Apples Manufacturing Strategy

Strategos, Inc. 3916 Wyandotte Kansas City MO 64111 USA 816-931-1414

Apple, Foxconn & Manufacturing Strategy

By Quarterman Lee, P.E. Strategos, Inc. 23 June 2012

C O N S U L T A N TS • E N GI N E E R S • S T R A TE G I S T S

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© 2012 Strategos, Inc.

Apple, Foxconn & Manufacturing Strategy
Steve Jobs and Apple Computer once built a "factory of the future" in Fremont, California. They spent $20,000,000 and then closed it after just two years. Today, Apple 's net worth is more than Poland. So, what went wrong in 1984? And, what is going right today? What went wrong was not cheap overseas labor. It was their failure to integrate Marketing Strategy with Manufacturing Strategy. Or, more likely, Apple failed to even consider the issues of Manufacturing Strategy. Later, when Apple partnered with Foxconn, Apple and Foxconn did not repeat the earlier mistakes. What follows is a review of what is publicly known about Apple and Foxconn in the context of Manufacturing Strategy.

Manufacturing & Marketing Strategy
Apple, Inc. has been in the news a lot lately. Partly because of their profitability and stock value; partly because of labor controversy. At Strategos we take no position on the labor controversy or stock price. We can comment on what little is known publicly about Apple 's manufacturing operations—both current operations in China and past operations in the United States. When Steve Jobs told Obama "Those jobs aren 't coming back" he was probably correct. But, maybe, they didn 't have to leave in the first place.

Steve Jobs
"Those jobs aren 't coming back."

Manufacturing Strategy addresses the question "How to go about fulfilling our manufacturing tasks?" The answer is at a policy level and addresses a range of issues such as equipment characteristics, plant layout, workflow and people. As the design of a factory progresses, engineers, managers, contractors and suppliers make thousands of decisions. A Manufacturing

References: [1] Samawi, Bachar, "Is there Apple Without China", Seeking Alpha, http://seekingalpha.com/article/460771-is-there-apple-without-china, 27 MAR 2012. [2] "Apple 's massive 'iPad 3 ' air freight deal with DHL shaking up shipping rates", Apple Insider, 5 MAR 2012, http://www.appleinsider.com/articles/12/03/05/apples_massive_ipad_3_air_freight_deal_with_dhl_shak ing_up_shipping_rates.html [3] Duhigg, Charles and Bradsher, Keith, How The U.S. Lost Out on IPhone Work, The New York Times, 21 JAN 2012. [4] Video Interview, "Cook on Apple 's Role in China and Manufacturing", All Things D, 29 MAY 2012, http://allthingsd.com/20120529/cook-on-apples-role-in-china-and-manufacturing-i-hope-peoplerip-us-off-blindly/. [5] SKINNER, WICKHAM, The Focused Factory, Harvard Business Review, May-June, 1974. SKINNER, WICKHAM, Manufacturing: The Formidable Competitive Weapon, Wiley, 1985. [6] HILL, TERRY, Manufacturing Strategy, Macmillan, London, 1985. LEE, QUARTERMAN, Facilities & Workplace Design, Engineering & Management Press, Norcross, Georgia, 1997. HAYES, ROBERT H. and WHEELWRIGHT, STEVEN C., Restoring Our Competitive Edge, John Wiley & Sons, New York, 1984. Platzer, Michaela D. and Harrison, Glennon J., "The U.S. Automotive Industry: National and State Trends in Manufacturing Employment" (2009). Federal Publications. Paper 666. http://digitalcommons.ilr.cornell.edu/key_workplace/666 Economix Editors, "The iEconomy: How Much Do Foxconn Workers Make?", The New York Times, February 24, 2012, http://economix.blogs.nytimes.com/2012/02/24/the-ieconomy-how-much-dofoxconn-workers-make/ . Uchitelle, Louis, "Factory Jobs Gain, But Wages Retreat, New York Times, Business Day, May 5, 2012, http://www.nytimes.com/2011/12/30/business/us-manufacturing-gains-jobs-as-wagesretreat.html?pagewanted=all 20 © 2012 Strategos, Inc.