Thursday, January 26, 2012

Why the US Will Never, Ever Build the iPhone

This article discusses outsourcing, and why it might now be why you think. The iPhone, along with numerous other products that are popular in the United States, are made in other countries, often times China. Cheap foreign labor is often cited as the reason why those jobs are sent overseas, instead of staying the the United States. However, there are other reasons as well. Factories in China cost less to run, due to lower wages, have better supply chains, and can scale up much faster. Workers in Chinese factories often live on site, so they can go to work at a moments' notice. Also, there are thousands and thousands of potential workers, so it is much easier to "scale up" production than it would be in the US. When it comes to supply chains, Asian factories have much better access to materials and components, since many electronics suppliers are based out of Asia. So instead of shipping every processor and hard drive from a factory in Asia to the US, it is far cheaper, faster, and easier to get those same parts to another site in the same region. Another big reason why most technology is primarily produced in other countries is education. China graduates nearly 10 times the number of engineers of the US. Engineers are needed to oversee the manufacturing process, and there are just many more in Asia. It is a slippery slope, because as more large companies move overseas to be closer to customers, wjo are also overseas, even more companies will follow.


Aditya said...

It is true that China can have much faster production due to a much larger population, lower worker wages, better supply chains, etc. But it also goes down to the basic economic system, the command system. Workers have to do what they are told, or they will suffer cconsequences. Many hours a day are spent working. Every Chinese hour has sixty Chinese minutes, and every Chinese minute sixty Chinese seconds, and all are spent working. It's not like an American hour that has what, 46 minutes? Work a little, take a break, have some coffee, check your email, the work ethic is not as extreme as that of the Chinese, where a lot of this factory work is good to send to, as a lot can be done due to the extreme work ethic.

Smith said...

Do you think this is a “bad thing” for the US or a good business decision?