Donald Trump’s Latest Pipe Dream: Bring Apple’s Manufacturing to the US

| Analysis

Donald Trump thinks it’s time for Apple to start manufacturing its products in the United States, and told CEO Tim Cook as much. Mr. Trump said Mr. Cook called him, and that he wants to give companies like Apple big tax breaks and remove industry regulations to get new factories in the country. That’s a pretty big dream considering the U.S. hasn’t ever had the production capacity to meet Apple’s needs.

Donal Trump wants Tim Cook to make Apple factories in the United States

Donald Trump to Tim Cook: Make Apple factories in the U.S.

In an New York Times interview, Mr. Trump—the President Elect of the United States—said he got phone calls from both Tim Cook and Bill Gates earlier this week. Apple, Microsoft, and the Bill and Melinda Gates Foundation chose not to comment on whether or not the calls took place, or who may have initiated them if they did.

Mr. Trump told the New York Times,

I was honored yesterday, I got a call from Bill Gates, great call, we had a great conversation, I got a call from Tim Cook at Apple, and I said, ‘Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States, where instead of going to China, and going to Vietnam, and going to the places that you go to, you’re making your product right here.’ He said, ‘I understand that.’

He went on to say his administration would use tax breaks to get Apple’s manufacturing in the United States. Mr. Trump told reporters he said, “I think we’ll create the incentives for you, and I think you’re going to do it. We’re going for a very large tax cut for corporations, which you’ll be happy about.”

It’s hard to see big tax breaks for corporations sitting well with Congress considering the sentiment that companies are gaming the system to avoid paying their fair share. Giving companies a way to pay even lower taxes ultimately translates into less money for the government—something law makers have been trying to stop, at least under President Obama’s administration.

Trump Wants Apple Factories

Getting companies to bring their manufacturing into the U.S. will take more than tax breaks in Mr. Trump’s estimation. He says Apple and other corporations shouldn’t be shackled by industry regulations.

“But we’re going for big tax cuts, we have to get rid of regulations, regulations are making it impossible. Whether you’re liberal or conservative, I mean I could sit down and show you regulations that anybody would agree are ridiculous,” he said. “It’s gotten to be a free-for-all. And companies can’t, they can’t even start up, they can’t expand, they’re choking.”

In other words, what we need to bring big-time manufacturing into the U.S. are massive tax cuts for corporations and greatly scaled back industry regulations. That doesn’t, however, take into account that the U.S. doesn’t have—and never has had—the infrastructure to produce on the same scale as China.

Foxconn’s Chinese factories where iPhones, iPads, and a long list of other devices from Apple and its competitors are made employ thousands of workers. The infrastructure to support the work force needed to build iPhones on the scale Apple needs requires what amounts to a city of workers, and that’s what Foxconn built. Its factories are essentially towns with living quarters, places to eat, activities, and other services a community needs.

The thousands of workers Foxconn employs to manufacture the electronic devices we want simply aren’t available in the U.S., and the days of company towns are long gone. This isn’t a matter of bringing jobs back to the country; it’s about creating a manufacturing system that never existed here. Tax cuts and industry deregulation won’t change that.

Apple already manufactures some of its products in the States, albiet on a small scale. It’s possible we could see more Apple production in the U.S., but don’t count on seeing Foxconn’s factories in China close down so all iPhones can be made here, no matter what Mr. Trump wants.

17 Comments Add a comment

  1. Machole1986

    I made an account just to comment on this blatant partisan idiocy.

    First if their was no chance of Apple moving production from China back to the US. Why is Cook asking Foxconn and his other manufactures to find a way to move production to the US?

    The very fact he’s asking about how Timmons production means that he is at least considering a move. Otherwise he wouldn’t waste the resources and his relationship with these companies asking this question.

    As for your “idea”, and I use the word idea in quotations because I can’t really call it an idea when it lacks any rational or reasonable thought, that the US cannot manufacture iPhone because we don’t have “the infrastructure”.

    Get out of your cave/basement/rock/whatever you have been living under and take a walk in reality. Have you ever been to SAS campus in Cary, NC or to Bose HQ in Framingham, MA? I’ll give you they are not “cities” because we don’t use de facto slave labor anymore in the US. They are massive campuses thought the size of a large university they have their own bus lines for employees they have a security force larger than a police department in towns and cities of comparable size. SAS even has a 5 star luxury hotel on its campus to wine and dine investors and visitors it invites for business.

    They are not alone either throughout the tech world you have these massive and posh campuses. Also unlike Foxconn you don’t have employees swan diving off the roof either because they are worked to death by foreign executives that racially hate them.

    The only barrier to high paying manufacturing jobs returning to the US is China’s unfair advantage through lopsided trade deals and currency minipulation to keep manufacturing costs artificially low in their country combined with over regulation and unfair tax rates in our country.

    If we stopped treating producers are a bad thing to be tolerated but punished and detested thoroughly, and started making America competitive for all business large and small again we’d see manufacturing return to the US in short order.

    So we either continue the failed polices of globalism that has left tens of millions out of the labor force with no hope and no prospect of worth while employment OR we make America great again for manufacturing and trade.

    I’m more than willing to flex our muscles and deal with the short term consequences of putting these pariahs like Mexico and China that have abused trade polices stacked against the US for decades. Yes it will be hard for a little while but the reward is a resurgence of American manufacturing and economic growth.

    All this hogwash about the US cannot survive a trade war is BS, its Mexico and China that cannot survive a trade war the US will be hurt by it but they will be destroyed by it. We got to stop squandering our prosperity and enriching others at our expense.

  2. Sorry, 1986, but your comment just doesn’t hold up to careful scrutiny.

    Sure, there are some large “campuses” but few of those are primarily doing manufacturing, as the Chinese ones are doing. China has for years had a state policy to encourage manufacturing capacity and, since it’s a monopoly state, eliminates virtually all barriers to achieve that end.

    The “unfair advantage” is NOT “lopsided trade deals” or “currency manipulation”. Currency manipulation was a thing but that ended several years ago. In fact, China is now propping up its currency the other way! As for the trade deals – it’s the WTO. You might argue that China has not held up its end of the WTO deal but that’s an issue with imports from here, not manufacturing and exports from U.S. to China.

    Tax rates in the U.S. are not a problem for most manufacturers. Sure, the nominal rate is high but none of them pay that because there are generous tax breaks to offset it. For example, Boeing’s rate of actual taxes paid (Federal, state, local and foreign) is 7.8%. For GE it’s 18%. Microsoft is 21%. Alphabet/Google is 16%. Do you think that companies in Europe are paying less? No, they’re not. But they do have tariffs for certain imports while we do not.

    As for well-paying manufacturing jobs, does the auto industry qualify? Do you think that there might be a reason that several of the European manufacturers have built plants here? Mercedes, BMW and VW, for example. BMW’s plant at Spartanburg is their biggest (just doubled in size). What which auto manufacturer is the biggest exporter from the U.S.? Hint – it’s not GM, not Ford and not Chrysler. No – it’s BMW.

    And there are well-paying manufacturing jobs at the Carrier plant in Indianapolis. Well, for another month or two. Then they’re going to Mexico. Not because the plant isn’t working well – in fact it’s doing very well and is quite profitable. No – it’s because Carrier’s corporate parent (United Technologies) can make more money for Wall Street by moving the plant and paying Mexican workers less. Nothing to do with “over regulation” or “unfair tax rates” (UT’s is 26%). No – this is corporate greed – pure and simple.

    It’s about time you realized this and stopped erroneously placing blame where it does not belong.

  3. President elect Trump was not my choice in the primaries; but I did vote for him in the general. I have mixed feelings about his conservative credentials. When it comes to his trade, regulatory and economic positions, he was saying the same type of things when he was a democrat. He obviously has deep convictions for what you call a pipe dream. Saying that the U.S. cannot bring manufacturing home is just too negative a point of view. Saying that the U.S. has never had a manufacturing system on the scale of Foxconn in China is debatable.

    I grew up in and around Lowell, MA which at the time was still known as a Mill Town. It was the home of row after row of textile mills, of other businesses that supported those mills and neighborhoods of housing for workers. Now, I know that Lowell was not the only city in the U.S. that grew to support large scale manufacturing systems. There were hundreds of them all across this country. And that is nothing compared to the transformation in short order that took place during World War Two.

    I remember that not long ago my mother in law worked QC on just one of Wang Industries many manufacturing lines. Many of my friends worked there as well. There was still plenty of talent available in the area for Wang to scale up if they had made the right business choices. Lowell was being transformed from a Mill Town to a Tech Town. It almost happened. This can be done. At least President elect Trump believes this can be done and has the convention to work for it.

    That is a hopeful thing that does not mean all of Apple’s products need to be made here in order for his dream to be fulfilled.

  4. I just fear that “eliminating burdensome regulations” will end up meaning getting rid of environmental protection, consumer protection, worker protection rules that are there for a reason. Remember, North Korea has 100% employment, but you wouldn’t want to live there.

  5. As retired military I can’t help but think someday in future we may not have much choice, but to bring back manufacturing. Then there was the recent story about some cellphones texting home to China, who knows what other such things are hidden in firmware and software, toxic stuff in toys and such. Recently I bought some steel fasteners, they won’t click to a magnet so I am guessing that the ferrous fell out on the way across the Pacific

    Two way trade is super important to us and others. The nations involved in the TPP are going to have agreement with each other with or without us. If we bail out then some other economic powerhouse will fill the void.

  6. The environmental issues are important. When viewed on a worldwide basis would we rather have manufacturing done here or China? Where are regulations stronger? For that matter, where are labor laws stronger? Cheaper iPhones seems a poor trade off when the result is abuse of workers and the environment.

    I don’t think we are talking about getting rid of all regulations in order to make progress in manufacturing things here.

  7. Donald Trump: “”Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States”

    Earth to Trump… Apple does NOT own or operated ANY of the plants that assemble its products. Those plants are owned and operated by other companies, and the people that work in those plants are employees of those other companies.

    Apple employs many tens of thousands of people in the USA. All of them receive MUCH higher pay than any of the workers who do menial assembly tasks for those other companies. In fact, many of those low paid workers are being replaced by robots… So even if one of those other companies built an assembly plant in the USA, it would be staffed mostly by machines (not humans). And what Americans would want to work for a few dollars an hour doing mind-numbing assembly line work, with tiny electronics anyways?

  8. kernel_panik

    This article is very disrespectful to readers who support Trump. It would have been one thing if you said “we examine the claim of Trump to bring Apple manufacturing back to US.”. But you chose a much more rude version of Trump’s “latest pipe dream.”

    It’s so sad how bitter and hateful you are.

  9. Everybody relax… Trump said is going to bring back every manufacturing job back. All those American companies are just waiting to pay each and every one of us $40 an hour to put plastic bits together. We will be rolling in the dough soon enough.

    Or maybe it will be set up more like Wal-Mart, keep the pay low so we will still need government assistance to make ends meet. While the profits keep coming going up. Who knows?

    Who better than Trump to fix all of our problems? That man is pure genius. Trump university. Trump steaks all viable business.

  10. Rick Hyman

    North Saanich has made a key point. Electronics companies in the US do not own the manufacturing plants they contract to build products. Most of the manufacturing plants are foreign owned. They have less incentive to come to the US.

    1986: no, the fact that Cook asked a manufacturer what it would take to set up in the US is not a measurement of how seriously he is considering such a move. He very well may have asked at a cursory level so he can say he asked, knowing what the answer will be.

    Another fact that plays into this whole idea of moving manufacturing of electronics to the US: recent reports indicate thousands of those same manufacturing jobs are being lost in China to robotic replacements. So, less would be gained by moving manufacturing to the US than any politician may believe. And, if manufacturing were moved to the US, jobs initially handled by humans would gradually go to robotics as robotics are developed that can handle the delicate assembly of electronics.

  11. “And, if manufacturing were moved to the US, jobs initially handled by humans would gradually go to robotics as robotics are developed that can handle the delicate assembly of electronics.”

    Delivered by selfdriving trucks. Well the good news is we all, those who survived the economic crash and revolution, will become subsistance farmers growing non GMO crops.

  12. “This article is very disrespectful to readers who support Trump.”

    Huh?

    How does the article mention Trump voters?

    Mostly it brings up points about several things which have dogged such discussions before.

    1. US corporate tax rates are not uniform and in some instances would be considered low.
    2. There are difficulties in bringing manufacturing back to the US.
    3. Regulations aren’t what drove drive companies to move manufacturing out of the US. Greed did.

    Now you can disagree with any or all of the points made.
    None if it is even slightly disrespectful to Trump[ voters unless, unless you are inadvertently saying that Trump voters are adherents to a demagogic belief system which is thwarted by discussion and hence any discussion of such things is offensive.

  13. As with every other “Bring manufacturing back to the U.S.” argument, his plans ignore the fact that if it were possibly cost-effective, venture capital money would be all over it. But even with a mostly insufficient minimum wage, companies still can’t afford to hire american workers to do this stuff. It’s cheaper to manufacture parts in South America, ship them to China for assembly and ship an assembled product back to the U.S. for sale than it is to build American. That’s a lot of expense to be covered by a “tax break.” That’s not an Apple problem, that’s a global economy, and Mr. Trump could only muddy waters in that pond. Tax breaks? Say what you mean, mr President Elect: you’ll make ALL Americans pay for these plants rather only than only those that choose to buy Apple. The biggest fact in that whole argument is that almost all the manufacturing jobs which have been lost in the U.S. since the the boom times were lost to improvements in technology, efficiency and automation, not shipping jobs overseas. Build a brand new plant in the U.S. and you will employ a tenth of the people it would have employed even a single decade ago, let lone back when domestic manufacturing earned real profits. Massive domestic manufacturing in this economy is gone for many reasons, and none of those reasons are things that any politician can change.

  14. gnasher729

    To Machole: Can you explain why the Bose manufacturing plant in Collier is for sale? And the one in Blythewood has closed? Could it have anything to do with Bose opening a plant in Malaysia?

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