Explaining Southern California's economy

Why Apple doesn't build anything in the U.S.

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Lintao Zhang/Getty Images

Apple Store in Beijing.

A long time ago in a galaxy far, far away — well, actually, it was just the USA — Apple made stuff in America. In fact, it manufactured its computers in California, right in its own Cupertino back yard. As Minyanville points out, until 1992, Apple hardware was made in the USA. Now iPhones and iPads are made anywhere but.

I know, 1992 seems like a century ago. There was no Web to speak of, and certainly no smartphones or tablets. Computers were not yet truly ubiquitous in the workplace. They were far from common in homes. But the writing was on the wall.

So why did Apple move its production overseas? Good question, and one that the New York Times recently asked:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing 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 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation 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.”

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Diet Mountain Dew: Pepsi's billion-dollar baby

The Diet Dew does a billion bucks in sales.

The Chicago Tribune reports that Diet Mountain Dew brings in $1 billion a year in sales. That's enough for PepsiCo, which produces the Diet Dew, to buy every many, woman, and child in America two 20-ounce bottles, with some change left over. And that 20-ounce bottle is very popular. Here's the Trib:

Diet Mountain Dew was introduced in 1988. According to the company, it is now the top-selling 20 ounce diet soft drink by volume in convenience stores and gas stations.

So you can see where the billion comes from. Interestingly, the other two billion-dollar Pepsi brands are Brisk tea and Starbucks beverages. Only one of those is an iridescent green color and contains few calories while invoking the storied history of American moonshine-making, so if that's what you look for in a drink, Pepsi has you covered.

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R.I.P, RIM?

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The infamous Blackberry.

You'd think that Research in Motion's decision to make a big change at the top, moving out co-CEOs Mike Lazaridis and Jim Balsillie and replacing them with a single leader, Thorsten Heins, would mean that the Canadian maker of the BlackBerry could finally see an end to its long nightmare. The sliding share price will reverse! People will buy BlackBerrys again and maybe even...PlayBooks, the company's largely unsuccessful tablet.

And if you thought that, you'd be...wrong, at least according to PC World:

RIM has gone from dominant market leader to virtually irrelevant in a matter of a couple of years. From the outside, it doesn’t seem like RIM actually has a strategy. But, whatever strategy it has is clearly not working. Suggesting that the current plan is sound is like taking over the Titanic knowing it’s about to hit an iceberg, and consciously deciding to stay the course and see what happens.

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J.C. Penney: The new Apple Store?

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Shereen Meraji/KPCC

The new Apple store at the Americana in Glendale.

Don't rule it out. J.C. Penney Company, which operates numerous* stores in Los Angeles, has hired Ron Johnson away from Apple, where he was credited with being the architect of the Apple Store retail concept. Visitors to, for example, the Glendale Galleria could someday visit Johnson's work for Apple to buy and iPad and then zip over to Penney's to buy...

Well, that's the problem, now isn't it? J.C. Penney now exists in a kind of retail twilight, mixed in with the likes of Macy's, but nowhere near as snazzy as Target (where Johnson used to work) nor as rock-bottom cheap and volume-oriented as Wal-Mart or Costco. It's a department store of old, in recent years forced to rely on a strategy of marking down everything, all the time. This is from Reuters:

Some 72 percent of Penney's $17.8 billion revenue last year came from items discounted at least 50 percent. Johnson said Penney's reliance on discounts may have gotten out of hand. "At some point, you seem desperate," he said.

Discounts will remain at Penney, but in a different form.

Every first and third Friday of the month it will clear out some merchandise by putting blue tags on certain items. The old practice, by contrast, was to throw items into a discount bin with signs proclaiming "70 percent off."

Johnson told a news conference on Wednesday that in the past 10 years, discounts have risen to 60 percent off on average from 38 percent, while the average amount of money that ends up in Penney's cash registers has fallen.

"The customer knows the right price," Johnson said. "To think you can fool a customer is kind of crazy."

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David Siemer talks venture capital with DeBord Report

David Siemer of Siemer Associates and Siemer Ventures.

I had a great conversation recently with David Siemer of Siemer & Associates, a boutique investment bank and early-stage venture capital investor — Siemer Ventures — that's based right here in Southern California. The merchant banking side of their business is "new" old school investment banking, centered on raising capital for clients and providing advisory services. In other words, investment banking the way it used to be, before trading of the sort practiced by the Big Boys — Goldman Sachs, Morgan Stanley — became a profit-driver.

Not surprisingly, David Siemer wanted to get into venture capital, as well. What's interesting about this part of the business, which focuses on digital media, is the firm's bullishness on Asia and India. Siemer Ventures was started in 2007 and currently has its main office in Santa Monica, which is beginning to re-establish the "Silicon Beach" critical mass of tech companies that we first saw back before the dot com crash. For what it's worth, New York is also picking up steam. Silicon Valley isn't the only place to go for venture funding anymore. (Not that it ever was, but it's always been easy to get that impression.)

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