By: Don Loepp
December 7, 2012
Last week my colleague Nina Ying Sun wrote on her blog that improved automation might mean an end to electronics manufacturing in China.
Her post was prophetic, it seems, as this week Apple Inc. CEO Tim Cook revealed that the Cupertino, Calif., company plans to manufacturer some Mac computers in the United States.
I'm sure that some people are. But by now most Americans have heard something about the re-shoring trend that's seeing manufacturing jobs return to the United States. We started to hear the news -- in the form of anecdotes from tooling suppliers and molders -- about five years ago, and now it's a full-blown trend.
The trend is driven by higher costs abroad -- especially in China -- along with more competitive U.S. factories and more than a few "lessons learned" problems from overextended global supply chains.
Re-shoring isn't going to mean the United States is going to become the manufacturing export powerhouse it was 50 years ago. But recapturing a share of domestic manufacturing is a pretty good start.
I wonder how much of Apple's move is motivated by its public relations problem involving the labor record at its big supplier Foxconn International. (See "Apple caught outsourcing its ethics.") Will moving manufacturing of one iMac to the United States inoculate the company against future criticism?
And finally let's consider just what Apple's re-shoring will mean to manufacturing -- including plastics part suppliers and labor.
To be sure, it offers an opportunity. But just how much will depend on how Apple wants to play the sourcing game, and how its existing suppliers respond.
Apple, after all, isn't so much a manufacturing company as it is a software/design/consumer products company. It may sell iPhones, iMacs, iPads and iPods (and soon, it seems, iTelevisions?). But the sourcing and manufacturing part of the business isn't the company's strongest point. That's how it ended up in hot water over Foxconn's problems.
Let's give the last word to Nina Ying Sun, who wrote that in the end, the growing use of automation might mean that it doesn't matter where electronics are manufactured.
Foxconn has built and installed its first batch of 10,000 of its own robots, nicknamed Foxbots, at a fairly low cost ($20,000 to 25,000 per unit), Sun wrote ("Will electronics manufacturing leave China?")
By the end of the year, another 20,000 Foxbots will be added to Foxconns factories.
"In the end, maybe the location of manufacturing won't even matter much anymore, because robots will handle most of the work," she wrote. "Labor cost won't be a crucial part of the cost equation. Then would China retain any advantage to continue to serve as the world's factory?"