$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest

was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, Presi-dent Obama interrupted with an inquiry of his

own: what would it take to make iPhones in the Unit-ed States?

not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manu-factured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so out-paced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Gold-man Sachs, exxon Mobil or Google.

however, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thou-sands at General electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to

By CHARLES DUHIGG and KEITH BRADSHER

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

By JIM RUTENBERG

CHARLESTON, S.C. — Sur-prising his rivals and scramblingthe Republican race for the presi-dency, Newt Gingrich won thepivotal South Carolina primarySaturday, just 10 days after a dis-tant finish in New Hampshire leftthe impression that his candidacywas all but dead.

It was a striking developmentin a months-long Republicannominating contest that has seenthe restive base of conservativevoters ping-pong among the al-ternatives to the party establish-ment’s favorite, Mitt Romney.

With late-night tallies showingMr. Gingrich beating Mr. Rom-ney by 12 percentage points, itwas no small win. Exit pollsshowed Mr. Gingrich had done itwith a formidable coalition ofgroups that have resisted Mr.Romney’s candidacy all electionseason long: evangelical Chris-tians, Tea Party supporters andthose who call themselves “veryconservative.”

Mr. Gingrich now heads toFlorida, where he faces a daunt-ing test in seeking to capitalize onhis new status as the candidatewho poses a singular, insurgentthreat to Mr. Romney. He usedhis victory speech to cast himselfas the champion of the party’santi-establishment wing, repris-ing his popular castigation of thenews media and other “elites”while keeping his focus on the de-feat of President Obama.

Standing beside his wife, Cal-lista, as he addressed an exuber-ant crowd in Columbia, Mr. Ging-rich attributed his victory to“something very fundamentalthat I wish the powers that be in

STEPHEN MORTON FOR THE NEW YORK TIMES

Newt Gingrich addressed supporters after winning the South Carolina primary. Next, the campaigns move on to Florida.

Wide Support inSouth Carolina

in Surge

Continued on Page 16

VOL. CLXI . . No. 55,658 © 2012 The New York Times NEW YORK, SUNDAY, JANUARY 22, 2012

U(D5E71D)x+z!&!/!=!$Thomas L. Friedman PAGE 13

OPINION IN SUNDAY REVIEW

By CHARLES DUHIGG and KEITH BRADSHER

When Barack Obama joinedSilicon Valley’s top luminariesfor dinner in California lastFebruary, each guest wasasked to come with a questionfor the president.

But as Steven P. Jobs of Ap-ple spoke, President Obamainterrupted with an inquiry ofhis own: what would it take tomake iPhones in the UnitedStates?

Not long ago, Apple boastedthat its products were made

in America. Today, few are.Almost all of the 70 millioniPhones, 30 million iPads and59 million other products Ap-ple sold last year were manu-factured overseas.

Why can’t that work comehome? Mr. Obama asked.

Mr. Jobs’s reply was unam-biguous. “Those jobs aren’tcoming back,” he said, accord-ing to another dinner guest.

The president’s questiontouched upon a central con-viction at Apple. It isn’t justthat workers are cheaperabroad. Rather, Apple’s exec-utives believe the vast scale ofoverseas factories as well asthe flexibility, diligence andindustrial skills of foreign

workers have so outpacedtheir American counterpartsthat “Made in the U.S.A.” is nolonger a viable option formost Apple products.

Apple has become one ofthe best-known, most ad-mired and most imitated com-panies on earth, in partthrough an unrelenting mas-tery of global operations. Lastyear, it earned over $400,000in profit per employee, morethan Goldman Sachs, ExxonMobil or Google.

However, what has vexedMr. Obama as well as econo-mists and policy makers isthat Apple — and many of itshigh-technology peers — arenot nearly as avid in creatingAmerican jobs as other fa-mous companies were in theirheydays.

Apple employs 43,000 peo-ple in the United States and20,000 overseas, a small frac-tion of the over 400,000 Ameri-can workers at General Mo-tors in the 1950s, or the hun-dreds of thousands at GeneralElectric in the 1980s. Manymore people work for Apple’scontractors: an additional700,000 people engineer, buildand assemble iPads, iPhonesand Apple’s other products.But almost none of them workin the United States. Instead,they work for foreign compa-nies in Asia, Europe and else-where, at factories that al-

How U.S. Lost Out On iPhone Work Apple’s Experience Shows

Why Jobs Are Flowing to China

DONALD CHAN/REUTERS

People flooded Foxconn Technology with résumés at a2010 job fair in Henan Province, China.

THE iECONOMY

An Empire Built Abroad

Continued on Page 20

By NINA BERNSTEIN

The feverish patient had spenthours in a crowded emergencyroom. When she opened her eyesin her Manhattan hospital roomlast winter, she recalled later, shewondered if she could be halluci-nating: “This is like the Four Sea-sons — where am I?”

The bed linens were by Frette,Italian purveyors of high-thread-count sheets to popes andprinces. The bathroom gleamedwith polished marble. Huge win-dows displayed panoramic EastRiver views. And in the hush ofher $2,400 suite, a man in a blackvest and tie proffered an elab-orate menu and told her, “I’ll beyour butler.”

It was Greenberg 14 South, theelite wing on the new penthousefloor of NewYork-Presbyterian/Weill Cornell hospital. Pamperingand décor to rival a grand hotel, if

not a Downton Abbey, have longbeen the hallmark of such “amen-ities units,” often hidden behindclosed doors at New York’s pre-mier hospitals. But the phenom-enon is escalating here andaround the country, health caredesign specialists say, part of aninternational competition forwealthy patients willing to payextra, even as the federal govern-ment cuts back hospital reim-bursement in pursuit of a moreuniversal and affordable Ameri-can medical system.

“It’s not just competing onmedical grounds and specialties,but competing for customers whocan go just about anywhere,” saidHelen K. Cohen, a specialist inhealth facilities at the interna-tional architectural firm HOK,which recently designed luxury

Continued on Page 4

Chefs, Butlers, Marble Baths:Hospitals Vie for the Affluent

A Syrian city, now in opposition hands,is enjoying what appears to be only atemporary taste of freedom from the As-sad government. PAGE 8

INTERNATIONAL 6-11

A Calm Before the UnknownAfter cancer treatments, PresidentHugo Chávez of Venezuela has regainedhis swagger, annoying both the UnitedStates and opponents at home. PAGE 10

Chávez Back to Defiant Self

By JACKIE CALMES

WASHINGTON — PresidentObama will use his election-yearState of the Union address onTuesday to argue that it is gov-ernment’s role to promote a pros-perous and equitable society,drawing a stark contrast betweenthe parties in a time of deep eco-nomic uncertainty.

In a video preview e-mailed tomillions of supporters on Satur-day, as South Carolina Repub-licans went to the polls to helppick an alternative to him, Mr.Obama promised a populist“blueprint for an American econ-omy that’s built to last,” with thegovernment assisting the privatesector and individuals to ensure“an America where everybodygets a fair shot, everyone doestheir fair share and everybodyplays by the same set of rules.”

Mr. Obama has honed thatmessage for months as he has at-tacked Republicans in Congressand on the presidential campaign

trail, contrasting it with what hehas described as Republicans’“go it alone” free-market views.

Last week at fund-raisers inNew York, he told supportersthat his push for a governmenthand had a precedent dating tothe construction of canals and in-terstate highways, and the cre-ation of land-grant colleges andthe G.I. Bill. He said that Repub-licans had moved so far to the

right that 2012 will be a “hugelyconsequential election.”

Notably, Mr. Obama will againpropose changes to the tax codeso the wealthy pay more, despiteRepublicans’ consistent opposi-tion. Americans overwhelminglysupport the idea, polls show, andthe White House hopes that itgains traction with voters, givenlast week’s acknowledgment bythe Republican presidential can-didate Mitt Romney that he paystaxes at a lower rate than manymiddle-class Americans becausemost of his income comes frominvestments.

With most Americans register-ing disapproval of the president’seconomic record after threeyears, it is all the more impera-tive for Mr. Obama to define theelection not as a referendum onhim but as a choice between hisvision and that of his eventualRepublican rival.

Mr. Obama’s third State of theUnion address is widely seen inparallel with the one delivered in

Continued on Page 18

In Speech, Obama to Draw Line on the Economy

JEWEL SAMAD/A.F.P. — GETTY IMAGES

President Obama says allAmericans need “a fair shot.”

By JEFF ZELENY

CHARLESTON, S.C. — ForMitt Romney, the South Carolinaprimary was not just a defeat,though it was most emphaticallythat. It was also where his cam-paign confronted the prospect ithad most hoped to avoid: a domi-nant, surging and energized ri-val.

The rebirth of Newt Gingrich, anotion that seemed far-fetchedonly weeks ago, has upended alitany of assumptions about thisturbulent race. It wounds Mr.Romney, particularly given hisstinging double-digit defeat hereon Saturday, and raises the likeli-hood that the Republican contestcould stretch into the springtime.

For now the race goes on, withMr. Gingrich and Mr. Romneyjoined by Rick Santorum and RonPaul. But Mr. Gingrich’s showinghere suggests that Mr. Romneymay no longer be able to count onhis rivals splitting the opposingvote into harmless parcels, or on

the support he is getting from theparty establishment to carry himpast a volatile conservativegrass-roots movement.

At a minimum, it is clear thatRepublican voters, after deliver-ing three different winners in thefirst three stops in the nominat-ing contest, are in no rush to set-tle on their nominee.

Mr. Romney, whose messagehas been built around the propo-sition that he can create jobs, lostbadly among voters who saidthey were very worried about theeconomy, according to exit polls.

He had trouble with evangeli-cals and voters searching for a

candidate who shared their faith.He did not win over people whosupport the Tea Party movement.And he struggled with questionsabout his wealth over the pastweek and could not match Mr.Gingrich in exciting the passionsof conservatives.

His arguments of electability— the spine of his candidacy —fell flat to a wide portion of theparty’s base here.

For all that, by most traditionalmeasures, Mr. Romney retains afirm upper hand in the Republi-can race as it moves into a pro-tracted battle to win 1,144 dele-gates.

He is on the ballot in all states,while Mr. Gingrich is not. Even ashe was steadily falling in SouthCarolina last week, he was rack-ing up tens of thousands of earlyvotes for the Florida primary onJan. 31. He has a well-financed“super PAC” ready to carry outattacks on his behalf. And hefaces far friendlier terrain in Feb-

Certainty Fades as Romney FaltersNEWS ANALYSIS

Continued on Page 16

Primary ResultsPERCENT REPORTING: 100%

Newt Gingrich 243,398 40%Mitt Romney 167,957 28Rick Santorum 102,213 17Ron Paul 78,093 13Herman Cain 6,326 1

Questions are being raised as the lobby-ing firm of former Representative Wil-liam Delahunt is set to be hired for aproject he once earmarked. PAGE 18

NATIONAL 14-23

Ethics Issues Over Earmark

MOTIVATION The top priority forRepublican voters was defeatingPresident Obama. PAGE 17

STRATEGY Aides to Rick Santo-rum say he will focus on stateswith proportional voting. PAGE 17

CAMPAIGN 2012

Upset by Gingrich Shifts G.O.P. Campaign

Today, clouds and sunshine, high37. Tonight, cloudy, a bit of drizzle,especially late, low 35. Tomorrow,rain arriving, patchy fog, high 51.Details, SportsSunday, Page 12.

Homeowners are crossing their fingersas heating oil prices, which have risensteadily, are expected to reach recordlevels this winter. PAGE 23

Shivering as Oil Costs Mount

C M Y K Nxxx,2012-01-22,A,001,Bs-BK,E3

create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an eco-nomic adviser to the White house.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former ex-ecutive described how the company relied upon a Chinese factory to revamp iPhone manufac-turing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. new screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 work-ers inside the company’s dormitories, accord-ing to the executive. each employee was given a biscuit and a cup of tea, guided to a worksta-tion and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large num-bers of domestic jobs. What’s more, the com-pany’s decisions pose broader questions about what corporate America owes Americans as the

global and national economies are increasingly intertwined.

“Companies once felt an obligation to sup-port American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Prof-its and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the na-tion has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough prof-its to keep paying for innovation. Doing other-wise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competi-tors have emerged.

Apple was provided with extensive summa-ries of The new York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.

This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technol-ogy analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.

Privately, Apple executives say the world is

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular provid-ers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred coun-tries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

‘I Want a Glass Screen’In 2007, a little over a month before the

iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a proto-type of the device in his pocket.

Mr. Jobs angrily held up his iPhone, an-gling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. he then pulled his keys from his jeans.

People will carry this phone in their pock-et, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a

glass screen, and I want it perfect in six weeks.”After one executive left that meeting, he

booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cell-phone? And how do you design it at the high-est quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hun-dreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semicon-ductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from europe and rare metals from Africa and Asia. And all of it is put together in China.

In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began build-ing the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running neXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove

most all electronics designers rely uponto build their wares.

“Apple’s an example of why it’s sohard to create middle-class jobs in theU.S. now,” said Jared Bernstein, who un-til last year was an economic adviser tothe White House.

“If it’s the pinnacle of capitalism, weshould be worried.”

Apple executives say that going over-seas, at this point, is their only option.One former executive described howthe company relied upon a Chinese fac-tory to revamp iPhone manufacturingjust weeks before the device was due onshelves. Apple had redesigned theiPhone’s screen at the last minute, forc-ing an assembly line overhaul. Newscreens began arriving at the plant nearmidnight.

A foreman immediately roused 8,000workers inside the company’s dormito-ries, according to the executive. Eachemployee was given a biscuit and a cupof tea, guided to a workstation and with-in half an hour started a 12-hour shift fit-ting glass screens into beveled frames.Within 96 hours, the plant was pro-ducing over 10,000 iPhones a day.

“The speed and flexibility is breath-taking,” the executive said. “There’s noAmerican plant that can match that.”

Similar stories could be told about al-most any electronics company — andoutsourcing has also become commonin hundreds of industries, including ac-counting, legal services, banking, automanufacturing and pharmaceuticals.

But while Apple is far from alone, itoffers a window into why the success ofsome prominent companies has nottranslated into large numbers of domes-tic jobs. What’s more, the company’s de-cisions pose broader questions aboutwhat corporate America owes Ameri-cans as the global and national econo-mies are increasingly intertwined.

“Companies once felt an obligation tosupport American workers, even whenit wasn’t the best financial choice,” saidBetsey Stevenson, the chief economistat the Labor Department until last Sep-tember. “That’s disappeared. Profitsand efficiency have trumped generos-ity.”

Companies and other economists saythat notion is naïve. Though Americansare among the most educated workersin the world, the nation has stoppedtraining enough people in the mid-levelskills that factories need, executivessay.

To thrive, companies argue they needto move work where it can generateenough profits to keep paying for inno-vation. Doing otherwise risks losingeven more American jobs over time, asevidenced by the legions of once-prouddomestic manufacturers — includingG.M. and others — that have shrunk asnimble competitors have emerged.

Apple was provided with extensivesummaries of The New York Times’s re-porting for this article, but the company,which has a reputation for secrecy, de-clined to comment.

This article is based on interviewswith more than three dozen current andformer Apple employees and contrac-tors — many of whom requested ano-nymity to protect their jobs — as well aseconomists, manufacturing experts, in-ternational trade specialists, technologyanalysts, academic researchers, em-ployees at Apple’s suppliers, compet-itors and corporate partners, and gov-ernment officials.

Privately, Apple executives say theworld is now such a changed place thatit is a mistake to measure a company’scontribution simply by tallying its em-ployees — though they note that Appleemploys more workers in the UnitedStates than ever before.

They say Apple’s success has bene-fited the economy by empowering en-trepreneurs and creating jobs at compa-nies like cellular providers and busi-nesses shipping Apple products. And,ultimately, they say curing unemploy-ment is not their job.

“We sell iPhones in over a hundredcountries,” a current Apple executivesaid. “We don’t have an obligation tosolve America’s problems. Our only ob-ligation is making the best product pos-sible.”

‘I Want a Glass Screen’In 2007, a little over a month before

the iPhone was scheduled to appear instores, Mr. Jobs beckoned a handful oflieutenants into an office. For weeks, he

had been carrying a prototype of the de-vice in his pocket.

Mr. Jobs angrily held up his iPhone,angling it so everyone could see the doz-ens of tiny scratches marring its plasticscreen, according to someone who at-tended the meeting. He then pulled hiskeys from his jeans.

People will carry this phone in theirpocket, he said. People also carry theirkeys in their pocket. “I won’t sell aproduct that gets scratched,” he saidtensely. The only solution was usingunscratchable glass instead. “I want aglass screen, and I want it perfect in sixweeks.”

After one executive left that meeting,he booked a flight to Shenzhen, China. IfMr. Jobs wanted perfect, there was no-where else to go.

For over two years, the company hadbeen working on a project — code-named Purple 2 — that presented thesame questions at every turn: how doyou completely reimagine the cell-phone? And how do you design it at thehighest quality — with an unscratchablescreen, for instance — while also ensur-ing that millions can be manufacturedquickly and inexpensively enough toearn a significant profit?

The answers, almost every time,were found outside the United States.Though components differ between ver-sions, all iPhones contain hundreds ofparts, an estimated 90 percent of whichare manufactured abroad. Advancedsemiconductors have come from Ger-many and Taiwan, memory from Koreaand Japan, display panels and circuitryfrom Korea and Taiwan, chipsets fromEurope and rare metals from Africa andAsia. And all of it is put together in Chi-na.

In its early days, Apple usually didn’tlook beyond its own backyard for manu-facturing solutions. A few years afterApple began building the Macintosh in1983, for instance, Mr. Jobs bragged thatit was “a machine that is made in Amer-ica.” In 1990, while Mr. Jobs was runningNeXT, which was eventually bought byApple, the executive told a reporter that“I’m as proud of the factory as I am ofthe computer.” As late as 2002, top Ap-ple executives occasionally drove twohours northeast of their headquarters tovisit the company’s iMac plant in ElkGrove, Calif.

But by 2004, Apple had largely turnedto foreign manufacturing. Guiding thatdecision was Apple’s operations expert,Timothy D. Cook, who replaced Mr.Jobs as chief executive last August, sixweeks before Mr. Jobs’s death. Mostother American electronics companieshad already gone abroad, and Apple,which at the time was struggling, felt ithad to grasp every advantage.

In part, Asia was attractive becausethe semiskilled workers there werecheaper. But that wasn’t driving Apple.For technology companies, the cost oflabor is minimal compared with the ex-pense of buying parts and managingsupply chains that bring together com-ponents and services from hundreds ofcompanies.

For Mr. Cook, the focus on Asia“came down to two things,” said one for-mer high-ranking Apple executive. Fac-tories in Asia “can scale up and downfaster” and “Asian supply chains havesurpassed what’s in the U.S.” The resultis that “we can’t compete at this point,”the executive said.

The impact of such advantages be-came obvious as soon as Mr. Jobs de-manded glass screens in 2007.

For years, cellphone makers hadavoided using glass because it requiredprecision in cutting and grinding thatwas extremely difficult to achieve. Ap-ple had already selected an Americancompany, Corning Inc., to manufacturelarge panes of strengthened glass. Butfiguring out how to cut those panes intomillions of iPhone screens requiredfinding an empty cutting plant, hun-dreds of pieces of glass to use in experi-ments and an army of midlevel engi-neers. It would cost a fortune simply toprepare.

Then a bid for the work arrived froma Chinese factory.

When an Apple team visited, the Chi-nese plant’s owners were already con-structing a new wing. “This is in caseyou give us the contract,” the managersaid, according to a former Apple exec-utive. The Chinese government hadagreed to underwrite costs for numer-ous industries, and those subsidies hadtrickled down to the glass-cutting fac-tory. It had a warehouse filled withglass samples available to Apple, free ofcharge. The owners made engineersavailable at almost no cost. They hadbuilt on-site dormitories so employeeswould be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in Chinanow,” said another former high-rankingApple executive. “You need a thousandrubber gaskets? That’s the factory nextdoor. You need a million screws? Thatfactory is a block away. You need thatscrew made a little bit different? It willtake three hours.”

In Foxconn CityAn eight-hour drive from that glass

factory is a complex, known informallyas Foxconn City, where the iPhone is as-sembled. To Apple executives, FoxconnCity was further evidence that Chinacould deliver workers — and diligence— that outpaced their American coun-terparts.

That’s because nothing like FoxconnCity exists in the United States.

The facility has 230,000 employees,many working six days a week, oftenspending up to 12 hours a day at theplant. Over a quarter of Foxconn’s workforce lives in company barracks andmany workers earn less than $17 a day.When one Apple executive arrived dur-ing a shift change, his car was stuck in ariver of employees streaming past.“The scale is unimaginable,” he said.

Foxconn employs nearly 300 guardsto direct foot traffic so workers are notcrushed in doorway bottlenecks. The fa-cility’s central kitchen cooks an averageof three tons of pork and 13 tons of rice aday. While factories are spotless, the airinside nearby teahouses is hazy withthe smoke and stench of cigarettes.

Foxconn Technology has dozens of fa-cilities in Asia and Eastern Europe, andin Mexico and Brazil, and it assemblesan estimated 40 percent of the world’sconsumer electronics for customers likeAmazon, Dell, Hewlett-Packard, Moto-rola, Nintendo, Nokia, Samsung andSony.

“They could hire 3,000 people over-night,” said Jennifer Rigoni, who wasApple’s worldwide supply demand man-ager until 2010, but declined to discussspecifics of her work. “What U.S. plantcan find 3,000 people overnight and con-vince them to live in dorms?”

In mid-2007, after a month of experi-mentation, Apple’s engineers finallyperfected a method for cutting strength-ened glass so it could be used in theiPhone’s screen. The first truckloads ofcut glass arrived at Foxconn City in thedead of night, according to the formerApple executive. That’s when managerswoke thousands of workers, whocrawled into their uniforms — white andblack shirts for men, red for women —and quickly lined up to assemble, byhand, the phones. Within three months,Apple had sold one million iPhones.Since then, Foxconn has assembledover 200 million more.

Foxconn, in statements, declined tospeak about specific clients.

“Any worker recruited by our firm iscovered by a clear contract outliningterms and conditions and by Chinesegovernment law that protects theirrights,” the company wrote. Foxconn“takes our responsibility to our employ-ees very seriously and we work hard togive our more than one million employ-ees a safe and positive environment.”

The company disputed some detailsof the former Apple executive’s account,and wrote that a midnight shift, such asthe one described, was impossible “be-cause we have strict regulations re-garding the working hours of our em-ployees based on their designatedshifts, and every employee has comput-erized timecards that would bar themfrom working at any facility at a timeoutside of their approved shift.” Thecompany said that all shifts began at ei-ther 7 a.m. or 7 p.m., and that employeesreceive at least 12 hours’ notice of anyschedule changes.

Foxconn employees, in interviews,have challenged those assertions.

Another critical advantage for Applewas that China provided engineers at ascale the United States could not match.Apple’s executives had estimated thatabout 8,700 industrial engineers wereneeded to oversee and guide the 200,000

THOMAS LEE/BLOOMBERG NEWS

A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.

How the United States Lost Out on iPhone Work

The shift from manufacturing means the loss of a “job multiplier,” creating new jobs in other industries, like construction, transportation and retailing. When an auto company hires 1,000 new workers, for instance, it creates more than four times as many additional jobs for marketers, managers, parts manufacturers and car salesmen. Service sector and retail jobs, on the other hand, are not big job multipliers.

In general, while jobs for professionals and service employees have grown, jobs for everyone else, like office clerks and factory workers, have shrunk. For example, General Electric is the only company on the list of biggest employers in both decades. But today, its single largest unit by revenue is GE Capital, which sells financial services.

FOR EVERY 1,000 JOBS CREATED IN:

ADDITIONALJOBS CREATED

Retailing

Hospitals

Computer systems design services

Motor vehicle manufacturing

Steel product manufacturing

240

670

1,190

4,710

11,890

20

60

100 %

1960 2010

Goods-producing,including manufacturing

14%

Service86%

PERCENTAGE OF WORKERSIN EACH SECTOR

THE LARGESTEMPLOYERS

Goods-producing

Service-providing

A Shift From Manufacturing

Walmart 2,100,000

Package deliverycompany400,600

Target355,000

Home improvementretailer321,000

Bank of America288,000

General Electric287,000

Sears Holding 312,000

PepsiCo294,000

Grocery retailer338,000

Hewlett-Packard324,600

McDonald’sCorporation400,000

Operator ofTaco Bell, KFC, Pizza Hut378,000

A job placementagency 538,000

I.B.M.426,751

General Motors 595,200employees

Bell System(later AT&T)580,400

General Electric260,600

U.S. Steel225,100

Ford Motor260,000

Sears, Roebuck 208,000

BethlehemSteel138,300

U.S. military contractor 105,700

Chrysler 105,400

SperryRand105,300

International Telephone & Telegraph132,000

WestinghouseElectric114,000

Supermarketchain153,000

1960 2010

Brand owned by Standard Oil of N.J.(later Exxon)140,000

International Harvester 104,300

CHANGE IN JOBS, 2000-10

All other jobs, including sales,construction,transportation, –11.7%

Managers and professionals, +7.9%

Service jobs, +12.0%

–10%

-5

0

5

+10%

Apple is worth about $400 billion — more than General Electric and I.B.M. But with only 63,000 employees worldwide, it doesn’t come

close to appearing on a list of the nation’s biggest employers.

A look at the largest employers shows how America’s economy has changed. Over the last 50 years, the country has shifted from creating goods to providing services. Today, about a tenth of Americans work in manufacturing, while service providers and retailers like Walmart and temp firms like Kelly Services employ about six in seven of the nation’s workers.

CVSPharmacy280,000

Apple

Sources: S&P Capital IQ (list of largest employers); Bureau of Labor Statistics THE NEW YORK TIMES

20 Ø N NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

Articles in this series are examiningchallenges posed by increasingly global-ized high-tech industries.

The iEconomy

ONLINE: A motion graphic on thedecline of manufacturing in America

and a forum for reader comments. OnMonday, Charles Duhigg will respond toreader questions.

nytimes.com/business

David Barboza, Peter Lattman andCatherine Rampell contributed report-ing.

From Page 1

C M Y K Nxxx,2012-01-22,A,020,Bs-BK,E2

two hours northeast of their headquarters to visit the company’s iMac plant in elk Grove, Calif.

But by 2004, Apple had largely turned to for-eign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had al-ready gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology com-panies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the execu-tive said.

The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely diffi-cult to achieve. Apple had already selected an American company, Corning Inc., to manufac-ture large panes of strengthened glass. But fig-uring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chi-nese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of

charge. The owners made engineers available at almost no cost. They had built on-site dormi-tories so employees would be available 24 hours a day.

The Chinese plant got the job.“The entire supply chain is in China now,”

said another former high-ranking Apple execu-tive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

In Foxconn CityAn eight-hour drive from that glass factory

is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple execu-tives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company bar-racks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of em-ployees streaming past. “The scale is unimagi-nable,” he said.

Foxconn employs nearly 300 guards to di-rect foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.

Foxconn Technology has dozens of facilities in Asia and eastern europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for custom-ers like Amazon, Dell, hewlett-Packard, Motor-ola, nintendo, nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s world-wide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

In mid-2007, after a month of experimenta-tion, Apple’s engineers finally perfected a meth-

od for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple execu-tive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Foxconn, in statements, declined to speak

about specific clients.“Any worker recruited by our firm is cov-

ered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Fox-conn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”

The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described,

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

was impossible “because we have strict regula-tions regarding the working hours of our em-ployees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any fa-cility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.

Foxconn employees, in interviews, have challenged those assertions.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s execu-tives 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. The com-pany’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.Companies like Apple “say the challenge in

setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill lev-el are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple re-cently built a $500 million data center in north Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.

But even those facilities are not enormous sources of jobs. Apple’s north Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.

“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gas-sée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they

don’t really need to hire much.”It is hard to estimate how much more it

would cost to build iPhones in the United States. however, various academics and manufactur-ing analysts estimate that because labor is such a small part of technology manufacturing, pay-ing American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are of-ten hundreds of dollars per phone, building do-mestically, in theory, would still give the com-pany a healthy reward.

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transform-ing the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flex-ibility. Other companies that work with Apple, like Corning, also say they must go abroad.

Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.

But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.

“Our customers are in Taiwan, Korea, Ja-pan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”

Corning was founded in America 161 years ago and its headquarters are still in upstate new York. Theoretically, the company could manu-facture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian busi-ness. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has be-come what the U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time eric Saragoza stepped into

Apple’s manufacturing plant in elk Grove, Ca-lif., he felt as if he were entering an engineering wonderland.

It was 1995, and the facility near Sacramen-to employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. his salary climbed to $50,000. he and his wife had three children. They bought a home with a pool.

“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”

At the same time, however, the electronics industry was changing, and Apple — with prod-ucts that were declining in popularity — was struggling to remake itself. One focus was im-proving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the ma-terials, of building a $1,500 computer in elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.

“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”

Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agricul-ture to manufacturing and then to other indus-tries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.

But in the last two decades, something more fundamental has changed, economists say. Mid-wage jobs started disappearing. Particularly among Americans without college degrees, to-day’s new jobs are disproportionately in service occupations — at restaurants or call centers, or

as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground al-lowed executives to replace workers with ma-chines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, sudden-ly, a few people with Internet connections were all that were needed.

Mr. Saragoza was too expensive for an un-skilled position. he was also insufficiently cre-dentialed for upper management. he was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. he taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley north,” had by then converted much of the elk Grove plant into an AppleCare call center, where new em-ployees often earn $12 an hour.

There were employment prospects in Sili-con Valley, but none of them panned out. “What they really want are 30-year-olds without chil-dren,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.

After a few months of looking for work, he started feeling desperate. even teaching jobs had dried up. So he took a position with an elec-tronics temp agency that had been hired by Ap-ple to check returned iPhones and iPads before they were sent back to customers. every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.

Paydays for AppleAs Apple’s overseas operations and sales

have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, new Jersey and Massa-chusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.

Some of that wealth has gone to sharehold-

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

Ø N 21NATIONALTHE NEW YORK TIMES SUNDAY, JANUARY 22, 2012

assembly-line workers eventually in-volved in manufacturing iPhones. Thecompany’s analysts had forecast itwould take as long as nine months tofind that many qualified engineers inthe United States.

In China, it took 15 days.Companies like Apple “say the chal-

lenge in setting up U.S. plants is findinga technical work force,” said MartinSchmidt, associate provost at the Mas-sachusetts Institute of Technology. Inparticular, companies say they need en-gineers with more than high school, butnot necessarily a bachelor’s degree.Americans at that skill level are hard tofind, executives contend. “They’re goodjobs, but the country doesn’t haveenough to feed the demand,” Mr.Schmidt said.

Some aspects of the iPhone areuniquely American. The device’s soft-ware, for instance, and its innovativemarketing campaigns were largely cre-ated in the United States. Apple re-cently built a $500 million data center inNorth Carolina. Crucial semiconductorsinside the iPhone 4 and 4S are manufac-tured in an Austin, Tex., factory by Sam-sung, of South Korea.

But even those facilities are not enor-mous sources of jobs. Apple’s NorthCarolina center, for instance, has only100 full-time employees. The Samsungplant has an estimated 2,400 workers.

“If you scale up from selling one mil-lion phones to 30 million phones, youdon’t really need more programmers,”said Jean-Louis Gassée, who oversawproduct development and marketing forApple until he left in 1990. “All these newcompanies — Facebook, Google, Twitter— benefit from this. They grow, but theydon’t really need to hire much.”

It is hard to estimate how much moreit would cost to build iPhones in theUnited States. However, various aca-demics and manufacturing analysts es-timate that because labor is such asmall part of technology manufactur-ing, paying American wages would addup to $65 to each iPhone’s expense.Since Apple’s profits are often hundredsof dollars per phone, building domes-tically, in theory, would still give thecompany a healthy reward.

But such calculations are, in many re-spects, meaningless because buildingthe iPhone in the United States woulddemand much more than hiring Ameri-cans — it would require transformingthe national and global economies. Ap-ple executives believe there simply are-n’t enough American workers with theskills the company needs or factorieswith sufficient speed and flexibility.Other companies that work with Apple,like Corning, also say they must goabroad.

Manufacturing glass for the iPhonerevived a Corning factory in Kentucky,and today, much of the glass in iPhonesis still made there. After the iPhone be-came a success, Corning received aflood of orders from other companieshoping to imitate Apple’s designs. Itsstrengthened glass sales have grown tomore than $700 million a year, and it hashired or continued employing about1,000 Americans to support the emerg-ing market.

But as that market has expanded, thebulk of Corning’s strengthened glassmanufacturing has occurred at plants inJapan and Taiwan.

“Our customers are in Taiwan, Korea,Japan and China,” said James B. Flaws,Corning’s vice chairman and chief fi-nancial officer. “We could make theglass here, and then ship it by boat, butthat takes 35 days. Or, we could ship itby air, but that’s 10 times as expensive.So we build our glass factories nextdoor to assembly factories, and thoseare overseas.”

Corning was founded in America 161years ago and its headquarters are stillin upstate New York. Theoretically, thecompany could manufacture all its glassdomestically. But it would “require a to-tal overhaul in how the industry isstructured,” Mr. Flaws said. “The con-sumer electronics business has becomean Asian business. As an American, Iworry about that, but there’s nothing Ican do to stop it. Asia has become whatthe U.S. was for the last 40 years.”

Middle-Class Jobs FadeThe first time Eric Saragoza stepped

into Apple’s manufacturing plant in ElkGrove, Calif., he felt as if he were en-tering an engineering wonderland.

It was 1995, and the facility near Sac-ramento employed more than 1,500workers. It was a kaleidoscope of ro-

botic arms, conveyor belts ferrying cir-cuit boards and, eventually, candy-col-ored iMacs in various stages of assem-bly. Mr. Saragoza, an engineer, quicklymoved up the plant’s ranks and joinedan elite diagnostic team. His salaryclimbed to $50,000. He and his wife hadthree children. They bought a homewith a pool.

“It felt like, finally, school was payingoff,” he said. “I knew the world neededpeople who can build things.”

At the same time, however, the elec-tronics industry was changing, and Ap-ple — with products that were decliningin popularity — was struggling to re-make itself. One focus was improvingmanufacturing. A few years after Mr.Saragoza started his job, his bosses ex-plained how the California plant stackedup against overseas factories: the cost,excluding the materials, of building a$1,500 computer in Elk Grove was $22 amachine. In Singapore, it was $6. In Tai-wan, $4.85. Wages weren’t the majorreason for the disparities. Rather it wascosts like inventory and how long it tookworkers to finish a task.

“We were told we would have to do12-hour days, and come in on Satur-days,” Mr. Saragoza said. “I had a fam-ily. I wanted to see my kids play soccer.”

Modernization has always causedsome kinds of jobs to change or disap-pear. As the American economy transi-tioned from agriculture to manufactur-ing and then to other industries, farm-ers became steelworkers, and thensalesmen and middle managers. Theseshifts have carried many economicbenefits, and in general, with each pro-gression, even unskilled workers re-ceived better wages and greaterchances at upward mobility.

But in the last two decades, some-thing more fundamental has changed,economists say. Midwage jobs starteddisappearing. Particularly amongAmericans without college degrees, to-day’s new jobs are disproportionately inservice occupations — at restaurants orcall centers, or as hospital attendants ortemporary workers — that offer feweropportunities for reaching the middleclass.

Even Mr. Saragoza, with his college

degree, was vulnerable to these trends.First, some of Elk Grove’s routine taskswere sent overseas. Mr. Saragoza didn’tmind. Then the robotics that made Ap-ple a futuristic playground allowed ex-ecutives to replace workers with ma-chines. Some diagnostic engineeringwent to Singapore. Middle managerswho oversaw the plant’s inventory werelaid off because, suddenly, a few peoplewith Internet connections were all thatwere needed.

Mr. Saragoza was too expensive foran unskilled position. He was also insuf-ficiently credentialed for upper man-agement. He was called into a small of-fice in 2002 after a night shift, laid offand then escorted from the plant. Hetaught high school for a while, and thentried a return to technology. But Apple,which had helped anoint the region as“Silicon Valley North,” had by then con-verted much of the Elk Grove plant intoan AppleCare call center, where newemployees often earn $12 an hour.

There were employment prospects inSilicon Valley, but none of them pannedout. “What they really want are 30-year-olds without children,” said Mr. Sarago-za, who today is 48, and whose familynow includes five of his own.

After a few months of looking forwork, he started feeling desperate.Even teaching jobs had dried up. So hetook a position with an electronics tempagency that had been hired by Apple tocheck returned iPhones and iPads be-fore they were sent back to customers.Every day, Mr. Saragoza would drive tothe building where he had once workedas an engineer, and for $10 an hour withno benefits, wipe thousands of glassscreens and test audio ports by plug-ging in headphones.

Paydays for AppleAs Apple’s overseas operations and

sales have expanded, its top employeeshave thrived. Last fiscal year, Apple’srevenue topped $108 billion, a sum larg-er than the combined state budgets ofMichigan, New Jersey and Massachu-setts. Since 2005, when the company’sstock split, share prices have risen fromabout $45 to more than $427.

Some of that wealth has gone toshareholders. Apple is among the mostwidely held stocks, and the rising shareprice has benefited millions of individ-ual investors, 401(k)’s and pensionplans. The bounty has also enriched Ap-ple workers. Last fiscal year, in additionto their salaries, Apple’s employees anddirectors received stock worth $2 billionand exercised or vested stock and op-tions worth an added $1.4 billion.

The biggest rewards, however, haveoften gone to Apple’s top employees.Mr. Cook, Apple’s chief, last year re-ceived stock grants — which vest over a10-year period — that, at today’s shareprice, would be worth $427 million, andhis salary was raised to $1.4 million. In2010, Mr. Cook’s compensation packagewas valued at $59 million, according toApple’s security filings.

A person close to Apple argued thatthe compensation received by Apple’semployees was fair, in part because thecompany had brought so much value tothe nation and world. As the companyhas grown, it has expanded its domesticwork force, including manufacturingjobs. Last year, Apple’s American workforce grew by 8,000 people.

While other companies have sent callcenters abroad, Apple has kept its cen-ters in the United States. One source es-timated that sales of Apple’s productshave caused other companies to hiretens of thousands of Americans. FedExand United Parcel Service, for instance,both say they have created Americanjobs because of the volume of Apple’sshipments, though neither would pro-vide specific figures without permissionfrom Apple, which the company de-clined to provide.

“We shouldn’t be criticized for usingChinese workers,” a current Apple exec-utive said. “The U.S. has stopped pro-ducing people with the skills we need.”

What’s more, Apple sources say thecompany has created plenty of goodAmerican jobs inside its retail storesand among entrepreneurs sellingiPhone and iPad applications.

After two months of testing iPads, Mr.Saragoza quit. The pay was so low thathe was better off, he figured, spendingthose hours applying for other jobs. On

a recent October evening, while Mr.Saragoza sat at his MacBook and sub-mitted another round of résumés online,halfway around the world a woman ar-rived at her office. The worker, Lina Lin,is a project manager in Shenzhen, Chi-na, at PCH International, which con-tracts with Apple and other electronicscompanies to coordinate production ofaccessories, like the cases that protectthe iPad’s glass screens. She is not anApple employee. But Mrs. Lin is inte-gral to Apple’s ability to deliver its prod-ucts.

Mrs. Lin earns a bit less than whatMr. Saragoza was paid by Apple. Shespeaks fluent English, learned fromwatching television and in a Chineseuniversity. She and her husband put aquarter of their salaries in the bank ev-ery month. They live in a 1,080-square-foot apartment, which they share withtheir in-laws and son.

“There are lots of jobs,” Mrs. Lin said.“Especially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s din-

ner last year with Mr. Jobs and otherSilicon Valley executives, as everyonestood to leave, a crowd of photo seekersformed around the president. A slightlysmaller scrum gathered around Mr.Jobs. Rumors had spread that his illnesshad worsened, and some hoped for aphotograph with him, perhaps for thelast time.

Eventually, the orbits of the menoverlapped. “I’m not worried about thecountry’s long-term future,” Mr. Jobstold Mr. Obama, according to one ob-server. “This country is insanely great.What I’m worried about is that we don’ttalk enough about solutions.”

At dinner, for instance, the executiveshad suggested that the governmentshould reform visa programs to helpcompanies hire foreign engineers. Somehad urged the president to give compa-nies a “tax holiday” so they could bringback overseas profits which, they ar-gued, would be used to create work. Mr.Jobs even suggested it might be pos-sible, someday, to locate some of Ap-ple’s skilled manufacturing in the Unit-ed States if the government helped trainmore American engineers.

Economists debate the usefulness ofthose and other efforts, and note that astruggling economy is sometimes trans-formed by unexpected developments.The last time analysts wrung theirhands about prolonged American un-employment, for instance, in the early1980s, the Internet hardly existed. Fewat the time would have guessed that adegree in graphic design was rapidlybecoming a smart bet, while studyingtelephone repair a dead end.

What remains unknown, however, iswhether the United States will be ableto leverage tomorrow’s innovations intomillions of jobs.

In the last decade, technological leapsin solar and wind energy, semiconduc-tor fabrication and display technologieshave created thousands of jobs. Butwhile many of those industries startedin America, much of the employmenthas occurred abroad. Companies haveclosed major facilities in the UnitedStates to reopen in China. By way of ex-planation, executives say they are com-peting with Apple for shareholders. Ifthey cannot rival Apple’s growth andprofit margins, they won’t survive.

“New middle-class jobs will eventu-ally emerge,” said Lawrence Katz, aHarvard economist. “But will someonein his 40s have the skills for them? Orwill he be bypassed for a new graduateand never find his way back into themiddle class?”

The pace of innovation, say execu-tives from a variety of industries, hasbeen quickened by businessmen likeMr. Jobs. G.M. went as long as half adecade between major automobile re-designs. Apple, by comparison, has re-leased five iPhones in four years, dou-bling the devices’ speed and memorywhile dropping the price that some con-sumers pay.

Before Mr. Obama and Mr. Jobs saidgoodbye, the Apple executive pulled aniPhone from his pocket to show off anew application — a driving game —with incredibly detailed graphics. Thedevice reflected the soft glow of theroom’s lights. The other executives,whose combined worth exceeded $69billion, jostled for position to glanceover his shoulder. The game, everyoneagreed, was wonderful.

There wasn’t even a tiny scratch onthe screen.

ABOVE, THOMAS LEE FOR THE NEW YORK TIMES; AT LEFT, JIM WILSON/THE NEW YORK TIMES

In China, Lina Linis a project

manager at PCHInternational,

which contractswith Apple. “Thereare lots of jobs,” shesaid. “Especially in

Shenzhen.” InCalifornia, EricSaragoza joined

Apple as anengineer in 1995,but as more work

occurred overseas,he was laid off.

Sources: Paul Semenza, senior vice president, Analyst Services, DisplaySearch, an NPD Group Company; Linley Gwennap, founder and principal analyst, the Linley Group; Ron Turi, owner, Element 3 Battery Venture; Wayne Lam, IHS iSuppli THE NEW YORK TIMES

The iPhone: Designed in the U.S. … … Made Overseas … … Assembled in China

43,000jobs in the U.S.

5,000 – 10,000jobs in South Korea

and other Asian countries

DISPLAYS

7,000 – 20,000jobs in Taiwan, Singapore, Malaysia,

Japan, Europe and elsewhere

SEMICONDUCTORS (CHIPS)

300 – 1,000jobs in China

BATTERIES ASSEMBLY

200,000jobs in China

Dreamed up in California

Apple once boasted that its products were

manufactured in the United States. No longer. Specifics differ between

versions, but an estimated 90 percent of iPhone components are manufactured overseas, by workers in Germany,

Singapore, Korea, Taiwan, China and elsewhere.

An industry lost

America was once a leader in television and other display manufacturing.

Today, virtually no displays are made in the United

States. They mostly come from Asia, especially South

Korea and Japan, where wages are not much

cheaper but technical manufacturing has outpaced

American capabilities.

An industry outsourced

The semiconductor was essentially invented in the United

States. Then foreign nations discovered that semiconductor manufacturing could jump-start

technology industries. In the 1960s, assembly was outsourced to Asia. Higher-skilled jobs soon

followed. Although the latest iPhone processor is made in

Texas, most of its other chips are made abroad.

No catching up

Sony helped develop the lithium-ion battery in the early 1980s for use in its

consumer electronics devices, including the

Walkman. Japan came to dominate the manufacturing of these batteries. Energizer

built a battery factory in Florida in the 1990s, but raw material costs and labor rates made it unable to compete.

It’s not just cheap labor

The iPhone is assembled in China by Foxconn, the largest electronics assembler

in the world. U.S. executives say they cannot function without companies like

Foxconn. The Taiwanese company has 1.2 million workers, many willing to live in

company dorms and spend 12 hours in a factory, six days a week. Chinese workers

are cheaper than their American counterparts — but just as important, they

are more flexible and plentiful, and thousands can be hired overnight.

C M Y K Nxxx,2012-01-22,A,021,Bs-BK,E2

ers. Apple is among the most widely held stocks, and the rising share price has benefited mil-lions of individual investors, 401(k)’s and pen-sion plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their sal-aries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.

The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Ap-ple’s chief, last year received stock grants — which vest over a 10-year period — that, at to-day’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security fil-ings.

A person close to Apple argued that the compensation received by Apple’s employ-ees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.

While other companies have sent call cen-ters abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other compa-nies to hire tens of thousands of Americans. Fedex and United Parcel Service, for instance, both say they have created American jobs be-cause of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the com-pany declined to provide.

“We shouldn’t be criticized for using Chi-nese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What’s more, Apple sources say the compa-ny has created plenty of good American jobs in-side its retail stores and among entrepreneurs selling iPhone and iPad applications.

After two months of testing iPads, Mr. Sara-goza quit. The pay was so low that he was bet-ter off, he figured, spending those hours apply-ing for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and sub-mitted another round of résumés online, half-way around the world a woman arrived at her office. The worker, Lina Lin, is a project man-

ager in Shenzhen, China, at PCh International, which contracts with Apple and other electron-ics companies to coordinate production of ac-cessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to de-liver its products.

Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent english, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apart-ment, which they share with their in-laws and son.

“There are lots of jobs,” Mrs. Lin said. “es-pecially in Shenzhen.”

Innovation’s LosersToward the end of Mr. Obama’s dinner last

year with Mr. Jobs and other Silicon Valley ex-ecutives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.

eventually, the orbits of the men over-lapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is in-sanely great. What I’m worried about is that we don’t talk enough about solutions.”

At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they ar-gued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.

economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unex-pected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic

design was rapidly becoming a smart bet, while studying telephone repair a dead end.

What remains unknown, however, is wheth-er the United States will be able to leverage to-morrow’s innovations into millions of jobs.

In the last decade, technological leaps in so-lar and wind energy, semiconductor fabrication and display technologies have created thou-sands 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. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.

“new middle-class jobs will eventually emerge,” said Lawrence Katz, a harvard econ-omist. “But will someone in his 40s have the

skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”

The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile re-designs. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.

Before Mr. Obama and Mr. Jobs said good-bye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.

There wasn’t even a tiny scratch on the screen. n

David Barboza, Peter Lattman and Catherine Rampell contributed reporting.