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Monday, December 21, 2015

Apple CEO tells CBS '60 Minutes' he came out gay to help others and brags about 60 hour work week for iPhone manufacturing employees

VIDEO: Apple CEO Tim Cook on the CBS "60 Minutes" program talking about Apple smartwatches, iPhones and why he waited to come out as gay, due to being a "private person," but he came out anyway, mostly to help others. Cook also bragged about reducing the work hours, of the Chinese workers assembling Apple iPhone products, to 60 hours per week (e.g. either 12 hours per day five days per week or 10 hours per day 6 days per week), but he was silent about the business profit implications of the lower wages paid in China. See report by CBS "60 minutes" TV report by Charlie Rose, "What's next for Apple? The technology giant's CEO, Tim Cook, addresses issues concerning his company -- including encryption technology, corporate taxes, and manufacturing products in China," broacast CBS TV Sun. Dec. 20, 2015

The political importance of gay people being "out and proud" has been recognized by gay activists since the Stonewall riot in 1969. Later, the important insights and activism of Michelangelo Signorile is well summarized by a gay Website:

"Michelangelo Signorile . . . After graduating with a degree in journalism at at Syracuse University, the Brooklyn native returned to New York where he got his first job at a public relations firm which specialized in placing stories about their entertainment clients in gossip columns. That naturally meant that he was collecting and trading in gossip, which is where he noticed the double standard in how the media glamorized the heterosexuality of celebrities while maintaining a veil of silence around anything that might be remotely gay. . . . Signorile is considered the pioneer of the controversial act of outing public figures. . . it was Time magazine which coined the term "outing," but Signorile always considered the term itself biased. He preferred to call what he did "reporting," and insisted that it was no different from the same kind of reporting that media outlets routinely do with straight people."
(Quoted from Jim Burroway, "TODAY'S BIRTHDAY: 55 YEARS AGO: Michelangelo Signorile: 1960," posted December 19th, 2015)

Tim Cook also showed off his palatial new "spaceship" Apple building in Silicon Valley California where his team will continue to design the products that will be built overseas. Rose asked Cook what it would take to bring these jobs and the Apple money back to America, but Cook said nothing new in response. What I have never seen Cook asked by investors is if he sees the risk in separating manufacturing in China from his designers in America? In my experience with doing international business for Hewlett-Packard, I learned that the best innovation happens when your research and development engineers are closest to both the manufacturing line and the end customer. The reason is that the R&D engineer will see what the problems in manufacturing are and be aware of how he can do it better in future products. Likewise, being slose to the customer will give the R&D engineer invaluable insight into what the customer both wants and needs in future product designs. What happens in manufacturing operations is that the people who work there are usually the ones who get these new insights and if they are not allowed to implment them, then they will leave the company and go into competition. Cook's strategy is one that will probably lead to Apple's demise, despite his designers bragging about how they are "more secret than the CIA." Although most of my career was in the R&D engineering of hi-tech computer and instrument products for Hewlett-Packard, I did have some manufacturing reporting me where I learned how many employees want a four-day per week, 10 hour per day working schedule because it gives them a three-day weekend. However, I saw how this idea broke down when it was extended to give workers alternating three-day and four-day weekends by having them work one week for three days at 12 hours per day, and then the next week for four days at 12 hours per day. Managers loved this schedule because it made it easier to do manufacturing 24-hour per day, seven days per week, and to maximize the use of expensive machines and capital, however, workers hated this work schedule and there was much anecdotal evidence that workers' health and injury rates increased.

Hewlett-Packard's co-founder Dave Packard, who is often considered one of the fathers of Silicon Valley, often grilled his managers on their strategy for global manufacturing. He thought HP should distribute their manufacturing resources around the world based on the relative percentage of customer demand for HP products. For example, two-thirds of HP's sales came from outside the U.S. (coincidentally, the same percentage Tim Cook said is the Apple revenue outside the U.S.) and therefore, Packard tried to set up two-thirds of HP manufacturing outside the U.S. However, Apple does virtually all of it manufacturing through a Chinese organization. Republican Presidential candidate Donald trump has also raised the issue of what will it take to get some of these jobs back to America. Implementing this will be complicated, and so there is no simple plan that can be explained in a few words, but it is clear to me that Wall Street moneymen have rewarded U.S. companies that engage in what is called labor arbitrage, which is the moving of factories to the lowest cost country at the moment. (After World War II it became Japan, then later China, which is now seeing manufacturing lines move to Vietnam and other lower labor costs countries.) Dave Packard rejected the labor arbitrage game as being only a short term strategy with short term gains in profit by lowering costs, instead of it being his desire for a long-term strategy to grow HP's business globally and profitably.

On a loosely related note, my memory about smart watches, which Tim Cook talked about, was jogged by the Businessweek article by Hugo Miller, "Intellectual Property, Building An Arsenal of Smartwatch Smarts, Swatch's boss has been cool on the idea but is stockpiling patents," Businessweek Dec. 14-20, 2015, p. 32-34 posted online Dec, 9, 2015 as "Swatch Is Secretly Stockpiling Patents, That's one way to take advantage of the smartwatch boom." that said, "Swatch has been burned by earlier forays into new technologies. Hayek has said the company still has unsold models of a 1991 pager that flopped and of the Paparazzi, a watch it made with Microsoft about a decade ago that could receive messages and stock quotes. But he also knows the risks of falling behind trends and the importance of protecting intellectual property. Hayek's father, Nicolas, formed Swatch in 1983 by merging two struggling Swiss watchmakers. Although the technology for quartz timepieces was developed in Switzerland, Japanese companies had been more successful in commercializing the new watches. . . "

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