NewCo Shift OpEd
And the company’s not alone in playing the game
Apple CEO Tim Cook appeared on CNBC last week to deliver some big news: The Company That Steve Jobs Built is placing $1 billion into a fund, which will then be invested in advanced manufacturing companies in the United States. This will presumably help Apple source more components for its computers and phones here.
“We can be the ripple in the pond,” Cook told Jim Cramer. “Those manufacturing jobs create jobs around them, because you have a service industry that grows around them.”
Cook is right about that; manufacturing jobs are like economic seed corn, and as such I’m happy the company has announced this investment. I’d be even happier — and Apple would have an even larger positive impact on manufacturing — if the products the company sells in America were made here, too. That’s something it’s doing in China and in Brazil, and something it plans to do in India.
So why not in America?
Well, mostly because this announcement is dressy PR. Apple’s is the latest in a series of low-key mea culpas, issued from companies that contributed to the decimation of American manufacturing.
There’s Walmart, in consumer goods: The retailer — whose demand for cost controls once encouraged a wave of offshoring — has pledged $250 billion in domestic procurement over a period of 10 years. Left unsaid? Its procurement budget likely would have led to that volume of purchases anyway; the announcement coincided neatly with rising energy costs, meaning more expensive transcontinental shipping; and Walmart’s grocery sales are booming — and Walmart counts its produce as “American made.”
There’s GE, in durable goods: The company — whose former chief executive once said, “ideally, you’d have every plant you own on a barge” — helped lead a global wave of outsourcing, though recently it reshored a trickle of jobs and its current CEO, Jeff Immelt, has acknowledged his company went too far.
And now comes Apple, the cash-laden icon, in the tech sector. That ripple effect Cook mentioned in his interview? It’s currently being enjoyed overseas, in places like the burgeoning Chinese city of Shenzhen, where an entire ecosystem of advanced manufacturing is now in place.
In southern China Apple has its iPhones made, and with years of practice, the Chinese manufacturers now make indistinguishable knockoffs. The tech-manufacturing ecosystem in China is flourishing; in 2015 alone, the United States had a nearly $120 billion trade deficit with China in advanced technology goods.
So what should be said about Apple’s announcement that it’s a company driven by values, and that one of those values is support for the U.S. manufacturing sector?
First, an acknowledgement: If outsourcing manufacturing was a crime, companies like Apple have gotten off with a very light sentence. We know where and the conditions under which products like the iPhone are produced, and we know how lucrative this manufacturing process has been for the corporate office in Cupertino.
Secondly, a response: If Apple wanted to make a tangible difference for domestic employment and manufacturing, it would open a factory to make an iPhone in the United States, invest about 2 percent of its $250 billion cash hoard, and jump-start a tech manufacturing revolution.
But it won’t. Instead, it mostly makes excuses about challenges like poor worker training and a dearth of engineers in the U.S., rather than offering to be part of the solution. For a company with such elegant design and imaginative product development, its production system is decidedly unimaginative, antiquated and ugly, relying on the sweat and toil of tens of thousands of underpaid workers.
Actions like this won’t will fundamentally alter the future of American manufacturing until actual production is brought back to these shores. That will require bigger commitments from companies like Apple, as well as their support for a more active Washington response to the overarching problem of the Chinese government’s trade mercantilism. But that’s an argument for another day.
I want Apple to succeed and spark a new manufacturing revolution. I love its products. I want to be proud of the way in which they are made, as well.
But the day it really returns manufacturing will be a day to celebrate.