Why Making Apple iPhones in America Is So Hard | WSJ

Why Making Apple iPhones in America Is So Hard | WSJ


(upbeat music) – [Narrator] Which one
of these Apple gadgets is the odd one out? Did you get it? The answer is this 2013 Mac Pro. Not because it looks like a trashcan but because it’s the only one
that was assembled in the USA. The others were assembled in China. Why is that important? – Apple makes their product in China. I told Tim Cook, who’s a friend
of mine, who I liked a lot, “Make your product in the United States. “Build those big beautiful plants “that go on for miles, it seems.” – [Narrator] President Trump, who is currently in the midst
of a trade war with China, wants these Apple products
to be more like this one. Actually, he wants them to
be fully made in the USA. But Apple, one of the companies most exposed to the trade war, has one of the largest,
most deeply-integrated global supply chains. So could Apple ever move
production back to the US? – We’ve taxed China on $300 billion worth of goods and products
being sold into our country. – [Narrator] Trump’s threat
of imposing fresh tariffs could drive the cost of Apple’s
iPhone XS up by about $40. Fortunately for Apple, that
tariff has been postponed until December 15th, and an earlier round of tariffs on circuit boards and computer chips has had minimal impact on the company. As China and the US keep
fighting over trade, Apple is already moving
some of its production to avoid tariffs and trade duties, like to India, for example, where many of Apple’s major
suppliers are relocating. That’s no mean feat. The company moved production
out of US years ago, building a global supply network. It lists suppliers in over 25 countries, with some parts made in
China since the early 2000s. – [Tim] The way that I view this is the vast majority of our products are kind of made everywhere. Largely I think that will carry the day in the future as well. – [Narrator] Others before Trump have tried to get Apple to
bring jobs back to America. President Obama reportedly
asked Steve Jobs what it would take to
make iPhones in the US, to which Jobs said, “Those
jobs aren’t coming back.” – Will there be an Apple product ever made again in the United States? – I want there to be. – So will there ever say on
the back of an Apple product, “Designed in California,
assembled in the United States”? – It may. – [Narrator] The company has tried before. Remember that Mac Pro? – It is designed by brilliant
engineers in California and assembled here in the USA. (audience cheers) – [Narrator] A series of debts at its main supplier’s factory raised questions over
working conditions in Asia, so the company invested $100 million to assemble the Mac Pro in Austin, Texas. – The reason the Mac
Pro was made in the US, that’s because it’s a
pretty low-risk product. It’s not making a ton of these. So it could move it here, test, and see if it could do US manufacturing. And if so, then it could
explore the opportunity for other products. – [Narrator] But the
plan in Austin had issues when it came to locally
sourcing enough components for the production of the
Mac Pro, leading to delays. So what did the company do? They imported some of
the parts from China, where manufacturers had capacity
to keep up with demands. – How many tool and die makers
do you know in the US now? I could call a meeting around
the United States and say, “Will every tool and die maker
come to this room tonight?” and we wouldn’t fill the room. In China, you would need several cities. – [Narrator] Recently,
production in the Austin plant has fizzled out. And production of the new Mac Pro– – This is the new Mac Pro. – [Narrator] Has been
relocated back to China, according to people
familiar with the plans. – With the new Mac Pro,
it’s not hard at all to shift production back to China. This is Apple’s playbook, right? They perfected the art of
making things in China. So transitioning the Mac Pro
or any other product to China makes a lot of sense for them. – [Narrator] So what are Apple’s choices if they want to navigate the tariffs? They have three options. Given how expensive and
complex moving out is, Apple may just decide to stay in China and at some point potentially pay tariffs, which would likely make Apple
products more expensive. Or Apple could move
manufacturing, just not to the US. India and Vietnam are
only two of the countries that are hoping to lure
Apple and its suppliers. Finally, the company could
strike an agreement with Trump. – Tim was talking to me about tariffs. And one of the things
that he made a good case is that Samsung is their
number one competitor and Samsung is not paying tariffs because they’re based in South Korea. It’s tough for Apple to pay
tariffs if they’re competing. And I thought he made a
very compelling argument, so I’m thinking about it. – [Narrator] In July, Cook
said tariff exclusions are key for Apple to make
the new Mac Pro in America. – [Tim] That’s what’s
behind the exclusions. So we’re explaining that and
hope for a positive outcome. – [Narrator] We contacted Apple following the latest round of tariffs, but the company declined
to comment further. Apple hasn’t recently moved
any of its manufacturing back to the US, but it says it spent $60 billion with 9,000 US suppliers
and companies last year, supporting 450,000 jobs. They’re even building a new
campus in Austin, Texas, the same city where that Mac Pro is no longer being assembled.

100 thoughts on “Why Making Apple iPhones in America Is So Hard | WSJ

  • In my opinion this is precisely why we need tariffs. If Samsung makes their products in South Korea, Apple should make their products in the USA. If we can’t compete then we have a much bigger problem! We are no longer on the cutting edge or our trade secrets are being exported out! Protect our intellectual property and cutting edge technology and everyone will want to buy our product even if they are more expensive. You have to produce a better product. Our problem is that we have stopped innovating and instead focused on cutting costs to provide a cheaper product. That’s precisely how Samsung and now China have managed to catch up!

  • Hi from Hongkong ??
    America to greedy its not how much you sell it for Its much product you can move at good price!!
    If it does get made in America you Americans better get prepared to pay double the price!!
    Never buy nothing from America its way overpriced for everything there?

  • And cmon America. Youre among the most developed countries in the world. You don't need factories, or coal mines or shitpits; there are greater jobs that can make more money…

  • If you look at the prices of Apple, you would actually think that the products are manufactured to high standards, but above all, that the high prices comes from fair and well-paid workers. We all know that, unfortunately, is not so and it is rather reversed, namely that the high cost is not meaningful have about the quality of the product and whether it was made by fairly paid-workers

  • New Mac Pro is made in Austin, Texas.

    https://www.apple.com/newsroom/2019/09/apples-new-mac-pro-to-be-made-in-texas/#targetText=The%20latest%20generation%20Mac%20Pro,be%20manufactured%20in%20Austin%2C%20Texas.

  • Why not just make in both USA and China and sell them side by side, USA $3000, China $1000. See which one is best seller.

  • its not hard at all , apple would just get a smaller profit. thats all. Being Greedy wins. Just add a few nets to prevent suicides and you are fine.

  • With the advancement of AI and economies of scale, it would eliminate outsourcing so companies will eventually move back to the country they’re from.

  • You cant find a ton of tool and die makers in the US any more because companies like Apple moved all the production out of the country…Why would there be a ton of them when there isnt a market in the US?

  • Hollywood would be a lot better if VIRGINIA were removed from Satellite Communications not to mention important news for family and friends domestically and internationally. Any doubts?

  • Cost would be very high. China and indian workplace iss too cheap.Would help in cost cutting and that's what every company wants

  • Doubt USA people would work for 1 US Dll. A month. Someone like Trump should know that since he is a "business" man.

  • I would prefer buying from the US and not from China. US has its problems but it’s the culture that fits me the most. US movies and everything made my childhood and I love it ❤️ besides I’m gay that it’s something not acceptable in Asia

  • So…people who are willing and able to spend $1,000 on a damned PHONE, won’t spend another $40 if it’s made in the USA? Really??

  • Companies should move more manufacturing to mexico. I’ve seen more and more companies make the change and if you think about it, it’s a no brainer. Labor would be more cost effective than if it were manufactured in the US and it would help support jobs with our neighbor, hopefully softening the immigration crisis. Product transport would be quicker, cheaper and better for the environment as well.

  • The mark-up on Apple products is already so high that a tariff would only take away slightly from Apple's profits. It shouldn't lead to higher prices.

  • ?‍♂️ Its pronounced “ten – (S)” Its a roman numeral? Have you ever heard of roman numerals? I think you should check google or wikipedia for more info on roman numerals. Its pronounced “ten,” not “ex”

  • Of course they can. The Iphone Xs costs ~500 to make and sells for ~1000. They make 500 profit PER PHONE. Making 460 would be just fine. Making just 100 would be too….

  • Not only the China has lower labor cost, that's just one thing, China has very mature supply chain. Manufacturing is a complicated industry.

  • apple should design housing. This industry needs a revolution its stuck in the dark ages. Like steve Jobs said make stuff that people need*, I would still love the mac pro

  • It's not hard, if US opens a industry zone and all the factories in the zone can hire legal foreign cheap workers, all the factories from all over the world will come back to US and establish the factories here in the USA, we American can do the higher positions and let the lower positions that no American wants to do to hire the foreign cheap workers, this way all the technologies and tax will stay in the US and will definitely make the USA great again

  • How do you turn out 10 millions of these products per month? You need a lot of workers. Foxcomm has 250,000 workers making these Apple and other products.
    It cost about $250-300 in materials to make the phones with $8 to foxcomm to physical assemble it. So you see the massive profit that goes to Apple.
    Yes you can shift these production over to the US but remember these products can come and go (fads). What do you do with these workers then? Fire them?

    To be honest, it probably will come back to the US but it will be fully automated. This is going to be for most manufacturing. As example, You can see where Tesla want to go – eventually.

  • i cant see karen building an iphone for below minimum wage & not running to the press to complain about her horrible working conditions

  • If Apple products are made in China:
    Lightning to Dongle cable – $ 9

    If Apple products are made in United States:
    Lightning to Dongle cable – $ 199

  • 2:02 So, you don't want the viewership of any non-US North or South American? Because when you claim the name "America" solely for your country, you are insulting all of those people. Even according to your own CIA's World Factbook, there is no country named America ! If, say, South Africa were the US of Africa, would it not be incredibly insulting to every other African for South Africa alone to claim that name?

  • The cost to set up a factory in the US and China will be a huge different. If you also factor in the labour cost in the US, the cost of putting an iphone the US easily reaches USD200 where else the cost in China only requires half of that or perhaps even lesser.

    Besides the cost, another couple of issues are skill, scale, expertise, and infrastructure — all of which require money, time and long-term investment. Unlike other manufacturing jobs that have migrated from the United States, Apple wouldn’t be bringing them “back” so much as starting from scratch. The cost would come in attempting to build a system that’s never been in the US, but has been built over decades abroad.

  • Because the Supply Chain is non existent the components ,screws, display , memory , battery are all built in China / ASIA.

  • Don't bother, the workers here in the US demand all sorts of stuff in addition to their pay. The Chinese are tougher; they produce the product more consistently, and they will always be a more profitable partner.
    I personally don't invest in companies that base their manufacturing in America. Patriotism be damned, it's all about the money guys.

  • I think the problem with Tim Cooks argument is the lack of context. The reason those manufacturers and engineers can't fill a room in the U.S is because Apple along with many manufacturers moved to china between 2001 and 2009. So those engineers aren't going to remain in business in a market where their services aren't on high demand anymore. American tech brands moved to China for low cost labor. Now that labor cost aren't the main thing stopping them from building their products, the issue is quantity of engineers. It's really a wrong deal they've handed to this country.

  • A lot of people think Apple doesn't make stuff in US because labor in US is more expensive. I guess not. Most people think China is a cheap place, and yes, it is in most parts, but (I guess) Apple products are made in places like Shenzen, and these are very expensive cities, and labor costs are high there. Probably not cheaper than, say, Taiwan or South Korea because, for example, Shenzhen has roughly GDP per capita of Taiwan or South Korea. (And I've heard anecdotes confirming that.)

    After all, labor cost is only a fraction of the overall production cost. And, no, labor alone doesn't make up for 40 dollars per iPhone this video refers to. Assuming a worker is paid $40/hour-an incredibly generous assumption, it would mean it takes an hour to assemble an iPhone, inspect it, put it in a package, etc. I don't think so.

    And, speaking of supply chains, it's all excuses. When a large company moves, the whole manufacturing base moves with it. In other words, other medium-sized supply providers move with the company. That's what happened to part providers for Samsung and Hyundai. After all, as far as I know, the most important parts for iPhone are from Japan, not China. (Other parts come from all over the place including U.S.) Tool makers that Mr. Cook is talking about? I suppose they would easily move to U.S. any day if they have to.

    Besides, many people seem to think that they should pay more for American made products. Not necessarily. Most likely Apple will simply take smaller profits because the same thing happens with tariffs. Sellers can hike up the price only if they can (i.e., consumers are willing to pay more).

    Also, lots of people assume Americans don't want to work in factories. Not true at all. They would take any job if it suits them. (In other words, if they like the pay and working conditions. True of anyone, really.)

    And no, the Chinese don't like to work for little pay and bad working conditions, either. They accept those only if they have to.

    From what I've heard, the real reason Apple make stuff in China is that

    1. Assembly jobs at phone manufacturers are often seasonal jobs-at least for Apple, or maybe for Foxconn, which is the actual maker of iPhones. In other words, they want the freedom to have a large number of temporary workers, and I guess it is quite hard to find a large number of willing temporary workers in most places in US (also it will bring bad press).

    2. China makes it really hard for companies to sell anything in China unless they make those things in China. So might as well have the whole production line in China.

    3. Also, quite possibly Foxconn, again, the actual maker of iPhones, has a (possibly political) reason not to move outside China or Taiwan, although this is purely my speculation.

    So, stop saying that jobs will never come back to U.S. Well, actually they may not come back. But, nonetheless America should try to have more robust job growth in manufacturing sector. After all, those jobs are often great jobs (although you guys on YouTube or in journalism probably think that those are stinky jobs).

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