I assume this is because Tim Cook is bowing to political pressure where Steve Jobs refused. Remember when Steve Jobs said, "Those jobs aren’t coming back" [1]? The question is - why now?
Eddy Cue: "I believe there will be a seven-inch market and we should do one." "I expressed this to Steve several times since Thanksgiving and he seemed very receptive the last time."
That he wasn't able to, coz he passed away, but the point stands. Jobs is famous for things like that. I remember clearly when he said there is no way anyone could make a computer that is less than 1000 bucks(when the rumor is ripe with upcoming ipad) and 6 months later releases the ipad for 500.
I was able to find this with a little Googling (no idea on the truthfulness of the article), but I could swear there was another article listing the iPad Mini as one of the last products he worked on:
Manufacturing in the country seems to have bottomed out a few years ago. Since 2008 several big manufacturers have been bringing jobs back from overseas.
The plain truth is that outsourcing was probably done too fast, by too many companies. There are a lot of reasons for the new in-sourcing:
1. Chinese wages climb every year.
2. American wages especially in unionized workforces have declined as unions allow for lower starting pay.
3. Oil has gotten more expensive -- ships use oil.
4. American natural gas has gotten much cheaper -- many factories use natural gas energy.
5. Companies have better QC and time to market when producing locally.
Not all jobs will come back. Nor should they. But it's definitely happening.
There are also IP theft issues, and (while this doesn't apply to Apple) the burden of having to set up join ventures in China in partnership with a local firm where the foreign company has less than 50% ownership of said joint venture.
In such a "partnership" (if you can really call it that), there is a constant struggle between the Chinese and the non-Chinese owners of the venture where the Chinese counterpart is trying to absorb knowhow as fast as possible while the foreign firm tries to maintain their technological leadership over their partner so that they don't get marginalized. Perhaps the benefit of such a contentious relationship has been eroded enough from higher wages and other costs that firms have started to migrate their operations back home.
I'd also like to point out that 100 million is a pittance of an investment for such a dramatic move for such a large company. It's really a no-brainier at that price.
This topic is covered in the Isaacson biography; Isaacson's recounting doesn't paint Jobs so black-and-white on the issue. the excerpt:
Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. “You can’t find that many in America to hire,” he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. “If you could educate these engineers,” he said, “we could move more manufacturing plants here.” The argument made a strong impression on the president. Two or three times over the next month he told his aides, “We’ve got to find ways to train those 30,000 manufacturing engineers that Jobs told us about.”
Isaacson, Walter (2011-10-24). Steve Jobs (p. 546). Simon & Schuster, Inc.. Kindle Edition.
* Odds are _those_ jobs _aren't_ coming back, these are probably some sort of _new_ type of job. Given Cook's operations background, I wouldn't be surprised if Apple is leveraging their cash/think different attitude to try improving the efficiency of US based work forces. It doesn't seem like Cook's style to give away a competitive advantages for the sake PR. Apple's NPS (Net Promoter Score) is already extremely high. However, if he can shave a few more dollars off assembly, that protects Apple's margins, and that feels like a very Apple-like move.
* If Apple were to leverage new manufacturing methodologies, and they have been working on that for a few years, they _would_ spin it for maximum PR. That makes them looks good, and focuses the store on job creation, not supply chain improvements. I don't think it is coincidence Cook spoke to both NBC and Bloomberg in the same news cycle.
* That said: if Cook is being altruistic... So what? Apple has tens of billions of dollars in the bank. If they wants to spend $100M on PR, I'm sure the people reaping the rewards won't care.
> if Cook is being altruistic... So what? Apple has tens of billions of dollars in the bank. If they wants to spend $100M on PR, I'm sure the people reaping the rewards won't care.
Stockholders will care. No way he's just being altruistic. Your other ideas are much more likely.
The jobs manufacturing iPhone/iPad/iPod aren't coming back, but I could see Apple bringing the manufacturing of computers (especially desktops) to the US.
For one, the computers have a higher BOM and price, so an increase in manufacturing costs takes a smaller share of the total profit. Plus they only make 5 million computers a quarter, compared to 41 million iPhones+iPads.
iDevices are released on an annual schedule, which means delays are extremely costly (especially if they are timed for the holidays). This requires a very tight supply chain. It isn't as big a deal if the iMac slips by a month.
Finally, the market for iDevices is extremely competitive compared to desktops. Execution matters way more for iDevices and a lot more money is on the line. It is easy to experiment with iMacs because there is much less pressure in that market segment.
It's not clear to me iPhone/iPad/iPod won't come back at some point. The news that Foxconn has started replacing workers with machinery means the labor cost portion of manufacturing is going to go down, regardless of geographical location. Robots in China aren't going to be any cheaper than Robots in the US, I don't think.
Of course, the number of people required will be a lot lower, so the number of jobs brought in likely won't be that large.
I've heard the supply chain argument a lot, so it might take a while, but the original reason for outsourcing, ie: low labor costs, is eventually going to go away.
all you sem to be saying is that "Apple can do it" though. Juat because they can doesn't mean they should. Given that they're a for-profit corporation, I'm betting on some kind of financial incentive.
Can we stop this hero worship please. We're all adults here and while Steve Jobs was clearly a great leader of Apple, we don't need the constant Steve-was-god rhetoric.
Watch the Jobs/Gates interview at '07 D5. He clearly stated he couldn't predict more than five years in this industry. Though, being able to see through five years ahead is quite a feat which he pulled often.
I would watch Steve's Stanford commencement speech if I were you. In it he talked about only being able to 'connecting the dots' in his life looking backwards not forwards. This idea that he planned his time at Apple is just revisionist delusion on your part.
That said there is nothing wrong with Apple thinking more short term.
And when I was working at Apple the very first thing Steve did upon coming back was giving away everything old on campus then said going forward was the only way to make Apple better.
To think a speech made to sell dreams to a group of idealistic and aspirational youths is relevant to what we're discussing right now is just plain inexperience on your part.
And that said, indeed there is nothing wrong with Apple thinking more short term. It's probably exactly why Tim Cook was chosen as CEO.
Hacker News discussion [2].
[1] http://www.nytimes.com/2012/01/22/business/apple-america-and...
[2] http://news.ycombinator.com/item?id=3494389