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Schueller: Government mindset vs. Business necessities

BY JOSEPH SCHUELLER | JANUARY 26, 2012 7:20 AM

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Want to know how to reverse the unemployment trend in America? Just ask Apple.

There is a brilliant feature in the New York Times from Jan. 21 that explained, "How the United States lost out on iPhone work." It shows rather plainly how the mindset of businesses focused on profit is radically different from the politically weak and highly bureaucratic federal government we have today.

It is true that Apple indirectly employs many people overseas. This wasn't the case just a few years ago. When producing the first iPhone, then-CEO Steve Jobs was not satisfied with the plastic screen that was on the device, which scratched easily in his pocket full of coins and keys.

It was just six weeks before it was due on shelves, but Jobs knew if it bothered him, it would bother his customers. So he told his fellow executives to fix it, which required the redesign and reassembly of hundreds of thousands of iPhones.

Obviously, history tells us that they accomplished this feat. How? Foxconn Technologies in Shenzhen, China.

The Times reports, "A foreman immediately roused 8,000 workers inside the company's dormitories … Each employee was given a biscuit and a cup of tea, guided to a workstation, and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing more than 10,000 iPhones a day."

The fact of the matter is that America does not train workers who come remotely near this kind of production. High-tech manufacturing jobs are down 30 percent in the last decade from when the technology sector began to boom. Restrictive immigration policies have deterred many qualified foreign workers from coming to America.

And it isn't an issue of labor cost, it's an issue of labor supply and logistics. The resources required to do what Apple needs to be as efficient as possible aren't in America. From precious metals, to factories that can scale up or down on a whim's notice, to workers who are efficient and willing to work for their dollar, we are eons behind the quasi-capitalist China.

From the Times story: " 'The entire supply chain is in China now,' said another former high-ranking Apple executive. 'You need a thousand rubber gaskets? That's the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.' "

It is also important to note that Apple is a foundational stock for not only direct buyers but for those who invest in the NASDAQ. As of the time of this writing, shares of Apple are at around $425. Its IPO was priced at a far smaller $22 a share, and it has split 2-for-1 three times in its history. If it were not for the profit that Apple makes every year, it would employ far fewer workers and many people's investment and retirement incomes would be significantly less. Apple employs 43,000 Americans — hiring 8,000 last year alone — and must be credited for its success and its contributions to society.

We have an administration that feels exactly like Betsey Stevenson, the former chief economist at the Labor Department. She told the Times, "Companies once felt an obligation to support American workers, even when it wasn't the best financial choice. That's disappeared. Profits and efficiency have trumped generosity." (Emphasis mine.)

Think about that. According to Stevenson, the main goal of business should be generosity, not profit. For an economist, she doesn't seem to know very much about the subject.

Until the federal government wises up and addresses the problem at the source, don't expect Apple — or any business for that matter — to bring outsourced jobs home.


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