Sunday, January 29, 2012

Rotten Apples: Bring Back Manufacturing!

"Morality, like art, means drawing a line somewhere."
- Oscar Wilde
If you've paid any attention to the news this past week, the New York Times ran an article last Sunday, which you can read here, pertaining to how manufacturing of Apple products, such as the iPhone and iPad, were effectively outsourced to Foxconn, a Chinese company known for less than reputable working conditions.




The article has drawn much attention to the production of what are arguably the world's most popular tech gadgets. And the most important question I would like to see addressed -- how does America return these jobs stateside?

According to the Times article, a conversation transpired between President Obama and the late Steve Jobs where the president was informed "Those jobs aren't coming back," referring to the manufacture of Apple products.

The advantages of manufacturing in China are significant. The corporate tax rate is lower (25% to America's 35%), labor costs are less, Chinese government regulations are far more lenient. Bringing those jobs back to the United States will no doubt require a great deal of cooperation between government and business.

President Obama himself outlined the need to bring back these jobs in the annual State of the Union address this past week. He challenged Congress to restructure the federal tax code to promote a friendlier environment for corporations seeking to open factories in country, stating he would endorse and sign such legislation. The president also encouraged special help for tech companies wanting to do so.

One of Apple's defenses to its foreign manufacturing was they simply could not find the qualified individuals necessary to perform these jobs. I cannot attest to how much truth that statement holds, but I do know another of the president's statements included a desire for secondary and post secondary educational programs to create programs in conjunction with business to train the necessary personnel needed for the work.

So, with a government willing to assist in changing society to meet the needs of business, will Apple and other corporations bring home jobs? I don't really know. But what struck me as odd, was a quote from a current Apple executive:
“We sell iPhones in over a hundred countries ... We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

And that leads me to the bigger question, does Apple have an obligation to the United States?

I was not shocked to discover an Apple executive was concerned only with the bottom line, but I was somewhat surprised they would be willing to actually say it aloud. Apple grossed over $108 billion in 2011 and projections for the current year expand even further.

Apple's supplier, Foxconn, has implemented a number of business practices that are deplorable, at best. Allegations of child labor have dogged Foxconn for years, but that might be the least of their concerns.

Foxconn literally has built their factory into an actual city where employees live in dormitories and spend most of their time. Up to ten employees share a room, have little time for associating or socializing, are paid under $20 daily, and have been threatened with prison for attempting to unionize.
Conditions are so deplorable for Foxconn employees, that many have committed suicide rather than continuing to work in those conditions. Foxconn's response? Raising nets around their factories to catch anyone who might jump in an attempt to take their own life.




At what point does Apple become incensed enough to make a change? To this point, Apple and other corporations don't owe the United States -- they owe it to themselves, their shareholders, and humanity to draw a line in the sand.

In outsourcing manufacturing, Apple has forgotten themselves in the same vein as many multinational corporations before them. Maximizing profits meant selling more than simply computer hardware. It meant selling out their country. Harsh? Definitely, but also true.

This corporation had prided itself for years on being designed and built in America. This nation provides the freedom necessary to innovate, gives the necessary wealth to citizens to purchase Apple products and services, and still today makes up a significant bulk of Apple's wares.

Perhaps Apple would enjoy being headquartered in China, where government stifles freedom and innovation with routine interference and control of business.

Moreover, China is undoubtedly the threat to American security no one wants to talk about. By moving manufacturing jobs overseas, the United States has made itself reliant on other nations for goods and components. Where is the spirit of American independence? Apparently that, too, is made in China.
If involved in a foreign policy dispute, conflict or war, American interests have become handcuffed by nations who supply us with resources and goods we no longer make ourselves.

The history of industry in America demonstrates that businesses once had a sense of duty to America. Both World Wars saw factory production chip in and do their part to aid a nation in need. What type of precarious situation would the United States been in during the winter of 1941 if a great bulk of our production was completed by Chinese peasants? Think about a war against the Japanese and Germans without self-sufficiency.

Although Apple products have proven to be reliable thus far, Chinese production as a whole has proven to be less than reputable. In the past decade, Americans have seen an overall lack of quality with the following products made in China: lead paint in children's toys, poorly made drywall that deteriorated inside homes, defective tires, poison in toothpaste, and low quality steel.

Apple ought to also be concerned with the level of espionage and intellectual theft the Chinese are engaged in. The Cox Report, an investigation by the House of Representatives in 1998, concluded China had stolen military secrets that enabled them to enhance their own nuclear arsenal. If interested, I highly recommend you examine this list of other major incidents of Chinese espionage.

If Apple believes themselves immune from this madness, they ought to consider the theft of intellectual property. The Chinese have the second largest demand for computer hardware, but rank eighth in sales of software. I would also like to take this opportunity to point out no Chinese citizen has ever won a scientific Nobel prize. China doesn't innovate, they steal. And apparently Apple has no problem being a hen willfully going to a forest of foxes. Does anyone believe Foxconn has the desire or ability to protect Apple hardware?

Apple isn't the only company complicit in what might be construed, by definition, as treason. And I don't use that word around lightly. But Apple has become the prime example of what scares me about multinational corporations. They represent the absolute worst of contemporary American society: self-absorbed egotism. No sense of responsibility to what makes it so great.

An old proverb (attributed to the Chinese) applies to Apple's situation: be careful what you wish for -- lest you receive it. Sales and profits are at an all time high, but at what cost?

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