Should We Even Try to Bring Manufacturing Jobs Back?

In my column this week, I wrote about the terrible conditions at factories in China where Apple’s iPhones and iPads are made. The impetus was a groundbreaking pair of stories in The New York Times about how the iPhone is manufactured and why it’s not made here.

In this post, I want to focus on why Apple and other manufacturers have moved so many jobs overseas that much of the US workforce hasn’t benefited from innovations originated in the US.

Why does Apple do almost all its manufacturing in China? Yes, labor costs are much lower—about $20 a day at the main Foxconn plants. But that’s not the whole story, as The Times pointed out:

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

So, China has attained critical mass in fast, efficient, high-volume manufacturing. So, when the late Steve Jobs demanded new, unscratchable glass screens be added to the iPhone–“I want a glass screen, and I want it perfect in six weeks,” he reportedly said—an Apple exec got on a plane to Shenzhen because “if Mr. Jobs wanted perfect, there was nowhere else to go….”

Why?

The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

We’ll get back to the Chinese government later, but there’s another big issue—the skill set of the workforce.

Workers in an electronics factory in Szenzhen, China. Photo: Jurvetson/Flickr

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match…In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend.

In other words, the US simply isn’t preparing people for the jobs that do exist, or would exist, here if there were enough people trained to do them.

So, I have three conclusions:

  1. Labor-intensive, low-end manufacturing jobs are gone forever. You simply can’t replicate the Shenzhen supply chain in the US, nor should we pay people $20 a day, as they do there. The global economy has moved on, so clothing, textiles, and most consumer electronics products will be made in China or other places from now on.
  2. The Chinese government has richly subsidized many of these factories to do things that otherwise would be deeply unprofitable. Surely some of this must be illegal under the World Trade Organization agreement, whose admission of China in 2001 opened the floodgates. The US needs to monitor this closely and pick smart battles in the WTO, because it’s a tough place to win claims and we don’t really want a trade war with China.
  3. We must better coordinate the needs of private employers and the resources of educational institutions. None of the Republican candidates have discussed this, because it’s all about guv’mint, which the GOP base loathes. President Obama has talked about it a lot, but it has to be part of a coordinated plan that could get through Congress—a big, big challenge. Community colleges are key here, because they can provide much more targeted vocational education than the head-in-the-clouds four-year colleges can.

What do you think? How can we bring back some of these jobs to the US—or create new ones? Please make a comment and have your say.

, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

21 Responses to Should We Even Try to Bring Manufacturing Jobs Back?

  1. Stephen E February 3, 2012 at 4:59 pm #

    The supply chain for I-phones and computers may be there. We should hold onto supply chains for existing and emerging technologies. Cars, military, aerospace, green technologies

    • ikeo February 4, 2012 at 6:24 pm #

      TS ALL ABOUT PAY. WHEN COMPANYS FROM THE UNINITED STATES CAN HIRE SLAVE LABORERS FROM FOREIGN COUNTRYS TO DO THEIR MANUFACTUREING AND THOSE COUNTRYS ALL HAVE A MUCH LOWER ECONOMYS WE AMERICANS SUFFER WEITH NO AVAILEABLE FAMILY SUPPORTING JOBS AND OUR COUNTRY SUFFERS FROM LACK OF MONEY BECAUSE OF THERE IS NO WAY TO FIND ANY TAXES TO SUPPORT OUR ECONEMY.ALL BECAUSE THERE IS NO JOBS!!!

  2. Not Optomistic February 4, 2012 at 12:19 am #

    Simple to me, Population in the US continues to rise ( people are living longer). More jobs are moved overseas and the jobs that are here are being replaced by automation. We are destined to become a service country for the rest of the world.

  3. Paul February 4, 2012 at 2:57 pm #

    In other word we need a retraining program!! I totally agree!!! Anyone who cannot find a job within 2 months should be drafted into retraining program. Where they are evaluated and trained in skills that would get them a job.

  4. Adam February 4, 2012 at 3:05 pm #

    There are yet two more reasons, not discussed in the article, that the U.S. has lost so much of its manufacturing base.

    For all of my life, American culture has lobbied hard to send its young people on an educational trajectory that bypasses anything associated with skilled or semi-skilled manual labor. I believe this tendency is deeply woven into the American cultural fabric, wherein manual labor has, for many generations, been viewed askance as undeserving of respect, to the extent that it does not present a viable entree for those seeking occupational prestige.

    The result has been a gradual, and by now wholesale, shift away from the type of polytechnic education that, in former generations, served as the engine of American industrial productivity and competitiveness. By contrast, Germany has, for over 200 years, maintained high levels of investment in its system of polytechnic education resulting, not coincidentally, in an industrial economy that is today Europe’s most productive, its largest, and by some metrics, its richest.

    Closely related to the American abandonment of polytechnic training and the neglect of manual occupational skills in general has been a corresponding bias toward the money handling occupations.

    I believe this process really began taking off in the 1960′s, as leaders of American manufacturing industry, who had hitherto been promoted internally through the ranks of design and engineering, found themselves increasingly replaced with whiz kids sporting shiny, new MBA’s. The inevitable result was a de-emphasis on product and a corresponding preoccupation with creative accounting and structured finance.

    Until the United States undertakes the agonizing soul-searching that must precede any revolution in our collective values, I foresee only continued malaise. The pressure under which the American middle class finds itself is traceable directly to the poor choices that we, as a nation, have made regarding the place that manufacturing industry should occupy in our economy. Fix the thinking and that will go a long way toward fixing the problem.

  5. Mike February 4, 2012 at 4:44 pm #

    Companies that exist in the U.S., receive tax breaks in the U.S. and other incentives, should have to build a percentage of their product here. Why give them incentives to ship jobs overseas? If they’re going to do that, tax them to death, make them move out of the U.S. and pay higher tariffs.
    Yes it’s going to mean higher prices for goods, but in the long run it will balance out because by giving us jobs we’ll have more money to buy the product, to send our children to school to achieve the degrees that are needed etc…

  6. Deborah Holley February 4, 2012 at 5:53 pm #

    First, I'd be happy to buy some of those "labor-intensive, low technology jobs" manufacturing products that are made HERE, if they were available. Not only would it be supporting our neighbors and countrymen, it would also be less energy-consumptive and more planet-friendly. Remember, the global economy exists only because of the abundance of fossil fuels, which will quickly diminish in the decades ahead. In the end, we will most likely have to return to local economies, which will be better all around for everyone. We as consumers can make this occur sooner by refusing to purchase these so-called “cool” consumer goods made out of the country. Sooner or later we’re going to have to realize that stability and moderate prosperity for everyone in our society is far better than being able to acquire every cheap giz-whiz that comes on the market. (Many of us are getting to the point where we can’t afford any giz-whizzes any more anyway.) If we would consciously support small domestic manufacturing by buying those products, our manufacturing base would increase naturally, just as it did originally. (But you would have to get large, global manufacturers under control; they are controlling everything, including our government, at this point; we have no such thing as free markets in this country currently.)

    Secondly, I certainly will affirm that this country has lost all of the supporting industry for manufacturing. I know people who have had ideas and attempted to make prototypes, only to have great difficulty finding materials and knowledge. They never ever got to the patent financing stages or beyond. If we want to return to an entrepreneurial environment, we need to have industry of at least some significant level to make it happen, and have legal protection for small businesses with new products from patent theft.

    Thirdly, without significant manufacturing, I shudder to think how we possibly think we can defend ourselves, should the need arise where we have to go to war. There are many other reasons why we desperately need our own manufacturing base, many of which are long-term benefits which are difficult to enumerate or possibly even envision at this time.

    Frankly, I don’t see where colleges have been of much help in encouraging manufacturing or even providing knowledgeable workers. My own experience in manufacturing, 16 years, showed that new ideas and knowledge came from “hands on” work experience, resulting in improved work processes and new ideas.

    Universities have professors develop their own research and sell their knowledge, with rights reserved for the institution, to investors, many of whom have been badly burned in the past trying to get these ideas turned into ventures. Professors also observe what’s going on in the work world and make money by quantifying what they’ve seen and publishing books on the subject, but they rarely come up with ideas that actually spur the development of industry.

    In my own experience, my company tried working with a university, but everything was definitely in the interest of that institution, with no benefit to us. And even community college graduates we hired had to receive further training; they were in no way ready to actually “get to work.”

  7. Jim February 5, 2012 at 3:24 pm #

    All good comments, and Mr Gold make a valid statement in the article.

    My contention is that we focus our labor training on the types of industries and jobs that CANNOT leave. Consider these: Food/Beverage, medical care, construction (all types), transportation, fuel production (natural gas, especially), product design, aerospace, entertainment and media production, just to name a few. We’re very good at these things, so let’s train more people to do them better and sell these to the world.

    Another thing I would do is export our skils, namely: ENGLISH. (We have lots of unemployed people that can speak English fluently, and we have billions of people around the world that are trying to learn it. Let’s get them together!) Another thing we do well is INFRASTRUCTURE. We’re really skilled at planning cities, putting in sewer, utilities, roads, etc. and there are many parts of the world that need those skills. Let’s export to them OURSELVES and our knowledge.

    The economy of the world is changing. We need to adapt.

  8. Cindy Eksuzian February 5, 2012 at 3:25 pm #

    I like a couple of the comments that Deborah Holley made. For example, the immediate question that has come to my mind is, why isn’t there some body in this country focusing more strongly on as Deborah states, “ideas that actually spur the development of industry.” I think this focus can be had or more paths be found here if our American economy looks more closely at what avenues Tax Reform can take to help make it more attractive for industry to begin and grow in America once again. Here is an example at R Ehttp://www.rechargenews.com/energy/wind/article285207.ece This article is interesting in that it talks about the state of NEW JERSEY trying to find a way to create jobs and sustainable energy alternatives through the government agreeing to offer an investment tax credit to embark on such an initiative.

    This brings me to the second point I wanted to make where again Deborah Holley states, “we will most likely have to return to local economies.” My thought here is where in our local economies throughout the United States can some sort of tax reform in the form of an investment tax credit benefit that local economy thereby fueling job creation?

  9. Alycia February 6, 2012 at 3:24 am #

    Should We Even Try to Bring Manufacturing Jobs Back? Absolutely Yes, we will bring manufacturing back? Absolutely not. At least not in the way we know it.

    Most of the companies that have the means to create new jobs are public companies. Their goal is to maximize profits to appease shareholders. To do that you need to keep costs down. Most companies biggest costs are related to employees salaries, benefits etc…

    In addition, we’ve conditioned American buyers to pay as little as possible for goods. Discount discount discount. You hear buy American a lot, but when it’s time to pull out the wallet the majority of buyers want low prices not made in America. This will not change… ever.

    Also, most American workers are not willing to do the jobs that we outsource or use migrant workers for. Working on an assembly line without Union support or in the fields picking produce for $10 an hour is not part of our make up anymore.

    Can the Federal government work with states and create jobs to help rebuild our roads, bridges and the rest of the Country’s infrastructure? Can we create new industries that allow hundreds of thousands of new positions? Can we get big corporations to forgo some profit and help reboot our education system?

    So many questions, so many options, so much trouble still ahead. It’s going to take years of suffering until we get the U.S. back. Are we willing to suffer? Can there be a swell of positive news that we rally around and really rebuild America? I hope we can. I rambled on but would love to read others thoughts.

  10. Aly February 6, 2012 at 9:36 pm #

    Hi Howard – I work for a titanium components manufacturer here in Houston, TX. I’d argue that we should definitely bring manufacturing jobs back to the US. I really appreciate your point about utilizing community colleges for more vocational training. The manufacturing industry has hundreds of thousands of jobs that we simply cannot fill. Investing in the education of future manufacturers is an important piece of the puzzle.

    Anyhow, thanks for sharing! – Aly

  11. Paul February 6, 2012 at 9:48 pm #

    It proves, again, the U.S. does not have "Free Trade" policies. Trade policies need to include all of our rules and regulations that American companies obey. Also, imports need to have the same tarriffs that the importing country applies to U.S. products we export. If the manufactured product is made in inhumane working conditions, or employs children, there needs to be an import ban on those products. Really we need Corporations to have Honor, Integrity, and Conscience. I think that is asking for the impossible.

  12. Kram Nirreh February 6, 2012 at 11:30 pm #

    The working capital that Apple has is massive, they are very smart on their profit margins BUT……..it is time that they set aside a lump sum every year in reserve for a build up to fund and bring their manufacturing to U.S. soil. A three year plan to offer engineering jobs and facilities to those who sign up and committ to Apple’s U.S. growth would be staggering. Students would come out of the wood work, former retired engineers who lost $ recently and local community colleges benefitting from specific courses Apple needs to bring those jobs from China to the U.S. It could almost single handedly turn around the U.S. unemployment rate and confidence, not to mention the pride in buying “made in the U.S.” Ipads and Iphones 5,6,7,8 and so on. We are begging/looking for anything American made and no company has the BALLS to invest OR take a chance on its own people. I say [screw] the 15% profit over last year’s quarter that the share holders demand.

  13. Kram Nirreh February 6, 2012 at 11:30 pm #

    THIS IS OUR TIME, OUR CHANCE, OUR MOMENT TO PLAN. THERE IS NO FINACIAL SUFFERING IF APPLE SETS ASIDE PROFITS TO BUILD EVERYTHING THEY NEED HERE. Our President is begging for it, both parties are foaming at the mouth to be the first to say “we did it, we brought manufacturing back here!” FOR THE LOVE OF THOSE LOST IN 9/11, FOR THE SOLDIERS COMING HOME, FOR THE UNEMPLOYEED LIKE MYSELF AND FOR ALL THE FUTURE GENERATIONS WHO ARE LOOKING FOR HOPE AND MOMENTUM LETS DO THIS TOGETHER AND ONCE AND FOR ALL “TRUST YOUR FELLOW AMERICAN” THAT IS WAITING TO WORK HERE AND SPEND THEIR MONEY ON THE TECHNOLOGY OF THE FUTURE…………APPLE IT’S YOUR MOVE…!CHARACTER ISN’T MADE, IT IS REVEALED……………………..WHATS YOUR CHARACTER APPLE?

  14. Asian Guy in USA February 7, 2012 at 1:04 am #

    I bet everyone of you have an apple device or someone in your family does. Stop!!! buying there stuff until it’s MADE IN THE USE PERIOD……………….

  15. BILL W February 7, 2012 at 1:26 am #

    ITS ALL ABOUT TAXES AND CORPORATE GREED. IF YOUR A 100 MILLION DOLLAR A YEAR COMPANY AND YOU SAVE 20 PERCENT ON TAXES PROFITS SURE GO UP WHILE THE AMERICAN ECONOMY GOES DOWN.

  16. dout June 4, 2012 at 1:22 pm #

    terrible article. I’m sorry but our workforce can be trained in a week to do manufacturing jobs. They are not gone forever. We have more warehouses and factories here than China does. This is all about trade laws and politics.

  17. Eric November 5, 2012 at 7:25 pm #

    Yep!! Just go ahead and leave those jobs over seas and very soon there wont be an American consumer to buy the cheap products. Very smart!!! The very concept this country was built on and workforce is trained for will no longer be here!! So everyone needs to go into more debt to get an education that they may or may not get a job for when they graduate. Then our government will be holding the loans that these “trained” people have that they cant find a job for. Guess what? Those loans go bad and our govmt goes bankrupt along with all the colleges and major universities that have created the education bubble just like housing. Very Very Smart!!! Keep up the great work you’ve just about got this country destroyed this country !!! In all fairness its too far gone anyway

Trackbacks/Pingbacks

  1. Apple has become reliant on a global chain of suppliers like Foxconn Technology Group… ‘Wouldn - February 3, 2012

    [...] Read Howard Gold

  2. The human price of Apple’s success | In Digest Biz - February 5, 2012

    [...] Should we even try to bring manufacturing jobs back? [...]

  3. Invest in Stocks | Howard Gold’s No-Nonsense Investing: The sweatshop price of Apple’s huge success - May 18, 2012

    [...] Read Howard Gold’s take on whether we should try to bring Apple-like manufacturing jobs back to t… [...]

Leave a Reply