Apple, America and A Squeezed Middle Class

Keith Bradsher & Charles Duhigg:

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.
But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

Well worth considering from a curricular, finance and social perspective.

2 thoughts on “Apple, America and A Squeezed Middle Class”

  1. The US has many infrastructure differences (not problems) that differs from China, and this NYT article (which is one of the best articles written in recent memory) reflects that.
    There is no question that dormitories at factories as described are a no-go in the US and rightfully so. So is, as should be the “company town”, as existed in the “coal country”. For a great memoir, “Rocket Boys” by Homer Hickam.
    As far as describing that lack of dedication and hard work which Americans are unwilling and unable put out, that is patently false.
    Having worked over the years for state government, I know from personal experience that our/we state workers have put in 60-80 our weeks, on short notice, to deal with projects that are at risk, or under significant time constraints, or under emergency conditions.
    Such workloads are not uncommon in IT. Servers are down, communication lines failed, database corrupted, failure of payroll/benefits.
    Lawyers and paralegals preparing for upcoming trials, accountants preparing for tax deadlines, surgeons preparing for and performing 12-16 hour surgeries, work very long hours.
    I heard that Michael Phelps prepares by swimming 12 hours per day during training. Any dedicated athlete does the same. Dedicated college students, especially in the sciences and engineering, put in 60-80 hour weeks. As a law student, putting in 60-80 weeks was routine. As a computer science grad, putting in 60-80 hours per week was not uncommon. College professors put that same kind of time in routinely, writing grants, writing papers for publication, guiding students and post-grads, serving on committees.
    It happens all the time, every week. Masses of Americans are putting in, and are flexible. ER personnel put in 12 hour days, at least. Broken water mains and downed electrical lines bring in people all hours of the night and day to repair. Crews that fought the fires in Texas and the southwest just this last year? Remember Katrina? How about 9/11?
    It is routine that owners/managers of restaurants and bars put in 12 hour days routinely, as do most successful Ma/Pa enterprises. People who need to work 2-3 jobs to make ends meet, for little pay, put in many hours, if they can find them, and may need to travel considerable distances to do so.
    Long haul truckers, taxicab drivers put in 12-16 hour days.
    Let’s not forget teachers. If you believe they only work 8 hour days and have cushy jobs, like CEO’s, you are completely clueless.
    Steve Jobs might have been a brilliant CEO, but he was as clueless as any other CEO making their millions.

  2. The problem with using Apple as an example of the retreat to China, is that Apple is one company that could actually make their products in the US (absent other infrastructure issues).
    Apple is a premium quality brand. And there are enough, but a significant minority of, people in the US and other places willing to purchase their products at premium prices. The wages that Apple would pay in the US would decrease their margins but would still allow them to make a very healthy profit.
    This is not true for the Dell’s of the world. Very low margins, low quality, and cheap, cheap, cheap.
    The key issue, seems to me, is that all the components used in our new toys are made in the East, and those companies are very low margin as well. But, the East has a virtual monopoly on production. In fact, the US no longer has a manufacturing infrastructure, and it’s not clear if the US could recreate one in the foreseeable future.
    The last factory manufacturing metal “silverware” in the US, closed it’s doors last year. And we don’t have any manufacturers of clothing or material in the US.
    The US is quite doomed even as a consumer/service society. The US is in a spiraling decline. It doesn’t look that way on the surface because the GDP is high. But that is a fake statistic.
    The cost of health care and drugs has skyrocketed, and that income/cost is reflected in the GDP growth. Bring down health care costs and the GDP will plummet.
    The financial sector accounts for 40% of GDP, but they don’t make anything but money. The housing bubble was just the latest symptom of a fake economy. Historically, the financial sector invested in productive enterprises, rather than creating financial instruments to invest in, and then the financial industry accounted for no more than 15% of GDP. Bring the fake financial sector back down to the historic 15% , and with control of health care costs, the GDP would properly reflect a real GDP of between 1/3 to 1/2 of current GDP.
    The lack of manufacturing in the US is reflected primarily in the lack of investment in productive capital, not in the inability of people to perform the jobs. Money is being drained out of production because the financial sector can make at least 18% on debt, 12% to 20% of fake financial instruments. Why invest in new productive enterprises which will only give you 3%-5% return, when you can make triple that investing in money. Compare our banking system with the highly government controlled banking system in China. China’s banks are required to invest in productive and infrastructure enterprises, that’s why the factories are there.
    The NYT article is eye-opening because it fundamentally misses the critical problem the US has. The US economy is nothing more than a big casino.

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