Skip to main content

Apple has an obligation to help solve America's problems

By Clyde Prestowitz, Special to CNN
April 3, 2012 -- Updated 2037 GMT (0437 HKT)
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
October 28, 2014 -- Updated 1237 GMT (2037 HKT)
Errol Louis says forced to choose between narrow political advantage and the public good, the governors showed they are willing to take the easy way out over Ebola.
October 27, 2014 -- Updated 1803 GMT (0203 HKT)
Eric Liu says with our family and friends and neighbors, each one of us must decide what kind of civilization we expect in the United States. It's our responsibility to set tone and standards, with our laws and norms
October 27, 2014 -- Updated 1145 GMT (1945 HKT)
Sally Kohn says the UNC report highlights how some colleges exploit student athletes while offering little in return
October 26, 2014 -- Updated 1904 GMT (0304 HKT)
Terrorists don't represent Islam, but Muslims must step up efforts to counter some of the bigotry within the world of Islam, says Fareed Zakaria
October 24, 2014 -- Updated 1302 GMT (2102 HKT)
Scott Yates says extending Daylight Saving Time could save energy, reduce heart attacks and get you more sleep
October 27, 2014 -- Updated 0032 GMT (0832 HKT)
Reza Aslan says the interplay between beliefs and actions is a lot more complicated than critics of Islam portray
October 27, 2014 -- Updated 1119 GMT (1919 HKT)
Julian Zelizer says control of the Senate will be decided by a few close contests
October 24, 2014 -- Updated 1212 GMT (2012 HKT)
The response of some U.S. institutions that should know better to Ebola has been anything but inspiring, writes Idris Ayodeji Bello.
October 22, 2014 -- Updated 2101 GMT (0501 HKT)
Paul Callan says the grand jury is the right process to use to decide if charges should be brought against the police officer
October 23, 2014 -- Updated 1619 GMT (0019 HKT)
Theresa Brown says the Ebola crisis brought nurses into the national conversation on health care. They need to stay there.
October 21, 2014 -- Updated 2235 GMT (0635 HKT)
Patrick Hornbeck says don't buy the hype: The arguments the Vatican used in its interim report would have virtually guaranteed that same-sex couples remained second class citizens
October 24, 2014 -- Updated 1630 GMT (0030 HKT)
The Swedes will find sitting on the fence to be increasingly uncomfortable with Putin as next door neighbor, writes Gary Schmitt
October 24, 2014 -- Updated 1632 GMT (0032 HKT)
The Ottawa shooting pre-empted Malala's appearances in Canada, but her message to young people needs to be spread, writes Frida Ghitis
October 26, 2014 -- Updated 0148 GMT (0948 HKT)
Paul Begala says Iowa's U.S. Senate candidate, Joni Ernst, told NRA she has right to use gun to defend herself--even from the government. But shooting at officials is not what the Founders had in mind
October 23, 2014 -- Updated 2208 GMT (0608 HKT)
John Sutter: Why are we so surprised the head of a major international corporation learned another language?
October 23, 2014 -- Updated 2154 GMT (0554 HKT)
Jason Johnson says Ferguson isn't a downtrodden community rising up against the white oppressor, but it is looking for justice
October 24, 2014 -- Updated 1621 GMT (0021 HKT)
Sally Kohn says a video of little girls dressed as princesses using the F-word very loudly to condemn sexism is provocative. But is it exploitative?
October 21, 2014 -- Updated 2006 GMT (0406 HKT)
Timothy Stanley says Lewinsky is shamelessly playing the victim in her affair with Bill Clinton, humiliating Hillary Clinton again and aiding her critics
October 23, 2014 -- Updated 1414 GMT (2214 HKT)
Imagine being rescued from modern slavery, only to be charged with a crime, writes John Sutter
October 21, 2014 -- Updated 1600 GMT (0000 HKT)
Tidal flooding used to be a relatively rare occurrence along the East Coast. Not anymore, write Melanie Fitzpatrick and Erika Spanger-Siegfried.
October 21, 2014 -- Updated 1135 GMT (1935 HKT)
Carol Costello says activists, writers, politicians have begun discussing their abortions. But will that new approach make a difference on an old battleground?
October 21, 2014 -- Updated 1312 GMT (2112 HKT)
Sigrid Fry-Revere says the National Organ Transplant Act has caused more Americans to die waiting for an organ than died in both World Wars, Korea, Vietnam, Afghanistan and Iraq
ADVERTISEMENT