Apple is increasing its efforts to shift production outside of China, according to the Wall Street Journal.
Production at factories like Foxconn has taken a massive hit amid riots over zero-Covid policies.
Shifting production will likely be difficult in the current global economic climate, sources told WSJ.
Apple is pushing to expedite a pivot away from manufacturing in China, as protests swell over the country’s strict zero-Covid policies and riots thwart production.
The technology giant is ramping up efforts to shift production to other Asian countries like India and Vietnam in order to distance itself from Foxconn, one of the company’s top suppliers and operator of the world’s largest iPhone factory in China, according to the Wall Street Journal.
In November, the area known as “iPhone City” erupted into violent protests among employees over withheld pay and strict zero-Covid policies that prompted a lockdown in Zhengzhou. As demonstrations grew, Foxconn, which employs upwards of 300,000 factory workers, offered workers $1,400 to quit their jobs, and later, $1,800 bonuses to stay to retain its hemorrhaging workforce.
The turmoil’s impact on Apple’s bottom line has led to a sense of urgency to diversify production away from China, which has long dominated manufacturing for the company. However, the economic slump and slowed hiring is proving challenging to outsource production and forge partnerships with new suppliers, the Journal reported.
“Finding all the pieces to build at the scale Apple needs is not easy,” Kate Whitehead, a former Apple operations manager and owner of a supply-chain consulting firm, told the WSJ.
According to the Journal, Apple plans to source up to 45% of iPhone production from factories in India, where it currently manufactures in just the single digits, and to ramp up manufacturing of products like computers, watches, and AirPods in Vietnam.
“This last month in China has been the straw that broke the camel’s back for Apple in China with the head-scratching zero-Covid policy untenable with major strategic changes ahead for Cupertino in this key region,” Ives Wedbush Securities analyst Daniel Ives wrote in a note to clients.
Canada’s main stock index opened lower Wednesday with consumer staples and utilities under pressure. On Wall Street, key indexes also started the day on the back foot as traders await this afternoon’s rate decision from the Federal Reserve.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 52.71 points, or 0.25 per cent, at 20,714.67.
In the U.S., the Dow Jones Industrial Average fell 46.44 points, or 0.14 per cent, at the open to 34,039.60. The S&P 500 opened lower by 6.53 points, or 0.16 per cent, at 4,070.07, while the Nasdaq Composite dropped 11.41 points, or 0.10 per cent, to 11,573.14 at the opening bell.
Wednesday will see the Fed’s latest policy announcement. Markets are widely expecting a quarter point rate increase. Traders will be watching for signals about what’s coming next and whether the central bank is nearing a pause in its tightening campaign. A week ago, the Bank of Canada hiked by 25 basis points and became the first major central bank to signal a break after eight consecutive rate increases.
“While Fed officials have insisted that rates will stay high for some time to come, the markets simply don’t believe them, especially when several key inflation indicators have shown that prices are still coming down on a steady trajectory,” Michael Hewson, chief market analyst with CMC Markets U.K., said in a note.
“This is what makes today’s [Fed chair Jerome] Powell press conference such a tricky proposition when it comes to market positioning,” he said. “The danger for the Fed is in allowing the market to continue to think that rates are likely to come down this year, which in turn could see inflation take off again, especially with the labour market being as tight as it is.”
The rate decision is due at 2 p.m. ET and will be followed by a news conference.
Meanwhile, earnings continue to pour in on both sides of the border.
On Wall Street, Facebook parent Meta reports after the close of trading.
Shares of Snapchat-parent Snap were down more than 12 per cent in morning trading after the social media company swung to a loss in the latest quarter. The company also warned that revenue in the current quarter could fall by as much as 10 per cent amid a weaker economy and rising competition. Snap’s net loss was US$288-million during the quarter, versus net income of US$23-million the previous year. It reported adjusted earnings per share of 14 US cents, beating Wall Street estimates of 11 US cents. The results were released after Tuesday close.
In Canada, Montreal-based CGI reported results before the start of trading. The company said first quarter earnings per share rose to $1.60 in the most recent quarter from $1.49 a year earlier. Excluding specific items, CGI said it earned $1.66 per diluted share, up from $1.50 per diluted share a year earlier. Revenue for the quarter rose to $3.45-billion, up from $3.09-billion last year.
Canadian Pacific Railway Ltd., meanwhile, says it earned $1.27-billion or $1.36 a share in the fourth quarter of 2022, compared with $532-million or 74 cents in the same period of 2021. The company reported revenue of $2.46-billion, up 21 per cent from a year earlier.
Overseas, the pan-European STOXX 600 was up 0.30 per cent by midday. Britain’s FTSE 100 added 0.23 per cent. Germany’s DAX and France’s CAC 40 were up 0.39 per cent and 0.30 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.07 per cent. Hong Kong’s Hang Seng added 1.05 per cent.
Crude prices wavered as traders await the outcome of the Fed’s latest policy meeting and weigh a decision by OPEC+ to maintain output.
The day range on Brent was US$85.25 to US$86.21 in the early premarket. The range on West Texas Intermediate was US$78.83 to US$79.73.
“The oil market is awaiting a couple of major events, both the FOMC decision and the OPEC+ meeting on output,” OANDA senior analyst Ed Moya said.
Members of OPEC+’s Joint Ministerial Monitoring Committee met virtually today. As expected, the group made recommended no change to its current output level. The group will meet again in April.
Reuters reports that OPEC’s oil output fell in January, as Iraqi exports dropped and Nigeria’s output did not recover, with the 10 OPEC members pumping 920,000 barrels per day (bpd) below their targeted volumes under the OPEC+ agreement. The shortfall was bigger than the deficit of 780,000 bpd in December.
Later in the day, markets will get weekly U.S. inventory figures from the U.S. Energy Information Administration. An earlier report from the American Petroleum Institute showed crude stocks rose about 6.3 million barrels last week, more than markets had been expecting.
Meanwhile, gold prices were down as traders await the Fed decision.
Spot gold was 0.2 per cent lower at US$1,924.26 per ounce by early Wednesday morning, after falling to its lowest since Jan. 19 in the previous session. U.S. gold futures fell 0.3 per cent to US$1,939.70.
The Canadian dollar was steady, trading around 75 US cents early Wednesday morning, while its U.S. counterpart slid against a group of world counterparts ahead of this afternoon’s Fed policy decision.
The day range on the loonie was 75.03 US cents to 75.26 US cents in the early premarket period.
There were no major Canadian economic releases due Wednesday.
On world markets, the U.S. dollar index, which measures the U.S. currency against six major peers, fell 0.15 per cent to 101.96 by Wednesday morning. It also slipped in the previous session, in part because of a report showing U.S. labour costs had increased in the fourth quarter at their slowest pace in a year, Reuters reported.
The euro was up 0.2 per cent at US$1.0885 as traders await Thursday’s rate decision from the European Central Bank, while Britain’s pound was flat at US$1.2320.
More company news
TC Energy Corp on Wednesday said it now estimates costs for completion of its troubled Coastal GasLink project to be $14.5-billion from $11.2-billion pegged earlier.
Intel Corp said that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn. The reductions will range from 5 per cent of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company’s hourly workforce’s pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly. –Reuters
Peloton Interactive Inc on Wednesday reported slower cash burn for the second quarter, after the company carried out a host of cost-cutting measures, including layoffs and store shutdowns. The fitness equipment maker posted a cash burn of US$94.4-million, compared with a burn of US$546.7-million a year earlier. –Reuters
(8:15 a.m. ET) U.S. ADP National Employment Report for January.
(9:30 a.m. ET) Canadian S&P Global Manufacturing PMI for January.
(10 a.m. ET) U.S. ISM Manufacturing PMI for January.
(10 a.m. ET) U.S. construction spending for January.
(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey for December.
(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press briefing to follow.
Gautam Adani looks set to cede his position as Asia’s richest man to another Indian billionaire as shares in his business empire continue to plunge following fraud allegations leveled by an American short seller.
In an investigation publishedlast Tuesday, Hindenburg Research accused Adani’s ports-to-power group of “brazen stock manipulation and accounting fraud scheme over the course of decades.”
Adani Group denounced the report as “baseless” and “malicious,” and has said it is considering legal action, but the market reaction has been brutal and relentless.
The conglomerate, which has seven listed companies, has lost more than $90 billion in market value in the week since Hindenburg published its report.
That stock market rout has wiped nearly $40 billion off Adani’s personal fortune. A week ago he was the fourth-richest person in the world. Now he ranks 10th on the Bloomberg Billionaires Index and looks set to be overtaken by Mukesh Ambani, India’s energy-to-telecom entrepreneur, as Asia’s richest man. Bloomberg’s index is updated at the close of every trading day in New York.
Forbes’ real-time ranking of billionaires already has Ambani, who controls Reliance Industries, above Adani. Ambani’s net worth stands at $83 billion, making him the world’s ninth-richest person, while Adani’s wealth is estimated at about $75 billion, according to Forbes.
The turmoil comes despite a brief respite Tuesday for Adani when his flagship firm, Adani Enterprises, managed to issue new shares worth $2.5 billion. The capital-raising exercise was touted as India’s biggest ever public offering by a listed company. After a tepid start, the offer was fully subscribed shortly before the close of trading in Mumbai.
But interest from retail investors was muted, and the market crash resumed Wednesday. Shares in Adani Enterprises closed down nearly 30% on Wednesday, while Adani Ports plunged almost 20%.
At the peak of his wealth last year, Adani was the world’s second-richest person, ahead of Jeff Bezos. That was the first time a person from Asia had ranked so highly on the Bloomberg list, long dominated by white tech entrepreneurs.
This is part one of a two-part series on writing a compelling value proposition letter.
There are many activities involved in job searching, such as networking, having an active result-oriented LinkedIn profile and resume, applying to jobs, interviewing, etc., to name a few. Aside from these job search activities, have you considered sending an unsolicited value proposition letter to potential employers?
What I am proposing is a networking technique that you should find comfortable. It is especially effective if you work in a niche industry (e.g., biofuels, pet insurance, medical tourism, hydroponic farming) where there are few players or if you possess a set of highly sought-after skills (e.g., cloud computing, network security, auditing, fluency in multiple languages).
A value proposition letter’s objective is to show how your skills and experience can solve, or at least be part of solving, an employer’s problem(s) (READ: pain points).
“Yes, in next week’s column.” (Answer to the question you are now asking yourself, “Will I be providing examples of a value proposition letter?”)
“Yes, actually, several.” (Answer to, ” Have you ever hired someone who sent you an unsolicited value proposition letter?“)
In order to write a value proposition letter that will resonate with your target companies, begin by doing some research while asking yourself, “What are some of the possible problems they are facing? How can I be of assistance in solving them?” For example, is it your belief that long delivery times are causing an e-commerce site you visited to lose customers to Amazon? As a supply chain analyst with 15 years of experience, how would you address this issue?
Writing a value proposition letter requires using your right brain, where your emotions, intuition, and creativity reside. This is not a fill-in-the-blanks exercise. It is essential that your letter appears human-written, something that is becoming increasingly rare with AI technology becoming more easily available. It is you, not AI technology, who is offering your skills, knowledge, and experience to help an employer address pain points they might be experiencing, according to your best guess.
Something to note; your “pain point guess” guess may point out something the company’s leadership team has never considered. In my above example, it is possible the company’s leadership team may not have thought their long delivery times discourage potential customers from purchasing their products. (Do they look at their cart abandonment rate?)
The most common pain points employers face today are:
Keeping and expanding market share.
Increasing productivity and efficiency.
Keeping up with and implementing technological advancements.
Supply chain issues causing order fulfillment issues.
Managing employee benefits and payroll costs.
Recruiting and retaining qualified employees with the right mindset and attitude.
If you have the skills and experience (READ: a proven track record) to address any of the above-mentioned pain points, then most employers will view you as gold.
With all the talk about a recession on the horizon, how can your skills and experience help employers weather the predicted economic slump?
Once you have identified your targeted employer’s potential pain points, you can start crafting your value proposition letter to sell your skills and experience to address those pain points.
There are four elements to a pain letter.
The employer’s pain point, which is either explicit or you believe exists.
Persuasively describe how your skills and experience can address the employer’s pain point.
It is essential to show that you understand the company’s goals and values. For instance, not every company is concerned with increasing its market share. Some companies are more focused on becoming environmentally sustainable or being seen as socially conscious. With this understanding, you will be on point explaining, confidently, how your combination of skills, experience, and knowledge can help the company achieve its goals.
Also important is being specific! Use numbers to quantify your achievements and results. Your opinion has no place in a value proposition letter. Likewise, your opinion has no place in your job search. At all times, you need to provide a solid, undeniable reason why you would be a value add to an employer, not your opinions of yourself, which is what most job seekers do. Numbers, the language of business, helps employers see your impact in your previous roles.
TIP: Throughout your job search, you do not want employers struggling to figure out what value you can add to their organization, hence why they should hire you. Therefore, use quantitative numbers throughout your LinkedIn profile, resume, cover letter and when interviewing… and in your value proposition letter.
A compelling value proposition letter convincingly conveys to potential employers how you would be a value add to their company. In my next column, I will provide examples of a value proposition letter, as promised earlier. In the meantime, compile a list of employers you would like to work for (Why not go one step further and find the contact information of those most likely to make hiring decisions, such as managers, directors, and C-suite executives?), their possible pain points, and how your skills and experience can ease their pain.