Lessons of the iPhone for American Manufacturing

The New York Times reports that Foxconn facilities assemble more than 40 percent of the world's consumer electronics.

The New York Times reported this weekend that, when Apple was deciding where to base its production operations for the iPhone, there were two factors taken into consideration -- and they weren't corporate taxes, regulations, or even the cost of labor. 

To assemble the iPhone and all its component parts, Apple needed to find a labor force with two qualities: skills and scale. For example, when a last-minute change to the iPhone model forced an assembly line overhaul,

A foreman [at the Chinese plant hired to make the iPhone] immediately roused 8,000 workers inside the company’s dormitories...Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

One of the reasons that this scene above is not taking place in the U.S. is that we simply don't have an adequate amount of workers with the right skills on tap. Apple currently requires no less than 30,000 on-site engineers to assist factory workers, and, as Steve Jobs said in an interview shortly before his death, "If you could educate those engineers [in the U.S]...we could move more manufacturing plants here."

Take note: this is one of the most successful CEOs in American history emphasizing that U.S. competitiveness has nothing to do with corporate taxes or regulations, but rather insufficient investment in education. And, as the President's Council on Jobs and Competitiveness emphasized last week, creating an adequately skilled labor force will require a bottom-up overhaul in the U.S. education system: expanding access to pre-school, increasing funding for classrooms, and supporting K-12 teachers in science and technology, all of which will increase the number of students who are actually qualified to enroll in technical training programs to learn basic engineering skills.

Comprehensive education reform, with an emphasis on producing a greater number of talented workers with technical training, is the basic prerequisite for luring high-tech manufacturing jobs back to the U.S. But, as I have written before, policymakers must acknowledge that the manufacturing sector is not the pro-labor industry that it used to be, with wages way down for many workers and unions more scarce. There is also the question of daily hours, scheduling, and the pace that workers must set in order to respond to constant changes in demand -- the Times article profiles an American worker, eventually laid off by Apple, stating that,

We were told we would have to do 12-hour days, and come in on Saturdays. [...] I had a family. I wanted to see my kids play soccer.

Now, that kind of hard work is not foreign to America, with some auto plants now running around the clock with three shifts of workers. Still, there is a broader question here as to whether America really wants to subordinate certain core values to compete against developed countries where harsher forms of capitalism are the norm. 

Many of us balked at the news last Thanksgiving that workers at major retailers were being asked to skip out on their family dinners in order to report to work at midnight on Black Friday, just so that stores could squeeze out more spending from American consumers. So why are we not equally discomforted by the prospect of forcing the American manufacturing sector to adopt these same labor practices? 

In his State of the Union address tomorrow, it is reported that the President's call for rebuilding a middle class economy will be framed as a "return to American values." That's encouraging, but we need to be clear what this means, particularly when it comes to the ever more urgent priority of revitalizing America's manufacturing sector. There is not much point in training highly skilled workers if we just send them off to work at the blue-collar equivalent of a Wal-Mart, while owners pocket all the real wealth that is generated.

Real American values dictate not only greater investment in job training and education, but also setting high labor standards so that workers share in the prosperity they create.