World, Writing, Wealth discussion
Wealth & Economics
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Apple of Discord or where is the best climate to grow apples?
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I don't really think that there is a realistic way to bring much of that manufacturing in cheap labor countries back to the USA: as you said, American labor is too expensive compared to, say, India or China. Apple would have to drastically raise the price of its products if it wanted to manufacture them in the United States and still make some profit. The one solution would be to extensively roboticize the manufacturing process but then you eliminate most of the jobs you wanted to return to the USA.
Apple will almost certainly leave most of its manufacturing where it is because it sells a very large amount outside the US. A second reason for staying there would be it had managed to get excellent quality where it is manufacturing now. Irrespective how good the workers are, setting up an alternative site to make them will introduce quality issues. My guess it will keep manufacturing where it is and tell the US citizens it is the political tariffs that are raising the price. The price would probably increase more anyway, partly for labour costs, and partly for the cost of setting up in a new place.
As long as the cost to bring the manufacturing back is greater than the cost of the tariffs, they'll keep production overseas.
And what does Apple owe to the US for creating a climate of free enterprise? I'd say everything.
And I guess most shareholders and management do still enjoy the safety and freedom of living in the US, but is it better to share the success (what a stupid thought) with compatriots through employing them and paying more than in China or through selling them merchandise at American higher prices?
Come come, Nik, capitalism is all about return on investment, not sharing.
Not sure on exact numbers but I think Apple now earns more outside the US than it does inside. Many of Apple's shareholders are not US Citizens (I have owned them in the past) again I do not know the current split and where investment fund own shares the investors are even more diverse.Sharing success from Nik's post. That is what a dividend is for. There is nothing to stop any US Citizen from purchasing a share of the Apple (funds permitting) and many probably do own a bit of Apple without realising it in a 401k or pension fund for example.
Of course if the cost of manufacturing goes up the company can either put prices up to recover profit or cut profit. If it cuts profit then all those investments lose dividend and it's likely the share price will go down.
If you were Tim Cook required as CEO (and every other CEO of a listed company) to maximize shareholder value - what would you do?
Of course a government can nationalise a company in the greater public interest - probably a bit socialist for the USA.
As for enjoying the safety and security of living in the USA - think that's best left for alternate threads with one statement - compared to which country? Apple also employs thousands of people in other countries not just its manufacturing suppliers in China etc.
Whilst comparing companies what about the other trillion dollar company Amazon. All their sales in Europe are routed through Luxembourg like Apple too (Ignoring Apple's lovely deal with Ireland which the EU has ruled illegal). Buy a book (this is a book site) through Amazon and revenue is scored against UK in my case but all profit is declared through Luxembourg. This is not Amazon's fault or Apple's this is the fault of the tax system.
If Trump want Apple/Amazon/Google/Facebook etc to declare profits in the USA then change the tax code to make it attractive. That will do more for US finances than tariffs and artificial forcing of manufacturing to a higher cost base.
Philip wrote: "Buy a book (this is a book site) through Amazon and revenue is scored against UK in my case but all profit is declared through Luxembourg..."Yeah, why to behave by the book, when there is Luxembourg? -:)
Well, if anything - Trump attempts to make tax rates more attractive by cutting the corporate tax substantially, but indeed not much is reported to be done about offshore profits and loopholes in taxation.
Remains to be seen what Apple will do, however I read reports that China companies attempt to get rid of 'made in china' tag.
https://www.phnompenhpost.com/busines...
In the end we might see each corporation having facilities in different locations to supply specific markets.
I think any CEO has a choice as of how to attain profitability. From a number of options, mass layoffs is probably the most popular. Interestingly that under 2013 sequestration the US Bureau of Labor decided to "Eliminate the Mass Layoff Statistics program.
The Mass Layoff Statistics program provides information that identifies, describes, and tracks the effects of major job cutbacks in the economy." -:) https://www.bls.gov/bls/sequester_inf...
When making a decision about where to manufacture a product, is profit margin the only consideration? Are ethics ever a consideration?
Scout wrote: "When making a decision about where to manufacture a product....... Are ethics ever a consideration?"That would be a rare breed - 'capitalism with a soul' -:)
Why do you think "fair trade coffee" is a thing?
J.J. wrote: "Why do you think "fair trade coffee" is a thing?"Didn't know such thing existed, but looked it up on the net now. Although I'm a big fan of the biz and its role in progress and general well-being, from my own observation I do see distortions mostly on the extremes that need to be improved. Biz is a part of life and should be based on the same values we kinda wanna see. Some ppl live by the distinction of 'going to war' with whatever is needed while at biz/work and returning to themselves when back home. Don't think moneymaking is a superior right over any other. On the other hand, biz is not a charity, so I don't expect corporate spirit disappearing entirely nor impairing entrepreneurship.
If bringing back the production is achieved, it would be a success, but the labor in US is still a lot more expensive than in many other countries, so wouldn't trade wars just make companies look for an additional parameter: cheap labor AND no import tariffs? Will Apple return to manufacture in the States or rather move some of its facility to Vietnam or other similar places? What do you think? If not tariffs, what would you propose to bring back manufacturing?