By Kevin Meyer
The New York Times created a deserved furor last week with their article describing how the U.S. supposedly can't compete with China on manufacturing – specifically the manufacturing of Apple products. As our fellow blogger Mark Graban points out in an excellent summary of that article, we shouldn't want to compete in that manner. The stories of worker abuse and managerial tyranny are appalling. Time magazine, in typical Time "hey please read us too" fashion, jumped on the bandwagon with an article on the human price of success. And Apple CEO Tim Cook tried to deflect the PR carnage with a long email describing all that Apple supposedly does.
Don't get me wrong – I'm a huge fan of Apple… products. I made the leap from PC to Mac a few years ago and haven't looked back. I also own an iPhone and iPad, a 27" Thunderbolt display, use iTunes – the whole kit and kaboodle. Those that haven't used Apple products for more than a few hours simply don't understand – the bloomin' stuff just works – and works like I want it to work – every time all the time. That has value, and is why I happily pay more for Apple products. Just this past weekend I watched a friend spend nearly an hour trying to get his Android phone to do what he wanted it to do. Wow. Really? There's a reason why less than 1% of Apple users leave Apple.
I've heard several people call Tim Cook the world's greatest supply chain executive. Sorry, I've never bought that. Tim Cook executed a traditional "chase cheap labor" supply chain strategy in a great way. But in my book that's not excellence – that's being the shining star of lemmings – the golden sheep if you will. The China factory isn't necessarily a bad thing – one valid reason to have a factory overseas is to be closer to your customers, and there are a lot of potential customers in that part of the world. But as nearly a singular factory serving the whole world? With employees that are abused? Sorry, no dice.
Apple, and Tim Cook, has done some good things. They do audit their supplier's factories more than most companies. They are taking some strong workers rights positions in their industry. They are opening their kimono and exposing more of their dirty laundry.
Apple has $96 billion in the bank – think of what they could do. More than just words and policy statements and such.
They could significantly increase the wages of their employees in China – even if they doubled their wages Apple would still have record profits. But that could actually cause more harm than good. Many workers simply want to earn enough to eventually go back to their home town or help their remote families. Some social destabilization dynamics need to be understood.
However consider this, Mr. Cook:
How about immediately hiring and sending an Apple observer into every plant, perhaps every line in every plant, full time. That way Foxconn wouldn't be able to shift workers from one line to another to hide abuses before audits occurred. How much would that cost? A million or two a year? Put Foxconn on notice that this is not acceptable, with milestones that could transfer manufacturing elsewhere. Difficult? Sure. Ethical business often is.
How about publicly saying (words…) that chasing low cost labor is not a long-term "manufacturing" option and then back it up by sinking a billion or two into developing truly innovative manufacturing methods and systems. Imagine what could happen if the same level of design prowess that was applied to product design was applied to manufacturing design. Perhaps Apple could become the next Toyota – instead of just another cheap labor chaser lemming.
I could go on – and I'm sure there are lots of other ideas out there. The bottom line is that thanks to its success – built on the backs of abused workers – Apple has the unique opportunity to change a global dynamic. But that will take more than just words.
As my friend Shrikant Kalegaonkar tweeted this morning, the world is changing. Voice of the customer now extends beyond products, and now includes the process for making the product. As an Apple customer – and also a shareholder – I care about Apple's financial performance. I want it to do well so it can return value to me in terms of new products and direct shareholder gains. I don't have a problem with wealth being created and distributed commensurate with individual effectiveness. But I also have a conscience, and increasingly I hate battling my conscience when using my Apple products. I bet many Apple customers are feeling the same way. That's dangerous for any company, and especially one like Apple which claims to embrace people.
So imagine. Imagine what would happen if Apple took the high road, then backed up the words with serious, solid, perhaps expensive action. Action that would change a global dynamic, showing that it is possible to be very profitable, very global, and very human-centered. $96 billion gives Apple the ability to do something truly incredible.
In addition to the actual improvement of the global condition, I bet a lot of folks would be impressed with the company – and would be inclined to buy its products.