Hilda.
I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by The New Zealand Herald. Over the last few months or we've been able to talk about when it comes to the economy, has been tariffs and trade wars behind a lot of what Donald Trump's talk has been about is his desire to see more manufacturing done in the United States, and that includes everything from
steel and cars down to smartphones. But how realistic is it to demand everything moves production to the US and has Trump perhaps touched on a floor in how our most popular products are made? Actually on the Front Page, we're joined by business desks Deleiper Vonseca to discuss how manufacturing actually works. So Deleiper took us through Trump's desire to get everything made in the US. What are some of the products or materials that he wants made at home there?
Well, he's talked a lot about everything basically, and you've actually raised by implication a really good point in there, which is to some degree people are kind of wondering what Trump is actually trying to do with the tariffs, Like is this about relocating a whole bunch of manufacturing or is it about raising a whole bunch of money. Depending what day it is, it seems to be either
or answer. But broadly speaking, he had the start, had said he was really concerned about all this manufacturing that was going to China, and then you know, afterwards we've sort of discovered that he's concerned about countries that are basically allowing China to continue exporting through them. So you know, that's countries like Vietnam and things where exception as China is sort of sending goods that are then just getting transshipped or it's kind of like a kind of like
a middleman sort of thing. And then more recently you would have seen the memes floating around of Trump Ai generated Trump putting together shoes in a switch shop, and lots of jokes being made about how Trump is basically just trying to get everyone a job in America making shoes. He's basically at the start he was talking about high value manufacturing that was what somebody wants, so and now he's talking more about relocating all manufacturing to the United States.
Yeah, I mean, why is this such a priority for him? What does he hope to gain politically from this pledge? I guess the US made mantra is a big one for him.
Yeah, I mean he sees this as like a job, you know, when a job opportunity thinks that if he goes and moves this manufacturing back, that that's going to regenerate some employment. He thinks that there's some kind of hostility towards China and that this will represent America being kind of more dominant by bringing all this manufacturing back
into the United States. But actually, the world economy is a really different place to what it was, you know, post World War Two, or you know, even in kind of recent decades. You don't just have one country manufacturing one thing. It's actually one product will be a component from a whole range of places.
What is the state of global manufacturing? It does seem like basically everything these days is made in China or India. Is that fair to say or is that a massive stereotype?
Well let's think. Let's think of a product, you know, the iPhone fourteen, you know, right, so it's a symboled in China, so you would say, right, it's manufactured in China. It's a that's a Chinese product. Effectively, all these iPhones are being manufactured in China, but China actually only produces of the iPhone fourteen four percent of the value of
an iPhone. Right, the actual value of an iPhone, the manufactured physical product is not so valuable then tough career manufactured you know, twenty five percent of the kind of components in there, Japan eleven percent, Taiwan seven percent, and the US. In terms of the value of an iPhone, it's actually contributing about thirty two percent of the value of that iPhone. And if you look at who's making the money off selling an iPhone, that's Apple, right, it's
actually not the manufacturer, you know, the manufacturer. If you're talking about fox Con, it's a Taiwanese company in China, that factory, and the factory's work is they're earning a wage, but they're not making the massive profits that you get from an iPhone. The massive profits come from the company that's designing it, coming up with the idea and also adding a lot of the highest value kind of components
and software to it. And that is basically still you know, an American product in some ways when we talk about you know this everything is being manufactured in a particular country where it's China or India. That's true that there's a lot of industrial sort of manufacturing going on, especially not just China, but you know Vietnam and thailandishly some of some of those other Southeast Asian countries as well.
But they are not necessarily contributing all of the value of a product, and they don't necessarily control all the profits from their product aid.
And that's not to say that making in China is bad. I think made in China is really has changed a lot over the years, and some of those factories have cutting each technology that you can't find anywhere. It's the reason why so many of our designers manufacture in China. I think it is quite gyring to see a brand that's so world renowned made in these factories. And it might be certain categories. For example, you've got the footwear in China, but then you've got the ready to wear
in Paris. So it's kind of like, I think it's a good thing. The more the consumers educated, the better we are, and it trickles down to how we consume locally.
Right, really set themselves up to be hubs for production, right, So it's not like there's one factory making phones and other factory making clothes. There are just hundreds of businesses that work cohesively together.
Yeah, it's like a supply chain of components. And actually, in some ways, this is where perhaps if Trump was really thinking about it, this is perhaps where the danger for America lies in the sense that China over the years, you know, it's no longer really the cheapest producer. You know, it doesn't have the cheapest laborers, doesn't have the cheapest workers. But what it has now because it's been manufacturing the iPhone for so long and other other products, it has
this whole ecosystem of companies. You know, no other sort of country really has those small little manufacturers who can then feed into the larger manufacturers and can really put together a product like that. You know, somebody, there was somebody from China recently who, to illustrate the point, pulled out their lighter to me and he said, look, you know this in one in one place in China, there's light where there's lighters manufacturer within two hours or the
kind of opponent manufacturers of that. Now does that exist in some place like New Zealand or the United States? Not really? And so if if there was any kind of break, diplomatic break, some kind of big issue Taiwan or something else, then that would perhaps leave like the United States vulnerable in terms of its industrial capacity if it needed to manufacture some products.
You've visited one of these manufacturing areas in India before.
Hey, yeah, so, Asian New Zealand Foundation Center a group of US over to India for a range of related to the Raisina dialogues which lux and went and gave a speech earlier in this year, and as part of that we also went to this I guess you'd call it kind of an economic zone, industrial park type arrangement called Shri City, which is a huge bit of land in the state just north of a next door to Tummil Nadu and that area is Tami Nadu, is I
think India's most industrialized state, the place where Sri City is located. That's also where you get the rockets where India launches its sort of space missions, so you can
actually it's written short distance of there. And within this kind of harbor there's a sort of free trade zone type thing where there's kind of you know, easier sort of tariff access for goods that are kind of being shipped through, but there's also domestic manufacturing products for different types of products, domestic manufacturing facilities, and effectively you we saw you know, we went in and we saw kind of an in conditioning manufacturer. We we went around the plant.
There is a fox complant there, but we didn't we didn't visit it. And these basically they're kind of in some ways putting together a kind of ecosystem there. They've got like different manufacturers of things. You know, their conditioner manufacturer was talking about how they're drawing on different people were located within these areas. But that's a huge investment,
you know, the and they're just getting started. And in fact, you know, when we've when Trump had talked about we want to get you have all these products made in the United States, or we want to get out of China, Apple instantly was like, right, we're gonna send all the production to India. But India only recently got up to manufacturally about ninety seven percent of the iPhones that itself consumes, so if it were to go and do it for America would have to wrap up this production even more.
Well, one company Trump directly called out, and you've already said it Apple, he wants them to make their phones in the US. I saw one bit of analysis saying that it had cost up to three thousand, five hundred dollars US if the phones were made there. That's about set what's seven a k New Zealand for your phone? That's more than I've ever spent. Actually, I'm thinking I've
ever spent on a car. I think it did get us thinking are we relying on cheap labor in Asia to make all of our popular products so it doesn't get up to three thousand, five hundred dollars.
I actually don't think that the labory qu is actually the most important part of it. I mean China actually it installed two hundred and seventy six three hundred robots like last year. Yeah, like I said, it's manufacturing now is moving into highly automated territory. I think that when we think about something like the iPhone, we've got to think about, well, we've got our product, and that's the product that we're buying, But where's the actual value for it for US as a country or as a nation.
Are we actually ever going to manufacture iPhones in New Zealand? No, because then it would really cost like three five hundred dollars or four thousand dollars. But if it is, if we're able to bring it down by relying on someplace where it's maybe more efficient to manufacture these, And that's not efficiency isn't only just going to be because of the labor. Actually it's going to because of all the other producers that are kind.
Of close by, and they've been doing it for decade.
Yeah, they've been doing it for a long time. So to go rebuild that somewhere else is just going to take a lot of money. And you can kind of do it. But then suddenly the iPhone is unaffordable for a whole bunch of people. So what happens Then people might use a Samsung or people might use another ecosystem. Well, if you do that, are there certain opportunities that aren't open to you? Then if you don't have access to iPhones, if it's unaffordable, then does that produce make a whole
bunch of the Internet now very inaccessible for people? So actually, you know, do we get more value out of being able to manufacture an iPhone in the country? Do we get more value from being able to access some of the services that we access on an iPhone or having our population being able to access those services.
We have Apple as you know, it's coming in. And I had a little problem with Tim Cooky yesterday. I said to him, tell me and my friend I treated you very good. You're coming here with five hundred billion dollars. But now I hear you're building all over India. I don't want your building in India. You can build an India if you want to take care of India. Because India is the highest, one of the highest tariff nations in the world. It's very hard to sell into India,
and they've offered us a deal. We're basically they're willing to literally charge just no tariff, so we go from the highest tariff. You couldn't do business in India. We're not even a top thirty in India because the tariff is so high.
We've talked here on this podcast before about how TikTokers in China were posting videos when the trade war stuff started about how cheap some of our most expensive products are purely because the factories are all there and they can buy things right off the production line. So do they quite enjoy having these products made there, do you think or is it just a front presented on social media?
Well, one thing, I should probably say, some of those tiktoks can't be one hundred percent surely, Yeah, yeah, yeah, I think so. I'm not sure. I'm not sure if some of them were real on but some definitely some of them were false. So there is that. But to your larger point, you know, is this a strategy from the Chinese? I think so, Like isn't I think that they actually set out to a big manufacturing industrial hub and they set out to make components that are important
for you know, WestEd businesses as well. Theyso wanted to be an important part of the global economy, so they couldn't just be shut off. So yeah, I mean, I guess Jhortly that is a strategy encouraging their industry as a strategy, it's not necessarily a cost free sort of a strategy. You know, Like we hear a lot about the really successful industrial factories, but they are actually a
whole bunch of factories in China that are struggling. You know, there's over capacity, their unemployment rates are kind of going high for younger people. There's a whole bunch of overquasity. So you know, there's kind of factories there that are only capable of manufacturing products that people may not necessarily want. And you know they're facing trade restrictions in some countries as well, So it's not all of massive benefit to China.
But I think you're right in terms of you know, you were as seeing a bit of strategy there.
Of course, is there even the demand in the US for people to want to work in factories. It sometimes feels like Trump thinks we're still live in the nineteen twenties and everyone is happy to pop off down to their manual labor job, when I think most young people today just want to be TikTokers buying cheap leggings.
Yeah, well, yeah, I mean I think I think that's probably pretty fair to some degree. Maybe not TikTokers, but maybe they'd like to be the people who are running TikTok or something like that, or maybe the people designing the TikTok a. This is the whole thing. Right up until this point, we've had like this real focus in our economy in the US on hell, let's move up the value chain. So countries like China, countries like Vietnam, they are doing the lower kind of value sort of stuff.
They're better position for that because they've got lots of manual labor, they have, you know, comparatively kind of lower levels of education, whereas we can kind of but we can move up the value chain. We can be the ones who are designing the products, h are coming up with the business ideas, and we can you know, we can trade you know, you know, our knowledge for their
sort of their goods or their helping us manufacture. Of course, with the breakdown of I guess the international rules based order changes in like tarth rates, that becomes tariff rates, tariff rules, people not sticking to their words, and naturally that then becomes a lot more difficult because part of being able to have a supply chain is to be able to rely on like that this company is going to be able to give you the product in a certain period of time.
So given that it might take a decade or more to move some production to the US, and it's all going to make things more expensive, do you think it's ever going to happen?
Really, I actually don't think they'll ever move all of it. I think that if they move all of it, it's going to be very costly, as Trump is sort of discovered. You know, don't call them Taco Trump for nothing. Trump always chickens out, as they say, and that's you know, for some good economic reasons. But I think that there is some benefit in countries thinking more deeply about issues
like resilience and vulnerabilities in their supply chain. I mean, I remembering the pandemic talking to a kind of a bid manufacturing company and they were talking to me and Zealand one actually, and they were talking about how basically during the pandemic they actually you know, they manufacture obviously the beds here in New Zealand, but is one component that's very important for a bid that you actually basically could only get from China because China had become the
sort of mass manufacturer of bed springs. And I think they found an alternative in Turkey, but obviously they had to scramp around for that that wasn't necessarily something they'd thought of before. So I think that you know, people like Trump and others in New Zealand who were about manufacturing capacity, I think they do have a point in the sense that you know, we do have to think
about resilience. But that doesn't mean that it's wise for us to spend a whole bunch of money relocating everything to one country, the United States.
Like how big of an issue is it for someone to have to build a bedspring factory in New Zealand.
Yeah, yeah, exactly, And we wouldn't have a big enough market, so any bed springs that we made, we'd basically have to ship them off somewhere else find someone to buy them. Presumably the next country that's also concerned about this sovereignty of their bedsprings is also going to want to have
a bedspring manufacturing country company. So you know, we have to We can't really manufacture everything that we want in this country, but that's not only stary bad thing, Like we can specialize in things that we're good at.
Thanks for joining us to Lepa.
Oh my pleasure.
That's it for this episode of the Front Page. You can read more about today's stories and extensive news coverage at enzherld dot co dot nz. The Front Page is produced by Ethan Sills and Richard Martin, who is also our sound engineer. I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or wherever you get your podcasts and tune in tomorrow for another look behind the headlines.