Apple Opening Arizona Plant With 2,000 Workers to Make Parts | Hacker News Reader

Apple Opening Arizona Plant With 2,000 Workers to Make Parts

bloomberg.com

51 pointsdcg31 comments

I wonder what the tax incentives to Apple were. A local story [1] reported: "Apple could qualify for several different state tax credits. An offer from the Arizona Commerce Authority is currently on the table but hasn't been finalized, senior vice president Nicole McTheny said."

I don't like tax incentives for big businesses to locate to a particular state. I see why they happen, as each state is put in a position to outbid the others and businesses are compelled to take free money. We should outlaw this practice with federal law and stop taking money from the middle-class to benefit the rich, under threats of having no jobs.

[1] http://www.petaluma360.com/article/20131104/WIRE/131109835/1...

Wouldn't something like this be taking money from the rich and the middle class and redistributing it to the lower-middle class who are out of work in AZ?

It could be, but don't the lower-middle classes get the most benefit from government dollars? (which are being redistributed to the business, which is owned by the upper classes)

>> Don't the lower-middle classes get most of the benefit from government dollars?

I wonder how that could be determined. I'm curious to see graph of benefit-per-capita grouped by income brackets.

EDIT: This link is "kindof" it, but there is no way that I can see to break it down by income.

http://www.usgovernmentdebt.us/US_per_capita_spending.html

Another bit of data which is suggestive, but again not exactly the right thing, is consumption data by income bracket:

ftp://ftp.bls.gov/pub/special.requests/ce/standard/2009/income.txt

The actual right data would be consumption+savings by income bracket, but I don't know where to get the savings data.

But if every state refused to offer these tax breaks, then the unemployed could still get jobs and the tax burden would not be lifted from businesses and placed on everyone else. Budget shortfalls on the state level are common and it's generally recouped through sales taxes, cutting services, raising property taxes, etc.

Most of these incentives cost more than the jobs they provide, they do not encourage businesses to make decisions they wouldn't already have made, and any promises in exchange for tax benefits are rarely even followed up on.

Read http://www.amazon.com/The-Great-American-Jobs-Scam/dp/157675... if you want to boil your blood about this topic.

I used to work in Brazoria county, Texas where a few large manufacturing facilities never paid a penny in local and state taxes. One company employed about 10,000 people and there were another 40,000 employed as contractors and in supporting companies. Despite the major employers not paying taxes, Brazoria county was considered one of the wealthier counties.

The benefit to local economy comes from sales and property taxes on employees, the relocation of supporting industry nearby who didn't get tax break. The key is to offer tax incentives to right kind of business. The key is to attract business with tax incentives that will attract anciliary and supporting industry.

So do the economics actually favor moving some manufacturing back to the US now or is this a token measure just attractive enough because of the right amount of tax incentives mixed with the intangible benefits like good PR?

Whenever I read these "Apple is bring manufacturing back to the US" stories all I can think of is the famous exchange between Steve Jobs and the President where Jobs supposedly said flat out, "those jobs aren't coming back" [0] Granted Apply has been known to make definitive statements like that only to do a 180 not long after.

[0] http://www.nytimes.com/2012/01/22/business/apple-america-and...?

I suspect there is a completely unrelated reason not mentioned. The Mac Pro isn't being assembled in the US for tax breaks or good PR, it's for the turnaround time on built-to-order machines. I expect a similar sort of reason (i.e. unrelated to economics) is involved here.

> it's for the turnaround time on built-to-order machines

Isn't this only true for the US market?

IIRC, the US accounts for about 50% of their sales, so I doubt it would be that.

Your argument doesn't make sense. If Apple can go from long-turnaround for nearly all of their built-to-order sales (i.e. assembled in China) to long-turnaround for only 50% of their built-to-order sales (i.e. assembled in US), how is that not a win?

I would assume Europe shipping times would be more or less the same from China or US.

I guess I was over estimating the amount of sales happening in APAC.

Apple sells a decent amount of product such as the iPhone in APAC, but let's recall this facility assembles Mac Pros.

The actual assembly of a consumer tech product is generally less dramatic an aspect of the cost than you might think.

Absolutely right. The materials cost isn't affected much by geography, just the labour cost.

> So do the economics actually favor moving some manufacturing back to the US now or is this a token measure

Haven't Apple always sourced their glass from the US? I thought Corning made most of their stuff in Kentucky, but perhaps I'm wrong.

As far as I understand from this article (page 5), it's not always made in US: http://www.nytimes.com/2012/01/22/business/apple-america-and...

“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”

The economics of manufacturing in the US make sense when the product is mostly made by automated machines. Glass is like that.

Despite outsourcing, the U.S. is still the world's second largest manufacturer.

I think outlandish statements are a seen as a technique by powerful people to get their message across. I know a guy who is very successful and he makes wild, speculative remarks and sometimes he is very wrong. It doesn't seem to affect his credibility.

Obama has repeated publicly "there are some jobs that are not coming back"[1]

And I think he's right. Modern US production facilities have far more automation requiring fewer, more highly skilled jobs. Barely skilled assembly line jobs just aren't worth the labour costs in the US.

[1] http://www.youtube.com/watch?v=AMdkzY-Eivg

The article contents and headline disagree with each other. The article contents says that the facility will create 2000 jobs in various fields in Arizona. But towards the end,Arizona's governor is quoted as saying the facility will create at least 700 jobs, as well as "1,300 construction and associated positions in the state", with no word on how many of those positions are temporary jobs related to the construction of the facility itself.

So what do we think they're manufacturing with sapphire? Watch faces or 4K touch screens? Perhaps gearing up for an extra-secret (no manufacturing leaks) iPhone 6?

The home button on the new iPhone 5s and the lens that was introduced with the iPhone 5.

Really, to then assemble them in China? Well, maybe. But don't ruin my fun! :)

"So what do we think they're manufacturing with sapphire?"

This is just fun conjecture, so take it with a grain of salt the size of a racoon's head, but considering you can make sapphire panels large enough for vehicle windows [1], you might be able to cover a TV with it (among other things).

Consider that Jony Ive is credited with a design for a TV where the display slides inside a glass enclosure [2][3]; Perhaps you'd want to coat the enclosure with artificial sapphire to maintain a strong protective layer, or even use a thin, strong sapphire enclosure to reduce thickness while achieving good-enough strength.

We know that Apple was happy to build its new Mac Pros in the US because they're expensive (high margin) and the largest number of buyers would be in the US (video production, music production), thus a reduction in logistics costs could help balance higher worker costs. We can make the educated guess that an Apple TV would cost a lot - perhaps approaching or exceeding the cost of a new Mac Pro. So it's not hard to imagine a chunk of production moving to where the customers are.

Either way, looking at [3] we can see that Apple is interested in glass enclosures for its devices, so sapphire would be a good way to minimize scratches and general wear.

[1] http://www.photonic.saint-gobain.com/uploadedFiles/SGphotoni...

[2] http://www.patentlyapple.com/.a/6a0120a5580826970c0192ac6465...

[3] http://www.patentlyapple.com/patently-apple/2013/08/apple-fi...

I grew up in Mesa and it's nice to see this happen here. Phoenix isn't a large tech hub and by Apple putting this plant in Mesa, this will help put it on the map (on a smaller scale)

I'm imagining that just because Apple puts a plant there won't change things much. Yeah, people will talk about it for a few days, but that's about it. I remember Google had an office in Arizona but then they closed it.

Well it's never going to be SV but when some other companies such as Ebay, Paypal, etc. went to Chandler and opened up offices, this helped other tech companies take notice and it's grown considerably over the past few years. I'm not implying it's going to attract other major tech companies to come to Mesa, but to get Apple to come is a big step in the right direction. If you would have said that a few years ago, people would have laughed. (including me)

Motorola, Honeywell, etc. Motorola was for long the largest employer in the state, perhaps still is. Arizona isn't heavy on RoR hipster startups, but for semiconductors, electronics, aerospace, and all the high-reliability serious software accompanying that, the Phoenix area can be considered a tech center. Same for Tucson.

Reply on news.ycombinator.com