I caught another one of those doomsday economic predictions yesterday. You know the type—some analyst with a spreadsheet and a flair for the dramatic warning that making iPhones in America would triple their price tag to a laughable $3,500.
Give me a break.
I've been covering manufacturing trends for over a decade now, and there's an almost predictable rhythm to these warnings. Every time reshoring gets mentioned, out come the consultants with their apocalyptic cost projections.
Let's be real about what's happening here. These analyses nearly always make the same fundamental mistake: they imagine current Chinese manufacturing processes picked up wholesale and dropped into American factories, with nothing else changing except the hourly wage. That's not reshoring—that's a thought experiment designed to fail.
What we're actually talking about is the manufacturing arbitrage model that's defined corporate America's approach for generations. Design here, build there, maximize margins everywhere. It's been gospel since the 80s.
Are American workers more expensive? Of course they are. (And they should be.) But that's only one piece of a much more complicated puzzle.
For starters, any serious American iPhone production would be automated to the hilt. Apple wouldn't just swap in $20/hour American workers for $2/hour Chinese ones and call it a day. The entire manufacturing process would be reimagined from the ground up.
Funny thing is, this is already happening in China. Foxconn—Apple's main manufacturing partner—has been steadily replacing human workers with robots for years. The difference? In America, that automation would be baked into the plan from day one.
Then there's shipping. Moving components and finished products across the Pacific isn't free, especially now. Remember those supply chain nightmares during the pandemic? Companies learned the hard way that "just-in-time" global manufacturing comes with hidden costs that don't show up in neat little spreadsheets.
Now, let's talk about something nobody wants to mention: Apple's margins. They pocket somewhere between 35-40% profit on each iPhone, depending on the model. Would they really pass every penny of increased production costs to consumers? Or might they—I know this sounds crazy—accept slightly lower margins on a device that already sells for over a grand?
Look, I'm not naive. Tim Cook would probably rather wear a Windows t-shirt to a keynote than significantly cut into Apple's profit margins. But there's wiggle room between "business as usual" and "tripling the price."
There's also the premium calculation. Some segment of consumers—maybe smaller than Apple would like, but not insignificant—would happily pay more for a device made by American workers under American labor conditions. "Designed in California, Made in America" carries weight with certain buyers.
The reality is that Apple, like most tech giants, has already been quietly reducing its dependence on China. Vietnam, India, Malaysia—the manufacturing base has been diversifying for years due to geopolitical tensions, IP concerns, and (surprise!) rising Chinese wages.
Complete American manufacturing probably isn't in the cards. What's more likely is a hybrid approach—some components and assembly steps in the US, others abroad, with heavy marketing around whatever American content exists.
Will this increase costs? Without question. Will your next iPhone cost as much as a used car? Come on.
I remember similar warnings when Japanese automakers started building plants in Tennessee and Kentucky back in the 80s. Critics insisted American-made Toyotas would be prohibitively expensive. Instead, these companies figured out how to make their American operations competitive enough to thrive for decades.
And that's Apple we're talking about—a company sitting on more cash than some countries, with armies of the world's best industrial engineers at their disposal.
So the next time some analyst predicts economic armageddon if we dare make things in America... maybe check their math. And their assumptions.
Because the reality of manufacturing economics—something I've seen play out across industries from textiles to electronics—is always messier, more adaptive, and ultimately more successful than the doomsayers predict.
