Sunday, January 22, 2012

"Free" Markets in the 21st Century

The New York Times has a very interesting article about the production of Apple products in the People's Republic of China.  Though Apple used to make products in the United States, it has changed its manufacturing approach over the past decade.
Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.” 
I guess "speedy and flexible" is one way to describe that situation.

And, of course, much of what makes the PRC attractive to companies like Apple is less the free market and more government subsidies:
When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day. 
Clearly, another victory for "free trade"!  Yves Smith has more thoughts on this.

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