Last Thursday, Tom Cook, the Chief Executive Officer of Apple, announced that Apple will invest $100 million next year in the United States in new manufacturing facilities for some of its Mac computers. Although $100 million represents about 2% of Apple’s expected capital expenditures in 2013, the new investment could portend a return of some high-end consumer electronics manufacturing to the United States, reversing the off-shore manufacturing trend of the last two decades.
Apple’s reasons for investing in new U.S.-based manufacturing are subject to speculation. Supply disruptions in Japan and rising labor costs in China almost certainly factored into its decision. But an article in today’s Wall Street Journal questions whether the decision was taken largely for political expediency: To show that Apple is committed to creating American jobs. The article quotes a group of CEO’s bemoaning the fact that, whatever they put forward in terms of corporate goals and achievements, “if it doesn’t create jobs, nobody’s going to listen.”
The CEO’s have a point. Although creating high-paying American jobs is important, it should not be the sole measure of technology goals or corporate accomplishment. Tootsie Roll factories provide many American workers with good, high-paying jobs. But that is not a good reason for any company, let alone the U.S. government, to invest in Tootsie Rolls.
The case for promoting the domestic manufacture of consumer electronics goes well beyond job creation. A few weeks ago I wrote in this column about how a re-birth of consumer electronics manufacturing in the United States could accelerate the development of electric vehicles (see “The Road to Electric Vehicles Runs Through Apple”). The substantially shorter product development cycles of new mobile apps devices permit technology developers with the opportunity to test and commercialize several generations of new batteries in the time it takes to commercialize one new advanced automotive battery. The development cycles for grid-supporting battery applications may be even longer than in automotive applications.
Opening the consumer electronics market to American battery makers would provide a tremendous opportunity for battery technology innovation, the traditional strength of the U.S. battery industry. That opportunity could well express itself in the more rapid development of advanced automotive batteries, as technology innovation in mobile apps spins off into the automotive sector.
Another reason to on-shore the manufacture of mobile apps devices is national security. At a recent battery industry event I spoke with the former commander of the Crane Naval Base, the facility which develops much of the electronic warfare technology for the U.S. Navy. The former commander told me that the technology lead of the United States over its potential military adversaries over the past 50 years has never been narrower than it is today. As a child of the Cold War, who remembers the Space Race and “Duck and Cover”, I expressed surprise. No, the former commander told me: The Soviets could do big and powerful pretty well, but we always knew that their technology was crap. Today our potential adversary can walk into Best Buy and purchase off-the-shelf consumer electronics that are distressingly similar to technology used in military applications. That being the case, common sense would suggest that the U.S. try to control that consumer electronics technology rather than let its manufacture and continued development take place off shore.
The United States should undertake a national initiative to return the manufacture of consumer electronics and mobile apps devices to its shores. Any such return faces daunting obstacles: re-establishing supply chains, re-training a work force, dealing with labor cost issues and all of the related expenses. But the payoff would be huge and would go well beyond the usual Red Herring of job creation. At stake is energy security, military security and a cleaner, more stable environment.