The Independent Market Observer

12/7/12 – Re-Shoring Gets a High-Profile Win

Posted by Brad McMillan, CFA®, CFP®

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This entry was posted on Dec 7, 2012 11:27:07 AM

and tagged Yesterday's News

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I have been writing about re-shoring for a while—most recently, yesterday. Today, front-page news in the New York Times and Financial Times, and front-business-page news in the Wall Street Journal, supports that theme in a big way. Apple has decided to start moving production of Macs back to the U.S.

The company plans to invest about $100 million to start manufacturing Macs here, beyond the assembly work it already does. Tim Cook, the CEO, explicitly says that he plans to work with partners to manufacture the full range of components in the computers.

Apple isn’t the only firm moving electronics manufacturing to our shores. Lenovo, a Chinese company, announced in October that it would start making computers in the U.S. as well.

There are multiple driving factors at play here, including proximity to customers, cost competitiveness, a superior business operating environment, and a superior workforce. Another factor—highlighted in a separate NYT front-page story, “Recalling Fire’s Horror and Exposing Global Brands’ Safety Gap”—is lower reputational risk. Apple, like many companies, has had public relations problems created by its subcontractors in other countries, particularly China. Locating operations in the U.S. helps to keep partners under better control.

This is a relatively small part of Apple’s business and, as such, won’t change the world immediately. It does set a new course, however. One of the world’s best companies will, for the first time in 10 years, relocate manufacturing here, beginning the process of reestablishing supply chains and supplier company networks that have disappeared over the past decade. Rebuilding those networks is essential to the long-term success of the re-shoring project, and Apple is smart to take it one step at a time.

As I said yesterday, this is a long-term trend, but now, at least, it’s underway. I look forward to my next Mac being made in the USA.

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