Why Apple Manufacturing Needs Few Workers

by Steve Wildstrom   |   December 8th, 2012

Old photo of women on assembly line (National Park Service)

Apple CEO Tim Cook’s announcement that the company would do some Mac assembly in the U.S. brought on a flurry of publicity vastly disproportionate to the importance of the development. It’s good that manufacturers see opportunities for U.S. operations for a variety of reasons, but a big surge of employment isn’t one of them. Dan Luria, a labor economists with the Michigan Manufacturing Technology Center was quoted by Bloomberg as saying that the Apple operation is likely to add only 200 jobs.

That’s not surprising to anyone who has visited a modern manufacturing facility, or who has seen only pictures of crowded Chinese assembly lines. Most factory work these days, especially in high-tech operations, is done by machines, not people (this is how a manufacturing company like Intel achieved revenues of more than half a million dollars per employee last year.)

The change is most striking in electronics assembly. Circuit board manufacture used to require humans to mount components on boards and solder them in place. Today, components have shrunk to the point where it is difficult at best for humans to place them with sufficient accuracy and impossible to solder by hand. Instead, high-precision robots place the parts on boards, which are then soldered in a quick trip through an induction furnace. Many Chinese factories still use lots of people for final assembly jobs because labor has been cheaper than robots; this is changing fast as Chinese wage rates rise.

A narrowing wage differential is one reason manufacturing in the U.S. is becoming more attractive. Rising shipping costs is another. As Quentin Hardy wrote in the New York Times Bits blog:

“The labor cost on a notebook, which is about 4 to 5 percent of the retail price, is only slightly higher than the cost of shipping by air. Soon even that is likely to change because of the twin forces of lower manufacturing costs from automation and higher transportation costs from rising global activity.”

The good news is that while the jobs are fewer, they are much better than most old factory work. Machines have taken over the heavy, dirty, dangerous jobs. (During my one summer of factory work, I spend a couple of weeks on the  shipping line, sealing boxes, and applying shipping labels and postage. Back then, this was all done with glued tape and labels and I ended each shift covered head to waist in glue. I would have paid the robot myself to escape.) The jobs that remain are more for technicians than operatives. They require higher skills and generally offer higher pay and certainly better working conditions.

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.
  • Rich

    I’m glad manufacturing in the U.S. is becoming more attractive. In my view, people who say our country is on the way down are much too negative.

  • AdamChew

    Simply can’t understand why there are so many pundits pouring cold water over Apple’s effort to bring jobs back to the US.

    Looks like Apple just can’t get any good deal either way they are skewed by clever people who think they know better.

    My challenge to them is create some jobs if they can.

    • steve_wildstrom

      “Apple’s effort to bring jobs back to the US” is exactly the wrong way to look at this. Apple is bringing production back to the U.S., undoubtedly for a mixture of many reasons, some purely economic, some PR or political. But neither they nor anyone else should expect a very significant number of jobs to be created directly by manufacturing.

  • def4

    I find the fascination with jobs over valuable effort to be ridiculous.
    Were people also decrying the fact that 50% of the population would no longer have farm jobs when tractors came on the scene?

    • steve_wildstrom

      As a matter of fact, yes. We have gone through waves of technological panic, believing that this or that technological advance would cause mas unemployment. Remember that the original Luddites were textile workers who sabotaged powered spinning frames that threatened their jobs.

      What has always happened is that productivity-enhancing technology has made society richer and created new jobs to replace the ones it destroyed. In the long run and for society as a whole, this is very good. But there is tremendous disruption and serious impacts on individuals along the way.

      • def4

        Well then we should support people with money and retraining programmes, not throw money at keeping or creating jobs that are being obsoleted by technology.