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Why Making Apple iPhones in America Is So Hard | WSJ - YouTube
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(upbeat music)
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- [Narrator] Which one
of these Apple gadgets
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is the odd one out?
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Did you get it?
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The answer is this 2013 Mac Pro.
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Not because it looks like a trashcan
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but because it's the only one
that was assembled in the USA.
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The others were assembled in China.
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Why is that important?
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- Apple makes their product in China.
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I told Tim Cook, who's a friend
of mine, who I liked a lot,
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"Make your product in the United States.
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"Build those big beautiful plants
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"that go on for miles, it seems."
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- [Narrator] President Trump,
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who is currently in the midst
of a trade war with China,
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wants these Apple products
to be more like this one.
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Actually, he wants them to
be fully made in the USA.
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But Apple, one of the companies
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most exposed to the trade war,
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has one of the largest,
most deeply-integrated
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global supply chains.
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So could Apple ever move
production back to the US?
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- We've taxed China on $300 billion
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worth of goods and products
being sold into our country.
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- [Narrator] Trump's threat
of imposing fresh tariffs
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could drive the cost of Apple's
iPhone XS up by about $40.
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Fortunately for Apple, that
tariff has been postponed
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until December 15th,
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and an earlier round of tariffs
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on circuit boards and computer chips
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has had minimal impact on the company.
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As China and the US keep
fighting over trade,
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Apple is already moving
some of its production
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to avoid tariffs and trade duties,
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like to India, for example,
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where many of Apple's major
suppliers are relocating.
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That's no mean feat.
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The company moved production
out of US years ago,
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building a global supply network.
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It lists suppliers in over 25 countries,
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with some parts made in
China since the early 2000s.
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- [Tim] The way that I view this is
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the vast majority of our products
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are kind of made everywhere.
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Largely I think that will carry the day
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in the future as well.
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- [Narrator] Others before Trump
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have tried to get Apple to
bring jobs back to America.
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President Obama reportedly
asked Steve Jobs
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what it would take to
make iPhones in the US,
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to which Jobs said, "Those
jobs aren't coming back."
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- Will there be an Apple product
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ever made again in the United States?
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- I want there to be.
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- So will there ever say on
the back of an Apple product,
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"Designed in California,
assembled in the United States"?
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- It may.
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- [Narrator] The company has tried before.
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Remember that Mac Pro?
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- It is designed by brilliant
engineers in California
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and assembled here in the USA.
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(audience cheers)
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- [Narrator] A series of debts
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at its main supplier's factory
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raised questions over
working conditions in Asia,
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so the company invested $100 million
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to assemble the Mac Pro in Austin, Texas.
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- The reason the Mac
Pro was made in the US,
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that's because it's a
pretty low-risk product.
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It's not making a ton of these.
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So it could move it here, test,
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and see if it could do US manufacturing.
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And if so, then it could
explore the opportunity
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for other products.
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- [Narrator] But the
plan in Austin had issues
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when it came to locally
sourcing enough components
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for the production of the
Mac Pro, leading to delays.
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So what did the company do?
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They imported some of
the parts from China,
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where manufacturers had capacity
to keep up with demands.
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- How many tool and die makers
do you know in the US now?
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I could call a meeting around
the United States and say,
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"Will every tool and die maker
come to this room tonight?"
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and we wouldn't fill the room.
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In China, you would need several cities.
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- [Narrator] Recently,
production in the Austin plant
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has fizzled out.
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And production of the new Mac Pro--
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- This is the new Mac Pro.
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- [Narrator] Has been
relocated back to China,
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according to people
familiar with the plans.
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- With the new Mac Pro,
it's not hard at all
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to shift production back to China.
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This is Apple's playbook, right?
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They perfected the art of
making things in China.
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So transitioning the Mac Pro
or any other product to China
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makes a lot of sense for them.
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- [Narrator] So what are Apple's choices
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if they want to navigate the tariffs?
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They have three options.
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Given how expensive and
complex moving out is,
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Apple may just decide to stay in China
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and at some point potentially pay tariffs,
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which would likely make Apple
products more expensive.
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Or Apple could move
manufacturing, just not to the US.
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India and Vietnam are
only two of the countries
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that are hoping to lure
Apple and its suppliers.
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Finally, the company could
strike an agreement with Trump.
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- Tim was talking to me about tariffs.
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And one of the things
that he made a good case
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is that Samsung is their
number one competitor
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and Samsung is not paying tariffs
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because they're based in South Korea.
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It's tough for Apple to pay
tariffs if they're competing.
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And I thought he made a
very compelling argument,
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so I'm thinking about it.
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- [Narrator] In July, Cook
said tariff exclusions
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are key for Apple to make
the new Mac Pro in America.
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- [Tim] That's what's
behind the exclusions.
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So we're explaining that and
hope for a positive outcome.
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- [Narrator] We contacted Apple
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following the latest round of tariffs,
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but the company declined
to comment further.
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Apple hasn't recently moved
any of its manufacturing
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back to the US,
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but it says it spent $60 billion
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with 9,000 US suppliers
and companies last year,
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supporting 450,000 jobs.
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They're even building a new
campus in Austin, Texas,
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the same city where that Mac Pro
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is no longer being assembled.
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