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i-Device Manufacturing Unprofitable To China

samzenpus posted more than 2 years ago | from the spinning-your-wheels dept.

China 320

N!NJA writes "One of my favorite facts of this past year was the proof that China makes almost nothing out of assembling Apple's iPads and iPhones. From the article: 'If you want lots of jobs and lots of high paying jobs then you’re not going to find them in manufacturing. They’re where the money is, in the design, the software and the retailing of the products, not the physical making of them. Manufacturing is just so, you know, 20th century.'"

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Why only iDevices? (5, Insightful)

InterestingFella (2537066) | more than 2 years ago | (#38494302)

As you can see the two largest inputs are materials and Apple’s own profit margin. Despite the machine being assembled in China it’s still true that the value of that labour is trivial: 2% or so of the cost of the machine.

So what? It's not like iPads and iPhones are the only devices they're making. In fact, China, Taiwan, Japan, Thailand and other Asian countries are making almost all of electronics in the whole world. They might only profit 2% of every device, but the sheer scale of the whole manufacturing industry more than makes up for that.

Besides, Apple's devices are notoriously known for having huge profit margin going to Apple, without actual technical or manufacturing reasons for that. It is, however, only true for Apple as every other manufacturer is actually also working on really thin profit margins. When taking into account every electronics company and not just Apple, this makes the Chinese manufacturers share comparatively much larger. Comparing it to Apple tells absolutely nothing.

Re:Why only iDevices? (3, Insightful)

Attack DAWWG (997171) | more than 2 years ago | (#38494376)

Haven't you figured it out?

Mentioning iAnything causes Nerd Rage.

Nerd Rage brings page views. Lots and lots of them.

Page views bring profit!

Who cares if the summaries are misleading or don't tell the whole story?

Re:Why only iDevices? (4, Insightful)

Doc Ruby (173196) | more than 2 years ago | (#38494458)

No, the study explains that they studied Apple devices because 1: they're "iconic" and 2: they do offer strong data that argues against what the authors say are commonly believed myths of benefits from manufacturing jobs lost by the US to China.

There's a good argument against this study, in that Apple's electronics are "iconic" but not the majority of sales even in their own markets, precisely because of the lower margins and more commodified products in the Android share of the market that better fits the Chinese manufacturing model.

But to argue that you'd have to read the study. Instead you'd rather whine about nerd rage, Apple envy, and some made-up conspiracy to get page views. Congratulations! You're a self parody.

Re:Why only iDevices? (4, Funny)

wiedzmin (1269816) | more than 2 years ago | (#38495164)

iPads are iConic? How iRonic! :P

Re:Why only iDevices? (4, Funny)

spaceplanesfan (2120596) | more than 2 years ago | (#38494490)

Haven't you figured it out?

Mentioning iAnything causes Nerd Rage.

Nerd Rage brings page views. Lots and lots of them.

Page views bring profit!

Who cares if the summaries are misleading or don't tell the whole story?

You mean iNerd, don't you?

Apple basically is the tablet market. (-1, Flamebait)

Anonymous Coward | more than 2 years ago | (#38494408)

While less so for smart phones, Apple basically is the entire tablet market. This is because the tablet market is a faux market. It's not built upon any real need or demand. Rather, it's purely a marketing creation using elements of religion to trick foolish people into thinking they need to buy expensive gadgets that are useless and unnecessary.

Yes, Apple can sell millions of tablets, but this is only because they have a very gullible following that other manufacturers just don't have. This is why we've seen RIM, HP, and others try to get into tablet market, but fail pretty badly. These other companies just don't have the pseudo-religious following that Apple has, and thus don't have the demand for their products. Their customers are smarter, and realize that tablets just aren't useful.

When intelligent people want a portable computing device, they get a smart phone and/or a netbook. Tablets, on the other hand, give you the worst of both words. You don't get the portability and convenience of a smart phone, while you also don't get the keyboard and power of a netbook. You're stuck in this shitty middle area with all benefit on either side.

Apple fanatics, on the other, don't care about utility, but rather just the possession of expensive status symbols displaying Apple's logo. Indeed, this is an area where tablets are much better than phones or netbooks. There's a larger area to display the logo, a larger logo can be used, and the logo will be prominently displayed while holding or carrying the device.

So when you're considering the tablet market, don't forget to consider the big picture. Apple basically is the entire tablet market. There really aren't any competitors. But it's also not a typical market. It's a very convoluted one not built upon the more traditional and common factors underlying real markets caused by need and demand.

Re:Apple basically is the tablet market. (5, Insightful)

Sponge Bath (413667) | more than 2 years ago | (#38494486)

Post summary:
I don't like Apple products and personally have no need for a tablet, therefore anyone who does is an inferior human.

Re:Apple basically is the tablet market. (5, Interesting)

dubbreak (623656) | more than 2 years ago | (#38495014)

Post summary: I don't like Apple products and personally have no need for a tablet, therefore anyone who does is an inferior human.

I'd also add that it is an excellent example of false consensus effect [wikipedia.org] whereby a person tends to overestimate how much other people agree with him or her. I don't have a use for X therefor no one could possibly have a use for X. Which is probably more accurately, "I don't think I have a use for X.." because the poster appears to have never used a tablet in a business setting.

At my prior employer all employees at tablets. They are the perfect device to bring to a meeting, especially if you are trying to go paperless. Notebooks and netbooks are bulky and not as good at some task (such as checking your calendar to set up a follow-up meeting.. while standing). I tended to go to all meetings or people's desks when chatting (work related) with my tablet and log book in hand (both the same size). That way I had all references I needed. I never had to head back to my desk to check something, or lay down a computer on their desk, open it, hunch over the desk or find a chair... a tablet is just better for some things. Now that I'm a consultant I use it to track my work and pretty much use it exclusively on planes (my 13" computer fits on my lap, but is nearly impossible to both type on and see the screen at the same time).

Tablets work for me, they worked for my coworker but they won't necessarily work for everyone. It's hard to accurately decide if they will work in a business situation without mass adoption though.

Re:Apple basically is the tablet market. (0)

Anonymous Coward | more than 2 years ago | (#38495214)

As an IT security guy working for just about every enterprise in North America, I hate you people. You have no consideration for regulatory compliance and data security with your "tablet this" and "paperless that".

A sad day at Slashdot, indeed. (-1)

Anonymous Coward | more than 2 years ago | (#38495056)

It's a sad day here on Slashdot when a useless, emotionally-driven comment like Sponge Bath's is at "5, Insightful", while the comment with actual in-depth analysis and intelligent consideration of the facts is merely at "2, Insightful".

The GP's comment clearly targets devices from other, non-Apple manufacturers. But I guess acknowledging that fact would render Sponge Bath's "OMG YOU HATE APPLE!!!@1!@!" emotional outburst less relevant, and blatantly incorrect.

And lower-class or middle-class people who spend more money than necessary on expensive luxury items and impulse buys usually are considered to be financially foolish. Maybe that doesn't make such a person an "inferior human" as Sponge Bath here likes to exaggerate, but it does bring into question whether the demand is real (i.e. to satisfy a need to enable some productive task to be performed) or merely emotional (i.e. buying a product because it has the right logo on it).

Re:A sad day at Slashdot, indeed. (0)

Anonymous Coward | more than 2 years ago | (#38495258)

Seems to me that understanding the post in question, or even the poster, is reflective of an insight towards it,hich enables the rest of us to recognize the less than fully honest nature of it. it would be one thing if a given statement would be taken as fully factual and unbiased, but that is rarely the case.

There is a reason why your representation of the post in question is incorrect, but the bigest is how youid not note the rather disdainful consideration of Apple.

Me, I'll use my tablet and know it gets me a lot more benefit in the long run than somme of the things I could buy. The logo hardly mattered, the function is right. it is no ipad or anything, but it does work.

Re:Apple basically is the tablet market. (-1)

Anonymous Coward | more than 2 years ago | (#38494492)

No, I got a tablet, because I like having something more substantial than a phone, but I don't need a keyboard or the form factor of a netbook. For everything I'd do on a netbook, I'd prefer to do it on a desktop computer.

But if I want to look something up quick on Wikipedia, or check the weather, or even the TV schedule, or just have something to read in the bathroom, I'll take a tablet with ease.

And no, I don't want an iPad, but I enjoy my Xoom. I also would enjoy my Touchpad, but I had to give it to my mother since the second one I bought stopped working, and getting another is too much trouble. I could get a cheapo sub-100 dollar tablet from Big Lots, but eh, I decided to go with something I figured would be supported.

Just waiting for ICS though I have no problems with Honeycomb as such.

Re:Apple basically is the tablet market. (-1, Flamebait)

spire3661 (1038968) | more than 2 years ago | (#38494544)

Well, I hope your reactionary, unpolished, and feature lacking product suits your needs.

Tell me about some of them features or polish (0)

Anonymous Coward | more than 2 years ago | (#38494678)

Exactly what further features would I need to browse wikipedia, check my email, the weather, or read a book, maybe play some music streamed over my media system? That's about all I do, and the only real reason I have a tablet is because it's a lot easier to do while lying on the couch or in bed, or sitting on the toilet.

Like I said, I could easily be satisfied with a sub-100 dollar product out of a close-out store. If you can think of something I'd want from a tablet, go ahead and tell me. I'll see if I can find it in the Market. Or tell me what things you'd like polished.

I'll be honest, I don't know of any, but my needs are simple. When it comes to car buying, I tell the dealer to give me a salesperson who will shut the fuck up when I say I don't want something and tell me what I want to know, which is usually far afield of the usual spiel. Half the time I'd probably be better off with a mechanic from the garage.

Re:Apple basically is the tablet market. (5, Insightful)

DJRumpy (1345787) | more than 2 years ago | (#38494600)

Yet another geek, who has little to no understanding about consumer demand. If the tablet trend was purely due to 'Apple Fanatics', then those fanatics would have bought their tablets and that would have been the end of it, yet almost every PC manufacturer on the planet is struggling to produce their own tablet. There is obviously a huge market and demand for devices like these. Simply claiming there is no logical reason for demand for these tablets because YOU don't see a need doesn't mean these don't meet a need in those consumers that buy them. Even sadder that you trolled out the treasured 'Apple Fanatics' and 'status symbol' buzzwords and of course were rewarded with an Insightful for it.

PC's have been trending towards simple email/web/media devices for years. The 'need' consumers see in a simple device that meets all of those wants, and is portable, has a small footprint, and easy to use, and you seriously don't see why people want tablets? I have to assume the disconnect between geeks and the regular 'joe user' is the fact that geeks are typically always power users and tablets simply don't fit the bill for that type of user, but for the vast majority of today's computing users, a tablet fits their needs perfectly for casual browsing, email, listening to music, and playing the occasional game.

Claiming the only reason for Apple's success is due to it's 'gullible' users may also get you an insightful mod, but it falls far from the truth. Apple and Linux users are shown to be far less gullible than Windows users, better educated, and tech savvy. There's a reason Apple has been number one in consumer satisfaction for something like the last decade. Their shit works, it's good quality, and people don't have to fuck with it all the time. Those are powerful draws to a casual user who browses the web, checks email, listens to music, and plays the occasional time-waster game while waiting for a doctors appointment or whatnot.

Re:Apple basically is the tablet market. (-1)

Anonymous Coward | more than 2 years ago | (#38494730)

If there's "obviously a huge market and demand for devices like these" then why are so many of the manufacturers having so much trouble getting people to buy their devices? Why have RIM's efforts faltered so badly? Why has HP had to basically pull out of the market and liquidate their inventory? Why don't we see Samsung, Acer or Sony selling as many devices as Apple?

I don't think it's a quality problem, nor is it a lack of software, nor is it a pricing problem, nor is it a lack of functionality compared to Apple's tablets. With many of the non-Apple tablets running Android, there is already a very wide range of software available for such devices. Some of these tablets cost significantly less than Apple's tablets, even while offering more processing power and capabilities.

I think the GP is right. The demand for tablets-as-a-tool just isn't there. The demand for tablets-as-a-status-symbol is there, but due to its very nature it's a market that only Apple can really participate in successfully. People wanting to do real work will be better off getting a phone or a netbook/laptop/desktop. People just wanting to show off that they can spend daddy's money buy Apple products. It's an explanation that fits the reality perfectly.

Re:Apple basically is the tablet market. (1)

Anonymous Coward | more than 2 years ago | (#38494812)

Every review for these tablets from all of the vendors you mentioned shows that are substandard, lacking, unpolished, or any other number of descriptive words, or at the very best, on-par with the Apple devices for the same price, and you wonder why these others aren't selling?

Re:Apple basically is the tablet market. (1)

Eponymous Coward (6097) | more than 2 years ago | (#38495190)

Every other manufacturer's tablet isn't fun to use, has poor application support, and poor battery life. The iPad works well for lots of normal people and is affordable (but not cheap).

Re:Apple basically is the tablet market. (1)

LordThyGod (1465887) | more than 2 years ago | (#38494810)

Abort, retry, fail

Re:Apple basically is the tablet market. (1)

timeOday (582209) | more than 2 years ago | (#38494816)

Even if you're 100% right, the author of the Forbes article would have no grounds to disagree with you. He'd simply interpret that as proof that branding is the creator of "real" value, whereas design and engineering can be lumped in with manufacturing, as work for dopes who really don't deserve even what little they get for their meager contribution to the pie chart.

Re:Apple basically is the tablet market. (1, Flamebait)

girlintraining (1395911) | more than 2 years ago | (#38494828)

Yes, Apple can sell millions of tablets, but this is only because they have a very gullible following that other manufacturers just don't have.

Most iPhones purchased 3-4 years ago still receive software updates from Apple. You won't find another domestic phone manufacturer with that level of support. Techies bemoan people's use of macintosh, but 1 in 7 people use a mac, and yet 98% of the phone calls to technical support are for PCs. If PC owners are comparatively "smarter", shouldn't that number be lower? "Apple fanatics, on the other, don't care about utility, but rather just the possession of expensive status symbols" -- I would say that the statistics do not bear that out. Apple customers want things that are easy to use, have long end-of-life product support, and have excellent customer service.

It's a very convoluted one not built upon the more traditional and common factors underlying real markets caused by need and demand.

Yeah. I can't see the appeal in a product you can take anywhere, use for 10 hours, and provides quick and ready access to the internet and multimedia resources, and has a powerful enough processor to play many kinds of games. Oh. Wait... that's what us "PC users" keep hoping our phones are going to do for us. Someday. Also... if the market isn't doing what you want it to, it must have become martian and no longer reacting to supply and demand instead of say, simply not meeting your expectations.

Re:Apple basically is the tablet market. (0)

Anonymous Coward | more than 2 years ago | (#38494830)

That may have been true a year ago, but competitors have been gaining ground. Q3 IDC pegs Apple at around 60% now. This is significantly lower than previous quarters, where Apple enjoyed shares in the 90% range.

Re:Apple basically is the tablet market. (3, Informative)

vijayiyer (728590) | more than 2 years ago | (#38494986)

There is no substitute for ForeFlight on an iPad. I'm not carrying a laptop in the cockpit to view charts, and it saves me hundreds of dollars a year compared to paper charts. You go fly a plane with a smart phone and a netbook in your lap and tell me that it's better.

Re:Apple basically is the tablet market. (0, Funny)

Anonymous Coward | more than 2 years ago | (#38495006)

Do you really believe what you are saying? That everyone who has bought an iPad is just some mindless zombie who slavishly buys whatever Apple produces with no thought whatsoever?

They've sold over 45 million of the things. During one of the worst economic recessions in a hundred years.

But the millions of "sheeple" (which you're not one of, of course) seem to be happy to pay over the odds for an Apple-branded product, when they could do perfectly well with another product by another company, for a fraction of the price.

I've bought loads of Apple Macs since the mid-90s. I've got an iPhone. I'm going to buy a new iMac. Surely, I'm one of the "sheeple" who buys Apple products out of a "pseudo-religious following"?
But I haven't bought an iPad. It's on my wish-list, but at the moment, I can't justify it financially. WAIT! How can I possibly resist the iPad, because everyone buys Apple products out of "gullibility", rather than rational decision...?

Maybe, just maybe, people actually think for themselves and decide what they want and don't want? But that would mean you would have to come up with another reason why so many people have bought iPads. Howabout: they fill a need, serve a purpose, and work well? Nah, can't be that. Must be the "Sheeple" thing.

Twat.

Market share (4, Insightful)

currently_awake (1248758) | more than 2 years ago | (#38494522)

In Asia it is common practice to do things cheap or below cost until you wipe out the competition, then raise prices.

Re:Market share (1)

mspohr (589790) | more than 2 years ago | (#38494862)

I see lots of the cheap part but don't see much of the "raise prices " part. What prices have been raised?

Re:Why only iDevices? (2)

kubernet3s (1954672) | more than 2 years ago | (#38494564)

the sheer scale of the whole manufacturing industry more than makes up for that

Err, I assume you're saying this in a Machiavellian, free market pirate sort of way (i.e., worth it for the manufacturing contractors), since volume production is a really crooked way to make money. Workers operating on razor thin profit margins don't make any more in a volume based system unless they multiply their workload. It also does a piss poor job of ensuring the economic security of a region in the normal way: wages are spread so thinly that they can hardly be entered back into the economy except in the form of food purchases. Sure, the numbers work out, but the Walmart business model is only good for the Waltons: no one else.

That's supposed to make us feel good? (4, Insightful)

Anonymous Coward | more than 2 years ago | (#38494336)

We go from "solid jobs have gone to China" to "there are no jobs, enjoy irrelevance." Yay?

IOW (0)

Anonymous Coward | more than 2 years ago | (#38494338)

apple makes a shitload of money off these things.

Re:IOW (4, Insightful)

Doc Ruby (173196) | more than 2 years ago | (#38494498)

The carriers make more. The study showed that the #1 profit share goes to iPhone telcom carriers (AT&T) over a 2 year contract. Which is why the carrier subsidizes the phone, paying Apple directly.

My main takeaway from the article was that carriers must be forced to unbundle phones from network access, to stop oppressing the consumer. Carriers should continue to subsidize upfront HW costs under a longterm payoff contract, but it must not be mandatory (or prohibitively expensive to avoid) for anyone who wants their own phone to buy access to any mobile network, at the same cost rate as a bundled phone does. Just like desktop Internet and voice service. Forcing the unbundling would do for competition, pricing and innovation what the forced unbundling of AT&T (still the one!) did starting in the 1980s, and what the inhibitions of bundling PCs with an ISP did for the Internet.

Re:IOW (3, Informative)

InterestingFella (2537066) | more than 2 years ago | (#38494632)

That's exactly how it works in rest of the world. Apart from U.S., of course.

Re:IOW (1)

mspohr (589790) | more than 2 years ago | (#38494916)

I get unlimited talk text and data for $40 month in the US. I can't believe people are suckered into $100 month contracts by a free phone.

Splendid News (2)

A12m0v (1315511) | more than 2 years ago | (#38494370)

I feel better about my Chinese assembled devices purchases.

Re:Splendid News (1)

Fastolfe (1470) | more than 2 years ago | (#38494468)

Why? The company finding this unprofitable is still taking the money and spending it on (Chinese) parts and labor. This revelation makes no difference to the trade deficit.

Re:Splendid News (0)

Anonymous Coward | more than 2 years ago | (#38494654)

i think he forgot his sarcasm tags

not the point (0)

Anonymous Coward | more than 2 years ago | (#38494378)

china's strategy is to employ as many people as possible to avoid idle hands etc.

No, it is slavery. (1)

sethstorm (512897) | more than 2 years ago | (#38494418)

Why else would China give freedom for multinationals, but not give it to regular, unconnected individuals?

There is a reason (2)

betterunixthanunix (980855) | more than 2 years ago | (#38494382)

They are not making these things out of the goodness of their hearts.

Re:There is a reason (1)

Doc Ruby (173196) | more than 2 years ago | (#38494510)

Nor for the profit, according to the study.

So what is the reason, as you say there is one?

Re:There is a reason (1)

betterunixthanunix (980855) | more than 2 years ago | (#38494662)

I do not know, but the Chinese have plenty of other things that they need to be doing, so something is compelling them to produce consumer electronics and computers. Maybe they are installing special hardware that would allow them to selectively disable systems? Maybe some sort of surveillance equipment? Maybe they just like the idea of wielding that much power over the American economy, and want to get us hooked on Chinese manufacturing so that they can raise prices and profit later?

Re:There is a reason (1)

Doc Ruby (173196) | more than 2 years ago | (#38494852)

I think it's for the profit. The Chinese companies aren't able to make the carriers' profit, nor Apple's. I suppose they're not able to make the Korean or Japanese profit off memory, touchscreen and other cutting-edge components, or they would be. So they're profiting where they can: the manufacturing.

It's a small profit, but that's all they can get. The electronics assembly labor market is global and evidently the most extremely competitive part of the entire supply chain.

Re:There is a reason (0)

Anonymous Coward | more than 2 years ago | (#38494978)

Design will go where the manufacturing is. Lower turnaround times. Also, when you're the only one who can manufacture millions of devices on short notice, you can increase your profit. It takes a long time to rebuild the manufacturing capability once the knowledge and the learning environment is lost. Think long term.

Re:There is a reason (1)

obarel (670863) | more than 2 years ago | (#38494716)

Must be the goodness of their hearts then.

Re:There is a reason (4, Insightful)

michael_cain (66650) | more than 2 years ago | (#38494904)

So what is the reason, as you say there is one?

Jobs. China still has on the order of 600 million subsistence-level peasants. Leaving those people in that state while a smaller number get comparatively richer working in the cities at manufacturing, construction, and related jobs is highly unstable. The government doesn't care about profits; it cares about creating enough jobs to continually employ more peasants.

Re:There is a reason (1)

sFurbo (1361249) | more than 2 years ago | (#38495020)

No, that is not what the study says (from my very cursory reading). It looks at how big a part of the final selling price goes to the physical manufactorers, not if the make a profit. Yes, I know, an errornous headline on slashdot is really shocking, but it seems to be the case here.

Earth is getting saturated (2, Insightful)

G3ckoG33k (647276) | more than 2 years ago | (#38494388)

Earth is getting saturated. Soon only India will be left as cheap labor. Soon after that, with markets like China, EU and the US, the Indians will be in the same position the Chinese are in now.

Will there ever be an expanding economy when there is no cheap labor left?

Re:Earth is getting saturated (5, Insightful)

MickyTheIdiot (1032226) | more than 2 years ago | (#38494398)

Yes. We had an expanding economy between WWII and 1975 and people were actually getting paid to do the work.

Doesn't work anymore (4, Interesting)

Anonymous Coward | more than 2 years ago | (#38494866)

The big question is: by whom where they paid?

Simple answer: by the employers they work for. That means that those employers had the money (by making a tidy profit) to actually pay their employees. How did they get that money? By selling loads of stuff. To whom? To consumers that got a lot of money by working...

The big drive behind all this was the rampant growth of the population in those periods.

Compare that to the current situation: population growth is stagnant (we're talking about people with money to spend, of course), which means a declining amount of purchases. Less money to be made by companies, so also less money to spend on employees. Which leads to even less spending.

The whole problem about our economic situation is that our economy is based on (rapid, maybe even exponential) growth. Once that stops, you can expect severe cutbacks. The housing bubble is not the reason for the recession, it helped to postpone it for a couple of years.

Watch this: The most important video you'll ever see [youtube.com] for a good explanation.

Re:Earth is getting saturated (3, Interesting)

Kjella (173770) | more than 2 years ago | (#38494988)

The question is whether or not it will contract back to where it would have been had it not been for pumping up the economy for loans first. Just today I read an article about the wages offered in Spain and Italy now (source [google.com] , in Norwegian so via Google Translate) and you practically can't get permanent employment anymore. They're being forced into intern or temp contracts which make minimum wage or less with little to no benefits.

A salary of 1,000 euros a month is about to become an unattainable dream.

That's $1300/mo or $15-16k/year, I think a minimum wage job in the US is around $10-14k/year. He was offered a 1-year contract for half that, $7-8k/year working 10 hour days. Another woman with a master degree says she makes 300 euro = less than $400 a month and yet:

Among the 30 in our class, I am among those who make the best career.

They can pretend what they want with the GNP figures but Europe is experiencing a really bad crunch now for those that haven't already got a permanent position - those are quite well protected, unlike in the US but the rest is going to hell. Same with the US, a lot of people aren't in the unemployment records simply because they're either trying to study their way through the crisis, have given up or don't get more benefits so they don't count in the statistics. And in a really bad crunch where the government should be trying to fire up the economy they're almost broke - in case of Greece, Portugal and Ireland really broke - and have to hit the brakes hard for a double crunch. I don't think we're at the bottom yet, it will get worse before it gets better.

Re:Earth is getting saturated (0)

Anonymous Coward | more than 2 years ago | (#38494442)

No is the simple answer. What we'll be left with is people in manufacturing earning a semi-decent wage. Sure that means you'll be paying more for your devices - but then it could be argued that you'll be paying the real cost for a device rather than the cost to-rip-some-poor-schmuck-off price. But by that stage no one in the first world will want those jobs (because they're seen as McJobs), and we'll still be left paying China and India to produce those devices.

Re:Earth is getting saturated (3, Insightful)

queazocotal (915608) | more than 2 years ago | (#38495146)

Well - I'd somewhat agree with this - but you've missed a bit out.
The above wages part is true - for china.

In the 'west' - we are at the moment living off the investment our grandfathers and great-grandfathers put in.

We have good sewers, good infrastructure, and the tip of the pyramid of an economy.

Most of the rest of the pyramid - the 'boring low-paid' jobs have been outsourced to china.

When chinas middle class gets going in a big way - and becomes a sizeable chunk of the population, suddenly exporting to the 'west' becomes a whole lot less important.

At this point we have major, major problems.

Chinese demand for resources goes up, as everyone wants a nice car and fridge and house.
We have little to export to china, as we have little manufacturing, and their firms are upskilling, and improving in quality.
Commodity prices go way up globally.
The lack of competitive exports means that foreign trade earnings goes way down, especially as fake-manufacturing companies like Apple get overtaken in the market by cheaper, shinier devices sold, designed, and with all the profit remaining in china.

Expect to see the price of Chinese goods _vastly_ shooting up, along with a weakening dollar/pound/euro, horrible fuel price inflation (which is one reason we should be decarbonising now!), and the west attempting to rebuild a manufacturing industry with almost no existing base.

Expect all social promises to be broken.
You (or if you're lucky, your children) are not getting the pension they thought they were, or if they do, it'll buy a bare fraction of what it did.

Re:Earth is getting saturated (1)

lorinc (2470890) | more than 2 years ago | (#38494476)

Everything will then be mechanized, just like Foxconn plans it to be (Foxconn is Chinese, btw). It means, it will always be possible to produce at a lower cost regarding human labor.

Is it compatible with the current redistribution of profits? Probably not. So the coming changes are not about manufacturing processes, but more likely about the inner structure of the economic system.

Re:Earth is getting saturated (1)

vijayiyer (728590) | more than 2 years ago | (#38495010)

Foxconn is Taiwanese.

Re:Earth is getting saturated (1)

currently_awake (1248758) | more than 2 years ago | (#38494552)

The direction the USA is going (economically) trends to third world status and wages. Looks like a big circle to me (back to the beginning).

Re:Earth is getting saturated (1)

nurb432 (527695) | more than 2 years ago | (#38494598)

Will there ever be an expanding economy when there is no cheap labor left?

There are always robots, which is the final end game for most of this stuff. But with no manufacturing staff left, your purchasing base goes into the toilet.

Re:Earth is getting saturated (0)

Anonymous Coward | more than 2 years ago | (#38494844)

Will there ever be an expanding economy when there is no cheap labor left?

There are always robots, which is the final end game for most of this stuff. But with no manufacturing staff left, your purchasing base goes into the toilet.

So we need consumer-bots. Then we can abolish humanity and the economy is saved into eternity.

Don't count on India for cheap labor. (0)

Anonymous Coward | more than 2 years ago | (#38494782)

We have a lot of Indian engineers at work. They usually go back every
year or two to visit. For the last couple of years they've all been saying
"It's really expensive back home. In fact most things are cheaper here",
here being the Eastern United States.

Re:Earth is getting saturated (1)

alen (225700) | more than 2 years ago | (#38494824)

Yes, we're going tO enslave aliens

Re:Earth is getting saturated (3, Interesting)

vlm (69642) | more than 2 years ago | (#38494834)

Soon only India will be left as cheap labor.

I can verify that some machine tool parts I have recent received were stamped as made in India. No punchline, none of that. For real.

Quality, fit, finish, were all about the same as Chinese, in other words, technically meets the bare minimum, but not much more.

Specifically some brazed carbide metal lathe cutting tools, and I believe a quick change toolpost for a lathe. I've heard they're starting to import Indian endmills (the thing that looks like a drill bit used in a milling machine).

Indian manufacturing is apparently coming soon to a walmart near you? They do have the advantage of at least theoretically knowing English, and China is beginning its first real industrial slowdown/crisis, so it'll be interesting to see if India ascends.

I remember, heck, I have stuff in my basement, from when imported machine tool components mean Polish as in Poland. Just after the berlin wall fell era, early 90s you couldn't buy an imported endmill that wasn't from Poland, or so it seemed at the time. Eastern Europe may yet rise again, possibly.

Re:Earth is getting saturated (1)

trout007 (975317) | more than 2 years ago | (#38494886)

When a star trek replicator is invented all manufacturing and agriculture will cease to exist. There will be no jobs required because there will be no scarcity. It doesn't make you poorer in real terms. People will be creative doing all types of design and art because that is what they want to do.

The thing I always wonder about in such a world is how to allocate the few limiting resources left like personal performances. I guess a holodeck is close but if people really want to see someone in person what could the charge or offer to decide on who gets to go.

Re:Earth is getting saturated (1)

JAlexoi (1085785) | more than 2 years ago | (#38494924)

No, there will be a massive shift in wealth. Let's just hope it will not be accompanied by a world war, because the last N shifts like that had a massive wars associated with them.

Re:Earth is getting saturated (3, Insightful)

orlanz (882574) | more than 2 years ago | (#38495238)

India? No, they are at the same state as China. China did it with GE, Walmart, Apple, Cisco, etc. India did it with Microsoft, Google, IBM, Accenture, Capgemini, etc.

India is probably a bit ahead of China in progress. China is facing a major shift in its people's behavior, makeup, wealth, demands, and political orientation. India has basically passed or doesn't have the same issues. Don't misunderstand me, they both still have a long way to go, just that India is ahead.

You want the next cheap labor? Look to where China is looking to meet their people's changing demand ... Africa. Even though the US provides more aid to Africa than any other country, African nations respect and look toward China more cause they feel their future is with them. It's a changing world.

Article fails to account for a few things (4, Insightful)

sethstorm (512897) | more than 2 years ago | (#38494392)

One of my favorite facts of this past year was the proof that China makes almost nothing out of assembling Apple's iPads and iPhones. From the article: 'If you want lots of jobs and lots of high paying jobs then youâ(TM)re not going to find them in manufacturing. Theyâ(TM)re where the money is, in the design, the software and the retailing of the products, not the physical making of them.

Sounds like someone that justifies few jobs versus the large amount of jobless.

The things that person fails to account for would be currency manipulation, government ownership of business, lack of freedom for those who do that manufacturing work, and less-than-honest accounting that is prevalent in China. Correct for those, then one can cut through the author's

If you want lots of high-paying jobs in the US and EU, kill every single guest worker program (fraud-ridden at any level), get rid of the ability to use length of unemployment (or employment) as a direct or indirect means of discriminating against the unemployed, and get rid of the tax and benefit dodges with second-class forms of labor (e.g. contractors, consultants). Finally, make it harder to not hire US citizens, within the US by making any tax cut follow the worker and is dependent on the length of time.

A correction (1)

sethstorm (512897) | more than 2 years ago | (#38494402)

Oops, meant:

The things that person fails to account for would be currency manipulation, government ownership of business, lack of freedom for those who do that manufacturing work, and less-than-honest accounting that is prevalent in China. Correct for those, then one can cut through the author's bullshit that they call "fact"

Re:Article fails to account for a few things (1)

Doc Ruby (173196) | more than 2 years ago | (#38494558)

I agree with you on all of those jobs policies, whether your criticism of Chinese Communism or of America's capitalism (or rather its anti-laborism).

But how does that undercut the conclusions of the study or its Forbes presenter? The study says that the system gives the vast majority of profits to US business (Apple, iPhone carriers, and a little to other US ecosystem members). All of which is enabled by the economic policies you criticize. I'd say that reforming those policies to honest accounting (and preferably change to honest economics) on both sides of the Pacific would be better for everyone (except the incumbent cronies, but they'd still do well). But the study's facts aren't any different when the political economy context is also considered. The revenues are distributed among the supply chain as the study shows.

Re:Article fails to account for a few things (1)

timeOday (582209) | more than 2 years ago | (#38494964)

The study says that the system gives the vast majority of profits to US business (Apple, iPhone carriers, and a little to other US ecosystem members)

Actually it doesn't! Here is what it (the study, not the Forbes story) does say:

After Apple, the next biggest beneficiaries in the iPad and iPhone supply chains are Korean companies such as LG and Samsung, who provide the display and memory chips, and whose gross profits account for 5% and 7%, respectively, of the sales price for the iPhone and iPad.

So, second to Apple is Korea, i.e. manufacturing. Plus, big swaths of the pie charts are "materials." What does that mean, if not costs for manufactured goods (even if it's bulk stuff like cardboard boxes)?

Anyways I don't understand what these charts are showing, since there is no slice for Apple's own development costs - i.e., no R&D!

Isn't this because... (2)

rsilvergun (571051) | more than 2 years ago | (#38494394)

the workers are paid like crap? You can't make a lot of money when you're paying a few cents to a dollar /hr. Raise their wages, add $50 bucks to the cost of iCrap and suddenly China's probably not doing so bad.

Re:Isn't this because... (4, Funny)

MickyTheIdiot (1032226) | more than 2 years ago | (#38494404)

Your comment fails because...

It calls for the use of common sense.

Please try again.

Re:Isn't this because... (1)

sethstorm (512897) | more than 2 years ago | (#38494480)

Or how about making them in the US - in factories located north of the Mason-Dixon line and east of the Mississippi River? Keep your $50 increase and they'd still make a profit.

The problem also is that it'd not only be profitable common sense, but that it goes against two other, incorrect orthodoxies:

1) If you manufacture in the US, that is the region you avoid.

2) Manufacturing in the US makes any product's price jump into the stratosphere.

Re:Isn't this because... (0)

Anonymous Coward | more than 2 years ago | (#38495130)

Then why is Samsing investing a whole load of money in a Chip Fab in Texas?

I agree about the quality issue on parts made in China & India. Just barley meets the spec is about right.
I know of two manufacturers who have stopped getting stuff made in China and are on the verge of giving India the elbow.
One of them is bringing it all back onshore. The other is partnering with a company in Poland. Their Polish partner makes components for BMW and Porshe so quality is really No 1 with them.

I see this as a increading trend. As costs rise in Asia the competitive difference that they have/once had will get less and less.
With Transport costs increasing it might soon be more economical to get stuff made locally rather than half way round the world.

finally, the Japanese Earthquake/Tsunami will serve as a warning to companies all over the world. JIT is all very well but how many productions lines in North America & Europe ground to a halt very soon after the event?
Businesses will take stock and may decide that it is just not worth it for saving a few cents per item.
 

Re:Isn't this because... (2)

sempir (1916194) | more than 2 years ago | (#38494794)

the workers are paid like crap? You can't make a lot of money when you're paying a few cents to a dollar /hr. Raise their wages, add $50 bucks to the cost of iCrap and suddenly China's probably not doing so bad.

Raise their wages...add $50 to the cost of iCrap and BINGO ...problem solved...NO MORE iCRAP...you're a fucking genius.

Doesn't look trivial to me (1)

artor3 (1344997) | more than 2 years ago | (#38494416)

Their chart says Chinese labor earns 2% of each iPad sold, so about $10 per device. There have been millions of devices sold. Are we now claiming that fifty million dollars is trivial? And since it's such a small portion, Apple could easily double or even triple the wages without a major impact to their profit margin. And don't forget, that's just the iPad. Throw in the iPhones and the iPods, not to mention all the non-Apple devices. And then you have to account for all the support jobs... people who build and maintain the factories, or sell things to the workers. In the end, you have billions of dollars in wages fluttering out of the country every year, all in the name of enriching the executive staff.

I get why cheap trinkets need to be made overseas. But on objects that cost hundreds of dollars and have a profit margin north of 20%, there's no reason for it, except to make the rich richer while making the country poorer.

Re:Doesn't look trivial to me (1)

MickyTheIdiot (1032226) | more than 2 years ago | (#38494464)

If labor is 2% of the cost then they are doing pretty good when you compared to other areas.

Consider that labor gets less than a dollar for a pair of $150 Air jordans. It just to be less than $.50, but who knows that those stats are now.

Cost of Materials = 31% is than APPLE 30% (0)

Anonymous Coward | more than 2 years ago | (#38494444)

Before even factoring in Labor, I looked at the cost of Materials which I assume come mostly from... China.
I think that area would have a high profit margin. But assembling devices... I think the whole reason why the rest of the world can't compete against China in Assembly is because they do it for a loss..

Companies do this all the time to kill off their competition... They sell the device for a loss or at break even.. and make it up with other revenue streams.. usually ones they aren't taxed on and where they can manipulate the prices.

The rich get richer ... (0)

Anonymous Coward | more than 2 years ago | (#38494456)

The march of progress. Most of the people that perform useful work in society get compension that allows them the honor of continuing to exist. Parasites running companies with patents on letters of the alphabet ... well ... that is where the money is to be made.

Good artists copy, Great artists steal. (2)

KuRa_Scvls (932317) | more than 2 years ago | (#38494506)

Many use this to bad mouth Steve Jobs for stealing or copying other companies' technologies, but it essentially boils down to this..
Good artists may be able to imitate something, might even be able to downright replicate it,
But when you're really good, you make it your own. You take that idea away from someone because your implementation is unique.
You learn how to take the redeemable features, and add your own character to create something utterly new.

But that cannot happen without practice.
Practice allows them to charge extra in the future.
It allows them to be efficient, and that's more valuable than anything else.

At the time of succession, Samsung's Lee Kun-Hee was seen as a pushover compared to his father, the founder of the conglomerate.
However, he was very dedicated in making his company the greatest in the world.

Mr.Lee adopted many tactics, both legal and illegal, to gain what he thought was the most important aspect in manufacturing, experience.
But how do you train your staff to produce something when there isn't even a single person in your own country that knows how to do it?

Easy, fly the experts in from your neighbouring country.

It is said that Mr.Lee flew in CURRENTLY EMPLOYED staffs from its largest competitors such as Sony so that he can learn the know-hows that were crucial in efficient production.

This kind of corporate espionage was quite prevalent in a country that had its economy relatively closed off from the foreign influence for many decades.
As long as it's Patriotic, it was okay.

Sound familiar?

Re:Good artists copy, Great artists steal. (1)

Bing Tsher E (943915) | more than 2 years ago | (#38494682)

The only kind of artist Mr. Jobs was is a con artist. Neither good or bad. He learned his con from the pros: the charlatan gurus in India.

Developers too (0)

StripedCow (776465) | more than 2 years ago | (#38494528)

iOS app development unprofitable to developers:
http://mobileorchard.com/iphone-app-sales-figures-32k-vs-535/ [mobileorchard.com]

DevelpeR (1)

Lazy Jones (8403) | more than 2 years ago | (#38494820)

It's just a cute story of one (unsuccessful) developer of a "cute" app. Yawn. Someone is apparently making around $2B in iOS app sales though.

Re:DevelpeR (0)

Anonymous Coward | more than 2 years ago | (#38494876)

Then where are the real stories? And by "real" I don't mean only those that make the headlines.

I guess earning big $$$ is just not happening for the majority of developers. In fact, I'm afraid most should be grateful with a break-even.

Re:Developers too (1)

Anonymous Coward | more than 2 years ago | (#38494882)

Fake article. Why do other places write that most Android developers flocking to iOS? Perhaps it is Apple's five year lead in the smartphone industry? Perhaps it is the fact that iOS doesn't have piracy as a common issue (installious does not work with current jailbreaks), or perhaps the fact that iOS shown to be (for intents and purposes) 100% secure against malware, other than JB phones with the default password being attacked?

Why manufacturing is important (2)

rudy_wayne (414635) | more than 2 years ago | (#38494546)

the design, the software and the retailing of the products, not the physical making of them.

Wrong.

The claim that we should abandon manufacturing and concentrate on "high value" jobs, like design and engineering is nonsense. The reason manufacturing is important is because it creates additional jobs beyond just those involved in a particular product. For example, the Samsung plant in Texas which created "only" 1100 jobs. What about all the machinery in that plant? It didn't magically appear out of nowhere. Someone had to design and build it. That's more jobs. Other companies supplied the steel, plastic and electronics that went into creating that machinery. That's more jobs. Other companies supplied those steel, plastic and electronics companies with various raw materials and equipment. That's more jobs.

China gets the know-how, USA gets the dependency (4, Interesting)

Paul Fernhout (109597) | more than 2 years ago | (#38494548)

The past couple decades have involved China trading a lot of cheap labor in exchange for Western technical know-how. China knows most of what there is to know by now about making gadgets. Eventually China could just create money for its own economy (by credit or printing it) and it could sell to internal markets and raise its material standard of living a lot. Export driven economies only have big value if you need imports. Although it is true that China does import stuff, so it will need to replace some of that with internal import replacing approaches, like Jane Jacobs wrote about (like solar energy instead of oil, or composites instead of metals) -- but aside from US food products, much raw materials come from other than the USA (like Australia or soon Africa). Although there remains a strategic military advantage for China in having Chinese products everywhere in the USA, so they may still do some of that. For example, most ascorbic acid (Vitamin C) in the USA comes from China. How much of it is really inspected? When is the last time you had something with extra vitamin C? That makes the USA's health very dependent on Chinese good will, as just one of many, many examples. Eastern minds typically grow up playing "Go", which teaches a very different way of "winning" (by encirclement) than Western Chess. Granted, the cost of this is that the average Chinese citizen has suffered a lower material standard of living for this sort of foreign policy (a cost that does not show up as "military" spending).

Access to top of the line technology schematics... (0)

Anonymous Coward | more than 2 years ago | (#38494578)

... might be worth a lot to any country.

derp (0)

Anonymous Coward | more than 2 years ago | (#38494582)

yeah because all the worlds manufacturing had just been bombed to hell. That was the entire reason the US automotive industry took off.

2% profit is bad?? (4, Insightful)

nurb432 (527695) | more than 2 years ago | (#38494586)

Works fine for groceries and many other companies. its all about volume. Sounds like capitalism is really starting to take root over there, at least the 'greed' component of it.

Sure thing. (1)

bmo (77928) | more than 2 years ago | (#38494652)

Then let's not manufacture anything then. Let's all be designers. Because, you know, all these devices are going to magic themselves into existence.

Such is the logic of pointy-haired-bosses.

--
BMO

Please explain Germany then (0)

Anonymous Coward | more than 2 years ago | (#38494674)

Germans enjoy high wages, robust exports, and (for Europe) low unemployment coupled with robust socialbenefits, and they have tons of factory jobs.

It's about Factory Jobs (4, Insightful)

bill_mcgonigle (4333) | more than 2 years ago | (#38494690)

Every industrialized country has gone through this phase where subsistence farmers abandon their farms for difficult factory jobs. They don't like the factory jobs, but they like it better than subsistence farming.

They save a little bit of money, and produce children who wind up becoming educated and form the middle class.

To say that China's not profiting from these assembly plants is taking a very short-term view.

Apple vs Dell or innovation over profit (0)

Anonymous Coward | more than 2 years ago | (#38494706)

I think this other Forbes article should explain a few more things:
http://www.forbes.com/sites/stevedenning/2011/11/18/clayton-christensen-how-pursuit-of-profits-kills-innovation-and-the-us-economy/

Yeah - but we need the jobs here! (0)

Anonymous Coward | more than 2 years ago | (#38494750)

Sure.. China may not make that much. But if all of the manufacturing jobs came back to the US, that would be more jobs here. Granted, they'd have to pay the US workers more money, making the products more expensive and less competitive. But if all manufacturing came back to the US, then each company would be equally competitive and we'd have much higher rates of employment around here.

Obviously, this is a self correcting problem. Since eventually it will become just as expensive to pay chinese workers, the jobs will come back to the US. But it may take 100 years.

thoughts (4, Interesting)

buddyglass (925859) | more than 2 years ago | (#38494758)

I'm not an economist, but the matter of "who's paying whom" seems significant when it comes to manufacturing jobs. Usually the money is flowing in from the outside. On the aggregate, then, that would seem to enrich the country doing the manufacturing. Obviously if you could train your entire populace to do something more lucrative (say, design) and then have your trading partners outsource that work to your country then you'd rake in even more money. However, one wonders whether that's feasible given the inherent variance in human ability. There will almost always be some portion of the population which, for whatever reason (lack of inherent ability, lack of education, poor choices, etc.) are unable to do much beyond manufacturing or other unskilled labor. For this group to be actively engaged in manufacturing seems like a "win" compared to, say, having them all be unemployed or performing some unskilled task (other than manufacturing) where the compensation comes from domestic sources (e.g. working as a maid).

When it comes to the U.S., I've always felt like it should endeavor to compete at all levels of the labor spectrum. Currently it is not competitive in sectors like manufacturing because the cost of unskilled labor is simply too high relative to countries like China. That's something that could potentially be addressed via government intervention (possibly in the form of wage subsidies). As it stands, the U.S. has basically "punted" on manufacturing. It seeks to employ its labor solely in white collar pursuits and servicing its own (very high) domestic consumption. Instead of assembling electronics, the unskilled in the United States flip burgers, work in retail, clean houses, work as nannies, etc. Basically they meet the demand of a highly consumer-driven economy. When that consumption dips, however, such as happened during the recent recession, you see massive job losses (and these concentrated among those with lower incomes).

Truth check (2)

Waffle Iron (339739) | more than 2 years ago | (#38494770)

Let's look at the issue from the other end: top down. If it's true that China doesn't make net revenue manufacturing stuff for the US, then the overall trade balance between the US and China would be neutral. But it's not, to the tune of $2e11 per year.

Verdict: argument is false.

that's not what they're for (0)

Anonymous Coward | more than 2 years ago | (#38494792)

you don't make profit manufacturing you get people who can't design jobs to keep them from starving on the street. very useful to china with there high population.

Manufacturing is for Machines, not People! (2)

davecb (6526) | more than 2 years ago | (#38494846)

A properly designed assembly line uses humans as supervisors and QA persons, not machines

I've worked on the old kind, where I actually manhandled truck rims, and it was an insanely expensive way to make them. The same time, Honda opened its assembly line for the old 305 twin engine: no humans did work! They made sure the machines worked properly.

If course, you needed to locate those lines where there were good (if expensive) machine designers, engineers and repairmen. For Honda, that meant the home islands. For certain other companies, it now means the USA and Canada.

--dave

Profitable Enough to China (1)

Doc Ruby (173196) | more than 2 years ago | (#38494888)

There's a good argument against this study's conclusions, in that Apple's electronics are "iconic" but not the majority of sales even in their own markets, precisely because of the lower margins and more commodified products in the Android share of the market that better fits the Chinese manufacturing model. The study probably has very different numbers for the overall market in which Apple's products compete but fail to win.

This situation is of course is exactly the same as has always been the case with Apple products, since the Apple ][+. Would you make the case on Chinese PC manufacturing using only the numbers from Mac manufacturing?

The Chinese companies aren't able to make the carriers' profit, nor Apple's. I suppose they're not able to make the Korean or Japanese profit off memory, touchscreen and other cutting-edge components, or they would be. So they're profiting where they can: the manufacturing. 2% profit on a premium-priced product selling hundreds of millions of units is pretty good. It's hardly "unprofitable to China" just because it's far more profitable to other countries.

It's a small profit, but that's all they can get. The electronics assembly labor market is global and evidently the most extremely competitive part of the entire supply chain.

"Dumping" and why it's bad (2)

erroneus (253617) | more than 2 years ago | (#38494934)

We know that selling things at or below their cost is an aggressive and even offensive tactic. We counter these tactics locally by making them illegal. We counter these tactics internationally through the use of tariffs and import banning. It's interesting that for the moment, these methods only apply to finished and unfinished goods.

Costs of labor are subjective and relative at the very least and impossible to prove at the worst. Some people might say "this is a self-correcting" thing where eventually, the expenses will require increasing prices for labor. But I don't think that's the case in places like China and surrounding areas. In any case, the purpose of this "dumping" is to make it so attractive to outsource labor that local labor facilities and locations are abandoned. Once the buyers are hooked and have no other alternatives, they are then free to charge any price they wish after the competition is starved.

Re:"Dumping" and why it's bad (0)

Anonymous Coward | more than 2 years ago | (#38495228)

By any price they wish you surely meant to add temporarily, because when they then charge any price they wish, they get competition again.

The key to preventing competition is to keep your profits reasonably low so no one sees opportunity in the large margins you're making, but have to innovate instead, which is something you also should be doing. This isn't exactly a new theory either.

As usual, these people miss the point. (1)

MyFirstNameIsPaul (1552283) | more than 2 years ago | (#38495000)

Throughout history there has never been money in being the laborer in mass production, except in modern U.S. and Europe, where those jobs are facing extinction. The money has always been in the non-labor side of things. I'm not talking about shareholders and executives, I'm talking about shift managers, QC managers, engineers, accountants, etc. A 1300 employee factory is going to have at least 1000 laborers and 300 non-laborers. This is why China has a booming middle-class and the U.S. has a shriveling middle-class. The average U.S. worker is simply over-qualified for line production work and in some logical parallel universe these people are working non-labor positions and are not only employed, but better paid.

Profit = jobs? (1)

szilagyi (633672) | more than 2 years ago | (#38495088)

I know it's slightly off topic, but are we really so detached from reality that we actually believe that we have more jobs when profits are higher?

There's an optimal balance where profits are enough to motivate investors, but companies spend as much as possible on production. Profit is an inefficiency that has value only insofar as it keeps capital flowing in from investors, when needed. The idea that corporate ethics implies maximizing profit at the cost of all other business objectives has done quite enough damage to investors. If you bleed off too much profit, you destroy value for the investor overall. (In fact, if that profit isn't going straight to dividends or back into the business, which it usually isn't, then it's probably bad for the investor, even in the short run.)

I'm not one of these types that argues that America is going down the toilet because we lost manufacturing jobs, and we should freak out. But the argument that manufacturing is not as valuable to the economy because it's less profitable than being Apple is nonsensical. There are only so many Apple shares around, and their value depends on other businesses with solid value as well, which aren't as profitable but have other advantages.

China != the company that builds iPhones. China as a whole is making a whole lot more from iPhone production than the profit, which, according to the article, is quite reasonable anyway.

Likewise, America != Apple. Since Apple's profitability is so much higher, its value to America is proportionally lower, knowing that Apple's profit doesn't generally get spent proportionally in America. (Not that Apple isn't great or I'm not glad to have their jobs in the US. That doesn't happen because they're so profitable, though. It's just correlated with profitability, i.e., Apple is good at what they do, they make money, they can afford to bank a lot of cash, and they can also afford to hire the best people. Then, they use their cash and people wisely to do their business well, a virtuous cycle.)

Associating corporations and their profits with their home countries makes no sense, even if they operated entirely within their home countries. The purpose of corporations is to allow capital to flow freely, including across national borders. Corporations are only boons to countries to the extent that they spend money and pay taxes in those countries.

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