Apple have made record profits.
As Aditya Chakrabortty showed in the Guardian yesterday, this is in no small part as a result of shifting production to China. As he also argued, they could still be massively profitable making their product in the US.
The problem for Apple and so many companies is a simple one. It is that if you make a mass produced product your workers have to be able to buy it. Henry Ford realised that. It was the basis of his success. As globalisation hollows out western markets leaving more and more unemployed in its wake increasingly that won't be true, not least because the replacement workers are, by definition, paid much less.
This, amongst many things, is the failed logic of the neoliberal model of globalisation.
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I couldn’t agree more, but then I have increasingly seen the work I do either offshored or performed in the UK by workers on visas (“onshoring”). Often the onshored workers are on basic salaries that are less than the minimum wage and are then topped up by allowances for temporary workplace (section 338) expenses.
Last year, HMRC’s NMW unit investigated one company that brings in thousands of workers every year and has the majority of its staff on visas, but decided:
“that for the purposes of the minimum wage legislation, the allowances paid to the workers on secondment duties to the UK by way of a dispensation agreement with HMRC are considered as wages and therefore taken into account in the calculation of the minimum wage pay.”
This is despite HMRC’s crackdown on UK employers after the “Minimum Wage (Amendment) (No. 2) Regulations 2010” was introduced to stop such abuses.
It’s all about big maultinational businesses making profits and the government and civil service falling over backwards to help them.
And it’s sickening
Unless of course the Chinese (and Indians, Russians & Brazilians) start buying them..?
I’ve covered that point
Richard,
Pretending for a moment that the Ford model is at play, a few items:
– The Chinese worker is making an iPad, such as the one you own
– The price of the fully-loaded iPad, such as the one you own, is £659
– Throw in the Ford model so the worker can buy that mass produced iPad, such as the one you own
– The Chinese worker is working 52 weeks/year and 5 days a week to make an iPad, such as the one you own
– Under the Ford model our Chinese friend will now be earning .32/hour …… the only problem with that being it is below the average Chinese hourly rate of 2002……
Fret not though. Our Chinese friend will be able to purchase an iPad just like the one you own.
Chas
I don’t follow your logic, at all
I guess you have one
Richard,
Yes, we are following the Ford model mentioned in the original post. That being:
“It is that if you make a mass produced product your workers have to be able to buy it.”
Ford employees were paid enough to buy a car, the car they were making. If we follow that same rationale for the Chinese workers making an iPad, they should be making enough to buy an iPad.
Unfortunately that will cut the wages of the Chinese worker severely, but the simpleton point of the Ford model will be upheld*
Chas
*again, we are pretending this is the reason for the Ford model in the first place…
You miss the point – I was saying the US worker may not be able to buy the product in the end
I wouldn’t want to disagree with your main Fordist argument, but your secondary point that that Apple would still being “massively profitable” if they shifted production back to the US is somewhat flawed IMHO.
I think you might be missing one of the same key points that the Guardian did: the fascinating and ultra-lean Shenzhen supply chain is fundamental to Apple’s profits and success, and it’s not as simple a story as just labour costs. The original NYT article makes this much clearer (as does the most-recommended comment in the Guardian). There’s also a really good explanation at http://blog.marksweep.com/post/20469283331/the-beer-game-or-why-apple-cant-build-ipads-in-the.
Sorry – but I think you miss the point Aditya and CRESC are making by a mile
So many people comment on China production as if it’s still all the cheap clothes and Christmas tat where it all started. You can still get that if you want, but the hi-tech end is seriously mind blowing. It’s not about saving cost, moving production to China to do that is now really not possible if you want good product (yes, globalisation has made the Chinese workers much richer and more skilled). It’s about volume, logistics, production planning, material scheduling and managing the supply chain (much of which is outside China) and no-one in the West can handle that. Foxconn made, stockpiled and then shipped 3 million iPad 3s for the latest release in an estimated 2-3 months (which included the Chinese New Year holiday). Try to find or setup somewhere in the US or Europe to do that.
Read Aditya’s analysis
It blows you apart
Read the comments in the Guardian to his article – that blows him apart.
Right wing troll comments on the Guardian prove nothing – which is why you’ll find the authors of all articles in the Guardian ignore the comments
Of course I’ve read it, and no it doesn’t.
I’ve spent 10 years working with several subcontract manufacturers from US$500m (small for China) turnover and up putting Western designed products (consumer, telecoms and medical) in from pilot run to mass production. I have worked with them from contract and design down to component level and walking the line talking to workers directly and even sitting in the line to assemble stuff myself to understand any issues they report. I think I know a little bit more than a Guardian journalist about this subject.
Respectfully, I doubt you know more than CRESC
And yet for all that Fordism has given us, none of which is at play here, Henry Ford was a supporter of tax avoidance, using one of the largest preference share schemes ever created.
I am not quite sure why you say that your makers HAVE to be able to buy. It was only a social concept of Ford’s rather than an economic requirement. Henry Ford also agreed with the use of un-skilled labour and reduced the number of people employed as he sought to replace labour with capital (machines). He loved the idea of keeping the worker thick, easy to employ to screw on hub caps.