Skip to content
Catholic Online Logo

By Catholic Online

1/23/2012 (2 years ago)

Catholic Online (www.catholic.org)

Apple executives explain why the US is losing ground in manufacturing.

In February of 2011, Barack Obama visited Silicon Valley for dinner with several movers and shakers of the electronics industry. Each visitor was asked to have a question prepared for the President. But the question that got the most attention was one fielded by the President himself to Mr. Steve Jobs, the iconic CEO of Apple.

This image shows the reason why the US cannot compete with China in manufacturing.

This image shows the reason why the US cannot compete with China in manufacturing.

Highlights

By Catholic Online

Catholic Online (www.catholic.org)

1/23/2012 (2 years ago)

Published in Technology

Keywords: Steve Jobs, President Obama, manufacturing, iPhone, iPad, factories, China, overseas, outsourcing, unemployment, business


LOS ANGELES, CA (Catholic Online) - President Obama asked, "What would it take to make iPhones in the United States? Why can't that work come home?"

According to another dinner guest, and Job's reply was blunt. "Those jobs aren't coming back."

At one time, United States was the world's industrial powerhouse. While the Industrial Revolution began in England, as early as the 17th century, the late 19th century saw the United States become the world leader in industry and manufacturing. The United States has wore that crown for more than a century. But now, intense competition from other countries, especially China, is causing America to lose its lead. The reason lies in the fundamental differences between the United States and Asia and how work is approached. 

Corporate executives have a fiduciary responsibility to maximize shareholder profits. This means finding the most profitable solutions for complex business problems. Manufacturing a product such as the iPad or the iPhone is a complex affair. A single iPhone will contain parts from almost every continent on the globe. The components are manufactured around the world, and ultimately assembled at factories in China.

After assembly, those products are sold around the globe.

Apple's success as a corporation can be measured in its profit per employee earnings. Apple earned over $400,000 in profit per employee last year. This exceeds the profits earned by other firms such as Google, Exxon Mobil, or even Goldman Sachs. Because of this success, more and more companies are looking to imitate Apple's business model.

Less than a decade ago, most of Apple's manufacturing was based in the United States. However, there were two problems. First, American workers demand higher pay, benefits, and shorter hours. They expect a high standard of working conditions and all these demands make them very expensive. Add minimum wage requirements, benefit requirements, and other government regulations and it's unsurprising as to why so much of America's manufacturing is sent overseas.

In addition to cost, business experts say that the United States is no longer producing the types of workers that are needed to produce sophisticated products such as iPhones. Education is lacking.

Meanwhile, in China entire cities are built around manufacturing centers. Multiple factories, each complementing the other, are built by the government and these large industrial complexes have become cities onto themselves. Workers do not have homes, but rather are housed in dormitories. Every need but the worker could have is met by the factory. Food, shelter, medical attention, everything is provided.

Workers live in dormitories, and can be roused at a moment's notice to go to work. Workers do 12 hour shifts, six days a week -- outperforming by far their US counterparts. They also work faster and produce far more per employee than workers in the West.

If factories need a component, it is very easy for them to get it nearby. If a new component must be made from scratch--even that can be done within a few hours or days at most. 

In fact, one anecdote shared by an Apple executive who asked to remain anonymous, explained that in 2007 Steve Jobs took a prototype iPhone out of his pocket to show a team of executives the scratches on the screen. He demanded a glass screen instead of plastic, one that would not scratch. As the executives left the meeting one booked an immediate flight to China and found a factory that could deliver.

Apple's executives knew that producing glass screens for the iPhone in the United States would be a time-consuming and expensive process. An entire factory would have to be tooled for the purpose, the glass would then have to be engineered and cut to precise specifications, and the company would need almost a year to hire the engineers and train the workers to do the job. Once that was done, it would cost millions to operate the factory and produce the new screens.

But in China, the engineers could be found within 15 days. The factory was already under construction with the equipment necessary to create the screens. In fact, Chinese executives already had free samples of the glass available to share with Apple. For Apple, it was a no-brainer. The contract was awarded and the factory went to work.

In another case, an executive described how a Chinese factory successfully revamped the iPhone on the fly with only a moment's notice from the company. Despite being the middle of the night, the company received the new plans, roused more than 8,000 workers from their dormitories, giving each worker a cup of tea and a biscuit, and immediately set to work on the new design. Within 96 hours, the factory was producing over 10,000 iPhones per day.

There are no factories in the US that can respond so quickly to those kinds of changes in production.

While many Americans will be quick to criticize business executives for creating jobs overseas rather than in the United States, the standard reply they give is that creating jobs in America is not their job. Business executives have a responsibility to make profits, not jobs. Outsourcing labor overseas where it is cheaper, fits perfectly with that responsibility.

At the same time, the executives retort that the importation of cheap goods from overseas does in fact create thousands of jobs in the US. Apple points to its chain of retail stores as well as its call centers which are all based in the US. Additionally, much of the programming for the iPhone is still done in the US -- jobs that might not exist if Apple were not so successful.

The heart of this matter is simply that the United States heavily regulates its manufacturing industry. But American workers demand much from their employers, and there is very little incentive for corporations to hire them. Globalization has opened up overseas labor markets to American firms. This is good for investors, and consumers. However, it's bad news for low skilled and unskilled workers who are making up the bulk of the unemployed in America.

Steve Jobs made clear to the President that he wasn't worried about the future of America. Mr. Jobs told Obama, "I'm not worried about the country's long-term future. This country is insanely great. What I'm worried about is that we don't talk enough about solutions."

Mr. Jobs is right. Much has been made of America's problems, but it appears that nobody is talking about solutions. And without that conversation, it is unlikely that much will change anytime soon.

. 

---


Pope Francis: end world hunger through 'Prayer and Action'


© 2014 - Distributed by THE NEWS CONSORTIUM

Pope Francis Prayer Intentions for December 2014
Christmas, hope for humanity:
That the birth of the Redeemer may bring peace and hope to all people of good will.
Parents: That parents may be true evangelizers, passing on to their children the precious gift of faith.



Comments


More Technology

Astronomers discover a new 'Super Earth' proving the Kepler spacecraft still has the right stuff despite malfunction Watch

Image of Kepler has discovered hundreds of new planets, proving that planets are a normal part of stellar formation.

By Marshall Connolly, Catholic Online (NEWS CONSORTIUM)

The Kepler planet hunting probe has detected another Earth-like planet 180 light-years from the Sun. The planet is massive and hot and uninhabitable, but it demonstrates once again that scientists have the ability to detect these new worlds with increasing accuracy. ... continue reading


Anywhere in the world in four hours or less: Space plane receives approval from European Space Agency Watch

Image of Reaction Engines proclaim that the technology is the biggest step in air travel since the jet engine was invented.

By Troy Dredge, Catholic Online

A futuristic plane that could fly anyone anywhere in the world in four hours or less, as well as carry spaceships out of the atmosphere without using rockets, has come closer to reality. The European Space Agency has given approval to the Skylon plane this ... continue reading


BURP! There! Proof of life existing on the planet Mars Watch

Image of If the gas were coming from living microbes on Mars, the finding would mark one of the biggest discoveries in history.

By Catholic Online (NEWS CONSORTIUM)

Belches...and worse, could have just proven the evidence of life on Mars. NASA's Curiosity Rover has detected mysterious spikes of methane. These rude outbursts can't be explained away by geology or other theories. The rover has been on Mars since 2012. ... continue reading


Are you a receptionist, security guard or retail clerk? You could soon be replaced by a ROBOT Watch

Image of Royal Caribbean cruise lines have installed new bionic bars with machine robots that fix passengers their drinks.

By Catholic Online (NEWS CONSORTIUM)

Automation works well if it spares humans from dangerous and monotonous tasks. While many have lost their line of work in assembly lines to nimble-fingered machines, the next wave of robotic replacement may soon well take the place of jobs requiring a more ... continue reading


Catch me if you can: A new device aims to catch wandering Alzheimer's patients and bring relief to caregivers Watch

Image of Alzheimer's disease affects more than five million people in the United States.

By Abigail James (NEWS CONSORTIUM)

Approximately five million people in the United States suffer from Alzheimer's. 65 percent of those patients wander. They get up in the middle of the night and take off. Many times these patients get lost or injured. LOS ANGELES, CA (Catholic Online) - Kenneth ... continue reading


Americans have a new champion for privacy -- Microsoft. Software giant squares off with Feds over private customer data held overseas Watch

Image of Brad Smith is Microsoft's general counsel.

By Catholic Online (NEWS CONSORTIUM)

Americans concerned about their privacy have a new champion, and he comes from an unlikely stable - the ranks of Microsoft. Brad Smith, Microsoft's general counsel, is preparing to fight against the U.S. government as they demand Microsoft hand over private, encrypted ... continue reading


Scientists believe they've found first physical evidence of mysterious 'Dark Matter' Watch

Image of After the spectrum from the Perseus cluster and Andromeda were analyzed, scientists saw spikes where nothing should exist.

By Troy Dredge, Catholic Online

Scientists came up with the concept of "Dark Matter," an elusive physical property more than 70 years ago. After years of searching, scientists have now uncovered evidence that Dark Matter may in fact exist - in an area where it should theoretically exist. LOS ... continue reading


The death of political ads on TV approaches as more people turn to the internet for media Watch

Image of The political TV ad is dying as more people move online for their media.

By Catholic Online (NEWS CONSORTIUM)

If you're planning to go into politics, don't ignore the internet and what an incredibly powerful tool it is. The internet is not only essential, it is a crucial multiplier of force, allowing a candidate to maximize limited financial resources. LOS ANGELES, CA ... continue reading


Water DID NOT come to Earth from comets, Rosetta probe concludes Watch

Image of The heretofore unprecedented close-up look at a comet is helping scientists answer the fundamental question of whether a bombardment of these primitive bodies brought water to Earth billions of years ago.

By Troy Dredge, Catholic Online

Europe's Rosetta mission, which made history by landing on Comet 67P last month, has come up with a controversial finding that is currently being debated by scientists. According to the Rosetta's latest findings, water did not come to the Earth from comets. LOS ... continue reading


Mars rover uncovers astonishing evidence of water, life on Mars Watch

Image of The Curiosity rover has since found evidence of standing water, along with energy and the key elements with the right atomic charges to prove long-term of evidence of water on Mars.

By Troy Dredge, Catholic Online

The Curiosity rover has since found evidence of standing water, along with energy and the key elements with the right atomic charges to prove long-term of evidence of water on Mars. Scientists have reached the conclusion that at least some of the planet must ... continue reading


All Technology News

Newsletters

Newsletter Sign Up icon

Stay up to date with the latest news, information, and special offers

Daily Readings

Reading 1, Judges 13:2-7, 24-25
2 There was a man of Zorah of the tribe of Dan, ... Read More

Psalm, Psalms 71:3-4, 5-6, 16-17
3 Be a sheltering rock for me, always accessible; you ... Read More

Gospel, Luke 1:5-25
5 In the days of King Herod of Judaea there lived a ... Read More

Saint of the Day

Saint of the Day for December 19th, 2014 Image

St. Nemesius
December 19: Martyr of Egypt. He was burned alive in Alexandria, Egypt, ... Read More

Inform, Inspire & Ignite Logo

Find Catholic Online on Facebook and get updates right in your live feed.

Become a fan of Catholic Online on Facebook


Follow Catholic Online on Twitter and get News and Product updates.

Follow us on Twitter