Apple Strengthens Growing U.S. Supply Chain With ‘SupplierPay’ Pledge

In an unusual move for a company that is notoriously secretive when it comes to revealing details about its supply chain, Apple (NASDAQ:AAPL) recently touted its substantial investment in U.S.-based suppliers over the past year. Apple’s U.S. supply chain disclosure came on the heels of the company’s decision to join President Obama’s recently announced “SupplierPay” initiative. Soon after the White House’s announcement, Apple revealed how much money it already spends on U.S.-based suppliers in a statement given to TechCrunch. “Last year, Apple spent more than $3 billion with over 7,000 suppliers running small and diverse businesses, creating tens of thousands of U.S. jobs,” said Apple.

As noted in a statement released by the White House, SupplierPay is the private sector equivalent of the Federal Government’s QuickPay initiative. Like QuickPay, SupplierPay seeks to lower the working capital cost of small business suppliers by having large businesses like Apple pay small suppliers quickly. The initiative also encourages companies to enable financing solutions to help small suppliers access working capital at a lower cost. Apple, AT&T (NYSE:T), Coca-Cola (NYSE:KO), IBM (NYSE:IBM), and Toyota (NYSE:TM) were among the first twenty-six companies to adopt the SupplierPay pledge.

“For the larger companies, joining SupplierPay demonstrates a recognition that a healthy supply chain is good for business,” noted the White House in a press release. “For the small business suppliers, benefiting from SupplierPay means having more capital to invest in new opportunities, new equipment, and new hiring.”

Besides announcing the new SupplierPay initiative, the White House also highlighted several case studies of companies that have contributed to the growth of small suppliers in the U.S. One of the case studies highlighted by the White House was Apple’s relationship with Metal Impact, a small supplier based in Illinois. Metal Impact gets millions of dollars in revenue by supplying the Mac Pro’s cylindrical aluminum enclosure. As seen in the video above, Apple’s Mac Pro is assembled in a facility in Austin, Texas.

Apple similarly cited the Mac Pro’s U.S. manufacturing base in a statement given to TechCrunch. “We are proud to be making Mac Pro in Austin, Texas, partnering with dozens of component and equipment suppliers from 23 states,” said Apple. However, according to Apple’s annual list of suppliers, the majority of the company’s manufacturing is still done overseas.

On the other hand, the Mac Pro facilities aren’t the only U.S.-based manufacturers that Apple now uses. As noted by Bloomberg, Apple’s Mac Pro production was just the beginning of a $100 million push to increase the company’s domestic manufacturing base. Apple has also invested in sapphire plants located in Arizona and Massachusetts that are run by GT Advanced Technologies (NASDAQ:GTAT). Recent component leaks and investigative research done by PTT Research analyst Matt Margolis suggest that Apple’s next-generation iPhones and the iWatch will feature sapphire-covered displays.

Apple’s push to bolster its domestic manufacturing base comes after years of criticism over its sometimes controversial use of manufacturing facilities based in China. Criticism of Apple’s overseas supply chain reached a peak in 2010, after a spate of suicides at factories run by Apple supplier Foxconn, also known as Hon Hai Precision Industry. However, Apple is now a member of the Fair Labor Association, a non-profit workers’ rights organization that regularly inspects the Foxconn’s facilities to verify that it is abiding by Apple’s Supplier Code of Conduct.

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