...Apple Manufacturing: Should More Apple Products Say “Assembled in the USA”? Production and Operations Management, BUS 5461 Abstract Apple, Inc. is a $170B global corporation that designs, markets and sells consumer electronic products such as the iPhone, iPad, and the Mac computer. Apple has structured their manufacturing and supply chain processes to take advantage of China’s cheap and plentiful labor. However, Apple has made an innovative decision to have the new ultra high-end Mac Pro partially manufactured and assembled in the US. This report includes research and analysis on the benefits available to Apple by expanding production in the US. Recommendations are presented that will help ensure apple succeeds in moving production to the US, and help reduce the risks Apple faces as a global corporation. Tables of Contents Chapter I – An Introductory Look at Apple, Inc………………………………………. 5-6 Chapter II – The Issues Facing Apple…………………………………. ……………… 6-8 Chapter III – Analysis: A Closer Look into Apple..…………………………………… 8-15 Chapter IV – Recommendations..……………………………………………………… 15-20 Chapter V – Summary ……………………….………………………………………… 20-22 References……………………………………………………………………………… 23-26 List of Figures Figure 1:Average Hourly Compensation Costs in Manufacturing, U.S. Dollars, 2002-2009….....9 Figure 2: Average Hourly Compensation Costs in Manufacturing, U.S. Dollars, 2002-2009……9 ...
Words: 5618 - Pages: 23
...subsidies and currency policy, the Chinese government created an attractive environment for foreign companies to invest in their country, and they successfully built China into the “world’s factory”. Currently, China is the country where most of Apple’s outsourcing processes are located. Suppliers and subcontractors in China produce most of the iPhones, iPads, iPods that we use in our daily lives. “What would it take to make iPhones in the United States?” President Obama asked former Apple CEO Steve Jobs this question in February 2011 (Duhigg and Bradsher). The reply from Jobs was “Those jobs aren’t coming back”. Is it true that America has lost those jobs for good? What would it take for Apple to bring those manufacturing jobs back to America? What can the government do to help reduce outsourcing and increase insourcing? What are the benefits for Apple to bring jobs back to the U.S.? What effect would it have on the U.S. and world economies if Apple were to produce its products in the U.S.? In this paper, I would like to use Apple as an example to discuss the above questions with the business initiative of Apple bringing outsourced manufacturing processes and jobs back to the U.S. Why Would Apple Bring Outsourced Manufacturing Jobs Back to the U.S.? What are the benefits for Apple? 1. The suppliers in China are cost-effective, highly productive and able to scale up and down like no U.S. companies can (Duhigg and Bradsher). However, they operate in conflict with U.S...
Words: 1604 - Pages: 7
...In its early days, Apple usually didn’t look beyond its own backyard to manufacture its devices. A few years after Apple started to make the Macintosh computer back in 1983, Steve Jobs bragged that it was “a machine that was made in America.” As late as the early 2000s, Apple still manufactured many of its computers at the company’s iMac plant in Elk Grove, California. Jobs often said that he was as proud of the Apple’s manufacturing plants as he was of the devices themselves. By 2004, however, Apple had largely turned to foreign manufacturing. The shift to offshore manufacturing reached its peak with the iconic iPhone, which Apple first introduced in 2007. All iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chip sets from Europe, and rare metals from Africa and Asia. Apple’s major subcontractor, the Taiwanese multinational firm, Foxconn, performs final assembly in China. Apple still employees some 43,000 people in the United States, and it has kept important activities at home, including product design, software engineering, and marketing. Furthermore, Apple claims that its business supports another 254,000 jobs in the United States in engineering, manufacturing, and transportation. For example, the glass for the iPhone is manufactured at Corning’s U.S. plants in Kentucky and New York. But an...
Words: 887 - Pages: 4
...technology word today is Apple. Created by Steve Jobs, Apple revolutionized the computer in 1976 with the release of the Apple 1. From that point on Apple has always been on the top of the market with its products. Presently they lead the market in Smart Phones, Tablets and Personal Computers. With the huge demand for their products, there comes an enormous responsibility for manufacturing the devices in a quick and cost effective matter. With the rapidly growing market of Apple computers and the technology/electronic industry as a whole, Apple eventually had to rethink how they manufactured their products to create the most efficient outcome; the highest revenue with the lowest cost. The competitive nature of the technology industry causes companies to look for a competitive advantage, which will make them much more profitable than their competitors. For the majority of the company’s history, they have been known to manufacture their products in the USA and even prided themselves with building the Macintosh computer which Steve Jobs described as “a machine that is made in America”. In 2004, when the company was not nearly as financially profitable as they are today, they decided their best option was to start manufacturing their products in other countries. The company, who is now a leader in foreign manufacturing, was lagging behind many American companies in terms of manufacturing abroad at that point in time. The majority of their foreign manufacturing takes place in Asia...
Words: 1270 - Pages: 6
...Apple is moving some of its production facilities back to U.S Why? Apple CEO Tim Cook said in recent interviews confirmed by CNN that his company, which currently does most of its production in China, would invest $100 million to bring some of its Macintosh manufacturing back to the U.S. next year. Apple's move isn't surprising. It follows a continuing pattern of American companies bringing manufacturing back home due to rising labor, supply and production costs in China. "China isn't cheap anymore. And you also worry about the political risks and the environmental cost of doing business there," said Anderson, whose firm creates consumer drone technology. He moved his company's production out of China two years ago, setting up manufacturing facilities in San Diego and Tijuana. Anderson said making his products closer to his customers has actually turned out to be cheaper. Instead of manufacturing in bulk as he did in China, he ramps up production as orders come in. He also saves on shipping and other distribution costs. "Coming back to the U.S. has been a huge win for us," he said. Apple's move may not generate many more new factory jobs, though, since tech manufacturing today is so automated, he said. "It's not like you need workers sitting on workbenches to assemble computers," Free said. Also, since so much of the country's manufacturing base has eroded over the years, finding American workers with the skills to immediately start on the factory floor can be a...
Words: 581 - Pages: 3
...research has been supported by grants from the Alfred P. Sloan Foundation and the U.S. National Science Foundation (CISE/IIS). Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the Sloan Foundation or the National Science Foundation. Abstract This article analyzes the distribution of value from innovation in the global supply chains of the Apple iPad and iPhone. We find that Apple continues to capture the largest share of value from these innovations. While these products, including most of their components, are manufactured in China, the primary benefits go to the U.S. economy as Apple continues to keep most of its product design, software development, product management, marketing and other high-wage functions in the U.S. China’s role is much smaller than most casual observers would think. A key finding for managers is that they need to beware of relying too heavily on single customers. With its control over the supply chain, Apple has the power to make and break the fortunes of many of its suppliers. A key finding for policymakers is that there is little value in electronics assembly. Bringing high-volume electronics assembly back to the U.S. is not the path to “good jobs” or economic growth. Capturing Value in Global Networks: Apple’s iPad and iPhone In an earlier article in Communications of the ACM [7], we conducted a micro-level economic analysis of Apple’s...
Words: 3262 - Pages: 14
...the benefits to Apple of outsourcing the assembly of the iPhone to foreign countries, and particularly China? What are the potential cost and risk to apple? - The benefits to Apple of outsourcing the assembly of the iPhone to foreign countries particularly targeting China is that the labor cost and cost for production is much lower in China allowing them to mass produce their product, though that is not the main focus and that it’s a small factor of the total value of the product. Apple says that one of the most important things for their business is the ability for Chinese contractors to respond quickly to request from their business to scale production. Steve jobs was an innovator and always looked to the most advanced technology to reflect in his product. An advantage that Steve Jobs found when it came to China is that the factories in China were ahead of what was thought about as advance technology and what Steve Jobs thought would improve his products, China was already forward thinking and implementing this ideas. The factories where dedicated to maintaining a current working system to keep up with the demand and Apples production schedule. This allow Steve Jobs to quickly mass produce his ideas and products. With Apple being a huge company that involves a lot of dedication to keep the product up to date, having high employment rate for the company was also huge. It was easier and quicker to higher engineers to work in China. Stated in the Article “Apple calculated that...
Words: 402 - Pages: 2
...Kimberly Soria Globalization HIS-213254 13 October 2014 Written Assignment Module 3 1 of 7 Apple, Inc. Transnational corporations are quite formidable as they manufacture, market and distribute their product all over the world. These corporations have specific strategies in place that help with efficiency, productivity and profitability through political activities, outsourcing and vertical integration. One of the most successful transnational corporations is Apple. From their first product launch of the Apple II to the in 1977 to the most recent iPad Mini in 2012 Apple has continued to evolve and develop their products it’s only natural that they move to a global scale. The development of the iPhone is what brought Apple to become more popular in the global market not just from a customer perspective but a manufacturing perspective as well. Corporations financially support the political process in several ways, such as contributions to the state and local level. They also engage in political spending indirectly through supporting trade associations Apple is a moderate political spender and has contributed approximately $580,000 in corporate funds to political activities in 2002 (Center for Political Accountability). Trade associations serve a variety of purposes such as engaging in lobbying and issue advocacy. Apple is a member of the Retail Industry Leaders Association (RILA) which serves as an advocate for the industry through integration of public policy with retail...
Words: 1568 - Pages: 7
...Apple Apple product is deign in California and made in china. Is an "extremely important market" for the company and it will continue to look at how to grow its presence in the country? However, China is not simply seen as a potential growth market for Apple products. The country often is regarded as the company's main production base. Just after a horrific rash of worker suicides at the Foxconn factory complex outside of Hong Kong in 2010, a monologist named Mike Daisey launched a one-man show called "The Agony and The Ecstasy of Steve Jobs”. If Apple can cut costs by having machines made in China then that is up to Apple. If China can make Apple machines to the quality that people around the world expect from Apple then many people in China will have much work to do. It is not 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. Who attempted to capture value in global networks by using Apple's iPad and iPhone as research examples - shows that only about "$10 or less in direct labor wages that go into an iPhone or iPad is paid to Chinese workers". Most of them live in dormitories on the site of the factory. They work six days a week, 12 hours a day. They earn the equivalent of 17 US dollars a day, and they are plum...
Words: 1065 - Pages: 5
...Apple: Human Rights Problem in China? For companies that rely on overseas workers, such as the Apple Company, there are accusations of a big and very important issue: human rights. It is the belief that every human, whether one is working or not, is entitled to the right of equality, freedom from enslavement, and freedom from discrimination. The Apple Company is accused of unsafe dormitories, overcrowding, and injuries in its factory over in China. Apple is an immensely large company and practically everyone on this planet knows the Apple name and their logo. For the Apple Company, to be accused of a human rights problem is problematic. It is an important situation that needs to be fixed because the company is one of the leading electronic manufacturers in the world and it stands as a first-rate and high quality company. Many electronic users, Apple users, and other rival companies are interested in what the future holds for the Apple Company. Users will also want to know how the company will respond and what they will do in this situation. According to Steven Foley, from The Independent, “in 2010, a spate of 13 suicides or attempted suicides at that factory, known as Foxconn City, first turned a spotlight on the companies Apple uses to build its devices.” Those incidents were one of the first problematic situations that put the Apple Company in the limelight. Foley states that any of the workers believe Apple needs to fix the problem of “long work hours, harsh management...
Words: 1597 - Pages: 7
...Gaining access to an audience it has coveted for years, Apple Inc. said it has reached an agreement to sell the iPhone through China Mobile Ltd., the world's largest mobile phone carrier with 763 million subscribers. The deal also promises to deepen Apple's complex relationship with a population that has been essential to its success over the last decade. Apple has transformed itself partly by moving most of its product manufacturing to third-party companies based in China. That move gave Apple a supply chain with speed, cost and flexibility that was second to none. The China Mobile deal is huge for Apple because it provides what they've never had: broad distribution in China with the country's largest carrier." Critics often noted that the cost of iPhones, and their limited availability, made them inaccessible to the people who built them. After becoming chief executive two years ago, Tim Cook, who had overseen Apple's manufacturing relationships in his previous role at the company, made it a priority to improve working conditions and reboot the company's relationship with China's workers. At the same time, he stepped up efforts to forge ties with China Mobile that had eluded the company for so long. The iPhone has been available on the networks of small China Mobile competitors as far back as 2009. This year for the first time, when Apple launched its iPhone 5c and 5s in September, the new phones went on sale in China the same day they were available in the rest of the...
Words: 314 - Pages: 2
...The Good Apple From one perspective, Apple's world could not be rosier and its future shinier. Rising from the rubble of a disintegrating company in 1997, Apple has reached the pinnacle of success in 15 short years. With a market capitalization of over $500 billion, Apple is amongst the most valuable and highly profitable companies in the world. Its remarkable success lies in the company's ability to create truly innovative products with vast customer appeal. Apple flouts the conventional wisdom of the consumer electronics industry, which emphasizes low cost, "me-too" products, and a continuously shortened product life. Instead, Apple has opted for constant and discrete product innovation, resulting in fanatic consumer loyalty and a high level of profitability. The Bad Apple So why does Apple treat its customers and workers by two different standards? When it comes to customers, Apple is a bold innovator that leads the industry into new directions and forces others to follow. However, when it comes to the management of its supply chain and treatment of workers in the Chinese factories that make its products, it hides behind the constraints of prevailing industry practices. What is even more disconcerting is the fact that these practices are in violation of not only local and national laws, but also of Apple's own voluntary self-imposed code of conduct. It is important to note that this voluntary code of conduct breaks no new ground. It is at best a modest attempt to ensure...
Words: 3028 - Pages: 13
...helped consumers as well. However, the United States has seen the outsourcing of manufacturing positions as a major problem in creating jobs. In the growing Smartphone and electronics industry, America’s most recognizable brand Apple is caught in the middle of the complex global dilemma. Apple contends the company’s responsibility is to produce the best quality product in a cost-effective way. American leadership claims that one of the worlds most innovative companies is contributing to Chinese workers outpacing Americans. Apple has developed double the amount of jobs overseas, but the higher paid jobs still remain within the U.S. Chinese factories with dorms, and full-time workers are put through significantly worse standards in the workplace. Apple has been receiving a lot criticism for it’s handling of occupational conditions that are observed in these overseas factories. Apple is seen as a major company exploiting foreign business practices. Apple and other tech companies have admitted that American plants cannot match Chinese workers producing upwards of 10,000 iPhones daily. In addition to this, the advantage of having capable engineers along with the 200,000 assembly workers is something that companies have realized is far too expensive in the U.S. Innovation has been the mechanism, which led to job growth. Even thou the Apple has looked overseas for effect and cost-effective manufacturing, they have also maintained the most important jobs in the U.S. It has been suggested...
Words: 826 - Pages: 4
...From one perspective, Apple's world could not be rosier and its future shinier. Rising from the rubble of a disintegrating company in 1997, Apple has reached the pinnacle of success in 15 short years. With a market capitalization of over $500 billion, Apple is amongst the most valuable and highly profitable companies in the world. Its remarkable success lies in the company's ability to create truly innovative products with vast customer appeal. Apple flouts the conventional wisdom of the consumer electronics industry, which emphasizes low cost, "me-too" products, and a continuously shortened product life. Instead, Apple has opted for constant and discrete product innovation, resulting in fanatic consumer loyalty and a high level of profitability. The Bad Apple So why does Apple treat its customers and workers by two different standards? When it comes to customers, Apple is a bold innovator that leads the industry into new directions and forces others to follow. However, when it comes to the management of its supply chain and treatment of workers in the Chinese factories that make its products, it hides behind the constraints of prevailing industry practices. What is even more disconcerting is the fact that these practices are in violation of not only local and national laws, but also of Apple's own voluntary self-imposed code of conduct. It is important to note that this voluntary code of conduct breaks no new ground. It is at best a modest attempt to ensure that workers...
Words: 3005 - Pages: 13
...of either becoming a solution to the problems bedeviling the world or join in and add to these problems. Global warming, corrupt practices, involvement of child labor in the supply chain are some of the problems occasioned by the growth and expansion of multinational corporations. It is incumbent upon these businesses to ensure that they operate ethically and by so doing avoid these dilemmas. Businesses are also expected to actively participate in upholding human rights. The Global Compact proposes presents the framework and guiding principles that can help these MNC’s navigate past these dilemmas as they enter new growth environments. This paper will report on the issues raised on the Bloomberg Interview and the Four Corners Program on Apple. The Global Compact (GC) is a proposal from the United Nations, which asks companies, MNCs included, to embrace and inculcate universal principles in their company operations and partner with the UN to ensure that human rights violations are not perpetuated in the business world (Rasche, et al., 2012). The UN GC has grown to become a crucial platform through which the UN gets to engage and interact constructively with the numerous enlightened global businesses. The GC’s primary goal is to encourage businesses to engage in businesses as forces of good and not evil. Multinational corporations are impacted by the GC which expects them to conduct their businesses is ethical manners. The Global Compact is alive to the fact that the...
Words: 1725 - Pages: 7
