revenue of around $120 billion. They have around $75 billion dollars in the bank. 9 months holdup in the tech world is an entire product generation: it would be suicide to hold up production for that long. One of the reason's Apple is so profitable is their production line is one of the fastest and most streamlined of any tech company.

Apple can't currently manufacture in the US because the US don't have the skilled workforce required.

At a dinner with President Obama in February, Steve Jobs said Apple could manufacture in the U.S. if community colleges, tech and trade schools trained “factory engineers,” writes Walter Isaacson in his biography of the high-tech leader.

Apple had 700,000 factory workers employed in China, he said, 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,’ he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. ‘If you could educate those engineers,’ he said, ‘we could move more manufacturing plants here.’

“The argument made a strong impression on the president. Two or three times over the next month he told his aides, ‘We’ve got to find ways to train those 30,000 manufacturing engineers that Jobs told us about.’

http://communitycollegespotlight.org/content/steve-jobs-train-factory-engineers_6979/

It's not that Apple WON'T manufacture in the US. There simply isn't the workforce available to make it happen. Which is exactly why Microsoft, Dell, Hewlett Packard etc etc don't manufacture in the US either.

 

[CowboyBob]

Fact check: Apple have a current annual revenue of around $120 billion. They have around $75 billion dollars in the bank. 9 months holdup in the tech world is an entire product generation: it would be suicide to hold up production for that long. One of the reason's Apple is so profitable is their production line is one of the fastest and most streamlined of any tech company.

Apple can't currently manufacture in the US because the US don't have the skilled workforce required.


http://communitycollegespotlight.org/content/steve-jobs-train-factory-engineers_6979/

It's not that Apple WON'T manufacture in the US. There simply isn't the workforce available to make it happen. Which is exactly why Microsoft, Dell, Hewlett Packard etc etc don't manufacture in the US either.

Excellent post. This is why properly funded education is so important. Slashing school budgets isn't the way to prosperity. You can't have an adequately educated work force when potential tax revenues are stashed away in Cayman Island bank accounts.

 

[Lostlover]

I read this article yesterday and I think the take-home message should be that the middle class is screwed: overseas labor is cheaper/just as efficient and the Republicans want them to pay more taxes than those that could afford to pay more and not see any noticeable difference in their lifestyles.

I've said this before: my uncle is a multi-millionaire in Florida and the only time he ever used tax cuts towards his business was when customers demanded a new product or service. So, he's pocketed that money. Fortunately for Miami residents, his business model required locals; he couldn't outsource his business.

 

[Lostlover]

I think this says a hell of a lot about what type of company Apple is. They turn $400,000 profit for each employee working for them. Made 180 billion last year (I think, I didn't refer back to the article to check my number) and they bitch and whine that it would take 9 months to hire the engineering work-force here to do the same job that China could do more quickly. On another note, I think 180 million is plenty of money to build your own factories right here in the US. I always heard Steve Jobs was a big prick anyway.....he wanted a glass screen in 6 weeks and the USA couldn't do it that fast, so he looked elsewhere. He has the right to do that, of course, but some things take time.

To some people and companies, the almighty dollar wins out over anything else.........Pity really.

I'm surprised Steve Jobs is a liberal. He never donated a penny to charity. Instead, he donated iPods (like to the trapped Chilean miners). In his official biography, his co-founder asked Steve Jobs to match his own contribution to another co-founder who was ousted by the board of directors with no Apple stocks or money. Steve Jobs replied, "Sure, I'll match your donation... if only you give him none [Apple stocks and money]."

 

[vulgar_newcomer]

Basically either through worker devotion or lack of human rights Apple could change a product and be making 10,000 new improved copies 96 hours after the change arrived. ALL based off workers living in dormitories on the factory campus.

The world is diametrically different in China and other Pacific Rim nations.

SO from a capitalism standard there is no way you can beat that flexibility, quality and cost.

When all of China and Pac Rim has better paying jobs than the US then manufacturing will come this direction again. However that wont happen in your lifetime JB.

The only thing that will alter this path is if some American developed paradigm shifting innovation is created in America and then requires our skills to continue. I believe that is what will occur in the realm of energy production.

I agree with Jayhawk's points. There is certainly a different mindset.

Perhaps the media isn't telling us the total truth about China though.

There is no doubt that GM is selling far more cars in China then the USA. 16.5 million Buick's and Chevys. That is 5.5 more cars then total brand sales in the USA including all manufactures. Buick has a waiting list! Buick even.
In addition I see and read that people in China do not rely on loans to purchase these vehicles but pay cash. Generally unheard of in the USA for a new vehicle.
How can they do this living on a bowl of rice, sleeping in a mesh hammock working for 30 cents a day? I mean how can someone go in and buy a brand new 2011 Chevy Camaro cash on that sort of wage? Wouldn't a GM Camaro cost the same in China as it would in the USA?
I think we are being deceived and little effort is given to the published and well known rapidly growing middle class in China. Instead we hear that they live in squalor.

As for unions in manufacturing in the USA. pffttt that is the same news touted in 1982. What is the current private sector union membership in the USA, about 9% (private & about 12% total union private/public).

Anyone doubting that whats left of manufacturing in the USA employees don't work 12 hr shifts, 6 days a week without overtime or bad working rules get in that truck with Swerve and drive with him to these various places and see that many workers in manufacturing are not driving the big fancy cars or have caged swimming pools but working long hours for little.

At one of my employers plants in Lake Charles Louisiana everyone that can be gone is and replaced with a contractor, who gets nothing they have replaced employees. My company isn't unique or hurting, it is after all a major petroleum and chemical producer.

Its a lie to say that unions in 2012 are the problem, but it still works to those not personally involved and away from the last hold outs like the Windy City. However I know people making plastic bottles and glass windshields in Chicago area who are not union and wages are similar to Jackson MS.

Our future lies within energy technology as Jayhawk says. There is a very good reason why solar panels or batteries are not evolving such as PC's have rapidly.
I can put a cheap drug store bought magnifying glass to a leaf on my patio and within 2 seconds its on fire. Yet to heat a swimming pool I must have huge solar panels that cover the roof. The power company & oil industries are in no hurry to develop these technologies increasing the dependance on the sun and decreasing the size of applications making them available to the masses instead of the power meter on the side of a house.

Decreasing the cost of utilities, needed household infastructure and day to day living necessities would allow for US workers to live on a lower wage. This is not the case. The cost of power, and necessities along with insurance climb steeply while technology lowers the cost of a 50" plasma TV. You cannot heat or cool your home with that.