Thread: How the U.S. Lost Out on iPhone Work

it is all about the mighty ROI and that is why out sourcing is so temping

say I need 10 people working 10 days to make 100 and I have to pay a total of 1000 expense (wage, facilities etc) for it.

Automation/innovation will reduce to 5 people 5 days to make the same 100 but I have to invest upfront 8000. As someone who has to watch his own cash flow and bottle line, he might not make that investment.

Now, if the same innovation will reduce the initial investment to 2000, now we are in business.

Originally Posted by Doktor

xinhui,

Low laboring cost depends on perspective. IIRC the minimum wage in Greece (even now) is 750 euros, all the Greek company needs to do is move the shop 50 km accross the border to Bulgaria (EU member), Albania or Macedonia and for 500 euros will get the best skilled workers.

Innovation depends on company's organization and if management is willing to encourage it, not on wages alone.

Google this: factory moving back to us from china

Moving back to America
The dwindling allure of building factories offshore

May 12th 2011 | NEW YORK | from the print edition

“WHEN clients are considering opening another manufacturing plant in China, I’ve started to urge them to consider alternative locations,” says Hal Sirkin of the Boston Consulting Group (BCG). “Have they thought about Vietnam, say? Or maybe [they could] even try Made in USA?” When clients are American firms looking to build factories to serve American customers, Mr Sirkin is increasingly likely to suggest they stay at home, not for patriotic reasons but because the economics of globalisation are changing fast.

more: Multinational manufacturers: Moving back to America | The Economist

Why we left our factories in China
June 29, 2011: 10:33 AM ET
Fed up with the poor quality of having their products made in China, American businesses like Sleek Audio are moving production back home.

By Sheridan Prasso, contributing editor

FORTUNE -- When Mark Krywko and his son, Jason, launched Sleek Audio, a small business making in-ear headphones for iPods and other audio devices from a Florida town near St. Petersburg, they asked several U.S. manufacturers for quotes on how much it would cost to make their product. It was, of course, oh so much cheaper in China, so they contracted with a factory in Guangdong province and launched their first product in 2007.

But last year, fed up with low quality, too much travel, communications problems, shipping delays, rising costs, and -- worst of all -- a ruined shipment of 10,000 sets of earphones that cost millions and nearly brought the company to its knees, the father-and-son team made a big business decision: quit China and move their manufacturing back to the U.S. "It became very difficult and taxing on us," says Jason. "Now we control the quality of the product. No more waiting for production has been a wonderful thing."

more: Why we left our factories in China - The Term Sheet: Fortune's deals blog Term Sheet

Get Ready for Manufacturing's Big Comeback
By Jordan Weissmann

Dec 21 2011, 9:20 AM ET 17

As the cost of doing business in China rises, U.S. manufacturing could be on the verge of a renaissance. But that won't necessarily mean a flood of blue-collar jobs.

In the past year, the conversation about U.S. manufacturing has undergone a quiet but remarkable change. Gone is much of the doom and gloom about the death of American factories. Instead, many now seem certain that industry is due for a comeback here at home.

The latest murmurs of good news came last week, when Cook Associates released the results of survey finding that 85% of manufacturing executives expected at least some kinds of factory work to return to the U.S. from overseas. The firm polled roughly 3,000 executives at small and mid-size manufacturers, about two-thirds of whom said their companies were currently manufacturing or outsourcing work abroad.

more: Get Ready for Manufacturing's Big Comeback - Jordan Weissmann - Business - The Atlantic

Apple simply arbitraged labor and environmental impact on the Iphone and to some degree will have to come back sooner or later due to energy/commodity dynamics.

I would read Karl Denninger (market-ticker.org) mostly agree with what he says on the subject.
No, High-Tech Thuggery is NOT All In China in [Market-Ticker]

On August 24, 2007, Ed Colligan, then CEO of Palm, Inc., wrote to Mr. Jobs, refusing Mr. Jobs’s request to enter into an illegal agreement with Apple. Mr. Colligan wrote: “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal.”

In addition to manipulating the market on one end they(high tech big heavy hitters) pretend like someone it is about someone being smarter and more enabled to succeed. But the reality is they get an employee for 22 bucks a day in China that makes 1 - 1.5 iphones a day that is literally their slave since they can't leave the premises and are in essence between actual indentured servants and slaves.
Why Are You Buying Apple (And Other Chinese) Products? in [Market-Ticker]

The executives loose sight of the fact that people like these whom are stifled and downtrodden through 3rd party contracts are in essence shut out of the creative process. They cannot improve it like someone making a shoe could if he were working directly for the owner everything is layered to insulate and streamline sameness.

No software engender, or product designer whom can express ideas or create new products will work for no pay and slave like conditions unless they are forced to, but its problematic selling the product since the creator won't be able to sell it to you. Those potential people whom could and should create new value will simply do it for themselves or someone else whom values them more highly than 20 bucks a day. Because the executive overhead gets used to getting something for nothing does not mean it will stay that way forever and when they do have need of people whom ask for equalized treatment and way more money they will be deluded by their former reality and go down the path of creative destruction, because they will feel like they know better and a software team in India will do it for less and faster with less risk, unfortunately the adjustments will sink the product when it hits the market place. But that is life.

What bothers me about all this is that once again we are applying our 21st Century morals and standards to the way another country does business. And we're ignoring the fact that early in our industrial revolution or development, not only was child labor rampant, but working conditions were horrendous for many children. England went thorough a similar experience.

In the early stages of industrialization, a country transforming from an agrarian economy is less sensitive to the moral implications of child labor and long shifts. The reason is because child labor and long hours has long been accepted as normal in farming. It not hard to imagine employers in a young industrial climate adopting the same ethic in hiring workers for their factories.

England, the US and other mature industrialized nations today operate under labor laws that took time to evolve. They now consider child labor, unsafe workplaces and long hours as inhuman and immoral. It is good that they help China see the light, but it is hypocritical to condemn her for not having seen it yet.

But we are living in the 21st century, why putting 18th century morals?

What's good for European or Americans should be good for Chinese as well, especially when we talk about kids labor.

Those kids should go to school, not to work. Period. By buying items produced that way, we support that behavior.

Originally Posted by Doktor

But we are living in the 21st century, why putting 18th century morals?

Kids on North American farms are still expected to do their share and while school does take up a large portion of their time, it does not mean that they don't clean out the barn before jumping on the school bus. And during haying or harvest time, they're expected to pitch in from sun up to sun down.

Originally Posted by Officer of Engineers

Kids on North American farms are still expected to do their share and while school does take up a large portion of their time, it does not mean that they don't clean out the barn before jumping on the school bus. And during haying or harvest time, they're expected to pitch in from sun up to sun down.

It's one thing to help your family and obtain working habits, it's another to work 8+ hours.

Originally Posted by Doktor

But we are living in the 21st century, why putting 18th century morals?

There are fundamental drives in all human activity that do not respect what century we are in, and there are cultural differences between east and west. We can communicate our wish that products we buy are not made by school children. Eventually the producer gets the message. It would be bad business to go ignore the customer's values.

What's good for European or Americans should be good for Chinese as well, especially when we talk about kids labor.

Agree up to a point. Take a hard look at our young people and answer the question: why are so many into drugs and other questionable activity? We may have it right about child labor, but we don't have it right in many ways.

Those kids should go to school, not to work. Period. By buying items produced that way, we support that behavior.

By expressing our disapproval, changes will follow.