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Summary:

Apple’s CEO reveals in an interview that he will invest $100 million of Apple’s money to build Macs in the U.S., starting next year. The reason: corporate responsibility.

iMac October 2012 event
photo: Om Malik

The very private CEO of Apple, Tim Cook, gave his first two wide-ranging interviews and both will publish Thursday. And he even made some news: Apple is bringing some of its manufacturing, for at least one product, the Mac, back home to the U.S., he revealed in a Q&A with Bloomberg Businessweek. He told NBC’s Brian Williams the same thing, in an interview set to broadcast Thursday night.

“Next year we are going to bring some production to the U.S. on the Mac,” Cook said. “We’ve been working on this for a long time, and we were getting closer to it. It will happen in 2013. We’re really proud of it. We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial. So we’ll literally invest over $100 million. This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money.”

The reason, he said, is that he feels Apple has a “responsibility” to create jobs.

“I do feel we have a responsibility to create jobs. I don’t think we have a responsibility to create a certain kind of job, but I think we do have a responsibility to create jobs. I think we have a responsibility to give back to the communities, to pick ways that we can do that … and not just in the U.S., but abroad as well.”

It’s not clear that it would be a profitable move for Apple, but it’s sure to be a politically popular move in the current economic environment. It’s even a bit trendy: for some of America’s iconic companies, in-sourcing is all the rage right now.

Cook says the reason Apple doesn’t make most of its products in the U.S. is that the skills and the training necessary are not here. “The consumer electronics industry was almost never here,” he told NBC, in a preview clip available online. “It’s not a matter of bringing it back. It’s a matter of starting it here.”

 

  1. It will be profitable. Apple wouldn’t waste money if profits weren’t in the picture – they are one of the most profit-oriented technology companies out there.

    When it comes to electronics manufacturing, most of the process is automated, anyway. The labor differential between China and the US is shrinking, and Apple has more automated manufacturing and assembly process than most other companies because of their scale.

    There are other reasons that they will benefit from having this close to home. Prototyping turnaround will be much faster, and they can do more experimenting with process technology and materials. I wouldn’t be surprised if Jony Ive’s increasing influence within company leadership circles is at least partially driving this change.

    100% offshoring makes sense for companies like Dell or HP that are churning our ho-hum designs using standard technology and pushing the limit on supplier-based cost reductions. By contrast, Apple is an innovation-driven company, so it makes a lot of sense to have at least some subset of manufacturing nearby where they can tweak the process, develop new approaches, and realize their leaps and bounds in other ways. As we have seen from them in recent years, this doesn’t necessarily mean that the products which come out of this effort will be more expensive. Rather, any price reductions will come from new developments rather than squeezing suppliers.

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  2. Kerry "Moe" Rovan Thursday, December 6, 2012

    Johnstown, Pennsylvania is THE PERFECT place for such a plant. President Clinton who has been visiting Johnstown over the last five years speaks of Johnstown becoming like a “second home” for him. And he spoke of Johnstown and its need to get people to know it all over again, (he feels people have forgotten us. I have been actually praying for Apple CEO Steve Cook to put a divsion of Apple here in some of our super large sitting empty Johnstown steel mills. For at least a year now I have been praying for this. Actually, my prayers for a division of Apple to come here go back to 1997 when Steve Jobs came back to Apple.

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    1. Kerry:

      A steel mill is probably not a suitable facility. Manufacturing requires a fair amount of “clean rooms” to operate. Free of dust, microbes, aerosol particles, and chemical vapors. There are places where such facilities are already available and empty. Refitting a steel mill would be a difficult project.

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  3. Stay with real insight from previous articles about Apple’s build in China and you recognize, first, that labor costs are only about 4% of the cost of production. Second, you would know that ab’t 80% of the components come from outside China – but, still in the Far East. Third, the prime factor in producing several variations on a theme someplace like FoxConn is sufficient process engineers to make a changeover in a timely fashion. They can throw 1500 engineers at a new build.

    I have no idea where in the US – right now – Apple could fill that last requirement.

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  4. “Cook says the reason Apple doesn’t make most of its products in the U.S. is that the skills and the training necessary are not here”.

    – The reason AAPL stock is dropping precipitously is because the skills and the training at the corporate officer level are not there. It’s time to insource highly skilled, “best and brightest” MBAs from India, China, and Latin America to replace American CxOs The level of CxO talent outside the U.S. surpasses that of staid, unimaginative US corporate officers. And globally sourced MBAs will work for far less than American CxOs. That would be a real value play for shareholders.

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    1. What is the basis for your statement “The level of CxO talent outside the U.S. surpasses that of staid, unimaginative US corporate officers”? I have lived and worked in China, Japan, and Taiwan and worked with many companies in Latin America and Europe, but I don’t see anything close to what you are saying. Up until recently many Chinese companies were hiring foreign nationals from North America and Europe to run their companies because they acknowledge that they didn’t have the talent. That is changing, but I see nothing that says the situation has completely inverted.

      There is a reason many of the best and brightest from the world over come to the US to gain an education. Higher education in places like China and Latin America doesn’t even begin to compare to the quality of what you get here. That’s why many of these countries are partnering with US universities to open satellite campuses in places like Shanghai and Singapore.

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  5. It will be interesting to see if the line of existing Mac he’s referring to is a reinvigorated Mac Pro tower! Long live the Mac Pro!

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