The "moment of reckoning" was long ago when the labor conditions and suicides at Foxconn were first revealed and made international headlines. Now we're observing a steady evolutionary progression of data gathering and corrective action. Wages and working conditions will continue to improve in China. The balance points will continue to shift for domestic vs. outsourced manufacturing decisions depending upon labor costs, shipping costs, intellectual property, technical support, and delivery time considerations.
"No, no one is pointing a gun to anyone's head and making them work at Foxconn. "
Have things changed in China then? When I was there in the 80's, it was explained to me that the government assigned you a job, and you either did that job, or starved. Moonlighting could get you put in jail or worse.
The problem is that China is a largely agrarian third-world nation trying to bootstrap itself into the 21st century and become an industrialized first world nation. We act horrified at the working conditions in Chinese factories, but fail to recognize that those jobs are steps *up* in pay, hours, working conditions, and status from being a peasant in the fields, and there is competition to *get* those jobs, with corresponding problems caused by mass migrations from rural areas to urban centers as people move to where the jobs are.
Another overlooked factor is that those jobs are attractive opportunities for *women*, in a culture where men are valued and opportunities for women are not abundant. Electronics assembly is a task that can be done by a woman as well or better than a man, which is not true of many of the other better paying jobs.
Yet another overlooked factor is fundamental differences in the underlying culture. The most important social unit in China is the *family*. Things are done for the benefit of the family, and by our standards, the individual simply may not *matter.* I think you'll find that many of those workers at Foxconn and other manufacturers are sending most of their pay back home *to* their families. They are working for the benefit of their families, not themselves.
What China is going through now is a stage I think every developed first world nation had to pass through on the way to becoming a first world nation. Conditions in China for those workers will improve as their economy expands and they come closer to *being* a first world nation, but while we can try to mitigate what we see ad problems, we can't make them go away.
I have worked on deals where we have competed head-to-head with Foxconn for Apple manufacturing contracts. I must admit that we struggle to compete with them on price as they have a completely different set of ethics to us.
@dencon22- yes, I believe most Americans would not want to work in unsafe conditions for a wage that does not cover their basic needs. With the labor reforms won in this country in previous generations, the idea of doing so is unsavory. Is that wrong?
@dranger-I don't agree that the article is "shrill" or that it "screams hyperbole." But you make a fair point about the characterization of the overtime pay issue. I have made some changes to that paragraph after considering your comment. Thanks for weighing in.
Sadly, Frank, I agree with you 100 percent. But I don't think it's that people are amoral or that they don't care, I think that people just don't truly think it through. I have to admit, until the last couple weeks, I didn't truly think about it. We've all got plenty of issues of our own to deal with, and it's not that easy to step outside of our situations and think deeply about the plight of other people that we don't personally know. But after giving it consideration, I feel that this is wrong and I personally won't support it.
Safe working conditions start with unblocked exits and functioning protective equipment, both of which were found lacking in the FLA investigation. The investigation also found that the employees worked excessive hours in violation of Chinese labor law.
"Living wage" is defined as the minimum hourly income necessary for a worker to meet basic needs (http://bit.ly/9l7UOe). In the FLA investigation, 64% of workers said of employees said their compensation does not meet their basic needs. Not a living wage.
IHS said that if ODMs comply with FLA rules, costs will increase. But IHS added, "Even so, given the small proportion of manufacturing costs compared to component expenses, this is unlikely to have a major impact on company margins or consumer prices."
According to an IHS teardown analysis (http://bit.ly/FQQYYn), the 32GB, 4G-capable version of the new iPad has a bill of materials cost of $364.35 and manufacturing cost of $10.75. Apple sells this model for $729. If the IHS estimates are accurate, the manufacturing cost is about 3% of the total cost to produce the device and about 1% of the retail price. If Foxconn were to give all employees a raise of 25%, how much more would you expect the iPad to cost?
You touch on the crux of the issue. At the same time that there is soul searching (among some) over labor practices in foreign countries where the electronics goods we buy are produced, many in the U.S., including the president, are concerned about manufacturing disappearing from this country. The pragmatist in all of us accepts at some level that offshoring manufacturing to developing nations with lower wages makes sense from a business perspective. But if we as consumers insist that the people who make the goods we buy be provided a safe working environment and paid a living wage, perhaps the numbers look different. Perhaps, if the exploitation of human beings were removed from the equation, it might not seem so foolish to just build stuff in the U.S.
This whole discussion reminds me of a segment several years ago on one of the newsmagazine shows. The subject was the plight of workers in the textile industry in Bangladesh and the influence of Walmart buyers and the endless pursuit of cutting costs.
They profiled a worker -- a single mother living in what westerners would describe as deplorable conditions, and they even brought her to New York, and to a Walmart where she found some of the very clothing she had sewed.
Various Walmart shoppers were asked, on camera, if they would be willing to pay just a little bit more so that this woman and others like her could have a slightly better life, maybe more nutritious food and so on. The majority said "no" -- times are tight, I shop here for the low prices, and all the usual excuses.
Dylan says "moral consumers" should send a message to Apple and other companies that we won't buy their products unless blah blah blah.
Call me cynical, but I suspect that if all the "moral consumers" took Dylan's advice, the effect on sales of Apple or Dell or HP or Nike or Aeropostale or whoever would be less than negligible.
I understand what this specific investigation was not about Chinese firms as a whole, however the issue is with Chinese firms as a whole, but if we were honest about that, it wouldn't show Apple in as unfavorable a light now would it? And yes, we can refuse to do business with any firm that does not insist on basic safety, as I referred to sweat shop conditions, but when half the world separates you, there's not a whole lot that can be done other than empty words. Again, those factories are gems in China. They can't change the entire country and the way business is done there overnight, but they are the example of a firm that is trying to do right by its employees - even if it's against the grain of the country. Foxconn losing business and going under would be the worst thing that can happen for China. There are checks and balances in life for a reason and they generally work out. This country had all the issues we are now seeing in other countries and today they are the exception and not the norm. China has a long way to go, but without firms like Apple they would likely never improve.