Apple Returns to America, Taiwan Companies return Home
United Daily News editorial (Taipei, Taiwan, ROC)
December 13, 2012
Summary: Early last year, Obama called on U.S. companies to return to the United States to set up production plants, and create jobs in the local community. Apple CEO Steve Jobs responded bluntly. "Those jobs aren't coming back." Jobs died little more than a year later. His successor Tim Cook has announced that he will spend 100 million U.S. dollars on the creation of a MAC computer production line in the United States. Can Cook complete this "Mission Impossible," one that strongman Steve Jobs swore he could not?
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Early last year, Obama called on U.S. companies to return to the United States to set up production plants, and create jobs in the local community. Apple CEO Steve Jobs responded bluntly. "Those jobs aren't coming back." Jobs died little more than a year later. His successor Tim Cook has announced that he will spend 100 million U.S. dollars on the creation of a MAC computer production line in the United States. Can Cook complete this "Mission Impossible," one that strongman Steve Jobs swore he could not?
Jobs are being lost, and not only in the U.S. Industrialized nations the world over have suffered a loss of manufacturing jobs. These losses have even led to the shrinking of the middle class. The Taiwan region has had to swallow a bitter pill as well. Bringing factories back home from places where labor is relatively cheap means higher costs, supply-chain disruptions, reduced competitiveness, and other challenges. That is why Jobs said "Those jobs aren't coming back." Today Cook has vowed to set up factories in the United States. If so, he must overcome these barriers. Only then will Apple's "return to the United States " have any real meaning.
The news spread that Apple production was returning home to the U.S. Many in the US welcomed the prospect. But others are dubious. They dismissed this as just another Apple PR campaign, in response to outside pressure. The Department of Justice has accused Apple attempting to fix e-book prices. Apple has been criticized for reaping huge profits from cheap labor in Mainland China, and of hiding tens of billions of dollars in overseas tax havens. Obama has criticized Apple for unfairness to the average U.S. taxpayer. Therefore, Apple is moving some production back home to the United States. This will dispel at least some of the social pressure, and soften accusations of exploitation.
Apple has the largest market cap of any corporation in the world. Apple has a market value of 500 billion U.S. dollars. Investing 100 million in the U.S. is a drop in the bucket. If this can change society's impression, the investment will be a bargain. But given Apple's record, such simplistic attempts to improve public relations are unlikely to win over many Americans. Apple needs to do more. It needs to rehabilitate the "Made in USA" label. It needs to demonstrate the efficiency and competitiveness of American production. It must dispel the curse that manufacturing isn't going to return to America. That is Apple's real challenge. Apple has been highly profitable. But it must face its corporate responsibility.
Cook disclosed few details regarding the planned investments. But when Hon Hai came to the United States and set up factories, it left a number of clues. Apple is returning to the U.S. But it is not acting alone. Part of the production chain is moving there with it. Manufacturing and assembly requires a cluster effect and an umbilical cord. Only this will meet US government requirements for the "Made in USA" label. Apple has invested 100 million U.S. dollars. If it can persuade downstream manufacturers to follow suit, it will have a multiplier effect on production and employment. If Apple can bring MAC production back to the U.S., and successfully make the leap to iTV production in the United States, that will constitute an even greater victory.
Hon Hai, Quanta, and other Taiwan-funded enterprises have long acted as Apple assembly plants and served as Apple component suppliers. If they follow in Apple's footsteps and move to the United States, they can no longer avail themselves of Mainland China's cheap and obedient labor. They will have to seek higher levels of automation and management to reduce production costs. This may present Taiwan's IT industry with an opportunity to undergo transformation. If it can create modes of production other than the Mainland's armies of factory workers, Taiwan foundries may be able to escape the fate of low margin OEM producers. Apple uses a single production line model. This is an important economic experiment. It tests the bottom line capabilities of various enterprises.
Now consider Taiwan. The Ma administration is vigorously promoting its "salmon returning home" plan. It is comparable to Obama's attempt to create more jobs for people in the United States. Many Taiwan companies are affected. Taiwan lacks a world leader such as Apple Computer. But many Taiwan businessmen are experienced in international business. They want to give something back to the community. They understand the Taiwan business model and local business conditions. Therefore in the long-term, individual Taiwan businessmen returning home will be able to create jobs, production, or exports, They will be able to catalyze industry and create a coat tails effect.
Obama is not the only one who wants to "bring manufacturing back to the U.S." This is a challenge for enterprises the world. When all manufacturing moves to low-cost regions, what will happen to the working class in developed countries? How will they maintain balance in the economic structure? Today this problem has been laid at Apple's doorstep. How will it solve the problem? How will it rid itself of the sweatshop label? This will present a major challenge.
2012.12.13 01:48 am