Jobs and Apple

This quarter,Apple exceeded its own phenomenal standards for success — valued at $415 billion,it has again pipped ExxonMobil as the richest company in the world. If it was a country,Apple’s market cap would make it the 29th biggest in terms of GDP. In 2011,Apple sold more iPhones than in the last four years combined.

And yet,none of the those iPhones was made in the US. The Apple model,with its entrenched global supply chain,directly repudiates what President Obama,in his State of the Union address,wants American companies to do — “insourcing”,to swell local employment and wages. Obama’s plan involves stripping incentives for companies to move jobs abroad,and bringing those jobs back. In stark contrast to Apple’s founding visionary,Steve Jobs,who famously told Obama that those manufacturing jobs were not coming back to America,and that with that innovation-squelching attitude,Obama was “headed for a one-term presidency”. Apple employs 10 times as many people outside the US than inside — especially in China. Apart from cheaper labour and convenient exchange rates,part of the reason driving Apple is the agglomeration phenomenon — that manufacturing depends on a whole cluster of suppliers (the screws,the case,etc) in close proximity,as is the case in China. While Apple may be the standout example,this shift in manufacturing out of America is inexorable,and Obama would do well to face up

to the realities of our current economic geography. Instead of lamenting manufacturing jobs lost,the US would do better to compete in an area where it has a fighting chance,even an edge — in highly skilled,imaginative labour,in writing software for the iPhone instead of fighting over the manufacturing contracts.

Apple,with its stupendous success,its homegrown ideas and its overseas supply chain is a singular reproof to Obama’s populist rhetoric about outsourcing.