NYT: How the U.S. Lost Out on iPhone Work

[sugarkang]

Long form article at NY Times about Apple, outsourcing and the American middle class. Yves Smith cuts to the core.

Lessons learned:

The shit jobs aren't coming back, so the problem is getting Americans to accept this fact.
Americans are uncompetitive for a number of reasons; larger relative salaries are only a single consideration.

[look]

Originally Posted by sugarkang

Long form article at NY Times about Apple, outsourcing and the American middle class. Yves Smith cuts to the core.

Lessons learned:

The shit jobs aren't coming back, so the problem is getting Americans to accept this fact.
Americans are uncompetitive for a number of reasons; larger relative salaries are only a single consideration.

Okay, so on high-tech products the Chinese have the edge. My question is about the introductory price of the iPad (around $500?) compared to the laborers working 12 hours on tea and biscuits. What was the profit margin for Apple?

[Florian]

Originally Posted by look

Okay, so on high-tech products the Chinese have the edge. My question is about the introductory price of the iPad (around $500?) compared to the laborers working 12 hours on tea and biscuits. What was the profit margin for Apple?

My question is: are all those Chinese workers living on tea and biscuits really more qualified than all the Americans who could have been employed?

The idea that there is a shortage of engineers and other qualified personnel in the US strikes me as pure BS. But I am sure there is a shortage of Americans who can live on tea and biscuits and sleep in dormitories.

[sugarkang]

Originally Posted by look

What was the profit margin for Apple?

Huge.

[sugarkang]

Originally Posted by Florian

My question is: are all those Chinese workers living on tea and biscuits really more qualified than all the Americans who could have been employed?

If you read the article, cheap labor is but one component of why Americans cannot compete. It's largely to do with the supply chain ecosystem.

The idea that there is a shortage of engineers and other qualified personnel in the US strikes me as pure BS. But I am sure there is a shortage of Americans who can live on tea and biscuits and sleep in dormitories.

Above.

[Florian]

Originally Posted by sugarkang

If you read the article, cheap labor is but one component of why Americans cannot compete. It's largely to do with the supply chain ecosystem.



Above.

I read the article, and I am not impressed by the claims of Apple. Nor by yours, needless to say.

[look]

Originally Posted by Florian

I read the article, and I am not impressed by the claims of Apple. Nor by yours, needless to say.

sk and Florian, I read the Smith article before I posted, and the NYT later. I must say I find the case of the ability of the Chinese to gear up and down depressingly believeable.

But hanging out in left field with Gandhi, as I do, I'm glad for the Chinese to be able to make some kind of money. Loved the story about the worker that lives in a thousand sqare-foot apartment with her husband, son, and all four(?) in-laws.

Regarding the barracks living, I wonder what that's like? Do they all basically get along, play cards, and study, or is more of a depressing prison atmosphere?

Regarding the Smith article, she points out that just because we can't scale to handle iPhone production does not give a pass to all industries to off-shore:

The problem with using the microcosm to illustrate the macrocosm is you need to choose the right microcosm. The danger in using the iPhone example is that (as I have discussed at length in prior posts) there are quite a few industries in which the case for offshoring and outsourcing is not compelling, particularly if you allow for the increased risk of extended supply chains, as Apple itself learned in the wake of the Fukushima nuclear disaster. But even in those cases, it still has the effect of transferring income from middle level and factory workers to the top brass. Thus the iPhone/consumer electronics example will have the effect of giving other businesses a free pass.

[sugarkang]

Originally Posted by Florian

I read the article, and I am not impressed by the claims of Apple. Nor by yours, needless to say.

I didn't expect you to be. How's that big government working for you, BTW?

[look]

Originally Posted by sugarkang

Huge.

A good, old-fashioned public shaming might be in order. It would be especially effective if owners of Apple products began a huge email/twitter/youtube campaign.

[sugarkang]

Originally Posted by look

A good, old-fashioned public shaming might be in order. It would be especially effective if owners of Apple products began a huge email/twitter/youtube campaign.

Why? According to the article, Apple couldn't exist at all it it had to solely depend on American suppliers. It now takes the entire world to come together to make a single product. The question is who makes the most important parts of the product. Right now, it's the United States.

[handle]

Originally Posted by look

A good, old-fashioned public shaming might be in order. It would be especially effective if owners of Apple products began a huge email/twitter/youtube campaign.

Why? 'cause your either for capitalism, or agin it? Just keep beating that drum. Anti-competition is anti-American. Then you can blame the far left when the economy stalls.
Hate to be the bearer of sad tidings, but I am in the very field you all are discussing and the NYTimes, and you, and every post I've seen on this subject doesn't scratch the surface. They are tooled up for production, correct. But all but a few of the parts that go into high tech devices, are made there. Even if our labor costs were lower, we still have to buy the parts from them at retail, making it more expensive to produce things here. In other words, we sold them the farm years ago, and now we are going to buy and develop a whole new one.
Not only that, we just sold our last plant that refined rare earth materials that are used in these devices to the chinese, and they shut it down, cornering the market. Don't look now but the prices have gone insane:


Falling now, yes, but look how high they soared!

[look]

sk, handle, as I mentioned above I'm glad the Chinese workers are making money, and I appreciate the unstoppable trend toward globalism. I'm just wondering if Apple could be considered robber barons, and if the Chinese workers should get a bigger cut of the profits.

[handle]

Originally Posted by look

sk, handle, as I mentioned above I'm glad the Chinese workers are making money, and I appreciate the unstoppable trend toward globalism. I'm just wondering if Apple could be considered robber barons, and if the Chinese workers should get a bigger cut of the profits.

I thought you were being sarcastic. Why single out apple? This is SOP across the board for most manufacturing.

[graz]

Originally Posted by handle

I thought you were being sarcastic. Why single out apple? This is SOP across the board for most manufacturing.

Well ... sk told her Apple has a huge profit margin ... and she can't very well coordinate a scolding campain via (twitter, facebook and email) for all those clients ... Now can she? Concern is duly noted.

Maybe the nouveau populist Newton Leroy will push for regulations to demand fair labor practices by the Chinese? Nah!

http://en.wikipedia.org/wiki/Foxconn
Major customers

Foxconn manufactures products for companies including:

(country of headquarters in parentheses)

Acer Inc. (Taiwan)
Amazon.com (United States)[26]
Apple Inc. (United States)[27]
ASRock (Taiwan)
Asus (Taiwan)
Barnes & Noble (United States)
Cisco (United States)
Dell (United States)
EVGA Corporation (United States)
Hewlett-Packard (United States)[28]
Intel (United States)
IBM (United States)
Lenovo (China)
Logitech (Switzerland)
Microsoft (United States)
MSI (Taiwan)
Motorola (United States)
Netgear (United States)
Nintendo (Japan)
Nokia (Finland)[27]
Panasonic (Japan)
Philips (Netherlands)
Sharp (Japan)
Sony Ericsson (Japan/Sweden)[29]
Toshiba (Japan)
Vizio (United States)

[handle]

Originally Posted by graz

Well ... sk told her Apple has a huge profit margin ... and she can't very well coordinate a scolding campain via (twitter, facebook and email) for all those clients ... Now can she? Concern is duly noted.

Maybe the nouveau populist Newton Leroy will push for regulations to demand fair labor practices by the Chinese? Nah!

Maybe he could be a consultant. He could decide where to place the nets intended to catch jumpers based on suicidal history. He does care you know. Down with vulture capitalists!

[graz]

Originally Posted by handle

Maybe he could be a consultant. He could decide where to place the nets intended to catch jumpers based on suicidal history. He does care you know. Down with vulture capitalists!

That idea is a candidate for Winning The Future.

[look]

Originally Posted by handle

I thought you were being sarcastic. Why single out apple? This is SOP across the board for most manufacturing.

Understood. It just seems that a company that made $108B last year could do a little better by the Chinese workers, but my understanding is limited in this matter. I sincerely appreciate the Chinese getting any leg up at all.

[look]

Here's an insightful article on China's geopolitcal challenges.

http://www.investorsinsight.com/blog...-of-china.aspx

[sugarkang]

Originally Posted by look

sk, handle, as I mentioned above I'm glad the Chinese workers are making money, and I appreciate the unstoppable trend toward globalism. I'm just wondering if Apple could be considered robber barons, and if the Chinese workers should get a bigger cut of the profits.

Should questions are moral/value judgments. I'm sure if you saw their living conditions you'd feel sorry for them. The question is what's their alternative? Like Milton Friedman says, a nation develops through marginal improvements with each generation laying the infrastructure and knowledge for the next. Their current shitty jobs are slightly better than their even shittier alternative.

Don't worry. Soon enough, the sweat shop jobs will move to Indonesia and Vietnam because the Chinese are getting too expensive. Then a whole new set of people will be "exploited," which is to say, they won't be. Meanwhile, we get cheap iPads. Oh wait. They're fucking expensive.

[handle]

Originally Posted by graz

That idea is a candidate for Winning The Future.

You missed this?

This is not the first time employee suicide has loomed over the plants. In 2011, Wired reported that 17 Foxconn workers had committed suicide in the past five years. Workers jumping to their deaths became so common that nets were hung between the buildings to catch them. Foxconn workers also asked to sign an anti suicide pledge, according to the Daily Mail.

And Newton declaring his lobbyist work for freddie was as a "historian"? He only received a mere pittance, $1.6M. Not that much more that Mitts $.374M for his inspirational oratory.

These guys are getting ripped off, man.

[handle]

Originally Posted by look

Understood. It just seems that a company that made $108B last year could do a little better by the Chinese workers, but my understanding is limited in this matter. I sincerely appreciate the Chinese getting any leg up at all.

The problem is, if you pay them more, the other people on foxconns list, many of whom are cloning the apple stuff will sell so much cheaper, that apple dies.
This is free market competition that the authoritarian / libertarian / conservatarian crowd is trying to free from the tyranny of the US gov. (us).
Ron Paul is saying he'll do what has already been done, and we all did it together. Except his idea is to end lobbyist influence by removing the incentive, that being government's power to regulate. One of the only things we still have any control over.
The trend will stabilize, and more industry will return to the states, but our assembly people won't be getting a whole lot more than their Asian counterparts.
Welcome to our free market salvation. Hope you are well connected and well financed.