US-Assembled iMacs Rekindle China Export Debate

Apple’s had its share of bad press for employing overseas plants to assemble popular gadgets like the iPhone 5.  But has it been enough to cause Apple to change its ways?  Imagine the surprise of these new owners of the 21.5-inch iMac, who reported that their units were assembled in the U.S.  This lead to the quick conclusion that Apple’s operations are now based stateside.  Still, other new iMac owners reported that their iMacs were assembled in China.  Apple’s operations aren’t back in the U.S. after all.

But what does “Assembled in USA” actually mean?

Assembled, Not Made

Being assembled in the USA is different from being “Made in USA”, which entails that a product’s component is “all or virtually all” from the USA.  “All or virtually all” means that “all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.”  The Federal Trade Commission is in charge of checking whether a company’s claims of a product’s manufacturing origins are true.

Example: An exercise treadmill is assembled in the U.S. The assembly represents significant work and constitutes a “substantial transformation” (a term used by the U.S. Customs Service). All of the treadmill’s major parts, including the motor, frame, and electronic display, are imported.  A few of its incidental parts, such as the handle bar covers, the plastic on/off power key, and the treadmill mat, are manufactured in the U.S.  Together, these parts account for approximately three percent of the total cost of all the parts.  Because the value of the U.S.-made parts is negligible compared to the value of all the parts, a claim on the treadmill that it is “Made in USA of U.S. and Imported Parts” is deceptive. A claim like “Made in U.S. from Imported Parts” or “Assembled in U.S.A.” would not be deceptive.

As for “Assembled in USA.” this means that a percentage of the components used in the products can be of foreign origin but it must not make the majority of the product.  In short, if a piece of equipment is made up of 80 percent foreign materials but was assembles in the U.S., it doesn’t have the right to claim “Assembled in USA.”  But if an equipment has only about 15-20 percent foreign parts and was assembled in the USA, the claim is legitimate.

Below are FTC’s examples:

Example: A lawn mower, composed of all domestic parts except for the cable sheathing, flywheel, wheel rims and air filter (15 to 20 percent foreign content) is assembled in the U.S. An “Assembled in USA” claim is appropriate.

Example: All the major components of a computer, including the motherboard and hard drive, are imported. The computer’s components then are put together in a simple “screwdriver” operation in the U.S., are not substantially transformed under the Customs Standard, and must be marked with a foreign country of origin. An “Assembled in U.S.” claim without further qualification is deceptive.

How are some Apple assemble in the U.S.?

As for the reason why not all the iMacs were assembled in the U.S., that only happens on “made-to-order” devices.  What that means is that those customers who want, say, an extra-high-capacity hard drive, get the final assembly executed stateside.  So if you’re not into pimping your iMac, then you’ll probably see “Assembled in China” on your device.

Are China plants looking to the U.S.?

While Apple hasn’t shifted its manufacturing hub to the U.S., one of its most prominent contractors might be looking into the matter.  Recent reports suggest that Foxconn wants to open plants in the U.S., though neither Foxconn nor Apple have confirmed.  According to SiliconANGLE Contributing Editor John Casaretto, Foxconn is still “conducting evaluations right now, so it’s pretty early stages at this point.”  But he also noted that Foxconn is a company that “reacts, plans, executes and does business very quickly” and news about Foxconn setting up plants in the US came in early November, so they might have already set up shop but are just keeping mum about it.