Question: For years it has been cheaper to manufacture many products

For years, it has been cheaper to manufacture many products overseas (China and other countries) than in the United States. Labor is still less expensive overseas than in the U. S., but the cost difference has been decreasing.
Late in 2012, Apple announced it would be building some Mac computers in the United States for the first time in about ten years. 1 It will be investing $ 100 million in 2013 in these new U. S. manufacturing facilities.
In 2013, Google’s Motorola announced that it would be assembling its Moto X smart-phone in Fort Worth, Texas, making it the first smartphone assembled in the United States. Also in 2013, Lenovo opened a new ThinkPad manufacturing facility in North Carolina.
For these companies, it is likely that the capital budgeting proposals for the U. S. manufacturing sites did not meet the companies’ standard capital budgeting criteria. Yet the companies are still opting to manufacture some products in the United States, where it is, for the time being, more expensive than other locations.

1. Why did Apple make an announcement in 2012 about its manufacturing operations ­upcoming in 2013?
2. What qualitative factors would likely have been considered when Apple, Google, and Lenovo made their decisions to invest in U. S. manufacturing facilities? In other words, why would Apple, Google, and Lenovo decide to manufacture products in the United States when all of these companies have well- established facilities and supply chains in China?
3. What challenges will these companies likely face in manufacturing products in U. S. plants?
4. What stakeholders are impacted, either positively or negatively, from the decision to manufacture in the United States? How are these stakeholders impacted?
5. What ethical issues potentially arise from not producing in the lowest cost location?

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  • CreatedAugust 27, 2014
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