Short answer: it's not just wages. The vastly different wages paid to American workers, compared to contemporaries in Taiwan or China, is a significant factor in the shift of massive supply chain operations in the tech industry over to Asia, The New York Times says in its in-depth examination of Apple and its suppliers.
Takeaway factoid someone will repeat in your earshot this week: manufacturing the iPhone in the United States would add about $65 to the cost of each unit. Is that worth it?
But it's not just about the wages. The biggest shocks of the paper's examination of Foxconn, one of Apple's major suppliers for the iPhone, are about physical scale, not payscale. The plant known as Foxconn City employes some 230,000 workers, with more than one quarter of them living on-site in company-built dormitories, The Times reports. The kitchens that feed the workers churn out 13 tons of rice per day, and guards work the hallways to prevent workers from trampling one another.
And the most chilling assessments of the U.S. labor market's inability to share in some of this new manufacturing activity speak to simple inability to compete.
The workers in Asian factories are working longer hours and weeks, and the factories and manufacturing processes themselves are being altered and streamlined in mere days, not the weeks or months that would be required for a major alteration within an American manufacturing plant, the article suggests. The central anecdote is a familiar one: Steve Jobs' insistence that the new iPhone have a glass screen, which required the company to scramble and overhaul its entire manufacturing process for a critical new product. That hasty, high-stakes rearrangement happened in China, not in the U.S., where worker protections are fewer, but where the U.S. is seeing some of the gains of its ascendant tech sector being realized.
From the story:
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 iPhonemanufacturing 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.”
Why, Matt Yglesias asks, shouldn't we just allow workers like those from Foxconn to simply move to the U.S.? Wouldn't that help balance out the current problem of this manufacturing occurring overseas? But a Foxconn in the United States couldn't operate with the impunity and authoritarian traits described at the facility in China. Would a Foxconn in California do Apple much good?