The Cost Of A USA Made iPad2

I consider myself a red-blooded American, and I love to see the "Made in USA" badge on products I buy. I would love to see more manufacturing jobs brought back home...the only sticking point is the cost. We all know manufacturing was moved to China because of cheap labor. So to come back home, how much more would the things we enjoy cost?

After doing some digging, according to the StoneStreet Advisors website, Apple has contracted with Foxconn to make their iPad 2′s in China, where employees are reportedly paid (after receiving a 30% raise) a king’s ransom of 1,200 Yuan/month, or about $185 at current exchange rates (y/$ = 0.154), or, if we assume an average 8-hour/day, 250-day/year (probably unrealistic assumptions), $1.11/hour.  But what if Apple decided to do the “patriotic” thing, and hire U.S. workers in the U.S. to make its heralded tablet?  How much more would it cost to make the iPad 2 in the U.S. versus in China?  Let’s run some back-of-the-envelope numbers and see:

Average U.S. manufacturing/mining/construction compensation is $32.53/hour as of December, according to the BLS. Research firm iSuppli estimates the iPad 2 costs $10 to manufacture, which – using the $1.11/hour rate – works out to about 9 hours each to complete.  If assembly and manufacture took the same amount of time in the U.S. as it does in China (another possibly unrealistic assumption), the cost of making each iPad 2 comes out to $292.77!

Again, according to iSupply, the material cost for the 32gb iPad 2 WiFi + 3g – which sells for $729 -  is about $325, or $335 including labor, which puts Apple’s gross margin (ex shipping/handling) at 54%.  Just using the simple math above, if the iPad 2 was made in the U.S it would cost $617.77, bringing Apple’s gross margin down to 15.25%!  Of course, Apple is not in the business of self-immolation, and given their relatively substantial pricing power, they could just make the iPad 2 more expensive, let’s say, increasing the price to the point where their gross margins stayed intact, from $729 to $1,144.02!

This brings us to the quasi-ultimate question (short of the larger macro-economic one, for another time): How much more are U.S. consumers willing to pay for the “Made in The U.S.A” stamp, if anything?

I don’t have an answer, at least not anything even remotely approaching a definitive one.

How much more would you pay? $100?  5%?  Zero?  Let us know in the comments!