You don’t say!


As I told you a while back, Apple hired the Fair Labor Association to carry out investigations to ensure that their contractor Foxconn runs their plants in a safe and ethical manner.  The Fair Labor Association (FLA) is a nonprofit organization dedicated to ending sweatshop conditions in factories worldwide.  It is made up of universities and nonprofit groups, along American companies that have offshored parts of their global supply chains to countries like China, Indonesia and Vietnam.  Well, the FLA published its report on Apple’s contractor Foxconn last week, and let’s just say they that apparently there is a little room for improvement.

Last week the New York Times published an article regarding the FLA report and Foxconn’s pledges to do better regarding the working conditions in their factories.  According to the Times, the FLA “found widespread problems— including at least 43 violations of Chinese laws and regulations, and numerous instances where Foxconn defied industry codes of conduct by having employees work more than 60 hours a week, and sometimes more than 11 days in a row.”  In order to prepare the report, the FLA surveyed 35,000 Foxconn employees and inspected factories where Foxconn makes Apple products.  Almost two-thirds of the workers interviewed said their compensation “does not meet their basic needs” and many workers had a sense that their place of employment was a dangerous place to work.

But not to worry.  Foxconn has pledged to cut hours and increase wages.  According to the Times, Foxconn has committed that by July of 2013, no worker will labor for more than 49 hours per week — the limit set by Chinese law.   Since Foxconn operates in China, I wonder why they don’t have to comply with Chinese law now?  According to the Times, complying with this law and other things Foxconn is pledging to do is going to force them to increase prices to Apple.  This may raise the price of your iProducts unless Apple is willing to lower its profit margins.  What do you think the odds are on that happening?

And what do you think the odds are that Foxconn will follow through with its commitments?  It seems, in 2006, Apple said that Foxconn “has enacted a policy change to enforce the weekly overtime limits set by our Code of Conduct.” According to the Times, Foxconn’s policy change did not lead to Foxconn complying with Chinese law or Apple’s regulations.  If at first you don’t succeed, try, try again I guess.

But I think the saddest part of the article was what the Times reported was Foxconn’s practices regarding earlier audits.  According to the Times, the FLA found “that Foxconn in the past prepped workers with answers to give to monitors to avoid detection of violations.” “We found a cheat sheet,” said Mr. van Heerden. “If you’re asked how many hours you work, say this, for instance. Since we’re not asking the questions that conventional auditors ask, we were able to see what’s really going on.”  Hmm, I guess I am not quite so confident as Mr. van Heerden.

Don’t get me wrong, I bet it is tough to be a watchdog in a foreign country.  I have a simpler idea.  Apple should bring assembly of its iProducts back home.  “Engineered in California, assembled in Oregon.”  Or Ohio, Idaho, Texas, who knows.  I think this is a no brainer, but it all gets back to that pesky profit margin mentioned in this latest Times article.  As this article amply demonstrates, Apple is in China for its cheap labor, labor that is hired by Foxconn.  The minute that labor gets more expensive, things gotta change; if Foxconn has to start raising wages for its iProduct assemblers, either the price of the iProduct must rise, or if the price is to stay the same, Apple’s margin must drop.  Strange how this Times article about Apple, unlike an earlier one, didn’t blather on about China’s supernatural supply chains being the reason Apple has Foxconn make its products in China.  I wonder why?  Could it be because they finally figured out that there has never really been much of an iProduct supply chain in China?  Let’s hope so.

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About tapirking

I live in Seattle and love telling stories about Americans, the places where they work and the things that they make.
This entry was posted in Apple, China, iPhone, Made in America, made in usa, Outsourcing, Reshoring and tagged , , , , , . Bookmark the permalink.

5 Responses to You don’t say!

  1. I was just remembering when I moved to Fremont, CA in 1992, just down the street was the Apple plant. It had a large parking lot with basketball hoops and a volleyball net. The employees would go out on their breaks or lunch and would have fun. Times sure have changed.

  2. Josh Hanson says:

    I don’t think we should give Apple all the credit for working conditions to Foxconn. While they are perhaps the largest purchaser of goods manufactured by Foxconn, there are a couple of dozen large companies that also contract their manufacturing out to Foxconn. Many popular products are manufactured there by foreign and US companies alike. Companies from Japan like Nintendo, Sony and Toshiba, as well as US companies like Amazon, Microsoft, Cisco, HP, Dell and Intel.

    I do understand that Apple is the largest contract Foxconn has, so they get the most attention from the media. However I don’t think we should overlook the other thousands of products produced there each day for other companies. Those companies should be held accountable as well, and not all the blame placed on Apple. I have not heard anything about any of these other companies even doing an audit. At least Apple is taking the step to publish audit results even if they are not following up aggressively on fixing problems. It does feel as though we are ganging up on one company even though there are many at fault.

    My last point is that while I do think Apple should move some manufacturing back to the United States I don’t think they should move it all. At least 60% of Apple’s sales are to customers in countries outside of the USA. In fact their most rapidly growing market is China. I think that Apple should move manufacturing to the US for products sold in the US, but keep production in China for the Asian market. In order to truly stabilize the global economy and create opportunity and jobs for people worldwide, products should be manufactured as close to the country they are being sold in as possible. Indeed if we moved ALL manufacturing back to the United States that would be millions of people in China that would have to be laid off and be without any income at all. I think some income, even hard earned, is better than none at all. I think at this point it is impossible for all the people that have moved from Chinese farms to factories to go back to farming. Jobs would have to be found elsewhere for them and why not manufacturing goods for their own ecomony under better working conditions.

    Anyway, thanks for following the Apple story the last couple months here on the blog.

  3. Josh Hanson says:

    Apologies if this ends up being a duplicated post. The first time I clicked “post” it didn’t look like it went through.

    I don’t think we should give Apple 100% of the credit for the working conditions at Foxconn. Yes Apple is the largest company that contracts with Foxconn, so they get most of the press coverage. However I have heard very little from the NY Times or any other publications about the several dozen companies that also manufacture their products at Foxconn. Lately it does feel like everyone in the media is ganging up on Apple when there are many other companies also at fault.

    Many other large corporations, both US and foreign, also contract with Foxconn for their manufacturing needs. Many of their products are also popular and successful. Companies from Japan like Sony, Toshiba and Nintendo as well as US companies like Amazon, HP, Dell, Microsoft, Intel and Cisco. I have not heard of any of these companies releasing their audit results of Foxconn’s working conditions. While we should question Apple’s affiliation here, these other companies should also be helping solve the problem. At least Apple has taken the step to publicly release results of their checks.

    The last point I would like to raise is that I do think we should bring some of Apple’s manufacturing back to the United States, but not all. To truly equalize and stabilize the global economy manufacturing should be as close to the country of purchase as possible. About 60% of Apple’s sales are from customers in foreign countries, including their fastest growing market of China. So while we should have factories in the US to build products for here, factories should also be available and people employed to build products their home market. Foxconn could, for example still continue to build products for the Asian market. They should raise working conditions, but they should also be allowed to manufacture products for their country.

    We should bring manufacturing of some Apple (and other companies) products to the US, but not all because then that would mean that millions of Chinese workers would suddenly be out of jobs. At this point we cannot expect all the Chinese workers that have left their farms to work in factories to go back to their farms and make less money than they are at the factory. We do not expect that factory workers in the US that have lost their jobs to go back to the farming lifestyle of the 1800’s so we should not expect the same of the Chinese.

    Thank you for bringing the story of Apple to us the last couple of months! I’ve followed closely and like reading your posts. Keep up the good work.

    • tapirking says:

      Josh: Thanks for your thoughtful comment. Apple is special I think because it sort of occupies the field in a manner that other firms like HP don’t. I think if Apple were smart, they would beat everyone else to the punch and move their production back here. They have a big advantage since they don’t have to licence their software from anyone since they own it. A couple of other comments on your comment. First, you make a good point that for some products, being close to your consumers is important. I don’t think that holds true for Apple’s products though. A minor point, but Foxconn isn’t Chinese, it’s Taiwanese. Also, it is going to start producing products in Brazil next year, and I bet it isn’t moving to Brazil to be closer to the Brazilian market. If Foxconn can figure how to assemble iPads in the Democratic Republic of Congo, they will go there. Foxconn is all about labor costs. I would encourage Chinese companies to hire Chinese workers to make things for the 1.6 billion Chinese consumers, rather than just being an export platform for Western firms. Thanks for your comment and your kind words about my blog. All the best, John Briggs

  4. madeinusafan says:

    I do wish and hope that Apple returns to manufacturing their products in the good old USA!!:)

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