Apples iPhone: the decline of US manufacturing
Have you heard any positive news about the economy lately? No!? Me neither. Wherever one looks around the western world the outlook is gloomy. More austerity, less service, higher tuition, more layoffs… However, there is some companies that are just doing great, for example Apple. With their impressive growth, at least they could have to power to revive, not?
Now listen what an Apple executive said:
We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.
Yes and actually that is no surprise, because Apple is not an American company any more, it is a global company. It employs 43,000 people in the USA, 20,000 overseas, but most important over 700,000 employed by subcontractors outside of the USA. Maybe most devastating, the reason for outsourcing is not only wages, it is generally that the Chinese supply chain is better, scales faster and provides huge numbers of mid-level skilled workers that don’t exist any more in the US.
It is therefore no wonder, that 90% of the hundreds of parts of the iPhone are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.
The bitter truth is, that its not only profit that moves jobs abroad. It has been calculated that producing the iPhone entirely in the US would cost $65 extra, which is not too much in comparison to the large profits Apples generates with the phones. But, simply, there are not enough skilled workers available in the US. Consequently, bashing the companies for outsourcing doesn’t help. The only way forward is to generate an economy that is competitive, and this means especially educating the people, so they can fill in the jobs.
So instead of cutting ever more costs and giving tax breaks in the hope wealth trickles down is prone to fail. Instead, education should be made available for everyone. It is inconceivable that student debt has surpassed credit card debt now reaching over one trillion dollar. The antiquated and inefficient infrastructure of the US is also infamous. This is were action has to be taken, because it is very obvious that the economy can’t survive on a few top 1% moving money around via obscure financial constructs.
