Apple's Holiday Gift to America

For years, investors have focused on companies' short-term profits and cash dividends, but neglected the long-term view of how great companies actually help the economy and long-term financial health.

Apple's (NASDAQ: AAPL  ) recent announcement that it's bringing some manufacturing back to the U.S. is a noteworthy step in a truly positive direction -- one that ensures investors receive healthy profits and dividends for decades to come.

The holiday gift with a $100 million price tag
This week, Apple CEO Tim Cook announced that the company plans to spend $100 million next year to shift production of one existing Mac line from China to America.

Granted, this represents just a tiny part of Apple's manufacturing footprint, since the technical nature of iPads and iPhones makes them far more difficult to produce in the U.S. In addition, much of the production may actually be automated, which doesn't necessarily indicate droves of new jobs.

Cook -- not to mention Steve Jobs before him -- has blamed a lack of workers with the necessary skills, not cost, for the relative lack of consumer electronics manufacturing in America. In that sense, Cook pointed out that this is not exactly a case of returning this kind of manufacturing to some mythical sense of former glory on U.S. soil -- Silicon Valley runs on different parts than Detroit -- but rather starting from scratch.

However, while many of the components in consumer electronics are largely sourced from Asian suppliers, Cook also pointed out that many all-important chips are made in America.

Still, I'd like to hope this will be a huge and positive step for Apple and America. Apple is big, innovative, profitable, and cash-rich enough to try to foster skills and create jobs in our floundering U.S. economy. And of course, speaking of cash-rich, Apple's $100 million in investment on this facility is absolutely nothing compared to its $29 billion cash stockpile. Apple could do more, and hopefully it will.

Given the argument that Americans tend to lack the know-how required for such jobs, responsible businesses could supply much-needed training that our educational system somehow fails to provide after 12-plus years of schooling. Furthermore, there should be more options for vocational training for those who would rather not go on to tackle the expense of higher education.

Companies like Apple could help more Americans find honest work making great products right here at home.

Top of the wish list
Apple's announcement isn't just about Apple. It's about something that should be on our collective holiday wish lists for our country.

Gainful employment provides what is known as a multiplier effect, meaning that the impact of employed people's spending spreads out into the overall economy. We all probably have a basic sense of this: The more people who have jobs, particularly good ones, the more money is spent on goods and services, providing more jobs, and so forth.

Contrast this with recent criticism of Wal-Mart's (NYSE: WMT  ) treatment of its employees. Although rival Costco (NASDAQ: COST  ) is lauded for providing living wages, benefits, opportunity for advancement, and respect for its employees, Wal-Mart falls very short.

Although Wal-Mart's defenders will say the mega-discounter provides jobs in America, the low wages and shoddy benefits actually perpetuate the plight of the working poor, people who need to turn to the government for health care and other aid. In a way, Wal-Mart lets American taxpayers subsidize its own businesses, which isn't economically expansionary, and I'd say pretty darn un-American. I recently joined the chorus of folks who believe Wal-Mart's a strong enough company to try to do better, not worse, for American workers.

Surprisingly, Target (NYSE: TGT  )  actually pays its workers a tad bit less than Wal-Mart, as do many other big-box retailers, even though Wal-Mart tends to bear the brunt of the criticism.

On a higher note in the retail world, though, Starbucks (NASDAQ: SBUX  ) recently increased the number of stores it expects to open in the U.S. to 1,500 over the next five years. That represents more U.S. jobs, and they're solid ones, too. Starbucks ranked No. 73 on Fortunes' list of 100 Best Companies to Work For in 2012, due to the fact that its huge part-time workforce receives full health care benefits and stock awards.

Starbucks CEO Howard Schultz has also been proactive about American job creation beyond his own corporation's "backyard," having helped spearhead the "Create Jobs for USA" initiative, which has provided $100 million in low-interest loans to give small businesses a boost.

This gift is a great investment
Companies like Costco and Starbucks actually do appear to have managements that recognize the common sense truth that Henry Ford did many, many years ago: If you treat (and pay) your employees well, they will not only be happy and motivated, but they will also be able to buy your own company's products. Let's add in the multiplier effect: They also contribute to the economic expansion that allows more and more consumers to purchase your products, too. That's win-win.

Hopefully, Apple can make more proactive moves in a pro-American job-creation vein. Short-term investors bray for short-term profits, right-now "special dividends." True long-term investors -- and the smartest corporate management teams -- know that boosting their own employees' means actually helps ensure that the economic outlook will be better for all of us over the long haul.

I started off implying that Apple's giving a holiday gift to America, one that might keep on giving. But the truth is, "gifts" like this one are actually bigger than we think; they're the best investments out there.

More expert advice from The Motley Fool
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more impor, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.


Read/Post Comments (15) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 07, 2012, at 4:08 PM, Remoss wrote:

    Yes, good press stuff trying to make their people proud... lol

  • Report this Comment On December 07, 2012, at 4:13 PM, NajdorfSicilian wrote:

    While the socialist bent to this missive is amusing, I think the author is confused.

    As a fiduciary, my moral AND legal obligation is to my investors. Not to some imaginary crowd of absurdly titled stakeholders.

    The same is true of Apple's board.

  • Report this Comment On December 07, 2012, at 6:58 PM, SuntanIronMan wrote:

    They already assemble some Macs in United States (ones that are made to order, it seems).

    Since Tim Cook did not mention what Mac line he would being to America, I'm going to speculate and say it is the Mac Pro. Seems like the easiest one to bring to America. In terms of how many computers they will have to make (not many) and the ease of building a tower desktop over a MacBook Air style computer, the Mac Pro seems like the most logical choice to bring to America.

  • Report this Comment On December 08, 2012, at 11:20 AM, moneytrail wrote:

    Dear Alyce in Wonderland:

    Perhaps your “analyst” skills are more suited to Rolling Stone Mag than Motley Fool.

    Although Apple’s move to bring jobs back to the US warms your heart and curls your toes in this Christmas Season, the fact is the move is a PR move directed at soft heads who believe products should be built in America regardless of the impact on the company’s investor profits or the elevated costs for American consumers.

    The primary reason we don’t build things in America, as we did in the past, is because of elevated production costs primarily driven by industry destroying unions and government bureaucrats whose purpose in life is to promulgate ever more, pointless regulations. Oh, let’s not forget our public education system that has been transformed into a golden goose for union teachers, while failing to teach our children basic reading and math skills.

    Then, as is usual in many of your Wonderland articles, soon after you lament that American workers are ill prepared for the jobs available to them, rather than shine the light of reason on the true culprit – teachers’ unions and an antiquated, hyper-expensive education system, you attack American icons like Wal-Mart. Despite the fact that Wal-Mart provides solid investment returns for investors (it’s primary reason for existing), bargain prices for hard working families enabling them to stretch their food budgets so they can purchase better quality foods for their families and, entry level training jobs along with a clear path to advancement, for otherwise unemployable workers, you still expect them to pay above market wages because it fits your dizzy “fairness” moral blueprint.

    To further highlight the horrors Wal-Mart brings upon its employees you contrast how Starbucks, with its $5 coffee and Apple, with its $1000 iPads, “humanely” treat their employees. Here’s a tip: it’s all in the margins – Apple, Starbucks – high margins, affluent customers; Wal-Mart – low margins, low cost, good quality for much less affluent customers.

    Perhaps you should work at Wal-Mart for a period of time so you can better understand the immense social value it provides for low to no-skill job market entrants, for those tens of millions of struggling Americans who can afford nutritious

    food because of Wal-Mart’s aggressive low overhead, low margin business model and; as important to some of us, for the investors who entrust their hard earned dollars to the principals of Wal-Mart who are responsible for the successful execution of Wal-Mart’s business model that provides exceptional value for its tens of millions of customers.

    Some of us actually started our working careers in low skill, low paying jobs. If we didn’t earn as much as we would have liked, we got a second job! Eventually, with hard, smart work we worked ourselves to bigger responsibilities and higher wages. I wish I had a Wal-Mart to help me along that path of advancement.

    I hear People Mag, Huffington Post and Rolling Stone are looking for “feel good” writers, with little sense about business or realty.

    Good luck!

  • Report this Comment On December 08, 2012, at 7:43 PM, sciencedave wrote:

    Everyone should understand their are lots of articles on the Mötley Fool. Some writers you may agree with and some you don't. Many take opposing views. That's why I like the Fool. First, seek to understand....but don't bash the writers personally if you don't agree.

  • Report this Comment On December 10, 2012, at 10:15 AM, mainelefty wrote:

    To all the above "capitalists"

    The idea that it is the responsibility of the fiduciaries managing American businesses to favor short term results and near term money outcomes to longer term ideas is non sense fostered in part by American business schools, which focus on microeconomic factors related to the current circumstances of an enterprise to the exclusion of wider considerations. The logic of this is that everything can be outsourced with impunity to places where economic distress is routinely exploited without consequences.

    This is little better than a rehash of the "iron law" of the nineteenth century, which is most famous for justifying the policies, much regretted to be necessary at the time, permitting the massive exporting of food from Ireland while the population starved and a third died, with millions fleeing.

    Of course, the ideas were preposterously wrong. Ireland today has several times the "maximum population" of the time.

    The fact is that the exploitation of low cost opportunities in less developed countries for production while marketing to the higher wage middle class in developed countries is a way to abuse the "economic commons" represented by the consumer population of the developed world. It is little different than avoiding marginal costs by fouling air or water, or harvesting forests unsustainably, or depleting topsoil or aquifers. It is ultimately self defeating.

    I don't think Apple is likely to avoid all their low cost opportunities in third world areas. In the end, however, their success will only depend on innovation, not the skill with which they exploit children. By direct or indirect process, the people in those places will eventually end the exploitation in some way, most likely by increasingly "socialist" policies like child labor laws, mandatory retirement security, universal education and health care.

    The company that prepares for that now is protecting their shareholders and preserving their competitive abilities.

  • Report this Comment On December 10, 2012, at 11:31 AM, moneytrail wrote:

    Sciencedave – pointing out ill-informed opinions by so-called “professional analysts,” like Lomax, is the result of understanding her child-like rants against companies like Wal Mart. Attacking opportunity creators, such as Wal Mart, while bemoaning the flight of jobs overseas, speaks volumes about the ignorance of Lomax about the vital role companies like Wal Mart play in lifting those without work skills by providing a path to personal economic success. She doesn’t understand the most basic principles that underlie a successful economy. Namely, the marketplace, not feel good sentiments about how to spend others’ money (investors in this case), is the driving force that objectively determines pay rates. Paying artificially elevated wages over an extended period of time, as forced by unions, will ultimately force those companies to either close their doors, or move to a venue where wages conform to the global marketplace. This is not opinion; it is a basic principle of human behavior, expressed in economic activity.

  • Report this Comment On December 10, 2012, at 3:12 PM, JAMKelly wrote:

    Where's that old cliche about why this country was built? Aren't we forgetting that God played a part in the development of this country and yet today we treat the workers of such companies as Wal-Mart like the current slaves. Why do you Republican Capitalists think the only important thing in this country is the ALMIGHTY dollar? Why can't you think of our brothers and sisters trying to earn a living wage? You really don't need two, three and four of everything while they don't even have the basic necessities!

  • Report this Comment On December 10, 2012, at 4:46 PM, moneytrail wrote:

    JAMKelly -- stereo-typing is so much easier than thinking, isn't it?

    Equating working for minimum wages with slavery is tantamount to comparing spreading other people's wealth around as compassion; a leap only a Marxist can make. If someone isn't earning enough in their current endeavors, they can work harder, learn and move up the economic ladder, as most successfull people did. Sometimes that may mean getting a second job and/or more education and training. Of course, the losers among us can renounce the rigors success requires and live with government handouts, paid by successful people.

    Working hard, earning and paying one's own way, even if it takes more than one job, is what responsible people do. Enjoying the fruits of one's own success is neither evil nor selfish; it is what successful people have earned the right to do.

    Most successful people weren't born that way, they made it happen. Jealousy and envy are poor substitutes for hard work and gratitude toward those who provide a chance to enter the economic mainstream with entry level jobs, so others can begin the process of career growth.

    Self-righteous condemation of "too much wealth" signifies an inability to understand the hardships associated with success and an unwillingness to acknowledge the magnanimous and giving nature of many successful people.

  • Report this Comment On December 11, 2012, at 10:36 AM, tdotsports1 wrote:

    Did you really say you can buy nutritious food at wal-mart? Good grief.

  • Report this Comment On December 11, 2012, at 10:46 AM, getrichslowfool wrote:

    Last I checked, most wal-mart supercenters have a "produce" section that offers cheaper fruits and vegetables than Whole Foods (imagine that).

    Do you even know what nutritious food is? Have you even been to a wal-mart?

    "Good grief..."

  • Report this Comment On December 11, 2012, at 7:32 PM, tdotsports1 wrote:

    I have no idea what cheap, chemically laden, non-organic produce is. Can you tell me?

  • Report this Comment On December 11, 2012, at 7:34 PM, tdotsports1 wrote:

    ..and no, I wouldn't be caught dead in a wal-mart.

  • Report this Comment On December 11, 2012, at 10:32 PM, moneytrail wrote:

    Well tdotsports; that's certainly your prerogative. Perhaps you don’t want to shop among the “unwashed.” However, many people don’t have that choice because of budget constraints. Sounds like the only place you buy coffee is Starbucks.

  • Report this Comment On December 12, 2012, at 7:47 AM, osho2025 wrote:

    I'd like it if everyone that reads this post go directly to Apple's investor relations website, get their contact information or phone number, and write or call them to say that shareholders what $$CASH payments now instead of spending our money on things that make no sense. Call and write now. Its time Apple pay its shareholders now.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2144807, ~/Articles/ArticleHandler.aspx, 10/30/2014 1:46:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement