Even if Apple will make concessions to US President Donald Trump and outsource the production of smartphones and other electronics in the States, it will not affect neither the economy nor create jobs. In connection with another round of protectionist rhetoric, discussions about the dream of the head of state broke out with renewed vigor. Meanwhile, the transfer will not bring joy to anyone except the President, confident in Content Review.
Trump, as shown by recent experience with a missile strike in Syria, are very susceptible to emotional pictures. Meanwhile, depicted in many photos of the infinite line with the Chinese Foxconn workers is only a small part of high-tech production of smartphones. Moreover, in the case of Apple is the number of workers required, not continuously, but only at the peak of production. For example, in anticipation of the release of a new model, when it is necessary to produce extremely large numbers of smartphones for holiday sales.
At other times workers much less, and the working power of the universal Foxconn may move for the production of other companies in a matter of days. If the factory assembling the iPhone will be in USA, it staff will be loaded unevenly, and a seasonal model of earnings in the microelectronics production is unacceptable.
The second important problem is the ecosystem that has developed around Chinese factories where the lion’s share of microelectronics for the whole world. This means that the logistics of component supply, transport routes and speed honed to perfection. In case of opening factories in the US, all these chains will have to be rebuilt again.
Apple has the experience to open factories in certain countries outside of China, but these cases are driven by commercial interests. For example, a factory in Brazil is required in order to avoid paying the 30% duty for the import of smartphones, and the factory in India was a condition of the authorities, from which depended the opening of the Apple retail brand in the country.
Meanwhile, to save on production of the iPhone within the United States is unlikely to succeed. Payment of labor in the cost of Apple devices is 2-3% in the U.S. the cost of labor is higher, and the downtime, as discussed above, will increase the prices of the devices. This is unacceptable in the conditions of tough competition, when Apple is struggling to maintain market share, and Korean and Chinese smartphone manufacturers are aggressively pushing price and performance.
