It is easy to see why Apple won’t make Macs & iPads in India yet

There’s probably a law somewhere that describes the speed at which complex manufacturing systems can be reconfigured and repositioned.

If that law exists, Apple is probably right at the bleeding edge of it as it literally rebuilds its entire manufacturing system for a new multi-polar world. That means it makes iPhones in China, India, and – soon – Brazil.

But making moves like these takes time, effort, and requires certain infrastructure is in place – not least energy, transport systems, and people capable of doing the job.

Apple is probably stretching the availability of all these elements as it works towards repositioning iPhone manufacturing for the US market to India, and that is potentially why it has no “immediate” plans to begin to make Macs in India as well.

Time and motion

Well, that, and the fact that the company has placed its out-of-China manufacturing facilities in Vietnam and Thailand (last time I looked).

The news out of India this morning is that the company has no plans to make Macs or iPads in India yet, despite India’s government offering up incentives to do so. India has also threatened to apply tariffs on Mac imports but delayed the imposition of that additional tax. In the current trading environment, it is possible that threat may have been rescinded now, but we shall wait and see.

Apple meanwhile has worked with its suppliers to put a mighty iPhone manufacturing system in place in India. It now has the Tata Group and Foxconn churning out iPhones in India and has reached a position where it can move toward manufacturing around half of all iPhones sold in India by next year.

The thing is, Apple has discovered that production of the device isn’t everything, components also need to be manufactured in proximity, too. That’s not yet the case in India, and while Apple is working with suppliers to convince them to set up shop, it hasn’t got there yet.

I’d argue that it’s not until component supply is in place that the company will be able to feasibly consider Mac or iPad manufacturing in India, as those products sell in smaller quantities than iPhones which implies component manufacture needs to be able to scale to make it feasible. That’s an argument, I suppose.

Forward planning is required

But the other part of this equation is that product manufacturing doesn’t just shift between locations overnight.

Think about the tech involved on the production line – manufacturing does not consist of tens of thousands of people in uniform sticking bits of plastic into boxes, these people are skilled, use expensive machinery, and at the degree to which Apple insists on manufacturing quality, the tech used is eye-wateringly expensive.

Manufacturing systems are delicate, hugely expensive, and themselves made in very small quantities. Think about the tech made by ASML, that stuff is lit. It is not cheap. Does not move well. And needs to be purchased and located in advance.

That’s the key clue to decoding Apple’s plans. Apple will have been ordering and investing in the equipment required to migrate its production line to India for an extensive amount of time.

To understand the extent of these investments you’ll need to look more deploy into the company’s financial reports, and then (if you have the time, which I don’t currently but intend to make) you’ll also need to analyze similar reports from those companies we know or can surmise have a part in Apple’s production line systems.

What I think we’ll find is that Apple has been investing in additional capacity, but as these investments cost billions, rather than hundreds, it has focused its resources on protecting its biggest-selling product, iPhone, which is why India is emerging as a BIG production hub for iPhones now.

A matter of priority

It is also why plans to make Macs and iPads there – or anywhere – just aren’t as advanced. The law of entropy means systems tend to stay the same until they stop. That law conflicts with Apple’s new Law of manufacturing migration, which means that making existing systems move costs way more than it does to keep them in place. It takes energy to fight entropy, and in this case all Apple’s available energy is dedicated to shifting iPhone production.

With that in mind, don’t expect Macs and iPads to move to the same nation yet – Apple needs to invest in supply chains, manufacturing, component manufacturing, logistical support, transport systems, education, human resources and machinery before it can realistically plot that course.

And while it has the resources of a small country with which to do it, even those resources aren’t sufficient to shift everything, and – eventually – it seems possible that governments wanting it to relocate Apple manufacturing to where they are will have to dig very, very, very deep to support that move.

This stuff costs time and money and there’s a limit to the extent to which hose costs can be passed on to consumers while still leaving a business that works.

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