I remember a bit on the news, some years ago, about TVs being built in Detroit. Seems the assembly plant was in Canton Township, where I live. The Canton plant is apparently gone now, but Element is still assembling TVs in South Carolina.
Parts like populated circuit boards and displays are imported, and assembled in the US. Some remember the huge subsidies Foxconn extracted from Wisconsin to build a flat panel display plant, which apparently never happened. Maybe Foxconn can make the numbers work now?
Building an iPhone, from scratch, in the US, right now, may be a no-go, but assembling imported components can be a first step in rebuilding the US electronics industry.
And as discussed in another thread, replacing the glue/adhesive that you buy for home or industrial use should be pretty straightforward. The US has a good chemical Industry base, largely because of cheap feedstock (oil). I could also see German chemical firms relocating production to the US, with or without tariffs.
They have been here, a long time. Another bit in my laff file from my time at the pump seal company, was a letter from a field rep, about a BASF plant in Geismar, Louisiana.
Low cost natural gas (and oil at competitive prices) have always been competitive advantages for chemical production in the US. Most European chemical companies are global and already have operations in the US.
The major problem in Europe for the chemical industry is loss of low cost natural gas from Russia. Higher cost has many companies reviewing operations there. That is a special situation with economic impact. Rising unemployment etc.
Where they have plants elsewhere shifting production to low cost locations is easy. Major expansion or new plants can take years to complete.
Most see chemicals as cyclical. Tied to new car sales and housing starts. (There are numerous exceptions in specialty chemicals but they are smaller business lines.). Few would list chemicals as a growth industry. A very capital intensive materials business.
Even assembly canāt be done efficiently enough in the USA. Not because the physical process canāt be done, it can, but because the replacement parts for machines used in assembly canāt be acquired fast enough. What happens every single day at assembly plants in Asia is that the Thingamabobattacher has a small part inside of it that sometimes breaks. When that happens, they grab a ārunnerā at the assembly plant and send them out to the company half a mile away that makes that small part, or that can fabricate that small part in an hour, and then they run back with the part to have it replaced and get that assembly line up and running again in just a few hours. Nowhere in the USA is that possible right now, or in 5 years from now. It takes many years for such a support network to build up. Because the fabricator of that small part goes to smaller fabricators of rubber protective pieces, and gets a part of what they need there. And they go to a smaller fabricator that sells all sorts of screws and fasteners. And the small company that makes rubber pieces in custom shares goes to a cutting tool fabricator nearby. And the cutting tool fabricator goes to a sharpener service nearby to keep their tools nice and sharp. And the sharpener service goes to a small motor maker nearby to get their motors to power their sharpeners. And they sell their sharpening metal dust to a company that makes devices that have metal dust well adhered to them for durable roughness. Etc. Etc. Etc. After decades of such businesses sprouting up, you have thousands, literally thousands, of small businesses around every large factory servicing their every need at rapid speed. Iām not exaggerating when I talk about ārunnersā, they actually have people that ārunā back and forth from the small suppliers to bring stuff to the factory that is needed to keep the production lies moving.
Hence the concept of ābusiness clusters.ā Takes a long time to develop.
Grandpa had a factory in Deckerville Michigan. He made the chrome badges for Ford cars. He wasnāt the only one but it was more than half his business. He filled up the rest of the years doing contract work for others:making fishing poles, rubber grips for bicycle handles, anything to pay the bills. But Ford was the anchor.
After he died Grandma moved the plant to Alabama because: cheaper labor. Ford cut them off, two years later they were bankrupt. Cheaper labor indeed.
Could you really see them relocating production with tariffs?
How would you calculate the business case?
build the factory using tariff-inflated construction materials
fill it with tariff-inflated German automation machinery
look for some assembly line workers in a concentration camp in El Salvador
And then what? How do you calculate in the risk of the tariffs being taken down one way or another in the next year and you standing there with the worldās most over priced factory while those that waited it out undercut your prices?
I agree, to a degree (story to follow). Element Electronics probably has the molded cases for the TVs make locally, but the display panels and board are imported. If Foxconn had built the panel plant they had promised the taxpayers of Wisconsin, that would bring that part of the supply chain closer. Making and populating circuit boards is mostly automated. When I worked in the Steelcase dealership division of Office Depot in metro Detroit, one of the major accounts was Jabil Circuit. Jabil has plants in Mexico and China, as well as the US, so a major shift of production out of those countries to the US may be zero sum. But the production capability does exist in the US.
This is true. The US is a lot bigger than Japan, or South Korea. You may have noticed how the big three have closed all their plants on the east and west coasts, and pulled their manufacturing footprint into a smaller area.
You win a story. I was in Oshkosh for the EAA fly-in a few years ago. I was sitting in a little snack bar in the basement of the EAA museum, resting my feet, when another guy came in, grabbed a pop, and started looking for a place to sit. I had the table to myself, so offered him a chair. Turned out, the guy used to fly for Kalitta, a major air freight carrier with a major hub at Willow Run, near my home. iirc, it was the Ford plant in Atlanta (closed in 2006) where the whittlybang had deconstructed, halting production. Ford had a spare whittlybang, in Dearborn. He got the call. A runner brought two small boxes to Willow Run, which were loaded into his LearJet. As he taxied to the ramp in Atlanta, he noticed a Jet Ranger sitting on the ramp starting up. As soon as he stopped his Lear, a guy ran to his plane, grabbed those two little boxes, and ran them to the Jet Ranger. The helo then flew off to the plant. Yup, that is the scale of multi-million dollar emergency, downtime becomes with a spread out supply chain.
Your post is critical knowledge of modern reality that, never mind my ignorant asethete friends, many of my engineer millionaire friends lack this knowledge, even though Silicon Valley in the 60s-70s was the same thing at a more primitive level of performance and more rarified level of product,
Not only modern! A distant relative of mine made a living with ā¦ buttons. Heās dead for more than 40 years now. Up to about 40 years ago, the garment industry was centered in New York City, there was a āgarment districtā. And everything that went into garments was there. And all the support businesses were there. There were businesses that made āpatternsā (paper cutouts that are used as a āpatternā to cut the actual fabric before sewing it together into a garment). There were businesses that sold scissors, and more importantly sharpened scissors, and even more importantly where you could drop your scissor off after work at 8:30pm and then pick it up the next morning at 6:30am all sharpened and ready for work. There were felt guys. There were fabric guys, all sorts of fabric guys. There were zipper guys. And ā¦ there were button guys, like the guy I described above. And there were 100 other specialties that fed into the garment industry. And they were all more or less walking distance from each other because the folks who sewed the garments needed all those things at a momentās notice.
actual cost of manufacturing an iPhone is not publicly disclosed, estimates and teardowns indicate a much higher cost, closer to $500 for the iPhone 14 Pro Max. This figure doesnāt include other costs like software development, R&D, marketing, shipping, etc. The $10 figure is likely a misinterpretation of assembly costs or a simplified Bill of Materials cost.
Dear Steve,
It was one of the leaders of the industry at one point who said the cost is $10.
Of course itās not, no company gives the blueprint for its supplier base and costs. That doesnāt mean you canāt get a reasonable approximation for it, as the Wall Street Journal did with this article on the iPhone costs with and without tariffs:
Hereās the iPhone. Hereās the iPhone With Tariffs.
This is what Apple pays for components inside its bestselling phone, and how Trumpās China tariffs could raise the bill
Take a look at this iPhone 16 Pro. Your cost, for the 256GB version, is $1,100. The cost of all the hardware insideāaka the bill of materialsāwas about $550 to Apple when the phone was introduced, says Wayne Lam, research analyst at TechInsights, which breaks down major products. Throw in assembly and testing and Appleās cost rises to around $580. Even when you account for Appleās advertising budget and all the included servicesāiMessage, iCloud, etc.āthereās still a healthy profit margin.
Now factor in the newly announced [tariff for goods from China] which currently totals 54%. The cost rises to around $850. That profit margin would shrink dramatically if Apple didnāt up the price. And you donāt become a [trillion-dollar gadget company] by charging for things at cost.
Thing is, supply chains are spread all over the world, thanks to ācompetitive advantageā. I used to own a Chicago built Ford Taurus -X. I noticed the compass was about 45 degrees off. Figured it was set to the wrong zone, so consulted the ownerās manual to see how to resent the zone. Before I reset it, I noticed the zone it was defaulted to: the zone that includes Japan. Seems that Ford found it economic to import the compass modules from halfway around the world. I remember seeing an item in the Detroit newspaper, around 2002 or 2003, about the big three starting to buy parts from China.
Seems that, for the last few decades, US companies have found the savings from outsourcing to the Pac rim, outweigh the costs of production being disrupted by containers of key parts being stuck in a dock workerās strike, or railroad logjam.
If tariffs remove that ācompetitive advantageā, then the supply chain can start coming back to the US.
$90.85 for a processor? Not if you make the processor. Figure AI server processors that are much more powerful than cellphone processors are $80.
Google AI
The cost to produce a processor varies greatly depending on factors like complexity, design, and manufacturing technology. For example, a 5nm chip can cost $449 million to design, while a 28nm chip costs $40 million. The actual manufacturing cost can also vary, with estimates ranging from around $10 to $80 per CPU, depending on the technology and the specific model. The raw materials themselves, like silicon wafers, can cost between $4,000 and $17,000 per wafer. The initial investment in fabrication plants (fabs) can be in the billions of dollars.
