Apple kicks off 'made in USA' push with Mac Pro

Peter Burrows

Published 4:51 pm, Wednesday, December 18, 2013

Apple will take orders Thursday for the new Mac Pro personal computer, which is being built in Texas with components made domestically as part of Chief Executive Officer Tim Cook's $100 million "made in the USA" push.

"We have begun manufacturing the Mac Pro in Austin," Cook wrote in a posting Wednesday on Twitter. "It's the most powerful Mac ever."

The cylindrical machine, which runs on Intel's latest Xeon chip, will be available to order at a starting price of $2,999, Apple said. While Google and Lenovo are doing some final assembly in the United States of parts made overseas, Cook said in October that Apple is manufacturing - not just putting together - the Mac Pro's metal parts in the United States.

"The difference with us is that we're taking a bottoms-up approach," Cook said at the time. "We don't want to just assemble the Mac Pro here, we want to make the whole thing here. This is a big deal."

Apple's partners are using industrial molds and production processes that were developed in the United States, he said.

Cook's pledge to domesticate some production followed years of criticism from labor advocates about conditions at contractors' plants in China, where most of Apple's products are built. Though Apple, the world's largest technology company, hasn't announced plans to make other products in the United States, recent investments suggest it may head in that direction, including a new plant in Mesa, Ariz.

Quick calculations

The newest version of the Mac Pro, a top-of-the-line computer used by graphic designers and filmmakers who require the fastest performance, is going on sale at the height of the holiday shopping season in customizable configurations starting at $2,999 and $3,999.
The sleek, rounded black machine, which looks like a space-age trash can or a small jet engine, is 9.9 inches tall and is an eighth the size of the current Mac Pro, the company said. Intel's Xeon processors will let it handle some calculations at twice the speed of the existing model, Apple has said, and will use 70 percent less power because of its smaller size. The computer comes with 256 gigabytes of flash-based storage, expandable to 1 terabyte - the equivalent of 1,000 gigabytes.

So far, the company's push isn't poised to have a big impact. Of Apple's $170.9 billion in annual revenue, more than 70 percent of that comes from the iPhone and iPad tablet, which are built in China. The new Mac Pro will probably contribute less than 1 percent of Apple's sales in 2014, said Gene Munster, an analyst at Piper Jaffray. He predicts the company will sell 1.1 million Mac Pros in 2014, compared with 300 million iPhones and iPads.

Other large technology companies have also been doing more work in the United States, yet few have begun manufacturing components in the country.

Apple has faced stepped-up scrutiny of its overseas labor in recent years. Allegations of use of underage workers, forced overtime and other infractions have led the company to investigate conditions at Chinese manufacturing partners Hon Hai Precision Industry Co. and PegatronCorp. Apple has joined the Fair Labor Association, and publishes regular results of hundreds of factory audits in a Supplier Responsibility Report.

'A drop in the bucket'

In December 2012, Cook told Bloomberg Businessweek that the company would spend $100 million to build a new version of one of its Mac models in the United States. In testimony before the U.S. Senate in May, Cook said the Mac Pro would be assembled in Texas using parts made in Illinois and Florida and equipment made in Kentucky and Michigan.

Last month, the company said a new Arizona plant will employ 2,000 people to produce a glass alternative made of synthetic sapphires, increasingly used in smartphones to cover camera lenses and home buttons.

Cook declined to say how many total jobs Apple might create in the United States.

Some of Apple's suppliers are already taking steps to boost their operations in the United States. Last month, Hon Hai said it would spend $30 million to build a factory in Harrisburg, Penn. Hon Hai CEOTerry Gou said the focus at that plant would be developing automation technologies, not creating job-intensive production lines.

Given the lower labor costs and smooth supply chain Apple has built in Asia, the company may never bring high-volume manufacturing of devices such as the iPhone back to the United States, said Mike Fawkes, who oversaw Hewlett-Packard's supply-chain operations until 2008. While labor costs in China have been rising in recent years, they are still 60 percent lower than those in the United States, according to Boston Consulting Group.

"It's a positive sign to see Hon Hai further establish its U.S. presence," Fawkes said. "That said, a $30 million factory is a drop in the bucket for manufacturing of any consequence."