When Apple Inc. briefly slipped past Exxon Mobil Corp as the most valuable company based on market capitalization, most of the analysis focused on what Apple had accomplished in the 12 years since Steve Jobs was resurrected as chief executive officer.
There was also analysis of the discrepancy between investor value versus operational value of the two companies. Apple's market value - the total shareholdings of its investors - closed at $337.2 billion on Aug. 10 while Exxon's market value slid to $330.8 billion. Exxon share value rose by the end of the week to again lift it to the top with market value of $350.1 billion while Apple's share values lifted it only to $349.5 billion.
It was all paper value, reflecting investor confidence in Apple - which was undoubtedly shaken by the subsequent announcement that Jobs was resigning as CEO.
If dividends matter, Exxon is the better value. Apple's net earnings for the year are projected at $26 billion while Exxon's projected earnings for the year ending Sept. 31 is $42 billion.
For all the analysis, there was little reflection on the implications of Apple's success in terms of the state of the U.S. economy. Apple is an archetype of a successful American corporation. It is based on U.S.-based technological and marketing innovations relying on engineering and design skills of its American employees.
But production of the consumer devices designed by Apple's U.S. technocrats is turned over to low-wage, low-cost factories in China - where U.S. worker concerns over environmental standards, hours, wages and safety protocols are readily ignored.
Apple has been repeatedly cited for problems at the manufacturing plants where its top-rated products are put together. When it was announcing its new iPad in 2010, the underlying stories in China were of the dozen worker suicides at the Foxconn plants where the new device was being made. Even the usually compliant government-run Xinhua news service was reporting on questionable work conditions and labor law violations.
In a Feb. 15 report this year, Apple acknowledged another of its suppliers, Wintek, required workers to use a highly toxic cleaning agent in manufacture of its touch-screen devices - the iPod, iPad and iPhone - that resulted in injury to workers. An official with a Chinese consumer agency charged that Apple failed to live up to a vow of "Corporate Social Responsibility" for its Chinese suppliers. But Ma Jun, director of the Institute of Public and Environmental Affairs, acknowledges the multinational corporations utilizing Chinese companies for its products face no legal actions when their suppliers endanger workers or pollute the environment.
"In the end, it would be supervision from the public, including consumers and NGOs, to hold companies responsible for their deeds," Jun says ("Apple hit by poisoning row," China Daily, March 7, 2011; www.chinadaily.com.cn).
For its part, Apple says it required Wintek to cease using the chemical, n-hexane, and to upgrade a ventilation system. "Since these changes no new workers have suffered difficulties from chemical exposure" ("Apple's take on Wintek's n-hexane problems," Feb. 16, 2011; evertiq.com/news/18947).
Apple is only a top-rung example of the new American business model, the one evolving in the Information Age. Success is based on technology, engineering and design. Manufacturing the products - the basis for America's economic strength through the 20th century - is relegated to the global marketplace where labor is cheap and regulation is minimal.
For Americans building on intellectual capital, the global market is wide open. Workers expecting manufacturing jobs based on innovations conceived by American technologists, engineers and designers may need to consider moving to China.
* Edwin Tanji is a former city editor of The Maui News. He can be reached at hakumoolelo@earthlink.net. "Haku Mo'olelo," "writing stories," is about stories that are being written or have been written. It appears every Friday.
