Skip to main content

Apple has an obligation to help solve America's problems

By Clyde Prestowitz, Special to CNN
updated 4:37 PM EDT, Tue April 3, 2012
Apple should realize that what is good for the company can also be good for the American economy, says Clyde Prestowitz.
Apple should realize that what is good for the company can also be good for the American economy, says Clyde Prestowitz.
STORY HIGHLIGHTS
  • Apple says the company has no obligation to help solve America's problems
  • Does Apple owe anything to Uncle Sugar? Clyde Prestowitz says yes
  • Prestowitz: Apple should tell suppliers it wants more components made in the U.S.
  • Apple can also move some of its assembly operations to Mexico, Prestowitz says

Editor's note: Clyde Prestowitz is the founder and president of Economic Strategy Institute. A former counselor to the commerce secretary in the Reagan administration, Prestowitz is the author of "The Betrayal of American Prosperity" and blogs about the global economy at Foreign Policy.

(CNN) -- Americans have become used to the fact that most of the jobs created by Apple are in China. We know that Steve Jobs told President Barack Obama that "those jobs aren't coming back." Recently, an executive at Apple said that the company has no obligation to solve America's problems by moving some of those jobs back to the United States.

As a business, Apple has a right to fear that moving the assembly work from China to the United States will entail raising labor costs so high as to make the company less competitive and profitable. But for it to say that it has no obligation to help solve America's problems is completely unacceptable.

Virtually every piece of technology in any Apple product had its origin or was partially developed on the basis of a U.S. government-funded program. In a global world where piracy of products is commonplace, Apple, like other multinationals, has continuously pressed the U.S. government to enforce copyright and patent laws to protect its intellectual property from international theft. Does Apple owe anything to Uncle Sugar? You betchum. Big time.

Clyde Prestowitz
Clyde Prestowitz

Skeptics are right to point out that moving the factory assembly operations to the United States is a nonstarter as long as we continue to have free trade with China. These kinds of jobs are labor-intensive, and the differential in the cost of labor between America and China is just too large. But this is not where the real value or the good jobs we want for Americans lies.

The assembly value in an iPhone is only about $7. The real treasure-trove is in the parts. For example, the displays, the processors, memory chips and other key electronic components comprise nearly half of the value of the iPhone. These components require intensive capital and technology investments, but they do not require a great amount of labor. In other words, they can all be produced in America. Indeed, according to a recent study by Booz and Co., to supply the U.S. market, the most competitive location in which to produce these components is the United States.

Audit of Foxconn finds major violations

At the moment, however, Apple is not procuring most of these parts in America. With a few exceptions, the company is getting them from South Korea, Japan, Taiwan, China or Germany.

Let's take Gorilla Glass, a product made by Corning Inc. of Corning, New York, that is used as the display for the iPhone and iPad as well as many other smartphones and tablets. Corning can and does make that glass in America.

But to gain access to China's market, Corning is pressured by the Chinese government to make Gorilla Glass in China so that it can be used in any Chinese factory that makes a product that needs the glass. Basically, Corning must invest and produce in China, even though, in my estimates, it might be less expensive to make Gorilla Glass in America and export it to China. The same is true for other assembly line parts.

So what should Apple do?

We know that Samsung, a South Korean supplier, had started to produce a key processor for Apple in Austin, Texas. That's a good first step. Apple should go further by telling other suppliers that it wants more components to be made in America. One advantage for this move is that it can create an environment in which more research and development is possible, which in turn can strengthen overall innovation for Apple.

Apple should also move some of its assembly operations to Mexico. Mexican labor isn't as cheap as Chinese labor, but after one adjusts for the differences in the cost of shipping, establishing assembly-line factories in Mexico should be quite acceptable from a financial and quality perspective. By moving more production of advanced components to America and the human labor to Mexico, more jobs will be added to North America and help reduce the U.S.-Mexican trade deficit, which is about $55 billion annually. And by having the assembly work just over the border, Apple can ensure that costs can be kept under control.

As Apple is trying to get out of the recent controversy surrounding its suppliers' labor practices in China, where workers put in more than 60 hours a week, the world's most highly valued company would do well to consider how best to spend and invest its $100 billion cash pile. It needs to realize that what is good for Apple can also be good for the American economy.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Clyde Prestowitz.

ADVERTISEMENT
Part of complete coverage on
updated 5:22 AM EST, Fri December 19, 2014
President Obama has been flexing his executive muscles lately despite Democrat's losses, writes Gloria Borger
updated 2:51 PM EST, Thu December 18, 2014
Jeff Yang says the film industry's surrender will have lasting implications.
updated 4:13 PM EST, Thu December 18, 2014
Newt Gingrich: No one should underestimate the historic importance of the collapse of American defenses in the Sony Pictures attack.
updated 7:55 AM EST, Wed December 10, 2014
Dean Obeidallah asks how the genuine Stephen Colbert will do, compared to "Stephen Colbert"
updated 12:34 PM EST, Thu December 18, 2014
Some GOP politicians want drug tests for welfare recipients; Eric Liu says bailed-out execs should get equal treatment
updated 8:42 AM EST, Thu December 18, 2014
Louis Perez: Obama introduced a long-absent element of lucidity into U.S. policy on Cuba.
updated 12:40 PM EST, Tue December 16, 2014
The slaughter of more than 130 children by the Pakistani Taliban may prove as pivotal to Pakistan's security policy as the 9/11 attacks were for the U.S., says Peter Bergen.
updated 11:00 AM EST, Wed December 17, 2014
The Internet is an online extension of our own neighborhoods. It's time for us to take their protection just as seriously, says Arun Vishwanath.
updated 4:54 PM EST, Tue December 16, 2014
Gayle Lemmon says we must speak out for the right of children to education -- and peace
updated 5:23 AM EST, Wed December 17, 2014
Russia's economic woes just seem to be getting worse. How will President Vladimir Putin respond? Frida Ghitis gives her take.
updated 1:39 AM EST, Wed December 17, 2014
Australia has generally seen itself as detached from the threat of terrorism. The hostage incident this week may change that, writes Max Barry.
updated 3:20 PM EST, Fri December 12, 2014
Thomas Maier says the trove of letters the Kennedy family has tried to guard from public view gives insight into the Kennedy legacy and the history of era.
updated 9:56 AM EST, Mon December 15, 2014
Will Congress reform the CIA? It's probably best not to expect much from Washington. This is not the 1970s, and the chances for substantive reform are not good.
updated 4:01 PM EST, Mon December 15, 2014
From superstorms to droughts, not a week goes by without a major disruption somewhere in the U.S. But with the right planning, natural disasters don't have to be devastating.
updated 9:53 AM EST, Mon December 15, 2014
Would you rather be sexy or smart? Carol Costello says she hates this dumb question.
updated 5:53 PM EST, Sun December 14, 2014
A story about Pope Francis allegedly saying animals can go to heaven went viral late last week. The problem is that it wasn't true. Heidi Schlumpf looks at the discussion.
updated 10:50 AM EST, Sun December 14, 2014
Democratic leaders should wake up to the reality that the party's path to electoral power runs through the streets, where part of the party's base has been marching for months, says Errol Louis
updated 4:23 PM EST, Sat December 13, 2014
David Gergen: John Brennan deserves a national salute for his efforts to put the report about the CIA in perspective
updated 9:26 AM EST, Fri December 12, 2014
Anwar Sanders says that in some ways, cops and protesters are on the same side
updated 9:39 AM EST, Thu December 11, 2014
A view by Samir Naji, a Yemeni who was accused of serving in Osama bin Laden's security detail and imprisoned for nearly 13 years without charge in Guantanamo Bay
updated 12:38 PM EST, Sun December 14, 2014
S.E. Cupp asks: How much reality do you really want in your escapist TV fare?
updated 1:28 PM EST, Thu December 11, 2014
Rip Rapson says the city's 'Grand Bargain' saved pensions and a world class art collection by pulling varied stakeholders together, setting civic priorities and thinking outside the box
updated 6:10 PM EST, Sat December 13, 2014
Glenn Schwartz says the airing of the company's embarrassing emails might wake us up to the usefulness of talking in-person instead of electronically
updated 5:33 PM EST, Fri December 12, 2014
The computer glitch that disrupted air traffic over the U.K. on Friday was a nuisance, but not dangerous, says Les Abend
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT