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Tim Cook’s US Manufacturing Reality Distortion Field

Posted by Bob Warfield on May 30, 2012

Tim Cook visiting Foxconn

Tim Cook visiting Foxconn

People say Steve Jobs had a “reality distortion field“.  His powerful charisma and messages were said to have the ability to make people believe in what he wanted them to regardless of the facts.  Now Tim Cook is trying to deploy his own reality distortion field of sorts, and it’s working so far.

A number of articles have been written around the question of why Apple doesn’t do more manufacturing in the US.  After all, its super high tech products are produced in huge volumes that create thousands of jobs and our country could use those jobs, especially in the manufacturing sector.  The iPhone production line at Foxconn’s Zhengzhou Technology Park employs 120,000 people, so a lot of jobs indeed are at stake.

Great stories abound of Apple going to extreme lengths to create the world’s most potent supply chain, to the point where it has become a powerful competitive weapon.

For example, in 1998, Apple bought out all available air freight for Christmas 1998 to ensure that the company’s new translucent blue iMacs would be available.  This was done at a cost of $50 million, and the move handicapped rivals like Compaq that got to the party late, wanted to book space, and found it had already been sold to Apple.  When Apple wanted to make the little green light appear next to the webcam on a MacBook, it bought hundreds of $250,000 laser machines to drill the tiny holes in the metal.  I marvel today at the light that appears on my own Macbook when the lid is closed and it is sleeping.  The holes are literally invisible they’re so small.  It’s as if the light shines right through the metal, which in a sense, it does.

With the ability to invest so much, why aren’t more Apple products made in the good old U, S, of A?  Why isn’t Apple creating more jobs here?

Rather than just admit they do it overseas because American workers are unwilling to sleep thousands in dorms while working around the clock 12 hour shifts, so therefore it is cheaper for Apple, Cook has a more savvy response.  He blames it on a shortage of skilled workers:

All the remaining American tool-and-die makers–a key profession in preparing to make high volume products–could hardly fill the auditorium in Rancho Palos Verdes where the event was held, Cook said. In China, those skilled in that trade would fill several cities, he added.

And that is Cook’s reality distortion field hard at work.  I’ll give you some counter arguments.

First, if there really is such a critical shortage of these skills, why are so many out of work?  How is it that the US Aerospace and Defense industries manage to produce so many of the world’s highest performance and highest tech products from stealth fighters to nuclear submarines to missiles to drones?  The products produced by this industry are coveted by every country on the planet.  Are we really to believe that we can produce stealth fighters and nuke subs but we don’t have the skills to make iPhones?  That beggars belief.

Second, if there are so few machinists available, why are so many participating in online communites and sites ranging from professional sites like Practical Machinist to amateur sites like CNCZone to hybrids like my own CNCCookbook?  I get over 1 million visitors a year to my little site.  Sure, some are from overseas, but very few are from China.  Most, in fact, are from the US.

Third, how is there such a strong Maker movement in the US and so many domestically created products on Kickstarter if this is all dead and dying in the US?

The answer is simple–Cook is talking balooney.  It ain’t true.  This is not about skilled tool and die markers, this is about having 8000 workers who are willing to roll out of bed, take a cup of tea and a biscuit, and jump onto a 12 hour shift to adapt to a last minute design change Apple mandates.  It’s about dealing with a country whose factories and workers are subsidized to the hilt by the Chinese government and by the substandard conditions these workers toil under.  It’s about having the Chinese government invest capital so Apple doesn’t have to.

In fact, Cook’s message about a lack of skills is really just parroting what Steve Jobs told President Obama:

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Then again, perhaps Jobs was parroting Tim Cook, who is the man credited with moving Apple manufacturing from domestic highly automated factories overseas.

Lately, the New York times and others have cried, “Foul!” over worker’s conditions in China, but I have not seen anyone calling “Bull!” on Job’s and now Cook’s claims that the skills simply don’t exist in this country.  There’s a lot more reality distortion and dust-raising-skuffling going on too.  No end of blog posts about why Apple should take this on  when other companies like HP, GE, or IBM heven’t.  Or whether it is Apple’s responsibility or whether it is fair to ask Apple to play on a field made uneven by competition.  There is hand wringing over how much good is done for workers in China who might otherwise be much worse off and whether it is fair to ignore their plight versus domestic workers or jobs created for retail clerks in Apple’s stores.

That’s more Balooney and hand waving–Apple is now investing in improving worker’s conditions and its margins are so large it can afford to do far more before any competitor has much of an advantage.  Why can’t it invest in recreating manufacturing that works in this country?  Imagine what an amazing and productive paradigm shift that would be?  Wouldn’t that truly be a “product” that Tim Cook, master of operations and supply chains, could be proud of in the same sense that Jobs could be proud of his fantastic innovations around personal computers, phones, and digital music?

I’ll leave the subject with one last counter-argument to this tale of how woefully inadequate US manufacturing is to the task.  Take a look at Germany.  By all accounts it should be far less competitive than the US in manufacturing.  Taxes are worse.  Regulations are worse.  Wages are higher.  Yet, Germany’s manufacturing economy thrives.  For more insights on why, see my blog post over on CNCCookbook.

Nobody there will sit still for the argument that there just aren’t enough skilled Germans to do the work.  We shouldn’t sit still for that argument either.  We’ve penalized countries in the past for dumping products here to decimate competition.  How should we deal with dumping cheap wage workers for the same purpose?

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6 Responses to “Tim Cook’s US Manufacturing Reality Distortion Field”

  1. [...] Check out my post on my other blog, Smoothspan for more. [...]

  2. OSHA, EPA, NLRB, Unions, OBAMAcare, uncooperative schools, parents who think blue collars jobs are “uncool”. All these factors mean large scale production in America is gone for good. They are nailing their own coffin shut. I think Kickstarter type projects, small business etc, are still happening in spite of government. In the good intentioned effort to make america safer, they have made it essentially impossible to run a profitable business. Only large scale business like Mcdonalds or Walmart have the manpower needed to comply. Indeed they are part of the effort to close down small business.

    Ilikec

    • There’s no question there is a lot of adversity for small businesses here, and especially for small manufacturing businesses. That’s a shame because small business creates most jobs. But, that’s a different rant (and one I have made too) than this one. I will say that Germany also offers a counterpoint to this with many successful small manufacturers despite an even worse regulatory environment.

      My point in this post is I think Mr Cook is disingenuous when he says the problem is that there simply aren’t enough skilled workers to do the kind of manufacturing Apple needs. Their scale is a big company scale, and it is big companies like Boeing that do manufacturing like the aerospace and defense I use as my counter example. Cook could’ve said the regulatory environment is too tough for manufacturing here, which is kind of a variant on, “it’s cheaper to do it in China”, but he didn’t. He specifically said he’d love to manufacture more here but can’t because the skilled labor doesn’t exist.

  3. It’s all BS. I can honestly tell you that there are thousands of unemployed professional people right here in Tennessee that would kill or die to have a decent paying job doing high tech machining and manufacturing tool and die work etc. . Lots of offshore companies are moving their production here just to be able to say their products are made in USA. We have some VERY high tech industries here and if even a few of these companies that have the capital and wherewithal to make manufacturing happen here would stop bemoaning the bullshit lack of talent or skills or whatever other excuses and step up to the plate and knock one out of the park for US employment opportunities I think they would quickly reap benefits not only from good production and very willing employees but also massive support from US buyers who truly WANT to support American business. Sure if you want cheap low quality products nobody can beat China and others. However if you want extremely high quality products made with a high degree of skill and not have to import and pay shipping fees I think you would find the “Gamble” of using USA manufacturing opportunities will payoff in a big way. Most “Quality” chinese or other imported products are pricey enough to justify a made in USA option so for companies like Apple and many others who can invest many millions of dollars into production opportunities and facilities overseas how come they can’t see that Offshore companies are moving their production HERE in many instances to save money? I know for myself I would LOVE to be able to do high end work and have invested a TON of my own meager cash into purchasing CNC equipment for my shop so that I can take on work that would normally be out of reach. I know for damn sure that I am not the only one either. I can show you at least ten different mom and pop CNC shops within a five mile radius of my home who are doing the same thing. There are tons of forums out there that are packed with like minded individuals who are seeking a better career and a better quality of life and are willing to invest heavily into their equipment and education to get there. I swear sometimes it seems like middle America and our workforce capabilities are just completely overlooked by industry. I know for sure that we are being bombarded by Chinese and offshore companies who are sucking up every bit of work that is available from US companies who are more than willing to just ship it offshore. It is quite disturbing and I agree with the other poster here who said we are driving nails into our own coffin with this ignorance. Peace

    Pete Matos

    • Pete, I couldn’t agree more. Thanks for joining the conversation!

      Folks, retweet, like, and forward by email this article. We need to get the word out to our fellow US Manufacturing contacts, but also beyond that to the non-manufacturing contacts. One reason Cook gets away with it is that the folks not in the industry have no idea whether it is true or not.

      Best,

      BW

  4. Rick Lewis said

    I would offer the following to this discussion. It is a very simple statement from Adam Smith (The Father of Capitalism).

    “A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude or menial servants.”

    Smith, Adam. Wealth of Nations Kindle Edition.

    Since we live in a fatuous world of political correctness I would comment first and foremost that Smith had nothing against menial servants, rather his point was that they were unproductive labor. Productive labor created material goods, unproductive labor (be they doctors, lawyers, kings, judges or the military) existed solely because of the surplus created by productive labor.

    The United States is becoming impoverished for a very simple reason: we no longer invest in improving the game of manufacturing. Tim Cook is really nothing more than a High Tech Simon Legree (the slave ower in Uncle Tom’s Cabin). Instead of investing in the best tools, the best software and the best processes and mantaining a wealth creating manufacturing infrastructer in the United States, it is so much easier to have 240,000 pairs of hands doing the assembly. Time Cook has a “Plantation Mentality.”

    I pledged on April 6, 2012 to not buy an iPad (my friends ask me why a tech-savy person such as myself does not have one). I refuse to give my hard earned money to individuals who are in effect traitors to the basic principles of the European Enlightenment and arrogantly dismissive of the American Experience. The man practices very transparent sophistry.

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