Saturday, January 28, 2012

The Shine Has Gone Off Apple

Bottom line (noun) 1. the last line of a financial statement, used for showing net profit or loss; the deciding or crucial factor; the 
ultimate result     --Random House Dictionary

Two hundred and thirty thousand employees: that’s how many folks work at one of the world’s largest manufacturing facilities, in Shenzhen, China. They make that most ubiquitous and loved of consumer products: the Apple iPhone. They work at an astonishing rate, churning out some 10,000 phones per day, in a plant that runs 24 hours a day, 365 days a year, without stopping. In fact, though Apple Computer still employs 43,000 people in the United States, the vast number of their employees now work overseas in places like China.  More than 700,000 Apple employees and contractors produce millions of computers, iPhones, iPads, and iTouches every year.  In a recent New York Times article about the steep loss of manufacturing jobs in the United States, especially during the current recession, one reported high level conversation shocked me.  It made me think about just what the “bottom line” is for “All American” companies like Apple Computer. 

The chat took place between President Obama and the late Apple CEO Steve Jobs at a White House dinner.   Obama: “What would it take to make iPhones in the United States? Why can’t that work come home?"  Jobs: “Those jobs aren’t coming back.”   The article goes on to explain the main reason Apple makes most of their products off shore: low labor costs and high corporate profits. That’s the bottom line. 

So the iPhone millions of us hold in our hands was made by a 12 hour shift worker who earns $17 a day and lives in a company provided dormitory. According to the article, if Apple chose to make iPhones here in America, the price for the phone would go up by about $65, apparently not an option for a company which boasted per American employee profits of some $400,000 last year, making it a more profitable company than Google, Goldman Sachs or Exxon Mobil.  As one unnamed current Apple Executive was quoted as saying, “We sell iPhones in over a hundred countries. We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” 
Now the consumer part of me gets this equation and adherence to the bottom line.  I want what I want, the best, and I also want to pay as little for it as possible, right?  If that means it is made in China, under the protective umbrella of an oppressive autocratic regime, by employees who work in conditions I’d never stomach, who get paid less in a day than I spend on coffee in a week, that’s alright—isn’t it? I want the American based companies I hold stock in, like Apple, which someday will fund my pension, to maximize their return on investment and pump up the stock price. If the best way to do that is to export jobs and close factories in the United States, I should be ok with that, yes?   Globalization is the economic rule which rules now, correct? 

But the American part of me, the human part of me, whose heart breaks for the unemployed and laid off factory folks, who laments the extinction of well paying blue collar manufacturing jobs in the United States? I am deeply troubled by the actions of Apple and a burgeoning list of so-called “American” companies that seem to be American in name only.  Apple may have its headquarters in the good old US of A. and sell itself as American as apple pie (excuse the clich√© and pun) but the truth is otherwise. 

Apple’s bottom line is record profits, soaring stock prices and a new CEO, Tim Cook, whose pay for 2011 was $378 million in salary and stock grants.  All which trumps any notion that Apple may also have a responsibility, even a duty, as a U.S. company to make stuff here too.  To employ more Americans and not just the cheapest worker.  To even charge just a little more for their oh so worshipped products by making them domestically and in doing so sacrifice just a bit of their bottom line. 

Apple’s bottom line ignores the truth that Apple is Apple because it was born in a country whose people and educational resources and entrepreneurial spirit and freedoms directly led to its birth.  Not a lot of Apple Computers or General Motors or Intel type companies born in China. America still has an amazingly free and wide open enterprise system which, more than almost any other place on the earth, provides the environment to start a company from scratch and then make something that the world needs and will buy.    

Apple is not alone in this corporate hypocrisy.  General Electric, whose DNA goes back to America’s most famous inventor Thomas Edison, paid not one dime in corporate taxes in 2010, not a penny.  Nothing in 2009 either.  But in 2010 it made $14.2 billion in profits. Is that really fair? Is that really American?  Ironically GE CEO Jeffrey Immelt serves as the chairperson of President Obama’s Council on Jobs and Competitiveness.  Now I’m a GE stockholder but really: zero in taxes?  As the federal debt spirals and the economy sputters, the iconic American industrial giant GE which “brings good things to life” apparently doesn’t include tax responsibility in that tag line.  Must not fit into the bottom line.

So in 2012 which bottom line finally matters the most in America? Profits or people?  Productivity or just a little company compassion? Record corporate revenues or responsible corporate citizenship?   

Yes, the iPhone is amazing.  But for me, the shine has gone off that Apple.


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