Why There Are No Lay-offs At Apple Computer


Why There Are No Lay-offs At Apple Computer


by David Reavill

You may have read about all of the layoffs in the Tech Industry. Most industry leaders have begun sending pink slips to their workers to cut costs. Conspicuously absent has been Apple Computer, which, to date, has not let go of anyone.

Here may be one reason why.

Tim Cook with Mayor Huang of Chongqing

We’re all familiar with the “Supply Chain.” That is the series of steps from a production facility, usually in Asia, to the end user, usually in America. Its process began in the 1950s when labels that read “made in Japan” began to appear. Back then, we considered such items an oddity. Didn’t American factories make all that Americans could want? That was the thinking at the time.

Offshore production dominates many American markets, such as pharmaceutical compounding, electronics production, and specific auto segments. Over the years, Americans have become increasingly accustomed to these overseas products, and now we couldn’t live without them. Over the past several years, America has purchased from its overseas’ suppliers $800 billion to $1 trillion more in overseas goods than we sold to them.

The most widely recognized of all these offshore products are the phones, personal computers, and other electronics produced by Apple Computer, one of the world’s largest multinational companies. In the Apple business model, product design and marketing occur in their offices in America, while manufacturing, or to use Apple’s term, “assembly,” happens in Asia.

The iPhone is the most profitable and famous of all Apple products. And it’s the iPhone that provides the best insight into Apple’s Business Model. The iPhone was designed by John Ivy and his team in the early 2000s and first came to market in 2007. Sleek, simple, and straightforward, the iPhone took the American market by storm.

Since its very beginning, it has been the dominant smartphone. The loyal customers for this product are legion, and I’m sure you know, as I do, several friends or family who must have the latest model each time a new iPhone is released.

We’ve just described the sum total of the America-based portion of Apple. Design and marketing, that’s it. Think about the incredible leverage here. Just a relatively few people are working in the US. Apple administration and management, the Marketing Department, and the Design Department. I’m discounting the employees at those Apple Stores. They do add headcount. But they are not an essential part of the Apple Business Model and came into Apple’s strategic business plan relatively recently.

Overall, Apple has one of the lowest corporate profiles of any major corporation. By any measure, the number of American-based workers is minimal compared to the sheer amount of business Apple conducts each year.

Because of these relatively few American-based workers, Apple has yet to appear on the list of high-tech companies laying off people. The short answer, the vast number of workers who assemble the iPhones don’t work for Apple. Shocking, I know.

Professor Yige Dong, at the State University of New York in Buffalo, has called the way Apple assembles the iPhone “gig manufacturing.” It’s a concept similar to what we call an “independent contractor.” Here, in the States, we’re only a temporary employer when we hire a plumber or repair man. The plumber or repairman agrees to perform a specific task, and we pay them a stipulated payment for the job.

That’s precisely how most of the workers for Apple work. Only they work for a company other than Apple, an intermediate. The largest iPhone Factory in the world is in the city of Zhengzhou, China. The plant takes up over 5,000 square kilometers and employs thousands upon thousands of workers. It makes more iPhones than any other plant, yet it’s not an Apple Plant. The plant is owned and run by Foxconn, a Taiwanese company that contracts with Apple to manufacture iPhones.

Taking it one step further, the workers at that iPhone Plant don’t work for Foxconn. Instead, they are independent contractors, those Gig Workers Professor Dong discusses. They come to the plant, do their closely watched task, and are paid monthly. The average compensation at this iPhone plant is $324 a month.

Because iPhone sales are highly seasonable, most sales occur in the three months around the year-end holidays; many workers have turned away after the high-sales period.

Remember, these are not layoffs; they are simply gig workers who no longer have work to do. And besides, this isn’t Apple letting them go; it’s Foxconn.

Apple has discovered the way around all those American rules, regulations, and benefits. There are no unemployment benefits for gig workers,  little or no insurance, no OSHA, no Union, no Retirement Fund, and on and on.

Apple, Nike, and most American multinationals have devised a virtual manufacturing process. Components and raw materials are “assembled” in an alien plant, where jobs and management are outside the watchful eyes of American regulators and the American public. It is a remarkable construct of which most of us are unaware.

And it is the reason that Apple may not lay off anyone.

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1 year ago

“The plant takes up over 5,000 square kilometers.”

Seriously? Do some fact checking as you write. Total Foxconn campus space in several locations in China total a bit over 5 square km, the largest facility being 3 square km. Big difference!

1 year ago

This is how the World Economic Forum Cult wants to restructure the whole World. Workers only work when it’s most profitable for “The Stake Holders”. They want you live in “Factory Towns” owned by them and kept the workers happily numb on drugs. As Klaus Schwab has told us, “You will own Nothing, and be Happy.”

The problem is that this form of Feudalism doesn’t produce Buyers. That is why China has Ghost Cities. The Central planners build cities without realizing that they weren’t creating workers who could have enough money to purchase the Millions of apartments they were building. It was a simple case of Supply and Demand in a Communist Economy. There was plenty of Supply, but without Wealth, there was no Demand. Communist don’t understand Capitalism. Wealth is the most important ingredient an economy. Without Wealth creation, there is no incentive for a Worker to Work. Work then just becomes Survival.

Small minded people, i.e. Liberals see the World as finite sized pie that you fight for a piece of, so they must control everything in order to get a big piece of the pie. Conservatives think Big. They want to create a bigger pie so everyone gets a good size piece of Pie. If the Pie isn’t big enough, then just build a bigger pie. Building the bigger pie is what scares Liberals. They look at the Universe and only see finite resources. Conservatives see plenty of resources and look for better ways to use the ones we discover, renew the ones we can, and recycle everything else.

I live in the Pine Belt of rural Mississippi. When I walk out the back door, I see trees everywhere. I see fields of grass filled with cattle grassing. I see my salad growing in the Victory Garden. I see renewable resources. More and more we see people using solar when it’s a “good Investment”. We have the room to go big! We recycle and repurpose as much as we can. We have friends over by the dozen and do “Country” things!

When a Big Blue City Liberal looks out the Window, they see the building next door. They see Traffic and Crowded Streets. They turn a light on and have no idea where the power comes from. They take a frozen dinner from the Freezer and have no idea of where their food comes from. They can’t breath fresh air, because there is none. In cities you don’t have friends over, you go meet them at a bar. For the most part, Big Blue City People just Survive.

The difference between Conservatives who really do love Country Life is that we invite Liberals to come join us and live the good life. Liberals on the other hand want to force us to live in the Hell Holes they create.

Last edited 1 year ago by GuvGeek
Peter B. Prange
Peter B. Prange
1 year ago

David, as usual most enlightening.