Recently I came across an article https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html?action=click&module=Top Stories&pgtype=Homepage
Following are few extracts from this article and our views:
“To start building their damn computers and things in this country,” Apple is unlikely to bring its manufacturing closer to home. A tiny screw illustrates why?
Apple began making the $3,000 computer in Austin, Tex., it struggled to find
enough screws, according to three people who worked on the project and spoke on
the condition of anonymity because of confidentiality agreements.
In China, Apple
relied on factories that can produce vast quantities of custom screws on short
notice. In Texas, where they say everything is bigger, it turned out the
screw suppliers were not.
of new versions of the computer were hamstrung because a 20-employee machine
shop that Apple’s manufacturing contractor was relying on could produce at most
1,000 screws a day.
suppliers shipped their components to Texas. But in some cases, the Texas team
needed new parts as designs changed, and engineers who were tasked with
designing the computer found themselves calling machine shops in central Texas.
is how they found Stephen Melo, the owner and president of Caldwell
Manufacturing in Lockhart. Employees of Flextronics, the company hired by Apple
to build the computers, in turn hired Caldwell to make 28,000 screws — though
they would have liked more.
When Mr. Melo bought Caldwell in 2002, it was capable of the high-volume production Apple needed. But demand for that had dried up as manufacturing moved to China.He said he had replaced the old stamping presses that could mass-produce screws with machines designed for more precise, specialized jobs.
made do with his new machines, although he could not make the exact screws
Apple wanted. His company delivered
28,000 screws over 22 trips. Mr. Melo often made the one-hour drive himself in
his Lexus sedan.
Let us look at the above story a bit closer. There is a real story behind this simple minded statement that Apple is unlikely to bring the manufacturing back to the U.S. shores because of a few small screws!
of small lots of custom screws on demand is different from manufacture of large
volume lots for mass manufacturing.
Apple did enjoy and does enjoy the luxury of custom manufactured items at low cost and short lead times in China thanks to many factors listed in the article – low labor cost, massive investment by Chinese Government in the manufacturing sector, authoritarian rule that can flex its muscle at will to make things – even custom manufacturing – happen on demand and at will.
U.S. manufacturing has to take hold again, U.S. Government and Apple as the end
user must invest in such mass customization resources for manufacturing. But this investment has to be well thought out
– between “Value Manufacturing” and “Volume Manufacturing”.
noted in the story above, Apple had a good source for quality screws in the USA
in 2002. When they shifted their manufacturing to China, the local manufacturer
had to shift their production capability. Now Apple cannot expect to rely on
its old friends in US, without systematic rebuilding of the needed eco-system
and capabilities. These are the shortages in the planning for manufacturing in
the USA. PLEASE DON’T BLAME THE TINY SCREWS!
screw shortage was one of several problems that postponed sales of the computer
for months, the people who worked on the project said. By the time the computer
was ready for mass production, Apple had ordered screws from China.
Read the above carefully and again! Apple did not strive to work on the manufacturing infra-structure. Instead they chose to ship their procurement to China! Detroit was not built as the automotive capital of the world by large manufacturers fleeing away from Detroit at the drop of a dime. This eco-system development has to be one of Transformational Skills for the return of US Manufacturing base.
challenges in Texas illustrate problems that Apple would face if it tried to
move a significant amount of manufacturing out of China. Apple has found that
no country — and certainly not the United States — can match China’s
combination of scale, skills, infrastructure and cost.
Above is an opinion stated as a fact. It is true that China has a unique combination of scale, skills, infrastructure and cost. But these advantages are not eternal or cast in stone. These are relative advantages gained through investments – both private and public – over a period of time. Since the late 70s US Govt. and the private sector as well as the educators have given lip service to these factors, the essentials for manufacturing competitive advantage. Now we are complaining that the barn is empty after having left the door wide open for decades. The answer is not to state that China has these advantages as a foregone event. Instead discussions and investments have to focus on how to corral more horses and fill the barn. It will require mfg. infra structure investments worthy of a leading global power. But we are far from any thought or discussions in this direction.
the U.S., you could have a meeting of tooling engineers and I’m not sure we could
fill the room,” he said. “In China, you could fill multiple football fields.”
The above statement means nothing. Today there are conferences on Brain and Cognitive sciences or Computer forum in the USA that attract over 30,000 attendees. Engineers are also people who will converge where they see opportunities. Let us create the right climate and opportunities in order for people to be attracted to that field. For over four decades there has been a drum beat of news coverage to describe everything “manufacturing” as “brick and mortar”, “legacy technologies”, etc. With that kind of beating down it is no surprise there are few left in the US who are proud to stand up and proclaim themselves as “manufacturing professionals”.
Huguet, an Apple spokeswoman, said the company was “an engine of economic
growth in the United States” that spent $60 billion last year with 9,000
American suppliers, helping to support 450,000 jobs. Apple’s Texas
manufacturer, Flextronics, did not respond to requests for comment.
Apple invested so much in the manufacturing infrastructure in US and they could
not get the screw they needed at the right time, place and quantity, does it
reflect on Apple’s effectiveness in their supply chain management as much as it
reflects on the Supplier base?
Cook often bristles at the notion that iPhones are Chinese-made. Apple points
out that Corning, at a factory in Kentucky, makes many iPhone screens and that
a company in Allen, Tex., makes laser technology for the iPhones’
The above is the most interesting and valid point pertaining to “manufacturing” in the USA. The Gorilla Glass from Corning is a great example of the kind of success one can envision in US Manufacturing – high value added products, design, services, capabilities, manufacturing resources. Instead of treating all manufacturing in one bucket, it may be necessary to discriminate between “Value addition” Vs. “High Volume low value added manufacturing”. As an example in the disk drive industry, the hardware for thin film heads are manufactured in the USA as hundreds of heads nestled in a single substrate. After this high value added manufacturing, a large amount of large volume fabrication and assembly are carried out off shore using low cost labor.
Cook has also disputed that cheap labor is the reason Apple is still in China.
But it doesn’t hurt.
is nothing to be ashamed of in using low cost labor where it counts. Low cost
labor is a reflection of the prevailing standard of living in the given country
or region. As long as there are lower cost resources – products, suppliers,
labor, etc. it is imperative for any manufacturer to take advantage of that. But,
what do you do and how do you take care of the people on whose back you built
your company and products is a moral question that must be addressed by the
manufacturer (seeking off shore resources) as well as the Government. The
profit made on low cost manufacturing comes from the earlier work of people in
home countries who invested their skills and toil leading up to the high volume
manufacturing stage. Today the manufacturers (Capitalists) and the Government
(ruled for and by special interests and lobbyists) are morally deficient. That
is the reality, which this article, the author of the referenced article and
the media at large miss when they discuss manufacturing. I have witnessed highly skilled workers travel
to China to set up plants and train the workers there only to find their pink
slips on their return. This lack of empathy, moral commitment and emotional
intelligence on the part of the Capitalists and the Government has to be the
critical issue to be addressed ASAP.
former Apple manager who spoke on the condition of anonymity said the
Flextronics team had also been far smaller than what he typically found on
similar Apple projects in China. It was unclear exactly why the project was
understaffed, the manager said, speculating that it was because American
workers were more expensive.
resources in a supplier are a reflection of poor Project Management.
Speculating on higher wages of the US workers (which is an obvious constraint)
as the reason suggests a total lack of understanding of the basic principles of
Supply Chain Management! SAD!!
frustration with manufacturing in Texas: American workers won’t work around the
clock. Chinese factories have shifts working at all hours, if necessary, and
workers are sometimes even roused from their sleep to meet production goals.
That was not an option in Texas.
could one write such hypocritical views and then print that as well?
“American workers won’t work around the clock”
is a self-full
filling prophecy? Has anyone seen the millennials who work in the Bay Area or
in the startup companies across the globe? Aren’t those hundreds of workers who
travel across the globe to get their job done evidences of US workers who are
ready to lose their sleep to meet their goals? Aren’t those employed today in
manufacturing sector in the USA working days and sleepless nights just to keep
their jobs, pay checks and hence put food on the table?
Helper said Apple could make more products in the United States if it invested
significant time and money and relied more on robotics and specialized
engineers instead of large numbers of low-wage line workers.
Ms. Helper and Apple may need to look at their “manufacturing” in a holistic manner and segregate the ”Value intensive” aspects of their manufacturing Vs. “Volume intensive” aspects of manufacturing and then foster infra-structure and invest plans in alignment with these two needs. This may not automatically imply robotics vs. low wage workers. This will certainly require high skilled engineers who are System Thinkers with Transformational Skills.
She said government
and industry would also need to improve job training and promote the
development of a supply-chain infrastructure.
can agree on these needs. Let us hope that Apple (and other manufacturers) and
the US Govt. can work collaboratively on these needs.
But, she added, there
is a low chance of all that happening.
this is also the fact and reality. But, to articulate the above needs is also
the role of the Media. Let us hope we can read more of articles reasoned on
real needs as opposed to glib statements, full of opinions and pre-conceived
notions as noted in this article.