Boy, Apple was the center of attention this last week, but not in a good way. The New York Times published an article this week documenting the less than sterling working conditions at the firms Apple hires to build its devices. Then there was yet another article about the environmental record of a number of Apple’s contractors. These articles were juxtaposed with the news that Apple reaped in record profits this last quarter, gave its new CEO compensation worth $378 million last year, and is sitting on nearly $100 billion in cash, 2/3 of which is held offshore far from the grasp of the IRS. So many people are thinking, why does Apple need to hire firms to make its produts that squeeze every penny if Apple is drowning in cash? Not surprisingly, Apple has shifted into full defensive mode. But instead of trying to get its contractor Foxconn to solve what appear to be serious problems on a few fronts, I would suggest Apple go with a game changing strategy to address these problems: the Homecoming campaign. Apple would, starting on January 1, 2013, assemble all iPhones, iPads and other Apple products in this country. And commit to manufacturing as many of the components that are assembled into the iPhone and iPad in this country as is possible.
If you have been following the blog, this is not a new idea for me. In a previous post, Comparing Apples to Apples, I suggested Apple should start making iPads in the U.S. Tim Worstall of Forbes.com wrote an article in Forbes that suggested this would be impossible because it would lead to too big a cut into Apple’s earnings. I am not so sure about that. Assembly costs contribute only about 4% to the cost of an iPhone. Manufacturing them in this country would only raise the cost of the iPhone by $65. Apple could either raise the cost of the iPhone by $65 or keep the cost of the iPhone the same and reduce their margin from 55% to around 45%. Throw into that equation the amazing PR value the Homecoming campaign would generate. No more stories about Foxconn employees committing suicide. No more stories about pollution in China. As part of the Homecoming campaign, Apple would commit to having their products assembled in America by members of our extended American family utilizing ecologically sound methods. Apple would further differentiate itself from its competitors like HP and others by moving its production back home. Given the current groundswell of support for creating manufacturing jobs in this County, Apple could absolutely cement its position as the leading firm in this country. I hope Apple understands that there are millions of Americans who hope that next year they will be able to buy an iPhone and/or iPad bearing the label, “Designed in California, Assembled in America!”