{"id":102620,"date":"2026-05-22T04:00:08","date_gmt":"2026-05-22T08:00:08","guid":{"rendered":"https:\/\/quotulatiousness.ca\/blog\/?p=102620"},"modified":"2026-05-21T16:18:34","modified_gmt":"2026-05-21T20:18:34","slug":"re-shoring-manufacturing-isnt-the-answer","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2026\/05\/22\/re-shoring-manufacturing-isnt-the-answer\/","title":{"rendered":"“Re-shoring” manufacturing isn’t the answer"},"content":{"rendered":"

On Substack, Tim Worstall<\/a> uses the examples of Apple and Foxconn to illustrate that most of the value generated isn’t<\/em> in the manufacturing side of the equation:<\/p>\n

\"\"<\/a>

Yes, I know Apple is up to the iPhone 17 now, but it’s still as true about (some) iPhone addicts now as it was then.<\/p><\/div>\n

Apple’s market capitalisation — the contribution to human wealth of the firm — is 4.3 trillion<\/a> of those American dollars. That of Hon Hai Precision<\/a> — most of us will know that better as “Foxconn”- is $3.1 trillion $. But those are the fun, New Taiwanese, dollars, which equals some $113 billion US dollars. Given the imprecision of what follows let us round those to $4 tr and $100b. Apple is worth 40 times Foxconn.<\/p>\n

Now it’s not wholly true that Apple manufactures nothing. I think they — more so they say they do so than anything else — make some of the Macs themselves. And perhaps some number of their processing chips but I think even that is outsourced to other foundries, isn’t it? It’s also true that Apple uses more than one manufacturing company — Pegatron is a name I’ve heard around.<\/p>\n

It’s also not true that Foxconn only works for Apple. It takes on that manufacturing and assembly work from a number of companies. Which is where my imprecision comes in, for I’m — just to make the example — going to assume that Foxconn does all and only Apple’s manufacturing, Apple does no manufacturing and sends it all to Foxconn. Those are incorrect assumptions but they’re good enough for this jazz hands of an argument.<\/p>\n

So, designing stuff then selling it produces 40x the capital value of manufacturing it. We also know that Apple runs at 40% net margins and Foxconn most certainly does not. My numbers are a little out of date but it’s not all that long ago that the cost to assemble — ie, “manufacture” — an iPhone was perhaps $10.<\/p>\n

We have pretty clear evidence that the place to make money in the global economy is sitting in an office and thinking therefore. Not out there bashing metal. So, why is it that so many say that the UK — and the US — must reshore all that manufacturing so as to get rich?<\/p>\n

One explanation is as with that of the Physiocrats. French economists — and therefore wrong, they’re French — back in the old days who insisted that only growing food was real wealth production. They were musing over their brioche rather before anyone really manufactured anything — rather than artisaned — true but they have, of course, been proven wholly wrong. They might well have been about right for the centuries before them but were wrong by the time they wrote it all down.<\/p>\n

We can extend the analogy to today. Yes, it has been true for much of the past couple of centuries that lots of manufacturing is what makes a place rich. Now, as with Apple and Foxconn this ain’t so. But some are still stuck in that old way of thinking.<\/p>\n

Could be.<\/p>\n

We can approach the same point from another direction. Actual manufacturing is something that is, these days, done by poor people in other countries. Why assume that if we did it it would make us rich? <\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

On Substack, Tim Worstall uses the examples of Apple and Foxconn to illustrate that most of the value generated isn’t in the manufacturing side of the equation: Apple’s market capitalisation — the contribution to human wealth of the firm — is 4.3 trillion of those American dollars. That of Hon Hai Precision — most of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[831,25,15],"tags":[160,27,859,547],"class_list":["post-102620","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-technology","tag-apple","tag-iphone","tag-manufacturing","tag-smartphones"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-qHa","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/102620","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=102620"}],"version-history":[{"count":2,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/102620\/revisions"}],"predecessor-version":[{"id":102622,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/102620\/revisions\/102622"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=102620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=102620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=102620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}