Corporate citizens like Apple have a greater responsibility than just making money for their shareholders. They have a responsibility to the future of this country. Given the problems that are occurring at the Foxconn plant where they have been subcontracting iPad production, they should fulfill their responsibilities and move the production of the iPad back to the United States.
Let's first look at what's gone wrong at Foxconn, the sprawling subcontracting plant where iPads and other high tech products are made in Shenzhen, north of Hong Kong. Let's look at the most fundamental point first, at least as it relates to the United States. That is that the workers at Foxconn's plant are paid $130 a month. Assuming that they work four fifty hour weeks a month, this translates to a wage of 65 cents an hour. That is basically a slave labor wage, at least as compared to the wages in western markets where the iPad is sold. How can we continue to tolerate a trading system that not only allows this, but in fact encourages it? It is true that workers in China seem to want these jobs because the alternative is even worse, but even that conclusion has now been thrown into doubt. If it's such an ideal career path, why have ten workers thrown themselves off buildings at the Foxconn plant (nine died and the other suffered severe injuries), why have their been reports of security guards abusing workers, and why has the work been described as relentless, as "making people numb," as turning them into machines?
It is a scandal that this is where the high tech goods that people across America are enjoying are being made. And Apple does not need to make them there. The classic economic argument that the very low wages are economically necessary for a product like the iPad simply makes no sense at all. iSuppli, a well respected international economics firm, estimates that the cost of manufacturing including labor in the iPad, is about $10 in a product that retails for about $600, in other words less than 2% of the price. And the profit Apple makes on the iPad is over $300 an item. Even if this $10 manufacturing cost (which includes such other things as factory overhead and energy costs) were doubled or tripled or quadrupled by paying a U.S. worker a reasonable wage and helping restore the U.S. economy, Apple's profits would still be enormous.
About 100 years ago Henry Ford realized you cannot have a sustained industrial economy if the people who make goods don't have enough money to buy them. So he paid his workers enough money that over time they could buy his cars, buy their homes and move into the middle class. Apple, now the largest technology company in America, is trying to squeeze every penny it can out of the U.S. consumers, and give nothing back, not even a manufacturing job in Silicon Valley or somewhere else in the United States for people making the iPad. 65 cents an hour is a better wage from their point of view. I'm a lawyer and I like to make a good income. I guess I should try and figure out how to pay my employees 65 cents an hour too.
One of the saddest footnotes, to me, in the whole Foxconn suicide story came from a nonchalant comment made by one of the Foxconn employees who an AP reporter interviewed next to the company swimming pool. The pool was supposedly built for the workers. But the worker commented that the pool closes at 9 pm, and she gets off too late to ever use it. It was sad both because this is just part of the whole Foxconn picture, unending routine, depersonalization, and migrant workers coming to Shenzhen with no way out. But it was also sad because it appears that Foxconn has built a Potemkin village, a fake façade, to appeal to U. S. outsourcers and U. S. journalists, and until recently, we all bought it.
\Mr. Kaplan probably met many times with lobbyists from the American Chamber of Commerce, who would have informed him and complained about the effects of China’s Labor Law, which gives far more protections to Chinese workers than American workers have. Of course, the law often goes unenforced...especially at cheap Taiwanese manufacturers. But Mr. Kaplan misleads his readers by implying that Foxconn’s issues are the norm in China-based manufacturers. Most foreign-owned manufacturers in China do not have mafia running the corporate security services. Not all factories in China have corrupt production managers which take bribes from their own operators, like what appears to take place at Foxconn.
One of the biggest mistakes Americans make is imposing their values towards labor onto other countries. He cites that Chinese workers make $130 per week - "slave labor wage" as he calls it. To Americans that seems pitiful. To most Chinese who have historically made much less - this is real money.
He neglects to mention that 800 million Chinese are farmers working in the western provinces. They earn substantially less than those Chinese citizens who have migrated to the eastern coast to work in China's booming cities. They leave their families on the farm and migrate east to work in the cities making great money (in Chinese terms) often living with strangers in dormitory like accommodations. They send their money back to their families and eventually move back to their farm in the west and another member of the family heads east and the cycle repeats itself.
The standard of living for the average Chinese citizen has increased at a phenomenal clip the past two decades. To call that slave labor is moronic. The standard of living for the vast majority of Chinese citizens has NEVER been better. This is why they make the "great migration" - a better standard of living. A better life for themselves. They hardly see it as "slave labor wages."
And Apple should move their production to where they can be most profitable. Period. If that's the US,
2) Apple's success vs. lower cost Asian = innovation, manufacturing and supply chain management.
3) The raw material costs do not take into account research and development, marketing, warranty costs, etc. This is a silly analysis
3) With this kind of logic, you would suggest that the Asian screen should be bought only from a US manufacture, the casing, etc. Assuming that labor is $75 of all the supply chain costs and that the relative cost of labor for these item is the difference between $.65/hour and a semi-skilled US worker at $25/hour, if somehow you could source the product in the US, the $75 would now be $2,850.
For a former Commerce official to suggest this kind of populist approach is to assure that our remaining innovation companies simply cede the market to their foreign competitors.
The US needs to have a value-added workforce that can compete intellectually vs their Asian and Indian competitors and we do. The leadership at Apple, the engineers, the marketers, the software designers, are primarily US based. The real patriotic politician or company executive will invest such a way that we retain and create high value long-term industries that take advantage of the best attributes of the US workforce, encourage retention and immigration of the best and brightest, encourage domestic investment in plants that are cost competitive with their asian counterparts and do not burden industry with unrealistic social engineering
http://mashable.com/2010/04/07/isuppli-ipad-cost/
"You’re paying at least $499 for the iPad, but what’s the actual cost of its parts? According to analytics company iSuppli, approximately half of that amount.
iSuppli estimates that the total cost of iPad WiFi (not the 3G-enabled model, which will be arriving to the market later this month) is $259.60. As far as individual parts go, the iPad’s touchscreen costs $95, the aluminum back casing costs $10.50 and the processor costs $26.80. For comparison, the $699 version of the iPad costs $348.10 to manufacture, also roughly half of the retail price."
Not 2% of its retail. I thought part of making a persuasive argument was relying on some factual evidence?
Nope, he did not.
I even understand that a corporation could care less about America but I have hard time understanding why we tolerate a government that lets Apples of this world make the rules for us. We've got to be some of the dumbest people on earth.
In order for the US to be a meaningful producer, it would have to have factories, located close to major cities, with good rail lines, a strong transportation system ... all the things which, quite obviously the United States does not and cannot have. Anymore.
(Oh, pardon me. I have just received this message from General Anthony McAuliffe, acting commander of the US 101st Army. Seems he's fighting something called "the Battle of the Bulge" and he's got this little one-word message ... "NUTS!")
In what way do you think they are particularly bad?
That is correct. Many observers here fail to realize that in many places in Asia, food, transportation, accommodation, medical and sometimes even clothing expenses are covered, and wages are net.
Low level Govt employees in places like Indonesia for example, receive rice, sugar etc above and beyond their regular wage, including subsidized housing. Private companies also service and give loans to their employees on a pretty regular basis.
Re: "The strange thing is that in the US only the top execs get company housing and free meals, but in Asia it's the other way around where only the lowest paid workers receive these services as supplement to their wages."
Bingo.
There was a video on CNN comparing the salaries and perks of the CEO of a Japanese company (JAL) versus and American one - apart from the huge gulf in wages, he ate his lunches in the cafeteria like everyone else.
http://www.youtube.com/watch?v=WYSZ8TUa3Vg