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First, this headline in a Washington Post op-ed by Vivek Wadhwa: “Trump’s demand that Apple must make iPhones in the U.S. actually isn’t that crazy.”
Well, maybe not that crazy if you don’t care who might assemble those iPhones. Actually, not “who” but “what.” If POTUS Trump could somehow coerce Apple into moving manufacturing to the US, it might not be humans getting those jobs. Wadhwa:
When American companies moved manufacturing to China, it was all about cost. China’s wages were amongst the lowest in the world and its government provided subsidies and turned a blind eye to labor abuse and environmental destruction. Things have changed. China’s labor, real estate, and energy costs have increased to the point that they are comparable to some parts of the United States. Subsidies are harder to get and Chinese labor is not tolerating the abuse that it once did. China is now a more expensive place to manufacture than Indonesia, Thailand, Mexico, and India according to Boston Consulting Group. … Technology is, however, changing the labor-cost equation even more and China is becoming unpredictable because of its faltering economy. It may make sense for Apple to locate some of its manufacturing closer to other markets just to protect itself from this uncertainty. …
What is changing the labor situation is robotics. Robots can now do the same manufacturing jobs as humans — for a fraction of the cost. A new generation, from companies such as Rethink Robotics of Boston, ABB of Switzerland, and Universal Robots of Denmark, are dexterous enough to thread a needle and nimble enough to work beside humans. They can do repetitive and boring circuit board assembly and pack boxes. These robots cost less than $40,000 to purchase and as little as a dollar per hour to operate. And unlike human workers, they will work 24-hour shifts without complaining.
There you go. The era of cheap labor is over. As it is, Chinese manufacturing employment looks to have peaked more than a decade ago. Beijing realizes this and is making a big automation push. As I have written, “So when Trump says he wants to force Apple to make its products in America, what he’s really unintentionally saying is that he wants American robots to do the work of Chinese robots.”
I don’t think this is what some Trump supporters are counting on. As Wadhwa adds, Apple’s manufacturing partner Foxconn might build a $10 billion iPhone facility in India: “India does have a labor cost advantage over the US but robots could eliminate this. Similar manufacturing facilities could be set up in the United States, product by product.”
Products manufactured by robots, that is. Not that zero human jobs would be created in the process. But the story of manufacturing is one of greater productivity through automation. We are not returning to mass manufacturing employment. The 1960s ain’t coming back.
An illustrative chart (although one that overstates the decline on factory jobs) from my colleague Mark Perry:
For more on this: “China, Apple, and Donald Trump’s economic nostalgia.”