There’s a big push toward bringing manufacturing home, and Apple Inc. (NASDAQ:AAPL) is feeling the pressure. The company has been exploring options for a possible “Made in the USA” iPhone for months, along with its key manufacturing partners.
However, the biggest partner of them all, Hon Hai Precision Industry Co., Ltd (OTCMKTS:HNHPF) — otherwise known as Foxconn — just threw a big glass of cold water on any hopes there might have been about building an Apple factory on U.S. soil.
Made in the USA
President Donald Trump made bringing jobs back to America one of his key campaign points, and it’s since become a focus of his presidency. As a result, a long list of companies has committed to moving jobs from offshore locations to U.S. soil.
Some of the country’s biggest technology firms are supporting the “Made in the USA” push, including Amazon.com, Inc. (NASDAQ:AMZN), which has committed to adding 100,000 full-time jobs by mid-2018.
Even South Korean giant Samsung Electronics Co Ltd (OTCMKTS:SSNLF) is looking at opening a U.S. factory to build appliances.
Apple isn’t exempt from this movement. On the contrary, as the world’s most valuable company, Apple is under considerable pressure to do something. Especially when the iPhone — its most lucrative and visible product by far — is made in China.
Deflecting criticism, Apple CEO Tim Cook has gone on record as saying it’s the availability of skilled, trained workers that makes outsourcing manufacturing to China the strategy AAPL pursues, not the cheap labor. The possibility of a U.S. iPhone factory is something the company is reported to have asked Foxconn to investigate starting last June. The results weren’t very positive.
The latest remarks from Foxconn make the idea of the company building a U.S. Apple factory seem even less likely.
Foxconn Chairman Throws Doubt on U.S. iPhone
Nikkei Asian Review was at an event marking the groundbreaking for a new industrial park … in China. There, Foxconn chairman Terry Gou commented on the possibility of building a U.S. iPhone factory. He had just returned from a trip to Washington after hinting his company might consider a large display panel factory in the U.S. (for TVs), as well as a molding factory.
However, Gou did not sound enthused.
In addition to echoing Apple CEO Tim Cook’s concerns about the lack of a trained, skilled workforce, and noting the entire iPhone supply chain is located in China, Gou has concerns about red tape. He told Nikkei:
“I am concerned as to whether the U.S. can resolve all the investment issues in only a few months’ time. Does the U.S. offer incentive programs for foreign investors? They’ll need to pass bills first, and we’ll need to wait for American authorities to make a decision first.”
In other words, the possibility of Foxconn building an Apple factory here to make iPhones is very low.
Made in the USA iPhone Out of Reach … For Now
What’s sometimes forgotten is that a U.S. Apple factory already exists. An Austin, Texas, plant churns out the company’s Mac Pro, complete with a “Made in the USA” sticker. Although it’s not exactly churning out these computers, and that’s a problem AAPL is facing as part of the whole U.S. iPhone concept.
It turns out that the Texas Apple Factory has faced challenges with having to make its own customized tools and training workers. The situation has been bad enough that some of Apple’s engineers are reportedly pushing the company to move production back to China, if and when a new Mac Pro model is released.
Who wouldn’t want to buy an iPhone with “Made in the USA” proudly etched on the back? Unfortunately, economic reality is a big obstacle to this goal.
With Apple’s Mac Pro experience, Tim Cook’s obvious concerns and the latest comments from Foxconn, the possibility of an iPhone manufactured in a U.S. Apple factory seems more distant than ever.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.