When Apple announced last week that it would begin building one product line here in the United States, reactions ranged from cynical to hyper-cynical, as can be expected when news from the world’s most successful company crosses the wire.
First, what we know: not much. Tim Cook went on NBC with Brian Williams and gabbed like a schoolgirl that Apple would be “doing” one of their products here in the US in 2013. He neglected to define “doing,” or which product, or where in the U.S. this doing would be done. We do know some of the new iMacs are being assembled in the USA, but Cook’s announcement sounded like a bigger deal than just assembly. The rumor is the new line of Mac Pros, but no one knows for sure.
Some tried to use the news as proof that Tim Cook, and by extension Apple, were backing Mitt Romney in the recent election. After all, if they had supported President Obama, they would have made this announcement just before the polls opened and let him trumpet the coming renaissance of American manufacturing. That was just Twitter rumormongering, though.
Perhaps more accurately, some viewed the move as a simplistic marketing ploy, something to cleanse the consumer’s palate after Apple’s manufacturing transgressions of the past few years.
“Made in the USA” has been a staple of American marketing since the 80s. It started when American consumers were shocked to find out a majority of their textiles – clothing and such – were manufactured overseas. Couple that with the ascendancy of Japanese and European cars, and people found marketers tugging on their patriotic heartstrings. The message is particularly effective during times of economic stagnation (such as the one we are struggling to emerge from).
But just with other trends, “Buy American” slowly ebbed away. Most consumers simply cannot afford to be patriotic when they are struggling to make ends meet. The small number usually beats the bigger number at the retailer, no matter what flag appears on the box. But there might be a new marketing trend that Apple is banking on.
According to the Harrison Group and American Express, 65 percent of high-end shoppers – the people who can afford to be patriotic with their wallets – prefer to buy American. Say what you will about Apple’s products, but no one can refute it’s a high-end brand. And if the rumors are correct, the Mac Pro is the highest-end product they have. Apple could simply be looking to gain a stranglehold in a segment of the population that it traditionally dominates: yuppies.
Smarter people, thankfully, are refusing to see the move through the spectrum of bias. In a recent Forbes article, Steve Denning goes into great detail on why manufacturing is slowly moving back to the U.S. One of his key points: It turns out that it’s not that easy or cost-effective to ship thousands of items from Asia. If there are any supply chain snafus, such as (ahem) strikes and riots, whatever cost savings you were anticipating from overseas manufacturing erode quickly.
With the right product, a company can actually increase profits by onshoring its workforce. The product cannot be very complicated, because we simply do not have much of a workforce educated in complex manufacturing practices, but the Mac Pro might be the least complicated product Apple makes right now. It’s an ordinary tower computer, something Americans have been assembling and manufacturing for decades.
Perhaps Apple’s strategy is all of the above. Having the ability to point to some American manufacturing, however incremental compared to the overall output of the company, can only be beneficial. Patriotism had no effect when Apple’s largest rival was Microsoft, but now that’s thrashing around in a very messy fight for global dominance against South Korea’s Samsung, every little bit helps. Especially if your target consumer is typically swayed by such messages.
The bottom line is twofold: This isn’t as big of a deal as the breathless media would have you believe, and Apple is not going to lose their shirt over this.
It’s understandable to want this news to be a harbinger of things to come, both from Apple and for American manufacturing in general. That’s simply not the case. The obstacles required for that level of manufacturing to return here are simply too great, and the solutions are generational shifts in nature. Any new jobs in the US are good jobs, but this is a drop in the bucket.
This is also a drop in the bucket for Apple. Cook said that Apple is spending about $100 million on this project, or 0.002 percent of the company’s value. The worst-case scenario is that Apple has to move the production back to Asia in the next product cycle. The best-case scenario is they save a little money and get some positive publicity.