Steve Jobs said “No!”
A recent article in the New York Times entitled “How the U.S. Lost Out on iPhone Work” highlighted this question asked of Steve Jobs last February by President Obama at a Silicon Valley dinner meeting:
"Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. 'Those jobs aren’t coming back,' he said, according to another dinner guest
The president’s question touched upon a central conviction at Apple. 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."
This “Superior Foreign Workforce” myth has become embedded in our corporate executives' way of thinking.
Unfortunately, this mindset is shared by senior executives at a majority of manufacturing corporations in America. Frankly, I think it should be taken as an insult to American middleclass workers. Are our workers really less flexible, less diligent and less skilled than their foreign counterparts?
Of course not.
I worked in high-tech firms in Silicon Valley for thirty years, before and during Apple’s meteoritic rise. One of the largest Silicon Valley manufacturing facilities in the ‘60s and ‘70s was IBM’s Disk and Data Cell plant in south San Jose. I worked there in the evenings while attending college. The IBM manufacturing plant was state-of-the-art, even by today’s standards. It had an automated warehouse distribution center that had computer-controlled robot-forklifts pulling parts off of shelves. The clean-rooms had automated parts transfer systems and just-in-time inventory controls. The entire plant literally ran “like clockwork.”
The IBM manufacturing workers were extremely motivated, diligent and highly skilled. The plant was operating three shifts at that time to keep up with the demand generated by IBM’s then-new System/360 mainframe. I worked in manufacturing administration and witnessed the planned “flexibility” built into the production line to address shifts in demand levels and engineering changes.
That period in Silicon Valley history represented “vast scale, flexible, diligent and industrially skilled” manufacturing at its highest level.
However, like most Silicon Valley companies, IBM closed down its San Jose plant and transferred production to cheaper labor markets.
The IBM San Jose manufacturing plant, as well as all of the high-tech manufacturing facilities in Silicon Valley, truly provided all of the “flexibility, diligence and industrial skills” that the Apple executives now say can only be found overseas. And Silicon Valley workers are able do it today as well.
In reality, there is only one benefit to U.S. corporations in having their manufacturing operations located overseas.
"Cheap Labor"
High-tech products can again be built in Silicon Valley with the same (or higher) levels of “flexibility, diligence and industrial skills.” But they will cost more, and that is a price that corporate America needs to understand is required in order to rebuild the American working middleclass.
American manufacturing corporations can continue to pay sweat-shop wages overseas and pump up executive salaries and bonuses at home due to the resulting cost savings. But, in the long run, the middleclass workers who purchase their products and services in the U.S. are going to become less and less able to do so.
The NYT article mentioned that the combined net worth of the Silicon Valley executives at last February’s dinner meeting with Obama “exceeded $69 billion.” As I mentioned in an earlier post, there is no one controlling their level of executive compensation. Yet they can, and do, ratchet-down the pay and benefits of their employees knowing that this will mean that they can ratchet-up their own income.
For corporate executives to say that manufacturing jobs will not come back to the U.S. because overseas manufacturing workers are more “flexible, diligent and skilled” is pure bullshit, and they know it.
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Update: January 25, 2012
Mishima666, in comments, provided some excellent insights into the U.S. government’s role in protecting the “foreign-sourced manufacturing” interests of U.S. companies like Apple. He also offered this interesting observation:
"Missing from the [NYT] article was [this] probing question. We learn that 90 percent of the parts of an iPhone are made outside the U.S. Then we hear Jobs (as in Steve) say: ‘those jobs aren't coming back.’ But wait a minute. The parts we are talking about are microprocessors, memory chips, displays, circuitry, and chip sets. These are all the kind of advanced, high tech, capital intensive, knowledge intensive, not cheap labor intensive products in which economists, business leaders, and political leaders always say America has a comparative advantage because it is the technology leader.”
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Comments
The foreign outsourcing of American jobs has become a standard over the last few decades. It is going to be a difficult tide to reverse.
Barracks style living and suicide watches and nets for jumpers...
Is this coming our way Steven??
I sure hope not.
I don't think manufacturing will return to this country. Not with the billions of Chinese working for pennies on the hour.
Of course it is bullshit—and of course they know it. But the alternative wording is: “We can get every one of those jobs back immediately, if sufficient numbers of Americans are willing to work for 75 cents an hour.”
I think you can understand, Steven, why corporate executives prefer the former to the latter.
It's all true.
The problem is, they don't talk about the impact on Chinese families. Chinese people are desperate for work, so they'll take anything at all. Anything. The Chinese countryside is full of villages with no working age adults, they're all living in dormitories hundreds of miles away. The children live at home on farms with the grandparents, who are eking out a living growing rice and getting checks from their children in the cities. Chinese new year, their major holiday of the year right now (like Christmas for us), involves huge, massive amounts of train travel, as everyone travels hundreds of miles to see their families. Their children living far from their parents.
I don't know what the future holds, but expecting every worker around the world to work 12 hours a day, 6 days a week, that's not living. That's Dickensian. People do it when they're frightened, when they're hungry, when they're terrified. I don't want to live that way. I wouldn't think anyone wants to. The Chinese are one generation away from starvation, so that's why they do it. The English peasantry did it in the Industrial Revolution for the same reason. You notice they didn't talk to any rank-and-file Chinese worker? Probably because they're afraid to talk. They wouldn't dare talk. That job is worth too much for them to talk, and probably six or eight people depend on that salary.
So the CEOs at Apple earn a huge buck, banking on the lives of hungry people halfway around the world, and they build an infrastructure based on slave wages of frightened people who don't even have a home to call their own. It means everything we've worked for here in this country, every protection (like the weekend, the eight-hour work day, the pension, a chemical-free workplace) is a lie, and an anachronism.
Sure, I could work 12 hour days, six days a week if I shipped my kids off to you to raise. And I'd invite you to visit me once a year in my 1000 square foot apartment, where Bob and Mary would visit at the same time. I don't want that life. I'm typing this as I'm sitting with my kid while she does her homework. A CEO doesn't care about my kids, my life, my dreams. They just want a cheap phone.
I don't know what the answer is. I know we have more than we need. We could live in a house half this size. But asking everyone to have so little and work so much that they can't raise or even see their own children, it's not sustainable. It's sad. It's terrified people with no democracy, who are not raised to speak up, ever, who take it and take it and take it again. I hate seeing the Chinese model held up as an example. I'd bet if we could ask them, we'd see a lot of lonely, unhappy people who are afraid to make waves. It makes me angry and sad for my children. I wonder what kind of world we're giving them.
The American system is based on freedom. Freedom to think creatively. Freedom to speak up. Freedom to be individuals, to make an argument and defend it, to think logically. 90% of what I learned in college was "come up with an idea and back it up with facts" not "do what you're told, memorize the material, and take a test." We're taught to apply what we know, to think, to create, to innovate. Every American company I've ever worked in is based on people speaking up with their ideas. They're expected to. Bring your opinions from your life, from your other jobs, and apply it here. Help us out. No one wants a rule follower, a coward, a human robot. But the Chinese system is based on human robots following rules for fear of starvation. A dormitory full of 3000 or 30,000 human robots that the bosses can roust out of bed at midnight and make them work, because they're too afraid to say no? I don't want that life.
An American college degree is still valued around the world, exactly because of our ethic of creatively applying what we know. We don't rely on tests alone, we rely on creative thinking. Innovation. But yet the CEOs of the world are saying they don't really want that for the masses, they want a factory full of people working at starvation wages, with no lives at all, that they can roust out of bed.
I like having a family. I like sleeping in my own bed with my husband every night. Sure there are a lot of things I have that I don't need... a few extra rooms in the house, cable TV, a vacation once a year. But what they're holding up as a model is people who can't sleep in a bed with their husband or wife, can't have children they see every day, and work a 72 hour week every week?
That's just wrong. It's wrong for them and it's wrong for us.
I began to comment here but it got too long. I'll post my reply to this blog on my page.
;-)
The extreme conditions in China were brought to light earlier this month when dozens of Chinese workers at Foxconn’s Wuhan manufacturing facility “climbed to a factory dormitory roof and some threatened to jump to their deaths in a dispute over jobs”
Foxconn is the maker of Microsoft’s Xbox video game consoles.
See: http://www.msnbc.msn.com/id/45969515/ns/world_news-asia_pacific/t/xbox-workers-china-threatened-mass-suicide/
I’m sure Microsoft’s Xbox profit margin improved when their manufacturing moved to Wuhan. But, this outsourcing of labor did not prove to be good for the workers in either country.
The only thing I can see that is positive in all this is that these computers are providing world-wide communication of a kind never experienced before...we saw how that worked in Egypt, which might be just an experimental first blip. The big corporations may in time come to regret producing all these 'cheap' means of people comparing notes and making plans...
The cognitive thinking that you are destroying your very customer base needed to survive by doing this never enters their mind. That's why they have to make up the crap like you pointed out in order to fully justify the move.
People die for mythical numbers in a ledger every day. History will paint us as beyond insane.
You got that right! It's all about cheap labor without the labor laws to protect them against abuse by corporations that are trying to squeeze as much as possible out of them until they drop or commit suicide.
--i.f. stone
"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."
--supreme court justice louis brandeis
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
--upton sinclair
"One withstands the invasion of armies; one does not withstand the invasion of ideas."
--victor hugo
"The greatest evil is not now done in those sordid dens of crime that Dickens loved to paint. It is not done even in concentration camps and labour camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. "
--cs lewis
gamechanger-- occupying republicans
When I was growing up, we could all sing the Uni0n Label song, which was part of the ILGWU's "Buy American" program, which was aimed at keeping the clothing industry in the U.S.
As long as American consumers bought American products, capitalists had no choice but to produce products in America.
The capitalists figured out that they could flood the US market with cheap foreign products that would drive more expensive American products out of the market...but that would only work if Americans would buy those foreign products.
Once upon a time, Made in Japan was a joke indicative of a low quality product. That changed in the late 1960s as the Japanese automobile industry invaded the US market.
Once upon a time, Made in China was a joke, but the joke is on us.
The fact is that it is American Consumers who created this dilemma by going to Wal-Mart and buying cheap foreign goods.
Henry Ford, the quintessential capitalist, didn't invent the automobile. He didn't invent the assembly line. His genius was to price his products so that his own employees could afford to buy them with his generous employee discount.
As a canny capitalist, Ford knew that it was essential to capture market share....and he did it through is pricing policy.
In order for an economy to prosper, the workers must be able to afford the products manufactured by that economy. In China, they have violated that paradigm.
There are two Chinas. One produces cheap consumer products, such as clothing, shoes, and the other basic necessities of life. They price the export versions of these products at a rate that subsidizes the domestic consumption of the same products.
In other words, a pair of jeans that you buy for $15 at Wal-Mart, will cost $1.5 in China....but, even at that price, those jeans represent a day's worth of labor.
Without a vibrant American market, the Chinese have nowhere to sell their products. As Americans lose purchasing power, China loses captive consumers.
The conundrum is that we can't afford our present lifestyle without those cheap Chinese products, so we continue to consume instead of demanding higher priced American products.
Question is: is it sustainable? Wish I knew.
http://datamarket.com/data/set/1fyg/us-economic-statistics-illinois-manufacturing-employment#!display=line&ds=1fyg
http://www.renaissancepersonnel.com/employment-news-and-trends/experts-say-arizona-economy-is-improving-at-a-good-rate/
But as you say, “Is is sustainable?”
"In the 1981-86 period I was one of the U.S. government's top trade negotiators, especially with Japan. At that time, Apple was trying to crack the Japanese market for personal computers and getting nowhere. Steve Jobs and other Apple executives had the funny notion that the U.S. government had an obligation to help them and asked me and other negotiators at the Commerce Department and the Office of the U.S. Trade Representative to help them get on the shelf in Japan. We did all we could and in doing so came to learn that virtually everything Apple had for sale, from the memory chips to the cute pointer mouse, had had its origins in some program wholly or partially supported by U.S. government money.
"Nor have things changed that much in the intervening time. Apple's products still have a large U.S. government R&D content and I'll bet that the guy who says Apple has no obligation to help Uncle Sam does strongly believe that Uncle Sam has an obligation to stop foreign pirating of Apple's intellectual property and to maintain the deployments of the U.S. Seventh Fleet and of the 100,000 U.S. troops in the Asia-Pacific region that make it safe for Apple to use supply chains that stretch through a number of countries such as China and Japan between which there are long standing and bitter animosities.
"In this context the comment in the article that Apple is the pinnacle of capitalism also struck me as anomalous. I mean, how would this no-obligation guy and his stock option and bonus baby colleagues feel about investing in those "incomparably scalable and flexible" supply chains if Washington decided to pull the fleets and the troops back to Guam, Hawaii, and San Diego? And those supply chains. Are they the natural product of good old free market capitalism or does that scalability and flexibility and capacity to mobilize large numbers of workers on a moment's notice have something to do with government subsidies and the interventionist industrial policies and of most Asian economies? It's the latter, of course. Apple is not the pinnacle of capitalism. It's the pinnacle of the marriage of Silicon Valley innovation with strategic Asian mercantilism.
"Missing from the article was the probing second question. We learn that 90 percent of the parts of an iPhone are made outside the U.S. Then we hear Jobs (as in Steve) say: "those jobs aren't coming back." But wait a minute. The parts we are talking about are microprocessors, memory chips, displays, circuitry, and chip sets. These are all the kind of advanced, high tech, capital intensive, knowledge intensive, not cheap labor intensive products in which economists, business leaders, and political leaders always say America has a comparative advantage because it is the technology leader. Why are South Korea, Taiwan, and Japan supplying the memory chips and micro-processors and displays instead of the United States. As a leading U.S. negotiator on these issues for some time, I can tell you. It's not because these countries have better technology or more engineers or cheaper wages. It's because they targeted, subsidized (through currency manipulation, tax preferences, and other means), protected, and even invested state money in these industries while U.S. government and business leaders largely failed to protest or counter these moves in any way. These jobs could and would come back to America if Washington were to begin to respond tit for tat to the mercantilist game."
" Flexible and diligent" is to some extent code for "willing work when and how we tell them, until they drop, for very little money. As to their skills, you know we do not train hardly anybody in applied machine technology anymore. I would not argue that particular point. As the anonymous Apple exec said, "The U.S. has stopped producing people with the skills we need." And he might have added, "...at the price we pay."
Businessmen have always held onto beliefs about what makes a good business, even when those beliefs cut their own throats.
For instance, it made "good sense" to allow half-hour infomercials to promote a product or service. Except...do you know someone who isn't paralyzed or brain-dead that would actually watch one of these horrors? And yet TV stations still run these disasters throughout the night and many parts of the day. Ineffectual commercials, wasted air time and something that cheapens the very act of broadcasting.
Nothing will happen until they go broke and end up on the breadlines, where we are. Or unless someone physically and materially threatens them. And by material I mean 7.62 millimeter globs of lead. If all Obama can offer is promises, and Republicans only offer genuflection before this philosophy, the people who are really affected by it are bound to take action eventually.