Updated: Wednesday, 1st October 2014 @ 8:41am

Apple's 'pinnacle of capitalism' economic model harms US and Asia job prospects, claims Manchester university report

Apple's 'pinnacle of capitalism' economic model harms US and Asia job prospects, claims Manchester university report

By Sophia Rahman

Apple’s business model is harming job prospects of people in the US and Asia, a study by University of Manchester experts found this week.

The report has been released as Apple’s profits have soared to a record $11.6billion whilst Foxconn, the Taiwanese company that assembles electronic components for Apple and other companies, is struggling to restructure and relocate to lower wage areas.

Apple products have been described as needlessly destroying western jobs by Guardian journalist, Aditya Chakrabortty.

He states that if the California-based corporation manufactured its devices in the US rather than China it could still maintain its world-beating profits.

Professor Karel Williams, Director of the university’s Centre for Research on Socio-Cultural Change (CRESC), who compiled the report, said: “If Apple were willing to accept lower margins, and the assembly labour on the iPhone were onshore and paid at US rates, Apple would still have a gross margin of nearly 50%.”

This leads Professor Williams to inquire: “Why are the assembly jobs in China when the assembly work could be done in the United States if Apple’s profits targets were lower?”

The New York Times reported that when Barack Obama spent an evening with the leading entrepreneurs of Silicon Valley in February 2011, he asked Steve Jobs, then Apple’s CEO, ‘Why can’t that work come home?’, to which Jobs retorted: “Those jobs aren’t coming back.”

The company’s executives are said believe that the US workforce do not possess the ‘flexibility, diligence and industrial skills’ offered by their Asian counterparts.

CRESC’s report finds that historically, Asian companies paying low wages and selling their product to high income markets, such as the US and Europe, have benefitted from such contracts. 

However, because of the effects of Apple and other companies utilising similar business models, Foxconn is suffering the same fate as unsuccessful manufacturing firms in the West.

The Asian Development Bank stated in a 2010 study into the contemporary version of the iPhone that: “It is the profit maximisation behaviour of Apple rather than competition that pushes Apple to have all iPhones assembled in the People’s Republic of China.”

This leads Chakrabortty to conclude that Apple utilises foreign contracts neither to keep customer’s costs down, as the price of their software is still high; nor for the company’s survival, but to direct ‘ever more money to those at the top of American society.’  

Foxconn is compelled to keep all costs to a minimum by Apple and its other contractors, a number of computer and smartphone multinationals.

Eighteen of their employees attempted suicide in 2010, which resulted in 14 deaths. This prompted 20 Chinese universities to compile a report on the company, in which they described the manufacturer as ‘a labour camp’.

Jared Burnstein, who until 2011 was an economic advisor to the US Government, has said of Apple: “If it’s the pinnacle of capitalism, we should be worried.”

For more on this story and many others, follow Mancunian Matters on Twitter and Facebook.