When Did Illiteracy Become a Skill?

Making its way around the blogosphere is this New York Times’ article detailing the migration of Apple from the US to China.

According to the piece, Americans, Apple asserts, can’t match “the flexibility, diligence and industrial skills of foreign workers.” “We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The US has stopped producing people with the skills we need.”

With all due respect to the late Mr. Jobs, this is complete bull.

When all manufacturing equipment needs to be icon-based because the migrant workers who run it can’t read, that hardly qualifies as “flexible.” “Dumbed-down” is more like it. Since when is illiteracy a skill?

American engineering prowess is second to none. It’s difficult to find even a single feature — voice calling, GPS, web browsing, MP3 — on an iPhone that wasn’t invented at least in part in the US. The ideas conceived daily by our military contractors are matched only by their amazing ability to turn those ideas into reality. We have developed, for example, a weapon system that begins as an 18″ inch tube, but when launched, “sprouts” rigid wings like a hawk and rises thousands of feet, where it is invisible to detection. That device can then zero in on a designated target miles away, and once locked on, will thrust itself toward its “prey” — even if the latter is moving — and plant its payload — a bomb — in its target’s chest.

By contrast, what exactly is it Steve Jobs’ conceived — the rectangle?

Another current Apple executive reportedly said, “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” Non sequitur aside, what that arrogant remark ignores, of course, is that without American laws, Apple likely would no longer even exist. Indeed, Bill Gates provided then-struggling Apple with $150 million in 1997 and US anti-trust laws for years forced Microsoft to capitulate on its bundled software products in order to keep the competition alive.

There’s another missing point. High volume manufacturing is still performed all over the US, just not in electronics. So as we move toward more lights-out/true full automation factories for building electronics, there’s no reason to think that product won’t be built in volume here, too. Keep in mind that following the flooding in Thailand and Malaysia and the earthquake in Japan, the cluster factory model so popular in Southeast Asia is not looking quite so good.

And another! Apple’s outsourcing overseas model works well for building mobility products. It doesn’t work so well when you are outsourcing tractors. Jobs’ hubris led him to extrapolate that he since so good in design, he must also be brilliant in economics and sociology. Not even.

Apple now has nearly $100 billion in cash on hand. But it can’t afford American engineers? Huh.

Blowing Smoke

The deadly explosion Friday at Foxconn’s Chengdu site killed three workers and injured 15 others. Will the company, at long last, feel its workers pain?

It says here, no.

Apple, one of the larger customers for the site, released a statement that was at once nonjudgmental and noncommittal. In it, the iPad maker had this to say: “We are deeply saddened by the tragedy at Foxconn’s plant in Chengdu, and our hearts go out to the victims and their families. We are working closely with Foxconn to understand what caused this terrible event.”


For a company that takes incredible umbrage at the slightest hint of disclosure, I suppose it would be asking too much for it to reveal any hint of emotion now. But Apple has long shown itself to be disinterested in the ugly goings-on at its largest supplier. Report after report has ripped Foxconn for worker abuses ranging from environmental conditions to overtime and penalties for mistakes generally associated with penal colonies.

Reportedly as much as 30% of the highly profitable iPad 2 tablets are built in Chengdu. If that’s the case, there is absolutely no reason Apple should not have an employee on site, 24/7, ensuring operations are running smoothly. This begs the question, where was that employee? Did he or she not know about the conditions in the polishing department where the explosion reportedly took place, and how workers complained “the department is full of aluminum dust” and “(e)ven though they have worn gloves, their hands are still covered by dust and so (is) their face and clothes?”

Other major Foxconn customers, such as H-P, Dell and Motorola, generally have avoided the scrutiny that Apple gets, but that doesn’t — or shouldn’t — make them any less culpable. It’s a convenient excuse to hide behind the veil of outsourcing as a means to ignore what goes on inside your supplier’s factories.

To me, it’s corporate-sanctioned cannibalism. We are supposed to be better than that.

When Chips are Down, Don’t Call the Bean Counter

Methinks Paul Otellini is feeling the heat — and I don’t mean the kind from his company’s chips.

The first non-engineer to run Intel, Otellini complained this week that the US government isn’t doing enough to create jobs.

“I think this group does not understand what it takes to create jobs,” Otellini complained. “The next big thing will not be invented here. Jobs will not be created here.”

True that, as long as OEMs like Intel use domestically trained engineers to move all their design to lower-cost nations not for intellectual reasons but to save a few bucks. The inconvenient facts Otellini so casually ignores are that American companies are sitting on record cash reserves, and no one would claim the US government should be in the business of forcing them to spend their treasure.

Ideologies aside, this is a tired canard. One can’t logically complain government inherently is the problem and in the next breath say that government needs to solve their problems. One can’t complain government isn’t doing enough to protect their IP and in the next breath say the laws are too onerous. That’s just whining.

In fact, even Otellini doesn’t seem to believe his own words, having at a conference last fall credited China’s rebound in part to its stimulus package. Let’s get at what Otellini really wants: A government handout. He is oh-so-proud of having garnered what were effectively tax-free plants in China, without stopping to consider that such blatant corporate welfare places the burden on the individual taxpayer. (Keep in mind, however, what you and I pay in taxes is not his problem.)

Still, based on his comments, one could picture Otellini formulating the following financial strategy:

Taxpayers give money to the government, which gives it to companies, which invest it in Asia (or just sit on it).

I’m just not sure what problem that solves.

Does Otellini really think China is a long-term answer and that its intentions are benign? Has he not considered the possibility that China and other poor Southeast Asian nations are doing anything they can to attract wealthy businesses, and that once it has the supply chain monopoly in place, those businesses will be forced to pony up? Intel is a pawn in a much bigger game, and he is betting his bank that he can cash in his chips before the house calls.

With Intel’s stock trading at a 52-week low and new research reports — coincidentally, I’m sure — projecting Samsung to overtake Intel as the world’s largest semiconductor supplier in the next three years, my guess is Otellini’s comments come from his ego and his wallet, not his head. And maybe Intel’s problems stem from having a bean counter, not an engineer, at the helm.

Aug. 30 addendum: A-ha! Intel just announced it is lowering its third-quarter forecasts. Otellini’s comments are sounding more and more like sour grapes.