"Apple Inc. is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes, according to people familiar with the situation....
The screens are far more difficult to produce than OLED displays.... The ambitious undertaking is the latest example of Apple bringing the design of key components in-house. The company has designed chips powering its mobile devices for several years....
So for several
years, years they've been doing more in-house
design. But the news is about manufacturing. How long has that been happening in-house?
The 62,000-square-foot manufacturing facility, the first of its kind for Apple, is located on an otherwise unremarkable street in Santa Clara, California... The facility also has a special area for the intricate process of producing LEDs. Another facility nearby houses technology that handles so-called LED transfers: the process of placing individual pixels into a MicroLED screen....
The complexity of building a screen manufacturing facility meant it took Apple several months to get the California plant operational. Only in recent months have Apple engineers grown confident in their ability to eventually replace screens from Samsung and other suppliers.
A year ago, Forbes ran a piece titled:
"Are Donald Trump's Calls To Bring Manufacturing Back To The US Out Of Touch?"
I don’t know if it’s right to call that “out of touch.” It might simply be that Trump doesn’t really understand why manufacturing jobs have declined. It may be that he understands just fine but he’s just saying what his audience wants to hear. Either way, he is either ignoring or denying the reality of rising U.S. manufacturing output. He’s focusing on raw numbers of jobs, and seems to be assuming that trade deals are the reason those jobs have declined, and seems also to be assuming that better deals or different deals or no deals at all would bring jobs back, and not just bring them back, but bring them back to the exact same places where they were lost over the past several decades.
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48 comments:
Tim Cook will make it clear this has nothing to do with Trump.
His Progressive credentials depend on it.
CNN will run his statements non-stop to keep people from seeing any growth in jobs, wages, or the economy as anything other than inevitable and certainly not due to Trump's actions.
Which is why the possibility of NK surrendering its nukes has them scared to death. Much harder to spin that one.
Given the way things are going with China it's probably not such a bad idea to do more domestically. But in this case I can't imagine we're talking about this heralding some huge new boom in domestic manufacturing from Apple. It's probably more likely to remain limited and smaller scale in the near term and massively roboticized in the far term, so not a ton of new jobs or anything.
The biggest problem with manufacturing jobs, my clients have been telling me for year, is finding people to fill them.
Unskilled people are difficult, skilled people are almost impossible. One pharma manufacturing client in NYC was looking for some mechanics. They put out a call and got 250 resumes. Only 8 met the basic qualifications and were interviewed. None were even made an offer. (Unsatisfactory, in other words) Giddings & Lewis in Fond Du Lac makes high end machine tools for making other machines. They've been around for 130 years or so. 80% of applicants fail drug tests.
A machine builder client in the Chicago area has had an opening for 10 shop people for more than 10 years. No special qualifications. They need to know a wrench from a screwdriver and how to show up on time. $40m to start and can go to $100m in 5 years if they are good and can learn. Can't find applicants.
I've got a million stories like this.
Everybody wants their kids to go to college and major in English of (fill in the blank) Studies or some such. Welcome to a career at Starbucks.
WITC graduates, from the Packaging Machine Tech program have their pick of jobs starting at $100m (probably more now). And that's a relatively inexpensive 2 year degree.
There have been damn few years in the past 75 where manufacturing output per capita in the US has not gone up. It would go up more if people were willing to work in the field.
John Henry
Hard to believe Apple started something like this and has moved it into production in the short time since Trump was elected. Although it is not inconsistent with some Trump themes.
We kid ourselves when we think we can keep design here and farm out manufacturing; they are tightly related. The designers have to be intimately familiar with and involved in the fabrication end, or they lose touch with the physical constraints that bound the firm's ability to produce.
Plus, it sounds like Apple is trying to steal a march on the rest of the industry's display tech, and you don't do that by letting someone else do the fab.
And that is all before even raising the questions about China.
"The president is very smart," Jobs told Isaacson, "but he kept explaining to us reasons why things can't get done. It infuriates me."
Jobs continued to press the engineering angle at the dinner, saying that at the time Apple employed 700,000 factory workers in China, plus 30,000 engineers to support those workers.
It perplexed Jobs. Why couldn't those engineers be American?
There wasn't a giant education barrier. They didn't need to be Ph.D.s. They could be educated in trade schools.
If those engineers were Stateside, Jobs argued, then the factories could be, too.
"If you could educate these engineers," he said, "then we could move more manufacturing plants here."
http://www.businessinsider.com/when-steves-jobs-and-barack-obama-dined-2015-1
Martin said
The designers have to be intimately familiar with and involved in the fabrication end, or they lose touch with the physical constraints that bound the firm's ability to produce.
Well, they should be intimately familiar but far too often they are not. This isn't just because of distance. I see the problem where the designers work in the same building as manufacturing. Distance does tend to make it worse, though.
Here's a video I did for a client on this problem in the packaging industry.
https://www.fraingroup.com/videos/package-design-changeover-john-henry/
John Henry
I know that Apple has been interested in developing the ability to manufacture its screens in-house for several years now. For most of its mobile devices, the screens are the limiting factor in terms of size, weight, and capability. Apple doesn't want to leave itself at the mercy of competitors for the development of such a critical component.
The reason I know Apple has been interested in developing this capacity is that it was working with a local Arizona company to develop a process for creating synthetic sapphire crystals that would be large enough to, when sliced, be used as the surface for Apple's screens. Unfortunately, that development program didn't pan out. The crystals produced were large enough, but had visual defects.
We kid ourselves when we think we can keep design here and farm out manufacturing; they are tightly related.
I think manufacturing eventually drives design and innovation. Manufacturing is the base and pulls in the rest.
The more manufacturing is robotized the less significant is the cost of labor.
Apple is doing the right thing.
Right for America and right for Apple shareholders.
Wonder how the mega Apple screen plant will affect Foxconn and the sizable investment Wisconsinites are making in that project.
Apple supplier Foxconn unveils plan to build a $10 billion LCD factory in Wisconsin
https://www.theverge.com/2017/7/26/16034394/apple-iphone-manufacturing-foxconn-wisconsin-plant-donald-trump
And I will bet money that when it comes time to mass produce the screens, Apple doesn't do it here and doesn't even own the factory outright.
Jobs continued to press the engineering angle at the dinner, saying that at the time Apple employed 700,000 factory workers in China, plus 30,000 engineers to support those workers.
Jobs was lying. Apple employs almost no one in China. The manufacturing of Apple products is contracted out.
Don't we need "Technology Neutrality" so that nobody can deny their competitors new technology? What's with this?
I think this is for the test amounts to try and reduce the risk of leaks/corporate espionage. Because I think Apple lives in a world where that's a real concern.
I've got a million stories like this.
These million stories are bullshit. If the jobs existed (10 jobs open for 10 years!) and were actually vital to the business, you would be willing to train people.
It's probably too early to assess a correlation between tariffs and compensation for environmental, labor, and monetary arbitrage.
Engineers are good at understanding the properties of materials, and what an effective end product should look like, and how it should work.
What they’re not always so good at is understanding the manufacturing difficulties of turning an unfinished product into a finished product, and the trade off between spending a lot of money to get exactly what they want versus minor modifications which can sometimes cut the final cost a lot.
Blogger James Graham said...
The more manufacturing is robotized the less significant is the cost of labor.
Not to pick on you, James, but this emphasis on robots drives me nuts.
Yes, robots are becoming more capable, practical and cheaper. Epson now has a really good one for under $10m. Also friendlier. Look up "Collaborative robot"
What I think you and many others really mean is not so much robots as automation. Robots are one automation tool or technique but not all that significant a one compared to all the other automation going on in manufacturing.
And that has been going on in manufacturing for a couple centuries now.
Not just in manufacturing. Look how many secretaries and typists there used to be. Now it is pretty much obsolete as a job. We all do it ourselves
Your general point is well taken.
Sorry for being pedantic.
Or maybe not.
John Henry
Blogger Freder Frederson said...
These million stories are bullshit. If the jobs existed (10 jobs open for 10 years!) and were actually vital to the business, you would be willing to train people.
Did you read my note, Freder? Did you read the part where I said:
No special qualifications. They need to know a wrench from a screwdriver and how to show up on time. $40m to start and can go to $100m in 5 years if they are good and can learn. Can't find applicants.
As I said, they do train. I don't think they even require a HS diploma. They do require a very basic mechanical or electrical ability and interest. The kind of ability that many of us acquired tinkering with things or taking shop classes. Interest is probably more a priority than ability. One can learn ability.
Nothing more. For $40m/yr to start.
They have hired people over the 10-12 years I've been working with them. They've expanded quite a bit. But they are turning away business because they can't find more people. If 10 people with the basic skills showed up tomorrow, they could start Monday. At about $20/hr plus benefits. They would have to pass a drug test, though.
What about you, Freder? Interested in earning a good living? Do you have what it takes for this job? What about your kids? How would you feel about them taking this kind of job out of high school instead of going to college? They could have $50-100m in the bank by age 26 instead of $50-100m in debt.
(It's kind of a rhetorical question. I do not mean to drag your kids into this discussion.)
John Henry
It would go up more if people were willing to work in the field.
My wife's grandson works for his uncle building and restoring vintage Porsches.
This is their business.
They hire machinists but not too experienced as they are hard to train.
Regular body and fender men they cannot teach to use their equipment.
Some of their cars sell for $1 million. We went through their shop a year ago and they had about 40 Porsches in the works.
They have moved to a larger shop since.
Jerry Seinfeld is a client along with Jay Leno.
His father, my stepson, builds custom houses in Oregon. Two his kids work for him. All are doing well and none have college degrees.
They do require a very basic mechanical or electrical ability and interest. The kind of ability that many of us acquired tinkering with things or taking shop classes. Interest is probably more a priority than ability. One can learn ability.
Send a guy down any week day to local pick-your-part auto wreckers. Gonna be a hundred guys a day coming through with mechanical skills and a toolbox who like doing stuff
"Freder Frederson said...
Jobs continued to press the engineering angle at the dinner, saying that at the time Apple employed 700,000 factory workers in China, plus 30,000 engineers to support those workers.
Jobs was lying. Apple employs almost no one in China. The manufacturing of Apple products is contracted out."
Jobs was lying? That was not a quote, and what the writer and or Jobs meant I'm sure is that Apple keeps 700K factory workers employed in China.
"The biggest problem with manufacturing jobs, my clients have been telling me for year, is finding people to fill them. "
Our community and our local manufacturers began working on this problem several years ago. We have a very large chemical company employing around 10,000 people locally, and a large paper mill, a munitions plant, plus lots of small manufacturing in the region. The chemical plant and paper mill faced the problem of replacing 2,000 - 3,000 highly skilled workers over a 5-10 year period as baby boomers retire. These are really good jobs - chemical plant operators, maintenance mechanics, machinists, electricians, instrument technicians, laboratory analysts, etc. So our local industries, local community college, and city/county/state governments got together to create the Regional Center for Advanced Manufacturing to teach these skills to graduates of local high schools and returning veterans. This was to ensure there was a feed of new workers to replace those retiring plus we are trying to retain out graduates in this small town, who tend to leave for college and the big city never to return. Two years of training is offered completely free by the community college usually leading to an AS degree or skills certificate and potential employment in a secure, well-paying job with great benefits and no student debt. It has been very successful. You can read about it here plus view some videos about the students. The center was recently expanded and also includes some great summer programs for students in middle and high schools.
I think other communities have done the same thing but since we are in a very deep red part of Deplorableland it doesn't get much coverage in the media. Many communities with large manufacturing bases like we have are not unaware of the problem. This is the kind of effort Mike Rowe has been pushing.
I can understand why companies in the U.S. can't find qualified applicants. Males, in particular, have been consistently bashed for "maleness" for several decades while we've elevated identity politics and victimization. Young people-- not all, but many -- are basically wimps. The education system is in the forefront of the decline and too often certain behaviors get you diagnosed and prescribed.
I have been betting for a while that autonomous cars do not take off in the next ten years, despite the enormous advances in computer vision thanks to deep learning algorithms. That bet hasn't been looking so good recently. It will be interesting to see where things progress from here.
Uber Halts Autonomous-Car Testing After Fatal Arizona Crash
My bet is that autonomous cars can never deal adequately with the irrational psychology of humans, no matter how good the computer vision gets.
Yes RCAM has a national reputation and is a good example of public/private funding that needs duplication in other manufacturing centers--there are manufacturing jobs, but training, which is available here in Wisconsin at our technical colleges needs help, along with the problem of so many failing drug tests creates these shortages.
What drugs do they test for, that so many applicants fail ?
Returning veterans will be a good source for those jobs as long as we can keep people like Diane Feinstein from labeling them all as crazy.
Am I the only one who's getting an intermittent Blogger error when trying to post ?
I know it's tempting these days to view everything through orange-colored glasses, but this is an R&D prototype facility employing 300 engineers and not an actual production facility. One of the reasons Apple is so fabulously profitable is that they have grasped that paying production workers $2 per hour is cheaper than paying them $20 per hour. Donald Trump may be a miracle worker, but he's not going to change that math.
John Henry,
I hate to call out a great commenter but I believe you have fallen prey to the "We just can't find the workers!" crap I've been seeing for the last decade or so. And while I strongly support training and education in trades and manufacturing your cites of $100,000.00 starting salaries for 2-year packaging trade school graduates is not backed up by the WITC (it seems to be the one you reference) website which lists potential starting salaries of 23k to 57k and longer term salaries of 45k to 82k.
That's good money for a graduate of a 2-year trade school but the 100k figure is not the norm.
For what it's worth, I was a Tool and Die maker for most of my working life.
"Am I the only one who's getting an intermittent Blogger error when trying to post ?"
I was getting it over and over again, then switched to a different browser (from Safari to Chrome) and it worked right away.
And it happened again with this post, with the same solution... not working... then working.
Trump or no Trump, Apple is highly vulnerable to conflict, violent or otherwise, in the Far East, especially involving China. They have been looking at how to minimize their risk for a while.
Here's the rub:
"Apple Inc. is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes ... Ultimately, Apple will likely outsource production of its new screen technology to minimize the risk of hurting its bottom line with manufacturing snafus. The California facility is too small for mass-production, but the company wants to keep the proprietary technology away from its partners as long as possible ..."
In other words, the facility in California is for research and testing, and won't get the job of building these new screens for full-scale production. But it could get the next research and testing job.
The U.S. still excels at specialty manufacturing, making small to moderate numbers of niche items. But for manufacturing an item in large numbers, the economies of scale favor China. That's not going to change until wages in China and the countries that compete with China go up relative to U.S. wages, as did happen in Japan over a 30 to 40 year period. We're probably at year 10 or 15 with China.
Ditto me on the blogger error. I cleared caches from the develop menu. Then could post. Do not know if that was cause-effect.
“I was getting it over and over again, then switched to a different browser (from Safari to Chrome) and it worked right away.”
Having it fairly consistently with a Chrome here on my iPad.
The problem with screen production is the huge costs.
Samsung is the major supplier to Apple, and is also a competitor.
If you had a few more East Asian commenters we could get this problem fixed pronto. Does Buwaya count?
Getting blogger error also. After typing post, I save it to clipboard. If error occurs, hit back button, paste comment, then it goes through.
tcrosse asked the right question: "what drugs are they testing for?"
If its opiods, cocaine, heroin, well, okay. If they're not hiring because of cannabis, that's just nutso. Do they test for and reject because of alcohol? Cannabis is farrrrrrr less harmful than booze.
"The biggest problem with manufacturing jobs, my clients have been telling me for year, is finding people to fill them. "
The more we build a world where workers have to relocate every time they take a new job, the more you're going to have to actually offer a better wage if you want people to move to where your job is.
Or, of course, hire immigrants, who will work for less. Which seems to be the point.
Ours has become a culture where severance packages have disappeared, relocation bonuses have shrunk or disappeared, and jobs now require more relocation than ever before. Every time a layoff destroys a community, there are ripple effects.
For instance, the entire town faces the reality that their house is now worthless but if they hand it back to the mortgage company, they won't have the credit to get decent housing. And it isn't just that they have to keep paying the mortgage: they need to pay for security (to ward off squatters), and for air conditioning (or else it will get moldy inside). And so on.
Meanwhile, the new job will pay 2/3 of what the old job paid, but a lot of people actually run up against the reality that the new job would not cover their costs, so they have to turn the job down.
And anyone who ever plays this game more than once learns that it's the companies that nickel-and-dime you that you want to avoid.
There's multiple problems in finding new workers, especially in minority heavy areas. One of the problems lies in HR departments and antidiscrimination laws. Your new hires have to look like the surrounding area. I remember a case a few years back, I believe in Chicago, where an employer with an almost all minority work force was fined for discrimination. His work force was almost all Hispanic in a largely black area. If there were openings, management would ask existing good workers if they could recommend anyone for the job. Can't do that.
I'm willing to bet that any manufacturing or industrial plant could fill all trainee positions if they could hire based on existing employee referrals.
Even in rural areas some of the mentioned problems exist. I was talking to someone recently whose nephews quit their new 40 hour a week regular job when they discovered they'd have to show up to work on opening day of deer season and fishing season and other holidays like them. There's enough day jobs available in the area they can eke out a living and take off whenever they want. No benefits, no retirement, often under the table, but it keeps them into the lifestyle they want.
Rabel,
WITC has a number of programs including Motorcycle mechanic, web designer, robotics, welding, outboard engines and more. I don't know much about any of those programs other than that, when I toured the facility quickly, they seemed to be very well equipped.
The program I am familiar with, is called, I think, Automated Packaging Machine Technician. I've worked with them for 10 years or so. I've visited a couple times and guest lectured. They use my textbook and the director and I discussed doing some independent projects together when he retires.
The director is the one who told me $100m. That was for field service technicians for packaging machine companies. The ones who go out and commission, upgrade, fix, train and so on. Based on what I know of what field service technicians make, it is not unreasonable. If they want a job in a manufacturing plant, they will start at $40-50m.
One advantage that they have is that Bosch has one of their main facilities literally next door. They build bagging machines, robots, case packers and other stuff as well as integrate complete packaging lines. (I've spent time in that plant too. Very impressive)
Many of the students in the packaging program have jobs at Bosch on second shift and summers. Not interns, regular, albeit part time, employees probably making $15/hr or so. So when they graduate from WITC, they not only have a really great education, they have real work experience.
So I believe the $100m to start.
WITC grads get recruited from all over the country. It is a very specialized program and the only one in the US. There are a few others that cover similar ground, industrial mechanics, but none specifically for packaging machinery.
UW-Stout in Menomenee also has one of the leading schools of packaging but it is a 4 year university degree focusing more on package design. They use by textbook and I've lectured there too. One of these days I've going to teach there if they ever figure out how to offer online education.
John Henry
Mountain man,
Good on your community for doing this kind of program.
There are a number of similar programs where local community colleges and, in some cases even high schools, are working with local industry to get people the skills they need for the industries.
One of the things I think we need more of is formal apprenticeship programs. They are hard to do without running afoul of various laws and regulations
John Henry
Re the display problem, I have had that a number of times today mainly when I tried to post a comment. Sometimes I needed to try 4-5 times to get it to work.
I do not use Chrome for the same reason I do not allow anyone to use Facebook on my devices so don't know if it would have solved the problem.
I did have the problem this afternoon once just trying to refresh the site. On my phone, using Android browser.
For those who do like Chrome Comodo Dragon is based on the Chrome source code but does not track you.
Like Chrome, it doesn't let you download Youtube videos or do some other things so I tend not to use it very much. Seems OK for what it is.
John Henry
Beloved Commenter AReasonableMan said...
"My bet is that autonomous cars can never deal adequately with the irrational psychology of humans, no matter how good the computer vision gets."
The larger problem is that you cannot sue an autonomous vehicle, but you can sue the company that built it. As Uber is about to find out.
Red,
Agree about alcohol being worse than MJ. OTOH, since alcohol is legal you can't refuse to hire someone because they test positive for alcohol. At least as long as they are sober on the job.
MJ is still illegal in all states at the federal level. There are some serious liability issues for an employer hiring someone who uses an illegal drug.
John Henry
It's the low-skilled manufacturing jobs we need back, the ones in the labor intensive sectors of production. But to get them we will need a wage-price equalization tax or its equivalent. Otherwise companies have no choice but to move operations off shore if they want to survive. If Apple is an exception it will only be because they have a monopoly on their hardware and software.
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