Apple’s Made in USA Mac Signals It’s Joining Retreat From Overseas Manufacturing

Thursday, 06 Dec 2012 02:31 PM

By Dale Eisinger

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With its announcement of a shift from off-shore-to-domestic fabrication for one of its existing Mac computer lines, Apple joins a growing trend of companies making similar moves back to U.S. shores.

The tech giant’s CEO, Tim Cook, said in interviews with NBC News and Bloomberg Businessweek on Thursday that Apple would be moving $100 million worth of iMac computer manufacturing to America in 2013.

The move makes both political and financial sense, as U.S. companies continue to face criticism for taking jobs out of a shrinking American workforce and as financial returns on offshore investments have eroded.

Though the initial Apple investment of $100 million is a tiny slice of the company’s $121.3 billion yearly revenue, it’s a symbolic move in a U.S. economy where unemployment rates are a favorite talking point of politicians and where many Americans are still having trouble finding work.

“I don’t think we have a responsibility to create a certain kind of job,” Cook said to Businessweek. “But I think we do have a responsibility to create jobs.”

And data show that any advantage of manufacturing overseas isn’t worth taking jobs out of the U.S. economy any longer.

According to a May 2011 study by The Boston Consulting Group, the average wages in China are rising by 17 percent per year. Pair that with global shipping costs, and the initial cost-cutting benefits of taking American manufacturing overseas starts to diminish. The BCG estimates the fiscal advantages of keeping jobs overseas will drop to single digit percentages soon.

“We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015,” said BCG’s Harold Sirkin.

With that short timeline apparently in mind, many companies have already made the move back to U.S. soil.

Caterpillar Inc., which on Thursday surpassed Goldman Sachs Group as the 49th largest company, judging by the S&P, has already brought much of its manufacturing home to Texas. NCR moved its ATM manufacturing plants back to Georgia recently. And one manufacturer of hula-hoops and Frisbees brought uprooted from Mexico and China back to the U.S.

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