The Times aims an arrow at Apple

In a close, critical look at why Jobs let so many jobs flee to Asia -- must reading -- the paper details more systemic issues.

CFOworld –

In a front-page look at how the U.S. lost out on Apple's iPhone work, Sunday's New York Times focused on a dramatic switch in the philosophy of the late co-founder Steven Jobs several years ago. The story is a recapitulation worth taking some time to read.

Reporters Charles Duhigg and Keith Bradsher open by reminding us of Jobs's one-time dedication to a "made in the U.S." approach. Today, almost all its 70 million iPhones, 30 million iPads and 59 million other products sold last year were manufactured overseas, according to the article.

Apple didn't comment for the record on the material that the pair gathered about the company. But in comments by Jobs, recalled from a meeting with President Obama last February, the then-CEO said plenty. Asked by the president what it would take to make iPhones in the U.S., Jobs said only: "Those jobs aren't coming back."

The story, part of a Times series called "The iEconomy: An Empire Built Abroad," looked at some of the reasons.

"Apple's an example of why it's so hard to create middle-class jobs in the U.S. now," former Obama economic adviser Jared Bernstein told the reporters. "If it's the pinnacle of capitalism, we should be worried."

In examining one case through the eyes of unidentified Apple executives, the story makes the issue come alive. The answer, in a phrase, to what Asia can provide that the U.S. cannot: supply chain flexibility.

When Apple called last year for a last-minute iPhone revamp, changing the glass screen design, a foreman at the Chinese plant called on 8,000 workers who lived in company dormitories there. He gave each a biscuit, and a cup of tea. Then he had them guided to a workstation. Within 30 minutes the instant crew started a 12-hour shift, fitting glass screens into iPhone frames, and the plant quickly stepped up to 10,000 phones a day.

The exec's appraisal: "The speed and flexibility is breathtaking. There's no American plant that can match that."

With Apple not commenting officially, the story left the CFO of major iPhone Apple glass supplier Corning to do some of the explaining.

While once centered at a factory in Kentucky --- where it still makes most iPhone glass, the story says -- Corning now produces much of the glass for Apple's growing smartphone rivals in Japan and Taiwan.

"Our customers are in Taiwan, Korea, Japan and China," Corning vice chairman and finance chief James B. Flaws tells the Times. "We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that's 10 times as expensive."

The company theoretically could make all its glass in the U.S. But that would "require a total overhaul in how the industry is structured," he says. "The consumer electronics business has become an Asian business. As an American, I worry about that, but there's nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years."

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