It’s going to take a lot more than a trade war with China to stop forces like automation from transforming manufacturing.
Image: Toshiyuki IMAI / Flickr
Back in January then-presidential candidate Donald Trump gave a speech at Liberty University in Virginia where he commented that, "We're going to get Apple to build their damn computers and things in this country instead of in other countries." But you have to ask yourself whether this would mean, not just a more expensive iPhone, but if it would even be possible at all.
I grew up in a steel making town just as the steel mills were closing, so I know exactly what the loss of manufacturing jobs mean to a community, and how it changes the way of life for the people in that community. I understand why the calls for the return of manufacturing are strong, because life for many people really was better back then. But those manufacturing jobs are never coming back.
In part this is due to the fact that most of the rare earths needed to build high technology products are also produced in China. While the country's attempt to capitalize on that by imposing export controls predictably led to foreign companies reopening mines, those mines are now in financial trouble, as are their counterparts inside China, due to oversupply driving down prices. Despite this, controls on rare earth production and export from China continue.
Of course the financial realities of moving manufacturing back to the US may change drastically if President-elect Trump moves forward with his proposed 45 percent tariff on Chinese exports to the United States. In the face of strong import tariffs for finished goods, Apple may well bring assembly of their products onshore to the United States. But, ignoring the trade war such a move would inevitably start, that doesn't mean skilled manufacturing jobs would return. We only have to look at Brazil to see what would actually happen.
In Brazil high import tariffs forced Apple, and Taiwan's Foxconn Technology Group, to open manufacturing plants. The only iPhones made outside of China are now rolling off an assembly line near São Paulo. But the phones retail in Brazil for twice as much as the Chinese made iPhone sells for in the United States, and the country has little to show for the tax and other incentives that brought Apple and Foxconn to Brazil except a widening deficit.
Only a small fraction of the promised 100,000 jobs that the government projected five years ago have ever materialised, and almost all of the work that have been created are low skilled assembly jobs. In the face of higher wage costs, and lower productivity, Foxconn has invested heavily in automation just as the American companies did in the later half of the twentieth century. In other words, even if Apple brings its manufacturing back to the United States the phone you have in your hands won't be Made in America, it'll be Assembled in America.
Even if Apple, and others, wanted to move real manufacturing back to the US, it's not clear whether the workers would be there to allow them to do it. In an interview with 60 Minutes at the end of 2015, Tim Cook said "China put an enormous focus on manufacturing. In what we would call, you and I would call, vocational kind of skills. The U.S., over time, began to stop having as many vocational kind of skills."
There's a truism amongst engineers that the only 'really interesting' engineering that happens today is building the machines that make machines. The tools to make the tools. Those engineering jobs are not the mass-employment engineering that has been in decline inside the United States over the last few decades.
Even if Apple brings its manufacturing back to the United States the phone you have in your hands won't be Made in America, it'll be Assembled in America.
While there has been an overall decline in large scale manufacturing in the United States, at the same time there has been a corresponding increase in small scale manufacturing. Increasingly the bespoke engineering needed to build the tools to make the tools is the type of manufacturing that the United States is doing well.
In part this is due to a tool-driven change in how manufacturing is done; the accessibility of the new generation of tools like desktop laser, and waterjet, cutters, and the mainstreaming of 3d printing. Of how funding for building hardware businesses has changed, and the rise of the maker movement, and while there has been a great deal of support from the President Obama and his White House for these changes, it's really rather unclear whether President-elect Trump will continue to support it during his tenure. As we can see from Brazil, attempting to return to the old mass-employment large-scale manufacturing era isn't going to work, because even in China those jobs are starting to disappear.
In the face of a call for a return to manufacturing in the United States it's vital that we realize that the type of manufacturing that is practical, that's needed, is changing. Because if we don't then the Chinese are quite capable of taking these new ideas we've nurtured, taking the tool-driven change, and making it their own.
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