The answer is pretty obvious, right? It’s cheaper labour! But is that the only reason why Apple (and other companies) outsource its workforce to China as opposed to keeping them in America? No. There’s more. The New York Times has an excellent report on why Apple ignores America when it comes to making the iPhone, and how that’s better for Apple.
During that infamous Silicon Valley dinner with Barack Obama, the POTUS asked Steve Jobs, “What would it take to make iPhones in the United States?” And once upon a time, Apple would have loved to make the iPhone in the US of A. In fact, the old Apple prided itself on making products in the US. But ever since the early 2000s, Apple has made most of its products outside the US. Why? It’s a combination of not only cheaper labour but better labour, better factories and scale. According to the New York Times, who spoke with Apple executives:
Apple’s executives had estimated that about 8700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
That flexibility, speed and scale in factory workers just doesn’t exist in the US. Apple says it “shouldn’t be criticised for using Chinese workers” because “the US has stopped producing people with the skills we need”. There just aren’t enough skilled workers in the US that have that in-between degree of high school and university. That’s what Apple wants in its factory workers and that’s what China gives ’em.
And though everyone cites how the cost of labour is much cheaper in China, the fact is labour is less important to a company’s bottom line than supply chains are. And the reality is all the supply chains to manufacture consumer electronics exist in China. Components are made in this facility, glass next door, a million screws can be found down the road, so on and so on — that convenience saves companies a lot more money than the benefit of hiring cheap labour.
Image: Tony Law/Wired