My colleague, Paul Studebaker, who was my direct predecessor as Editor of Control has written a fascinating editorial at his new venture, www.sustainableplant.com. I have decided that what he's saying is important enough that I want to reproduce the editorial here entirely. You can comment here, or you can comment on SustainablePlant, or via email to firstname.lastname@example.org.
Herewith is Paul's editorial:
What Apple Could Do with Its $76 Billion
By Paul Studebaker, Editor-in-Chief August 29, 2011 04:13:18 pm
Many of my coworkers, friends and family members are very fond of Apple products. While I don’t share their amazing loyalty to the brand, I do admire the company that has managed to earn it, and certainly believe it deserves to charge for it. So when, unlike his PC-loving older brother, my younger son requested we replace his well-worn Dell with an iMac back in 2007, we took him seriously and shelled out the premium price over an equally functional PC.
He was 13, in middle school, involved in music and science, and forming a direction. We bought the machine on Apple’s Web site and followed its progress, with no small dismay on my part, as Apple chronicled its manufacture and journey from, as I recollect, Shanghai to Beijing, over the Arctic Circle to Alaska, then Chicago and our home. It’s not easy for an American father of my generation to explain to a budding technologist why his new computer is coming from China.
I’ve been reminded of the purchase of that iMac and of that son’s many subsequent Apple products by recent stories in the news about the $76.2 billion cash-on-hand that Apple reported at the end of the second quarter. Some of the articles included interesting observations (“It’s more than the GDP of 126 of the world’s nations”) and excited thoughts about what the company could do with the money (“Buy Hulu! Pay a dividend! Put a big down payment on Facebook!”).
I’d like to add my voice to those who’ve suggested that Apple might invest some of it in developing a U.S. manufacturing system that would produce its products at a lower cost than a Foxconn factory in Chengdu. My reasons go beyond those of, for example, “Thomas,” who commented on a news story, “Here's an idea, they could use that money to build their amazing devices in a country where employees are treated like humans, or somewhere that environmental concerns are brought up.”
I’d remind Apple that many of its smartest, most creative and valuable employees live in the United States, where their success and happiness depends at least in part on the quality of life, environment, education and culture provided by a thriving economy and solidly funded government services. It’s in Apple’s best interest to fully participate in and help fund those employees’ personal, social and professional ecosystems.
It’s also worth mentioning that many of Apple’s current and potential customers also are in the United States. A significant percentage of them are looking for work, and an investment in the technologies, facilities and labor to develop a competitive supply chain and manufacturing capability in the United States would provide many more people the means for purchasing Apple products.
I’d add that mass-producing personal computers and electronics at a reasonable profit in the United States seems to have become a challenge beyond the capabilities of any manufacturer. Imagine the competitive advantage of figuring it out, and taking that intellectual capital global. Apple could do it.
Finally, Apple really needs to do something about its image. According to a recent study by Brandlogic comparing companies’ customer ratings with their actual performance on environmental, social and governance (ESG) factors, Apple is among the companies that are getting a lot more credit than they deserve for sustainability and social responsibility.
“[Companies] with high perception scores relative to reality may have significant value at risk if this gap persists,” reports Brandlogic. “This is because they may be benefiting financially (in valuation, cost of capital, etc.) from underestimation of their ESG vulnerability based on inaccurate assumptions of performance, which more thorough scrutiny may reveal.” The report says Apple, Google, Honda, Marriott, Visa and Walt Disney apparently fall in to this category.
It’s clear that Apple always will have strong loyalists, including many who have plenty of money even in a down economy, some who don’t care a bit about where their stuff comes from or how it was made, and a few who would forgo food to spend their last unemployment dollar on iTunes. But what about the rest of us?
My Apple-loving son is now 17, planning to become an engineer and beginning to be aware that there’s more than “cool factor” involved in purchasing decisions. When he and more of his generation start to understand why their jobs don’t pay more, their streets are full of holes and they can’t afford health care, they will start preferring to buy from companies that have their back.
Offering cell phones, devices, tablets and computers made in the USA would go a long way towards legitimizing Apple’s image as a sustainable company. Imagine the benefits to the U.S. economy, national pride, and Apple’s own employees’ self esteem.
It might even win over my older son, the PC.