If you want to better understand why many jobs are going to China, you might
want to read the article, “Why the United States Will Never, Ever Build the iPhone,” that
appeared in The Atlantic. It summarized a longer article that appeared in The New York
Times about why Apple chooses to build its iPhones in China.

If you assume that the reason Apple builds iPhones in China is merely because
the country has cheap labor, guess again. Certainly that is a small part of the reason.
Building the iPhone stateside would add up to $65 in cost to the device. But given the
margins on Apple’s products, they could absorb that extra cost and still make a profit.

Tim Cook of Apple says their decision to focus on Asia “came down to two
things.” Factories in Asia “can scale up and down faster” and “Asian supply chains have
surpassed what’s in the U.S.”

What does it mean to “scale up” faster? The manufacturing company that Apple
pays to assemble its product has the ability to hire thousands of new workers in a single
day. They can “wake up 8,000 employees, herd them out of the company’s on-sight
dorms, and order them to pull a midnight shift fastening glass screens onto phones.”

What about supply chains? Asia is the hub of electronic components
manufacturing. Therefore, Chinese factories get crucial parts faster and cheaper, whether
they are coming down the street or from a Samsung plant in South Korea. And local
Chinese factories crank out little metal bits like screws cheaply and efficiently.

Finally, China has a labor advantage that goes beyond the low-skill workers. It
excels in educating middle-skill “industrial engineers.” And the Chinese schools educate
600,000 engineers a year compared to the 70,000 educated in the U.S.

The reason the iPhone is manufactured in China instead of the U.S. is due to
much more than cheap labor. China’s industrial policy and supply chains are better than
ours. I’m Kerby Anderson, and that’s my point of view.