With wages in low-cost countries on the rise, the growing complexity of far-flung supply chains, and increased concern about working conditions in offshore factories, there’s been a lot of talk about manufacturers repatriating jobs to the US – a notion known as “reshoring.” Last week, Apple CEO Timothy Cook announced the company would spend $100 million to produce some of its Mac computers in the US, according to The New York Times. While Apple already does some assembly work in the US, few details were offered as to how the money would be spent, or what kind of new jobs the investment might create.
While any news about manufacturing job creation in the US is good news, some remain skeptical that the country can recapture its former glory as a manufacturing powerhouse. Since 2010, the US economy has added more than 400,000 manufacturing jobs, but an additional million more jobs would have to be added just to get back to pre-recession levels. That, however, seems unlikely. Manufacturing in the US is highly automated and requires fewer workers than it used to. That trend is almost certain to continue.
On a global basis, Apple has created a ton of jobs over the last several years. Since 2004, the number of full-time employees has increased almost sevenfold – going from nearly 11,000 to more than 72,000. However, more than half of all full-time Apple employees staff its wildly successful retail operations. Apple closed its last US manufacturing line in 2004. Furthermore, building Macs in the US represents investment in a slower-growing segment. Apple’s bread & butter – iPads and iPhones – together account for nearly 70 percent of sales. Those products will continue to be manufactured overseas, mostly in China by contractors like Foxconn.
In support of the idea that we may be seeing a trend, Lenovo announced in October that it will begin manufacturing computers in North Carolina in 2013. The company has been trying to raise its brand awareness in the US, and the move is part of a larger effort to locate production nearer to where products will be sold. But are Apple’s and Lenovo’s moves the bellwether of greater things to come for US manufacturing, or one-off strategic moves that also make for good PR when “creating jobs” has been the headline for 5 years?
For more about the ups and downs of the tablet computer supply chain, check out my colleague Linnea Kirgan’s post about the new D&B Infographic: Tablet Supply Chain Risks.