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Apple Considers Expanding Manufacturing Base to Indonesia

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Apple CEO Tim Cook said the company is "looking at" potential manufacturing opportunities in Indonesia following his recent meeting with the country's president.

indonesia-tim-cook-president.jpg
Tim Cook with Indonesian ministers (photo: AP Photo)​

During the meeting with Joko Widodo, Cook highlighted the mutual interest in boosting local manufacturing to support Indonesia's economic growth. "We talked about the president's desire to see manufacturing in the country, and it's something that we will look out," Cook later told reporters.

Indonesia has been actively seeking to attract foreign manufacturing to power its economic development, with the Widodo administration pushing to become a new hub for international business. This offers new openings for Apple as it pursues its strategy to reduce reliance on Chinese manufacturing, which is mainly operated by its assembly partner Foxconn.

Apple seeks to diversify its supply chain in the face of geopolitical tensions, economic slowdown, and other risks such as production disruptions caused by China's COVID lockdowns. With production shifts already opened in Vietnam and India, Apple is exploring further expansion in Southeast Asia.

"I think the investment ability in Indonesia is endless. There are many great places to invest, and we're investing. We believe in the country," Cook added.

The meeting came shortly after Cook's visit to Vietnam, where he met with Prime Minister Pham Minh Chinh. In Hanoi, Cook outlined plans to deepen Apple's investment and increase expenditures with local suppliers, reinforcing the company's commitment to enhancing its presence in the region.

Article Link: Apple Considers Expanding Manufacturing Base to Indonesia
 
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https://www.macrumors.com/2024/04/17/apple-considers-manufacturing-base-indonesia/
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threesixty360

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Would it not make sense for the big American tech firms to work together to establish production facilities in some of the cheaper areas of the USA or even the Caribbean etc? Places they have influence over. I get that China already has a lot of expertise there, but that was built up over time. In 10-15 yrs Apple, dell, HP, Google and meta etc could build equivalent manufacturing at home.

With govt help surely that’s possible? What are the downsides? As long as there is a mandate for keeping real estate costs down for workers it could work. Or is America just too expensive forever now?
 
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ThunderSkunk

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Mexico would be great. …but I wonder how many years they plan on having humans mfg these things at all. Their disassembly robot drawing on a library of assembly instructions for a growing catalog of models shows they’re putting significant brainpower into automation and automation-friendly design & mfg already.

Perhaps it still makes financial sense for all involved to build an entire plant in indonesia just for a few more models before its all shut down & robotic lines build everything for the american market in New Mexico for the tax incentives. At that point, I could see similar assembly plants in other markets, one for the EU making their specific consumer-friendly models never to be exported, one for China for both our national security purposes, and one on a floating barge at sea free from all laws and regulations defended by a police force of genetically engineered hyperintelligent dolphins with laser eyes and
 
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TechnoMonk

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threesixty360 said:
Would it not make sense for the big American tech firms to work together to establish production facilities in some of the cheaper areas of the USA or even the Caribbean etc? Places they have influence over. I get that China already has a lot of expertise there, but that was built up over time. In 10-15 yrs Apple, dell, HP, Google and meta etc could build equivalent manufacturing at home.

With govt help surely that’s possible? What are the downsides? As long as there is a mandate for keeping real estate costs down for workers it could work. Or is America just too expensive forever now?
Click to expand...
It isn’t the labor cost/wages. Most of the iPhone components are manufactured in Asia. US needs to be hub for components, before it can start assembling iPhones or other gadgets. There isn’t enough labor to ramp up quickly in US/Mexico to build parts that go in to iPhone.
 
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threesixty360

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TechnoMonk said:
It isn’t the labor cost/wages. Most of the iPhone components are manufactured in Asia. US needs to be hub for components, before it can start assembling iPhones or other gadgets. There isn’t enough labor to ramp up quickly in US/Mexico to build parts that go in to iPhone.
Click to expand...

TechnoMonk said:
It isn’t the labor cost/wages. Most of the iPhone components are manufactured in Asia. US needs to be hub for components, before it can start assembling iPhones or other gadgets. There isn’t enough labor to ramp up quickly in US/Mexico to build parts that go in to iPhone.
Click to expand...
Ok. But is it impossible to be a component hub in the west? This has become a strategic issue for the USA because all their manufacturing is centred around regions they don’t control and are far away.

A long term to bring that closer to America should be important no? Going from one far est Asian country to another doesn’t completely solve the long term issue of lack of control.
 
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TechnoMonk

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threesixty360 said:
Ok. But is it impossible to be a component hub in the west? This has become a strategic issue for the USA because all their manufacturing is centred around regions they don’t control and are far away.

A long term to bring that closer to America should be important no? Going from one far est Asian country to another doesn’t completely solve the long term issue of lack of control.
Click to expand...
Nothing is impossible, but it doesn’t mean feasible now. If US is serious about bringing back manufacturing, it has to be a long term plan. Even a decade is aggressive, but can be done with policies conducive to manufacturing hubs without red tape and crippling regulations. Companies wnat reliable supply chains, if US can’t provide that, there is no long term. American is too divisive on both sides to actually work towards a middle ground. It’s either no regulation or too much. I wish it would happen one day, but it’s not as easy as labor costs.
 
sw1tcher

sw1tcher

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threesixty360 said:
Would it not make sense for the big American tech firms to work together to establish production facilities in some of the cheaper areas of the USA or even the Caribbean etc?
Click to expand...
Quick search shows that the average hourly pay for a factory worker in Indonesia is IDR 54,151 per hour or roughly $3.34USD. Meanwhile, the average hourly pay for a factory worker in the U.S. is $17 per hour. Then there are the higher regulatory and environmental compliance expenses in the U.S. compared to those in less developed or developing countries.

No matter where you go in the U.S., even in the cheaper areas, the cost of production will be much higher.

Then there is the issue of filling those positions. The states that tend to have the lowest labor costs are also the ones struggling to fill current factory/production jobs.

www.ecisolutions.com

US Manufacturers Struggle with Growing Need for Skilled Help

The manufacturing labor shortage is a persistent problem for businesses across the U.S. View the top 10 states with the biggest shortage of manufacturing jobs.
www.ecisolutions.com www.ecisolutions.com
 
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TechnoMonk

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sw1tcher said:
Quick search shows that the average hourly pay for a factory worker in Indonesia is IDR 54,151 per hour or roughly $3.34USD. Meanwhile, the average hourly pay for a factory worker in the U.S. is $17 per hour. Then there are the higher regulatory and environmental compliance expenses in the U.S. compared to those in less developed or developing countries.

No matter where you go in the U.S., even in the cheaper areas, the cost of production will be much higher.
Click to expand...
Indonesia is 7th largest economy if you consider the real GDP(purchasing power parity). Indonesia is much cheaper to live. There is a reason, highly regulated EU countries fall further down in real GDP. Is US willing to find a middle ground and be flexible. Can it reform itself to bring costs down? Look at the list, EU ranks pretty poorly in real GDP terms.

Real GDP (purchasing power parity)

www.cia.gov www.cia.gov
 
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