The New York Times today published a startling article discussing the manufacturing of the Apple iPhone and the economic impact of the company’s production decisions over the past several years. The crux of the piece centers on Apple’s global supply chain and the dominance of Asia when it comes to electronic manufacturing. The article also questions whether it would be possible to make the iPhone in the United States and how the shift of manufacturing by U.S. companies has impacted the American economy and the middle class. As an American, the article is utterly terrifying.
Some excerpts from How U.S. Lost Out on iPhone Work:
For over two years, the Apple had been working on a project – code-named Purple 2 – that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality – with an unscratchable screen, for instance – while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?
The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.
In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was â€œa machine that is made in America.â€ In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter thatâ€œI’m as proud of the factory as I am of the computer.â€ As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMacplant in Elk Grove, Calif.
But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations – at restaurants or call centers, or as hospital attendants or temporary workers – that offer fewer opportunities for reaching the middle class.
â€œWe shouldn’t be criticized for using Chinese workers,â€ a current Apple executive said. â€œThe U.S. has stopped producing people with the skills we need.â€
I hear a lot of Americans say that we don’t need manufacturing anymore, but the truth of the matter is: jobs at Wal-Mart rarely turn into anything better than low wage retail jobs. And they certainly don’t hold much promise of economic advancement. As the Times points out, it’s all about job multipliers.
Read the full article here.
One more thing while I am on my soap box. Reporting and news like this is the reason why The New York Times is worth supporting through digital subscriptions, or better yet, through traditional subscriptions. Just my two cents.