Apple, Facebook and Alphabet need fewer employees than top companies did 20 years ago.

By Lisa Fu and Stacy Jones
June 22, 2017

Twenty years ago, market giants employed huge swaths of the workforce.

Many of these companies needed to staff factories or fill rows of office cubicles in their quest for profits. These days, the number of employees is less important as automation and sophisticated programs (read: more technical and less physical labor) take over. Technology companies dominate the market, leaving once powerful car manufactures in the dust.

In this age, the Silicon Valley Three — Facebook, Alphabet and Apple take the lead.

 

Facebook, Alphabet (nee Google) and Apple in Silicon Valley have been compared to the Big Three in Detroit–General Motors, Ford and Chrysler by The Atlantic and The New York Times. The trios are both concentrated in a singular region, with car manufacturers in Detroit and tech companies in Silicon Valley.

In their heyday, 1955, the Big Three in Detroit held over 90 percent of market share according to the Federal Reserve of Chicago. Initially it seems the tech giants came close to earning the kind of combined revenue in 2016 that the carmakers saw 20 years earlier, in 1996. But once you adjust the Detroit companies’ $376 billion for inflation to December 2016 dollars, the tech giants don’t even come close to the automakers’ $546.7 billion.

But with increasing globalization and the expansion of tech, Facebook, Alphabet and Apple now have the clear advantage. Unlike the car industry that catered only to American consumers, the three in Silicon Valley reach consumers around the globe. In addition, these tech giants incur fewer costs in comparison to those in the auto industry. Facebook and Alphabet generate the majority of their revenue from digital advertisers. And Facebook spends virtually no money on raw materials or keeping inventory.

Though Apple still makes most of its money from its physical products — the iPhone, iPad and laptops — it also generates revenue from iOS software services such as Apple Music. While the materials to make the iPhone 7 aren’t cheap, putting it together only costs $5 and Apple sells its products with a hefty margin. iPhone 7 buyers pay approximately three times what it costs to manufacture the device.

It’s not just the costs of manufacturing and property that give tech companies an edge in today’s economy.

They also employ fewer employees. Apple employed 80,000 U.S.-based workers in 2016. Facebook currently employs 17,048 full-time workers. And Alphabet reported a workforce of 73,992 in the first quarter of 2017.

As bad as things are for the car industry, GM still employed 225,000 U.S. workers in 2016. That’s nearly twice as many people as Apple, and around 13 times more people than Facebook. Still, Facebook managed to rake in over $7 billion in revenue during the third quarter of 2016.

 

 

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