A Rotten Apple Tale Of A Trade Swindle

As mad as I get at Ross Douthat, John Harwood, David Brooks et al from time to time, I don’t know any other paper except the New York Times that is capable of the type of reporting on display here, from yesterday (the topic is the gradual extinction of the manufacturing sector of this country, concerning both blue and white-collar jobs…well, the Inky is capable of something like this with Barlett and Steele, but their work hardly appears anymore, though I do link to it later here)…

When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

I would ask that all of those people out there deifying Jobs and who were ready to risk injury to themselves upon the news of his death pay particular attention to that remark.

Also…

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

And why is that, exactly? Well…

…a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

But wait, there’s more…

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The last thing in the world I intend to do here is extol the supposed virtues of a country that houses its workers in dormitories (mentioned in the article), making them work in excess of 12 hours a day six days a week (also mentioned) and makes them sign agreements not to kill themselves when the workload gets too unmanageable (not mentioned in the Times story) and puts up nets around the outside of the dormitories to catch them if they try to kill themselves by jumping out a window (also not mentioned there, but here).

Also, it should be pointed out (and I don’t want to shock anybody) that, apparently, in China they don’t have these stupid arguments all over the place about what is the role of state government versus the federal government, the requisite conservative versus liberal hissy fit, etc. , so much so that nothing gets done anymore (at least here). Someone in authority pretty much tells a worker “do this for almost nothing or I’ll shoot you” and it gets done (again, not something I admire).

Still, you want to find out what Apple executives really think of the U.S. workforce?

Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

…

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

Gee, wouldn’t it be nice if these nameless Apple executives actually had the guts to go “on the record” with these observations?

And speaking of the “pay no price, bear no burden” bunch, how exactly have they fared? I think you know the answer…

As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.

Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.

The biggest rewards, however, have often gone to Apple’s top employees. (Timothy D.) Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.

But of course Cook and his pals don't think US unemployment is their problem. That makes Cook another economic sociopath as far as I’m concerned – continuing…

A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.

So did Apple have any thoughts on how to generate more U.S. jobs?

…the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.

Another “tax holiday” and more H1B visas - more non-answers…

So it appears that anyone with at least half a brain in this country knows that we need an emphasis on education at all levels to try and close this gap and create more jobs. And this comes at a time when at least one of the leading presidential contenders offered by one of our major political parties in this country want to abolish the Department of Education (here).

But not to worry; the story tells us at the end that Steve Jobs got his unscratchable glass surface for his phones that he could show off at the California dinner party with President Obama (in front of executives whose combined worth was $69 billion, the story notes).

The Times story fails to note, however, whether or not these corporate vampires could see their own reflections.