Steve Jobs to Obama: Those jobs aren't coming back.

By Catholic Online
1/23/2012
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.

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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 ...

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1 - 10 of 10 Comments

Ms. Texas Catholic
1 year ago
This is a Catholic website. What does the Church and its "social justice" teaching say about the relative merits of American workers' expectations and working conditions vs. those in China ? Seems like Americans' reasonable expectations would be justified under Catholic teaching -- decent working hours, wages, working and living conditions. I hear a lot of platitudes from Church leaders about labor, immigration, social justice etc. but never hear any concrete suggestions. Do they think everyone has a right to a college education, premium health care, healthy (ex. perhaps organic) food, etc. If so, why does the hierarchy continually criticize Americans for having "too high a standard of living" when in fact they lobby, literally and figuratively, for the exact same thing for the rest of the world and for illegal immigrants to the U.S. It is like they want the best for people as long as those people don't have those things. Once you join the American middle class, for example, you inexplicaby become the "Bad Guys" instead of being people who have their just due in a material sense. I have B.A. in Economics from the University of Dallas (Catholic school) from the 1980's and I still haven't figured all this out. Any clergy willing to explain ?
citizen2000
1 year ago
Several Chinese scientists came to the University of Michigan in the 1990's to study with one of the world's experts on industrial dust explosions, like those at Apple's Chinese suppliers. This was part of the American effort to help China's economy which had been close to collapse in the 1980's. However, when those scientists went back to China they did not work on industrial safety but instead went to work for the Chinese military on making better bombs.

These are the choices China's authoritarian regime has made but American universities still keep making deal after deal with them and sending our technology to China to help them modernize their military and compete with us for jobs. Obama says we are now serious about fair trade but he is coming to the University of Michigan tommorow and I wish he would speak to President Mary Sue Coleman and tell her the the UM is an American university and should be doing everything it can to help us compete with China. Read more at www.china-threat.com
DLL
1 year ago
A US company that assembles it's products in another country is a foreign company. Buy American these days is a notable last laugh. US workers do however assemble Hondas in THIS country. Confusion! Hondas are a Japanese product totally? Jobs are anywhere and everywhere for any company,wether they be in this country or any where else. The only National job is a local one,so it seems. American companies have their products made in almost any country other than the good old USA. Cheap labor works. Sorry Charlie! When has it been any different? Don't vote for any candidate for President just because he promises jobs. If education is so bad in this country,why is a College education so expensive and why do individuals from other countries come to the US universities to be educated. Why do individuals from other countries stay in the US to set up their practices such as doctors. Why won't they go back to their own countries to practice their various trades. Capitalism works I guess.
David
1 year ago
It seems to me that the author of this article has described the slave labor in China pretty well - long hours, living in your work place, being aroused at a moments notice...I wonder where their churches are?
The problem in America is that American's are unreasonable in their expectations but at least we have freedom...for now. Americans are also less educated, owing to the break down of family life and secularization.
The solution is simple - return to our Judeo-Christian roots. Great families produce great children without the need for a great interposing government. How can we make that happen?
Gary
1 year ago
This article is shallow and less understood.
Rob
1 year ago
Notice how he said nothing of taxes. While I admire Santorum's interest in the American blue-collar workers, if his plan does not go beyond taxes, it will not succeed. And unless we have American's willing to work in the same conditions as the Chinese and for the same pay, those jobs are coming back. The only thing that will level the playing field is when the Chinese begin to deman a greater share of the profit for their efforts. I can't imagine they want to make the equivalent of less the the US minimum wage their entire life while the companies they produce for make tons of profits. As it was the case here, that model cannot sustain itself long-term.....unless you have the communist threats above your head.....
Frank Gregory
1 year ago
"American workers demand much from their employers, and there is very little incentive for corporations to hire them.... it's bad news for low skilled and unskilled workers who are making up the bulk of the unemployed in America."

Is the author really suggesting that American workers compete with the Chinese to be the cheapest labor? live in dorms? work 12 hour shifts, six days a week? Foxconn corporation where the Ipad is assembled has had an epidemic of employee mass suicides at the factory. The answers are much more complex than this author is suggesting. Perhaps the author would feel differently if it were HIS children or theirs working under those conditions. This has no place in a Catholic publication.
Robert Strunk
1 year ago
What kind of opinion is that?

"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."

I dont think you have the slightest idea whats going on.

look around you, yes alot of the unemployed are "low skilled" but you have to look at the majority of the people who file for unemployement in the country, bottom line is they had a profession before they got LAID OFF.

Another thing is you act like the way China treats there workers is a good thing, while in fact yes they are blowing us out of the water with manufacturing, but at what cost, slave labor?.

The plain and honest fact is we lost something great in this country which is independence, and the fact that you need to come from money to get a good education in this nation is not the peoples fault.

well good news is us high school drop outs can always write for catholic online, because apperently the UNSKILLED person who wrote this article still has a job
JB
1 year ago
Think he meant "This Jobs isn't coming back". Misquote!
Ayman
1 year ago
There is some serious misinformation in this article. The most notable being the working conditions of Chinese workers in tech manufacturing. Conditions could be described as little more than slave labor and large corporations such as Apple exploit this to maximize profits.

This podcast is essential listening for anyone with half a conscious and a great eye opener.

http://www.thisamericanlife.org/radio-archives/episode/454/mr-daisey-and-the-apple-factory

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