Tax-breaks for jobs: How Arizona attracted Apple to Mesa w/ tax breaks & perks for new Sapphire plant

Mesa-Arizona

If you were wondering why Apple chose Mesa, Arizona, as the location of its latest manufacturing plant in the U.S., a story today from Bloomberg explains that Apple, not shy about going after tax breaks, has taken advantage of many perks put in place by the suburb’s mayor:

So last year, when Apple was searching for a place to house a factory that makes a stronger glass for its gadgets, Mesa pulled out the stops. The city, which was ravaged by the 2007 housing crash, offered tax breaks, built power lines, fast-tracked building permits and got the state to declare a vacant 1.3 million-square-foot facility that Apple was exploring a foreign trade zone. With unemployment high, such are the lengths that towns are willing to go to to lure the world’s most valuable company.“Any time you have a company like Apple come in and invest in your area, especially with this type of operation, it’s significant,” said Smith, who triumphed late last year when Apple spent $114 million to buy the factory. The mayor celebrated by placing bowls of green and red apples in City Hall.

Smith added that original preparations were done before the city even knew it was Apple, but later Apple requested additional perks before moving in and even got construction permits expedited. Among the other advantages of choosing Mesa for Apple was a $10 million building grant from the Arizona Commerce Authority and an agreement with the city’s power company to build solar and geothermal installations and a new power substation for the plant: Read more

Is there some secret iMac assembly plant in the US?


imac-assembled-usa
iFixit

From iFixit’s ritual iMac dismemberment yesterday, we learn that the particular 21.5-inch iMac they bought says it was “Assembled in USA”. The moniker isn’t new—we’ve seen it since at least a few iMac models back on the packaging. But as far as we can tell, “Assembled in USA” wasn’t etched in the actual machine’s aluminum, leading people to believe that the iMacs that were shipped were “refurbished in the USA”. However, this forum shows that some were actually assembled and sold new with the “Assembled in USA” label (below—27-inch iMac, previous gen).

iMac_label

Regardless of previous endeavors, Apple is shipping new iMacs “Assembled in USA”.  PED at Fortune found one. Jay Yarrow at BI found one, too. This isn’t an isolated incident. We also heard that other new iMacs say “Assembled in China”, as you’d expect.

Still, it makes for an interesting question:  Is Apple building some of its iMacs in the United States? Is that percentage growing since it seems much of the first line of iMacs are coming with USA labels?

The “Assembled in USA” label doesn’t just mean that foreign parts screwed together in the U.S. either. The U.S. Federal Trade Commission assumes that a “substantial transformation” must happen in the U.S. for the label to be used.

Specifically, the FTC states that the label “Assembled in the USA” should be the following:

A product that includes foreign components may be called “Assembled in USA” without qualification when its principal assembly takes place in the U.S. and the assembly is substantial. For the “assembly” claim to be valid, the product’s last “substantial transformation” also should have occurred in the U.S. That’s why a “screwdriver” assembly in the U.S. of foreign components into a final product at the end of the manufacturing process doesn’t usually qualify for the “Assembled in USA” claim.

Example: A lawn mower, composed of all domestic parts except for the cable sheathing, flywheel, wheel rims and air filter (15 to 20 percent foreign content) is assembled in the U.S. An “Assembled in USA” claim is appropriate.

Here’s where it gets more interesting. The FTC gives the specific example of a computer manufacture:

Example: All the major components of a computer, including the motherboard and hard drive, are imported. The computer’s components then are put together in a simple “screwdriver” operation in the U.S., are not substantially transformed under the Customs Standard, and must be marked with a foreign country of origin. An “Assembled in U.S.” claim without further qualification is deceptive.

That means one of two things: Either Apple or its contractors have some sort of significant manufacturing operations in the U.S., or it is being deceptive in its marketing (something that sadly, isn’t out of character)… Read more