After stunning sales in the last quarter, Apple just became the most valuable publicly-traded company in the world, with a market value of $419 billion -- proving yet again that American ingenuity and technological know-how remain unsurpassed in the global economy.
So why were almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year manufactured overseas?
The conventional wisdom would say that manufacturing jobs are leaving the United States to chase cheap labor, and that America will never again be able to compete with China or other nations where workers are willing to work 12 hours a day, six days a week, for just $1 or $2 an hour. This grim future of American manufacturing was summed up memorably by the straight-talking (fictional) presidential candidate Jack Stanton in the movie Primary Colors: "We now live in a world without economic borders. Push a button in New York and a billion dollars moves to Tokyo. In that world, muscle jobs go where muscle labor is cheap, and that is not here."
There's just one problem with the conventional wisdom: It's wrong. It reflects old-fashioned notions of assembly-line manufacturing that rely on human labor to insert tab A into slot B, thousands of times per shift. But while repetitive, unskilled, mind-numbing human labor may have powered the manufacturing economy of the last century, today's factories replace unskilled labor with high-tech automation that can provide spotless precision 24 hours a day, seven days a week.
So if low-cost human labor is not the deciding factor, why is America's manufacturing sector leaving our shores -- and more important, what can we do to bring it back home?
These are tough questions, with complicated, multiple-choice answers. But one thing is clear: Other countries are producing huge numbers of highly skilled, well-educated workers to oversee high-tech manufacturing, and America is falling behind.
As the Council on Competitiveness noted in its recent report, Make: An American Manufacturing Movement, "American manufacturers lack people with the necessary education and know-how to fill thousands of jobs, including skilled laborers, technicians, scientists and engineers."
The recent article in the New York Times on Apple's decision to outsource production summed up the problem in a single anecdote: When the iPhone was first going into production, "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."
Something is very wrong when good jobs go overseas because American corporations can't find enough qualified Americans to fill them here.
Let me stress: This problem has nothing to do with the ability or intelligence of American workers. We simply haven't been providing the training those workers need to fill those spots -- and we haven't been working in partnership with U.S. companies to make sure those jobs will be here when those workers complete their diplomas or training certificates.
We have to solve this problem, and we have to do it fast. Partly, we need to make sure that Americans who want to work have the skills they need to fill the available jobs. That means investing in community colleges and training programs that are tightly aligned with the current and anticipated needs of our high-tech companies.
But even more important, we need to "reshore" American manufacturing to create the kinds of productive innovation ecosystems that are powering our overseas competitors. U.S. companies cannot expect to prosper with an "Invent it here, make it there" business model. We need to invest in new hubs of industrial innovation that will bring together researchers, inventors, investors, manufacturers -- and factory workers.
When designers and engineers at high-tech companies share a roof, a campus or a zip code with their factory foremen, it creates opportunities to discuss ideas, test theories and solve problems. Ultimately, those ideas flowing back and forth between the R&D department and the factory floor result in better consumer products, increased sales, and higher profits.
As the fictional Jack Stanton noted, to compete successfully in the new global economy, "You have to exercise a different muscle -- the one between your ears." That's true for American workers, and it's true for American companies. We can never hope to be the world's cheapest labor force. Our only hope is to become the world's smartest -- and that, I believe, we can do.
Follow Eric D. Isaacs on Twitter: www.twitter.com/argonne
The solution is total recall of every elected official who accepts money from rich donors.
Start with Joe Barton.
Maybe you should stick to research...and read "Free Trade Doesn't Work" by Ian Fletcher.
Hire American worker for $20/hr
Hire Chinese worker for $2/hr, plus get tax break from american gov't, plus tax break from chinese gov't, plus get many other incentives to not hire american worker.
That's a tough decision, isn't it?
What happened to this country? Where have all the visionary leaders gone? Killing ourselves with a million cuts, but no one in charge cares...kinda depressing.
Here's a stupid idea that no one will ever think to implement...impose a tariff on any imported goods made in that chinese factory...a tariff that make up for the difference in savings by moving manufacturing to china. "ARE U CRAZY? That's PROTECTIONISM!!!", says the top 1%.
The author also ignores the fact that for the past 15-20 years students in the US have observed that a degree in engineering or science is no longer a ticket to a long-term career because of the increasing numbers of foreign competitors with similar degrees who are willing to work for a lot less because of lower costs of living in places such as India and China. That's why so many of our "best and brightest" turned to careers on Wall Street.
It is having the same trouble again at its Mississippi facility.
8700 genuinely qualified engineers is a lot of people to put through a modern interview process.
Foxconn is also located in an area where there's a tremendous concentration of skilled and educated people. I'm not sure there's a comparable concentration in the US. If there is, cost-of-living for such an area may be cost-prohibitive.
There would need to be people relocating to fill that many jobs, typically a time-consuming and expensive process.
All that being said, capital has zero interest in American manufacturing these days. Why would a capitalist bother with 5% return when they can buy up the next IPO and almost certainly double or triple their money?
Maybe it's not about the cost of talent; it's the cost of money.
In November, after pressure from environmental groups, Apple agreed to 3rd party participation in a portion of their audits. That is a positive step. The next logical step would be more credible procedures, including spot-checks etc. Telling a supplier 90 days in advance of an audit makes the effort effective only for PR. (http://sloanreview.mit.edu/the-magazine/2012-winter/53209/improving-environmental-performance-in-your-chinese-supply-chain/)
There are plenty of qualified or almost qualified workers here in the states. But unless you fit a very specific spot, it is simply cheaper to hire a similarly(sometimes) qualified employee from a Low Cost country and train them.
I work in IT for a manufacturing company, we almost never hire here in the states, not for Engineering and certainly not for IT. And when we do the call goes out for someone that can work on each and every system and sub-system we have, is fluent in English, Spanish and Chinese has Dual Masters in Engineering and Business and will work for $50k a year. Since no one shows up they hire contractors in Low Cost Countries.
We have seen stories where businesses complain they can't find skilled machinists but they are looking for someone with 10 or 15 years experience and want to pay $15 an hour.
Even if you take one of these jobs with a promise of better things to come, how can anyone believe Big Business especially, that when things get better they will make things better for you? CEO's get raises, workers are lucky to have a job.
First, we don't have anything like Foxconn in the United States. We do some vertically-integrated mass production and a substantial amount of horizontally-integrated mass production, but modern contract manufacturing giants like Foxconn are horizontally-integrated supply chains encapsulated in vertically-integrated management structures. It's like manufacturing "in the cloud".
We don't do that. We have supply chains owned and operated by vendors, and we have supply chains managed under contract by vendors, but we don't have managed supply chains as a service to vendors. But this new structure has become indispensable to tech manufacturing, and our vendors have no domestic alternative to the Asian contract manufacturing giants.
The other factor is that American culture and infrastructure has evolved contrary to the needs of any domestic contract manufacturing giant. Foxconn City in Shenzhen province employs roughly 400,000 workers in a one square mile campus. A quarter of the workforce lives in company-owned dormitories on campus and the rest are bused in from neighboring towns.
We don't have anything like this, and if we did, I'm not sure we'd have a willing workforce. One common variant of the American Dream is that a regular full-time job in manufacturing should support a family. Foxconn City is no place to raise children. It's a place where young adults work to support their parents. We couldn't have 400,000 suburbanites commuting to an American Foxconn City -- the highways and parking lots would have to be impractically large.
We need to do a house cleaning fast with zero-intelligence people in all the leadership positions. You can not create Knowledge Society with a lot of comparatively dumb people as the top of the totem pole. That is what happened to the large societies before us in the last 5000 years. So figure out how to move our meritocracy up and not idiots up. In China, the top politburo are engineers, here we do not have such structure hoping we are no longer the manufacturing heaven which is turning out to be the one. We still can design a lot of new ideas, but using those ideas are very rare as our system does not provide better value anymore except companies like Facebook or commercial media activities.
So, time to think how to move to the Third Wave from where we are. Do not read Toffler's book as that does not explain the path...from this point onward.
Have you seen their job requirements lately? They combine what just a decade ago were five or six people's job skills into one job role. I've interviewed for positions with two masters degrees and a bachelor's of science (all with an A average) 15 computer certifications (Microsoft, Novell, Cisco, and Citrix engineer with many speciality certifications such as the highest certifications as database administration etc...) and twenty-five years of work experience with top companies and been turned away from the job. The HR people would tell me they were interviewing over 1,000 qualified candidates.
I'm self-employed today but the point is that the assertion they don't have qualified workers available from today's well educated middle-aged population is a false assertion. They just want to import young geniuses from overseas and pay them a pittance. That's what it's all about.
The author is correct to say that we as a country need to address this skill gap and raise the skills of workers so they can compete for those positions. It is not a matter of ability, but our high schools, community colleges, and technical schools do not produce people with the necessary skills.
For the last30 years, the American companies hired many local student immigrants by adding "kitchen sink" needs in the job qualifications with very little salary. That went on for many years. In the mean time, as the businesses moved their companies and told the Government that they can not find again the kitchen sink based quality people, no one not even the President cleared the job demand and asked the private employment resource companies for help. Cheating bad business practices only kills our society for good. In the meantime, we steal the public funded research and time (like doing text books) from educational institutions and government labs to sell out our investment free.
But the fact remains, the skills of our highs school graduates, community collegel graduates, and technical school graduates are not meeting the needs identified by the author today. Additionally, our colleges are not producing enough engineers and computer science graduates as needed.
So we need to have a plan for this even with "AdditionalÂly, our colleges are not producing enough engineers and computer science graduates as needed. "
Instead of people complaining about a given company, Americans needs to think in terms of INDUSTRIAL STRATEGY to preserve or rebuild America's manufacturing base!!
Mr. Isaacs argument (and Steve Jobs excuse) that the lack of qualified American workers is the cause of American manufacturing decline, is incompatible with the facts. Ten million scientists and engineers are working in non-technical jobs in the U.S. (National Academy of Sciences). The supply of skilled technologists in the United States is plentiful.
We cannot afford another decade of political misdirection.
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I find it hypocritical to complain about companies moving jobs overseas from people who drive foreign made cars, use foreign made electronics, wear foreign made clothes, etc.