Dec. 3, 2012 at 3:44 PM ET
When Apple fans get excited about a new product, it’s usually because of a faster processor, better display or cool user interface — not what’s printed on the housing. In the course of taking apart a new 21.5-inch iMac, tech blog iFixit.com noted that the back of the unit was inscribed with the phrase, “Assembled in USA.”
Apple did not respond to multiple requests for comment, but American-assembled iMacs might be a one-time anomaly or they could represent a shift toward a more diverse manufacturing strategy.
One possibility is that assembling some iMacs here could be a response to a supply crunch. In the company’s most recent conference call, Apple CEO Tim Cook said “In terms of general shortages on the iMac, we’ll be constrained for the full quarter in a significant way... I expect the demand to be robust. So we will have a significant shortage there.”
In all likelihood, the iMacs assembled stateside probably aren’t coming from an Apple-owned facility. At The Wall Street Journal’s D: All Things Digital D10 Conference in May, Cook said, “With manufacturing, we looked at it and said that someone else could do it better."
Andy Hargreaves, an analyst at Pacific Crest Securities, expressed skepticism that a third-party vendor could be called in on short notice to assemble the computers. “I doubt it’s a response to supply constraints because I don’t believe they could have ramped a full iMac production line in two months,” he said.
This could be a more fundamental strategy shift.
“I’ve certainly seen less-active outsourcing and a lot of companies talking about having a much more global footprint long-term,” said Tavis McCourt, managing director at Raymond James & Associates.
The changing economics of manufacturing in China, Apple’s growing appetite for labor and the public perception that the company should be a standard-bearer of sorts for American manufacturing could be prompting the company to do more in the United States.
“I think there is, not just at Apple but at a lot of tech companies and their manufacturers, a longer term strategy of diversifying,” McCourt said, pointing out that Foxconn, which manufactures Apple products in China, is looking at developing more facilities in Brazil.
The climbing cost of fuel has made it more expensive to ship items from Asia. The iMac is a bigger, bulkier item than the iPhone, for instance, “so, shipping costs are higher as a percentage of sales,” McCourt said.
“The kind of volumes they’re dealing with means they probably have to diversify production,” said Jason Dedrick, an associate professor in the School of Information Studies at Syracuse University. “It may make sense for some of their products to be made here.”
“And there’s always some political pressure,” he said. “When you look at the brand equity that Apple has and the value of that brand and the need to protect it... they definitely have to be responsive to that.
At the D10 conference in May, Cook addressed the question directly. "There's an intense focus on the final assembly. Could that be done in the U.S.? I sure hope so,” he said. "We will do as many of these things [in America] as we can do.”
The iMac is a good candidate for a couple of reasons. A company can’t just tighten a bolt on an otherwise finished product, declare it assembled domestically and call it a day. The FTC has 40 pages of rules governing when a company can and can’t use that designation, which stipulate, “‘Assembled in USA’ claims should be limited to those instances where the product has undergone its principal assembly in the United States and that assembly is substantial.”
Dedrick said putting together the new iMac, in which the entire machine is housed in a shell behind the screen only 5 millimeters thick at the edges, is probably more difficult than assembling an average desktop computer. “When you think about how picky Apple is about the fit, the feel and the aesthetics — it’s probably a fairly sophisticated assembly process,” he said.
The amount of labor needed to produce Apple’s mobile devices rules out American assembly. “I would doubt if iPhones could be manufactured in the USA. It’s a very high volume business,” said Trip Chowdhry, managing director of equity research at Global Equities Research. “Assembling in the United States for Apple is a hobby, not a business.”