How the U.S. Lost Out on iPhone Work
This is an informative article by Charles Duhigg and Keith Bradsher for the NYT and IHT. Here is a brief section:
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone's expense. Since Apple's profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans - it would require transforming the national and global economies. Apple executives believe there simply aren't enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple's designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
But as that market has expanded, the bulk of Corning's strengthened glass manufacturing has occurred at plants in Japan and Taiwan.
"Our customers are in Taiwan, Korea, Japan and China," said James B. Flaws, Corning's vice chairman and chief financial officer. "We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that's 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas."
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would "require a total overhaul in how the industry is structured," Mr. Flaws said. "The consumer electronics business has become an Asian business. As an American, I worry about that, but there's nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years."
David Fuller's view This article encompasses both the economic logic and harsh reality of globalisation.
Companies with superior products and an international vision can prosper from globalisation as never before, becoming the Autonomies often mentioned by Fullermoney. Provided they can maintain their competitive edge, these companies will remain among the best stock market performers over the medium to longer term. Relative performance will be the arbiter and subscribers can monitor this on price charts.