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Nine years ago during a dinner in Silicon Valley, President Barack Obama questioned Apple’s founder and CEO Steve Jobs on why the company couldn’t manufacture their products on American soil. It’s reported that Jobs was dismissive, arguing that production and assembly jobs would never return to the United States.
It’s true that offshoring had all but become the default option for U.S. manufacturers thanks to cheaper overseas labor and materials driving down overall production costs.
In the past decade, though, American companies have endured growing pressure to move production back home to create manufacturing jobs, with the number of U.S. companies reshoring hitting an all-time high in 2018. Political instability, trade wars, rising labor costs in developing countries, and disruptive global events — including COVID-19 — are further contributing to this shift.
Is Apple Reshoring Production to the United States?
Apple has long been dependant on offshore manufacturing. For example, in 2019 it was reported that five million Chinese jobs depended on the company’s manufacturing — 10,000 of which were direct employees of Apple.
Reshoring all of this production would be an immensely costly process. It’s been estimated that moving iPhone manufacturing back to the U.S. alone could cost upwards of $4 billion, which would likely have an impact on Apple’s end customer. At the same time, the company must be seen to be putting American citizens first, which is why it has taken several steps to reshore some of its production.
Here’s a brief timeline of Apple’s reshoring efforts.
December 2012
Following Jobs’ death, Tim Cook took on the role of Apple’s CEO. During an interview with Brian Williams on NBC, he announced that the company would be investing $100 million to resume manufacturing in the U.S., starting with one of Apple’s existing Mac lines.
November 2013
Apple announces plans to open a new manufacturing plant in Mesa, Arizona, that will run on 100% renewable energy. The plant will create 1,300 construction jobs and 700 positions at the plant itself, manufacturing sapphire materials for several Apple products.
March 2016
During his presidential campaign, Donald Trump called upon Apple to reshore its production and threatened to impose harsher tariffs on Chinese imports. “I’m going to get Apple to start making their computers and their iPhones on our land, not in China,” he said during a rally in March. “How does it help us when they make it in China?”
Since then, the Trump administration’s “America First” policies have led to speculation that Apple might be incentivized to reshore production with a lowered corporate tax rate and a one-time tax on its $200 billion in overseas accounts.
August 2017
Apple uses Taiwan-based company Foxconn to assemble its products in China. Just as the trade tensions start to escalate rapidly between China and the U.S., Foxconn announces a $10 billion investment in production facilities in Wisconsin.
January 2018
Apple commits to investing more than $30 billion in capital expenditures in the U.S. over the course of five years. This includes an increase in funding — from $1 billion to $5 billion — to its Advanced Manufacturing Fund, which serves to boost the domestic manufacturing sector. These investments are predicted to create an additional 20,000 Apple jobs.
Indeed, in September 2019, as an example, $250 million from the Advanced Manufacturing Fund was awarded to Kentucky-based Corning Incorporated, which supplies the company with precision glass for the iPhone, Apple Watch, and iPad.
July 2018
A new study ranks the manufacturing companies most committed to reshoring jobs, and Apple comes out on top. The study reported that Apple has reshored a total of 22,200 jobs.
September 2019
Apple confirms that it will manufacture its redesigned Mac Pro in Texas, from the same Austin facility where the Mac Pro has been made since 2013. The device will feature components manufactured by more than a dozen U.S. suppliers.
COVID-19 and Beyond
Apple’s supply chain was not exempt from coronavirus-related disruption, with many of its suppliers in China being forced to shut down production for several weeks. Apple reported component shortages and shipping delays as well as postponed the release of the iPhone 12.
Some commentators believe that the devastating events of 2020 will be enough to kill off global supply chains and trigger mass reshoring. Others are more skeptical, arguing that there is no evidence as of yet to suggest companies will reshore a significant number of manufacturing jobs in direct response to the pandemic.
The good news for the U.S. manufacturing industry is that Apple has proven its commitment to creating American jobs of its own accord.
Get Thomas Insights on Reshoring
- How the Apple Supply Chain Stays Top Ranked in the World
- What Is Reshoring, and Why Do Companies Reshore?
- Offshoring vs. Outsourcing: What’s the Difference
Image Credit: Attila Fodemesi / Shutterstock.com
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