• The U.S. factories couldn’t get close enough to perfection for Steve Jobs. So Apple went to China. In perhaps the broadest profile you’ll read about the manufacturing process that creates most of the electronics you use today, The New York Times’ analysis of the structural reasons why the iPhone isn’t made in the U.S. manages to pull off a surprising trick: It turns a story which on the surface is about one of the world’s largest corporations into a story which shows weaknesses in the recession-laden U.S. economy. A quick roundup of what we learned from this article:

• one Apple was a late-comer to the international manufacturing racket, and as recently as 2003 built their products in California. Before they went to Asia, they struggled to keep up with the rest of the tech industry, which used the kinds of contractors Apple uses now.
• two In Asia, it’s much easier to get all their ducks in a row in terms of supply chain management. The lower labor cost helps, but it’s the ability to turn on a dime — such as when Apple changed its iPhone screen from plastic to glass — that really makes a difference in terms of cost.
• three Despite the outsourcing, an important point to keep in mind is that Apple’s success does create jobs in the U.S., both directly — 8,000 in the past year alone — and indirectly, with companies like FedEx and UPS adding many jobs based solely on Apple’s needs. source

• » What it means for the U.S. economy: With speed, flexibility and manufacturing prowess better in China, Apple’s move abroad has taken two types of jobs out of play: One, the low-paid but stable manufacturing job (which FoxConn offers both to Apple and numerous other manufacturers); and two, the mid-level engineer, which the article suggests is hard to find in the U.S., but easy to find in China. In fact, the story features a fascinating anecdote about a mid-level engineer who once worked a well-paying job at a U.S. Apple factory, only to get laid off and, years later, work another Apple job he was overqualified for — at a much lower salary. That’s the real story. Look past Apple. They’re the hook of the article, but the real story is how the U.S. economy is no longer the best spot for these kinds of jobs. How can the U.S. change that?

Posted by Ernie Smith • Permalink