Why your iPhone may never be Made in the USA
The 15-minute video begins with upbeat music and a title slide that reads "We Are Manufacturing." It cuts to a shot of the clear blue sky, with three flags ruffling in the breeze. There's the Stars and Stripes, California's Bear Flag and a multicolored Apple logo.
The camera pans toward a high-tech-looking building and a narrator tells us we're in Fremont, California, about an hour's drive from the heart of Silicon Valley.
"People and machines work together to build the highest-quality personal computers in the industry," the narrator says. The screen cycles through images of microchips and boards moving through an assembly line while workers test and inspect them.
"This facility combines state-of-the-art equipment with a skilled workforce to achieve manufacturing excellence."
Eventually, the parts end up inside a Macintosh computer, which is packed, boxed up and put on a truck headed to a store to be sold.
This isn't some totem from an alternative universe where Apple builds the technology we depend on in the US. It's a marketing video that dates back more than three decades -- from the halcyon days when Apple co-founder Steve Jobs was obsessed with showing his company was savvy enough to manufacture its technology in the US, just as well as the powerhouse Japanese consumer electronics giants of the time.
Spoiler: Apple couldn't. The factory was shuttered in 1992, and the company shifted those jobs to Asia.
Today, millions more American manufacturing jobs have shifted overseas, and many companies almost entirely rely on factories that are a boat, plane or long-haul drive away from their customers. But now that may be starting to change.
The COVID-19 pandemic exposed how fragile this whole system is. Many factories in China were forced to shut down as the virus began its spread. But that wasn't all. Even as Chinese factories began to slowly restart manufacturing, companies faced disruptions in shipping, trucking, air travel. And soon enough, shelves in stores around the country started to go empty.
Manufacturing experts and advocates say the last year highlighted how, even in a pinch, American factories haven't been able to fill the gap. It's also partly why in January, President Joe Biden signed an executive order bolstering "Buy American" rules, encouraging the federal government to spend its multitrillion-dollar budget purchasing goods with up to 75% of parts made in the US. Boosting demand for American products, he hopes, will get companies to start reinvesting in manufacturing back home to fill that demand.
Biden isn't alone in trying to solve this problem. Jobs' successor, CEO Tim Cook, pledged in April that Apple will spend $430 billion on US investments that'll add 20,000 jobs in the United States over the next five years to work on 5G wireless, artificial intelligence and silicon chips.
But there's a limit to how far this can go. Even with that multibillion-dollar investment, it's unlikely Apple and Cook will make US manufacturing the next big thing for key Apple products. The iPhone, Apple's top moneymaker, will most likely continue to be assembled at factories in China for many years to come. To make that change, the US would need to spend years investing in new manufacturing technologies while offsetting lower wages and other costs from overseas, experts and advocates say. The United States would also need to rebuild its apprenticeship and education systems to improve the pipeline of American workers for manufacturing jobs, and convince people it's a worthwhile career field to join.
The global supply chain of parts for the products Americans love — mobile phones, cars, computers, refrigerators, silverware, patio furniture — would need to expand back to American shores too.
But perhaps the biggest hurdle to American manufacturing is you and me, our friends and families. We vote with our wallets. And even though "Buy American" polls well, we all seem to keep buying stuff no matter where it comes from.
"Am I willing to do the legwork to find what's made in the US or find what was made locally and purchase that to give my signal to the system?" says Krystyn Van Vliet, a professor, research vice president and associate provost at the Massachusetts Institute of Technology, who looks for ways to bring products designed from MIT's research out into the real world.
She adds, "Consumers signal to manufacturers what consumers want, so we have a responsibility if we want this to change."
Biden's Buy American
Decades ago, car companies, drug manufacturers and some toy makers manufactured their products in the US (except Barbie, which was never made here). But these days, a lot of the clothing you'll find on the rack in your closet likely came at least in part from countries like Vietnam, Bangladesh and Colombia. Mattel's figurines and other toys are produced in China, Indonesia and Mexico, among other places. This morning I shaved using a razor blade made from Chinese steel.
And if you want to track products from the tech industry, that's even harder. As gadgets and gizmos have gotten smaller, more advanced and embedded into our lives, the tech industry has turned into a sprawling worldwide network of suppliers and manufacturers. Minerals extracted from mines in Africa, Australia, South America and the US take trips around the world to be melted, treated, extruded and shaped into microchips, sensors, batteries and even special types of glass.
That all seemed to work well — until the pandemic anyway. Then factory shutdowns in Asia contributed to shortages of cars, various drugs and even garlic (China grows 80% of the world's supply). Experts say America's lack of manufacturing capability meant that we'd struggle, even in a national emergency, to build everything we need. And even Apple, long renowned as one of the most sophisticated supply chain companies in the world, cautioned that parts shortages were limiting how many iPad tablets and Mac computers it could build.
For his part, Biden is betting the federal government's trillions of dollars in buying power will help convince companies to start reinvesting in the states, even after the pandemic threat passes. "We're going to make sure that they buy American and are made in America," Biden said after signing the "Buy American" order, flanked by a sign that featured the presidential seal and said "The Future Will Be Made in America."
On July 28, Biden added to his order by increasing the percentage of parts that need to make up a product for it to be considered "Made in America," from 55% to 60%, and eventually 75%. Speaking at a Mack Trucks manufacturing facility in Pennsylvania, Biden emphasized that the federal government owns about 600,000 cars and that not enough of the parts in the vehicles are made in the US.
Making more products in America is an idea that presidents of both parties have long tried to push. Donald Trump, whose MAGA hat, ties and other swag are made in China, won the presidency in 2016 with the help of manufacturing-heavy states like Pennsylvania, Ohio, Michigan and Wisconsin. He promised to bring American factory jobs back home. Some of those jobs did come back to the US during his four years in office, but at roughly the same rate as during Barack Obama's administration.
Biden is hoping to make more progress than his predecessors by creating a new "Made in America" team within the Office of Management and Budget. In April he tapped Celeste Drake, a longtime labor rights advocate and government liaison at various unions, to act as its first ever director. Drake's role is to make sure the federal government rewards US-based companies, including small businesses, by giving them government contracts.
"It's true that procurement policy alone would not bring the manufacturing sector back to the power that it had 50 years ago, or even 20 years ago," Drake said in an interview with CNET. Instead, one of the Biden administration's primary goals is to rebuild the supply chain to be more reliable. "It really does take a lot of work to identify the critical components," Drake said, "and to figure out how we can incentivize making those critical components here. And where we're also going to work with our allies and our trading partners to make sure that we have that redundancy and resiliency, so that we're not vulnerable to these problems when there is a pandemic, when there's a natural disaster."
To be sure, there are some things we still make in America, even if they aren't iPhones. Wahl makes motors for its premium hair clippers here, and Weber makes its top-rated grills. The Airstream trailer is still made in Ohio, and jazz musician Doc Severinsen buys his instruments from a small company in Massachusetts. You can bake a cake with an American-made KitchenAid stand mixer. Corning makes glass for cars, kitchen appliances and phones out of factories in places like Kentucky. And don't forget the famous Wisconsin Cheesehead foam hat, still made in Milwaukee.
But the truth is that though we do make some premium products domestically, buying completely American-made goods every day isn't easy. A lot of stuff is no longer made in a single town or factory. Instead, it's assembled from parts brought together from around the world. That's especially true of anything with a battery or a microchip in it.
Even the cream for my chapped knuckles says it's "Made in USA with Domestic and Imported Materials."
"This is a problem, but not unsolvable," said Harry Moser, head of the Reshoring Initiative, an advocacy organization whose tagline is "bringing manufacturing back home" and that's supported in part by the Association for Manufacturing Technology.
He agrees with analysts who say there's no one fix to bring "Made in America" back to what it once was. It would take about a decade of concerted investment, he says, to graduate people with the right skills, certificates, training or degrees necessary to build back up American manufacturing capability. It'll also take years to shift supply chains currently focused on bringing parts into and out of Asia.
"As we bring the manufacturing back, we'll put more people into those jobs, and then we'll have all that expertise," Moser says.
Read more: How to shop from local businesses on Amazon
He also supports investing in apprenticeships and training centers, to help people learn skills they need to either enter or change their careers. And he believes the US government needs to carefully impose tariffs and value-added taxes to "take the tilt out of the playing field," referring to the Chinese government's reported subsidies to its industries to keep prices low.
"There is no one thing alone that can get this stuff done," Moser adds.
No easy fix
Bringing back American manufacturing won't be as easy as "Buy American" either, it turns out, because it's hard to define what "American Made" even means.
Cars.com, for example, publishes an annual list of cars whose parts were made in North America, compiled using government labeling programs. But even that's hard to track. "This notion of being 'very American' has dropped over the years," said Kelsey Mays, the site's consumer news editor.
Last year, 121 of the 344 passenger vehicles sold in the US were at least assembled here, the survey found. That includes the Ford Mustang and Jeep Cherokee, assembled in Michigan and Illinois respectively. The top of the list includes Tesla's Model 3 and Model Y sedans, which are assembled in Fremont, not far from Apple's old Mac factory site.
"In a perfect world, you'd buy a product where all the R&D, manufacturing, production and everything came from your neck of the woods," Mays said. But as carmakers have expanded their reach — with cars made to be sold in Chattanooga and Chongqing alike — American manufacturing jobs and the skill-based expertise needed to work them have waned.
What needs to happen next, and hasn't as much in the US, is investment and more innovation in new types of manufacturing. We need to invent things like processes to recycle used materials into new ones, or come up with advanced technology to make the next big thing. "That's a huge workforce growth opportunity for us," said MIT Associate Provost Van Vliet. "It takes technology and it takes investment."
For companies that get it right, there can be a big reward, she said. But right now US companies, schools and families aren't focused on making that happen.
"There are skills that are associated with manufacturing that have left the US," Apple's Cook said in a 2012 interview with NBC. It's not just the cheap labor screwing and gluing and testing parts as they go down a conveyor belt. Experts say the US isn't teaching enough people the complex skills to help build and run these complex manufacturing lines.
"That's sad. How do we get that back?" NBC anchor Brian Williams asked. Cook said it would take "a concerted effort to get them back."
When Obama asked Jobs that question during a dinner with Silicon Valley luminaries a year earlier in 2011, The New York Times reported that Apple's co-founder was less optimistic and more blunt. "Those jobs aren't coming back," Jobs said.
Making it in America
Steven Yde has worked in the consumer products world for three decades, but he keeps coming back to an experience he had about 20 years ago.
At the time, he watched up close as the consumer products company he worked for was bought, and its factory in Manitowoc, Wisconsin, was shuttered. His experience was far from unique; about half of the computer and electronic products manufacturing jobs in the US disappeared between 2000 and 2005, according to data compiled by the Brookings Institution. By 2010, more than 5 million manufacturing jobs of all stripes had disappeared. Many of them were shifted to China or Mexico, where Brookings said wages were reportedly as much as 80% lower than in the US.
"It was just devastating and a horrible thing to be involved with," Yde remembered. "I always felt our competitive advantage was the fact that we could build a product right here in the United States."
Yde's experience came at a time when Chinese manufacturing was booming too. Western companies learned that in the years since President Richard Nixon visited the country in 1972, China was transforming into an advanced manufacturing powerhouse. It wasn't just cheap labor, which experts say helps offset costs that come with shipping goods across oceans and continents. In a country of more than a billion people, employers could, quickly and with little effort, hire thousands willing to work an assembly line.
"The movement to Asian suppliers accelerated as competition among them ramped up too," said Shane Rau, an analyst at IDC. As a result, Asian suppliers "got even better at what they did," pushing US manufacturers even further behind.
The demand meant that by 2005, China was pumping out at least 200,000 engineers a year, according to reporting from the Wall Street Journal, Duke University and others. The US, meanwhile, was graduating less than half that many.
In 2004, Yde started a job at Wahl Clipper Corporation, a family-owned company in Sterling, Illinois, that makes premium hair clippers. Unlike its Rust Belt colleagues, Wahl had resisted outsourcing all its manufacturing jobs overseas. Instead, it chose to set up factories in places like Vietnam, Hungary and China, to serve customers in those areas. Clippers for US customers were still largely made in Sterling.
Yde calls this approach "regional manufacturing."
On his first day, Yde got called down to the boss' office, and was told he had two responsibilities in his new job. He needed to increase sales and profit, of course, and to keep jobs at home. "Those are the best words I've heard from anyone's mouth since I've been in business," he remembers telling his boss.
Now, as head of consumer products marketing at Wahl, he's a vocal advocate for American manufacturing. Yde argues that many profit-obsessed public companies need to reinvest in their communities with manufacturing jobs, which typically pay more than service sector work. He said internal surveys by Wahl also indicate that younger generations want to "buy local," among other community-focused trends. Pew Research found that climate change and environmental issues are top concerns for millennials and Gen Z, too. That could be a threat to China's image, considering its historically poor record on pollution at a time when US emissions are in decline. All that could be a strong incentive for a company that takes the leap to make products back home.
"If your motivation is always going to be how much profit I can make, you can never change the system," Yde said. "There are benefits as a marketer to say, 'Made in the USA.'"
But the parts inside Wahl's products tell a more complex story. Yde says there aren't US companies building the types of transformers, motors, controller boards and batteries needed to power a cordless rechargeable trimmer, and so those are made overseas and then imported to the US.
"I wish someone would come back and compete," he said. Even if the costs pushed up the $15 starting price for his clippers, Wahl's premium as a brand would convince people anyway. "But you can't find them, they don't exist."
Part of what's holding back American manufacturing is cultural. The Boston Consulting Group found in a 2013 survey that over 80% of Americans said they were willing to pay more for American-made products, 93% of whom say it's because they want to protect jobs. The average respondent also said they were willing to pay up to 60% more for US-made wooden baby toys, for example, and 19% more for US-made gas ranges.
But fast-forward nearly a decade, and we find that commitment waning. A Reuters-Ipsos poll published in March found 69% of Americans said it's at least somewhat important for an item to be US-made. But less than half would be willing to pay more than a 10% premium.
Some advocates say it's on us to vote for American companies with our wallets. "We as consumers have to decide on our own, and make it our patriotic duty, to spend on American products to save American jobs," said Don Buckner, head of MadeInAmerica.com, which runs a website and trade show focused on connecting manufacturers, suppliers and retailers. "If the consumer wants American-made products, the retailers will buy American made products."
Reuters said its survey results haven't changed much in the four years since the poll began, around the same time Trump won the 2016 presidential election. And even with the supposed groundswell of demand from survey respondents, the US Bureau of Labor Statistics reported that the manufacturing sector saw no outsized improvements in jobs or domestic output during Trump's term. That was despite his often-touted cuts to the corporate tax rate, regulation rollbacks and increased tariffs on Chinese goods.
The pandemic does appear to have changed things for at least a few companies as people have ramped up their online shopping. Greg Owens, head of Sherrill Manufacturing, said sales for his company and its US-made Liberty Tabletop flatware have boomed during the pandemic.
"Our business doubled" to $10 million, he said, from people seeking out nicer kitchenware to eat on because they were cooking and eating at home more.
Like Wahl's, Sherrill's products are premium. But Owens said he's able to keep prices competitive by avoiding retailers that take a cut of the sale. Instead, he offers his and partner products on his website, as well as through Amazon. As a result, he can compete with big box stores like Target and Walmart, even though he employs 70 people in his New York factory and sources steel for his flatware from Pennsylvania.
"Companies like ours are starting to use social media to reach people in a way that makes people identify and fall in love with your brand," he said. Some people are responding to his environmental message too, contrasting Sherrill's products with the cheaper stuff you may need to replace in a few years. "We say, 'Buy it once and it'll last a lifetime.'"
The American manufacturing sector has enjoyed a spate of good news in the last few years. Manufacturing jobs have been steadily returning since the end of 2009, Obama's first year as president. Output, which grew steadily alongside, ended up rising about 50% over that time too, to more than $6 trillion, according to data from the Federal Reserve Bank of St. Louis and the US census.
Still, the manufacturing sector's size is nowhere near its peak of 19.5 million jobs in 1979. The industry was hardest hit in the decade after the year 2000, losing more than 5 million jobs, according to US Bureau of Labor Statistics surveys. American manufacturing sunk to 11.4 million jobs during the great recession and again during the coronavirus pandemic, marking the lowest totals since before World War II.
Now the pandemic, and the problems with the global supply chain it highlighted, may help to convince companies to invest again.
Three of the world's biggest chipmakers — Intel, TSMC and Samsung — have committed a total of about $42 billion in new US-based chip manufacturing plants in Arizona and Texas, with rumors swirling that the number could grow even more.
Toolmaker Stanley Black & Decker said it's in the process of opening a new $90 million plant in Texas that uses a mix of automation and skilled jobs to keep production costs in line with those from China. The process began before the pandemic, when Black & Decker decided it would invest in manufacturing outside China as a way to protect its supply chains from potential disruptions. A year and a half in, the company is starting to open its new factories in the US.
"We think of manufacturing as a major advantage," said Sudhi Bangalore, Stanley Black & Decker's technology chief and head of smart manufacturing. The company is plowing research and development funds into automation, robots that assist with the manufacturing process, and 3D-printing. Ultimately, Black & Decker hopes 60% of the products it sells in North America will be made here, up from about 45% today, Bangalore said.
But corporate investment in American plants and people buying American-made products goes only so far, he added. People will also need to start encouraging their children to work in the field, too. And those already working in the industry will likely need to become accustomed to retraining, applying skills from one type of job to another.
"You have to believe that there's something about exciting the new generation of people into manufacturing," Bangalore added. "You have to show the moms and dads this can be an exciting place to be."
Black & Decker's work is starting to get noticed. Consulting firm PwC said the toolmaker was one of two companies it identified among 1,000 publicly held companies that spent their research and development dollars more efficiently than their industry peers. The other one was Apple.
For its part, the iPhone maker's $430 billion commitment will be in fields like chipmaking and 5G wireless technology. One of those investments is through its Advanced Manufacturing Fund, which awarded $450 million to Corning, the Kentucky-based glass maker. (Corning recently helped Apple produce its scratch resistant ceramic shield for the iPhone 12.)
Apple is also making Mac computers in the US again. In 2019, just before the pandemic, Apple announced that its $5,999 Mac Pro computer would be built in a facility in Austin, Texas, expanding on efforts it began in 2013. Touting its ability to source components from "manufacturers and suppliers across Arizona, Maine, New Mexico, New York, Oregon, Pennsylvania, Texas and Vermont," the company said at the time that "the value of American-made components in the new Mac Pro is 2.5 times greater than in Apple's previous-generation Mac Pro."
Apple's Cook took then-President Trump on a tour of the facility before its newest product officially went on sale that December. Though Apple declined to say what the two men discussed, it's a good bet the narrator from that old Macintosh video would've been comfortably at home describing what the two men saw as they weaved across the factory floor, meeting workers and viewing machinery.
Whatever Cook said, Trump came away impressed. "I would always talk about Apple, that I want to see Apple building plants in the United States," Trump said. "And that's what's happening."
Yes, though it's small. Mac computers accounted for just 10% of Apple's annual sales last year, and the powerful Mac Pro, designed for professional graphics, audio and video editing, isn't among its fastest-selling computers when measured against consumer demand.
Cook and Trump also posed with an engraved metal plate similar to the ones on the back of every new Mac Pro computer coming out of the facility. It said, "Designed by Apple in California. Assembled in USA."