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Business Impact

Apple’s $1 Billion Manufacturing Boost Will Likely Bring Robots, Not Factory Jobs

Advanced processes can certainly boost productivity—but they’re unlikely to lead to more jobs in the industry.

Tim Cook has announced a new fund that will invest $1 billion into U.S. companies that perform advanced manufacturing.

This may seem like music to Donald Trump’s ears. The president has long argued that America’s most successful gadget firm should manufacture more of its products on domestic soil. A push to invigorate the U.S. industry sounds like good news from that standpoint. Trump’s main goal in calling out Apple, of course, is to create new jobs.

The manufacturing industry is indeed likely to welcome the infusion, even if it is small beer to Apple these days. As Reuters notes, the company already spends $50 billion per year with U.S. suppliers, and has $257 billion in cash overseas. But it rivals the investment into advanced manufacturing made by President Obama in 2013—money that went toward building new national institutes focused on developing new manufacturing techniques.

Apple hasn’t released much in the way of details about its plans for the investment, saying only that the first beneficiary will be announced later this month. And to add to the difficulty in predicting its direction, “advanced manufacturing” is a large umbrella term that includes everything from 3-D printing aerospace components to installing robots on assembly lines.

Apple certainly has enough cash with which to experiment outside its own domain. But you can expect at least some if to be channeled toward the automation of hardware manufacturing. The firm has shown off an iPhone recycling robot in the past. There’s no reason that couldn’t be turned into something that puts devices together instead of taking them apart.

Still, regardless of the recipient, the investment is unlikely to yield the new jobs that Trump so desperately wants.

As we’ve explained in the past, advanced manufacturing—with all of its automation and super-efficiencies—can certainly bring productivity gains. But it won’t bring back manufacturing jobs. Just last month we finally got some hard numbers on the impact of automation on the labor force in our factories and warehouses: more robots bring with them decreased employment and lower wages. So if Apple’s focus is indeed going to be on using robotics, it’s not going to be good for the workforce. 

It’s perhaps no wonder, then, that Tim Cook appeared to play up the wider effects of boosting the industry when he announced the news, explaining that “manufacturing jobs create more jobs around them because you have a service industry that builds up around them.”

Indeed, the Manufacturing Institute claims that every $1 in sales of manufactured products supports $1.33 in output from other sectors—the biggest multiplier in any industry. As far as Apple’s investment goes, that may have to be enough for Trump.

(Read more: CNBC, “Manufacturing Jobs Aren’t Coming Back,” “Obama Push on Advanced Manufacturing Stirs Economic Debate,” “Actually, Steve Mnuchin, Robots Have Already Affected the U.S. Labor Market”)

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