In the last decade, economic conditions have made it highly profitable for companies to ship as much of their development and manufacturing overseas, thereby taking advantage of the cheaper labor costs as well as the possible tax advantages.
Most major companies have some sort of footprint in one of these countries and Apple is no different. In the last couple of years, Apple has faced quite a bit of negative press due to the poor working conditions at Foxconn which has led some workers to commit suicide. Recently, ABC’s Nightline was given access to this company to try and learn just how Apple does business overseas. Nightline’s access could be considered unprecedented as they were able to see the factory floor, see just how iPhones are built and get feel of the overall assembly process.
From the results of this investigation, Nokia’s former development manager and now blogger Horace Dediu tried to piece together just what it costs to build such a device and for his investigation, there were two key pieces of information that he was able to gather from the Nightline report. These included the fact that each device required 24 hours to fully assemble, including a 6-8 hour burn in period and the other key factor was that employees made $1.78/hour.
From this information, he was able to determine that the labor cost of an iPhone is roughly $12.5 to $30 per device, meaning that labor costs are insignificant when compared to the final price of the device. Additionally, there were 141 steps required to build a device that needed a hands on touch and the fact that Apple has not automated the process shows that it is cheaper to have manual labor then to automate.
