Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said.
For computers, phones and tablets, it's hard to make a real premium product, as the economies of scale work so well - Tim Cook's Apple has closed in on PC prices by a focus on costs and suppliers, and by building fewer models and relying on Chinese flexibility to ramp them up.
The Gold iPad 2 had a huge premium price, but also weighed more the 3 times as much as a normal iPad.
Instead, what if Apple made premium USA iPads, MacBooks and iPhones? They could have a distinctive look, so people knew they were US made, focus on the higher-end models, and charge a premium markup for the warm glow of supporting US jobs.
How much more would it cost? Hard to say, according to the NYT:
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.
Compared the the huge price disparities for other goods, these seem modest; for example, Timoni found a nice carry-on bag recently:
Couldn't find carryon I wanted. Then found a nice one: "This is good, I could get this." Price? $8,000. *doh*— timoni west (@timoni) January 9, 2012
So here's my proposition for Tim Cook:
Reopen the Elk Grove Apple factory to sell top-line Apple products, designed for those who want 'designer' luxury goods, and are willing to pay more for exclusivity. Make the 'made in USA' a key argument for a premium price. that way you need fewer staff than in China, and paying them well just adds to the cachet of the devices. You could cover them in Jasper Johns Flag, visibly number them as a limited edition, or come up with something more creative. As a way of extending the product line to a new, higher price point, while quieting those who wish Apple did more in the US, it seems an a obvious move.