Steve Jobs supposedly told President Obama ““Those (iPhone) jobs aren’t coming back,” according to this article in the New York Times. Apple’s labor in China is also showing up in much hand-wringing in the Presidential race.
Let’s explore a few other dimensions of the issue:
The Chinese labor is a small part of the iPhone
It is mostly assembly of components that come from Japan, Korea, Germany and other countries. The China value add in the iPhone is less than 10% by many accounts. Frankly, I would rather see US companies compete for the higher value components that go into iPhones, iPads and other Apple products.
China today, Brazil tomorrow, gone day after?
Foxconn, Apple’s contract manufacturer which employs the Chinese labor, has looked at a shift of at least some of the jobs to Brazil. It has also looked at robots to replace some of the jobs. Do we want those jobs to come back to the US, then watch them move out again?
Who could take over for Foxconn in the US?
It’s’ not just the economics. Foxconn has delivered to Apple unbelievable flexibility across so many product releases and security given the intense scrutiny Apple products get. If Apple brought it back to the US, could an IBM or an Accenture or another outsourcer deliver that level of performance? And most US outsourcers also have significant non-US labor forces in India, E. Europe and elsewhere. So, unlikely jobs would remain in the US. Also, there is little reason for Apple to insource the function and run it on its own given it went through a disruptive buy versus build transition in the late 90s.
What about the App Store, retail and other jobs?
700,000 apps and counting have created plenty of entrepreneurial opportunities for thousands of small businesses in the US. From the case study on Taubman malls in my upcoming book, many of which have Apple stores, I also know they have become more of anchor stores than the Macys and other traditional stores. That has meant vibrant customer traffic and jobs in many retail locations. Then there are Fedex and other logistics jobs from the massive global supply chain around Apple products.
Where are the AT&T and Verizon jobs around the iPhone?
AT&T and Verizon in particular (Sprint more recently) have earned at least $ 50 billion in voice and data plans around the iPhone. Given the network issues AT&T has had, and the data limitations both have put on iPhone customers, it does not appear either has invested much in network expansion even with that much revenue. Those are construction and telecom jobs that by definition are much more difficult to offshore – they would stay in the US.
Whether Apple likes it or not, there will be plenty of this discussion given the elections this year. I hope the discussion is a bit more nuanced than just focusing on the assembly jobs in China.
- Should Apple Make Its Products In The U.S.?
- One mustn’t upset the Apple cart!
- Apple margin per device – expressed in Chinese
(Read this and other articles @ Deal Architect)