"Does anyone at Apple have a soul?" - Foreign Policy Hogwash

Posted by Winston Wolfpack on April 5, 2012 12:11 am 8

I haven't been able to spend much time on the forums here yet, so I appoligize if this should have been consolidated with another post that I couldn't find.

Clyde Prestowitz recently posted a very scarcastic and very harsh post on his Foreign Policy blog bashing Apple and Foxconn's labor practices, joining in with the crowd. What sets Mr. Prestowitz apart is his vitrolic approach and a disregard for any insightful analysis.

I was so disturbed by the negativity in his post that I had to respond. I might have gone a bit overboard, but I ended up citing a proposal originally from Josh, Nilay, and Paul in one of their Vergecasts for a premium-priced, American made iPhone.

I'm hoping to continue the conversation here to dive a bit deeper into the possibilities, and challenges a company like Apple would face in bringing some of it's manufacturing back home to offer consumers a choice. I know there are a lot of significant barriers that make this a logistical and statistical longshot, but could it really be possible?

Below if my direct response to Mr. Prestowitz's post, hopefully I didn't go overboard into troll-dom.

I'm glad the majority of the responses to this post have pointed out the uneducated, vitriolic nonsense that Mr. Prestowitz presents here. I come to ForeignPolicy for thoughtful, educated, discussion and analysis of todays issues, not this poor excuse for a tirade. Apparently that distinction stops with Ricks, Walt, and Hoffman. I am very disappointed in this content and it has seriously damaged my opinion of Foreign Policy as a source for valued information.

To briefly touch on why I am so upset:

Auret van Heerden, a very intelligent and insightful individual, IS A MAN. Yes, he may have a long pony-tail, but he is most definitely male. It took considerable effort to read through the rest of this post once Prestowitz clearly demonstrates that not only does he have no background knowledge of the area he is criticizing, but he didn't even take the 5 seconds to fact check and fill in the gaps of his knowledge on the area. Where did he even pull up Mr. van Heerden's name and all this data then?!? Please, since Prestowitz didn't put forth the effort to adequately educate you throughout these 858 words of rubbish, visit Mr. van Heerden's TED profile and educate yourself (http://www.ted.com/speakers/auret_van_heerden.html) he has some great TED talks about making global labor fair.

Secondly, the root of the issue is the global supply chain and the economics of scale in electronics production. As an electrical engineer starting up a company involving hardware, it is a fact of life that once you get to scale you almost always have to shift production and manufacturing to South Asia. It isn't just Apple, it isn't even just Foxconn, it's the way the global economy, and China's labor laws, works.

It's fine to illustrate this global issue through the lens of Apple, a company who has seen such explosive success that every reader will relate. But it is irresponsible to flatly say that they "have no souls" while not even alluding to the fact that this issue is seen across the industry and Apple is one of the foremost advocates of workers' rights and fair treatment in their contracted facilities.

What else would you have Apple do? Yes, it is unfortunate that Apple was the one funding the FLA audit and report of their own facility, it introduces doubt and ethical questions into the results. But who else would pay for it? The Chinese government? The American government? What is capable of driving change in a country where our standards and expectations of worker treatment are higher than the local laws? You have to give Apple and Foxconn at least some credit for making HUGE strides to improve transparency and take some actions to correct identified issues. You ask in your article if they actually will implement the mitigations they have promised? Then read their Supplier Responsibility Reports (http://www.apple.com/supplierresponsibility/reports.html) and fact-check.

One other fact-check nit-pick, Apple's margins on their iPhones have been estimated to be MUCH higher than 30%. Bernstein Research and UBM have both issued reports citing massive, industry-leading gross profit margins approaching 60% (http://tech.fortune.cnn.com/2010/03/02/what-doth-it-profit-an-iphone/and http://www.bgr.com/2011/10/06/apple-maintains-big-margins-on-iphone-4s-according-to-ubm-analysis/). I don't have an MBA from Wharton, and won't claim to be an economist - would Apple's operating profit margins be only 30% with such a high gross margin? Where did 30% come from? I'm not claiming to be educated or sarcastic with this one, I really don't know.

So instead of just stoking the fire with misinformation and attempting to rally a mob, how about proposing a possible solution after some thoughtful analysis?

So I'm an American consumer. I like Apple's products and I want to buy them. But I don't like the working conditions of the people who make them in China, and I don't want to perpetuate what I see as a problem. What can I do? What can Apple do?

The best idea I have heard from so far is from the editorial staff at The Verge (http://www.theverge.com/), on their weekly podcast featuring Joshua Topolsky Nilay Patel, and Paul Miller. If you're interested in technology-focused news and insightful analysis, please check them out, it's a wonderful team. The idea they tossed around was to give consumers an option - buy an iPhone made in China at the regular price, or buy an iPhone made in the United States at a premium.

This works on multiple levels, but I'd love to hear some criticisms from any MBAs or supply chain management folks to identify the pitfalls. Once you get to a massive scale of production with consumer electronic devices, the largest cost of the unit is by far the components, the human labor involved is a small percentage. Josh and Nilay cite an analyst report (sorry, couldn't find the one they cited) that it would cost approximately $60 more for the consumer to make an iPhone in the United States. If given the option, I would gladly pay an extra $60 to stimulate my local economy and promote higher labor standards. I'm going out on a limb, but I'd also assume that a significant percentage of consumers with the disposable income to spend on an Apple product would be willing to consider that alternative as well.

Now maybe that's just a pipe dream, there are very real reasons for why manufacturing has been outsourced to South Asia and very real barriers to bringing it back. I'll let one of the very well done articles from the New York Time's iEconomy series explain this in better words than I could provide (http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?pagewanted=all). While some of the articles in the iEconomy series showed some misinformation (re: Mike Daisey http://www.thisamericanlife.org/blog/2012/03/retracting-mr-daisey-and-the-apple-factory), this article rings consistently with opinions expressed to me personally by multiple electronics manufacturers and assemblers in the North Carolina area.

I apologize for the rant, but I hope this post has salvaged some value for other readers from the misinformation that Mr. Prestowitz has presented. I don't think Apple is in any position to be blindly protected and supported for their actions, and I believe that they can serve as a valuable lens to analyze and discuss numerous issues in multiple industries. But I do not understand why and how everyone and their mother can attack this single company with such unsupported balderdash.

I understand that this was largely sarcastic, that this is a blog, and that this is an op/ed, but those should never be used as excuses for such vitriolic misinformation. Regardless of your intent Mr. Prestowitz, I was left very disappointed and disturbed by your writing here.

So what do you think? Is an American iPhone a solution? Is it even remotely possible? Would you buy it at a premium?