With Steve Job’s passing, certainly one of the greatest losses of 2011, it may be a good time to look at his company as a case study for the future of other companies in the USA. I write this on a MAC, own an I-pad, I-pod and love them all. These inventions have revolutionized our lives and have especially made life as a real estate broker better. Does the answer to the USA’s horrible unemployment rate lie in the name Steve Jobs?
Lets be blunt about Apple’s success, a huge success, and one of America’s greatest: Genius product is designed in the United States….The company employs about 35,000 people in the USA. Most of its products are manufactured (cheaply) in China. About 300,000 jobs are in China. Yes, 35,000 in the USA, 300,000 in China. The super-low cost of production translates to a super-profitable company. Apple sits on $ 76 billion in cash reserves. The questions we should be asking now are:
1) If Apple manufactured its products in the USA, would it be the success it is to-day?
2) If Apple had half its cash reserves because it sacrificed some of its profits to produce some of its goods domestically would these employed Americans have the capacity to consume more (thereby creating more consumers for Apple products….and real estate!) and maybe lifting Apple’s sales (and profits) pretty close to where they are to-day?
3)Would Apple be the success it is to-day if its profits were lower? Would Wall Street have abandoned the company?
4) Why does Apple not pay a dividend to its shareholders?
5) $ 76 billion would pay for over 300,000 US jobs paying $ 50,000/year for five years. Those 300,000 jobs in China do not result in many Apple product consumers as they are mostly low paying jobs. Which jobs would serve Apple AND the USA best?
My big picture question about Apple is the same question I ask about many other highly successful US companies that manufacture most of their goods in China: Had we kept most of these jobs in the USA, would the additional manufacturing costs with reduced profits have produced less of a return than a much lower unemployment rate with a much healthier and stronger (consuming) middle class that may indeed have compensated for the loss in profits by being in a position to spend more?
The lesson from Apple is that it, like many other companies, have indeed been creating hundreds of thousands of jobs, but not in the USA. These jobs were shipped off to China to boost profits. It has worked. The only problem is it has left some companies super-profitable, and their owners super-rich, but it has left the US economy in deep trouble. What has happened is the same as what happened to the small retailer: Large retailers with huge buying power buying directly from manufactures, could cut pricing dramatically while retaining profitability…..thereby driving small retailers out of business. Think of the middle class as a small retailer. The sooner we resolve the unemployment crisis, the sooner foreclosure sales will slow and Americans will be in a better position to own a home…..and start consuming without government assistance. The more people are earning, the more taxes are collected…..is it time for some trickle up economics?
There has to be a happy compromise somewhere. But it will require some honesty.