Sat, Dec 08, 2012 - Page 15 News List

Apple to produce line of Macs in the US next year

STRATEGY:Companies are rethinking the location of their manufacturing process, as Chinese wages are rising by 15 to 20 percent per year, an analyst said


Apple Inc chief executive officer Tim Cook said the company will move production of one of its existing lines of Mac computers from China to the US next year.

Industry watchers said the announcement is both a cunning public-relations move and a harbinger of more manufacturing jobs moving back to the US as wages rise in China.

Cook made the comments in part of an interview taped for NBC’s Rock Center, but aired on Thursday morning on Today and was posted on the network’s Web site.

In a separate interview with Bloomberg Businessweek, he said that the company will spend US$100 million next year to move production of the line to the US from China.

“This doesn’t mean that Apple will do it ourselves, but we’ll be working with people and we’ll be investing our money,” Cook said.

That suggests the company could be helping one of its Taiwanese manufacturing partners, which run factories in China, to set up production lines in the US devoted to Apple products.

Research firm IHS iSuppli said that both Foxconn Technology Group (富士康科技集團), which assembles iPhones, and Quanta Computer Inc (廣達電腦), which does the same for MacBooks, already have small operations in the US.

Apple representatives had no comment on Thursday beyond Cook’s remarks.

Apple and Foxconn have faced significant criticism this year over working conditions at the Chinese facilities where Apple products are assembled. The attention prompted Foxconn to raise salaries.

Cook did not say which line of computers would be produced in the US or where in the country they would be made.

However, he said that the production would include more than just final assembly.

That suggests that machining of cases and printing of circuit boards could take place in the US.

The simplest Macs to assemble are the Mac Pro and Mac Mini desktop computers. Since they lack the built-in screens of the MacBooks and iMacs, they would likely be easier to separate from the Asian display supply chain.

Analyst Jeffrey Wu at IHS iSuppli said it is not uncommon for PC makers to build their bulkier products close to their customers to cut down on delivery times and shipping costs.

Regardless, the US manufacturing line is expected to represent just a tiny piece of Apple’s overall production, with sales of iPhones and iPads now dwarfing those of its computers.

Apple is latching on to a trend that could see many jobs move back to the US, said Hal Sirkin, a partner with The Boston Consulting Group.

He added that Lenovo Group Ltd (聯想), the Chinese company that is neck-and-neck with Hewlett-Packard Co for the title of world’s largest PC maker, announced in October that it will start making PCs and tablets in the US.

Chinese wages are raising 15 percent to 20 percent per year, Sirkin said.

US wages are rising much more slowly, and the country is a cheap place to hire compared to other developed countries like Germany, France and Japan, he said.

“Across a lot of industries, companies are rethinking their strategy of where the manufacturing takes place,” Sirkin said.

Cook said in his interview with NBC that companies like Apple chose to produce their products in places like China, not because of the lower costs associated with it, but because the manufacturing skills required are not present in the US anymore.

He added that the consumer electronics world has never really had a big production presence in the US.

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