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Apple Considers Expanding Manufacturing Base to Indonesia
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I feel like every time Tim Cook appears on this site it's to talk about where he's cutting costs and seldom about innovation.
Love that they are moving away from China. Guessing that Tim and team are looking to diversify in general considering geo-political circumstances, which is probably why they are looking at a variety of countries within Asia.
cuz you're out for coffee longer than you are at work ;D + you're too expensive and slow workers.
Labor productivity isn’t the issue. The issue is cost of living in the US.
How much would the pay be? Would the cost of labor be 30 times what it is now, 100 times?
What would you be willing to pay for your products, if Apple maintained even a minimal profit instead of ~30%?
Well, the problem with the idea is that the United States has a federal minimum wage that, while way too low, is still significantly higher than wages in China, India etc. So it isn’t possible to shop for cheap labor by region in the USA. It’s all either the federal minimum or the state minimum if it’s higher.
Working so hard? Hardly. It's not even work. It's simply curiosity if those unspecified genuinely innovative software/hardware features rise to the level of him/her switching phones. And wondering what those innovative features are.
It's a genuine question. Try not to care so much about what I'm curious about. Especially as it doesn't concern you. Relax.
What customers will pay is what determines the selling price of the item.
Apple finding ways to save money by shipping your money out of your country is for their own profits, not as means to reduce the cost to the consumer.
Why would it make sense? Mexico’s cost of labor is not particularly low and it’s very far from Asian suppliers. Unless there was some kind of tariff benefit through NAFTA like with automobiles I doubt Mexico has a competitive advantage when it comes to making electronics.
I can show you several empty General Motors facilities in Ohio where the people weren't interested in working but they wanted job security. Back in 1985, someone told me how much someone pushing a broom at GM was making and it was two times what I was making doing computer work.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.
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
And yet, we’ve seen Apple by and large stick to their 30% profit margin over the years. As we saw with the AVP, Apple won’t eat the higher manufacturing cost if it means cutting into their margins. We’ve also seen price reductions as manufacturing costs come down in the past (the latest being the M2 MBA). I’m not saying Apple reduces prices out of the goodness of their heart since the price reduction means increasing units sold, but it seems that they pretty consistently keep to that 30% margin.
Really? I don't remember that in accounting. Customers can refuse to pay, but it would take a complete boycott of the products to change the price.
It's not that Apple is shipping money out of the country. It's the cost and the consistency of labor that dictate the most volatile part of the cost of a product.
Yes, the US$7.25 per hour or US$2.13 per hour for table servers is much higher than other countries. California's $16.00 per hour for typical hourly workers and $20.00 per hour for fast food workers still keeps them in poverty. Imagine if the Tesla auto workers in Fremont, CA were working for minimum wage. I see a great many of them and Tesla uses buses to transport them to work three hours away.
Aka I don’t want to pay people wages they deserve to be paid because I’m a greedy bastard and Apple being worth $3 TRILLION isn’t enough.
Unfortunately this. We also brainwashed people into thinking college degrees are required to be successful.
So people go tens of thousands of dollars (or more) into debt for some job that makes them $60,000 a year.
These are assembly jobs. The worker do repetitive tasks that are easy to learn. No skill is required. All the skilled engineering is done in California.
The big problem is simply finding the people. Unemployment rates are very low. Both Mexico and Malaysia have rates under 5%. So to attract workers Apple will have to offer pay high enough that workers quit their current jobs. So Apple has to look for places where they can afford to afford (literally) "attractive" pay.
As for putting the assembly plants in the US. Here is the question: "What would it take you cause you to quit your job and go to work as a low-skilled assembly worker?"
Remember the suicide nets? Some workers were jumping off the roofs of tall buildings at Foxconn because they saw themselves stuck for life working at a low-skilled assembly job. They felt they could not leave because other options paid even worse, so they felt like "wage slaves" locked into meaningless job forever because they wanted the money. We in the US see the $6/hour pay as "low" but they see it as just high enough that they are trapped. Then a typical Foxconn plant might hire 100,000 people. The company typically offers free or very low cost on-site housing so they don't have a commute to work. The pay and conditions were good enough that none of the people could find anything better. But at the same time they live and work on the company plant 24*7. Some decided that jumping off the roof was a better option. Hence the nets.
Would you (yes, you) quit your current job to work at a place that needed to install suicide prevention nets? No. Because in the US you can be an Uber driver, a PhD student, or a policeman. There are better options.
SO Apple/Foxconn are forced to build plants on places where there are no better options for people. It is not so much cheap labor as simply finding 100,000 people who want to do this kind of work.
The low-wage thing is a myth. Currently, in Malaysia, they have nearly full employment. I just looked it up and unemployment there is running at 3.3%. If Apple/Foxcon wants to open a plant with 20,000 workers they will have to offer pay high enough that 20,000 people will quite their current jobs and move to Foxcon. Gone are the days you cn offer a Chinese worker any money at all and they will work. Today your company has to be the best option, espacially when you need 20,000 in a country that has full employment.
We have the same thing here in California. The minimum wage is $17.50 per hour. In the pre-covid days retraunts used to be able to find employees with an offer of below minimum wage plus tips. But today it is illegal to offer that. they MUST pay minimum wage. But you know what? No one will work for only $17.50, even McDonald's has to offer a starting pay above that. As I said, with our current low unemployment, the ONLY way to hire a worker is to motivate him to quit his current job. You have to pay more than the other guy or offer better working conditions, promotion opportunities, or pensions.
Could you imagine would Foxcon would have to offer to cause 100,000 Americans to quit their jobs and go to work for Foxcon? It will never happen.
The 1% skew the results. Remove the 1% from every country and the numbers would change dramatically for some. Mostly in countries with a huge wealth disparity.Why does the U.S. need to reform itself when it's ranked #2 in terms of real GDP? It's higher than Indonesia.🤔
Half the workers in 'Merica live paycheck to paycheck, not because they're lazy. A sizable number of them work 2 or more jobs. The bottom 50% own less than 3% of the wealth.
That's always very misleading.
Adding up the cost of all the shares of any company does not tell us much other than the gamblers who play with equities are making long plays.
Apple has cash on hand and it has quarterly revenues, and it has IP. Those are the things Apple can use to buy/influence/bribe others to do its bidding.
Apple pays taxes on its income.
The gamblers playing the stock market are just doing their own thing.
It isn’t the consumer’s fault. Apple and the other gadget makers trained people to expect the price points we see now. Higher than a decade ago but still obscenely low considering how cheap Apple and the others get their labor for. I mean, think about it. Today’s iPhone would have blown away anyone who saw it in 1995. Compared to 1995 tech it’s a crazy powerful super computer that fits in your pocket. And Apple “only” wants about $1k for it. 1995 me would have been amazed that you would eventually be able to buy that kind of computing power for so little money. Back then desktop computers ran at megahertz speeds and packed whopping tens of megabytes of memory. Not to mention the vast 100 and 200 megabyte hard drives. A nice setup with a monitor and external drive might have cost you somewhere in the neighborhood of $4,500.00.
The iPhone is a crazy bargain. Artificially cheap actually.