Apple's Holiday Gift to America
For years, investors have focused on companies' short-term profits and cash dividends, but neglected the long-term view of how great companies actually help the economy and long-term financial health.
Apple's recent announcement that it's bringing some manufacturing back to the U.S. is a noteworthy step in a truly positive direction -- one that ensures investors receive healthy profits and dividends for decades to come.
The holiday gift with a $100 million price tag
This week, Apple CEO Tim Cook announced that the company plans to spend $100 million next year to shift production of one existing Mac line from China to America.
Granted, this represents just a tiny part of Apple's manufacturing footprint, since the technical nature of iPads and iPhones makes them far more difficult to produce in the U.S. In addition, much of the production may actually be automated, which doesn't necessarily indicate droves of new jobs.
Cook -- not to mention Steve Jobs before him -- has blamed a lack of workers with the necessary skills, not cost, for the relative lack of consumer electronics manufacturing in America. In that sense, Cook pointed out that this is not exactly a case of returning this kind of manufacturing to some mythical sense of former glory on U.S. soil -- Silicon Valley runs on different parts than Detroit -- but rather starting from scratch.
However, while many of the components in consumer electronics are largely sourced from Asian suppliers, Cook also pointed out that many all-important chips are made in America.
Still, I'd like to hope this will be a huge and positive step for Apple and America. Apple is big, innovative, profitable, and cash-rich enough to try to foster skills and create jobs in our floundering U.S. economy. And of course, speaking of cash-rich, Apple's $100 million in investment on this facility is absolutely nothing compared to its $29 billion cash stockpile. Apple could do more, and hopefully it will.
Given the argument that Americans tend to lack the know-how required for such jobs, responsible businesses could supply much-needed training that our educational system somehow fails to provide after 12-plus years of schooling. Furthermore, there should be more options for vocational training for those who would rather not go on to tackle the expense of higher education.
Companies like Apple could help more Americans find honest work making great products right here at home.
Top of the wish list
Apple's announcement isn't just about Apple. It's about something that should be on our collective holiday wish lists for our country.
Gainful employment provides what is known as a multiplier effect, meaning that the impact of employed people's spending spreads out into the overall economy. We all probably have a basic sense of this: The more people who have jobs, particularly good ones, the more money is spent on goods and services, providing more jobs, and so forth.
Contrast this with recent criticism of Wal-Mart's treatment of its employees. Although rival Costco is lauded for providing living wages, benefits, opportunity for advancement, and respect for its employees, Wal-Mart falls very short.
Although Wal-Mart's defenders will say the mega-discounter provides jobs in America, the low wages and shoddy benefits actually perpetuate the plight of the working poor, people who need to turn to the government for health care and other aid. In a way, Wal-Mart lets American taxpayers subsidize its own businesses, which isn't economically expansionary, and I'd say pretty darn un-American. I recently joined the chorus of folks who believe Wal-Mart's a strong enough company to try to do better, not worse, for American workers.
Surprisingly, Target actually pays its workers a tad bit less than Wal-Mart, as do many other big-box retailers, even though Wal-Mart tends to bear the brunt of the criticism.
On a higher note in the retail world, though, Starbucks recently increased the number of stores it expects to open in the U.S. to 1,500 over the next five years. That represents more U.S. jobs, and they're solid ones, too. Starbucks ranked No. 73 on Fortunes' list of 100 Best Companies to Work For in 2012, due to the fact that its huge part-time workforce receives full health care benefits and stock awards.
Starbucks CEO Howard Schultz has also been proactive about American job creation beyond his own corporation's "backyard," having helped spearhead the "Create Jobs for USA" initiative, which has provided $100 million in low-interest loans to give small businesses a boost.
This gift is a great investment
Companies like Costco and Starbucks actually do appear to have managements that recognize the common sense truth that Henry Ford did many, many years ago: If you treat (and pay) your employees well, they will not only be happy and motivated, but they will also be able to buy your own company's products. Let's add in the multiplier effect: They also contribute to the economic expansion that allows more and more consumers to purchase your products, too. That's win-win.
Hopefully, Apple can make more proactive moves in a pro-American job-creation vein. Short-term investors bray for short-term profits, right-now "special dividends." True long-term investors -- and the smartest corporate management teams -- know that boosting their own employees' means actually helps ensure that the economic outlook will be better for all of us over the long haul.
I started off implying that Apple's giving a holiday gift to America, one that might keep on giving. But the truth is, "gifts" like this one are actually bigger than we think; they're the best investments out there.
More expert advice from The Motley Fool
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Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.
The article Apple's Holiday Gift to America originally appeared on Fool.com.Alyce Lomax owns shares of Starbucks. The Motley Fool owns shares of Apple, Costco Wholesale, and Starbucks, and has the following options: short JAN 2013 $47.00 puts on Starbucks. Motley Fool newsletter services recommend Apple, Costco Wholesale, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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