Apple’s planned investment of $100 million next year in a U.S. manufacturing facility is relatively small, but still important. Apple has the money, talent and resources to build a highly automated factory that turns out products that are potentially cost competitive with those it now makes in China.
Apple has already demonstrated its use of automation in the manufacturing of some of its MacBook products, including the MacBook Air. It was built with what the company calls its “unibody design” that was crafted from a single sheet of aluminum.
A 2009 Apple video of its unibody manufacturing process has glimpses of highly automated systems shaping the metal. In it, Jonathan Ive, Apple’s senior vice president of design, talked about the manufacturing process. “Machining enables a level of precision that is just completely unheard of in this industry,” he said.
Apple has the know-how to build one of the world’s most modern plants, and if it succeeds, it could influence others to build in the U.S. But success will mean holding down costs, and to do so, Apple will likely rely heavily on automation, say analysts and manufacturers.
Larry Sweet, the CTO of Symbotic, which makes autonomous mobile robots for use in warehouse distribution, described a possible scenario for the Apple factory.
First, a robot loads the aluminum block into the robo-machine that has a range of tools for cutting and drilling shapes to produce the complex chassis as a single precision part, Sweet said.
A robot then unloads the chassis and sends it down a production line where a series of small, high-precision, high-speed robots insert parts, secured either with snap fit, adhesive bonds, solder, and a few fasteners, such as screws. At the end, layers, such as the display and glass, are added on top and sealed in another automated operation.
“Finally, the product is packaged and packed into cases for shipping, again with robots,” Sweet said.
The importance of robots in warehouse distribution was illustrated in March, when Apple’s tablet-making rival Amazon announced an agreement to buy Kiva Systems, a company that also makes autonomous mobile robots to work in warehouses, for $775 million.
Apple CEO Tim Cook has not said whether Apple’s manufacturing plant will build products from scratch or assemble materials. Some see this relatively small manufacturing investment as an effort to counter criticism about the company’s reliance on China, where it now makes its products. Apple’s revenues are at $156 billion.
But it may be shortsighted to dismiss what Apple is doing as a public relations move.
Whatever Apple builds, “you can guarantee it will be using the most up-to-date and modern factory automation equipment that one can buy,” said Robert Atkinson, president of The Information Technology & Innovation Foundation and author of Innovation Economics: The Race for Global Advantage.
Atkinson said Apple will build a leading facility partly because it’s Apple, but also because of the relative high cost of U.S. labor. “You’ve got to use automation more than you might in China,” he said.
“One of the potentially significant things about the Apple announcement is it could send a message to American companies–you can do this–you can make this work here,” Atkinson said.
Michael Palmer, an IDC analyst who researches electronics manufacturing, said that by having a manufacturing plant in the U.S., Apple will save on shipping costs and shorten the time a product is in inventory.
Palmer also pointed out that labor costs in electronics manufacturing are already relatively low, about 8 percent of the total manufacturing cost. “It’s all about having volume,” he said.
In the mid-1990s, Apple did make products in the U.S., and Jim Daly, manufacturing expert, helped to set up one of their plants.
Apple originally built a factory that was highly automated, but it wasn’t flexible and couldn’t adapt quickly to changing needs. At the time, Daly was working for a contract manufacturer that was hired by Apple, which quickly set up a factory to build two models of the Mac. That plant relied more on labor and less on automation to get its flexibility, he said.
Today, Daly is vice president of manufacturing and operations of Rethink Robotics, which makes robots for manufacturing. These robots are designed to be flexible enough to adapt to fast-changing manufacturing requirements.
But Rethink Robotics also has a story to tell about U.S. manufacturing. Over his career, Daly has set up manufacturing operations in the U.S. and in Asia, and “what we found is there are some really competitive companies here.”
Rethink doesn’t manufacture or assemble its robots, but works closely with suppliers in the design process and then orchestrates the integration and assembly, Daly said.
“All the plastics, all the metal, the tubing, the gearboxes, the circuit boards are all manufactured in the U.S.,” he said. “U.S. supplier quality and efficiency, quite frankly, can be much higher” than in lower-cost overseas regions of the globe, said, Daly said. “Low cost labor hides a lot of sins.”