iPhone Production Doesn’t Have To Stay In China

iPhone Production Doesn’t Have To Stay In China

June 30, 2019

The China-U.S. trade war has disrupted traditional supply chains with threatened (and partially implemented) tariffs on hundreds of Chinese exports.  The 25% tariff would impose a severe tax on Apple’s iPhone, its “most profitable product”.

Hon Hai Precision Industry, also known as the Taiwan contract manufacturer Foxconn, is the primary partner for Apple products.  According to their semiconductor division chief Young Liu, Hon Hai has sufficient production capacity outside China (estimated at 25%) if Apple asks its partner to relocate production outside of China.

Such a relocation for final assembly is described as “easy”, but not so the full production of components that go into the final product.  It would likely mean moving other assembly from non-U.S. companies back into China.  Currently, Foxconn is testing quality for mass production of the iPhone XR near Chennai.  Further, there is the future prospect of the Wisconsin plant to further diversify some aspects of the iPhone production.

To date, Apple has not announced any plans for such a change in its production strategy, but further uncertainty regarding the tariffs could change that.


Video Spotlight: Apple Doesn’t Need to Make All iPhones for U.S. in China


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Border Politics Disrupt Mexico-U.S. Supply Chain Movements

Border Politics Disrupt Mexico-U.S. Supply Chain Movements

April 20, 2019

President Trump’s threat to close the Southern border has disrupted supply chains as delays are building for commercial vehicles crossing the border, especially northbound.

Delays of ten hours above normal are reported, and the threat of a total closure is accelerating efforts by shippers in Mexico to get goods loaded and moving.  This, in turn, accelerates the congestion at the border, made yet worse by the reassignment of 750 Customs and Border Protection Agents.

The threat of a border closure- despite assurances it is not imminent- is intended to pressure Mexico to do more to constrain the flow of refugees to the border.  At the same time, the re-negotiated NAFTA deal is pending a House vote, adding further to uncertainty.


Video Spotlight: Ripple effects of a potential Mexico border shutdown


This post is based on the Industry Week article, Mexico Border Wait Times Spike, by Michael Hirtzer and Thomas Black, April 8, 2019, and the YouTube video, Ripple effects of a potential Mexico border shutdown, by USA Today, April 3, 2019. Image source: Rouzes/Getty Images

Discussion Questions:

1. What uncertainties are shippers facing on cross border movements between the U.S. and Mexico?

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Model 3 Output Is Not Tesla’s Only Problem

Model 3 Output Is Not Tesla’s Only Problem

February 22, 2019

Since the fourth quarter of 2018, Tesla has successfully ramped up production of the Model 3 to gradually reduce the accumulated backorders for this “affordable” EV. However, as new owners experience minor accidents or mechanical problems that require service, too often the needed parts can take months to arrive.

Customer complaints are rising about these delays and flaws in newly delivered vehicles.  Elon Musk commented on the poor logistics of parts management, but the problem goes deeper since the number of service centers is limited to Tesla’s own network of 85 locations.

It is significant that Consumer Reports latest ratings position Tesla at 27th of 29 brands evaluated, a slide of six spots.


Video Spotlight: Top 2 most common supply chain problems


This post is based on the Breitbart article, Tesla is Failing to Service Its Customers’ Vehicles, by Lucas Nolan, February 11, 2019; the Wall Street Journal article, Tesla is Cranking Out Model 3s- Now It Has to Service Them, by Tim Higgins, February 10, 2019; and the YouTube video, Gerard Schouten shares top 2 most common supply chain problems, by Supply Chain Secrets, August 29, 2017. Image source: Shutterstock / Joey Continue reading

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