Techworld

Apple to invest $US100m next year in US Mac production

Primarily a PR ploy, analysts agree, but may make some sense to build iMacs in America

Apple will manufacture one of its Mac lines exclusively in the US by the end of 2013, CEO Tim Cook has told NBC and BusinessWeek in interviews.

Analysts saw the move as primarily a public relations ploy, a reaction to criticism of labor practices at its Chinese manufacturers and calls for the company to bring some jobs back to the US.

"Even Apple has to pay attention to public perception," said Ezra Gottheil, an analyst with Technology Business Research.

Cook was cagey about Apple's plans for the U.S.

"Next year we will do one of our existing Mac lines in the United States," Cook told NBC's Brian Williams in a segment that will air tonight on the network. Cook did not specify what line, or how extensive manufacturing would be, or even if it would be more than just assembling components shipped in from China.

To BusinessWeek, Cook was only slightly more forthcoming.

"Next year we are going to bring some production to the U.S. on the Mac," Cook told the publication in an exclusive interview. "We could have quickly maybe done just assembly, but it's broader because we wanted to do something more substantial."

Cook said that Apple will invest more than $100 million in the project -- pocket change for a company that has over $120 billion in the bank -- but that it wouldn't do it themselves. "We'll be working with people, and we'll be investing our money," he said.

"It can make some economic sense to do some assembly in the U.S.," said Brian White of Topeka Capital Markets, who then dismissed Cook's announcement as a marketing move. "I just don't believe in this whole 'We have to make things in the America," he said. "You should do what you do best."

And to White, that means manufacturing the vast bulk of its products in China, which still retains an enormous advantage for Western consumer electronics companies.

"There's still a substantial difference [in costs]," White said. "If you did all of your production here, it would be cost prohibitive for U.S. customers. It would really jack up the prices."

NBC's Williams, in fact, asked Cook what it would mean to the price of an iPhone to make it exclusively in the U.S., but Cook dodged the question, instead ticking off some of the components that are made in America, including the iPhone's glass panel and what he called its "engine," a reference to the system-on-a-chip (SoC), or processor, which Apple designs.

Both Gottheil and White speculated that it could make sense on the spreadsheet to assemble larger Macs -- such as the iMac -- in the U.S., to save on shipping costs to American customers.

Gottheil was more likely to accept Apple's move on its face. "They're doing it out of good business practice," he said. "They don't do things out of the goodness of their heart."

Apple once built its personal computers in the U.S. -- the company's huge seller decades ago, the Apple II, was made in the country -- but now virtually all of its products, including most Macs, are made in Asia.

According to Gottheil, Apple facilities in Cork, Ireland and Elk Grove, Calif. assemble some or all of the Mac Pro machines, the company's low-volume tower-style computer. Foxconn, Apple's biggest Asian manufacturer, also has facilities in the U.S.

Apple has had plants in Elk Grove for 20 years, and in the past built a variety of computers there, including the 1999 Power Mac G4 computer tower and the first iMac in 1998.

Most likely, said Gottheil, Cook's comments indicate that Apple will invest the $100 million to boost Foxconn's U.S. presence. The amount clearly is not enough to build a full production plant.

Neither analyst thought that the shift of some assembly to domestic shores would have any impact on customer prices or on Apple's profit margin. "It's too small [of a deal] to have any impact," said Gottheil.

Cook's announcement was both a recognition of real-world manufacturing and a bit of a departure from former CEO Steve Jobs' opinion. In a meeting with President Obama in 2011 just months before his death, Jobs reportedly said, "Those jobs aren't coming back," when the President asked what it would take to make iPhones in the U.S.

Cook said something similar today. "It's not so much about price as it is about skills," he told Williams. "Over time, there are skills associated with manufacturing that have left the U.S. The consumer electronics business really was never here. [So] it's not a matter of getting it back, it's a matter of starting it here."

Apple isn't the only major computer maker to recently rethink manufacturing. In October, as Gottheil noted, Lenovo announced it would open a factory in North Carolina that would create just over 100 jobs.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Lenovo inherited facilities in the state when it bought IBM's PC business unit in 2005.

Read more about macintosh in Computerworld's Macintosh Topic Center.

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