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Original thread:
Post 1 made on Friday January 22, 2016 at 11:16
BizarroTerl
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On 1/18/2016 @ Liberty University in Virginia, Donald Trump was giving a speech and he said the following:
"I was saying make America great again, and I actually think we can say now, and I really believe this, we're gonna get things coming... we're gonna get Apple to start building their damn computers and things in this country, instead of in other countries."

Isn't this contrary to the less government philosophy? What would the Republican caucus do if Obama mandated Apple or GM be forced to bring all production back to the US?

And as far as business acumen is concerned, his statement is quite alarming. The reason Apple has their products built in other countries is because it is less expensive. They compete in a global market. A significant increase in their cost would result in a large erosion of their market share. Keep in mind they're already at the high $ end of the market. Anyone with a modicum of business sense understands this.

Trump is either saying that if he is elected President he will have government determine how a company can run their business, well beyond the current crop of regulations, or he will make the conditions here such that they will bring it in country. How can he do that?

Costs for any product can be broken into 3 parts - materials, labor, and overhead. Let's look at them.
Overhead - this is the cost of administration (engineering, accounting, business management, shipping, facilities, utilities,advertising, etc.) that is required to produce a product. This cost isn't directly based on volume. With high volume this ends up being a very, very small part of the cost of a individual item being sold. Apple would probably see a very small increase in overhead costs moving production to a US based manufacturer. They may even see a decrease as shipping and time zone issues would be lessened. Lessening of current government regulations would have minimal if any impact at all.
Materials - Building it here or there won't have much if any impact. Apple's volumes are so large they are getting the best prices possible. Having the parts shipped to Michigan instead of Shanghai won't make a real difference.
Labor - This is the core cost issue. The manufacturers that build iphones now are notorious for ruthlessly keeping labor costs low. They pay their employees a bare minimum and with forced living in company housing take back as much as they can.

So the only real place for Trump to entice large volume manufacturing back to the US (other than just making them do it) is to address the wage issue. For US workers to compete with this our hourly labor rate would have to be much lower than the current minimum wage. Have you tried to live on minimum wage?

As President, along with congress, Trump could lower the minimum wage to allow the US to compete with Chinese manufacturers. The only question is, who would be willing to work for those wages?

Last edited by BizarroTerl on January 26, 2016 14:38.


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