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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsApple’s iPhone profits dwarf its labor costs (labor cost = 2% of price)
Various market researchers, including iSuppli and Horace Dediu of Asymco, have broken down the costs of the iPhone, which Apple sold to wireless carriers for an average price of $630 in the fourth quarter of 2011.
All agree that Foxconn’s assembly cost— approximately $15, or 2% of the total—is a miniscule part of the iPhone’s cost.
Apple’s estimated $319 profit per phone is at least 20 times the cost of producing the iPhone. In fact, because the labor cost is only part of Foxconn’s costs, which include energy, property, and its own profit, Apple’s profit per phone is more than 20 times the labor cost.
http://www.epi.org/blog/apple-iphone-profits-dwarf-labor-costs/
I'm not singling out apple; i think the picture is similar for most electronics and a lot of manufacturing.
<a href="http://www.statista.com/statistics/217158/quarterly-percent-change-in-the-us-manufacturing-sector-unit-labor-costs/"><img src="
" alt="U.S. manufacturing sector unit labor costs - quarterly percent change" title="U.S. manufacturing sector unit labor costs - quarterly percent change" width="660" /></a><br />You will find more statistics at <a href="http://www.statista.com">Statista</a>
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dkf
(37,305 posts)HiPointDem
(20,729 posts)dkf
(37,305 posts)Now that Chicago's children have returned to not learning in school, we can all move on to the next crisis in Illinois public finance: unfunded public pensions. Readers who live in the other 49 states will be pleased to learn that Governor Pat Quinn's 2012 budget proposal already floated the idea of a federal guarantee of its pension debt. Think Germany and eurobonds for Greece, Italy and Spain.
http://online.wsj.com/article/SB10000872396390444032404578008291279754994.html
HiPointDem
(20,729 posts)choices.
they just happen to be the choices preferred by the 1%.
dkf
(37,305 posts)dkf
(37,305 posts)HiPointDem
(20,729 posts)but that is the only choice the 1% wants us to believe exists.
as do you, apparently.
dkf
(37,305 posts)US equivalent wages?
HiPointDem
(20,729 posts)invisible in all your calculations.
but in answer to your question, the reaction would vary a great deal depending on the situation; for example, it would be different if chinese workers had burned down several foxconn installations & strung up a number of execs, or if the US government nationalized Apple, or if chinese wages were rising generally, or if US workers had rebelled against having their pension funds invested in the stock market, or any of dozens of alternative scenarios one can imagine.
not to mention that it wouldn't take much to bring chinese workers up to us standards in terms of worker purchasing power. a doubling of average wages would probably cover it. but then labor cost would be (gasp) 4%!!!! of price.
apple's gross profit margins are almost 50% = half of the price of their goods.
but i'll put you down as one who believes that the good of some invariably depends on the degradation, misery and enslavement of others, and will fight for that outcome.
HiPointDem
(20,729 posts)PowerToThePeople
(9,610 posts)labor vs parts cost.
lame54
(35,445 posts)they're just as wrong as everybody else
HiPointDem
(20,729 posts)PowerToThePeople
(9,610 posts)stopped reading @ the graphic.
Stinky The Clown
(67,900 posts)First off, the component cost of the phone is 1/3 of its selling price. That seems pretty normal to me and is true across a lot of businesses and industries.
The labor cost cited is for the final assembly of the product. There is also labor in all the components, too. I would expect the labor cost to be lower than labor has been, historically, due to automation.
They have a 50% gross profit on the iPhone but Apple has lots of other products, too. That $319 doesn't go right into Tim Cook's "I wanna be Steve" jeans.
What's sad in all this is how little it would increase the cost of the product if it were built in the US instead of China.
HiPointDem
(20,729 posts)Last edited Fri Sep 21, 2012, 06:15 PM - Edit history (1)
of the iphone is 2% -- a near-irrelevant fraction of the final price.
i think we can assume that the picture for labor cost in the components is similar -- which means that TOTAL labor cost for every stitch of the phone is way under 30%.
profit is a larger percent of the cost than labor, by several magnitudes.
cook was the highest-paid exec in silicon valley, also by several magnitudes. and maybe in the world.
so yes, a lot of that cash does go directly into his pockets, both as exec & shareholder.
According to an annual analysis of top executive compensation in the Valley done by the San Jose Mercury News, the head of the Cupertino, Calif.-based computer maker was paid a whopping $378 million in the 2011 fiscal year, the vast majority of it in Apple stock....
News of Cook's gigantic pay package isn't new. We heard about it back in January. But the San Jose Mercury News analysis, which included "CEO salaries, bonuses, stock grants and options reported by the Bay Area's 198 biggest publicly traded companies for their 2011 fiscal year, as compiled by Equilar," confirms what we all suspected when we heard he would be receiving one million Apple shares for becoming CEO: that he would certainly be Silicon Valley's best compensated exec, and maybe even the highest paid in the world. Runner-up Larry Ellison of Oracle, earning a comparatively modest $77.5 million, wasn't even close.
http://www.huffingtonpost.com/2012/07/16/tim-cook-salary_n_1676660.htm
jeff47
(26,549 posts)You're missing part of your post: the "Now what?" part.
Do you want Apple to lower the price?
Do you want Foxconn to pay more? (btw, they are already paying above average...for the terrible pay one gets in China)
Do you want iPhone buyers to feel a moment of guilt?
What would you like people to do, now that they have this information?
HiPointDem
(20,729 posts)I wonder why you are asking such a question.
people may do whatever they like with the information, just as they may do whatever they like with the much more inconsequential information that romney put his dog on top of his car.
jeff47
(26,549 posts)You've provided a factoid. Which will be promptly forgotten before it ever comes up in a trivia contest.
If you want people to remember your factoid, you'd need to do a little more for them to remember it.
As for Romney, that becomes important because in his mind abusing an animal was a good thing - he bragged about the incident before it became widely-known. It shows a nice window into how Romney thinks.
How's this different? There's lots of possible angles. You could be calling Apple greedy, you could be bashing labor policy in China, you could be complaining about outsourcing. Or you could be telling us a bit of trivia you think is useless.
Apparently you think it's important enough to self-bump. Yet you're apparently unwilling to say why.
HiPointDem
(20,729 posts)
cthulu2016
(10,960 posts)even greater mutiple of the labor involved in printing it.
wtmusic
(39,166 posts)HiPointDem
(20,729 posts)we ate for breakfast.
yeha, do be sure to write your congressperson about how the chinese are destroying archeological artifacts in their search for profit.
HawgWyld
(1 post)Just some advice from a dear friend of yours on the right -- I do believe Apple makes more than $319 profit per phone. Why do I say that? According to estimates from the Center for Business and Economic Research at the University of Arkansas, the actual labor costs are about 7 to 8 cents per phone. Foxconn may add some cash on top of that, but I can't help but think the average of $15 per phone is far too high an estimate.
Regardless, I don't regard this as a "left vs. right" issue. Both sides of the aisle should agree on the notion that losing our manufacturing to China is a horrible thing and we ought to howl about it. If manufacturing -- even a portion of it -- was moved here, American workers could earn decent wages from Apple and Apple could record outrageous profits rather than obscene ones. If other allegedly American companies followed suit, the unemployment rate that is absolutely murdering the economy would fall. Everyone would win under that scenario.
The myth that companies simply can't afford American labor and remain competitive is nonsense. Apple and other tech companies could remain competitive by keeping prices exactly where they are and boosting their labor costs. The math used to justify stiffing American workers by off shoring everything simply doesn't add up.
HiPointDem
(20,729 posts)cheap-labor democrats, who woulda thought.
