Why Aren’t Apple Products Made in America?

Jan 21, 2012 - 47 Comments

Apple factory

As recently as 2002, most of Apple’s products were manufactured in the USA. What happened? Why is nearly everything, from Macs to iPhones, made in China now? The New York Times provides an in depth report on Apple’s move overseas, and it’s not as simple as you might think.

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

If you enjoyed the “Mr Daisey and the Apple Factory” podcast, you’ll probably enjoy reading this too, as it sheds some light on the business decisions driving factories like Foxconn. Here’s an example on the challenge Apple faced when hiring skilled engineers in the USA vs China:

Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States. In China, it took 15 days.

The lengthy read also includes several anecdotes about Steve Jobs and Tim Cook, as well as plenty of quotes from other unspecified current and former Apple executives. If you’re interested in Apple and Apple history, don’t miss it.

Read New York Times: How U.S. Lost Out on iPhone Work

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Posted by: Paul Horowitz in News

47 Comments

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  1. Jshell says:

    Easy…. Taxes and regulations. Steve even said so in his biography.

    Our government is our own worst enemy.

    • Jake says:

      Someone didn’t read the article. Pull your head out of your politics for 2 minutes and learn something new.

    • Rick Santodumb for PREZ! says:

      Nothing to do with taxes or regulation, everything to do with the business and skilled labor, plus the fact that the Chinese government is subsidizing the building of factories. But if you read the article you’d know that.

      • Susan says:

        Taxes and regulations have everything to do with manufacturing going to other countries. Try to start up a new business in California and you’ll find out how much it costs just to own a 2 person operation. I’ve been in the manufacturing business for over 30 years and have seen the changes and all the hoops they have to go through just to sell a product.

        • Mark says:

          I agree with Susan. Labor? Are you kidding me? Labor can be found anywhere, the US has plenty of diligent workers just ask GMC. Problem is uncle sam has 2 hands in the cookie jar. Research how to start and maintain a big or small business. This ain’t the entrepreneur friendly US grandma and grandpa built. and for most of you it would be great grandpa and great grandma.

      • Adam says:

        Skilled labor… Are you kidding me. There is an extremely small percentage of skilled people that Apple relies on in China and all the rest are low paid general labor workers. You want to know why everybody is manufacturing in China – its cheap. It’s that simple… Ask ANY investor if a company would be more competitive producing goods in the US or China. Unions and regulations drove up the cost of producing anything in the US.

        • Desi says:

          THANK YOU!!! It’s BS to say the issue is the lack of skilled labor when the VAST majority of those working in those factories are UNSKILLED assembly line workers. It’s cheaper: PERIOD. Apple could care less about doing business in the states, not because of the tax code where they effectively pay a lower rate than EVER before, but because they can sidestep the employment regulations we have here against labor violations and minimum wage. It’s a DISGUSTING evil company and I refuse to purchase any of its products because it’s yet another company who will screw over Americans in its pursuit of endless profit.

          • Rafael says:

            to say that apple moved over seas only because they were able to find more skilled workers in china as opposed to here in the US to over see 200 000 workers… its BS. they could have kept their factory here and imported the talent they say they needed, the only difference is.. here in the US you can not pay someone 1 dollar an hour to put your ipad together, while in china you can. include logistic costs and you are still way ahead… my question is.. why am i paying 1800 dollars for my mac when it was built for much, much less. where is the value in that.. for a product to cost as much as it does, i would assume that it should be made here in the USA. i love my mac, but i am willing to give up my mac for a company that would make a product here in the USA… buying american and demanding american is the only way we can help this country. we can not continue to turn our backs on our own people for cheaper products.

          • Wendi says:

            They’ve already said that they have more money than they know what to do with. What they should do is give it back to their costomers by lowering their prices about 40%. If they did something like that then it maybe worth a little forgiveness, but there just patting themselves on their backs right now a throwing their hands up in the air like, “I dont’ know what to do.” Screw Apple!

        • john says:

          I am sorry, its not anymore cheap labor, its not only poor labor law. It is most important to have avaliability of resurces like rare earth materials (anytime, any moment, also great supply chain networks, communication network) uninterrupted electricity, gasoline and of course skilled, hardworking labor (doesn’t mean cheap labor). To find cheap labor Companies could to to India or other South Asian countries, there you can find most cheap labor than any where in the world (probably some African countries too). I’ve worked with obscure Chinese SMEs, labor are relatively paid well and many companies are implementing 6S. So does by multi-national companies. of course there are many debacles like poor working condition /overwork, almost no weekend/holiday (monthly once).

  2. floydstyle says:

    it’s not made in america, just like anything else, because it would sell 2 to 3 times the actual price

    • JD says:

      Actually the iPhone would cost just about 60$ more if it’s made in usa.

      I think it’s more about this:

      “We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

      Read the whole article at the NewYork Times, really interesting!

      • Silvia says:

        Actually if our education system is so bad as they say why do so many foreign students (Chinese) come to the US for education, including engineering? It’s not that Americans don’t want the education it’s that universities make more money off of foreign students therefore replacing a seat that could be filled by a American educated student with grades just as competitive with the foreign student that will be charged twice or three times as much. So once again the greed of money brings down our own.

  3. francis says:

    we product iPhone but let US sale it, the profit is none of our business.

  4. René Dubois says:

    Reads to be as Tim Cooks decision, granted how Steve was quite fanciful about his factories.

  5. Alberto says:

    It is because in China you can ask to 12 y.o. chindren to work 15 hours a day and 7 day a week for (almost) free…

    • Macbodo says:

      Sorry, that’s western propaganda! Have you ever been in China? I was there many times.

      USA has the same problem like Germany and other western countries. They do not enough for education! They waste money for their army! Put ONE per cent from the American military budget in their education sector and you will get many very good qualified workers!

      In USA(and other western countries) wars bings more profit than education … that’s the real reason!

      • Alberto says:

        Don’t be sorry, please don’t be sorry!

        USA and other western countries are not the same…
        And they have absolutely not the same problems, except some problems from USA origin that unfortunately Europe has to share and suffer now.
        USA is just a Tiger of Paper that continues to exist just by destabilizing continuously the rest of the world and fighting everything it is afraid by… But the end is always closer…

        About education you cannot compare USA (30% of illiterate people) with Germany France or Italy (1 % of illiterate people – most of them from foreign origin)
        :D

  6. io tdtw says:

    有些白痴总是把组装于China意淫成制造于China

  7. Joseph says:

    The average education level in America is low, it’s been proven! Also we’ve been taught to look down on these kinds of jobs as menial and below us. Also the same people complaining about the lack of jobs here are the same ones who would bitch if they had to work in a factory.

  8. Peter K says:

    It always amuses me when the free-market right congratulate communist China to show how capitalism should be run. That is, sans democracy and representation – perhaps even the rule of law (regulation).

    The internet was invented from an encounter between counter-cultural idealism and technological experimentation. It wouldn’t have come out of China, which is less individualistic and still scared of what the net could do for ‘harmony’ in society. But if you want to run industry like China, the US would have to become less individualistic, less free and have many more state run banks and enterprises that currently gives China such a grip on its economy. In the end, it’s got a massive population which is generating a dizzying number of engineers and educated people unencumbered by the costs that bog down education in the west.

    The question for Apple is more long term – if it reduces the demand for engineers and skilled people at home and don’t make the investment in the US, the more dependent on foreign workers it will become. Where will the free thinking innovators they apparently identify with come from?

    In China there’s less distinction between state and private interests – in the end they’ll protect China first. What of Apple and the US?

    • Lewis says:

      The internet was hardly a product of anything counter-cultural. It was born by the military to control weapons.

      Also, I wouldn’t consider the i-products to be anything innovative. They’re basically radios with common electronic components that have all been around for a long time. The phones and pads, in my experience, are sought out and coveted by people of limited intellect, children, and other flavours of thoughtless drones that now saturate the U.S.

      Apple isn’t Boeing. What they are now is nothing more than a fad, a product of the very intelligent innovators that the company has in their employ: marketing people. When the marketing loses the grip it has on the purse strings of all the retards, children, and office workers in the U.S., they’ll vaporise. There’s no need for any of them to think about investing back in the U.S. They don’t have anything to offer.

  9. william king says:

    You can significantly cut lead times when you dont’ take any concern for workers health and safety into account.

  10. Thomas says:

    Taxes, regulations, and higher wages are the biggest problem. And of course, slipping bribes to the right people doesn’t always work here. Usually it does, but it was probably just too much trouble for Apple.

  11. Deocliciano says:

    Imagine if Microsoft and Google do not license their work?

    With whom Apple would directly compete with?

    Apple competes not with Google and Microsoft, not directly, but with Microsoft and Google´s partners.

  12. barefootman says:

    really, who gives a toss? i want to pay the cheapest possible price for my products. if that involves making them in china, mongolia or Uzbekistan then so be it.

    it’s the cost that the consumer cares about; not this crap you’re all discussing.

  13. icebreaker says:

    But would you pay twice as much if it had the ‘Made in the U.S.A.’ label on it? No you wouldn’t, so stop complaining.

    • Desi says:

      I would, so stop assuming. Many people of means would. But it would not be sold as much and be more of a premium product which is fine. I would rather pay 1800 for an IPAD and know it was made in the USA and that it provided AMERICAN jobs than 920 (which I did for my son’s) and to know it was NOT helping my country. In fact, I wish I had known about this sooner as I would NOT have bought my son an iphone 4 or his Ipad. I hate this company now!!!! I am a BIG believer in buying American and thought Jobs would have kept that going.

  14. Nidaros says:

    Instead of changing NAFTA, the US should insist that all products imported into the USA, be produced in factories that meet the same strict EPA guidelines US factories do. China creates more pollution than the entire North American Hemisphere, Mexico (which says alot), Central America, South America. It is staggering how much factories in China are destroying our planet and contaminating natural resources.

    Child labor is cheap, yes Apple insist they perform checks on factory conditions. Unfortunately not all the factories are checked. Not all the parts of an apple products are produced in “House”.

    Apple doesn’t care about working conditions, they care about the bottom line.
    Apple cares, they are not paying US minimal wage, but 25cents a day for foreign labor.

    It is a pitty that such a great company, can’t do more to insist on factory conditions.

  15. JMH says:

    The reason why Apple is manufacturing abroad is purely economic. Apple, like all other companies, rationalizes cheap labor for high profit margins. And yes, the Chinese will work for cheap.

  16. chinaski says:

    Slaves for a 12 hours working day are cheaper in China.

  17. MizuInOz says:

    I am moving my company back to the US and setting up operations in Hawaii because of tax incentives (State & Federal). It involves RD&D and manufacturing, use of a free trade zone (Hawaii is one) and global shipping. I researched for four years where would be best for my company and found Hawaii to better than the mainland. I plan on employing 2500 people – professional, engineering, trades and administration. Funny thing is that it is difficult finding the skilled engineers and trades people that I need – even if I search on the mainland.

    I considered at one time moving the company to Switzerland because of the incentives there and the high amount of skilled labour but in the long run, I wanted to create more jobs in the US.

    We shall see. I am hoping that this year I will be able to find the people I need. I do not want to outsource my operations overseas (out side the US) any more. To many headaches – mostly cultural – and I am in Australia. Imagine what it would be like in Asia.

    I understand Apple’s decisions but I feel that the real reason is that there is no support to bring the jobs back to the US by State and Federal Gvts. Remember, the first Jeep factory in China was negotiated by one of the Bush clan. The whole purpose of bringing China into Most Favoured Nation status was to utilise the enormous labour pool. Also, 50% of all of the world’s consumer goods are produced in China.

    Those of us wanting to buck the trend are not getting all of the support that is really necessary. I had to find $50,000,000 on my own before I could get anyone really interested. Did it without an IPO. Want to stay private for as long as possible.

    Enough rambling. All the best. Cheers.

  18. John says:

    A couple of points. First, if the U.S. is so ill suited for manufacturing, why do we still have more than 11 million people in the manufacturing sector? Second, if Apple states that it needs to be in China because it needs all the inputs for the iPhone and iPad to be close at hand, why are 95% of the parts that are in an iPhone and iPad manufactured in nations other than China? iPhones and iPads are not “manufactured in China”, they are assembled in China with parts manufactured elsewhere. That is why Foxconn can move a large share of its iPad production to Brazil; iPads can be assembled almost anywhere. iPhones and iPads could be assembled in this country by electronics assemblers making over $13.00 an hour. Of course to keep the price of the iPad the same, Apple would need to cut its margin from 55% to 38%. If you are interested in this question, please visit my blog at simply-american.net and find the article “Comparing Apples to Apples.” Tim Worstall of Forbes.com wrote a piece on that post that is also interesting to read; you can find it at http://www.forbes.com/sites/timworstall/2011/12/18/if-apple-onshored-ipa…. If Apple wants to assemble iPads in China and Brazil so it can make more money, so be it. But they should be honest about their reason for locating their facilities in those countries.

    • JIM FROM TEXAS says:

      John, I totally agree with you and the only reason for outsorcing is greed. I live in Houston and Texas instruments could do the jos jus as efffectively and so could the Toshiba plant here.

      I dont’t buy anything from China unless there are’nt ant manufactured in the states and I just have to have it and I haven’t been there yet.

      No one can tell me that chinese are smarter or better than Americans.

      So I boycott china……!!!!!!!!!!

  19. Liam Benson says:

    LOL DONT COME TO AUSTRALIA!!! LABOUR IS SOOO EXPENSIVE!!!If they took away minimum wage away we would have a better australia :)

    • JIM FROM TEXAS says:

      Liam,

      Unfortunately it would problably like the States, they would give you what they want or you could just starve. They need to set minimum wage at the least at entry level or higher for the respective positions.

      Jim

  20. Peter K says:

    It’s not just cost of labour though is it. Look at the case of Germany. Higher wages and strong unions and yet a likewise strong economy based on high tech engineering exports. What accounts for this is a highly skilled workforce but also companies that plan, invest and innovate for the long term. They also have a raft of middle sized companies that just make specific components of the larger items they also manufacture in the country. As a result, there’s already an existing network of suppliers companies can draw on. To me, it sounds like the networks (financial and cultural) required to create a manufacturing economy in the US have broken down. It’s a long game, not there for a quick buck. You can’t make this happen if you’re looking to create value from asset stripping. An economy based on consumption alone can’t be sustained long term. Without an industrial base, the US will no longer be a super power.

  21. ldtowers says:

    It isn’t unions per se that is the problem. Labor in other countries is being paid for pennies on the dollar compared to American workers. That’s not a union issue. Americans don’t want to work for chump change.

  22. […] you found the recent New York Times pieces on the making of Apple products to be interesting and “Mr Daisey and the […]

  23. Amy says:

    90 % of iPhone’s parts were NOT made in the U.S., but in China. Google it. Everybody knows that. Who are you trying to fool ? As for the high end jobs that require highly skilled engineers, there are only a FEW in the world.

    Open your eyes and look at the economy. Ever since 2007 when Apple introduced the iPhone, many jobs have been cut everywhere in the World. Thanks Steve Jobs, you’ve made a FEW people in this world extremely rich, but put everyone OUT OF A JOB. He and Apple helped to eliminate the middle class in North America and offered NO CHANCE for future generations and the rest of the world to progress.

    I don’t know about the rest of the people, but I would rather have a good paying job and enjoy my life instead of being stuck with an iPhone while working in a crappy low paying job. Before iPhone showed up, life was far better in North America. Now all the good jobs end up in China, a country without morales or values.

    So next time when you decide to buy Apple products, consider the economic implications that will inflict upon you in North America and the rest the World. While at the same time help propel Communist China, to become a World Super Power.

  24. bill says:

    because americans willl want more money than china and they charge less than americans some will work hard and some will get payed for doing nothing all day as i see and in china they will finish faster and will get more done than in america i now some americans are hard workers this is to show why they make it in china and not in america

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