A couple minor news items combined last week to get tech commentators’ hearts all aflutter. Both items involved Foxconn, the notorious assembler of consumer electronics for companies like Apple. Foxconn has been controversial for some of its labor practices, with conditions at Chinese factories leading to strikes, protests, and even suicides on occasion.
The first news item was reported by Reuters: the chairman of Foxconn told reporters, “It’s not easy to make the iPhones. We are falling short of meeting the huge demand.” That fact was sort of common knowledge already.
Then DigiTimes reported that Foxconn was planning on opening manufacturing plants in the United States. The source? “Market watchers.” OMG, iPhones made in America, right?
Well, no. For one thing, Foxconn denied that it was planning on expanding its American presence in an e-mail to another news organization, CNet. The company already has some facilities in the United States, though not full-blown gigantic manufacturing plants like in China.
But let’s just say it’s lying and the report is correct. Assuming the unnamed “market watchers” know anything about anything, they said that the U.S. plants would focus on building televisions, not Apple products. Foxconn assembles devices for many companies, Apple being just the most famous. Such a move would, however, allow Foxconn to offload production of some products to America and free up staff to build more of those precious iPhones in China.
Does making televisions in America make sense in itself? With rising labor costs in China, it’s starting to. There aren’t many electronics assembled here because all the intricate component parts are made in southeast Asia anyway, so it’s most convenient to assemble them there. With televisions, though, there’s a not-insignificant amount of molded plastic that needs to be integrated with electronic pieces, and the infrastructure to make that does exist here.
Larger items are more expensive to ship, so building them closer to their target market can be a smart move. That’s part of why so many foreign car makers have plants in the U.S., despite labor being cheaper elsewhere. As long as labor costs aren’t too much more expensive here, it can still be cheaper overall to produce and sell in America. Some labor can also be automated, meaning the jobs involved aren’t factory workers but robot designers and technicians.
If labor is too much more expensive, there’s still the attractiveness of a “Made in USA” label that would allow a company to sell a product for a bit more than a foreign-made item. Are American consumers willing to absorb that cost? What’s the limit? Would an “Assembled in USA” iPhone (or television, or notebook computer, or other gadget) be worth 10 percent more here than an identical item assembled in China? Twenty percent more? Fifty percent? Google tried American assembly for its Nexus Q set-top device, but it’s not currently selling it, for unknown reasons.
With a foothold of a few Foxconn plants, I could see electronics manufacturing making a comeback in the USA. It’s not as if we have zero manufacturing capacity. Plenty of vehicles, obviously, are built in the United States. Companies like Intel and Texas Instruments already have semiconductor fabrication plants here; it’s only finished consumer electronics assembly plants that are in such short supply.
How much of a premium would you pay for “Made in USA” electronics?
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