Tuesday, January 24, 2012

Why Apple doesn't make the iPhone in the USA

and what it means to Southern Illinois business.

Here is the article that got me started - TUAW Overview. Here is a link to the NY Times article that had the original research. The summary - "the Times found is both simple and chilling: iPhones aren't made in America because they just can't be. The infrastructure and labor force doesn't exist at the levels necessary to support Apple's operations -- it's not even close."

The big problem I found running BoundlessGallery.com was the lack of trained talent to do the work. After thinking about this for a long time, I have decided that you can't run an IP based, technology company, that requires 50 or 200 software engineers. So, in a small way, we (Southern Illinois) vs. Silicon Valley are/is just like the US vs. China.

We had better do something where you can get enough talent. I'm thinking iPhone apps, small scale factories and the like are the future. I'm liking the sin business more and more.

More about this later, but it is interesting to think about.

Of course, your comments are welcome.


Anonymous said...

What? You're saying there's talent for the sin business in S. Illinois? What are we talking about? Prostitution? Drugs?

Justin Baggott said...

Mr. Gregory,

I think that you and the NY are both correct about this but I also think that if the the US was more business friendly and labor unions were abolished that we would have built similar manufacturing infrastructure and would be competitive enough to overcome the increased shipping costs.

I think our politicians should be targeting companies like Foxconn who are clearly exploiting workers, almost to the point of slavery. There has to be a reason why so many that live in those dorms that are committing suicide. Having an efficient and dedicated labor force is one thing, but "enslavement" is another. I know that the cost of living in China is much lower but the article stated that some workers are being paid about $17 per day. I assume that is above the cost of the dorm space and food, but it is still a very low yield for a 12 hour shift.

On a different subject, I was told that you might have some interest in investing in Southern Illinois startups. If that is true, please contact me at jbaggott@mchsi.com

Anonymous said...

Clearwave Communications is in the process of constructing a 740 mile world class fiber optic network throughout southern Illinois. No joke. They applied for and received a grant from the NTIA (stimulua money).

I thought you would want to know.
R.C. in Carbondale

PeterG said...

Well, sin by my standards. I was thinking luxury products, high end food stuffs, liquor and the like. It has better be high enough value to ship by UPS.

The price difference between the US and China was remarkable, but is now closing. There was an article in the WSJ about a $160 polo shirt, made in the USA. Labor was over $10. You ready to pay $40 for a polo shirt? Better make those in lower priced labor markets. I have written extensively in past years, here in my blog, about labor rates in Illinois vs its neighbors. That is pretty scary too.

Very cool about the fiber optic. Can I get it at my new house?

Jonathan Bean said...

"I'm liking the sin business more and more."

Ha! This comes up in my "Business of Vice" seminar. There are books on the topic - and guidance. One strategy is to invest in everything the "goo-goos" (socially responsible investors) decide is "sinful" (by their "progressive" standards). Still legal but "sinful" or "irresponsible." Tobacco, weapons, government defense contracting, Nestle for milk to Africa (is that still an issue?). Back when I lived in the People's Republic of Burlington, VT, the Peace and Social Justice Bookstore had long lists of which companies sold what and who owned whom. I recall in the early '80s thinking "there ought to be a simpler way" - voila! - the socially responsible mutual funds. But by then I had abandoned my youthful dalliance with such causes and was selling whatever financial instrument best suited my clients (imagine that!).

On places with programmers, don't forget Israel. There is a reason why Apple, Google, MS, et al. are setting shop up in that small, high tech nation. See _Start-up Nation: The Story of Israel's Economic Miracle_ and so many other recent titles.