In a followup to this post about your products being manufactured overseas and possibly built by underpaid, overworked 13-year olds, here’s another article for your viewing displeasure. Read here.
The gist of the article is that not only is it more lucrative to build overseas, but America doesn’t have the infrastructure to support the markets that big manufactures require.
In Asia, specifically China, you can have a special screw at a factory that is situated next to a factory that makes glass screens … that’s next to one that makes another special component.
Another force is competition. Once Apple has a great product, then it forces other manufacturers to head overseas to find vendors with competitive components.
One driving moment in the article is a story about Steve Jobs requiring a glass screen on the iPhone that pushed them to contract in China.
You can read the whole thing yourself. But here are two long-ish snippets:
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
It is difficult to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying U.S. wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Jobs. GM went as long as half a decade between major auto redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.
Before Obama and Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights.
The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.
There wasn’t even a tiny scratch on the screen.