Tech

Trump Says Apple Will Build Three U.S. Plants. It Won't.

The business press should know by now that the president is not a reliable source. Investors figured that out.

This is Apple's U.S. footprint: retail, not manufacturing.

Photographer: Mark Kauzlarich/Bloomberg

President Donald Trump's latest media interview brought this not-very-revealing revelation: Apple Inc. promised the president that it would build "three big plants, beautiful plants," he said.

I have no idea what the president meant, and Trump didn't elaborate in the interview. Clearly the president wants to take credit for convincing the world's most valuable public company to start making iPhones in U.S. factories that hire U.S. workers. It's a pledge Trump made when he was campaigning for president. But there is a zero percent chance this is true.

Apple doesn't build or operate factories -- except a lonely one in Ireland that manufactures some Mac computers but exists mostly for tax reasons. Apple made itself an American success story by helping to create one of the world's most intricate manufacturing and production networks -- in Asia, owned and operated by Apple's corporate partners in Asia, employing people in Asia. This won't change by U.S. presidential decree.

We're all left to parse the real meaning behind the president's words. This is the impossible situation faced by both the political and the business press in trying to write about public figures who shoud be authoritative sources, but can't be believed.

It's possible the president and Apple have discussed or reached agreement on expanded U.S. facilities that aren't Apple-owned manufacturing plants. There are a few existing middlemen companies that do at least some assembly of relatively small numbers of Mac computers in places like Austin, Texas, and Fremont, California. 

Maybe Apple is working to expand the work of these middlemen in the U.S. That's not what Trump said, of course, but Apple CEO Tim Cook has previously boasted about these contract manufacturing companies as signs of Apple's commitment to U.S. production.

It's also possible Trump was referring to new factories under consideration from the companies that make iPhones or parts used to make iPhones and other Apple gadgets. Foxconn, the Taiwanese company that assembles iPhones under contract with Apple, is scouting for locations to build a U.S. factory, and Trump is expected to announce one on Wednesday. This potential future factory won't be making Apple products, however, even if it does one day materialize. Foxconn hasn't followed through on previous pledges to invest millions to create U.S. jobs.

Cook also said the company planned to invest at least $1 billion to support advanced manufacturing companies in the U.S. Corning, which makes glass used in iPhone and iPad screens, was the first recipient of money from this Apple investment pool. Again, these are not Apple plants, but they do create jobs in the U.S.

Maybe the president was referring to new Apple server complexes. Apple operates these warehouses full of computer equipment in places like North Carolina and Nevada (in return for big tax breaks) to store people’s files including photos and iTunes music. It's worth noting that these computer facilities are highly automated and require very few workers. Some of these data centers Trump might find "beautiful," if he enjoys giant complexes stuffed with computer equipment and chilled to a temperature that is uncomfortable for humans.

Or maybe when he said "three big plants," he meant lower-case "apple."

No matter what Trump says, a "made in America" iPhone isn't coming. If Apple planned to start its own manufacturing facilities in the U.S. or anywhere else, it would need to completely upend how it does business. Its stock price would be tanking. But Apple shares are up about 75 cents on Wednesday. Investors by now know not to take the president's comments literally.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Shira Ovide at sovide@bloomberg.net

    To contact the editor responsible for this story:
    Philip Gray at philipgray@bloomberg.net

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