Tim Cook stated during a recent conference held by AllThingsD that he'd like to see more US manufacturing of Apple products. That apparently has rattled some Taiwanese sources and their reaction is captured in a report by DigiTimes this morning.
The Cost of Moving is Too High
DigiTimes is reporting this morning that Taiwanese sources aren't in sync with Tim Cook's view of plants moving back to the US. DigiTimes reports that "Although Apple CEO Tim Cooks recently commented that he hoped more of Apple's production lines can move back to the US in the future, sources from the upstream supply chain pointed out that idea will be highly difficult to achieve in a short term since Apple's current supply chain is mostly located in Asia and if the company decides to conduct assembly in the US, costs to transport components will be too high.
The sources also pointed out that if Apple decides to move its production lines from China to the US, the US's high wage rates will be also an issue that could greatly boost Apple's cost.
Since moving a supply chain from one place to another takes time, while enterprises are mainly concerned about costs, if there is no profitability in moving, the related upstream component makers are unlikely to follow Apple in moving to the US."
So what did Tim Cook really say?
Tim Cook on Possible US Factories
During AllThingsD Conference held on May 29, 2012, Walt Mossberg asked Tim Cook having US factories once again, as many of us would like to see. The following covers that exchange:
6:46 pm: Walt notes that Apple used to have factories in the U.S. He asks if Apple ever envisions having big manufacturing in the U.S.
"I want there to be," Cook says. This is not well known, Cook says, but the engines for the iPhone and the iPad are built in the U.S., in Austin, Texas. The glass is made in a plant in Kentucky.
There's an intense focus on the final assembly, Cook says, but a lot of the value is in the different materials. On the assembly piece, could that be done in the U.S.? "I hope so, someday," Cook says, but he notes that the tool-and-die industry has shrunk dramatically.
"There are things we can do, and that's what we are working on," Cook says. "We should do more semiconductor things in the U.S."
Cook's Own Replies Don't Support US Manufacturing
With Apple's profits skyrocketing, there are a lot of people that are thinking it's high time that Apple bring back jobs to the US. The answers noted from Apple's CEO Tim Cook don't really confirm that a US plant is seriously on Apple's mind. In fact, earlier in the interview Cook stated that "We decided a decade ago there were things Apple could do best and that there were other things that somebody else can do as well or better. Manufacturing was one of those. I think that's still true." Can that be any clearer?
It's a catch 22 in that Cook states that the tool-and-die industry has shrunk dramatically in the US and yet with companies like Apple moving their manufacturing to Taiwan what do you expect? If Apple were to seriously bring a plant back to the US, I'm sure the tool-and-die industry would once again rebound.
China will always have labor cost advantages over the US and it's up to US lawmakers to level the playing field. If the middle class is ever to survive, US lawmakers will have to begin a trade war with China and tax products accordingly to make it profitable for US companies to bring back some of their plants to the US. But that's a political argument for another day. For now, the mere thought that Apple is even considering bringing back some manufacturing to the US is already freaking out some suppliers in Taiwan.
Make no mistake about it – I would love to see Apple take leadership in this area and bring back some manufacturing jobs to the US. Sadly, however, I equally understand that it's just never going to happen, and that's the bottom line. In the end, it was just another good sound bite for Apple's Tim Cook, and that's really too bad.