Could your next iPhone be made in America?
In an interview with The Wall Street Journal today (July 25), President Trump said that Apple CEO Tim Cook promised to build "three big plants" in the U.S. as part of the Trump administration's push to return manufacturing jobs to this country.
Update 7/26 7:43 am ET: According to the Los Angeles Times, Apple declined to comment on Trump's claims. We have also reached out to Apple for comment and will update this story should we hear back.
Much of Apple's product line, while designed in the U.S., is assembled overseas, primarily in China, where labor costs are lower and the supply chain of components is already in place.
"I spoke to [Mr. Cook], he’s promised me three big plants — big, big, big,” the Journal quotes Trump as saying. “I said 'you know, Tim, unless you start building your plants in this country, I won’t consider my administration an economic success.' He called me, and he said they are going forward.”
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There are several reasons to treat this announcement with some skepticism. For starters, Apple didn't join in the announcement, and it declined to comment to the newspaper. Also, as New York Times reporter Vindu Goel noted in a series of tweets, Apple doesn't have much to do with manufacturing, even overseas: it owns one plant in Ireland, and assembly at the sole American facility in Austin, Texas, is handled by a partner.
Apple's "whole business model relies on using other companies to make its products," Goel tweeted.
Jason Snell, editor of SixColors.com and a long-time Apple Watcher agreed. "It seems unlikely that Apple would build three giant manufacturing plants in the U.S., but the company has experimented with U.S. production and it's not beyond the realm of possibility that it would experiment more in the future," Snell said. "I doubt it would ever be a major part of Apple's production line."
A more likely scenario, Snell added is that Apple would open "more data centers and expand other aspects of its research and development efforts in other places, rather than the mechanics of building hardware from scratch."
Still, Apple has indicated that it's at least open to bringing back some manufacturing work to the U.S., even if that work is done by other companies. Appearing on CNBC back in May, Cook said that Apple will spend $1 billion to promote advanced manufacturing jobs in the U.S. As part of that program, Apple's already invested $200 million in Corning to support research and development and glass production at a Kentucky plant. Corning makes Gorilla Glass, a protective material found in many smartphones.
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In another sign this talk of "big, big, big" plants isn't entirely bluster, Taiwan-based assembly giant Foxconn appears likely this week to announce plans to bring a manufacturing facility to Wisconsin. The plant could employ as many as 10,000 workers. Foxconn handles iPhone assembly for Apple as well as manufacturing for other tech firms.
It's often assumed that cheap overseas labor costs are what keep companies like Apple from building more things in the U.S., but that's only part of the issue, Snell said. "It's true that American workers are more expensive and that might raise the cost of Apple products, but the larger issue is the availability of a complex supply chain providing the parts for Apple to assemble into devices," he said. "Without that supportive supply chain, moving parts in and out becomes even more expensive and inefficient.
The bottom line: the devil's in the details and until we hear more of those from Apple, it's unclear just what impact this will have on your next iPhone or iPad.
