Apple’s iPhone maker Foxconn is doubling production capacity to 400,000 units a day. The move will cost $1.1bn and will see the company's facility at Foxconn Science Park in Zhengzhou, China, become the world's biggest phone factory, accounting for $20bn in sales revenue in 2012. China Daily reports that the Zhengzhou factory …
The numbers game
I didn't think there were actually THAT many people in the entire world wanting to get their hands on one of those gimmick-laden, over-priced, over-hyped pieces of Jobsian-spun junk.
Got to keep the children off the streets somehow.
Can anybody calculate how much an iphone would cost if it were made by 130,000 unionized over paid Americans?
Because YOUR job salary has nothing to do with laws?
"Unionized" and "Over paid"? In other words, laws that try to protect corporations from creating domestic sweat shops? Like the 1800's?
Sure, you think that "minimum wage" is "anti-business" -- but business's #1 job is: extracting as much money, from everyone it can, with a minimum of outlay.
Apple is the king of this. They manufacture iPhones for maybe $200, but extract $600-$700 (when factoring in contracts. They also profit, from their own disclosures, $150 per iDevice (ipod, fone, pad, etc) per year.
They are sitting on over $80 BILLION cash. That is enough to employ 1.6 MILLION people at $50,000/year, for one year, just to find new ways. Yes, 1.6 million NEW JOBS.
Do they? No. They know that they already extract every extra dollar they can out of every iFan with money. They don't want to create new jobs NOR do they want to employ Americans. Apple wants to HARVEST MONEY.
Roll that, and smoke it.
Possible to take a stab at it, yes.
Start from here:
Chinese labour is 1.8% of final cost. Maybe $10 just to use a round number. At Chinese labour rates that's, say, 7-9 hours of labour. Heck, call it 10 just to makle the maths easy.
Labour productivity won't change much between a Chinese factory and a US one. The general labour productivity of the entire economy is wildly different, yes, but productivity in a factory doing exactly the same thing with the same equipment will be broadly similar. Maybe 10-30% greater in the US, but not twice or thrice (see Paul Krugman, "Ricardo's Difficult Idea" on this).
So again, just to keep the maths easy, ignore this again.
US wages for electronics assembly workers are $13 an hour or so. Upgrade that by 50% ish to cover employment taxes, health care and all the rest. Say cost to employer is $20 (yes, indeed, there's lots of guessing here. But we are in the right sort of ballpark).
$20 an hour times 7-9 hours of labour? $140 to $180 extra cost per phone.
Now, maybe this can all be automated, maybe we can get vastly better labour productivity (unlikely, but pretend). In which case there won't be 130,000 people making them.
IT costs less than £100 to manufacture deliver and market and develop the iPhone 4s. In fact with so many sales the cost is now in the region in £60 per unit, which is decreasing day by day.
In fact by year two the over all unit cost could be as low as a tenner!
For all of you out there who will dispute this, mainly Apple fanbois who want to justify the high price you paid for it, these facts are readily available.
You Go Glen!
"Do they? No. They know that they already extract every extra dollar they can out of every iFan with money. They don't want to create new jobs NOR do they want to employ Americans. Apple wants to HARVEST MONEY.
Roll that, and smoke it."
Made my day.
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