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Foxconned: Apple's iPhone Risks Becoming the Next Hummer

Posted by Abe Sauer on January 23, 2012 04:04 PM

It remains The New York Times' most emailed story two days after it was published: "How the U.S. Lost Out on iPhone Work."

The explosive article tells the story of how, early last year, President Barack Obama publicly asked Steve Jobs "what would it take to make iPhones in the United States." Retorted Jobs, reportedly: “Those jobs aren’t coming back."

It's no secret that many of "those jobs" are in China, where Apple is increasingly under fire about the working conditions facing those who assemble America's favorite tech gadgets. But it goes further, with Apple no longer feeling "an obligation to support American workers." It's a direction that threatens to turn the iPhone into the Hummer of its day.

All the qualities that have won Apple products hours of fan waiting time in queues and millions of column inches of invaluable free press also make the brand's products a favorite target for schadenfreude. Apple had its fanboys, but it also has those who love to hate it, including rival brands such as Samsung, which has been spoofing Apple fans in spots such as this:

With pieces like the one from The New York Times and a recent profile of Apple's China suppliers by NPR's radio show This American Life (a favorite of Apple fanboys), Apple brand managers should be concerned the brand is being set up to be the "next Hummer."

In its heyday, Hummer was the pollution-spewing SUV everyone loved to hate. The Hummer came to be ridiculed as both an overcompensation for under-endowed men (Arnold Schwarzenegger's endorsement nothwithstanding) and as the best example of the gas-guzzling middle finger American sentiment had for environmental impact.

The Sierra Club lampooned the brand with a website, hummerdinger.com. The spite environmentalists and Hummer drovers shared for each other flared at times, with   the group Earth Liberation Front going so far as to set a Hummer dealership on fire.

Apple's iPhone brand is course not at this level of representation… yet. One thing Apple should keep in mind is that just because others are "just as bad," doesn't mean a single brand won't bear the totality of public sentiment.

Indeed, 2009 government fuel economy and greenhouse gas emissions ratings for Miles Per Gallon City/Highway (MPG) and Greenhouse Gas Emissions (tons/yr), put the Hummer at 14/18 MPG; 11.40 t/y. That was better than the Cadillac Escalade (12/19; 12.20 t/y), the Land Rover Range Rover (12/18 MPG; 13.10 t/y), the Porsche Cayenne (12/19 MPG; 13.10 t/y) and the Mercedes-Benz ML63 AMG, which at 11/15 MPG and 15.20 tons/year made a Hummer look  reasonable. None of those models ever saw the Sierra Club launch publicity campaigns against them.

Foxconn, the company that, on the cheap, builds Apple's iPhone also assembles consumer electronics for Dell, HP, Amazon, Dell, Nokia, Motorola, Nintendo, Sony and Samsung, accounting for, by The New York Times estimate, 40 percent of the globe's total. But the history of brand vilification is not one of parceling out, but instead one of consolidation.

What the Hummer brand did was come to embody a number of growing concerns amongst Americans, providing a single easily identifiable brand tagline for those concerns. Is it impossible to believe a continued barrage of such iPhone stories might see the gadget's name come to represent such growing concerns as eroding workplace standards, loss of American manufacturing, a rising China and a corporate America that no longer identifies itself as "American" but as global entities, an thus, feel no particular obligation to create jobs in any one country?

Apple has a chance to avoid this fate and it appears the brand understands this. After years of secrecy, Apple has agreed to release more information about its overseas suppliers. But the Times story proved not everyone at Apple understands the brand damage at stake. As one current Apple executive insisted in the brand's defense, "We shouldn’t be criticized for using Chinese workers. The U.S. has stopped producing people with the skills we need.” Earlier, another current executive said, “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” And Jobs himself stated in 2010, following "very troubling" news of worker suicides at Foxconn, that even though it was "not a sweatshop" Apple was "all over" the employment conditions there.

That might be true. But if Apple hopes to maintain its stellar reputation, it has to understand that, true or not, those sentiments are brand poison in a nation (America) with record high unemployment, and workers ready to assemble iGadgets.


Doug Miller United States says:

You need to clarify which Hummer product you are talking about.  Hummer was a brand that offered several models.  It's like saying a Chevrolet gets XX/XX mpg.

Citing fuel economy without identifying the model doesn't offer enough information for the reader.  I am sure the fuel economy you mentioned is not for the H1, but are you talking about the H2 or H3?

January 24, 2012 08:46 AM #

A Sauer United States says:

Good point. This was the H3, one of the filed down versions but a Hummer nonetheless and with all of the ugly brand baggage. Hummer's response to its own reputation was too little too late.  

January 24, 2012 12:51 PM #

Mike United States says:

If this becomes a big issue for Apple, it's because of an ignorant consumer base combined with yellow journalism.  Not one single smartphone is manufactured in the US, so why should Apple be singled out and held to the fire?  If Apple, or any smartphone company for that matter, produced one in the US (which would be great, don't get me wrong) the cost would likely more than double.  How many people are going to be willing to fork over that much dough for a phone?

January 24, 2012 11:06 AM #

Eric United States says:

Mike nailed it and I wonder why brandchannel.com would have a writer pen an article for them that is so completely clueless as far as how production works.  I no longer work in the electronics industry, but I was in product development 5-6 years ago and I have been to Chinese plants (which are very clean with safe working conditions because electronics have to be produced in clean environments).

The only real way to make a 'US made' phone would be to import every single part from China and then assemble these parts in the US.  (And assembly is the area with the least skill level and most labor intensive so this would add significantly to the expense of a phone.)  And  if all components were manufactured in the US and assembled here, the price of an iPhone would be at least double.  And very few would buy it. Softening sales would make the economies of scale need for profitability even less likely and soon they would scrap the whole idea.

And since Apple would have to produce all the components in a totally US made phone, they would need to develop expertise in a bunch of areas they do not have.  They are essentially a software/computer company, they do not make or assemble any of these components.  Ironically, a company that wanted to produce these phones domestically would have to hire and bring Chinese engineers over to help start production.  As with any newcomer to manufacturing processes, the waste and defects from such a plant would very likely be far above industry standards for a time (adding even more expense per phone).

Now, if Abe Sauer or Barrack Obama think this is the solution US manufacturing then ignorance runs deep.

Long story short: I love the US and wish it really was as easy as saying: "hey, let's make these in the US".  But in reality, this is simply a moronic idea brought up by people who do not understand anything about the electronics industry and electronics production.

January 24, 2012 12:10 PM #

A Sauer United States says:

Well, if you read the NYT piece, you'll find the estimated added cost of a US-made iPhone is +$65. Well within the scope of remaining very profitable.

And, it seems everyone agrees that a US-made iPhone is not going to happen, in part for the reasons you laid out. But the problem for Apple is one of branding, not logistics. As I noted, the Hummer was hardly the only polluting, monster SUV on the road, but it was the one that got all the attention. Likewise, Apple's brand faces being singled out as a example of the whole.

January 24, 2012 12:56 PM #

Mike United States says:

Working for a Fortune 100 manufacturer over the past 16 years, I find it extremely difficult to believe in the $65 cost increase.  Certainly doesn't correlate with what we've seen - it would typically be much more.  And while I understand and agree that Apple stands to be hurt more because they're the hottest brand, it doesn't mean that we should perpetuate that with stories like this. I feel more attention should be given to the fact that just about every major CE brand uses Foxconn as a supplier.  Yet Apple is being singled out.  

January 24, 2012 01:42 PM #

A Sauer United States says:

As this is a trade publication, I'm not so sure much written here could perpetuate anything for Apple. That comes more from direct to consumer publications. That said, I think Apple is being singled out for the same reason it has always been singled out, the perception of being "better." Indeed, a lot of people buy Apple for the perception of being a "better" person whether it's buying into the "think different" ideal or the aesthetic and philosophy of Steve Jobs. Pointing out that Foxconn also services, say, Dell creates a collective shrug as it would be expected that crappy old Dell would use cheap, questionably-treated labor. That's why Dell doesn't have an episode of Modern Family built around one of its products.

Point being, as devil's advocate, why should Apple only now start getting the same treatment as everyone else?

January 24, 2012 05:47 PM #

Comments are closed

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