Foxconn Investing $1.1 Billion to Boost iPhone Production Capabilities

carlgo said:

The people are the robots in this case, but there are only minutes of hand labor in a phone. The labor issue is a red herring, despite the postings of the surrogates that magically appear every time the issue comes up.

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Pass whatever you're smoking this way. 140,000 workers at 40 hrs. per week for a full year, divided by 72MM iphones per year works out to be about 3.75 man hours per iphone. I've seen estimates of about $6-$7 per iphone in assembly costs--and at $2 per hour, seems this estimate may be in the ballpark. Even when you start shocking those numbers, it is far in excess of the minutes per iphone you claim. In addition, all of the parts come from contries that have extremely low wages--so if you were to actually bring the iPhone to the US, the price would skyrocket.

The savings come from tax dodging, no pesky laws about dumping stuff in the river, no problems with dealing with any human issues. Just give them an order and in time containers full of iPhones appear.

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The tax savings only comes from foreign sales. US sales face US taxes. And when they repatriate those funds, they'll be subject to tax. Unfortunately for all taxpayers, they're waiting for those "tax holidays" the government does every 5 years or so as a handout to the big corps. I think the next one will need to wait until a Republican is in the White House.

Labor is not the only problem, it's the complex and excessive regulations that caused many companies to stay away from US.

lupado said:

Keep production costs down? Apple is one of the most valuable companies in the world because of how much profit they take from each item. Greed is what keeps them and other companies in China. Popularity will sell products. I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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This is a business, not a charity. Most businesses are in it to make money, nothing more and nothing else. No morality is required in running a business.

Majority of Apple's cash came from the iOS devices, those will end sometime as the market continues to become saturated and Apple's increasing revenue will either equalized or decline. Apple's iOS platform could fail over time just as it did with the Mac in early 90s. It's better that Apple hordes as much as they can to protect themselves in the future.

Also, while you may pay an additional $100, not everybody feels the same way. The current economy does not give everybody that option. An additional $100 does not mean it boost our economy right away, it wouldn't make that much of a difference, you're talking about transferring wealth from the Americans into a single company who doesn't give back to Americans and the extra money for more devices boost the economies in Asia, not here.

Also, it's about marketing as well. Kindle Fire is successful because of the lower $200 price compared to other non-iPad devices. If iPad was sold for $600, it would not sell as much as 500$ if other Android devices were selling for 400-500$.

lupado said:

Why don't we pay American prisoners the same as we pay Chinese workers to prevent outsourcing?

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Because of the federal minimal wages, even prisoners are included here. However, many companies already hire prisoners for labor, here's the Forbes article a few years back.

Consultant said:

Just about everything electronics is made in China due to China's labor price advantage.

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I'd like to posit that much of what is made in China would lose most of its price advantage during its 6,000 mile airborne journey if the true cost of protecting oil producing regions was paid for by the shippers. Instead of being protected for free by the world's most expensive military courtesy of the American taxpayer.

daxomni said:

I'd like to posit that much of what is made in China would lose most of its price advantage during its 6,000 mile airborne journey if the true cost of protecting oil producing regions was paid for by the shippers. Instead of being protected for free by the world's most expensive military courtesy of the American taxpayer.

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While some iPhones come by airfreight, most come by sea. Sea freight is extremely cheap as the ships that bring them here are as big as a city and they just float here on some crude oil! Very efficient.

bommai said:

While some iPhones come by airfreight, most come by sea. Sea freight is extremely cheap as the ships that bring them here are as big as a city and they just float here on some crude oil! Very efficient.

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Looks like you still forgot to factor in the cost of using the world's most expensive military force to protect several oil production and distribution areas. For starters lets take the last trillion dollars the American taxpayer spent protecting much of the world's oil resources and split that cost among every barrel of conventional oil. Then we'll factor in the cost of tomorrow's tar sands oil and we'll see just how cheap it is to ship everything from six thousand miles away by sea.

Anything to help keep up with iPhone demand is good news. The Chinese market is and will place new production pressures on Apple. Expansion is definitely in order.

lupado said:

Can we stop investing in China???! Come on Apple!

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So, you're willing to pay a lot more for product produced in the USA? I think not!

DanielSw said:

The main reason iPhones are produced in China is that workers there are willing to work for the wages they get--that's WILLING, NOT forced. The main reason they're NOT made in the US is that workers here are too lazy and greedy and NOT WILLING to work ANYWHERE.

Oh, and it's "its" not "it's" in your last sentence.

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Funny, I don't recall anything in my post about forcing anyone to do anything. I said I hoped that the workers would benefit from the huge income coming to the factory.

Your comment on the freedom of Chinese workers reminds me of the aphorism (source unknown) - "rich and poor alike are free to sleep under the bridges of Paris. The rich just don't choose to do so".

As for your statements about the American worker - good to make sweeping and ridiculous generalizations. The American working class thanks you, I'm sure.

Thanks for the punctuation correction.

JHankwitz said:

So, you're willing to pay a lot more for product produced in the USA? I think not!

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Apple could make the products here and sell them for the same price.
They would have significantly lower profit margins.

At the end of the day, Apple doesn't care who makes/assembles their products.
They are looking for the highest profit margin they can get.

DanielSw said:

The main reason iPhones are produced in China is that workers there are willing to work for the wages they get--that's WILLING, NOT forced. The main reason they're NOT made in the US is that workers here are too lazy and greedy and NOT WILLING to work ANYWHERE.

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"Hey, Bob. I want you to produce motherboards for $25 a week. Just be careful not to breathe around that open vat of chlorine over there. It'll kill you."

"What? No! Don't you have OSHA standards here? Good God! I'm not getting anywhere near that stuff! And $25 a week? That's practically slave wages! I want to get paid an amount I can live on! $25 won't even cover my basic necessities. Like toilet paper and food. I NEED TOILET PAPER AND FOOD, MIKE!"

"You're so lazy and greedy, Bob. There are people in other countries who don't complain about not having food and toilet paper. What makes you so special?"

"They're not complaining because they keeled over from lack of food and toilet paper, probably. Whatever. I'm gonna get a job at Costco."

Apple boosts our economy almost everyday.

They teamed up with Samsung to build an entire factory in Texas, they higher engineers almost daily and scores of others.

As to that $100 extra, you may be willing to pay that much but most aren't. Further the difference is likely to be far more than $100.

As to your friend, sorry about this but screw him. Nobody should be given a job they need to earn it just like the rest of us. I have little tolerance for the give me, give me folks of the world.

lupado said:

Keep production costs down? Apple is one of the most valuable companies in the world because of how much profit they take from each item. Greed is what keeps them and other companies in China. Popularity will sell products. I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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lupado said:

I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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Having good intentions like that alone are not enough. That is not how capitalism, market forces and competition work. That is a sure recipe for a lot more people to get laid off.

Oil is evil don't you know!

thetexan said:

I find it funny that politicians blast oil companies who make around a 10% profit while they not only employee a lot of blue collar Americans but pay them exceptionally well while Apple seems to get a free pass making a 25% profit and outsourcing all of their blue collar labor.

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Everyone hates the oil companies even if they do pay good wages.

I once had a long discussion about this with a friend in business. It comes down to need vs want. If you are in the business of selling things that people need, lawn mowers for example, don't expect much respect or high prices. If you sell something people want riding lawn mowers with all the fancy stuff high profit and respect come.

The funny thing is the oil companies don't make a huge profit on what they sell. The problem is many need the gas or whatever so see the expense as evil no matter how much it costs. Since the expense is evil the companies associated with it must be evil.

Apple on the other hand almost exclusively sells things people want. Since people don't generally see themselves as evil they can't associate a company that sells something they want or desire with evil. So instead companies get defended because attacks on the company are seen by the people wanting that product as attacks on them and their desires. So yeah a free ride because believe it or not politicians aren't that dumb and don't want the grief of going after a company with a positive public image.

Is that 'Cute iPhone Girl'?

Man do you have a warped sense of reality.

daxomni said:

Looks like you still forgot to factor in the cost of using the world's most expensive military force to protect several oil production and distribution areas.

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When was the last time we fought a war to protect oil production? That is totally asinine. Face the reality that we would still be fighting in the middle east even if there wasn't a drop of oil in the region. The problems that get exported from the middle east ( terrorism, slavery in various forms and other evils) have nothing to do with oil but rather the culture of the middle east.

For starters lets take the last trillion dollars the American taxpayer spent protecting much of the world's oil resources and split that cost among every barrel of conventional oil.

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The US arm forces have been structured for decades to fight wars with China and Russia. It actually took significant effort to reorganize to fight terrorism in the last decade. Your knowledge about the US military is extremely limited and frankly warped by an obsession with oil.

Then we'll factor in the cost of tomorrow's tar sands oil and we'll see just how cheap it is to ship everything from six thousand miles away by sea.

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You need to do a few things before posting again. One is go back to school and learn a little math. Second take that math skill and look at the costs of shipping by sea.

By the way tar sand oils come from Canada. Are you implying that the US military needs to defend Canada too?

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Kaibelf said:

lupado said:

Keep production costs down? Apple is one of the most valuable companies in the world because of how much profit they take from each item. Greed is what keeps them and other companies in China. Popularity will sell products. I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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That's fine, but don't volunteer away MY $100.

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I don't think you got it! The poster volunteers your $100 for you! You don't have a choice in the matter. His conscience is assuaged by blowing the $100. He doesn't care if you haven't hundred dollars to blow It's the same logic behind keeping Walmart out of various localities

lupado said:

Keep production costs down? Apple is one of the most valuable companies in the world because of how much profit they take from each item. Greed is what keeps them and other companies in China. Popularity will sell products. I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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No one will invest in the US just for the sheer hell of it. The US has to show demonstrably competitive advantages, especially in terms of labour costs.

Wanting to keep costs low isn't greed, it's basic to business. Right now, the US isn't competitive in this area. Simple as that.

Speak for your own $100.

*LTD* said:

No one will invest in the US just for the sheer hell of it. The US has to show demonstrably competitive advantages, especially in terms of labour costs.

Wanting to keep costs low isn't greed, it's basic to business. Right now, the US isn't competitive in this area. Simple as that.

Speak for your own $100.

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It's funny because Samsung is manufacturing their products in Korea, Apple are very greedy..

wizard said:

When was the last time we fought a war to protect oil production? That is totally asinine.

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What was the point of protecting tiny little insignificant Kuwait from our (former) friend Saddam Hussein in the first Gulf War? How about Gulf War II Saddam vs. Bush Rematch? If it wasn't to secure a major source of oil and establish long term contracts for American oil companies I have no idea what it was. It certainly wasn't to disarm imaginary weapons that Knight-Ridder had managed to debunk prior to the start of the war.

wizard said:

Face the reality that we would still be fighting in the middle east even if there wasn't a drop of oil in the region. The problems that get exported from the middle east (terrorism, slavery in various forms and other evils) have nothing to do with oil but rather the culture of the middle east.

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There are several types of countries that terrorize their own people but who we still don't attack. Those who are willing to cut us in on a deal to use their resources and/or location to our advantage (such as Kazakhstan), those who are not perceived to have the necessary quantity or combination of resources to be worth the political and financial cost of alienating their friends and/or neighbors (such as Burma), and those who possess nuclear weapons and/or who have a standing agreement with a nuclear country (such as North Korea). With few exceptions most of the countries we interfere with today are weak militarily but have substantial reserves of natural resources that we would be happy to see end up with American conglomerate under preferential terms. That's not to say we're the only country that does this, but I'm not aware of anyone else who does it on the same scale we do.

wizard said:

The US arm forces have been structured for decades to fight wars with China and Russia. It actually took significant effort to reorganize to fight terrorism in the last decade. Your knowledge about the US military is extremely limited and frankly warped by an obsession with oil.

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Who exactly do you think is the world's largest consumer of oil Mr. Wizard?

wizard said:

You need to do a few things before posting again. One is go back to school and learn a little math. Second take that math skill and look at the costs of shipping by sea.

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Yeah, I certainly can't compete with the math you've already shown us. Personally I would like nothing more than for the US military to publish precisely how much money American taxpayers spend invading/occupying/protecting oil rich countries and their supply/export networks so we can figure out how much it would cost oil based shippers if it were on their hands instead.

wizard said:

By the way tar sand oils come from Canada. Are you implying that the US military needs to defend Canada too?

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Tar sand oil and similar low-energy/high-cost deposits are located both inside and outside of Canada's borders, but yes, I have no doubt that if Canada were attacked America would come rushing to the rescue.

lupado said:

Keep production costs down? Apple is one of the most valuable companies in the world because of how much profit they take from each item. Greed is what keeps them and other companies in China. Popularity will sell products. I'll pay and extra $100 for an iPad if they boost our economy and give my unemployed friend a job.

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A $100? Seriously? Try $1000.

130 thousand workers

I wonder how you get that many people through the doors each morning. I worked for a while in a plant with 18,000 workers, we had three starting times for the day shift and it still took thirty minutes thru 5 entrances.

Wouldn't it be funny if Apple sued them and got someone else to make the iPhone instead?

*LTD* said:

No one will invest in the US just for the sheer hell of it. The US has to show demonstrably competitive advantages, especially in terms of labour costs.

Wanting to keep costs low isn't greed, it's basic to business. Right now, the US isn't competitive in this area. Simple as that.

Speak for your own $100.

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Wouldn't you like to pay more so that Apple makes a bigger profit? I thought you'd be all over this.

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This thread is hilarious!

Sadly, Americans especially; think a quick one line answer will solve just about any problem. These things are very complex and deserve a bit more study before throwing out answers.

Supply, demand, taxes, available and willing labor, regulation, building and long term costs, medical, retirement, etc etc etc


With all that said, let me throw out a one liner. If we eliminated paying people unemployment, more would be willing to work at a lower wage here. After all, there are 13 million people unemployed right now.

Kaibelf said:

I hope you realize $2 goes a lot farther in China than it does here.

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Especially when you get free room and board on top of that. Cost of living for these folks could be pennies of that $2. Making things much less 'slave labor' than people want to scream