Monday, December 21, 2015

Tim Cook is Wrong: The US has many tool and die makers

In the midst of a 60 Minutes piece on Apple's products and manufacturing, this whopper of a statement from Apple CEO Tim Cook (emphasis mine): 
And most Americans would be surprised to know that nearly all Apple products are manufactured by one million Chinese workers in the factories of Apple contractors, including its largest: Foxconn. Yet Tim Cook insists that China's vast and cheap labor force is not the primary reason for manufacturing there. 
Charlie Rose: So if it's not wages, what is it? 
Tim Cook: It's skill. 
Charlie Rose: Skill? 
Tim Cook: It's skill. It's that Chi-- 
Charlie Rose: They have more skills than American workers? They have more skills than-- 
Tim Cook: Now-- now, hold on. 
Charlie Rose: --German workers? 
Tim Cook: Yeah, let me-- let me-- let me clear, China put an enormous focus on manufacturing. In what we would call, you and I would call vocational kind of skills. The U.S., over time, began to stop having as many vocational kind of skills. I mean, you can take every tool and die maker in the United States and probably put them in a room that we're currently sitting in. In China, you would have to have multiple football fields. 
Charlie Rose: Because they've taught those skills in their schools? 
Tim Cook: It's because it was a focus of them-- it's a focus of their educational system. And so that is the reality.
So there are two claims here. The first claim is that the US has very few tool and die makers.

That is false. According to the Bureau of Labor Statistics, the United States has somewhere around 75,000 tool and die makers. Maybe these aren't the folks that Tim Cook is looking for? Maybe these folks make too much money for him to hire? Maybe there aren't enough for Apple?

But he is wrong: there are many, many tool and die makers in the United States.

Regarding the second claim: I would like to hear if it is true that manufacturing skills are emphasized in the Chinese educational system. Something tells me this is wrong. Readers, your thoughts?

UPDATE: This Marketwatch commentary (thanks, Anon1221p) notes that there were fewer tool and die makers in the US in 2014 than there were in 2004. Sure hope that number turns around, and that Apple is a part of it.  

22 comments:

  1. Tim cook, I was due for my upgrade and was thinking of iphone6. For what you said, I am rethinking my options. Folks, can someone tell me if any cell phones are made here in the US and I am damn serious!

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    1. No, according to www [dot] americansworking [dot] com/cellphone.html. My old-series Moto X may have been the last of them....

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  2. I haven't bought an Apple product since the 512K Macintosh. And I don't plan to start - you can sell my Apple stuff to the Chinese.

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  3. you know when you buy most electronic stuff, it was made overseas. for him to suggest its because of a lack of skill is absolutely laughable. gotta wonder if he got the questions ahead of time and the lawyers said "theres no way you can say that we make iphones in china because of the cheap labor. come up with something else."

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  4. We (Dupont) toll damn near everything in China and skill is never mentioned as a reason, only cost. The only time we decide to manufacture in the US is when we think the technology is too valuable to risk it being stolen at a Chinese toller. Otherwise we just assume that it will be stolen.

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  5. And how many people will call him out? And of those that do raise questions about his assertions, how many will get the same amount of air time as Tim Cook ? I am not optimistic about that prospect.

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  6. As Tim Cook made his statement, the film footage running was of hundreds of young Chinese women sitting and assembling electronics. Not a tool and die maker amongst them. About a minute later, Charlie Rose spoke of the conditions at Apple contract factories, how Apple has 'agreements' that work weeks will be capped at 60 hours. Next, there was footage of the 'suicide nets' hanging from worker dormitories, to keep stressed out workers from killing themselves.
    These are the reasons that Apples devices are made in China - the work week is longer, most of the workers are unskilled and working on assembly lines, and they are forced to live in crowded dorms under a significant amount of stress. Sounds like significantly less expensive than assembling the devices in the US. What CEO wouldn't want this?
    About 2 years ago, I saw another TV interview with Tim Cook, and he said they were planning on bringing some assembly work back to the US. But last night, there was no talk of this.
    Yeah, I agree with ClutchChemist - the Apple PR folks must have known Tim Cook would be asked about jobs, and so he lit on the 'tool and die maker' myth. At least he didn't say that we need more H1B visas to bring tool and die makers to the US.

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    1. In case anyone is wondering what it will take to convince companies to move manufacturing to the USA: "there was footage of the 'suicide nets' hanging from worker dormitories, to keep stressed out workers from killing themselves."

      If employers can push workers this hard to increase profits, why wouldn't they (aside from moral reasons, which the Chinese apparently don't hold so dear). I guess we don't mind that kind of working conditions, as long as it's not us---we bought >200 million iphones last year! (

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  7. I don't think the real reason is cheap labor. It shouldn't cost much if you just use automation and manufacture the same product in the US. To me, it looks like the real reason is that companies don't want to invest. They have to buy machinery, hire technicians, build factories, deal with unions etc. If only people cared as much as they cared about dolphins or climate change, companies like these wouldn't be able to exploit workers.

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  8. This year the Boston Consulting Group (not a worker-friendly company) issued a report with manufacturing cost comparison. Apparently the cost of manufacturing in the USA is only 5% higher than in China.
    http://fortune.com/2015/06/26/fracking-manufacturing-costs/

    IMHO the move of manufacturing to China was mostly caused by the ease of suppression of any kind of dissent. When this shift was picking up steam in the 70's and 80's the labor movement was still strong in the USA.

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  9. It isn't really cheap labor, it's infrastructure and networks and combinations. I can design and build guitar amplifiers, solid-state and vacuum tube, and I'm pretty good at it: anyone who plugs into one of my amps loves it. I mean, not just copying old Fender and Marshall, I can actually design. Looked into building and - whoa. Parts costs are more than a finished item from China. Guess where the parts are coming from? China. So you get out your Digikey catalog and find a capacitor for 45 cents, in volume you can get it for 25, watta deal! But you'll never compete with a Chinese firm that gets it for a nickel. And I mean, why should they sell the parts overseas, how does that help? There's no fucking 'common carrier' doctrine over there, or even here anymore, for that matter. I can get the people to build guitar amps, if I wanted to, I teach in a Voke school - I exit my classroom and turn left, I can find sheet metal kids and if I turn right, I can find kids who do wiring. No, it's those petty details of parts. China doesn't sell them to American manufacturers.

    What's the new fad - 'hoverboards'? Dozens of models available from China. None from America. Is it that nobody in America can program a PID controller? Like Hell it is. It's about getting ahold of the motors and the batteries for less than the price of a finished hoverboard from China. They don't sell that shit here, and why should they? No benefit to them.

    Give more accolades to dead old Steve Jobs but I remember thinking about tablet computers back in the 90s and I'd go and look up some parts prices and the idea would be dropped .... he wasn't a genius like Michael Faraday, he was a genius like old Sam Walton, it's about getting a network and knowing the right folks and having enough cash to cram people down on price. It was never that nobody in America could design a motherboard or program an OS. It's about the combinations.

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    1. I have been buying electronic components from HK, mainland China, and Thailand directly or via small US distributors or even via eBay for many years. The prices often are 5-20% of those at DigiKey. Some sellers sell junk, some sell OK quality, some sell nice stuff including amplifier-quality caps. The motors and batteries would be harder to find.

      The convenience of the discount requires testing the suppliers...

      I still go to DigiKey or Mouser for some specialty stuff that is hard to get even on eBay.

      The Apples and Googles use a lot of custom components before they even get to Foxconn for assembly. This is harder to reproduce via eBay.

      My point is that we can get cheap components from China (with thorough QC) and assemble them here. Tesla has their assembly plants here, not overseas. Valve assembles their Steam game controllers in the US. Only when you want to use lots of manual labor like Foxconn you need to go to China because the workers there can be forced to do the mind-breaking stuff there and not rebel.

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    2. Yeah, not only could you recreate that network in the rust belt, but it wouldn't even have had to be rebuilt if everyone hadn't been fired and the factories closed in the first place. What, the unions aren't dead enough for them now?

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    3. Hmmm, I don't know. A lot of my family have worked for decades in Dofasco (Hamilton, Ont.) and they have not closed since 1930s and are not unionized. There were some benefits reductions and some layoffs over the years, but the profit-sharing plan is going strong.

      I guess you don't have to give up, roll over, and close everything down. The terms I happened to read today in "Pharmaceutical Technology" were "blue ocean" vs. "red ocean" business models. Dofasco is somewhat a blue ocean company - unique products, close ties to customers and ownership of suppliers. Selling any-steel on open market is a red ocean model - bloody competition. There is always a bigger shark out there.

      Tim Cook inherited a company transitioning from a blue to red ocean model. Maybe this colors his thinking a bit.

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  10. Ran a 100 million annual sales business for a scientific manufacturer. It was all about cost. The quality was less, the skills were less. but the margins were sky high.

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  11. I'm glad other people thought this was a ridiculous statement. I'm more confident the sequence of events was: manufacturing got outsourced, vocational training dried up AFTER that, not the other way around as he implied. The idea that companies moved manufacturing overseas because Americans stopped learning assembly skills is laughable.

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    1. This observation could support your assertion: a few months ago I decided I would like to take some classes in machining (like 'adult education' type at a local vo-tech or community college). And do you think I could find any within an hour drive? The only place I could find is one of those "collaborative workspace" deals, which have classes, but are aimed at inventors (which would serve my role but speaks to the loss of real education in this area).

      It is my impression (without really spending time researching it), that the lack of work did lead to cutting these courses. With a lack of interest, why fund them?

      It would seem to me that it's hardly a 'level playing field' in manufacturing, due to labor (laws, unions) and environmental regulations being large differences.

      Another thing I forgot about until I found this article:

      http://www.nakedcapitalism.com/2011/09/the-decline-of-manufacturing-in-america-a-case-study.html

      is the lack of maintenance of capital equipment used in production. Being from the rust belt, our area suffered from the closing of steel mills. I remember a substitute teacher in high school talking about this subject and one of the things he commented on was cutting back on equipment maintenance and investing in newer equipment to keep the mills productive and state-of-the-art. In other words, more of the same "killing of the goose that laid the golden eggs" mentality that has thoroughly contaminated our so-called leaders (c.f. also the Dow-DuPont merger and the role of the activist investors).

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  12. Opinion on Market Watch: http://www.marketwatch.com/story/tim-cook-oversimplifies-us-skill-problem-2015-12-21

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  13. Interesting. I am now in a Starbucks in Mountain View (not too far from Apple HQ) where the folks next to me are talking about how American industry is leaving the local people high and dry. They have mentioned Apple several times.

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  14. Apple is just another traitor company.

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    1. It isn't the responsibility of Apple or the government to find you a job. If you want to earn money, learn something valuable and find customers for your good or service.

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  15. I've been to China. What they have is People, BILLIONS OF PEOPLE. What the US does with 10 , They throw 100's.
    All must work in China. Its the Mao Communist way. The skills they have, they learned from our US companies training them.

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