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Alright, this is a really long read but I highly recommend you take the time to read the whole piece. Talks a lot about why we have the unemployment we do while corporations outsource what used to be American jobs. I tried to bold and underline key parts or sections. Quote:
January 21, 2012
How U.S. Lost Out on iPhone Work
By CHARLES DUHIGG and KEITH BRADSHER
When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.
But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.
“If it’s the pinnacle of capitalism, we should be worried.”
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.
But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.
Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.
This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.
Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.
They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.
“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”
‘I Want a Glass Screen’
In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.
Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”
After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.
For over two years, the company 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 “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.
But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.
In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.
For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.
The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.
For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.
Then a bid for the work arrived from a Chinese factory.
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
The Chinese plant got the job.
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
In Foxconn City
An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.
That’s because nothing like Foxconn City exists in the United States.
The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.
Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.
Foxconn, in statements, declined to speak about specific clients.
“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. 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.
Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.
But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.
“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.
“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”
Middle-Class Jobs Fade
The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.
It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.
“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”
At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.
“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”
Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.
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.
Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.
Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.
There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.
After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.
Paydays for Apple
As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.
Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.
The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.
A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.
While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.
After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.
Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”
Innovation’s Losers
Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.
Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”
At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.
Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.
What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.
In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.
“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”
The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.
Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.
There wasn’t even a tiny scratch on the screen.
David Barboza, Peter Lattman and Catherine Rampell contributed reporting.
Link
In summary, corporations feel the United States has provided conditions, such as workers rights, that are detrimental to their business plan of record profits. Many corporations have inadvertently become unethical in their treatment of workers due to a lust for their own personal gain. It's quite tragic, actually. Can someone tell me why these companies need even more tax breaks when they carry out these procedures overseas? They feel they need "skilled workers", those who are subservient to worker injustice, which the U.S. lacks. I'm sorry but I don't want that type of "skilled worker" to exist here in The United States of America.
Last edited by RocketOptimist; 01/22/12 02:03 PM.
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Legend
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Legend
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If we would lower taxes on the job creators in this country, then I'm sure those 31 cent an hour jobs would come back to America. 
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Quote:
If we would lower taxes on the job creators in this country, then I'm sure those 31 cent an hour jobs would come back to America.
Yes....it's that simple and applies to EVERY job creator in America.. 
Do you have any idea what the tax code looks like for businesses in China? It's onerous and inconsistent...yet the opportunity for ridiculously cheap labor keeps them in business.
We need to make it more attractive to do business in the USA period...from tax breaks to reduced regulation to fill-in-the-blank.
We can't compete on hourly wages...but we CAN compete on ease of doing business and reduced taxation.
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The types of regulations corporations are fighting for look to diminish workers rights. Do we really want that in America?
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Quote:
The types of regulations corporations are fighting for look to diminish workers rights. Do we really want that in America?
I am not interested in diminishing workers' rights and am focused on the other regulations that companies must comply with...including the assault on the Right To Work.
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Unions still have a place but I believe people should have a right to not belong to one. It's a matter of using such policies to not discourage/encourage joining a union but providing workers a foundation of knowledge on what a union can/can't do. When right to work happens, unions tend to lose their power immensely.
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Another good article today on Yahoo Finance. Apple’s Sweatshop Problem: 16 Hour Days, ~70 Cents An Hour By Henry Blodget PostsWebsiteEmailBy Henry Blodget | Daily Ticker – Fri, Jan 20, 2012 12:28 PM We love our iPhones and iPads. We love the prices of our iPhones and iPads. We love the super-high profit margins of Apple, Inc., the maker of our iPhones and iPads. And that's why it's disconcerting to remember that the low prices of our iPhones and iPads — and the super-high profit margins of Apple — are only possible because our iPhones and iPads are made with labor practices that would be illegal in the United States. And it's also disconcerting to realize that the folks who make our iPhones and iPads not only don't have iPhones and iPads (because they can't afford them), but, in some cases, have never even seen them. This is a complex issue. But it's also an important one. And it's only going to get more important as the world's economies continue to become more intertwined. (And the issue obviously concerns a lot more companies than Apple. Almost all of the major electronics manufacturers make their stuff in China and other countries that have labor practices that would be illegal here. One difference with Apple, though, is the magnitude of the company's profit margin and profits. Apple could afford to pay its manufacturers more or hold them to higher standards and still be extremely competitive and profitable.) Last week, PRI's "This American Life" did a special on Apple's manufacturing. The show featured (among others) the reporting of Mike Daisey, the man who does the one-man stage show "The Agony and the Ecstasy of Steve Jobs," and The NYT's Nicholas Kristof, whose wife's family is from China. You can read a transcript of the whole show here. Here are some details: The Chinese city of Shenzhen is where most of our "crap" is made. 30 years ago, Shenzhen was a little village on a river. Now it's a city of 13 million people — bigger than New York. Foxconn, one of the companies that builds iPhones and iPads (and products for many other electronics companies), has a factory in Shenzhen that employs 430,000 people. There are 20 cafeterias at the Foxconn Shenzhen plant. They each serve 10,000 people. One Foxconn worker Mike Daisey interviewed, outside factory gates manned by guards with guns, was a 13-year old girl. She polished the glass of thousands of new iPhones a day. The 13-year old said Foxconn doesn't really check ages. There are on-site inspections, from time to time, but Foxconn always knows when they're happening. And before the inspectors arrive, Foxconn just replaces the young-looking workers with older ones. In the first two hours outside the factory gates, Daisey meets workers who say they are 14, 13, and 12 years old (along with plenty of older ones). Daisey estimates that about 5% of the workers he talked to were underage. Daisey assumes that Apple, obsessed as it is with details, must know this. Or, if they don't, it's because they don't want to know. Daisey visits other Shenzhen factories, posing as a potential customer. He discovers that most of the factory floors are vast rooms filled with 20,000-30,000 workers apiece. The rooms are quiet: There's no machinery, and there's no talking allowed. When labor costs so little, there's no reason to build anything other than by hand. A Chinese working "hour" is 60 minutes — unlike an American "hour," which generally includes breaks for Facebook, the bathroom, a phone call, and some conversation. The official work day in China is 8 hours long, but the standard shift is 12 hours. Generally, these shifts extend to 14-16 hours, especially when there's a hot new gadget to build. While Daisey is in Shenzhen, a Foxconn worker dies after working a 34-hour shift. Assembly lines can only move as fast as their slowest worker, so all the workers are watched (with cameras). Most people stand. The workers stay in dormitories. In a 12-by-12 cement cube of a room, Daisey counts 15 beds, stacked like drawers up to the ceiling. Normal-sized Americans would not fit in them. Unions are illegal in China. Anyone found trying to unionize is sent to prison. Daisey interviews dozens of (former) workers who are secretly supporting a union. One group talked about using "hexane," an iPhone screen cleaner. Hexane evaporates faster than other screen cleaners, which allows the production line to go faster. Hexane is also a neuro-toxin. The hands of the workers who tell him about it shake uncontrollably. Some workers can no longer work because their hands have been destroyed by doing the same thing hundreds of thousands of times over many years (mega-carpal-tunnel). This could have been avoided if the workers had merely shifted jobs. Once the workers' hands no longer work, obviously, they're canned. One former worker had asked her company to pay her overtime, and when her company refused, she went to the labor board. The labor board put her on a black list that was circulated to every company in the area. The workers on the black list are branded "troublemakers" and companies won't hire them. One man got his hand crushed in a metal press at Foxconn. Foxconn did not give him medical attention. When the man's hand healed, it no longer worked. So they fired him. (Fortunately, the man was able to get a new job, at a wood-working plant. The hours are much better there, he says — only 70 hours a week). The man, by the way, made the metal casings of iPads at Foxconn. Daisey showed him his iPad. The man had never seen one before. He held it and played with it. He said it was "magic." Importantly, Shenzhen's factories, as hellish as they are, have been a boon to the people of China. Liberal economist Paul Krugman says so. NYT columnist Nicholas Kristof says so. Kristof's wife's ancestors are from a village near Shenzhen. So he knows of what he speaks. The "grimness" of the factories, Kristof says, is actually better than the "grimness" of the rice paddies. So, looked at that way, Apple is helping funnel money from rich American and European consumers to poor workers in China. Without Foxconn and other assembly plants, Chinese workers might still be working in rice paddies, making $50 a month instead of $250 a month (Kristof's estimates. In 2010, Reuters says, Foxconn workers were given a raise to $298 per month, or $10 a day, or less than $1 an hour). With this money, they're doing considerably better than they once were. Especially women, who had few other alternatives. But, of course, the reason Apple assembles iPhones and iPads in China instead of America, is that assembling them here or Europe would cost much, much more — even with shipping and transportation. And it would cost much, much more because, in the United States and Europe, we have established minimum acceptable standards for the treatment and pay of workers like those who build the iPhones and iPads. Foxconn, needless to say, doesn't come anywhere near meeting these minimum standards. If Apple decided to build iPhones and iPads for Americans using American labor rules, two things would likely happen: The prices of iPhones and iPads would go up Apple's profit margins would go down Neither of those things would be good for American consumers or Apple shareholders. But they might not be all that awful, either. Unlike some electronics manufacturers, Apple's profit margins are so high that they could go down a lot and still be high. And some Americans would presumably feel better about loving their iPhones and iPads if they knew that the products had been built using American labor rules. In other words, Apple could probably afford to use American labor rules when building iPhones and iPads without destroying its business. So it seems reasonable to ask why Apple is choosing NOT to do that. (Not that Apple is the only company choosing to avoid American labor rules and costs, of course — almost all manufacturing companies that want to survive, let alone thrive, have to reduce production costs and standards by making their products elsewhere.) The bottom line is that iPhones and iPads cost what they do because they are built using labor practices that would be illegal in this country — because people in this country consider those practices grossly unfair. That's not a value judgment. It's a fact. So, next time you pick up your iPhone or iPad, ask yourself how you feel about that. Aaron Task interviewed Mike Daisey last year. WATCH: Mike Daisey Says Technology Is a New Religion The Darker Side of Apple: The Human Cost of Your Apple iProducts SEE ALSO: The Shocking Conditions Inside Foxconn [PHOTOS] http://finance.yahoo.com/blogs/daily-tic...-172800495.html
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jc...
I'm sure that when en masse unskilled American labor is willing to do the work for ~$10/hr, then maybe electronics manufacturers (not just Apple, but all major US electronics manufacturers who export labor overseas) will start to consider the domestic labor force.
The second article also fails to mention any of the vast myriad of other costs that go into the cost of a good produced outside of parts and labor. It's also not clear whether the converted dollar amount figures it cites are based on exchange rates or purchasing power parity.
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alot of people work for less then $10 an hour. However those people are making $10 a Day. Not everyone works for the gov and gets 75K a year.
If you need 3 years to be a winner you got here 2 years to early. Get it done Browns.
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Quote:
I'm sure that when en masse unskilled American labor is willing to do the work for ~$10/hr, then maybe electronics manufacturers (not just Apple, but all major US electronics manufacturers who export labor overseas) will start to consider the domestic labor force.
Why would you think that someone working for $8/hour in America would be appealing as opposed to paying people cents by the hour, with no regulations or limits as to how hard or long they can work them?
Corporations and those involved within that institution, for better or worse, have zero compassion. There is no hometown discount.
I always find it funny how those who advocate free market capitalism fail to realize that if we actually played by the rules of free market capitalism, we'd be crushed in the blink of an eye. We simply cannot compete in that arena.
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jc..
We have a major shortfall in that while we might be able to assemble the products, manufacturing and shipping the components is still a major factor, and it's cheaper to ship a finished product back to the US, than to ship a bunch of components for assembly, which is done at a higher cost as well, thereby increasing production cost of the item.
And with many of the "dangerous" chemicals and metals used in semi-conducters and circuitry, I doubt we can product those at a competitve cost as to what the Chinese or Japanese can.
We either have to change thw ay we thnk of ourselves, or wait for the world market to balance out the Cost of Living across the globe (not sure we can hold out that long)
If you look back, it wasn't but maybe 100 years ago were many Americans lived much like the Chinese do. Can we wait 100 years for the Chinese to catch up now? Which with thier government will probably take longer. Many of the regulations our government has put in place have helped workers alot, but at the same time many more have handcuffed corporations when it comes to being competitive.
We don't like the idea, but truly, why do we think that our wages should always go up, and should never be adjusted down when the market or industry we are in changes? If company A makes a product with a cost of $5, and sells for $10. Then due to rise in materials and labor, cost goes to $7, and competition lowers the selling price to $8. The workers still expect to get regular pay increases.
Maybe companies should consider a minimum pay (below premium wages) plus profit sharing pay rate(A predetermined % of profits set aside for distribution amongst the employees). If the company profits alot, employees make more, if the profits dip, employees make less. It would also encourage better products and service from employees.
We don't have to agree with each other, to respect each others opinion.
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Why would you think that someone working for $8/hour in America would be appealing as opposed to paying people cents by the hour, with no regulations or limits as to how hard or long they can work them?
I don't, at all.
I also think that selective indignation is a bit silly.
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The types of regulations corporations are fighting for look to diminish workers rights. Do we really want that in America?
Worker rights mean little if they don't have jobs.
If everybody had like minds, we would never learn. GM Strong ![[Linked Image]](http://www.dawgtalkers.net/uploads/small-gator-chomp.gif)
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Quote:
The types of regulations corporations are fighting for look to diminish workers rights. Do we really want that in America?
Worker rights mean little if they don't have jobs.
Hail to Ballpeen.... 
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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Why would you think that someone working for $8/hour in America would be appealing as opposed to paying people cents by the hour, with no regulations or limits as to how hard or long they can work them?
Corporations and those involved within that institution, for better or worse, have zero compassion. There is no hometown discount.
I always find it funny how those who advocate free market capitalism fail to realize that if we actually played by the rules of free market capitalism, we'd be crushed in the blink of an eye. We simply cannot compete in that arena.
I knew as I was reading it that this would turn into a wage discussion.. but it is SOOO much bigger than that.
He mentions the speed and flexibility that other places offer.. if they need another wing to a factory, the start building it.. like tomorrow. If we need another wing on a factory we have to apply for 10 different permits, have 8 different studies done, solicit the input of the surrounding community to see if they actually want a new wing on the factory, fight over whether the workers in the wing will be union or not... hell it would be 3 years at least before we even START to build a new wing on a factory... By the time we are doing to construction drawings for the factory, the technology it is being built to accomodate will be obsolete.
If they need to improve their supply chain they expand the port... tomorrow. We do 25 environmental impact studies on how the expanded port will impact the migration of the yellow bellied catfish, then we have to get all of the same approvals for permits and dock workers agreements then we have to make sure the added trucking isn't going to create traffic delays and make sure that the noise from a 24 hour port won't bother the neighbors and the nesting habits of the local birds.
Somewhere there has to be a happy medium where you have enough regulations in place to prevent really stupid mistakes but at the same time, not so many that you create the inability to get crap done.. right now we are WAAAAAYYYY over on the inability to get crap done side of the scale.
yebat' Putin
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So the American people should be just so eager to bend to the will of whatever these mega trans-national corporations say to where we need to go, "Well. I'm getting paid $7.75, working six 12 hour shifts a day, but at least we have jobs again and no free time to enjoy the fruits of our labor!" Chattel Slavery, how are you doing today?
Not picking on just you, Daman, but the order of priorities is grossly twisted there. The corporations that are in cahoots with our government should fear the nation's people. NOT the other way around to where we need to live based off of fear as to what these "job creators" will do to us if we don't appease them.
The goal of an economic system is supposed to be intended for the betterment of the majority of all people. The current system does a terrible job of that. One just must be patient and such a system will collapse from within is what Ghandi had to say on that front. It just can't happen soon enough...
Politicians are puppets, y'all. Let's get Geppetto!
Formerly 4yikes2yoshi0
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"Well. I'm getting paid $7.75, working six 12 hour shifts a day.....
Those 72hr days can be a killer, but the money's good! 
And into the forest I go, to lose my mind and find my soul.
- John Muir
#GMSTRONG
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I knew as I was reading it that this would turn into a wage discussion.. but it is SOOO much bigger than that.
He mentions the speed and flexibility that other places offer.. if they need another wing to a factory, the start building it.. like tomorrow. If we need another wing on a factory we have to apply for 10 different permits, have 8 different studies done, solicit the input of the surrounding community to see if they actually want a new wing on the factory, fight over whether the workers in the wing will be union or not... hell it would be 3 years at least before we even START to build a new wing on a factory... By the time we are doing to construction drawings for the factory, the technology it is being built to accomodate will be obsolete.
If they need to improve their supply chain they expand the port... tomorrow. We do 25 environmental impact studies on how the expanded port will impact the migration of the yellow bellied catfish, then we have to get all of the same approvals for permits and dock workers agreements then we have to make sure the added trucking isn't going to create traffic delays and make sure that the noise from a 24 hour port won't bother the neighbors and the nesting habits of the local birds.
Somewhere there has to be a happy medium where you have enough regulations in place to prevent really stupid mistakes but at the same time, not so many that you create the inability to get crap done.. right now we are WAAAAAYYYY over on the inability to get crap done side of the scale.
Excellent point.
Here in podunk little Archbold, we have the country's larges RTA furniture company. (RTA is Ready To Assemble). Good paying jobs.
They create a lot of sawdust. Years ago, I don't remember when - 8? 10? 12? they decided to put the sawdust to good use, and built, according to EPA standards, a power generating plant - burning the sawdust to create electricity.
A couple of years ago - due to the required "self reporting" mandated - they had been over the allowable limit of "pollution".
The epa fined them $330,000.00. For what? Polluting. Less than one half of 1 percent of the time. For the year, that was less than 2 days.
The Ohio EPA didn't fine them - the federal EPA did. Sauder got it reduced to "just" a $79,500.00 fine.
But, as to your point - even when U.S. companies try darn hard to obey the laws we have here, the epa comes down hard.
In China - and many other countries - there are no such limits/restrictions, etc. While that's bad for the world, it's good for those companies that pollute without giving a rip.
And, consequently - it creates just one more inhibitor of/towards doing business in this country.
http://www.archboldbuckeye.com/news/2009...oodworking.html
If you'd care to read how environmentally careful the company is - read this. (interestingly enough, the epa allows for 20% opacity - and Sauder generally runs at 3%.)
http://www.woodworkinstitute.com/news/story.asp?pr=1&id=216
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I had to look up the yellow bellied Catfish, because it sounded made up, but it's real. 
We don't have to agree with each other, to respect each others opinion.
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Folks crap and cry about wages ,,,, Then run to Walmart to shop ,, what a joke !
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I had to look up the yellow bellied Catfish, because it sounded made up, but it's real.
It is? Huh.. I just made it up. 
yebat' Putin
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So the American people should be just so eager to bend to the will of whatever these mega trans-national corporations say to where we need to go, "Well. I'm getting paid $7.75, working six 12 hour shifts a day, but at least we have jobs again and no free time to enjoy the fruits of our labor!" Chattel Slavery, how are you doing today?
Not picking on just you, Daman, but the order of priorities is grossly twisted there. The corporations that are in cahoots with our government should fear the nation's people. NOT the other way around to where we need to live based off of fear as to what these "job creators" will do to us if we don't appease them.
The goal of an economic system is supposed to be intended for the betterment of the majority of all people. The current system does a terrible job of that. One just must be patient and such a system will collapse from within is what Ghandi had to say on that front. It just can't happen soon enough...
Ok.. I'm not all in for appeasement of multi-national corporations and I'm not all in for working 80 hours a week for a fraction of what I make now... but let's suppose our economy collapses or there is some kind of revolt by the people that brings down a lot of these multi-national corporations or forces them out... then what?
Do you think a bunch of high paying jobs are just going to appear because you want them to? Who is going to hire somebody at $20/hour to make a product that they can't sell for a profit? Who is going to buy it in a collapsed economy when all of the big corporations have been shut down or pushed out? Or do you plan to regulate them into forcing them to make stuff here and pay their people $20/hour to attach widget A into slot B on a cell phone for 8 hours a day so they can build the perfect cell phone that has to sell for $1,500? And the next generation of cell phones will be out in.. oh I don't know.. 5 or 6 years because that's how long it takes to retool the factory, retrain the workforce, renegotiate the labor agreement, comply with the new EPA regs, set up a viable supply change thats required to make a change?
I'm just curious what you think will happen to our economy, our standard of living, if it were to happen?
Because the only other option, as I see it, is to sit and wait for the economies of Asia and other places to collapse as well.. then we might have a chance to start over...
yebat' Putin
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Because the only other option, as I see it, is to sit and wait for the economies of Asia and other places to collapse as well.. then we might have a chance to start over...
Or as I stated earlier, we wait for them to catch up to us. Which could take 50-100 years. Are we willing to wait? Can we wait?
We don't have to agree with each other, to respect each others opinion.
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Admittedly, it's easier to talk about dissecting the current system and which parts are needed to be flushed out. A good portion of the political divide in this country is from that. We'll split it up and talk about wealth distribution, why it does/does not matter, role of government being too restrictive or lax, corporate power as a necessity or downfall, etc. That's not the source of ALL the divide, as we get wedge issues like abortion, gay marriage, affirmative action, etc. which to many people, will be the only aspect in elections they'll vote based off of. That's hurt a great deal and minimized the scope we'll look at our economic system, and will continue to do so so long as we have political "leaders" who'd rather have the serious, nuts and bolts discussions about day to day life on the back burner, all the while holding up puppet strings, dancing to the eerie tune of social ills. What happens in the wake of multi-national ouster? Aside from how difficult to minimize, let alone eliminate corporate power in our nation would be, there's no doubt the transitional phase would plain suck. What either has to happen is watching those jobs shift to a more socialistic lean where gov't is the outlet for the majority of production (has a lot of cons to the one pro of basic needs being met) or we subsidize smaller business on the home front and/or hold our corporations accountable similar to how they were about 150 years ago where they were chartered by the states to task up useful functions to society (actually of demand to the populace). There were clear stipulations for how long to operate, limits to capitalization, shareholder/ownership accountability, etc. Unfortunately, with the Fourteenth Amendment- aimed at equality for black people after the Civil War so states couldn't restrict their involvement as free in society- stated that "...nor shall any state deprive any person of life, liberty, or property without due process of law." That's not unfortunate. What was unfortunate was the corporate lawyers- being the clever bastards that they really are (assist Django for terminology  )- said, "Oh. Can't deprive any person of life, liberty, or property. Umm. Well, we're a person!" Between 1890 and 1910, there were 307 cases brought to court under that amendment, and 288 were brought by corporations to only 19 by African Americans. It's sad. I'm not saying they're all bad, but since the corporations have achieved personhood in our society, their responsibility to the population lessened while it grossly increased strictly to shareholders and bottom line profit. Gov't might have it's many ills and is in the mix for responsibility in our current mess, but to not acknowledge how corporations have been of detriment is equally appalling as hammering in on gov't being the be-all-end-all answer to our problems. Just like certain entitlement programs can become too permanent once instituted that you may be against, the power of corporations is a hell of a lot harder to take away once seized. Because of their limited liability and cold-blooded business models, they'll just shrug off the non-consenting third parties at the behest of it's own self interest. Do we need the incentive and innovation that comes with associations of people getting together to sell a commodity for profit? Yes. But at what cost is the basic premise of my ramblings. It can't be at the cost of Chevron dumping toxic sludge on indigenous Ecuadorean lands, the IMF framing policy to charge Bolivians over a quarter a days wages for water, mortgage companies playing hot potato with bad loans- then selling those mislabeled securities- while knowing of a pending housing crisis, etc. Also of crucial importance, we can't allow corporations to circumvent democracy as they have particularly in the past 40 years. "By the people, for the people" has been replaced by who's got the most money. You can see all that money in Washington as a see-saw game of serial lobbying takes place between the Democrats and Republicans, just in favor of different industries who want them in office. That comes at the cost of the American people who have been left out of the forum of discussion, and the constant despite shifting faces in the White House, Senate, and House is that corporations have benefited tremendously regardless of who's been in power. Methinks that's an issue that needs addressed also... I don't know who to credit with this one, but my favorite line about corporate personhood is, "I'll believe corporations are people when the state of Texas puts one to death."
Politicians are puppets, y'all. Let's get Geppetto!
Formerly 4yikes2yoshi0
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DC and arch, I was going to do a similar post, but you guys said it much better than I could. Especially DC's last sentence.
The whole point of the article was summed up several times in its body. Apple could care less that people here get paid $8/hr plus benefits plus whatever vs Chinese laborers who are paid a tiny fraction of that. With the profits they make, IT DOESN'T MATTER.
What matters is the setup, flexibility and supply chain (overall "getting stuff done"). They do that, we don't.
That's way scarier than just difference in wages.
"I'll take your word at face value. I have never met you but I assume you have a face..lol"
-Ballpeen
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