’60 Minutes’ scrutiny: Tim Cook ’60 Minutes’
Published: December 22, 2015
’60 Minutes’ scrutiny: Tim Cook ’60 Minutes’, Would Apple investors tolerate lower profit margins to help rebuild manufacturing businesses in the U.S.? Hardly.
Might American shoppers be willing to pay higher prices to spur the opening of more tool and die factories in the U.S.? It would be a very tough sell.
These points illustrate why Apple Inc. AAPL, +1.23% CEO Tim Cook oversimplified the situation when saying a shortage of “vocational kind of skills” at home has led the company to have most of its products made by an estimated (by CBS) one million workers in China.
During an interview on “60 Minutes” Sunday, Charlie Rose pressed Tim Cook on this issue. Following his comments on a shortage of skills in the U.S. and the “focus” of other countries’ educational systems on vocational training, Cook said, “you can take every tool and die maker in the U.S. and probably put them in a room that we’re currently sitting in. In China, you would have to have multiple football fields.”
Cook was referring to the small number of manufacturers in the U.S. capable of turning out a variety of finished high-tech goods. (You can read the full interview transcript at CBS.com).
Here are two sets of numbers from the Bureau of Labor Statistics that outline the problem beautifully:
Month Workers employed by tool and die makers mean hourly wage Mean annual wage
May 2004 99,390 $21.19 $44,070
May 2014 75.950 $24.08 $50,090
Source: Bureau of Labor Statistics
So the number of tool and die workers dropped 24% in 10 years, while the mean hourly and annual wages rose 14%. Those wage growth numbers are simply terrible. There is no question that the workers who were lucky to keep their jobs fell further and further behind the rising cost of living.
Click here and here to look at the full sets of BLS data on tool and die manufacturing employment.
Yes, a number below 76,000 underlines Cook’s point that there are very few people in the U.S. working in factories capable of making iPhones. And yes, it would be wonderful to have a stronger focus on vocational skill training in our public schools, and even to think outside the box a bit more, with sponsored apprenticeship programs.
But to argue that the U.S. doesn’t have enough skilled workers puts the cart before the horse. If it were easy for tool and die manufacturers to turn a profit in this country, many more people would make sure, any way they could, that they would learn the skills necessary to be employed by what would be a growing industry.
The fact is that lower labor costs abroad, combined with low shipping costs, make it irresistible for companies like Apple, or any other mass producer of finished consumer goods, to have as much production as possible taking place outside the U.S.
Simply training more people with vocational skills won’t bring back U.S. tool and die manufacturing.
That die was cast long ago.
Instead, the U.S. needs to focus on the type of technical education that can help people prosper in a service economy. And even that won’t be easy.
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