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Why Apple is Relocating

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Apple recently announced plans to relocate several parts of its manufacturing from overseas in Southeast Asia to Texas, right in the U.S.A. While many were excited by the decision, the actual impact of this decision on the economy might not be as monumental as it sounds. There are several reasons that Apple may have made the decision to relocate to America.

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They Don’t Stand to Lose Much
Several years ago, the cost of outsourcing the manufacturing of parts overseas was a massive operation that stood to save companies huge amounts of money. The small cost of labor was a large incentive to move, since Southeast Asian workers were usually willing to do the job for a small fraction of what legal American workers were willing to do. However, in recent years, that has changed. The cost of fuel has increased disproportionately to the rise of paying American workers. Flying all of those parts from China to America and back again makes it a huge cost, and that’s not counting the cost of flying supervisors and managers back and forth to make certain that everything is right. Compared to those fuel costs, paying American workers is looking more cost-effective than ever. The cost of paying American workers has risen about 10% in the last 20 years, whereas the cost of fuel has risen over 100%, according to GasBuddy. Given those numbers, Apple doesn’t stand to lose much fiscally by in-sourcing the production of their Mac computers.

The Mac is a Small Component of Apple
Even if Apple did stand to lose a lot on the Mac computer assembly that is going to take place in-country, the Mac computer is a tiny fraction of the money Apple makes. Most of the money they make is in the iPhone, the iPad, and the iPod, not to mention iPhone and iPad repair. By making a smart political move, Apple stands to lose a lot less than they stand to gain by switching over to American workers for this tiny subsection of their company. If it works, they’ll likely continue to move operations over to America, until it’s more cost-effective for them to make pretty much all of their parts right at home. If not, they don’t stand to lose too much, and could easily relocate back to Asia.

It Works
Many other companies have attempted the same switch as Apple, with exciting and intriguing results. GE, for example, recently re-sourced all of the production of their Whirlpool machines to America, and has had fantastic results. The amount of waste that occurs during an outsourcing operation, according to GE, means that the savings of outsourcing aren’t nearly as dramatic as initial projections suggest. By sourcing their products right next door, they’re able to access all of the experts and managers they want, and can make sure that nothing is lost in communication. GE immediately sourced many of its other machines to America, as well. If Apple does well after relocating, more companies will likely follow suit, which is good news for the employment rate in America.

Siddartha is a Blogger from India. He is currently working as a Java Front End developer and he loves writing about tutorials, technology, algorithm, etc. You can follow him on Twitter | Facebook | Google+. You can subscribe to GadgetCage RSS Feed or Email Notifications.

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