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antiquus
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re: Analysis: Foxconn salary hike will stress OEM supply chain
antiquus   6/12/2010 12:25:09 AM
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The U.S. suicide rate (reported by http://www.cdc.gov/mmwr/preview/mmwrhtml/ss5904a1.htm) was 11.6/100k in 2007, and somewhat higher for Asians. This means that if 430000 people worked in the U.S., we would expect 50 suicides (actually 49.9 for you 3-digit guys), in a year. According to http://en.wikipedia.org/wiki/Foxconn#Employee_suicides_and_deaths, the Foxconn death rate is much less than that. With that many people in close quarters it is easier to believe a societal issue, like the rise of organized crime, as opposed to something the corporation has or has not done. Economists have long known that importing goods to the U.S. has the cost of exported inflation -- our prices stay about the same, prices for others must go up. Foxconn is willing to raise costs for the world's perception to be appeased, and the other vendors will come along quite willingly, if for no other reason than they can justify raising sales prices. Passing on higher costs leads to larger gross revenues, and more headlines to give the company a good image on wall street. Sales prices at that level are probably (and I have no data to back this up), consistently double COGS, meaning that if COGS goes up by $1, sales goes up by $2, and gross profit goes up by $1 also. Therefore, higher costs lead to higher profits, and that's a positive feedback loop in anyone's book, limited only by how far ahead of their competitors they can stay and still sell product. The "Cadillac" and "Apple" attitude will work well (e.g., my product is this much better, so my higher price is actually a benefit to my customer).

WWANG1698
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re: Analysis: Foxconn salary hike will stress OEM supply chain
WWANG1698   6/9/2010 10:05:38 PM
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The living standards of workers have to be improved, whether it is in China or elsewhere. This forces the industry to upgrade in China, moving from manufacturing to design to financial services. It's the route that England had undertaken in the past 150 years. There's no reason why those people shouldn't be paid what they deserve, as they had already been underpaid in the past 10 years.

Mi302
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re: Analysis: Foxconn salary hike will stress OEM supply chain
Mi302   6/8/2010 7:56:15 PM
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"Terry Gou, chairman of the EMS company, said salaries would go up in October to 2,000 yuan, or $293, per month, up from 900 yuan ($130)" This place will be shutting down. Better no job at $293 than one at $130 - right?

Avagadro
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re: Analysis: Foxconn salary hike will stress OEM supply chain
Avagadro   6/8/2010 5:11:41 PM
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How far the engineering community has come!!! There was a day when most engineers were relatively conservative voters -- I sure dont see that in these posts. Try another view - when you invest YOUR money (and if you aren't, dont look for any SS money when you retire - it wont be there), you want the HIGHEST possible return for the stock that you purchased. You are taking the RISK- you want the REWARD. It is the JOB of the corporation to OUTPERFORM their competition or the next round of capital will not go to them - and they cant expand and hire new workers , or develop new products. And eventually, they may actually go out of business. Are their employees better off unemployed or having their wages suffer? If you dont like this, dont invest in the company, dont buy their products, and invest in a fund or a stock that you believe to be socially responsible. If a republican doesnt like guns, they dont buy one. If a democrat doesnt like guns, they want them all banned. Think about it. Equality can never be legislated. It isnt possible.

SallyF
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re: Analysis: Foxconn salary hike will stress OEM supply chain
SallyF   6/8/2010 2:05:59 PM
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Big crocodile tears roll down the faces of all the Democrats. Pile on Democrats. Hypocrits. You won't help anyone or give anything to anyone. You won't even allow little babies to live but you are so very tender hearted. Make the big greedy corporations pay. Now your concience is clear.

KGFRANK
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re: Analysis: Foxconn salary hike will stress OEM supply chain
KGFRANK   6/8/2010 1:50:03 AM
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As the EMS are at the end of the supply chain, their margin are squeezed by the OEM. It's all in the food chain. The one who eats first will eat the most leaving less for EMS to scavange. Compare the dirty margin of the OEM to EMS and see the big gap. Some pressure on the OEM will probably help to stop building these sweatshops around the world.

GuyL3
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re: Analysis: Foxconn salary hike will stress OEM supply chain
GuyL3   6/8/2010 1:15:54 AM
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A raise of $163/month for 430,000 employees is $0.88billion/year for Foxconn, who enjoys $61billion in revenue last year. This is a 1.4% increase (as a fraction of revenue, not fraction of their cost). Add the margins of Apple,HP, etc, and the 1.4% will be further diluted. I think we can all afford to pay that little bit more.

research90
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re: Analysis: Foxconn salary hike will stress OEM supply chain
research90   6/8/2010 1:10:18 AM
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In any business, high tech is no exception, the price is decided by bargaining power. We can all blame Foxconn or the like for not treating its employees as we like. But it just doesn't have much bargaining power against Apple, HP or Dell on the contract manufacturing price it can get. Compare the gross margin or profit of Apple and Foxconn. Do you think Foxconn got lots of money from Apple and squeezes its employees to make extra profit or Apple demands very low price from Foxconn to make all the trendy gadgets we all pay lots money for? Any suicide, even if it is below any country's average is too much.

Guru of Grounding
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re: Analysis: Foxconn salary hike will stress OEM supply chain
Guru of Grounding   6/7/2010 7:00:56 PM
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Why is it that OEMs "do the right thing" only when their feet are held to the fire? They're as greedy as the folks who brought you the Wall Street meltdown. We need to understand that (contrary to recent supreme court insanity) corporations are not PEOPLE with any kind of conscience! They squeeze profits out of slavery as long as they think no one will find out. I, for one, will be more than willing to pay more for the trendy electronics assembled offshore and sleep with a clear conscience. Those big corporate tears won't evoke any sympathy from me ... this trend is way overdue!

clay_cowgill
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re: Analysis: Foxconn salary hike will stress OEM supply chain
clay_cowgill   6/7/2010 6:52:10 PM
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At risk of sounding excessively insensitive-- if we believe the numbers mentioned here on EET (~430,000 workers at Foxconn's Shenzhen facility alone) and the WHO by way of Wikipedia (in 1999 China averaged ~13 suicides annually per 100,000 population) the number of suicides reported may be entirely ordinary given the 'sample' size? I wonder how the rate of suicides for factory workers in Lithuania or Russia or Belarus compares? (430K people at one site could really skew perception. That might be equivalent to the total suicides at 100+ other companies combined-- regardless of what country they operate in.)



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