2. Even the IBM PC and the Boeing 777 Aren't Allamerican!

WEB: CH. 1, Salvatore’s Introduction to International Economics, 2th Ed. 2. Even the IBM PC and the Boeing 777 Aren't All-American!

The following Table shows that of the total manufacturing cost of $860 for the IBM PC in 1985, $625 was for parts and components made abroad (of which $230 was from U.S.-owned plants). Although all the parts made overseas could be manufactured domestically, they would have cost more and would have led to higher PC prices in the United State (and reduced competitiveness of IBM PCs in international markets). Today, even a larger proportion of parts and components going into the IBM PC are made abroad and, in 2004, IBM actually sold its laptop business to China’s Lenovo for $1.75 billion. Only 13 of 33 major components of the new Boeing 777-330ER jetliner are made in the United States, 7 are made in Japan and another 13 in other countries (England, Italy, South Korea, and Spain). Even less of the brand new Boeing 787 Dreamliner jet is made in the United States.

Distribution of Manufacturing Costs for the IBM PC in the United States and Abroad

Total Manufacturing cost $860 Portion made overseas $625 in U.S.-owned plants $230 in foreign-owned plants 395

Distribution of manufacturing costs: Monochrome monitor (Korea) $ 85 Semiconductors (Japan) 105 (U.S.) 105 Power supply (Japan) 60 Graphics printer (Japan) 160 Floppy disk drives (Singapore) 165 Assembly disk drives (U.S.) 25 Keyboard (Japan) 50 Case and final assembly (U.S.) 105 Total manufacturing cost $860 ______

Source: “America’s High-Tech Crisis,” Business Week, March 11, 1985, pp. 56–67; “Outsourcing to the U.S.,” The New York Times, December 25, 2005, p. C1;Boeing News Release, June 11, 2002; and “A Plastic Dream Machine,” BusinessWeek, June 20, 2005, pp. 32-35.