Apple Brings Jobs Back
Published in Süddeutsche Zeitung
(Germany) on 8 December 2012
by Nikolaus Piper (link to original)
Apple is the transformative company of today. Its products — iPhone, iPad, MacBook — shape and change the life of people around the globe in a manner that nobody could have imagined until recently. The design seems style-forming, extending far beyond the computer world. How the products are manufactured can become a political issue. Since 14 workers employed by Apple supplier Foxconn in China killed themselves two years ago, the media has closely tracked what happens before an iPad lands in an Apple store in New York or Munich.
Now, Apple has hit the headlines again. For the first time in about 10 years, the company will self-produce Mac computers in the United States again. The company’s CEO, Tim Cook, announced in an interview that Apple will invest $100 million for this purpose. That is not much for a business realizing a profit of $41 billion. Furthermore, nearly all the details are unknown: Which Macs are involved and where exactly do the investments go — to the suppliers or to Apple itself? Nevertheless, the decision could set a trend: Industrial jobs returning, not only to the United States, but also to the old industrial countries.
For a long time, it appeared to be the inevitable fate — basic jobs being outsourced from the United States, Germany or France, to China, Mexico or Eastern Europe. Services and a few industrial jobs for highly trained employees remained with the old industrial nations. Average- qualified workers did not stand a chance anymore. The simplicity of this dismal picture has never quite rung true. In fact, added value became globalized; former developing countries such as India, Mexico, Taiwan, and particularly China, earned their place in the international division of labor. Thus, wage costs were always an important factor, but never the only one.
No Massive Re-importation of Jobs
How complex the situation actually is always became evident when a company returned home accompanied by media frenzy. The German fluffy toy manufacturer Steiff brought the production of teddy bears back from China to Germany. The company cited quality problems as the cause. Stihl, the Swabian world market leader for chainsaws, outsourced a part of its production back from Brazil, because the exchange rate of the currency there had increased too heavily. Public expectation also plays a role. Apple CEO Cook concedes that his company has the “responsibility to create jobs,” including in its native United States.
If the old picture of job exports never added up, then the opposite cannot be right nowadays, either: There is not going to be a massive re-importation of jobs. Industrial production is, and will remain, globalized. Nobody with economic sense would even try to alter this. The wealth of hundreds of millions of people depends on the functioning of the international division of labor. The jobs that now “return” are mostly not the ones that were once “lost” — they are new ones.
Role Model Germany
China is no longer simply a low-wage country, but also a high-tech producer and an increasingly sophisticated customer. Prosperity is increasing, and with it, labor costs. As a result, the old industrial nations also have new opportunities. One of the best examples of this is Germany. The Germans are globally regarded as a role model: If the will is there, a country can maintain its industry and even expand it. Crucial to the Germans’ success after the crisis were the traditional strengths of the middle class and the disposition to wage restraint in prior years. The export surplus of the German Federal Republic is an expression of the fact that German industry was capable of utilizing growth in China and other emerging markets in a manner beneficial to itself.
If there is a declared goal by Barack Obama, then it is the following one: Creating well-paid jobs for the American middle class. This is only feasible if American industry, similar to the German one, fundamentally renovates itself. A great deal is still lacking in order for this to happen — most notably an elementary reform of professional training. Other elements are already in place: The oil and gas glut gives companies the prospect that industrial electricity will remain inexpensive in the foreseeable future.
The news of Apple’s $100 million dollar investment fits into this picture: It could signify a piece of American re-industrialization.
Now, Apple has hit the headlines again. For the first time in about 10 years, the company will self-produce Mac computers in the United States again. The company’s CEO, Tim Cook, announced in an interview that Apple will invest $100 million for this purpose. That is not much for a business realizing a profit of $41 billion. Furthermore, nearly all the details are unknown: Which Macs are involved and where exactly do the investments go — to the suppliers or to Apple itself? Nevertheless, the decision could set a trend: Industrial jobs returning, not only to the United States, but also to the old industrial countries.
For a long time, it appeared to be the inevitable fate — basic jobs being outsourced from the United States, Germany or France, to China, Mexico or Eastern Europe. Services and a few industrial jobs for highly trained employees remained with the old industrial nations. Average- qualified workers did not stand a chance anymore. The simplicity of this dismal picture has never quite rung true. In fact, added value became globalized; former developing countries such as India, Mexico, Taiwan, and particularly China, earned their place in the international division of labor. Thus, wage costs were always an important factor, but never the only one.
No Massive Re-importation of Jobs
How complex the situation actually is always became evident when a company returned home accompanied by media frenzy. The German fluffy toy manufacturer Steiff brought the production of teddy bears back from China to Germany. The company cited quality problems as the cause. Stihl, the Swabian world market leader for chainsaws, outsourced a part of its production back from Brazil, because the exchange rate of the currency there had increased too heavily. Public expectation also plays a role. Apple CEO Cook concedes that his company has the “responsibility to create jobs,” including in its native United States.
If the old picture of job exports never added up, then the opposite cannot be right nowadays, either: There is not going to be a massive re-importation of jobs. Industrial production is, and will remain, globalized. Nobody with economic sense would even try to alter this. The wealth of hundreds of millions of people depends on the functioning of the international division of labor. The jobs that now “return” are mostly not the ones that were once “lost” — they are new ones.
Role Model Germany
China is no longer simply a low-wage country, but also a high-tech producer and an increasingly sophisticated customer. Prosperity is increasing, and with it, labor costs. As a result, the old industrial nations also have new opportunities. One of the best examples of this is Germany. The Germans are globally regarded as a role model: If the will is there, a country can maintain its industry and even expand it. Crucial to the Germans’ success after the crisis were the traditional strengths of the middle class and the disposition to wage restraint in prior years. The export surplus of the German Federal Republic is an expression of the fact that German industry was capable of utilizing growth in China and other emerging markets in a manner beneficial to itself.
If there is a declared goal by Barack Obama, then it is the following one: Creating well-paid jobs for the American middle class. This is only feasible if American industry, similar to the German one, fundamentally renovates itself. A great deal is still lacking in order for this to happen — most notably an elementary reform of professional training. Other elements are already in place: The oil and gas glut gives companies the prospect that industrial electricity will remain inexpensive in the foreseeable future.
The news of Apple’s $100 million dollar investment fits into this picture: It could signify a piece of American re-industrialization.