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As Apple becomes more and more transparent with its 3rd party suppliers and manufacturing process (one of a handful) we are beginning to understand how Apple makes its legendary products. Marketplace’s Rob Schmitz recently visited a Foxconn factory that was making iPads for Apple and posted the below video showing the assembly process for Cupertino’s tablet but Schmitz’s article was mostly about the people behind the manufacturing.

…He (Rob Schmitz) didn’t meet anybody who was poisoned on the job. He didn’t meet any 13-year-old workers. Nobody he talked to had been hurt in an explosion. He says the stories he heard were more about China than Apple….

Over the last 3 months, Apple has been getting hit hard by articles and news stories accusing the iPhone/iPad maker of horride working conditions, specifically in its Chinese factories. The New York Times wrote several stories covering the supposed grievances, we wrote about it here and you can find the Times article here. Yet, the NYT wasn’t the only organization jumping on Apple over worker treatment, others were quick to point the finger at Apple (90% were hit pieces) and one of the loudest was the much beloved podcast: This American Life.

Back in January, This American Life ran a story, with the help of Mike Daisey’s, over the treatment of Apple factory workers in China and possible child labor practices. The piece was hard hitting, very animated (with the help of Mr. Daisey’s theatrical training) and explosive. It was another nail in the coffin for Apple’s continuing PR nightmare but Tim Cook (CEO Apple) didn’t take the accusations lightly, reiterating Apple’s stance on worker conditions:

We think the use of underaged labor is abhorrent. It’s extremely rare in our supply chain, but our top priority is to eliminate it totally. We’ve done that with our final assembly and we’re now working with vendors farther down in the supply chain. If we find a supplier that intentionally hires underage labor, it’s a firing offense….

After months of public pressure and countless articles “exposing” Apple’s supply chain and supposed worker abuses at Foxconn’s city-factories – Nightline (ABC News) is being given access to Apple’s supply chain. The ABC exclusive will air Tuesday, February 21 at 11:35 p.m. ET:

Apple has given “Nightline” anchor Bill Weir exclusive access to their suppliers’ factories in China, amid reports of safety problems, hazardous conditions and underage workers. Weir is the first journalist go inside the factories to see these life changing gadgets get made. He traveled to Shenzhen China to see firsthand what life is like for factory workers, most of whom have never used an iPod, iphone or Apple computer…

The New York Times wrote several articles describing the supposed conditions Foxconn workers lived/worked under and while there hasn’t been an open or un-biased report detailing Apple’s supply chain, the countless articles that followed the NYT’s articles have forced Apple to address the issue. C.E.O. Tim Cook has repeatedly said that:

“Apple takes working conditions very seriously,” said Cook, launching right into a question about how Apple handles working conditions. “We take the conditions of workers very seriously. I worked in factories, I worked at a paper mill. We understand working conditions at a very granular level…”

While Nightline and ABC News have been given this exclusive insider view to Apple’s supply chain, there are still people within the media that see this report as a white-wash, as ABC is a parent Disney company and Disney has an extremely close business/board-member relationship with Apple. I look at this as transparency and the more transparency the better but this should be industry wide – not a witch hunt for the guy on top.

Source: ABC – Source: Times – Source: TheNextWeb

Last week, the New York Times published an article written by Charles Duhigg and Keith Bradsher intitled: “How the U.S. Lost Out on iPhone Work”. It was a brilliant article detailing the realities of why China constructs 70%+ of Apple’s products and why America can’t compete with China’s factories/workers. The article got so much praise, that now there is talk of it winning the Pulitzer but in its brilliance, there were some shockingly sad realities about America’s manufacturing past/present/future.

Let’s start at the beginning. About a year ago, President Obama came to California and had dinner with silicon valley’s heavy weights – C.E.O.s from companies like: Netflix, Genentech, Oracle, Google, Intel, Facebook and Apple. At the dinner, each C.E.O. was asked to have a question ready for President Obama. As the story goes, when the late Steve Jobs (C.E.O. of Apple) was talking, President Obama interrupted him and asked: “what would it take to make iPhones in the United States? Why can’t that work come home?” Without blinking, Steve Jobs looked at the President and responded: “Those jobs aren’t coming back.”

Why aren’t those jobs coming back? Why can’t we complete with China and its workers? Why is Apple, a company with cash assets now worth almost 100 Billion and a stock price that puts it only second to Exxon (market Cap) not doing more to return some of that wealth back to America. These are some hard questions to answer and unknown to most of us, these questions have some very uncomfortable answers. Answers that not only define our country and what it has become but also, how we live and buy things. Here is where the answers start:

Weeks before the first unveiling of the iPhone 4, Apple decided to make last minute changes to the screen – last minute changes that effected every aspect of the iPhone’s assembly line. The decision to change the screen was made in the afternoon – by midnight, the whole assembly line was re-worked for the proper changes and the foreman of the factory woke up 8,000 workers (middle of the night) – putting them to work (each had been given a biscuit + some tea). 96 hours later, the factory was producing 10,000 iPhones a day – with production ramping up daily.

Charles Duhigg and Keith Bradsher go on to point out that executives they spoke to said:  “The speed and flexibility is breathtaking…There’s no American plant that can match that…” when speaking of Chinese factories. So, Here is where we start to see the real divide:

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.- New York Times

So let’s go back to President Obama’s question to the late Steve Jobs: “Why can’t that work come home?” The sad reality is not so complex but it is tragic on many levels and Mr. Jobs was right in saying: “Those jobs aren’t coming back.”

1) The Establishment: The established factory and factory cities in China make moving full scale manufacturing back to America nearly impossible. At just one of Foxconn’s factory cities, nearly 1 million people work, sleep, live and eat. Imagine moving all that infrastructure back stateside.

2) The Chains That Bind: The established Asian supply chains would make mass production, assembly and changes much more expensive, if factories were located in America. The majority of the hundreds of small parts that make up the iPhone 4S are made in Asia – meaning that they would need to be shipped all the way to America for assembly.

3) Information Economy: While America has quickly adopted an information economy, we have also abandoned the manufacturing economy that made this country grow. We no longer have the facilities necessary to bring jobs back (look at Detroit’s buildings) and if we were to start building our infrastructure, it would take years to catch up to China.

4) They’ve Got Skillz: While skilled workers can be trained anywhere, China has industrialized training – with specific manufacturing positions being filled within 2 weeks. Workers go to training schools, within massive factory cities and study 15+ hours a day. This is expected in China and the average factory worker has “submitted” to this type of treatment/work. Americans have never experienced this type of industrialized learning and treatment, at least not in the last 3 generations. Maybe during the industrial revolution and after the 1929 stock market crash, did American workers see that type of life.

5) I’ll work for 30¢/Hour: The most prominent difference between manufacturing jobs in China and America are the laws. This includes hundreds of labor, safety and wage laws. What is the minimum wage law in your state? $8.25/Hour? How about 30¢/Hour and you work a 36 hours work shift! That’s right – there have been reports of people working 36 hours straight.

6) I’ll buy that for a dollar: Buy “Made in America.” People have speculated the cost of an American made iPad 2. The numbers have ranged all the way up to $1,140 – please keep in mind that these are fact based estimates and not tested. Yet, for the sake of argument let’s say Apple made two versions of the iPad: One made in America and the other made in China – how would the average capitalistic american consumer react? Right now, you walk into an Apple store and see on the shelf two iPads – times are tough – the economy is hard – your wallet is not what it used to be. The Chinese iPad on the right has a sign that reads: $499 – the American made iPad on the left has a sign reading: $699 (they are the same iPad/build quality/specifications) what do you pick? I think it’s fair to guess that the majority of people would still buy the Chinese built iPad.

It’s not that we can’t compete – we aren’t even playing the same game. The average Chinese worker and the average American worker can’t compete, they live in two different worlds. Over the years, Americans have fought for standardized labor laws, protecting the standard of life and living they desired. China has essentially sold the majority of its population into slavery to the world. This is the brutal truth to why those jobs will never come back to America. It isn’t a matter of Americans not being able to put together an iPhone, its a matter of, “I won’t do it for 30¢/hour!” The “Jobs” issue is immensely complex and while I have done my best to cover the main points – this is not solely an economic problem. This is a social, economical, moral and cultural problem. Sadly, there will be no real solution and no “jobs” will come back to America until people truly understand what they are asking for when they say, “I want those jobs back!”

Charles Duhigg and Keith Bradsher have written what I consider, (hands down) the best article of the year….so far. Please go and read it in its entirety, as my summarization does not do it justice. You can find it here – New York Times.

Source: New York Times – Image Sources: Pic1 – Pic2 – Pic3