Apple's 'Made in USA' Plan: Good PR, Bad Strategy or Both?

Apple CEO Tim Cook made the media rounds this morning to hype a major announcement: For the first time in well over a decade, Apple will be manufacturing a certain number of its products within the United States. As cynics, we see this move as a blatant attempt to counter all the bad PR that Apple received over the Foxconn outsourcing/slave labor/suicide scandal (though we would note that this awful story didn't really prevent anyone, least of all ourselves, from buying Apple products). The fact that late CEO Steve Jobs supposedly denied a request for more domestic production from none other than President Obama strengthens this theory. As much as we've accepted outsourcing as a part of the modern business landscape, everyone loves to hear about good new jobs for Americans. So this is great PR, right? Maybe--but investors hated it, and we have a feeling certain Apple advisers did too. As we mentioned in this morning's news ticker, Apple shares promptly fell 6% after Cook made his announcement. Why? Because the act of moving manufacturing operations from China to the US will cost the company approximately $100 million--and these expenses will, presumably, lead to higher overall production costs and lower profit margins (at least on the Made-in-America models). Some also theorized that this big Wall Street "thumbs down" came from predictions that Apple's American product would be some kind of television. Cook hinted at that possibility at the end of his interview with NBC's Brian Williams, saying: “When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years. It’s an area of intense interest. I can’t say more than that.” The idea here is that investors dumped their shares because they don't trust Apple to succeed in the crowded TV market. But we prefer the first, more Scrooge-like explanation. Now contrast the investment world's response to this story with another top news item: Citibank's decision to fire 11,000 employees in a one-time mass purge. We can't think of a dumber decision to make from a PR perspective--or a less appropriate time to do it! The fact that thousands of financial professionals will spend Christmas on unemployment makes the entire Citi organization look like a bunch of fat cat Grinches, doesn't it? Of course, investors don't really care about these things--so Citi's stock made a big jump today, because the only way to make more money in an era of greater regulations and public opinion challenges (not to mention record profits) is apparently to cut--and cut big. The livelihoods of 11,000 people are "a small price to pay for efficiency." Unfortunately, it would seem that good business and good PR are no longer one and the same--if they ever were.

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Apple's 'Made in USA' Plan: Good PR, Bad Strategy or Both?

Patrick Coffee

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