“There is a misconception that the reason most electronic devices are manufactured in China is because of low labor costs. That used to be the case but is no longer true, as China and other low-manufacturing-cost countries experienced a significant increase in relative manufacturing costs since 2004,” Castellano writes. “Now it is a matter of established infrastructure (initiated in the early days of contract manufacturing in China) and logistics.”
“A Boston Consulting Group study shows that China is virtually even with the U.S. when the most important economic factors are considered – total labor costs, energy expenses, productivity growth, and currency exchange rates,” Castellano writes. “Apple doesn’t have to move total iPhone production to the U.S., just for the 20 or so percent purchased in the U.S. and under the jurisdiction of the U.S. government. But any additional costs to manufacture in the U.S. would be spread out over the entire 100% of iPhone sales.”
Read more in the full article here.
MacDailyNews Take: Lats week, The Wall Street Journal reported:
If Apple finds enough workers to assemble in the U.S., the cost of making an Apple iPhone 7 could increase $30 to $40, estimates Jason Dedrick, a professor at the School of Information Studies at Syracuse University. Since labor accounts for only a small part of an electronic device’s overall costs, most of these higher expenses would come from shipping parts to the U.S.
If the iPhone components were also made in the U.S., the device’s costs could climb up to $90, according to Mr. Dedrick’s research with UC Berkeley’s Greg Linden and UC Irvine’s Ken Kraemer. That means that, if Apple chose to pass along all these costs to consumers, the device’s retail price could climb about 14%.
As Castellano writes above, “any additional costs to manufacture in the U.S. would be spread out over the entire 100% of iPhone sales.”
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