It’s nearly impossible to talk about manufacturing in the U.S. without talking about China. If you’re in the hardware business, your supply chain is almost surely linked to the People’s Republic somewhere along the line. Trade and tariffs are the issues de jour, but the intricacies of global trade have made all the wrangling around this much more complicated than it might seem at first glance.
You might think that a company like Apple manufactures in China because its the cheapest place to do so. This actually isn’t true — labor in China is cheap, but it’s more expensive than a lot of other places. The key is that it is a confluence of kinda cheap, and pretty skilled. A country like Bangladesh would be super cheap for manufacturing, but the infrastructure and labor force isn’t as equipped for high-end technology construction.
A recent article in Vox went over the dynamics of all of this and why Apple looks to China for so much of their business.
Apple CEO Tim Cook said last year that he needs a “rare” combination of craftsman-like skill, sophisticated robotics, and computer science. That combination is a system that’s been built over time in countries like China that have made the investment.
The U.S., on the other hand, is very skilled and very expensive, but companies still make a lot of stuff here — this is even true for companies that aren’t American.
I spent some years near Detroit, and when it came to cars, “Buy American” was a big slogan that made the rounds. Global trade muddles this notion. Ford, for example, makes a ton of cars in Mexico. Honda meanwhile does a lot of manufacturing in Ohio. In some cases it makes more sense to buy a Civic instead of a Fusion if you want to support American industry.
Apple, maybe for PR or maybe to truly look to diversify its operations, took its own stab at manufacturing in the U.S. And according to the New York Times, they ran into problems. Specifically, it seems, nobody could make them enough of the screws they needed! Indeed, the article confirms what the Vox article was hinting at.
The challenges in Texas illustrate problems that Apple would face if it tried to move a significant amount of manufacturing out of China. Apple has found that no country — and certainly not the United States — can match China’s combination of scale, skills, infrastructure and cost.
Ms. Helper said Apple could make more products in the United States if it invested significant time and money and relied more on robotics and specialized engineers instead of large numbers of low-wage line workers. She said government and industry would also need to improve job training and promote the development of a supply-chain infrastructure.
Undoubtedly some of these issues are because this was a novel attempt, and a lot of these problems could be squared away in the future, but for now Apple continues to rely on China for its manufacturing. The recent volatility from tariff and trade regulations will surely cause some anxiety and it’s likely we’ll see Apple diversifying its operations. It remains to be seen if that will mean more manufacturing in the U.S. or abroad.