2014年8月30日 星期六
Less Can Be More for Product Portfolio
https://www.bcgperspectives.com/content/articles/lean_manufacturing_consumers_products_less_can_be_more_product_portfolios/
by Hannes Pichler, Peter Dawe, and Love Edquist
2014年4月19日 星期六
NPR podcast on customs duties and tariffs for imported apparel
http://www.npr.org/blogs/money/2011/01/26/133120017/the-friday-podcast-a-meat-grinder-for-fabric
Marian Federoff uses an autopsy saw to cut apart shoes at the port of Long Beach.Alex Blumberg/NPR
Almost half of all the duties collected in the U.S. are on apparel or footwear, and the laws that govern the importing of these goods are extremely complicated. Where the goods come from, what they are made of and how they are assembled, all play a role in how much duty an importer will have to pay.
We've talked about tariffs before on the podcast, but now that we've got our own Planet Money t-shirt in the works, we're paying much closer attention. Since it's likely at least some part of our t-shirt will be made abroad, we wanted to know exactly what to expect.
Cotton (left) and polyester (right) under the microscope at the port of Long Beach.U.S. Customs & Border Protection
On today's podcast, we consult with trade lawyer Michael Cone, and visit the lab where customs officials check to make sure importers are following the rules.
Almost half of all the duties collected in the U.S. are on apparel or footwear, and the laws that govern the importing of these goods are extremely complicated. Where the goods come from, what they are made of and how they are assembled, all play a role in how much duty an importer will have to pay.
We've talked about tariffs before on the podcast, but now that we've got our own Planet Money t-shirt in the works, we're paying much closer attention. Since it's likely at least some part of our t-shirt will be made abroad, we wanted to know exactly what to expect.
Cotton (left) and polyester (right) under the microscope at the port of Long Beach.U.S. Customs & Border Protection
On today's podcast, we consult with trade lawyer Michael Cone, and visit the lab where customs officials check to make sure importers are following the rules.
2014年4月18日 星期五
Car industry_ Podcast of history of the attempt by General Motors to absorb and replicate Toyota-like processes and culture.
http://www.thisamericanlife.org/radio-archives/episode/403/nummi
MAR 26, 2010
A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late.
Host Ira Glass introduces the story of the New United Motor Manufacturing Inc., aka NUMMI. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. But today, GM cars still don't have the quality of Japanese imports, GM is bankrupt and on March 31, NUMMI will be closed, sending thousands of car workers looking for jobs. In this hour-long story, NPR Automotive Correspondent Frank Langfitt tells the story of NUMMI and why GM—and the rest of the American car business—wasn't able to learn from it more quickly
The rise of NUMMI, or how one of the worst auto plants in America started producing some of its best cars, thanks to lessons learned from the Toyota production system.
Why did it take so many years for GM to begin implementing the lessons of NUMMI across the company? NPR Automotive Correspondent Frank Langfitt continues his story.
403: NUMMI
MAR 26, 2010
A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn't learn the lessons—until it was too late.
Host Ira Glass introduces the story of the New United Motor Manufacturing Inc., aka NUMMI. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: How it made cars of much higher quality and much lower cost than GM achieved. But today, GM cars still don't have the quality of Japanese imports, GM is bankrupt and on March 31, NUMMI will be closed, sending thousands of car workers looking for jobs. In this hour-long story, NPR Automotive Correspondent Frank Langfitt tells the story of NUMMI and why GM—and the rest of the American car business—wasn't able to learn from it more quickly
The rise of NUMMI, or how one of the worst auto plants in America started producing some of its best cars, thanks to lessons learned from the Toyota production system.
Why did it take so many years for GM to begin implementing the lessons of NUMMI across the company? NPR Automotive Correspondent Frank Langfitt continues his story.
2014年4月12日 星期六
China’s Exports Perch on Uncertain Truck System
By DAVID BARBOZA
Published: April 28, 2011
Moving those goods from the factory floor to one of China’s enormous seaports — often a drive of less than two hours — typically means relying on an independent trucking company. And as vital as trucking is to China’s mighty export machine, the government seems to be ignoring the drawbacks of what analysts say is an increasingly disorganized, inefficient and even costly way to transport factory goods to seaports.
Trucking’s tenuous (稀薄) status has been underscored by recent protests and demonstrations by drivers. Last week, in an unusually bold display of public anger, 2,000 truckers went on strike in Shanghai to complain about the rising cost of fuel and unfair government transportation fees. Some protestors hurled (猛力投擲) rocks, tried to overturn police cars and smashed the windshields of truck drivers who refused to join the strike.
The Shanghai municipal government eventually ended the three-day strike by arresting protestors and threatening strike organizers, while also promising to lower some fees that trucking companies must pay to use the roads and seaport.
But the challenges that trucking pose to China’s $1.5 trillion a year in exports are still in place — and could become even greater, now that huge factories have begun relocating to poorer, inland regions to save on labor costs.
“Our concern is that as these factories move away from the coast, the service standards won’t keep pace,” said Ken Glenn, an executive at APL, a transportation services company. “Rail and barge are even less developed.”
Within China, thousands of small trucking companies, many of them family-owned, compete by promising low-cost delivery. Then they overload their 18-wheelers in dangerous ways, pay bribes to ward off highway inspectors and hope to eke out (增加，補充) tiny profits.
Now, though, with global oil prices sending the cost of fuel soaring, many truckers say they are heading toward bankruptcy.
“We’re paying a lot more money for fuel than we did three years ago, but what we get paid for freight has stayed the same,” said Qi Zhenwei, a truck owner stationed at a dusty trucking depot near one of Shanghai’s busiest ports. “How am I supposed to survive?”
Mark Millar, a China logistics expert at M Power Associates in Hong Kong, sees Chinese trucking as “a seriously fragmented and brutally competitive industry.”
“Most of the drivers are owner-operators, and in order to make money, they carry more cargo than the truck is supposed to hold,” Mr. Millar said. “This is obviously not a healthy model.”
Not all trucking in China is such a seat-of-the-pants affair. Some global companies transport goods by truck in sealed shipping containers from factory to dock, sometimes accompanied by security escorts.
But more often, goods destined for export are delivered to seaports by small trucking companies — usually hired by logistics firms that bargain to get the lowest possible shipping price. To scrape by, many of the small trucking firms violate the law, pay bribes to avoid heavy fines and transportation restrictions, and even force drivers to sleep in the trucks overnight, sometimes in insecure parking lots.
These rigors might seem to contradict the heavy investment in infrastructure and expressways that China has made to make its transportation network more efficient.
But many of this country’s modern roadways are expensive toll roads. And the government has placed tough regulations on many aspects of the transportation industry, which analysts say have burdened companies with heavy taxes, insurance and government fees. As a result, transporting goods by truck in China is relatively more expensive than doing so in the United States.
According to the American Trucking Associations, moving goods by truck in the United States costs about $1.75 per mile. That includes driver salaries, truck leases, insurance, tolls and many other related costs.
By comparison, trucking costs in China’s two biggest export regions — the Yangtze River Delta region near Shanghai and the Pearl River Delta around Hong Kong — are $2.50 to $3 a mile. That is despite low pay to Chinese drivers, who might earn only 25 cents an hour, versus about $17 an hour in the United States.
Corruption is also a major problem. Chinese truck drivers say highway and port inspectors routinely demand payoffs or bribes. Drivers who refuse to pay may find themselves hit by large fines for even the smallest infraction. (That many of the trucks are overweight makes them ripe for sanctions.) Some regions even operate illegal toll booths.
Rachel Katz, a Fulbright research fellow from the United States who is spending a year in China traveling with long-haul truck drivers, says the drivers are constantly harassed by highway officials.
“There’s every kind of fine you can imagine,” she said in a telephone interview from Chengdu, in southwest China. “There are many different people regulating the roads and finding a way to tax the truckers. I can’t believe the system operates this way.”
Ms. Katz recalls one driver telling her: “In the U.S., you issue tickets in order to control traffic. In China, we control traffic in order to issue tickets.”
Truck drivers do not get much sympathy from their clients — factory bosses who are also struggling to cope with inflation. With labor and raw material and energy prices soaring here, factories are reluctant to pay higher fees to move goods to the major ports.
Despite fears of government reprisals (報復), they agreed to talk this week in the rusted metal container that now serves as a lounge at their dusty truck depot, amid engine parts and a bucket filled with cigarette butts. Between phone calls and dashes in and out of the makeshift lounge to talk to colleagues, they told their story.
Until about seven years ago, they were peasant farmers struggling to make a living in Henan Province, one of the country’s poorest regions. Neither of them had finished high school.
They traveled more than 500 miles east to Shanghai and found work as truck drivers. (“I once went 24 consecutive days without sleeping in a bed,” Qi Zhenwei said.) Eventually, they earned enough to combine their savings with $100,000 they borrowed from some friends and relatives to buy their own fleet of five new and used Chinese-made trucks.
But shortly after they invested in some of their most expensive vehicles, the global financial crisis struck. Exports plummeted, devastating their container hauling business. A year later, in 2009, when China’s exports began to rebound, so did inflation and fuel prices. And now, the brothers are faced with greater competition from a growing number of small trucking companies.
“So far, I didn’t make any money,” Qi Zhenwei complained.
The brothers refused to talk about the recent strike here, saying the government had been visiting all truckers in the area. But they freely discussed their costs: tire fees, insurance, driver salaries, road use fees, oil changes, repairs and even fees that trucks pay to enter the city.
“If I had a chance to sell the truck, I’d get out of the business,” the older brother said, dejectedly smoking a cigarette. “I’d go back to my hometown. Now, people there are planting crops for Chinese medicine. And they’re making good money.”
Published: April 28, 2011
SHANGHAI — For years, China’s export juggernaut (重型卡車) has been fed by highly efficient factories, low-cost labor and a fleet of container ships capable of transporting huge volumes of toys, textiles, electronics and other goods to every corner of the world.
But there is a surprisingly weak link in the Made in China chain.Moving those goods from the factory floor to one of China’s enormous seaports — often a drive of less than two hours — typically means relying on an independent trucking company. And as vital as trucking is to China’s mighty export machine, the government seems to be ignoring the drawbacks of what analysts say is an increasingly disorganized, inefficient and even costly way to transport factory goods to seaports.
Trucking’s tenuous (稀薄) status has been underscored by recent protests and demonstrations by drivers. Last week, in an unusually bold display of public anger, 2,000 truckers went on strike in Shanghai to complain about the rising cost of fuel and unfair government transportation fees. Some protestors hurled (猛力投擲) rocks, tried to overturn police cars and smashed the windshields of truck drivers who refused to join the strike.
The Shanghai municipal government eventually ended the three-day strike by arresting protestors and threatening strike organizers, while also promising to lower some fees that trucking companies must pay to use the roads and seaport.
But the challenges that trucking pose to China’s $1.5 trillion a year in exports are still in place — and could become even greater, now that huge factories have begun relocating to poorer, inland regions to save on labor costs.
“Our concern is that as these factories move away from the coast, the service standards won’t keep pace,” said Ken Glenn, an executive at APL, a transportation services company. “Rail and barge are even less developed.”
Within China, thousands of small trucking companies, many of them family-owned, compete by promising low-cost delivery. Then they overload their 18-wheelers in dangerous ways, pay bribes to ward off highway inspectors and hope to eke out (增加，補充) tiny profits.
Now, though, with global oil prices sending the cost of fuel soaring, many truckers say they are heading toward bankruptcy.
“We’re paying a lot more money for fuel than we did three years ago, but what we get paid for freight has stayed the same,” said Qi Zhenwei, a truck owner stationed at a dusty trucking depot near one of Shanghai’s busiest ports. “How am I supposed to survive?”
Mark Millar, a China logistics expert at M Power Associates in Hong Kong, sees Chinese trucking as “a seriously fragmented and brutally competitive industry.”
“Most of the drivers are owner-operators, and in order to make money, they carry more cargo than the truck is supposed to hold,” Mr. Millar said. “This is obviously not a healthy model.”
Not all trucking in China is such a seat-of-the-pants affair. Some global companies transport goods by truck in sealed shipping containers from factory to dock, sometimes accompanied by security escorts.
But more often, goods destined for export are delivered to seaports by small trucking companies — usually hired by logistics firms that bargain to get the lowest possible shipping price. To scrape by, many of the small trucking firms violate the law, pay bribes to avoid heavy fines and transportation restrictions, and even force drivers to sleep in the trucks overnight, sometimes in insecure parking lots.
These rigors might seem to contradict the heavy investment in infrastructure and expressways that China has made to make its transportation network more efficient.
But many of this country’s modern roadways are expensive toll roads. And the government has placed tough regulations on many aspects of the transportation industry, which analysts say have burdened companies with heavy taxes, insurance and government fees. As a result, transporting goods by truck in China is relatively more expensive than doing so in the United States.
According to the American Trucking Associations, moving goods by truck in the United States costs about $1.75 per mile. That includes driver salaries, truck leases, insurance, tolls and many other related costs.
By comparison, trucking costs in China’s two biggest export regions — the Yangtze River Delta region near Shanghai and the Pearl River Delta around Hong Kong — are $2.50 to $3 a mile. That is despite low pay to Chinese drivers, who might earn only 25 cents an hour, versus about $17 an hour in the United States.
Corruption is also a major problem. Chinese truck drivers say highway and port inspectors routinely demand payoffs or bribes. Drivers who refuse to pay may find themselves hit by large fines for even the smallest infraction. (That many of the trucks are overweight makes them ripe for sanctions.) Some regions even operate illegal toll booths.
Rachel Katz, a Fulbright research fellow from the United States who is spending a year in China traveling with long-haul truck drivers, says the drivers are constantly harassed by highway officials.
“There’s every kind of fine you can imagine,” she said in a telephone interview from Chengdu, in southwest China. “There are many different people regulating the roads and finding a way to tax the truckers. I can’t believe the system operates this way.”
Ms. Katz recalls one driver telling her: “In the U.S., you issue tickets in order to control traffic. In China, we control traffic in order to issue tickets.”
Truck drivers do not get much sympathy from their clients — factory bosses who are also struggling to cope with inflation. With labor and raw material and energy prices soaring here, factories are reluctant to pay higher fees to move goods to the major ports.
=> Due to increasing material, energy and labor costs, factories are not willing to pay higher to transportation.
Besides, many of the factory bosses seem to recognize that there is an oversupply of small trucking companies desperate for cargo.
“They face a situation of absolutely cutthroat competition, and many of them are not well educated,” said Tyrrell Duncan, a transportation director at the Asian Development Bank. “There aren’t programs to train them.”
Qi Zhenwei, who is 35, and his 31-year-old brother, Qi Erwei, are typical trucking bosses working in Shanghai’s bustling (活躍的) Baoshan port district.
Besides, many of the factory bosses seem to recognize that there is an oversupply of small trucking companies desperate for cargo.
“They face a situation of absolutely cutthroat competition, and many of them are not well educated,” said Tyrrell Duncan, a transportation director at the Asian Development Bank. “There aren’t programs to train them.”
Qi Zhenwei, who is 35, and his 31-year-old brother, Qi Erwei, are typical trucking bosses working in Shanghai’s bustling (活躍的) Baoshan port district.
Despite fears of government reprisals (報復), they agreed to talk this week in the rusted metal container that now serves as a lounge at their dusty truck depot, amid engine parts and a bucket filled with cigarette butts. Between phone calls and dashes in and out of the makeshift lounge to talk to colleagues, they told their story.
Until about seven years ago, they were peasant farmers struggling to make a living in Henan Province, one of the country’s poorest regions. Neither of them had finished high school.
They traveled more than 500 miles east to Shanghai and found work as truck drivers. (“I once went 24 consecutive days without sleeping in a bed,” Qi Zhenwei said.) Eventually, they earned enough to combine their savings with $100,000 they borrowed from some friends and relatives to buy their own fleet of five new and used Chinese-made trucks.
But shortly after they invested in some of their most expensive vehicles, the global financial crisis struck. Exports plummeted, devastating their container hauling business. A year later, in 2009, when China’s exports began to rebound, so did inflation and fuel prices. And now, the brothers are faced with greater competition from a growing number of small trucking companies.
“So far, I didn’t make any money,” Qi Zhenwei complained.
The brothers refused to talk about the recent strike here, saying the government had been visiting all truckers in the area. But they freely discussed their costs: tire fees, insurance, driver salaries, road use fees, oil changes, repairs and even fees that trucks pay to enter the city.
“If I had a chance to sell the truck, I’d get out of the business,” the older brother said, dejectedly smoking a cigarette. “I’d go back to my hometown. Now, people there are planting crops for Chinese medicine. And they’re making good money.”
In Roaring China, Sweaters Are West of Socks City
By DAVID BARBOZA
Published: December 24, 2004
ATANG, China - You probably have never heard of this factory town in coastal China, and there is no reason why you should have. But it fills your sock drawer.
Datang produces an astounding nine billion pairs of socks each year - more than one set for every person on the planet. People here fondly call it Socks City, and its annual socks festival attracts 100,000 buyers from around the world.
Southeast from here is Shenzhou, which is the world's necktie capital. To the west is Sweater City and Kid's Clothing City. To the south, in the low-rent district, is Underwear City.
This remarkable specialization, one city for each drawer in your bureau, reflects the economies of scale and intense concentration that have helped turn China into a garment behemoth（巨獸）. On Jan. 1, a new trade regime will end the decades-old system of country-by-country quotas that divide the world's exports among roughly 150 countries. Now, China is banking on its immense size and efficient operators to grab an even larger share of the world's clothing orders.
Neither Adam Smith nor Karl Marx could possibly have imagined that this kind of capitalism would evolve from a communist system in quite this way, with an obscure town in the middle of nowhere becoming the world's socks capital. But these days, buyers from New York to Tokyo want to be able to buy 500,000 pairs of socks all at once, or 300,000 neckties, 100,000 children's jackets, or 50,000 size 36B bras. And increasingly, the places that best accommodate those kinds of orders are China's giant new specialty cities.
The abolition of quotas is expected to accelerate this trend over the next decade or so, particularly under the guidance of China's visible hand. The niche cities reflect China's ability to form "lump" economies, where clusters or networks of businesses feed off each other, building technologies and enjoying the benefits of concentrated support centers - like the button capital nearby, which furnishes most of the buttons on the world's shirts, pants and jackets.
The new era, thus, offers a glimpse into how China's fast-paced economy is developing into more than just a beehive of individual private enterprises. Beyond the entrepreneurial vigor so palpable here, the textile business is a prime example of how the Chinese government's attempt to guide development more indirectly through local planning instead of outright state ownership is starting to pay off in a big way.
China is not just becoming the leader of the pack. In many ways, it hopes to run away with as much of the market as possible.
New import limits by the United States, along with other external and internal forces, are expected to hamper China's progress in apparel and textiles for several years, if not longer. That should allow several other countries to maintain vigorous garment industries as well. But there is little question that China will ultimately be the dominant force in the business, and the growth of its industrial enclaves here highlights just how powerful a force China's industries are becoming in almost every sector they have entered.
In the late 1970's, Datang was little more than a rice farming village with 1,000 people, who gathered in small groups and stitched socks together at home, and then sold them in baskets along the highway.
Back then, government officials branded Datang's sock makers as capitalists and ordered them to stop selling socks. Now, they produce over a third of the world's output, and the government has nothing but praise for such entrepreneurs and their domination of the sock business.
"If the restrictions are dropped, there'll be even more production here," says one government official, Weiming Feng, the town's deputy party secretary and an official at the city's sock market.
Signs of Datang's rise as a socks capital are everywhere. The center of town is filled with a huge government-financed marketplace for socks. The rice paddies have given way to rows of paved streets lined with cookie-cutter factories. Banners promoting socks are draped across buildings. And each year, Datang is decorated with balloons and flags for the annual sock fair.
And rags-to-riches tales abound in Datang. Just ask Dong Ying Hong, who in the 1970's gave up a $9-a-month job as an elementary-school teacher to make socks at home. Now, she is the owner of Zhejiang Socks - and a sock millionaire.
Hai Yun Shi, the 41-year-old founder of Hongyun Socks, has a similar tale.
"I started out making socks by hand when I was 18," he said at the company's headquarters. "In '96 we founded this company. Now, we have a contract withWal-Mart."
These kinds of gains have sharply eroded America's old sock-making might. American textile companies filed a petition earlier this year asking Washington to place limits on Chinese sock imports. Hoping to ease trade tensions, the Chinese government said in early December that it would voluntarily add tariffs on some of its own textile and apparel exports to reduce their competitive thrust.
That is one reason, among others, why many specialists believe that China's wallop(v.痛打,n.重擊 ) will not come all at once.
"It won't happen overnight," said Bruce Rockowitz, president of Li & Fung, a Hong Kong company that is one of the world's largest apparel distributors. "It's not a big movement to China right now for retailers. There's too much uncertainty."
Smaller countries, like Bangladesh and Cambodia - which feared they could not keep up with China - are breathing easier. At least for now.
Still, China already accounts for about 16 percent of all apparel imports into the United States. And several studies project that in the next few years, once all the limits are lifted, that figure could soar to 50 percent to 70 percent.
"There's no question, at the end of the day, China ends up a much bigger player in the global apparel business," said David Weil, an associate professor of economics at Boston University.
Textile and apparel makers in China have long been preparing for the coming boom. In recent years, they have invested billions of dollars in new factories along the country's eastern seaboard, particularly here in the Yangtze River Delta.
Many of the old government-owned operations are gone. Private enterprises are importing high-end machinery and luring millions of peasants from the countryside.
Since the early 1980's, when China began moving to a market economy, much of its competitive advantage was built on low-cost labor. Companies spend about 92 cents an hour for each worker in China, versus $1.20 in Thailand, $1.70 in Mexico and about $21.80 in the United States, according to a study by Goldman Sachs. Among big exporters, only India, at about 70 cents an hour, is cheaper.
Investors from Hong Kong, Taiwan, Japan and South Korea were among the first to come. But in recent years, Chinese entrepreneurs set up their own shops, starting out with small stitching operations and quickly expanding into gigantic factories.
For instance, Shengzhou, now popularly known in Chinese as International Necktie City, developed after a Hong Kong investor moved his necktie operations there in 1985 and brought modern tie-making techniques to the city. That was only a few years after China opened itself to capitalism when Deng Xiaoping in 1978 declared, "To get rich is glorious."
Later, some of the company's managers broke away to start their own tie companies. And within a decade, Shengzhou was awash in tie makers and suppliers.
Similar stories can be heard throughout the province of Zhejiang, which is considered one of this country's most enterprising regions.
But textile specialists say China's boom is not simply the product of the newfound entrepreneurialism that is sweeping this country; it is also the nation's ability to form what are called lump economies, focused on one product.
Savvy entrepreneurs started out by luring suppliers, like fabric, dye or tool makers, to their cities, and as these clusters grew, they attracted more local investors who competed by trying to further specialize in socks or jeans production.
"The clusters are getting more and more specialized," says Qingliang Gu, a professor of textile economics at Donghua University in Shanghai. "It's a little like Italy, where you have the city of Como making silk fabric, Vicenza with fine wool and Veneto for knitting."
=> Specialized cities like Italy
The Chinese government has also played a crucial role, opening huge swaths(收割的寬度) of land for development, forming giant industrial parks, doling out tax benefits and developing the infrastructure and transportation networks needed to move products quickly to market.
=> Role of government
"The textile cities started initially from the spontaneous development of private companies," said Chunyi Xie, an economist at the Shanghai Garment Trade Association. "But when it reached certain dimensions it drew attention from the government."
Private companies, with the support of the government, now build huge textile factory complexes, complete with dormitories, hospitals and even curfews to replace the state role in providing food, shelter and health care, along with close supervision. Many textile companies in the province of Jiangsu house and feed thousands of migrant workers who are bused in from the countryside, often for three- or four-year factory stints (定量，限額).
The campus of the Huafang Group, one of China's largest textile companies, has over 100 factory buildings, 30,000 employees and round-the-clock operations.
On any day, it teems with more than 20,000 workers, who live free of charge in Huafang's dormitories. Conditions are hardly heavenly, but they are often a step up for these workers, who are mostly young women from poorer inland provinces like Anhui or Henan. Many of them come here after high school, intending to stay for a few years before returning home to be married.
Then, after those women return home, another 10,000 or so are bused in from the countryside, beginning yet another cycle in the pool of migrant labor that perpetually feeds China's bustling mills.
"When we need new workers," said Wei Xin Shi, a Huafang Group executive, "we just announce it and people here call home and tell their friends to come to work at our factories."
Yun Liu, 23, is one of those workers. She left a small town in northern Jiangsu four years ago. Now, she makes $130 a month in Huafang's cotton spinning mill, where she spins raw cotton into fine threads eight hours a day.
"I really like being here," she said one afternoon outside the factory. "It's a stable job, and I like the environment."
Few places on earth can match the sheer scale and variety of textile and apparel companies clustering in this region.
"In terms of vertical supply chain, China has no competition," says Ruizhe Sun, president of the China Textile Information Center, a government-sponsored agency in Beijing. "We have button makers, fabric makers, thread makers, zipper makers, you name it."
=> Vertical supply chain including button makers, fabric makers, thread makers, zipper makers.
That situation is luring investors and competitors from other parts of the world.
"A few years ago, when I came here there were no Italians," said Ellen Zhou, a Chinese citizen now working for a textile company based in Thiene, Italy. "Now they're everywhere, in the hotels, at the cafes."
Chinese textile executives, however, are well aware of the risks of over-expansion. And there are other problems looming as well. The market for labor has tightened in the past year, pushing up wages.
=> Risk: wage go up, over-expansion, market change, etc.
Companies and even government officials have long ferried migrant workers into Zhangjiagang from the nearby province of Anhui, many of whom were willing to work for $4 a day. But recently some factories have been struggling to find workers, and many executives say they expect wages to rise.
"We feel labor costs are going up," Jianhong Gu, vice general manager of Pukun Textile, a Zhangjiagang suit maker whose factories operate 24 hours a day. "There's tremendous competition."
Moreover, foreign designers and retailers are keen to keep a network of business ties with other countries with relatively modern factories, like India, Pakistan and Bangladesh.
Fred Abernathy, a researcher at the Center for Textile and Apparel Research at Harvard, says retailers in the United States will continue to buy quantities of textiles and apparel close to home, particularly in Latin America and the Caribbean, because of the need for "just in time" delivery for some items.
He also expects specialty clothing and textiles operations to continue to survive in New York, North Carolina, France and Italy. But, he concedes, "China will gain over the long run."
Jinfei Wang, the chairman of the Jiangsu Diao Garment factory in Tongzhou, just outside Nantong, says there's no doubt about that.
"I've been to factories all over the world," he said in a recent interview while walking his own bustling factory floor, observing women's suits destined for J. C. Penneystores. "And we can compete with any of them. Without restrictions, certainly China is going to be No. 1
Published: December 24, 2004
ATANG, China - You probably have never heard of this factory town in coastal China, and there is no reason why you should have. But it fills your sock drawer.
Datang produces an astounding nine billion pairs of socks each year - more than one set for every person on the planet. People here fondly call it Socks City, and its annual socks festival attracts 100,000 buyers from around the world.
Southeast from here is Shenzhou, which is the world's necktie capital. To the west is Sweater City and Kid's Clothing City. To the south, in the low-rent district, is Underwear City.
This remarkable specialization, one city for each drawer in your bureau, reflects the economies of scale and intense concentration that have helped turn China into a garment behemoth（巨獸）. On Jan. 1, a new trade regime will end the decades-old system of country-by-country quotas that divide the world's exports among roughly 150 countries. Now, China is banking on its immense size and efficient operators to grab an even larger share of the world's clothing orders.
Neither Adam Smith nor Karl Marx could possibly have imagined that this kind of capitalism would evolve from a communist system in quite this way, with an obscure town in the middle of nowhere becoming the world's socks capital. But these days, buyers from New York to Tokyo want to be able to buy 500,000 pairs of socks all at once, or 300,000 neckties, 100,000 children's jackets, or 50,000 size 36B bras. And increasingly, the places that best accommodate those kinds of orders are China's giant new specialty cities.
The abolition of quotas is expected to accelerate this trend over the next decade or so, particularly under the guidance of China's visible hand. The niche cities reflect China's ability to form "lump" economies, where clusters or networks of businesses feed off each other, building technologies and enjoying the benefits of concentrated support centers - like the button capital nearby, which furnishes most of the buttons on the world's shirts, pants and jackets.
The new era, thus, offers a glimpse into how China's fast-paced economy is developing into more than just a beehive of individual private enterprises. Beyond the entrepreneurial vigor so palpable here, the textile business is a prime example of how the Chinese government's attempt to guide development more indirectly through local planning instead of outright state ownership is starting to pay off in a big way.
China is not just becoming the leader of the pack. In many ways, it hopes to run away with as much of the market as possible.
New import limits by the United States, along with other external and internal forces, are expected to hamper China's progress in apparel and textiles for several years, if not longer. That should allow several other countries to maintain vigorous garment industries as well. But there is little question that China will ultimately be the dominant force in the business, and the growth of its industrial enclaves here highlights just how powerful a force China's industries are becoming in almost every sector they have entered.
In the late 1970's, Datang was little more than a rice farming village with 1,000 people, who gathered in small groups and stitched socks together at home, and then sold them in baskets along the highway.
Back then, government officials branded Datang's sock makers as capitalists and ordered them to stop selling socks. Now, they produce over a third of the world's output, and the government has nothing but praise for such entrepreneurs and their domination of the sock business.
"If the restrictions are dropped, there'll be even more production here," says one government official, Weiming Feng, the town's deputy party secretary and an official at the city's sock market.
Signs of Datang's rise as a socks capital are everywhere. The center of town is filled with a huge government-financed marketplace for socks. The rice paddies have given way to rows of paved streets lined with cookie-cutter factories. Banners promoting socks are draped across buildings. And each year, Datang is decorated with balloons and flags for the annual sock fair.
And rags-to-riches tales abound in Datang. Just ask Dong Ying Hong, who in the 1970's gave up a $9-a-month job as an elementary-school teacher to make socks at home. Now, she is the owner of Zhejiang Socks - and a sock millionaire.
Hai Yun Shi, the 41-year-old founder of Hongyun Socks, has a similar tale.
"I started out making socks by hand when I was 18," he said at the company's headquarters. "In '96 we founded this company. Now, we have a contract withWal-Mart."
These kinds of gains have sharply eroded America's old sock-making might. American textile companies filed a petition earlier this year asking Washington to place limits on Chinese sock imports. Hoping to ease trade tensions, the Chinese government said in early December that it would voluntarily add tariffs on some of its own textile and apparel exports to reduce their competitive thrust.
That is one reason, among others, why many specialists believe that China's wallop(v.痛打,n.重擊 ) will not come all at once.
"It won't happen overnight," said Bruce Rockowitz, president of Li & Fung, a Hong Kong company that is one of the world's largest apparel distributors. "It's not a big movement to China right now for retailers. There's too much uncertainty."
Smaller countries, like Bangladesh and Cambodia - which feared they could not keep up with China - are breathing easier. At least for now.
Still, China already accounts for about 16 percent of all apparel imports into the United States. And several studies project that in the next few years, once all the limits are lifted, that figure could soar to 50 percent to 70 percent.
"There's no question, at the end of the day, China ends up a much bigger player in the global apparel business," said David Weil, an associate professor of economics at Boston University.
Textile and apparel makers in China have long been preparing for the coming boom. In recent years, they have invested billions of dollars in new factories along the country's eastern seaboard, particularly here in the Yangtze River Delta.
Many of the old government-owned operations are gone. Private enterprises are importing high-end machinery and luring millions of peasants from the countryside.
Since the early 1980's, when China began moving to a market economy, much of its competitive advantage was built on low-cost labor. Companies spend about 92 cents an hour for each worker in China, versus $1.20 in Thailand, $1.70 in Mexico and about $21.80 in the United States, according to a study by Goldman Sachs. Among big exporters, only India, at about 70 cents an hour, is cheaper.
Investors from Hong Kong, Taiwan, Japan and South Korea were among the first to come. But in recent years, Chinese entrepreneurs set up their own shops, starting out with small stitching operations and quickly expanding into gigantic factories.
For instance, Shengzhou, now popularly known in Chinese as International Necktie City, developed after a Hong Kong investor moved his necktie operations there in 1985 and brought modern tie-making techniques to the city. That was only a few years after China opened itself to capitalism when Deng Xiaoping in 1978 declared, "To get rich is glorious."
Later, some of the company's managers broke away to start their own tie companies. And within a decade, Shengzhou was awash in tie makers and suppliers.
Similar stories can be heard throughout the province of Zhejiang, which is considered one of this country's most enterprising regions.
But textile specialists say China's boom is not simply the product of the newfound entrepreneurialism that is sweeping this country; it is also the nation's ability to form what are called lump economies, focused on one product.
Savvy entrepreneurs started out by luring suppliers, like fabric, dye or tool makers, to their cities, and as these clusters grew, they attracted more local investors who competed by trying to further specialize in socks or jeans production.
"The clusters are getting more and more specialized," says Qingliang Gu, a professor of textile economics at Donghua University in Shanghai. "It's a little like Italy, where you have the city of Como making silk fabric, Vicenza with fine wool and Veneto for knitting."
=> Specialized cities like Italy
The Chinese government has also played a crucial role, opening huge swaths(收割的寬度) of land for development, forming giant industrial parks, doling out tax benefits and developing the infrastructure and transportation networks needed to move products quickly to market.
=> Role of government
"The textile cities started initially from the spontaneous development of private companies," said Chunyi Xie, an economist at the Shanghai Garment Trade Association. "But when it reached certain dimensions it drew attention from the government."
Private companies, with the support of the government, now build huge textile factory complexes, complete with dormitories, hospitals and even curfews to replace the state role in providing food, shelter and health care, along with close supervision. Many textile companies in the province of Jiangsu house and feed thousands of migrant workers who are bused in from the countryside, often for three- or four-year factory stints (定量，限額).
The campus of the Huafang Group, one of China's largest textile companies, has over 100 factory buildings, 30,000 employees and round-the-clock operations.
On any day, it teems with more than 20,000 workers, who live free of charge in Huafang's dormitories. Conditions are hardly heavenly, but they are often a step up for these workers, who are mostly young women from poorer inland provinces like Anhui or Henan. Many of them come here after high school, intending to stay for a few years before returning home to be married.
Then, after those women return home, another 10,000 or so are bused in from the countryside, beginning yet another cycle in the pool of migrant labor that perpetually feeds China's bustling mills.
"When we need new workers," said Wei Xin Shi, a Huafang Group executive, "we just announce it and people here call home and tell their friends to come to work at our factories."
Yun Liu, 23, is one of those workers. She left a small town in northern Jiangsu four years ago. Now, she makes $130 a month in Huafang's cotton spinning mill, where she spins raw cotton into fine threads eight hours a day.
"I really like being here," she said one afternoon outside the factory. "It's a stable job, and I like the environment."
Few places on earth can match the sheer scale and variety of textile and apparel companies clustering in this region.
"In terms of vertical supply chain, China has no competition," says Ruizhe Sun, president of the China Textile Information Center, a government-sponsored agency in Beijing. "We have button makers, fabric makers, thread makers, zipper makers, you name it."
=> Vertical supply chain including button makers, fabric makers, thread makers, zipper makers.
That situation is luring investors and competitors from other parts of the world.
"A few years ago, when I came here there were no Italians," said Ellen Zhou, a Chinese citizen now working for a textile company based in Thiene, Italy. "Now they're everywhere, in the hotels, at the cafes."
Chinese textile executives, however, are well aware of the risks of over-expansion. And there are other problems looming as well. The market for labor has tightened in the past year, pushing up wages.
=> Risk: wage go up, over-expansion, market change, etc.
Companies and even government officials have long ferried migrant workers into Zhangjiagang from the nearby province of Anhui, many of whom were willing to work for $4 a day. But recently some factories have been struggling to find workers, and many executives say they expect wages to rise.
"We feel labor costs are going up," Jianhong Gu, vice general manager of Pukun Textile, a Zhangjiagang suit maker whose factories operate 24 hours a day. "There's tremendous competition."
Moreover, foreign designers and retailers are keen to keep a network of business ties with other countries with relatively modern factories, like India, Pakistan and Bangladesh.
Fred Abernathy, a researcher at the Center for Textile and Apparel Research at Harvard, says retailers in the United States will continue to buy quantities of textiles and apparel close to home, particularly in Latin America and the Caribbean, because of the need for "just in time" delivery for some items.
He also expects specialty clothing and textiles operations to continue to survive in New York, North Carolina, France and Italy. But, he concedes, "China will gain over the long run."
Jinfei Wang, the chairman of the Jiangsu Diao Garment factory in Tongzhou, just outside Nantong, says there's no doubt about that.
"I've been to factories all over the world," he said in a recent interview while walking his own bustling factory floor, observing women's suits destined for J. C. Penneystores. "And we can compete with any of them. Without restrictions, certainly China is going to be No. 1
2014年4月10日 星期四
Dead White People’s Clothes
How the used clothes you send to Africa are killing the local textile industries.
BY: MERI NANA-AMA DANQUAH
Posted: March 5 2009 6:40 AM
It's impossible to have a conversation about fashion in Africa—traditional or contemporary—without talking about the used-clothing industry and how damaging some people say it’s been.
A whole industry has cropped up around apparel that's been donated to charities located oceans away, imported throughout the African continent and then sold cheaply in African marketplaces. These low prices undercut local retailers and undermine the entire textile and garment business in Africa.
The importing is sometimes done by enterprising individuals, but, more often than not, this huge, multimillion-dollar industry is orchestrated by charitable multinational organizations. These aid agencies' primary mission is, ostensibly (表面上)
, to provide various forms of relief to residents—not only in the harrowing face of disaster, but also through the challenging facts of day-to-day life. That’s one major aspect of the controversy surrounding the industry.
But it's not the only one. The psychological—and, as a result, financial—blows of the used-clothing industry have been crippling. What seems to be carried over, along with the previously worn clothing, is that old-colonial mentality of "ours is better than yours," the often unspoken belief heralding all that is Western as superior, and all that is African as inferior.
Especially telling are the various names, phrases and labels attached to the industry. In Togo, the garments are referred to as "dead yovo" clothing. Translation: “dead white person clothing.” Across the border, in Ghana, my native country, the used clothing is called "broni wa wo." Literally translated, this expression means: “a white man has died.” After all, only death could separate a white person from such wonderful clothing: jeans—skinny, bootleg, stonewashed, stretch; faux Burberry dresses, trousers, scarves; T-shirts advertising products, Web sites, conferences and other events; bras—lace, Wonder, padded, with underwire, without underwire.
In some countries, the preference for used clothes has all but killed the local textile industry. The used-clothing industry is Kenya’s seventh largest import, raking in well over 60 million euros per year. Hundreds of thousands of African workers have lost their jobs as a result of these imports. In Malawi, the largest textile company had to close its doors. Other such companies in Mozambique and Uganda are headed toward bankruptcy. Zambian textile workers have staged several strikes in an effort to promote national and international awareness of their plight.
In Ghana, the government has tried to rejuvenate their local textile industry by announcing a program called National Friday Wear, which encourages all citizens to dress in traditional clothes in hopes that the trend will spill over into other days.
African designers have mounted a spirited defense. Many are biting back at the Western world and revitalizing the fashion industries in their own countries, industries which had nearly been brought to a grinding halt by the demands of a changing market.
Part of the problem is that younger generations no longer want to wear "outdated" traditional attire; instead, they crave the sort of sophistication and modernity promised in the pages of American and European magazines. They covet the styles they see on the latest television shows—Hollywood sitcoms and celebrity gossip shows imported by a fast-paced cable market. And the controversial used-clothing trade is quick in its attempt to fill each and every one of those fashion desires.
There are no easy answers. But what many don’t understand is that African textiles are much more than an assemblage of brightly colored cloth. Many of the designs have names, usually in the form of an aphorism. And they contain stories, folklore which is sometimes literally written into the cloth. Africans use fabric in much the same way that the Western world uses newspapers and magazines to commemorate, document and celebrate events, accomplishments and individuals.
When Barack Obama was elected as America’s first black president, Africans all throughout the continent sewed their pride into their cloth. When Miriam Makeba died, she was honored the same way. In traditional engagement ceremonies, fabric is a requisite part of the dowry that a male suitor presents to the woman’s family. Fabric is handed down from one generation to another. I inherited a number of my grandmother’s outfits. I will pass them on, along with the history and culture they carry, to my daughter. Because of what I’ve seen first-hand, I believe that donating used clothing to charities which then export them to Africa will ultimately result in the death of such traditions and legacies—which is why I won’t do it.
BY: MERI NANA-AMA DANQUAH
Posted: March 5 2009 6:40 AM
It's impossible to have a conversation about fashion in Africa—traditional or contemporary—without talking about the used-clothing industry and how damaging some people say it’s been.
A whole industry has cropped up around apparel that's been donated to charities located oceans away, imported throughout the African continent and then sold cheaply in African marketplaces. These low prices undercut local retailers and undermine the entire textile and garment business in Africa.
The importing is sometimes done by enterprising individuals, but, more often than not, this huge, multimillion-dollar industry is orchestrated by charitable multinational organizations. These aid agencies' primary mission is, ostensibly (表面上)
, to provide various forms of relief to residents—not only in the harrowing face of disaster, but also through the challenging facts of day-to-day life. That’s one major aspect of the controversy surrounding the industry.
But it's not the only one. The psychological—and, as a result, financial—blows of the used-clothing industry have been crippling. What seems to be carried over, along with the previously worn clothing, is that old-colonial mentality of "ours is better than yours," the often unspoken belief heralding all that is Western as superior, and all that is African as inferior.
Especially telling are the various names, phrases and labels attached to the industry. In Togo, the garments are referred to as "dead yovo" clothing. Translation: “dead white person clothing.” Across the border, in Ghana, my native country, the used clothing is called "broni wa wo." Literally translated, this expression means: “a white man has died.” After all, only death could separate a white person from such wonderful clothing: jeans—skinny, bootleg, stonewashed, stretch; faux Burberry dresses, trousers, scarves; T-shirts advertising products, Web sites, conferences and other events; bras—lace, Wonder, padded, with underwire, without underwire.
In some countries, the preference for used clothes has all but killed the local textile industry. The used-clothing industry is Kenya’s seventh largest import, raking in well over 60 million euros per year. Hundreds of thousands of African workers have lost their jobs as a result of these imports. In Malawi, the largest textile company had to close its doors. Other such companies in Mozambique and Uganda are headed toward bankruptcy. Zambian textile workers have staged several strikes in an effort to promote national and international awareness of their plight.
In Ghana, the government has tried to rejuvenate their local textile industry by announcing a program called National Friday Wear, which encourages all citizens to dress in traditional clothes in hopes that the trend will spill over into other days.
African designers have mounted a spirited defense. Many are biting back at the Western world and revitalizing the fashion industries in their own countries, industries which had nearly been brought to a grinding halt by the demands of a changing market.
Part of the problem is that younger generations no longer want to wear "outdated" traditional attire; instead, they crave the sort of sophistication and modernity promised in the pages of American and European magazines. They covet the styles they see on the latest television shows—Hollywood sitcoms and celebrity gossip shows imported by a fast-paced cable market. And the controversial used-clothing trade is quick in its attempt to fill each and every one of those fashion desires.
There are no easy answers. But what many don’t understand is that African textiles are much more than an assemblage of brightly colored cloth. Many of the designs have names, usually in the form of an aphorism. And they contain stories, folklore which is sometimes literally written into the cloth. Africans use fabric in much the same way that the Western world uses newspapers and magazines to commemorate, document and celebrate events, accomplishments and individuals.
When Barack Obama was elected as America’s first black president, Africans all throughout the continent sewed their pride into their cloth. When Miriam Makeba died, she was honored the same way. In traditional engagement ceremonies, fabric is a requisite part of the dowry that a male suitor presents to the woman’s family. Fabric is handed down from one generation to another. I inherited a number of my grandmother’s outfits. I will pass them on, along with the history and culture they carry, to my daughter. Because of what I’ve seen first-hand, I believe that donating used clothing to charities which then export them to Africa will ultimately result in the death of such traditions and legacies—which is why I won’t do it.
Alabama Town Questions an Economy of Socks
Fort Payne, Ala., calls itself the World's Sock Capital — and it doesn't like competition. The local congressman convinced President Bush to re-enact a tariff on all socks imported from Honduras. Some in town say Fort Payne needs to diversify if it wants to compete in the global economy.
Copyright © 2007 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.ADAM DAVIDSON: Jimmy Baker is one of the survivors. He's watched most of his neighbors go out of business. And he's doing whatever he can just to hold on. Things used to be so much better. He started Baker Hosiery with nothing but a beat-up old knitting machine and some yarn.
Mr. JIMMY BAKER (Owner, Baker Hosiery): The company was founded in 1978.
DAVIDSON: How old are you? You're not old enough to have founded it.
Mr. BAKER: I was 22, 23 when the company was found.
DAVIDSON: Like most sock men, Baker doesn't have a lot of education, but he's smart. He's real polite and kind of tough; he looks like he could lift a Matec Mono 4 knitting machine right over his head, which, as it happens, he now has 250 of - humming loudly.
Mr. BAKER: This is our knitting facility. As you can see, it's far from a sweatshop.
DAVIDSON: Sweatshop? There are hardly any workers here. Sock machines are pretty much automatic. Each is about the size of a large washing machine. There's a metal tube in the middle with dozens of needles that act like robotic claws, grabbing pieces of thread and knitting them.
Mr. BAKER: This is a lady's half (unintelligible) cushion no-show.
DAVIDSON: No-show meaning it's like an anklet.
Mr. BAKER: Yes, it's like an anklet. This comes out from the top of the foot.
DAVIDSON: Every few minutes, the automatic machines spurt out what's called a sock core - basically, a gray, uncolored sock tube with the toes still open. Baker tells me he can make a sock core just as cheaply as anyone in China or Honduras - the machine costs the same, so does the yarn, there's hardly any labor. The big cost, the reason more than 100 Fort Payne mills have shut down recently comes in the next step.
Mr. BAKER: Generally, the biggest difference is the closing of the toes or the seaming of the sock.
DAVIDSON: Take your shoe off; look at your socks. That little line near your toes, that seam, it's killing the U.S. sock industry. It's simple, it just costs more to seam a sock in the U.S. than it does in China or Honduras. It doesn't cost a lot more, just a little, but that difference is enough to wreak havoc.
Baker shows me the sewing floor - there are four women sitting in front of specialized sewing machine.
Mr. BAKER: This operator, she has to turn the sock wrong side out, put it on the sewing machine, comes through, turns it back. It goes in the inventory then it goes down under wet(ph) process.
DAVIDSON: It takes about five or six seconds to sew each toe. The faster the sewer can work, the more she makes. Sock workers are paid per sock rather than an hourly wage.
Mr. BAKER: Traditionally, here in the United States, that piece rate will average anywhere from 22 to 30 cents a dozen.
DAVIDSON: In Honduras or China, it's cheaper, a penny per sock cheaper to sew a toe close. But those pennies add up; Baker sells more than 100 million socks a year; nationwide, retailers are buying billions of socks a year. There's no way they're spending a penny more per sock, so Baker and others decided the only way to save the U.S. sock industry is to convince the Bush administration to reverse a decade-old policy.
Back in 1984, the U.S. wanted to help the poor Central American nation of Honduras, where democracy had only just replaced a military dictatorship(獨裁者的職位), by allowing duty-free exports of socks whose toes were seamed there.
Today, Baker wants the U.S. to rescind(廢止) that deal, to re-impose the old sock tariff.
Mr. BAKER: Let's say they implement the maximum amount, 13 and a half or 14 percent, whatever it is. Well, it then makes it a closer gap.
DAVIDSON: Baker says that for him, getting this tariff back is life or death. With it, his business will thrive; without it, he's doomed(天數已盡的). He'll close up shop, so will most American sock makers.
But the president is a committed free trader. He believes that tariffs hurt the U.S. economy. Why in the world would President Bush go along with this? One reason - a deal he struck late one night in July 2005. That night, the president met with Fort Payne's congressman, Republican Robert Aderholt, to talk about tariffs and the sock business.
Representative ROBERT ADERHOLT (Republican, Alabama): I had talked with the president and told him my concerns about it.
DAVIDSON: That meeting was, most likely, the moment Aderholt had more power than at any other time in his life. The House was voting on CAFTA, the Central America Free Trade Agreement. The vote was an exact tie, Aderholt was the holdout(抵抗；堅持), and President Bush very much wanted CAFTA to pass. So, Aderholt told the president that it's simple. He could get his big free trade deal only if he rolled back free trade on one industry, the sock industry.
Rep. ADERHOLT: Absolutely. And I told him this was what I needed; this was the one thing that I had, you know, great concerns about.
DAVIDSON: That night, the president agreed to Aderholt's deal. CAFTA passed, and the White House gave itself a self-imposed deadline of December 19th of this year to put back tariffs on sock exports from Honduras.
(Soundbite of clock ticking)
Mr. JIMMY DURHAM (County Economic Development Officer, Fort Payne): Up here at the lab, we'll take a left.
DAVIDSON: I take a tour through town with Jimmy Durham, the county economic development officer. He shows me just how grim things have been for the sock business here.
Mr. DURHAM: This was a hosiery mill that was closed down.
DAVIDSON: And then this, is it a closed mill?
Mr. DURHAM: That was another one.
DAVIDSON: Five just in…
Mr. DURHAM: Yeah. Yeah.
DAVIDSON: Basically, in just a tenth of a mile stretch.
Mr. DURHAM: Right.
DAVIDSON: But here's the thing, you might think Durham is in despair about the future of Fort Payne - not at all. Those closed sock factories - they're reopening as new businesses.
Mr. DURHAM: Now this is Steadfast Breeds.
DAVISON: I've never seen a pile of (unintelligible).
(Soundbite of laughter)
Mr. DURHAM: Well, they make them and then ship them out.
DAVIDSON: Steadfast employees make decent money; making bridges brings a lot more profit than socks. Down the road is the massive Ferguson distribution/warehouse.
Oh, wow. That is huge.
Mr. DURHAM: Now, see there, they are the largest retail plumbing company in the United States - Jacuzzis, (unintelligible) tubs.
DAVIDSON: In Fort Payne, you meet a lot of people, like Jimmy Durham, who say they don't mind that socks are no longer the single, massive industry that dominates the town economy. There are newer, better-paying industries coming. There's a huge new distribution center for the National Retailer Children's Place, two new metal tube manufacturers, a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. In fact, most of the 4,000 recently laid off sock workers quickly found new jobs. It's an irony that this tariff fought for so hard by some in Fort Payne will likely have its biggest impact thousands of miles away in Honduras.
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Mitumba: The Second-Hand Road
Most people just get dressed in the morning without much thought to the clothes they put on other than whether they fit and look good.
If we stop liking them then we throw them out, give them to charity shops or simply put them into recycling bins where, we hope, our discarded clothes will be of use to someone less fortunate than ourselves.
Raffaele Brunetti traced one humble T-shirt's epic journey, to find out what does happen.
Mitumba, how the trade of second-hand clothes is known in Africa, is a revealing modern day story of how globalisation connects us all in millions of unseen ways, and how one person's disposable goods are someone else's new possessions.
Filmmaker Raffaele Brunetti joined Witness host Rageh Omaar to discuss the making of the film.
Rageh: Before I had seen your film I presumed when someone was giving away clothes a charity would pick up the clothes and give them out to people in Africa and Asia. But that does not happen at all from what I saw in your film?
Raffaele: We also thought the same thing, but in the film we interviewed a lot of people who were donating clothes and asked them where they thought they were going. They said they were being given for free to people in need.
But then we discovered the clothes are being sold and that in many cases it is not even the charitable organisation that collects the clothes but some commercial groups that are operating under the charities' names to collect the clothes and then a commercial chain begins.
This also generates work for a lot of local people. So the fact the clothes are not donated is a good thing as it generates an economy for people to buy and sell.
Did you talk to international aid organisations and charities about how the second-hand clothes system works?
Second-hand clothes are in big demand in Africa
Of course we contacted many organisations, the big ones such as Caritas, the Red Cross and Oxfam. At first we did not get a big response to our questions and did not understand exactly why.
We do not think there is anything wrong with selling the clothes because of course the activity of these charitable organisations does not only consist of giving clothes to Africa.
They deal with many different things and it could be they are finding ways to fund their operations - such as second-hand clothes.
We suspected that the agencies did not want to make it clear they were selling the clothes and they may think that people are more willing to donate clothes if they think they are being given away for free. So this is probably one of the reasons we did not get a good response.
The irony is that your film shows there is a benefit from selling the clothes as it encourages economic self-help.
We believe agencies should make it clear what the aim of collecting the clothes is and where they are going.
A strange thing is that when we interviewed people in Africa, nobody believes that people in Europe or the US donate clothes but that they are selling them or that they belong to "dead white men". However, in the West, everyone thinks the clothes are donated.
Do you think there are people opposed to Mitumba in Africa?
Most people who give their clothes to charities do not know what is happening to them
There is opposition to Mitumba and when I was there I read some articles and interviewed some journalists and people from the government who said it was sort of shame that a country was forced to say that its people rely on second-hand clothes.
Mitumba - The second-hand road can be seen from Sunday, June 27, at the following times GMT: Sunday: 1400; Monday: 0600, 1900; Tuesday: 0300.
If we stop liking them then we throw them out, give them to charity shops or simply put them into recycling bins where, we hope, our discarded clothes will be of use to someone less fortunate than ourselves.
Raffaele Brunetti traced one humble T-shirt's epic journey, to find out what does happen.
Mitumba, how the trade of second-hand clothes is known in Africa, is a revealing modern day story of how globalisation connects us all in millions of unseen ways, and how one person's disposable goods are someone else's new possessions.
Filmmaker Raffaele Brunetti joined Witness host Rageh Omaar to discuss the making of the film.
Rageh: Before I had seen your film I presumed when someone was giving away clothes a charity would pick up the clothes and give them out to people in Africa and Asia. But that does not happen at all from what I saw in your film?
Raffaele: We also thought the same thing, but in the film we interviewed a lot of people who were donating clothes and asked them where they thought they were going. They said they were being given for free to people in need.
But then we discovered the clothes are being sold and that in many cases it is not even the charitable organisation that collects the clothes but some commercial groups that are operating under the charities' names to collect the clothes and then a commercial chain begins.
This also generates work for a lot of local people. So the fact the clothes are not donated is a good thing as it generates an economy for people to buy and sell.
Did you talk to international aid organisations and charities about how the second-hand clothes system works?
Second-hand clothes are in big demand in Africa
Of course we contacted many organisations, the big ones such as Caritas, the Red Cross and Oxfam. At first we did not get a big response to our questions and did not understand exactly why.
We do not think there is anything wrong with selling the clothes because of course the activity of these charitable organisations does not only consist of giving clothes to Africa.
They deal with many different things and it could be they are finding ways to fund their operations - such as second-hand clothes.
We suspected that the agencies did not want to make it clear they were selling the clothes and they may think that people are more willing to donate clothes if they think they are being given away for free. So this is probably one of the reasons we did not get a good response.
The irony is that your film shows there is a benefit from selling the clothes as it encourages economic self-help.
We believe agencies should make it clear what the aim of collecting the clothes is and where they are going.
A strange thing is that when we interviewed people in Africa, nobody believes that people in Europe or the US donate clothes but that they are selling them or that they belong to "dead white men". However, in the West, everyone thinks the clothes are donated.
Do you think there are people opposed to Mitumba in Africa?
Most people who give their clothes to charities do not know what is happening to them
There is opposition to Mitumba and when I was there I read some articles and interviewed some journalists and people from the government who said it was sort of shame that a country was forced to say that its people rely on second-hand clothes.
Another reason is there are now also economic agreements with countries such as China for the import of new clothes which are becoming cheaper and cheaper even if the quality is very low.
So now Mitumba, or second-hand clothes, are forced to compete with new clothes from China. How much of this trade do you think is operating on the edges of the formal economy and the law - especially in Europe?This is a very controversial subject and I was asked this question many times while making the film.
At the end of the film I say that I will continue to put my clothes in the boxes and we think this is good and the alternatives would be destroying or throwing away the clothes which would have an environmental impact and encourage the chain of fast consumerism.
Also, having been in Africa and see how many people deal in the clothes and how many people wear them, we decided that even if it is a controversial thing that needs better information on it, it is still worth doing - even if it will probably not last long.
Mitumba - The second-hand road can be seen from Sunday, June 27, at the following times GMT: Sunday: 1400; Monday: 0600, 1900; Tuesday: 0300.
2014年4月8日 星期二
How the U.S. Lost Out on iPhone Work
People flooded Foxconn Technology with résumés at a 2010 job fair in Henan Province, China.
By CHARLES DUHIGG and KEITH BRADSHER
Published: January 21, 2012
When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.
But as Steven P. Jobs of Apple spoke,President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?
Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.
“If it’s the pinnacle of capitalism, we should be worried.”
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhonemanufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”
Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.
But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.
To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.
Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.
This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.
Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.
They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.
“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”
‘I Want a Glass Screen’
In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.
Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.
People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”
After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.
For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?
The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.
In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that“I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.
But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.
In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.
The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.
For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.
Then a bid for the work arrived from a Chinese factory.
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.
The Chinese plant got the job.
“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”
In Foxconn City
An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.
That’s because nothing like Foxconn City exists in the United States.
The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.
Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.
Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.
Foxconn, in statements, declined to speak about specific clients.
“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”
The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.
Foxconn employees, in interviews, have challenged those assertions.
Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days.
Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.
Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.
But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.
“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.
But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.
“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”
Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”
Middle-Class Jobs Fade
The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.
It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.
“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”
At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.
“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”
Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.
But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.
Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.
Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.
There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.
After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.
Paydays for Apple
As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.
Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.
The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.
A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.
While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.
“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”
What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.
After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.
Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”
Innovation’s Losers
Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.
Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”
At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.
Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.
What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.
In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.
“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”
The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.
Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.
There wasn’t even a tiny scratch on the screen.
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Practical Steps for Attacking Complexity Without Jeopardizing Value
Harmonizing specifications along the supply chain (such as for ingredients and formulations, product specifications, and packaging) enables the company to reduce changeover times and free up line capacity, thereby generating savings through improved line efficiency. Growth opportunities for products with harmonized specifications can be pursued at lower incremental costs. Companies can achieve the greatest impact by harmonizing the specifications of high-volume products.
Companies can increase scale in procurement by introducing a “menu card” that sets out standard ingredients and packaging materials. A company should select product ingredients and materials on the basis of cost, with the objective of developing a minimum number of base formulations. It should then diversify products only where the market analysis has identified a value to customers. This creates savings for procurement by allowing that function to purchase greater quantities of fewer ingredients, packaging materials, and raw materials.