Apple investing more than $100 million to bring Mac production line to the US

Marking one year since his ascension to Chief Executive Officer of Apple, Tim Cook has been on a bit of a public relations blitz recently. It's not something Apple really needed, they're not reeling from some unexpectedly poor launch of disappointing figures, but it's been a year since he took over and everybody wants to know how Apple is doing, how Apple has changed, and where Apple is going. We've talked extensively about those changes here - Cook has reorganized Apple from the top-down, tweaking the structure and personnel for greater efficiency and cooperation.

Since taking the helm of Apple, Cook has repeatedly been asked about bringing Apple manufacturing to the United States, and repeatedly said that's something he wants to do. In separate interviews posted today by NBC's Rock Center (full interview coming tonight at 10pm Eastern) and Bloomberg, Cook was again asked about manufacturing in the US, and in light of the stock-configuration iMacs that we've been seeing hitting shelves with "Assembled in USA" labeling, he apparently thought it was time to expound more on Apple's USA plans. The lines delivered to Rock Center and Bloomberg were similar (the man knows how to rehearse), but Bloomberg's included a little extra:

"Next year we are going to bring some production to the U.S. on the Mac. We’ve been working on this for a long time, and we were getting closer to it. It will happen in 2013. We’re really proud of it. We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial. So we’ll literally invest over $100 million. This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money."

It's still not clear if the new iMacs we've been seeing singing Springsteen's Born in the USA are the first steps in this program or merely Apple using their US custom configuration facilities to produce enough of the ultra-slim computers to meet demand at launch. Either way, there are certainly going to be a lot of people happy to see Apple bringing production lines to the United States, so long as the price and quality of the product aren't affected.

As he has been doing from the start, Cook noted that the US has never really been an electronics manufacturing powerhouse, "so it's not a matter of bringing it back, it's a matter of bringing it here" and building up the skillset in US workers to manage that sort of work. Toyota, Honda, and Nissan (the New York Times has an excellent piece on how Nissan set up automobile manufacturing in Tennessee) went through a similar set of challenges when they brought their automobile manufacturing lines to the United States - while the US auto industry primarily existed in and around Detroit, the skills and practices of the Japanese automakers were, in a way, quite foreign to US workers. IT's worth noting that Apple has not for many years produced their own hardware (unlike the days when there was an Apple-owned Macintosh factory in California), so it's likely that - as Cook implied - Apple will be working with existing manufacturing partners to bring Apple product production to the USA, be it manufacturers already here, or those looking to expand to the US (as Foxconn has rumored to be exploring).

There's also the question of how much this is going to cost Apple from a purely financial standpoint. The idea of production in China comes with the benefit of a highly flexible and massive workforce and incredibly short supply lines. Combined with China's historically low wages, Chinese production is generally just plain cheaper, though you end up paying to ship your completed product across the ocean before you can sell it. Production in the US has it's own risks for Apple, including the higher wages demanded by US workers and the now trans-oceanic component supply lines, though Cook did note that "'it's not so much about price, it's about the skills" and that the sort of engineering and manufacturing education needed to do this isn't as strong in the US as it is in China.

But as the executives at Nissan, Honda, and Toyota would tell you, the US workers they hired in their new factories adapted faster than expected to the Japanese way of building cars - and the Japanese manufacturers learned from the US-trained workers as well.

Source: Rock Center; Bloomberg

Derek Kessler

Managing Editor of Mobile Nations, Army musician, armchair pundit, and professional ranter.

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Reader comments

Apple investing more than $100 million to bring Mac production line to the US

13 Comments

I apologize for my lack of information, but how will Apple benefit from bringing the manufacturing to the United States? It will be good for the country, but Apple has to invest a lot of their money to do this and making the computers might not be as fast and maybe even efficient for them. An answer would be appreciated! :)

I just wish somebody would bring democracy back to the U.S. (Oh, wait, we never really had it in the first place--check.)

Re: "It's still not clear if the new iMacs we've been seeing singing Springsteen's Born in the USA are the first steps in this program or merely Apple using their US custom configuration facilities to produce enough of the ultra-slim computers to meet demand at launch."

It's possible that Apple could start small. By building only a fraction of the total iMac (or Mac Pro) volume in the US. If production requires the same number of workers as it does in the current Foxconn factories, assembly costs will be much higher. Or, if Apple manages to automate much of the assembly process (like they did with early Macs) they could keep assembly costs down.

Either way, it will cost more to actually build Macs here. So how can Apple reduce the overall cost of Macs even as assembly costs go up?

By using ARM-based systems:

Top-of-the-line Intel Core i7 CPU: $999.00
Apple A6X SoC: $17.50

Do the math.

more like still Jobs distortion field. that part about it really being about building the skillset of the american worker. That's out of Job's mouth. Jobs said he could manufacture in the U.S. if he had 10k competent engineers to deal with production. So i think this is just a carrying on of what Jobs wanted. either way i'll be glad to see it.

I live in Alabama where Hyundai built an auto plant. It is a bit of a win-win for Hyundai. They get to save on taxes, get good PR by assembling in the USA, and by being in Alabama they avoid the UAW.

I wonder if Apple will follow this idea to avoid the union labor tax.

Well at least you didn't post the Born In The USA album cover which Springsteen is presumably pissing on the flag.