OT: iphone factory life....

[ultraman6970]

Very interesting because if we get those phones produced in the US, they could cost like 5000 bucks each hehehe... not an apple fan myself, they figure it out how to sell you useless stuff and feel great about it

http://www.businessinsider.com/man-s...as-like-2017-4

[icepick_trotsky]

I actually have read that domestic production would increase costs a lot less than you'd think. The main reason for Asian production is that all of the supply chain of competent manufacturers are there and can react more quickly to production changes.

[tylercheung]

yes, there's a lot of infrastructure investment in these things that has not been matched in the US. Granted, over there, it's a brutal race to the bottom in terms of margins for these parts, so it's not an easy thing for individual companies in Asia to survive there.

[benb]

It seems like it'd take 20-30 years to bring the production/supply line back here, and it would be heavily, heavily robotic, but I'd tend to agree maybe it wouldn't be as expensive as we think.

My first internship was in 1995.. the company was still assembling hardware (network equipment) in the US at that point.

All of the placement of chips onto boards and the soldering was robotic... and that was 1995.

And they sold all those robots and shipped all the hardware work to china by 1996 when I went back for a second summer, cause it was cheaper to have Chinese workers do it by hand than do it with robots in Massachusetts. (the software side never left the US)

[johnmdesigner]

The US and Asia are two completely different work mentalities and different sets of rules concerning safety in the workplace.
Remember how hard it was to get US workers to build Japanese cars here?
Remember the Foxconn explosion from aluminum dust in the factory where the Iphone housings were being polished?
Do an online search and see how the workers lives have been affected by an industry with virtually no regulation.
I don't think you could duplicate that here without considerable change and considerable cost.

[bicycletricycle]

I would be interested to see what that $450 dollars gets a person in that economy, seems like that housing was included so I guess they have $450 in cash per month to spend. I have to say that the conditions were better than I expected but not obviously super great.


The cost of labor really does raise the price of manufactured goods in the US. It is true that you can bring that price back down with robots, but then you are really bringing back a lot less jobs.

A client I have makes a relatively simple product both here and in China, both in factories it owns. It is mostly made of molded plastic components and has a few minutes of assembly time.

It costs twice as much to make it here! The plastic costs the same, it is made on the same machines and in similar molds. The labor is the difference. They could redesign it to be less complex to assemble and add some robots to help bridge this gap, but not all the way(some of those improvements would help the china cost as well) , unless you plan on huge import taxes that is just a road to going out of business. Unless people start spending considerably more money on made in the USA products.

The consumer has a lot of power in this situation.

[johnmdesigner]

Originally Posted by bicycletricycle

I would be interested to see what that $450 dollars gets a person in that economy, seems like that housing was included so I guess they have $450 in cash per month to spend. I have to say that the conditions were better than I expected but not obviously super great.


The cost of labor really does raise the price of manufactured goods in the US. It is true that you can bring that price back down with robots, but then you are really bringing back a lot less jobs.

A client I have makes a relatively simple product both here and in China, both in factories it owns. It is mostly made of molded plastic components and has a few minutes of assembly time.

It costs twice as much to make it here! The plastic costs the same, it is made on the same machines and in similar molds. The labor is the difference. They could redesign it to be less complex to assemble and add some robots to help bridge this gap, but not all the way(some of those improvements would help the china cost as well) , unless you plan on huge import taxes that is just a road to going out of business. Unless people start spending considerably more money on made in the USA products.

The consumer has a lot of power in this situation.

There was a survey a while back about the cost of a pair of pants.
I think they were about $10 more if manufactured in the US.
The consensus was "no way would I buy that."

Very hard to convince the US public to stop buying imported $5 tee shirts and $10 pants.

[bicycletricycle]

Yes, I think that the cost barrier is a really difficult problem. The global economy is probably not going away soon. If we are going to compete with 3rd world labor rates we will need-


A higher price ceiling provided by the consumer.

or

Huge import taxes (good luck with trade war)

or

Wait until the economies that are being exploited for cheap labor rise to a higher quality of life and become less competitive (Japan,Taiwan). The problem with this plan is that their will probably always be some low quality of life country to exploit for cheap labor.


The most direct way to start to solve this problem is increased consumer demand, not sure how this happens exactly.......

Originally Posted by johnmdesigner

There was a survey a while back about the cost of a pair of pants.
I think they were about $10 more if manufactured in the US.
The consensus was "no way would I buy that."

Very hard to convince the US public to stop buying imported $5 tee shirts and $10 pants.

[Tony T]

Originally Posted by ultraman6970

…not an apple fan myself, they figure it out how to sell you useless stuff and feel great about it

Yeah, who needs computers, useless.

[echelon_john]

Conditions there sound a whole lot better than in an Amazon warehouse in the U.S....

Similar dynamic in terms of short tenure, minimal training, tight scheduling and heavy demands placed on employees.

Link here for a look: http://gawker.com/inside-an-amazon-w...mak-1780800336

[colker]

Originally Posted by echelon_john

Conditions there sound a whole lot better than in an Amazon warehouse in the U.S....

Similar dynamic in terms of short tenure, minimal training, tight scheduling and heavy demands placed on employees.

Link here for a look: http://gawker.com/inside-an-amazon-w...mak-1780800336

Good post. What exactly is more expensive in the US labour? Maybe it ends in taxes and insurance other than the worker´s wallet.
HOusing in 3rd world big cities is not that less expensive. It´s becoming expensive everywhere. It´s a globalized economy and makes it 2 ways: at first, work goes towards poor environments but then those become expensive due to globalized finances.

[bicycletricycle]

The longer interview is very interesting.

I pulled out this segment because I have close family members that have made bad decisions in their life and are persistently destitute, a simple non physical job that people can show up and do without any skills or need for an application in exchange for housing and enough money for food would go a long way for a lot of people. Perhaps putting screws in a phone seems like a crap job but it is better than homelessness (I have been homeless).

Warning- I will now say something that makes me sound like a right wing maniac, even to my own ears which is a strange experience.

Perhaps lowering the minimum wage to get more jobs like this back home wouldn't be the worst idea?





Leswing: Is it a respected job? Is it a job that people go, "Oh, that's a decent way to earn a living"?

Zeng: I don't think so. People working the factories are also working on becoming a security guard, deliveryman, housekeeper. So it's the same kind of level of position. You don't see it as better.

I think the only way to look at the factory job is that you really keep people from being homeless. Because you need no skills, you just get into the factories. They don't even ask you any questions. During the interview, you can just get in that day. And then they take care of your meals and your dorm.

So it's like if you really have nowhere to go, if you're in the city alone and have no relatives to support you, go to the factory. You might earn some money, a little bit, and then gradually you can get your life together[/I][/I]


I have close family members that have made bad decisions in their life and are persistently destitute, a simple non physical job that people can show up and do without any skills or need for an application in exchange for housing and enough money for food would go a long way for a lot of destitute people.

[alterergo]

Originally Posted by ultraman6970

they could cost like 5000 bucks each hehehe...

I think the rule of thumb is that with a lot of high tech products 1/3 to 1/2 of the MSRP price is bill of materials and assembly labor. A lot is distribution costs (stores, eCommerce, warranty, tech support) and R&D expenses, all these usually involve US labor. So, even if US wage bill is 10 (!) times higher (some of it is higher productivity), I don't think I phone would be more then $200 more expensive if produced in the US. But if it competes against Asia-produced Android phone, that might just kill its sales.

[colker]

Originally Posted by bicycletricycle

Warning- I will now say something that makes me sound like a right wing maniac, even to my own ears which is a strange experience.

Perhaps lowering the minimum wage to get more jobs like this back home wouldn't be the worst idea?

I am w/ that line. Deregulation can be a good thing if we have more jobs being offered. Unemployment is worse, way worse than low wages.

[alterergo]

Originally Posted by colker

I am w/ that line. Deregulation can be a good thing if we have more jobs being offered. Unemployment is worse, way worse than low wages.

It is a sensible thing to think and say. It is just not well supported by evidence. As it was mentioned already, frequently, it is not about just iPhone producer, it is about whole industrial clusters, with specialized suppliers, etc. You can see that even in apparel, button producers specialize and locate next to pants and shirts producers, etc. So, lowering min wage might will only help if it induces the whole "cluster" to relocate to the US. That might be a pretty drastic cut.

Moreover, people looked at instances of increases in min wage in the US. It appears that higher min wage associated with higher (!) employment in poor communities. The argument is more disposable income allows to purchase more local goods, benefiting local economy as the whole.

This is, for instance, a classic study:
Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania
http://www.nber.org/papers/w4509