By Andreas Becker
The Apple develops the iPhone and other products at its headquarters in Cupertino, California. Nelam works the majority of the 116 thousand employees of the company, full-time employees, including engineers, designers, programmers and marketing professionals. There is also only in the USA 268 Apple stores, the Apple Stores, who also have their employees.
However, the iPhone is produced in China, as well as most of the smartphones of competitors, through two companies that are headquartered in Taiwan: Hon Hai Precision Industry, also known as Foxconn, and Pegatron. Together, the two companies produce about 200 million iPhones per year.
“I’m going to make Apple produce their computers and iPhones in our country and not in China,” said Trump repeatedly during the election campaign. The message is that this would result in the creation of jobs in the United States for the americans, and the country would become again “great”.
The account, please!
according To the japanese magazine specializing in economy Nikkei Asian Review, Apple has asked its subcontractors, Foxconn and Pegatron that calculassem the cost of a transfer of the production to the USA. “The Foxconn responded to the request,” said the publication, citing an anonymous source. “Pegatron, however, refused, for reasons of cost, to make the calculation.”
the result of The calculations of Foxconn, according to the same source: to manufacture iPhones in the us would cost more than double. An iPhone 7 with 32 GB of memory costs 649 dollars for Apple. The cost of production calculated by the consulting firm IHS, Markit is 220 dollars, of which, about $ 5 are labour costs.
But Foxconn, as the main producer of the iPhone in China, is not a reliable source to predict a doubling of costs in a transfer to the USA. Jason Dedrick, a researcher of globalization at the University of Syracuse in New York, he comes to the other figures.
“If the iPhone were assembled in the USA and all the components required were imported ready-made, the cost of production would increase by 30 to 40 dollars,” says Dedrick, in an interview with DW. This is due, in part, from the wages of the USA and, on the other hand, higher costs of transport and logistics.
“If all the items are produced in the USA, and the iPhone is also assembled in the country, the production encareceria in at least 80 to 90 dollars”, calculates Dedrick. Apple could offset the costs by increasing the sale price or would have to have a profit margin correspondingly lower.
Advantage of China
But even Dedrick does not believe in a transfer of all the iPhone production to the United States. “In the short and medium term, it would be impossible to build in the country all the necessary infrastructure for the production of hundreds of millions of iPhones each year”, says Dedrick.
The local production in China became true urban centers for the manufacturing of smartphones. Them, not only the devices of all manufacturers are assembled. In these locations, are also the majority of the suppliers and processors of so-called “rare earths”, which are extracted mostly in China and can not miss on our cell phones.
“Apple also needs to continue competitive, a company such as Foxconn, that has the equipment, the knowledge and the experience necessary to start production, going from zero to several millions, within a short period of time,” says Dedrick.
The construction of this infrastructure in China lasted for “several decades” and needed to, according to the expert, investment high for thousands of companies. “It is impossible to estimate how much it would cost a similar structure in the U.S.,” says Dedrick.
it Is questionable also if it is in fact many jobs would be created by a transfer of the assembly to the United States. “There, most likely the production would be more automated,” says Dedrick. Because already now, due to the wages still relatively low, but is rising in China, the manufacturers are already making plans for the mount to be increasingly performed by robots.
Dedrick is convinced that a transfer of production would also bring disadvantages for the United States. “Especially Apple’s competitors would profit from this, because they have cost advantages in China. And if Apple is selling less, also many jobs for high wages in the U.S. can disappear, in research and development between engineers and managers,” he says.
As president, Donald Trump will hardly be able to force Apple and other companies to produce in the USA. He had also promised in the election campaign that sobretaxaria in up to 45% of China’s exports.
To be remembered by an interviewer from the tv station itself the american NBC, in June, that the rules of the World Trade Organization prohibit such tariffs, punitive, Trump said: “So renegociamos or left. The World Trade Organization is a disaster.”
In the early 1980s, the then U.S. president, Ronald Reagan, tried to protect sectors in american manufacturers of chip and motorcycle, competition – so the japanese, with high customs tariffs.
“In general, however, the U.S. maintained a trade policy that is free and open,” noted David Flath, professor of economics at the State University of North Carolina.
If this change with Trump, not only in the U.S. as the rest of the world will suffer. “A closing of the doors of the USA is the invention of fools, it is not a goal that can be achieved,” concludes Flath.