Image via Bloomberg
We didn't cover Tim Cook's announcement that Apple would invest $100 million in U.S. manufacturing when the news broke a couple weeks ago, but the highly informed folks over at our discussion boards have been chiming in about the decision, both in terms of the tech company's strategy and as a symptom of a broader shift in 'insourcing.' Indeed, the cover of the most recent issue of The Atlantic reads: "Comeback: Why the Future of Industry Is in America," and Charles Fishman's excellent essay is one of many articles cited in the discussion thread:
For years, too many American companies have treated the actual manufacturing of their products as incidental—a generic, interchangeable, relatively low-value part of their business. If you spec'd the item closely enough—if you created a good design, and your drawings had precision; if you hired a cheap factory and inspected for quality—who cared what language the factory workers spoke?
This sounded good in theory. In practice, it was like writing a cookbook without ever cooking.
Regarding the specific case of the C-Suite in Cupertino, Timf notes that the Chinese government is looking to shift "from externally focused [manufacturing] to internally focused," and Ray Jepson identifies additional factors,
1. People don't realize how little labor is involved in electronics... It's basically capital investment... you basically need 1-2 people to feed a bunch of machines with components. Everything else is automated. Maybe a little more QC at the end.
2. Mexico manufacturers a lot of computers, TVs, cell phones. I'm sure it is mostly assembly, but still. From my experience, most of those facilities are pretty light on manual labor too.
3. Tim Cook's expertise is logistics. I'm sure that this will save Apple money. There will be significant tax advantages in terms of avoiding tariffs and getting tax credits. I don't see anything altruistic or patriotic. It's a smart business move.