Trump’s proposed tariff increase on Chinese imports would affect Apple products including the Apple Watch, though apparently not the iPhone itself. Here is Apple’s response.
And from President Trump:
Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!
There has been much discussion for some time about the economic feasibility of building Apple products–especially the iPhone–in the United States, and considerable new commentary in the wake of the tariff controversy. In 2011, then-President Obama asked Steve Jobs what it would take to make iPhones in the US. Steve’s response was that, basically, the problems were more about skill levels and cultural factors–in particular, he is said to have mentioned a need for 30,000 manufacturing engineers.
This strikes me as a very improbable requirement. Manufacturing engineers are the people who design and improve manufacturing processes: I can’t imagine why you would need 30,000 of them for all of Apple’s product lines combined, let alone for the iPhone alone. (It’s possible that the term “manufacturing engineers” was a misquote of what Jobs actually said, or the Jobs was speaking very loosely–indeed, he apparently went on to say that the people in question could be educated in trade schools. Maybe he meant toolmakers…although also, 30,000 toolmakers sounds like an awful lot for iPhone or indeed all of Apple…or shift supervisors, or something of the sort.
There was a Quora discussion in 2016 on the topic: How much would an iPhone cost if Apple were forced to make it in America? Out of all the responses, which were of various quality, Forbes chose in January of this year to reprint one that seems to me to be rather extreme: In the $30,000 to $100,000 range…assuming it could be made at all.
The author quotes Apple CEO Tim Cook on the skills gap between China and the US:
… the reason is because of the skill … and the quantity of skill in one location … and the type of skill it is. The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here.
In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.
The author says:
Tooling engineering is a highly skilled position that requires years of training and experience. It is an “analog” type skill that combines artisanal craftsmanship with precision engineering skills. And as Mr. Cook alludes to later in the talk, the Chinese have developed and scaled these skills over the last three decades while the U.S. and other countries have gone the other direction and de-emphasized them.
(The author also talks about the fact that the iPhone supply chain is now largely centered in the Far East, which is true–but “moving iPhone manufacturing to the US” does not imply that every single component or subcomponent or raw-material element in the periodic table would need to come from the US.)
It is certainly true that the US over the past couple of decades has deemphasized manufacturing-related skill sets: but I doubt seriously that the problem is so severe as to make the US manufacturing of a product like iPhone infeasible. After all, cars and trucks are made in the US, and they involve quite a lot of production engineering and tooling. Airplanes and jet engines, too, are made here, and I’d expect that the production engineering challenges for a GE or P&W jet engine equal or exceed anything involved with making an iPhone. And there are plenty of other products and components manufactured in the US as well.
One would think that Tim Cook’s comments about the decline in manufacturing skill levels would lead to widespread concern about what America has done to ourselves, and to the conclusion that maybe Trump is right to think that the hollowing-out of manufacturing needs addressing. It may be true that a very rapid and comprehensive switch of manufacturing now done in China to the US instead would lead impossibly-severe skill shortages. But I don’t think that a few product lines for a few companies, growing over time, would necessarily yield this result.
Just the other day, a ran across an article by a woman who–when working as a summer intern–implemented a 3-D printing approach to streamline a complicated mold-making process. To accomplish this, she worked with an employee (“Gary”) who had been a mold-maker for for 30 years. He was very highly skilled at his trade, and although concerned about what the project would mean to him personally, he was very helpful to the author.
The new approach succeeded, and Gary’s job became redundant. The company moved him to a new area, but he chose to retire from the company. He is now working in a customer-service job somewhere.
I expect there are a lot of underemployed former mold-makers, toolmakers, etc, who would be thrilled at the opportunity to help enable iPhone manufacturing in the US.