Can Apple’s $1 Billion Pledge Help Revitalize American Manufacturing?

The newswires went abuzz this week after Apple CEO Tim Cook told CNBC’s Jim Cramer that his company plans to launch a $1 billion fund to accelerate advanced manufacturing jobs across the United States.

Cook’s timing was prescient, considering how quickly companies have promised to either keep manufacturing operations stateside or pad the number of American jobs already on the books. The decline in manufacturing jobs in part led to Donald Trump’s surprise victory over Hillary Clinton last November.

And the enthusiasm for a resurgence in manufacturing is obvious when considering how well these jobs pay. According to the latest numbers released by the U.S. Bureau of Labor Statistics (BLS), manufacturing jobs, when available, can lead to a decent middle-income lifestyle with the average wage well over $26 an hour. Mining and logging pay even higher with hourly wages surpassing $32. Contrast those figures with retail jobs, which pay an average of $18 an hour; jobs in the leisure and hospitality services lag far behind, paying an average hourly wage of $15.33.

Cook was cagey on details. He said the company’s decision was in no way was influenced by the president. Furthermore, this is also not a promise to hire more American employees, but instead a commitment to help boost the American manufacturing sector’s potential in the coming years.

Cook also said Apple is ready to invest in another company in order to pursue this agenda, though he declined to name any specific firm. More details will reportedly be announced later this month.

Technology companies are often criticized by critics of free trade and offshoring, especially since many of these firms moved their manufacturing operations overseas years ago. Apple itself outsourced the vast majority of its manufacturing to its overseas supply chain; and its relationship with the electronic devices manufacturer Foxconn subjected the world’s most valuable technology company to rampant criticism several years ago.

Cook’s announcement indicates a slow turnaround from two decades of standard business practices in the technology sector. But there is a huge caveat: He made it clear during Wednesday’s talk with Cramer that this new fund will focus on advanced manufacturing jobs.

As publications including the New York Times have pointed out, this niche of manufacturing does not exactly cover mass-produced widgets or durable goods such as air-conditioning units or kitchen appliances. In general, this sector manufactures high-value products, including electronics, medical devices, energy technologies and cars. And these sectors are not reliant on scores of workers at an assembly line – they increasingly turn to workers who have some background in coding, as well as next-generation advances in 3-D printing and automation.

As Don Lee of the Los Angeles Times wrote during the heat of the presidential campaign last summer, we are witnessing a trend of companies that are either returning to the U.S. to open factories or supplementing their stateside operations.

True, manufacturing in China is not the cheaper and more viable alternative it was earlier this century. Chinese workers are demanding higher pay, and turnover at many factories is high. But more companies designing a range of products from electric toothbrush heads to bicycles have concluded that it makes more sense to have the “Made in the U.S.A.” label, especially when advances in technology and automation allow factory managers to hire fewer employees – and not necessarily pay those heady wages on par with BLS averages.

The truth is, U.S. manufacturing output is increasing, and has been for several years. But automation, which has a broad reach from coal mining to automobile assembly lines, will continue to displace workers. And no one in either government or business has come up with a solution that can address the needs of not only older people who cannot find work, but also younger citizens who still have a long working life ahead but limited job options.

Image credit: Scott Beale/Flickr