The “Make it in America” crowd are just making populist noises.
Lots of talk about this NY TIMES article, How U.S. Lost Out on iPhone Work.
The article just reinforces what I’ve been telling the “make it in America” crowd for years– the decision to manufacture in China was not just a matter of cheaper labor. You just CAN’T do this stuff in the USA. Besides lower manufacturing costs, China offers mature supply chains, economies of scale and, increasingly, a world-class transportation infrastructure. It’s industrial environment is uniquely suited for this type of work, while USA is better suited for high-tech, ultra high value work. High-cost Germany might be a good model– they are a powerhouse in high-end car manufacturing among other things. Thgey don’t feel the need to look down the value chain for opportunities.
According to the article, Obama actually asked Steve Jobs what it would take to make Iphones in the USA instead of China.
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.
I believe the president knew damn well it was a naïve question, but was motivated to ask it for political reasons. I also believe that most of the “bring it home” crowd are motivated to express populist sentiment at the expense of a reasoned argument.
Then the article goes on from there:
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.
There is no serious debate about US suitability for this type of high-volume/low margin assembly work. If we want to emulate a manufacturing power, we should look to Germany, not to China.
some related posts:
- China– it’s not just cheap labor (another perspective)
- Rising cost in China: will it push garment factories out, or push retail prices up?
- Li & Fung: China to remain an important apparel manufacturing center.
- By 2015 China’s labor costs will equal USA’s. Not really.
- “The Pearl River Delta region has more to offer than just cheap labour”
- Repost: China Manufacturing– It’s Not All About Labor Rates