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The answer is pretty obvious, right? It’s cheaper labour! But is that the only reason why Apple (and other companies) outsource its workforce to China as opposed to keeping them at home? No. There’s more. The NY Times has an excellent report on why Apple ignores America when it comes to making the iPhone and how that’s better for Apple.
During that infamous Silicon Valley dinner with Barack Obama, the POTUS asked Steve Jobs, “what would it take to make iPhones in the United States?” And once upon a time, Apple would have loved to make the iPhone in the US of A. In fact, the old Apple prided itself on making products in the USA. But ever since the early 2000′s, Apple has made most of its products outside the US. Why? It’s a combination of not only cheaper labor but better labor, better factories and scale. According to the NY Times, who spoke with Apple executives:
“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.”
That flexibility, speed and scale in factory workers just doesn’t exist in the US. Apple says it “shouldn’t be criticised for using Chinese workers” because “the U.S. has stopped producing people with the skills we need.” There just aren’t enough skilled workers in the US that have that inbetween degree of high school and college. That’s what Apple wants in its factory workers and that’s what China gives ‘em.
And though everyone cites how the cost of labour is much cheaper in China, the fact is labour is less important to a company’s bottom line than supply chains are. And the reality is, all the supply chains to manufacture consumer electronics exist in China. Components are made in this facility, glass next door, a million screws can be found down the road, so on and so on—that convenience saves companies a lot more money than the benefit of hiring cheap labour.
Go read the full NY Times report on Apple and China. It’s a great one. [NY Times, Image Credit: Tony Law/Wired]
So the way to repair systemic underfunding in your countries infrastructure is to continue to export work? No, you start assisting people through college and University with grant and scholarships, they then spend part of their time in China and part at Apple US learning exactly what the company needs and how it does things. This leaves you with people that are not only fully trained at their job, but also in your way of doing things, who feel gratitude to you for helping them get their education. This of course does not just apply to Apple or US companies but to everyone.
Interesting that the above article seems to accept Apples decision without comment or criticism.
Isn’t part of the problem that so many people expect to go to uni now and not have to do “menial” jobs? Everyone wants to have letters after their name and get paid a fortune.
Even if they could have found the 8700 industrial engineers, would they have managed to source the 200,000 low-paid workers, prepared to work the hours the Chinese do?
Don’t get me wrong; I don’t necessarily think they’re right in what they’re doing, but part of me thinks that the US and UK (And probably others) have managed to squeeze themselves out of the manufacturing business one way or another.
That’s the reason why the new Rasberry Pi is being made abroad and shipped to the UK rather than being made over here.
Not entirely!
It’s cheaper for them to have the whole thing built and imported in to the UK – than it is for them to have the components imported and then assembled in the UK.
It involved the import tax by the UK Gov
But they did say it was also to do with labour and how much more would get made in China compared to the UK
Of course there is a great deal of truth in what you say but equally, why should the workers be low paid. Certainly it would be harder to compete for some companies but Apple already grossly overcharge for their products and people still fall over each other to by them so they could afford to pay more to produce them (and maybe cut their profit margins a little) and still be worth the million billions that they are. Think of the Kudos of being able to claim your tech products are made buy people who earn a decent wage rather than in a sweatshop.
Sorry, I don’t mean that people should accept low wages (Poor writing on my behalf).
People should be paid a fair, living wage; however, there is a shortage of people who are able/willing to do what are seen as menial jobs.
There are no apprenticeships anymore (At least not any that are worth anything to the people doing them). Hence we have a shortage of bricklayers, plumbers, joiners, sparks etc. This in turn has led to an influx (And for anyone reading this, please don’t take this into an immigration thread; this isn’t a rant against immigration) of east-European workers… where uni education tends not to be as easily accessed as it is (Or was) here. As such there is a surplus of people who have the necessary skills.
Now, I’m not putting these jobs into the same skill set as plumbers etc, but it’s the same sort of idea; you don’t need to go to uni to be able to do these jobs. What you do need is a willingness to work and a decent work ethic.
I do think that possibly one of the biggest reasons for them moving isn’t so much the cost (While it’s obviously a huge factor); I think the agility of these companies to change direction so quickly is the biggest attraction (Cost is probably the second reason). Companies “in the west” tend to move like great lumbering oil-tankers.
“why should the workers be low paid”-so apple can have more pie.
apple cares not for kudos as long as stuff rolls off the shelves and they roll in money.
Why should they? Not to be awkward, but I’ve heard it before and quite frankly it’s not a companies place to educate, they exist to make money, the government knows that the education system/boons for industry need to be reformed, they can either do it and create jobs or not do it and let the work go elsewhere.
And it’s reportage, not opinion.
In the west if you are skilled/capable, you would already have a job. The rest are unskilled lazy bums who live off the state. The chinese don’t want to be paid sh!t but they still work. If all the jobs in china came to US/UK or where ever I bet the majority of the positions will be filled by immigrants/overseas labor. the US/UK unemployed will then say “oh, look, they come into our country and they stealing our jobs cos they work for so little” – No, they are willing to work even if the pay is poor. others think they deserve something more and cant even be bothered to get these jobs that immigrants are ‘stealing’
“In the west if you are skilled/capable, you would already have a job. The rest are unskilled lazy bums who live off the state.”
Sweeping statement ahoy! Haven’t you noticed that the dole queue has just gone up by about a million since the government decided that having a public sector is crap and that private sector will take up the slack? Let me know when that begins working.
Being kicked out of your job, in the middle of a bad recession is nothing to do with being skilled/capable. It’s called unlucky. To say that they’re unskilled lazy bums living off the state is bollocks. There are plenty of skilled, hard working people, out of a job with no chance of getting another one anytime soon, through no fault of their own.
But, I do also agree that there is a totally different work ethic in east Europe and the far east (Which is what I think you’re essentially trying to say).
ok. i retract that statement.
but, i’ve been to the job centre and there are ‘loads’ of jobs available. it’s just that if a teacher/(insert job) unfortunately lost their job they would turn down available jobs and claim there are no jobs, where in fact they actually mean there are no jobs they are willing to do, for the amount they want to get paid and rather claim benefit. are you saying you can go into a job centre and literally find nothing, why are they even open, and what are all theses jobs that east europeans and asians are stealing.
“but, i’ve been to the job centre and there are ‘loads’ of jobs available.” – Yep, agreed.
“in fact they actually mean there are no jobs they are willing to do, for the amount they want to get paid” – Probably a harsh truth, yes.
The one thing that I would add to this, is that I do know a few people (Not many I’ll admit) that are attempting to find work, cleaning or doing unskilled shop work (I.E. Clothes retail etc – not Next or BHS or that sort of thing) who have relevant experience, but they’re not getting the jobs they’re applying for. It’s not even like they get told why they’re not getting the jobs (I.E. Bad interview, experience whatever).
So it isn’t sometimes as black and white as not wanting to work; but I agree that there are people who won’t work out there.
First article that I’ve seen on the UK Giz and thought about how wonderfully it was written. Well done!