“Once upon a time, the car was the key to understanding the U.S. economy. Then it was the family home. Nowadays, it is any device created by Steven P. Jobs. Call it the Apple economy, and if you can figure out how it works, you will have a good handle on how technology and globalization are redistributing money and jobs around the world.” – NY Times

Today Apple and all the “i” products are being used around the world.  Their success is a testament to globalization and their products can also be said to be aiding globalization.  Now as more and more ipods, iphones and ipads are sold all over the world people become more interconnected and have access to information within seconds at the touch of a button.  In the article quoted above from the NY Times, a paper (Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod) examines how Apple has helped create profits and jobs around the world, providing a prime example of how Apple is benefiting from globalization.

Gone are the days when an American company, Apple, manufacturers and employs most of their workers and products in their country of origin.  Today nearly twice as many people work for Apple abroad than they do in the US.  But what is more interesting about this stat is that the American workers earn nearly $750 million in salaries compared to less than $320 million by the workers abroad.  A large factor in the wage disparity is the result of cheap outsourced labor abroad.

As we saw in the Nike case, the low costs of production in Asia are just too good to resist and outsourcing production becomes the norm.  This is where Apple receives enormous benefits from globalization.  Without the cheap labor Apple would not have been able to amass their estimated worth of $465 billion.  However globalization has also started to hurt Apple.  Now through the media and use of technology the labor conditions, which in the past were almost unknown, have now taken center stage.

Apple is one of the recent companies to have the standards and wages of their factories questioned in a long list of multinational organizations.  The Foxconn factory has been at the heart of the issue where “employees work excessive overtime, in some cases 7 days a week, and live in crowded dorms.”  The workers are also exposed to hazardous chemicals and conditions which have resulted in deaths and injuries.

So while the rise in globalization has brought massive amounts of revenue, an expanded market of consumers and cheap labor for Apple, it has also moved jobs away from the US and aided in the deprivation of many workers in Asia.  The “i” products are some of the most innovative pieces of technology that have been created in recent years but when does the human cost of life and rights outweigh the products that are created?  I don’t think people truly understand the “human costs” that should be factored into the total costs of the “i’ products they use and rely on every day.

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6 responses »

  1. Jordi says:

    One aspect of outsourced manufacturing I find odd, from a management perspective, is that it seems the manufacturers often produce for multiple firms. In the Nike case, a given factory may make shoes for Nike today and Reebok tomorrow. I get that; despite the efforts spent on marketing and branding, athletic shoes are really a pretty standardized, commodified product.

    But an iDevice? Isn’t there some proprietary design and manufacture in there? If you let Foxconn make iDevivces today and Kindle Fires tomorrow, as is happening according to PC Magazine, then aren’t you leaving all kinds of explicit and tacit knowledge out there for the manufactures to use for themselves or to sell to your competitors?

    • Sarah says:

      I totally agree with your point Jordi. For most consumer goods I don’t think it is as much of an issue because in the end the products are pretty much the same and what makes the difference is the logo on the product. But for very technical products like the Idevices, I would assume that the information and technology used to make the products is not standard knowledge. The manufacturing process for Idevices might even have some trade secrets involved in it. So maybe workers at Foxconn are legally obligated not to reveal the key information involved in the manufacturing process of Apple products. However given the issues surrounding the standards and working conditions, I don’t know if I would trust my trade secrets to a company that has had to put up nets to catch people who were trying to commit suicide! This whole issue of factories producing products for different companies just goes to show how important branding and marketing is. A product could be produced in the same factory, but if it is attached to a well know brand it will sell for double the price of a lesser known brand.

    • Zach says:

      Like you said, there is definitely a lot of redundency among top technology firms in their choice of international manufacturing partners. Foxconn along has customers such as Apple, Acer, Amazon, Cisco, Dell, Hewlett-Packard, Intel, Microsoft, Motorola, Nintendo, Nokia, Samsung, Sony, Toshiba, and Vizio. But I think there are a couple of reasons why these companies aren’t that worried about possible trade secrets being divulged. The biggest one is that in order to copy someone, you have to be able to source the same materials. In recent years Apple has been one of the most innovative companies around. What this means is that they are able to sign exclusive deals with suppliers for the resources they need. For instance, for several years other companies could not use the same displays as Apple used for its iPad, because Apple was buying every single screen that was being produced at that size. Therefore, Apple probably didn’t care much about if another company found out how they were making the iPad, or what materials they were using, because by the time competitors were able to get there hands on the same supplies, they had already moved on to the next big thing.

  2. Jordi says:

    In very rough terms, but accurate based on what you report here, the value of the iDevice, due to the location and relatively lower power of workers, is able to be distributed to Apple and its shareholders on more favorable terms. This economic fact is exactly what many labor and worker’s groups, such as those that make up the global social justice movement we are reading about for this week, were worried about.

  3. scoutberger says:

    I find the whole subject of outsourcing to be a very interesting. On one hand you can stand up and argue for the employees in developing countries that are being exploited. Unfair hours and unfair wages. If these employees were working in the United States they would make more than triple what they are making in overseas countries. On the other hand, you can argue that companies like Apple should be applauded for creating profits and jobs for people all over the world. It is significantly less expensive for Apple to use workers overseas but at the same time it would be more beneficial from an employment percentage standpoint if Apple didn’t outsource and only produced in the US. Apple is a powerful company and technically has the ability to give Americans jobs that are desperately needed right now. However, from a business standpoint, it makes much more sense for Apple to outsource; it is significantly cheaper.

    I certainly don’t think that companies like Apple and Nike are the only ones out there that are in this predicament. Most companies would jump on the opportunity for cheap labor. With this comes a price. These major corporations are in the spotlight which means that ultimately their plan of exploring workers has to be reduced to satisfy society.

    If you were a major corporation, how would you balance this topic of discussion? Would you push to exploit workers overseas and outsource as much as possible until the media started intervening? Would you only hire from within the US?

  4. brookeparker16 says:

    http://www.ebaumsworld.com/video/watch/82313815/

    Here is the video of footage inside the factory. I wonder how much of this was staged like a reality television show. It was also interesting to look at people’s responses to the video. There was much back in forth talk about whether or not Apple is in the wrong or not. However, I feel that a lot of people jumped to the conclusion that Apple was the new evil of the world because this video is really all they have seen on the matter. People seemed to have no idea that outsourcing was an issue or that other companies other than just Apple did this.

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