Wednesday, 25 January 2012

How the U.S. Lost Out on iPhone Work ­- and maybe India also lost out!!

How the U.S. Lost Out on iPhone Work 
An interesting article in The New York Times , 21st Jan 2012 –  and maybe India also lost out!!

Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas- All in China - Not one in India. !!  

Interestingly INDIA also lost out on this big manufacturing opportunity.

Or are we still losing such oppurtunities ???

Foxconn Technology Group  Taiwan is the largest manufacturer and exporter in Greater China and the second-largest in the Czech Republic. Foxconn clients include American, European and Japanese companies wishing to reduce labor costs without sacrificing quality. Notable products which the company manufactures include the Amazon Kindle, iPad, iPhone, PlayStation 3, Xbox 360 and Wii.

But Why isn’t  Indian Manufacturing sector not able to compete with China and other Asian countries which are able to attract such opportunities?

India's growth is slowing down while inflation is going up. The manufacturing sector’s contribution to India’s GDP is considered low when compared to other Asian economies (where manufacturing contributes closer to between 25 percent and 34 percent of GDP) and is seen as not fulfilling. The share of manufacturing sector in China's GDP was 34 per cent in 2007, compared with 16.1 per cent for India in 2009-10. Two years ago, a conference of the State Industry Ministers put forth the goal to increase the contribution of the manufacturing sector to GDP from 16 percent to 25 percent.
The Union Cabinet on October 25, gave its approval to the long-awaited ambitious National Manufacturing Policy (NMP), which seeks to set up mega industrial zones, create 100 million jobs by 2022 and put India at par with manufacturing powers like China and Japan. The NMP seeks to enhance the share of manufacturing in the GDP to 25 percent within a decade.

 Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones.

China is today the largest producer of engineering graduates in the world, with some 600,000 passing out of its colleges and universities last year.   India, it seems, isn't far behind.
India currently has 113 universities and 2,088 colleges, many of which teach various engineering disciplines. Engineering colleges in the country have been growing at 20 per cent a year, while business schools have grown at 60 per cent. Five Indian states -- Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka, and Kerala - account for 69 per cent of India's engineers. Uttar Pradesh, Bihar, Gujarat, Rajasthan  and Orissa account for only 14 per cent. 

The outturn of technical graduates and post graduates increased to over 7 lakh in FY11 compared to a little over 5.5 lakh in FY10, says Nasscom in a report earlier in the year. Enrolment in technology colleges in the same period increased sharply from 12 lakh to 16 lakh.
Due to deceleration in the rate of growth of real emoluments, Most engineering graduates do not prefer to pursue their engineering skills on the shop-floor and instead prefer to take up managerial positions. It is necessary for the manufacturing sector to retain technologists who are engaged in production process and for this the real per capita incomes to technologists have to move in tandem with those for the other managerial staff. 
Productivity increases depend both on technology and managerial improvements and India can ill-afford to neglect either of these.

According to a McKinsey Global Institute study on the emerging global labour market, India produces a large number of engineering graduates every year, but multinationals find that just 25 per cent of them are employable. 

One is constantly reminded by the corporate sector that India does not have an unemployment problem but an ‘unemployability’ problem, i.e., a lot of the workforce is unemployable due to lack of skills. This gap between demand for skilled labour and the available supply is already large and rising further.  Though Indians are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need.
We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need”.  Steve  Jobs commented “This country (US) is insanely great. What I’m worried about is that we don’t talk enough about solutions.” – IS INDIA IN A SIMILAR SITUATION or are we only talking and not ready to "Walk the Talk"?

 In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China.  

How many of such SUCH JOBS have come to India??

Apart from the liberalized government policies , power generation, environment and infrastructure development needed, if India needs to compete with the manufacturing giants in this era of globalization we need to produce quality engineering graduates.

If such companies and jobs are coming to India – are our engineering graduates  ready to grab the opportunity?  

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