Wednesday, February 13, 2013

~ Manufacturing in the US is a mirage ~

I had few glimpses of #SOTU {State of the Union} address by Obama from my Twitter TL {Time Line}. Of the many things being said, one particular statement caught my attention 

There might be intent and zeal to get more manufacturing jobs back from China into the US. Absolutely nothing wrong with the idea. Financially, I do not think Apple will take this road to reduce its profits nor the sales.

Why this would remain a distant dream:
  1. Apple products do not come cheap even in the US. They are priced commodities compared to the competitive products in the market. 
  2. The current pricing model cannot be sustained if manufactured in the US.
  3. If the prices go up, will consumers still buy Apple or look at other options? 
  4. A company like Apple would never like to loose out revenue. Mr Jobs himself had made a statement that it would be nearly impossible to get the manufacturing of their products back to the US.

Google, Apple's asymmetric competitor, took the audience at annual Android event by surprise when they announced the Nexus Q, a streaming device which would be "Made in USA". 8 months after the hyped launch Google has already lost the plot with Nexus Q. They has killed it. What could be the reason?

Cost. Cost. Cost. 

Which consumer would like to pay $300 when you have options starting at $99 & above. That speaks a lot about what consumers really think. They are concerned about economy than "Made in USA". China has the grip over manufacturing sector. Even India has begun sourcing many consumer products from China these days. 

When Obama asked Jobs how to bring all the iPhone manufacturing jobs back to the United States. {via NYT}

“Those jobs are gone,” Jobs is said to have snapped back, like a professor to a student who hadn’t done his homework, “And they’re not coming back.” according to Forbes.

Unless Apple has a decent Wages-Cost ratio strategy up it's sleeve for their products that are manufactured in the US; till then it would remain a mirage for Obama & Apple.

I would like someone from the media to pose this question to Tim Cook at some point of time to know how Apples plans achieve this. Thought Obama was a thinker & who did his ground work before addressing. However, this time around makes me think that he is no better than any other politician who is seen making grand promises.

Charles Fishman has an article 'The Insourcing Boom' in the December issue of The Atlantic, which I would like to read. #Longread

The Atlantic has a good summary of reaction from various people here.

Image source: MrBrill

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