President Obama recently met with Apple CEO Steve Jobs, who told him that there are 700,000 manufacturing contract workers in China making iPods, iPhones and iPads "and everything else we're cooking up," Obama told the inaugural meeting of his Council on Jobs and Competitiveness on February 24. If all of those Chinese workers were directly on Apple's payroll, the company would be ranked by Fortune Magazine in 2009 as the fifth largest employer in the world. Apple has about 50,000 people on its payroll, 29,000 of whom work in Apple's retail operation.
Jobs told Obama that the wage differential between workers in the United States and China "isn't the only reason we have so many people over there," Obama recounted. "I didn't completely buy that. I think he was exaggerating a little bit. He is taking advantage of lower cost generally."
Jobs told Obama that the biggest problem facing Apple in the United States is finding mid-level manufacturing engineers, "not the guy going to Caltech or MIT designing our products, but the guy on the ground in the factory who's constantly tweaking and making sure the operations are functioning effectively."
The United States needs to start training these type of skilled workers -- those who are good at math and are currently getting their undergraduate degrees in business administration, said Obama.
Jobs told Obama that Apple has 30,000 manufacturing engineers in China. John Doerr, partner with Kleiner Perkins Caufield & Byers, who set up the meeting with Obama and Jobs, told the council that "in less than nine months [Apple] built a city of 70,000 workers to build the iPad alone." Of those workers 12,000 are manufacturing engineers.
Apple's outsourcing business model is extremely successful. For the quarter ending in December, Apple's sales skyrocketed to $26.7 billion, up from $15.7 billion for the same quarter in 2009. Its gross margin was $10.3 billion, with a total net income of $6 billion ($6.53 per share), compared to $3.4 billion ($3.74 per share) for the same period in 2009. At the end of the year, the company said it had $59 billion in cash and cash-equivalents, up from $50 billion at the end of September 2010.