Why Isn’t the iPhone Manufactured in the United States?

January 24, 2012 in Daily Bulletin

The New York Times recently wrote an article that examined the reasons why Apple chose not to locate production of the iPhone in the United States. They found that:

  • Contrary to popular perception companies have not outsourced to countries such as China because labour is cheaper. The price of labour is a small fraction in the overall cost of a product. Apple, for example, would have to pay just $65 more if it wanted to produce the iPhone in the United States, and this wouldn’t significantly hurt the hundreds of dollars that Apple makes from each phone. However the United States is unable to offer:
    • Speed – the report notes an incident where Apple revamped the screen of its device in the last minute before launch. The Chinese factory building the devices awakened 8000 workers that lived within dormitories on company property, gave them a biscuit and a cup of tea, and within the hour had them start full day 12 hour shifts.
    • Flexibility – Chinese workers are willing to live on corporate grounds and come in on weekends or work long nights.
    • Scale – the 8,700 industrial engineers that would be necessary to produce the iPhone would take 9 months to find in the United States. In China it took just 15 days.
  • Apple notes that while the iPhones aren’t manufactured in the United States, the advent of the popular mobile phone has created jobs in other areas including:
    • Cellular providers
    • App software developers
    • Marketing Campaigns for the devices
    • Shipping services such as FedEx and UPS that deliver Apple Products

Read the entire 7 page report on Apple’s decision to outsource the iPhone’s manufacturing to China and what this means for manufacturing in the United States over here.

Source: The New York Times

Via: Marginal Revolution