Apple Could Bring Back Jobs to U.S., But ...

Posted by Kirhat | Monday, January 23, 2017 | | 0 comments »

The President and the First Lady
During a fancy dinner way back in 2011, out-going U.S. President Barack Obama asked Steve Jobs: "What would it take to convince Apple to make the iPhone in the United States?"

Jobs' response: "Those jobs aren't coming back. "

Fast forward six years, and President-elect Donald Trump is asking the same question — and possibly finding a different answer.

In an interview with Axis, Trump said that Apple CEO Tim Cook has "his eyes open" to the possibility of a U.S.-made iPhone, adding that Cook wants to "do something major here."

According to Mashable, Trump has referenced a desire to bring iPhone production back to the U.S. since June 2016, part of his broad stance against companies outsourcing jobs overseas. Since the election, numerous companies have been touting their investments in the U.S. regardless of when those moves were first announced or planned.

Apple has been among them. The tech giant is pitching in US$ 1 billion to a new tech-focused fund run by Softbank, a major Japanese telecommunications company that has close ties with Trump. Softbank has pledged to create 50,000 U.S. jobs and invest US$ 50 billion in the U.S.

Apple's investment is a drop in the bucket for the company, which currently sits on more than US$ 215 billion in cash and other investments. Much of that money, however, is sitting overseas to avoid taxes – something that could prove to be an important detail if Trump begins changing around the corporate tax structure. Apple could end up pleasing its shareholders mightily if it works out a deal with Trump to bring that money back to the U.S.

What wouldn't please Apple shareholders is making iPhone production markedly more expensive, which could happen if it was moved stateside and no economic incentive is considered.

The iPhone is made up of a variety of different components, many of them supplied to Apple by different companies that operate around the world. Assuming that Trump isn't interested in disrupting that part of the equation, Cook could focus on assembly.

MIT Technology Review ran a scenario on what would happen if all iPhones were assembled in the U.S. It's hard to forecast exactly how much more expensive that would be, though its June 2016 estimate found the move could add around 5 percent to the overall cost of an iPhone 6s Plus.

It's also worth noting that Apple doesn't actually assemble its own iPhones. That task goes to a company called Foxconn. Foxconn and Apple have a very close relationship, with Apple at one point convincing Foxconn to assemble some iPhones in Brazil (instead of China) to get around that country's import taxes.

The Brazil situation also serves as a warning of what these kinds of deals can become. When Foxconn, Apple and Brazil made a deal to have iPhones made in Brazil, it was touted as opening the door to a massive investment in the country's technology sector. The few phones made there ended up costing almost twice as much as those sold in the U.S. Few of the promised jobs materialized.

Could Trump strike a better deal? Maybe. But it something needs to be done as well. The government will have to strike a balance between, manpower, automation and outsourcing. It will be a delicate process, especially now that advanced robotics and artificial intelligence continue to take jobs, especially those in the manufacturing sector.


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