Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL), Google Inc (GOOG): The Significance of “Made in the USA”

At Apple Inc. (NASDAQ:AAPL)‘s  Worldwide Developers Conference, the company confirmed longstanding rumors about a new product. Later this year, Cupertino will release a radically redesigned version of its premium Mac Pro desktop computer, which currently starts in the low $2,000s. The high-end PC lacks a monitor, but is Apple Inc. (NASDAQ:AAPL)’s most powerful machine, although recent versions were less than cutting-edge.

Apple Inc. (NASDAQ:AAPL)

The new Mac Pro is anything but behind the curve. It’s a beautiful machine with advanced components, but it also includes a special feature that Apple hasn’t used in a long time: it will be assembled in the U.S. And Apple Inc. (NASDAQ:AAPL) is not the only company taking an interest in American manufacturing. Google Inc (NASDAQ:GOOG)‘s Motorola Mobility subsidiary will be assembling the new flagship Moto X phone in Texas. And Google Inc (NASDAQ:GOOG) already built its failed Nexus Q living room box in America, so the trend isn’t new.

So what does this trend mean for traders? Does being made in the USA equal higher profits, or lower margins?

The bad

There’s one serious hangup with building your products in the United States: cost. Foxconn, a major electronics manufacturer that builds the iPhone, pays its workers below $5 an hour — and that’s overtime pay. The standard per-hour pay is $2.50. A comparable worker in the United States would make five to eight times that amount, so you can see why companies like Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) like to make things overseas.

But cost isn’t the only thing; in fact, it might not be the most important factor. Remember that, while Foxconn workers assemble the devices, they do it using components manufactured mostly in China. These parts are built in huge factory complexes where hundreds of thousands of laborers live and work. You can move the assembly to the United States, but the rest of the supply chain will still be in China.

There’s a legendary story about how Steve Jobs decided, weeks before the release of the iPhone, that it needed a glass screen instead of a plastic one. His executives could not have turned to America to build 10,000 redesigned phones a day in less than a month. Only China has the workforce, supply chain, and labor laws to facilitate that kind of grueling schedule.

The good

But there are also plenty of positives in building products in the United States. Apple Inc. (NASDAQ:AAPL) hinted for months before the unveiling of the new Mac Pro that the company was going to be building something in America. And Google Inc (NASDAQ:GOOG) is hyping up a storm about the Moto X being the “only smartphone made in the United States.” It’s a publicity coup to build your product in the United States these days, especially if your product is electronic. Such a pedigree is usually reserved for high-end, luxury devices that are out of the reach of the average consumer.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.