Bowing to pressure from consumer groups and
government officials, Apple Inc. said it will bring some manufacturing of its
computers back to the United States starting next year.
Chief Executive Tim Cook made the
announcement Thursday in interviews with Bloomberg Businessweek and NBC, saying
the Cupertino, Calif., company would invest $100 million to build some Macs
domestically.
"We've been working on this for a long
time, and we were getting closer to it," he told Bloomberg Businessweek.
"It will happen in 2013. We're really proud of it. We could have quickly
maybe done just assembly, but it's broader because we wanted to do something
more substantial."
Cook made the pledge as the technology
company faces increasing criticism for working conditions in overseas
manufacturing facilities run by its suppliers, particularly those owned by
Foxconn.
Foxconn is Apple's largest supplier and
makes iPhones, iPads and other Apple devices at massive facilities in Asia that
resemble small cities. It has been plagued by negative publicity because of
worker suicides, brawls and strikes.
Apple has been working with a labor group
in recent months to help improve worker conditions at Foxconn facilities. That
has led to the supplier pledging to increase employee pay, reduce hours,
enforce breaks and update maintenance policies.
Despite those efforts, Apple has been
repeatedly asked why it doesn't build its products in the U.S. During one of
the presidential debates, President Obama and Mitt Romney were asked
specifically about how they would persuade companies like Apple to bring
manufacturing back to the country.
Apple did not say which line of Macs would
be involved or where in the country they would be made, but analysts said the
scale and magnitude of Apple's manufacturing move was not expected to be major.
"The percentage of production likely
to be shifted by Apple from Asia to the United States in 2013 is likely to be
negligible, both for the company and for PC industry at large," said Craig
Stice, senior principal analyst for computer systems at IHS.
"Apple's move appears to be a symbolic
effort to help improve its public image, which has been battered in recent
years by reports of labor issues at its contract manufacturing partners in
Asia. However, given Apple's high profile in the market, the company's
'insourcing' initiative could compel other companies to follow suit and
transfer production to the United States over the next few years."
Colin Gillis, an analyst at BGC Financial,
predicted that bringing some Mac manufacturing back to the U.S. would be
"immaterial to the stock and immaterial to the margins, but a good move
for America."
"If there's anyone who can make it
work, Tim Cook would be one of those people because he's operationally so
strong," Gillis said. "It might be the start of a larger trend to
bring manufacturing jobs back to America if he can do it cost
effectively."
The news, revealed Thursday morning,
boosted Apple's shares $8.45, or 1.6%, to $547.24 after a big decline the day
before.
Cook, who noted that parts of Apple
products are already made in the United States, including the glass of the
iPhone, said the company would work with partner firms to manufacture a line of
Macs in the U.S.
Apple made most of its products in the U.S.
until the late 1990s. When co-founder Steve Jobs, after returning to the
company for his second stint, hired Cook in 1998, Cook's mission was to
overhaul Apple's supply chain and manufacturing. A big part of his strategy was
to move most of that manufacturing overseas, particularly to China.
Cook told NBC that the main reason Apple
outsourced much of its manufacturing was "not so much about price — it's
about the skills."
"Over time, there are skills that are
associated with manufacturing that have left the U.S.," Cook said in an interview
on NBC's "Rock Center With Brian Williams," which aired Thursday
night. "Not necessarily people, but the education system stopped producing
them."
A clue as to whom Apple might partner with
in the U.S. came this week, when Foxconn said it would be expanding its
manufacturing facilities in the U.S.
"We are looking at doing more
manufacturing in the U.S. because, in general, customers want more to be done
there," Louis Woo, a Foxconn spokesman, told Bloomberg News.
Recent reports indicated that a small
number of new Macs were already being made in the U.S., with some Apple users
saying their new, ultra-thin iMac computers were shipped with "Assembled
in USA" on them. Whether that's related to Cook's announcement is unclear.
Apple fans also got another piece of
welcome news, when Cook again teased that Apple might be working on a
long-rumored television set.
"When I go into my living room and
turn on the TV, I feel like I have gone backwards in time by 20 to 30
years," Cook said in the NBC interview. "It's an area of intense
interest. I can't say more than that."
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