Apple Inc. has a staggering amount of cash lying around. Business Technology’s resident U.S. blogger Keil Hubert thinks he’s found a good way for Apple’s spare change to bolster the UK shipbuilding industry.
I have an unorthodox proposal that I’d like to float by y’all. I think I’ve stumbled onto an idea that might just solve a bunch of irritating economic problems and also improve the world by a small but meaningful amount. It involves strategic investment, global power projection, job growth, economic security, and tax policy.
Specifically, I want Apple Inc. to purchase and operate an aircraft carrier.
I apologize if that last statement caused you to snort coffee all over your keyboard or mobile. It’s not quite as daft an idea as it first appears. Follow the logic…
This idea came to me entirely by accident. I was skimming an article on maritime counter-piracy operations in the Malacca Straits when I overheard someone nearby talking about software piracy issues, and I conflated the two ideas into one striking image: that of menacing strike fighters catapulting off the bow of a titanic warship that featured the Apple logo painted on the flight deck. That idea was so captivating that I let my coffee get stone cold before I remembered where I was.
So, here’s the thing: Apple is a huge company. They’re number five on Fortune magazine’s list of the 500 largest publically-traded companies in the USA. They’ve got a market valuation of $479 billion. Last quarter (October through December, 2014), they made $18 billion dollars in profits. They are, as public companies go, quite the panzer in the playpen. They have enough spare change to obliterate – or to consume utterly – any rival company smaller than Microsoft that threatens to challenge their market position. They’ve got so much money, in fact, that some investors are a bit miffed that Apple isn’t applying its stacks of cash to do more neat things.
At the same time, Apple has been getting some flack from legislators in a number of countries for its complex (but legal) practice of shifting profits from the USA to Ireland. The press covered this argument in considerable detail back in September, discussing how Apple might have evaded paying some national taxes by moving its money around. Both US and EU legislators weighed in on the subject. I won’t bore you with the details; suffice it to say that lots of people who occupy positions of power are a bit upset at the idea that global mega-corps might not be paying their ‘fair’ share of taxes – tax monies that could be used (so it’s said) to help dig us all out of lingering misery of the Great Recession. Supposedly. Theoretically.
So, Apple has money. There’s the money that we all gave to them hand-over-fist for our new iPhone 6s and what-not, and then there’s the (theoretical, accused) leftover profits that Apple (supposedly) should have paid out in the form of taxes. No matter what, the problem is that they have a lot of cash, and cash-hungry governments want to get their hands on it – ostensibly for economic stimulus purposes.
Along those lines, mega-scale engineering projects employ a huge number of skilled employees… but only while they’re actively funded. In this case, I’m thinking specifically about the creation of the HMS Queen Elizabeth. If the publically-released figures for her construction are accurate, shipbuilders BAE Systems, Thales Group, and Babcock Marine are receiving at or about £6.2 billion for the creation of the HMS Queen Elizabeth and her sister ship, the HMS Prince of Wales. All together, around 100,000 workers get pay and benefits to bring these awesome ships to life over the next five years.
Those intrepid shipwrights will probably support another four times as many service-support jobs (e.g., brewers, bakers, barbers, etc.) from the wages that the builders spend on the local economy. All of those folks (e.g., the builders and those nearby businesspeople who support them) will pay part of their wages back into the system in the form of sales and income taxes, thereby perpetuating the economic stimulus process.
Aircraft carriers are astoundingly useful tools for increasing international stability. Yes, they’re warships, but they also have a unique ability to project noncombat power to pretty much anywhere on earth. The clever sailors who crew them aren’t mindless thugs; they’re as interested in altruism as anyone else. Further, they have the tools, the ingenuity, and the compassion to bring humanitarian relief to disaster zones on very little notice. A nuclear carrier can bring medical, logistical, and food relief to a devastated community whenever and wherever it’s needed – and unlike conventional ships, a carrier can deliver its service deep inland. [1]
Back to the manufacturing problem: Britain only needs a handful of new aircraft carriers to meet its projected global security and overseas diplomacy needs. Once the UK’s last required carrier is commissioned, the shipyards have to either start building something else, or risk closing down. That’s why defence contractors are always exploring the export market for their products. The US is the world’s largest arms exporter by far, holding 39 per cent of the worldwide market in CY 2012. UK defence exports were about £17 billion in 2013. Sometimes the export market works out, and sometimes it doesn’t. Often, though, it’s a shrewd way to keep factories running when local demand peters out.
That’s where we might just have an opportunity to try out a variation on a well-understood process. Consider the factors in-play:
- Apple Inc. has about $164.5 billion in cash and cash-equivalents sitting around, available for other use (that’s about £109 billion, as of the start of February).
- Government legislators are eyeing Apple’s cash reserves as a lifeline to help get their economies back on track.
- Britain’s shipbuilding industry needs a new project after they finish building the HMS Prince of Wales in 2020.
- UK taxpayers are paying less for their new aircraft carriers than consumers worldwide paid for iPhones in one fiscal quarter.
Apple has the funds. They could probably drop the cash on the project without negatively impacting their dominant market position; after all, they could buy such a ship outright and run it for a decade on about five per cent of their current bank balance. All of that money would go directly to keeping the UK’s shipbuilding industry strong, and would provide significant tax revenue to the UK government. No one would have to pass laws wresting back profits from private companies. They simply have to ‘encourage’ alternative capital investments.
Moreover, Apple could facilitate tremendous goodwill – also known as positive brand awareness – by bringing an unbeatable concentration of Apple technologies and expertise to underserved markets during times of upheaval. Imagine turning on the telly and hearing that cheerful Apple employees rebuilt an entire city after a devastating tsunami, or inoculated ten thousand children against a terrible disease, or provided logistical support to underfunded UN peacekeepers. Apple would accrue well-deserved praise, tons of people would benefit, taxes would get paid, and our over-stressed navies would get some space to catch their breath.
No, I’m not suggesting that Apple be allowed to operate a fleet of stealthy attack aircraft. That’s just a little too cyberpunk even for me. They wouldn’t need anything stronger than defensive anti-piracy weaponry while operating off the coast of Somalia. Nothing that could overthrow a country.
Rather, let Apple (and Microsoft and Adobe and IBM and Google, et al) take up a little of the slack in the international peacekeeping and nation-building game. Give them a pass on conventional corporate taxes if they’ll turn their excess profits into strengthening global humanitarian outreach. Apple could team up with Médecins Sans Frontières for a logistical partnership – Apple would supply the transportation and materiel management functions, while MSF delivers emergency medical relief to Ebola victims. The white Apple logo could, over time, become as recognizable a symbol of hope as the Red Cross.
It gets better: such a move would not only lead to greater economic investment in our shipyards and ports, it would also help to create all-new jobs. The Queen Elizabeth is supposed to have a crew of 679, with berths for up to 1,600 sailors. The new USS Gerald R Ford super-carrier will sport a crew of 4,660 – and could carry a bunch more if they converted their armaments spaces into hospital bays. As we all draw down our militaries to pre-war levels, a corporate fleet would allow tens of thousands of separating sailors to find good private-sector jobs with great benefits aboard the SS Steve Jobs.
Am I being facetious? Is this proposal utterly ridiculous? Er… yes and no. [2]
On its face, it’s a silly idea because Apple isn’t in the business of operating a modern navy. The thing is, they could if they wanted to. They have the brain-power and the enthusiasm to do just about anything if they put their collective will behind it, and they have the spare change to try the idea out if the whim strikes them. They have to do something with all that buying power eventually, because its mere existence inspires lust in the hearts of tax ministers the world over. If they don’t pre-empt the problem and invest some funds in such away that it slakes the legislators’ appetites, they’ll eventually come up with a pretence to come after it. Therefore, if the money needs to be spent on something anyways, I’d like to suggest that global economic stimulus, humanitarian relief, and manufacturing subsidization are pretty darned good places to apply some cash.
Of course if that idea doesn’t fly, Apple Inc. could just purchase the entire Russian stock market. Maybe we’ll get peace in the Ukraine through an Apple-mandated ceasefire. That’d be great… Or course, a cease-fire would be more likely to ‘take’ if Apple could back their directives up with a few strike carriers forward-deployed to the Black Sea… Perhaps Ford-class carriers with an F-35C strike wing… Hmmm.
[1] If it’s not clear, I’m a big fan of seeing Great Britain get back in the international aircraft carrier game. We’d all prefer that these ships never have to fire their guns in anger during their 50-plus year projected lifespan. During that time, though, they have the ability to serve as sterling ambassadors for Britain’s compassion, decency, and generosity everywhere that experiences an ocean tide.
[2] Yes. Yes, it is. This proposal is only is a satirical vehicle for discussing corporate profits and taxes in a global context, not an actual policy statement from either the US or UK governments. [3]
[3] That being said, if Apple decides to purchase and sail its own corporate aircraft carrier, I totally intend to apply to work on it because that would be unspeakably awesome.
POC is Keil Hubert, keil.hubert@gmail.com
Follow him on twitter at @keilhubert.
You can buy his books on IT leadership and IT interviewing at the Amazon Kindle Store.
Keil Hubert is a retired U.S. Air Force ‘Cyberspace Operations’ officer, with over ten years of military command experience. He currently consults on business, security and technology issues in Texas. He’s built dot-com start-ups for KPMG Consulting, created an in-house consulting practice for Yahoo!, and helped to launch four small businesses (including his own).
Keil’s experience creating and leading IT teams in the defense, healthcare, media, government and non-profit sectors has afforded him an eclectic perspective on the integration of business needs, technical services and creative employee development… This serves him well as Business Technology’s resident U.S. blogger.
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