Apple: Designed in California – Assembled in China

Apple: Designed in California – Assembled in China
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The NYT published recently this piece on Apple and its products. According to the article, almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas. Last year, Apple earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

During a dinner with Technology Business Leaders in Woodside, California, Feb. 17, 2011, President Barack Obama asked the late Steve Jobs (Sitting to the left of the President on the picture above) : Why can’t that work come home?

NYT: “Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest. 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 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.”

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. ”

 

CBS 60 Minutes: Steve Jobs’ advice to President Obama
Steve Jobs met with President Obama a few times and gave him ideas for how to generate jobs in the U.S., according to his biographer, Walter Isaacson.

“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.

“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.”

We discussed several times on Cap Falcon some of the key issues around creating jobs for a knowledge economy and the necessity to provide and follow the right education paths.

The solutions are obvious but they require discipline and determination.

Sources: NYT / DealBook

Photo Credits: President Barack Obama joins a toast with Technology Business Leaders at a dinner in Woodside, California, Feb. 17, 2011. By The White House / FlickR