
Tim Cook: Apple products aren’t made in China because it’s cheaper - pavornyoh
http://www.marketwatch.com/story/tim-cook-apple-doesnt-make-its-products-in-china-because-its-cheaper-2015-12-20
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jacquesm
"We are outsourcing because people outsourced in the past to the point that we
can no longer do things properly here."

The only way to fix a trend gone wrong is to reverse the trend, not to
compound it.

~~~
Jgrubb
Exactly what I was thinking, and wouldn't it be a PR master stroke to start
the repatriation of the US's manufacturing sector?

~~~
rimantas
They do manufacture Mac Pro in US.

~~~
jacquesm
They assemble it in the US. But the mb is made by Foxconn iirc.

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shellmayr
_“That is total political crap,” Cook fired back. He said he’d “love to bring
it home” but doesn’t because “it would cost me 40%... and I don’t think that’s
a reasonable thing to do. This is a tax code, Charlie, that was made for the
industrial age, not the digital age. It’s backwards. It’s awful for America.
It should have been fixed many years ago. It’s past time to get it done.”_ I'm
a little insulted by the fact that Cook thinks it's up to him to decide
whether or not his company should be paying taxes. Obviously they've found a
loophole, but his phrasing suggests he's doing it for the greater good. Maybe
if Apple and similar huge companies actually paid those 40% (I doubt it's that
high a percentage) to government, public school could get more funding, etc.
and the US wouldn't need as much philanthropy.

~~~
jjtheblunt
Insulted? Apple paid taxes on foreign earnings by foreign branches in the
countries where earnings occurred. What nonsense is being dismissed is the
idea of then paying duplicate income taxes, on the same earnings, to a second
foreign government: in this case the United States. It's obscene to think it
makes sense. The fallacy in perception is a political slight of hand to fury
fund a way too hungry big government many would say.

~~~
sleepyhead
That's not correct. Apple do not pay income tax here in Norway even though
they obviously sell a lot through the Apple Store. They "pay" tax in Ireland,
which I assume is next to nothing. The argument is not about paying duplicate
income taxes. It is about Apple and others using loopholes to get income in
countries with low/zero tax rate instead of the country they sell in or
actually operate in.

~~~
rahimnathwani
"Apple do not pay income tax here in Norway even though they obviously sell a
lot through the Apple Store."

Corporation taxes are levied on income, i.e. profit. Yes, Apple sells a lot
through the Apple Store in Norway, but do those stores make any profit?

The _retail_ margins on Apple products are tiny. Try negotiating a discount on
an iPhone from an Apple reseller. Would the Apple Store (which probably has a
much higher cost base than a normal Apple reseller) make any profit? If not,
why should they pay corporation tax?

~~~
sleepyhead
> Yes, Apple sells a lot through the Apple Store in Norway, but do those
> stores make any profit?

My mistake: I meant the App Store not a physical Apple Store. We are not
worthy of that yet here.

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rahimnathwani
Is the App Store based in Norway? If not, why would it be subject to
corporation taxes in Norway? Just because it has customers in Norway? Would
you expect a SaaS provider in Norway to pay corporation taxes in the US just
because it has customers there?

~~~
sleepyhead
This is exactly what the discussion regarding digital sales is about. Apple
has set up their store in Ireland even though it is an American company. They
have people employed in Norway and sell to Norwegian customers but pay no
taxes as sales are made through Ireland.

I expect that a company pay taxes where they realistically operate. I don't
think it's fair to set up shell companies in countries where they have no real
operations. A company uses a lot of state resources that are paid through
taxes. Without contributing they are cheating the rest of the people in a
country.

~~~
rahimnathwani
"I expect that a company pay taxes where they realistically operate."

Would you expect a SaaS provider in Norway to pay corporation taxes (i.e. a
tax on company profits) in the US just because it has customers there?

What about state and federal sales taxes?

Would your answer change if the company were to have a single marketing
employee based in the US?

What if none of the company's customers are in Norway, but all are in the US?
Should the company pay profits taxes in Norway, the US, both, or neither?

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onion2k
Apple couldn't move their manufacturing out of China even if they wanted to.
As soon as they started making motions that they're going to the Chinese
government would slap a levy or a ban on the export of some key material
component in order to protect _their_ manufacturing industry. Foxconn employs
more than a million people, and there are many times that number once you
include the whole supply chain. No government is going to let a significant
part of that leave their country.

~~~
mcphage
> No government is going to let a significant part of that leave their
> country.

Well... the US did, which is why we're in the situation we did.

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orionblastar
The USA used to have skilled factory workers until jobs went overseas for
factories. Now almost nobody studies how to work in a factory because of lack
of available jobs in the USA.

If you want to bring back the jobs to the USA you have to get more people to
study how to work in a factory again.

~~~
simonh
How many Americans actually want to go back to a low-cost assembly based
manufacturing economy?

I'm a Brit and recently had a rather weird experience as a friend of mine
waxed lyrical on the one hand about how Britain needs more honest
manufacturing jobs because that's how wealth is created, while also talking up
how great his Son's private school is and that he's got a fund set aside for
the boy's University education, probably in the arts. It was more than a
little surreal.

The fact is UK manufacturing is actually doing pretty well. It accounts for
12% of the country's output compared to a high of 25%, and has mainly migrated
into higher value engineering and design. So yes it's a lot lower than during
the 70s proportionately, but they are predominantly much, much better jobs.
What we should be doing is what my friend is actually doing versus what he was
advocating. Educating and investing our way into a higher value economy.

~~~
norea-armozel
If I knew there was a future in manufacturing I wouldn't had bothered with
college except to grow my knowledge for its own sake. Factory work that pays
well enough to take care of my bills and leave with more than enough to save
up for things is IMO better than risking it all in a college degree that may
be worthless due to shifts in career news hype.

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venning
> _" I mean, you can take every tool and die maker in the United States and
> probably put them in a room that we’re currently sitting in."_

Don't know how big that room is, but you could probably fill it with the toll
and die makers in my extended family and their coworkers. I get his argument,
even if I don't buy it, but that's just an insulting remark.

~~~
steve19
It's a ridiculous soundbite which I am sure was devised by a PR hack.

There are probably enough US tool makers with YouTube channels to fill a room!
(I subscribe to many of them)

If he were honest it's probably because China is cheaper but also because it's
much easier. They can order a product, at crazy high volumes, and let the
Chinese figure out how to scale. And afterwards there is no bad press when
workers are fired.

~~~
jacquesm
NL is a lot smaller than the US (17 M vs 300+M inhabitants).

We have 100's of tool-and-diemakers here, I think Cook will need a slightly
larger room for the US ones.

But I can see why he doesn't actually know about this, tool-and-die makers are
not exactly hobnobbing with the jet-set. And don't forget that tool-and-
diemaking is a specialization from being a machinist and you could probably
find quite a few of those and train them to become tool-and-diemakers. The
(much harder) sub-discipline is the one of moldmaker, and of those too there
are (still) quite a few.

~~~
rimantas
Cook being the one who fine-tuned Apple's operations to perfection I think he
knows a lot about the things he talks about.

~~~
forgottenpass
Cook being a public face of Apple, I think he makes deceptive public
statements to protect Apple, regardless of what he knows.

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carsongross
_“The U.S., over time, began to stop having as many vocational kind of
skills,”_

Over time... Just happened...

As if this wasn't a concerted effort on the part of american-based multi-
nationals to move the entire supply chain to cheap-labor, non-existent
environmental control countries. They wanted to arbitrage the consumption
power of salaries in the west by not supporting them out of profits, but
rather out of debt.

REEEEEEEEEEEEEEEE

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samfisher83
A lot of manufacturing capabilities have moved. I am engineer not even
mechanical, but occasionally I will have to make prototypes. Maybe it wouldn't
be super pretty, but if I had six weeks I think I could become proficient
enough to make a pretty good units. These aren't super complicated parts, but
does require soldering, box cuttings, wire routing etc.

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glastra
The submission title is a bit misleading. First I read it as "the reason Apple
products aren't made in China is because that would be cheaper".

Perhaps rephrasing to "Apple products are made in China not because it's
cheaper" would be less ambiguous.

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fivesigma
Nice PR misdirection, Tim.

Apple is the kind of company that will skimp on updating base storage to 32GB
on their €650 smartphone because it might reduce their margins by 0.001%
(number pulled out of my behind but you get the idea).

It certainly IS because it's cheaper.

~~~
syllogism
What?

The base storage is low to get you to buy the upgrade. Cost is irrelevant.

~~~
johnchristopher
Of course cost is relevant. It's all about the cost in the end.

