Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Apple, Lenovo, and Google Are Bringing Production Back to the US, but Should We Celebrate?

By

The production of state-of-the-art electronic devices largely remains an international enterprise, and this is unlikely to change.

PrintPRINT
Google itself plans to produce its new Glass devices in the US, yet again it's likely to outsource the production to a large-scale manufacturing company, like Foxconn.

Hold the Applause?

A handful of smaller companies -- like Falcon Northwest, Puget Systems, and Lotus Computer -- already assemble their PCs in the US, yet it's only the efforts of big-name brands that attract media attention and praise. Do these firms really deserve the warm, fuzzy vibes we send them?

If you were to tear down your laptop -- say, the latest Apple MacBook Air -- you'd discover a set of components coming from different countries.

Your new MacBook Air's Intel (NASDAQ:INTC) processor was likely manufactured in Israel (or the US or Ireland) and packaged in Malaysia, for example. The battery pack was probably assembled in China. The solid-state disk drive and display likely came from Samsung (KRX:005930) factories in Korea. And while the MacBook Air is "designed by Apple in California," the actual assembly happens in China.

This should come as no surprise. The modern laptop, like almost any other electronics gadget, is a complex product, reliant on a number of components manufactured around the globe, with most parts still coming from Asia. But the manufacturing couldn't have happened without design and engineering, which is often based in the US or Europe.

Don't forget that every piece of hardware needs software to operate, and the software might come from almost anywhere – the US, India, or China. More than that, a number of technology companies are operating globally and developing their products through the collaboration of the teams scattered in offices around the world.

Given all of this, are companies being honest by adding a "Made in the USA" sticker to electronics assembled here? Should we really get excited about computers and smartphones assembled at home, and operated by global companies with headquarters overseas?

Don't forget that manufacturing plants usually employ a low-skilled and low-wage workforce, and US companies competing with overseas manufacturers face enormous pressure to keep wages down. In 2011, IHS Global Insight reported some samples of low factory wages in developing nations: $0.90 per hour in Pakistan, $1.28 in Indonesia, and $2.19 for China.

So do we really have to care that much about the efforts of the big three and admire these companies for creating a couple of hundred non-engineering positions in the US (and remember that these positions are not even operated by American companies)? Or maybe adulation should go to the companies, big and small, actually creating "the next big things" right here in America?

While it can be assembled nearly anywhere in the world, a device like the iPhone can only be dreamed up in a special sort of country. The same goes for a microprocessor, or the Windows operating system.

As long as inventions like these are happening in the US, where production is located should remain a less important issue.

(See also: The iPhone Was Designed in California and the Moto X Was Born in the USA: Should We Care?)
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE