Wow! Yes, another iPhone post, but this is something. So here's the very quick 411 on this.
Foxconn Technology Group is the assembler of Apple Inc. iPhones. Foxconn employs more than 1 million workers in China. They had to STOP production for the second time in as many weeks after factory-line workers at one of its plants PROTESTED against increased pressure. If you haven't heard, the iPhone 5 has come under scrutiny because many were coming ALREADY scratched when consumers opened their new box! (Due to a new, lighter aluminum material much more susceptible to scratching) Employees at Foxconn work more than 12 hours a day and were made to work through a holiday week and ' subject to “overly strict” product-quality demands without adequate training. '
Also, last month there was a brawl involving 2,000 workers at another Foxconn plant that stopped production. More than 40 were hospitalized and it resulted in bringing in "security teams wearing riot helmets and wielding plastic shields into the Taiyuan plant, which employs 79,000 people." Lastly, the article goes on to state that Foxconn is the only company out there (I'm assuming in China) that has the ability and capacity to amass so enough workers for Apple's production scale. Foxconn works on a very small and tight profit margin for their part of the production chain, while Apple had an operating margin of 31% last year.
Hmmm...seems like the majority of the VALUE-ADDED to the product is occuring from the retailers' (Apple) end. It's quite obvious that the employees working in this large assembly plant in China have been freaking out for sometime. This is a CLASSIC example of a large North American corporation manufacturing their product in a lower-wage and much more inexpensive environment. Some may consider this modern day slavery. Walking off the job, long hours, working holidays, RIOTS!?!? Something is terribly wrong. The reality is that Foxconn is not getting a large enough piece of the iPhone pie. They are working on tight margins and essentially trying to squeeze more and more out of their employees for less. Apple would never manufacture this product domestically - it would cost them ridiculously more per unit. [The article states that the base salary over there at Foxconn is equivalent to only $289/month!!!]. That being said, as the author of this article suggests, Apple should definitely consider giving Foxconn a bigger cut of the action (profits). They need production to be 100% in order to satisfy market demand - striking while the iron is hot! Many consumers have already been waiting as iPhones are back-orderd. Disruption in these plants is one of those contributing factors. Every day that consumers patienly wait, costs Apple millions. Lastly, from a social justice perspective, there are definitely some issues - environmental concerns and employee safety to name a few from a Chinese Labor Watch group. Though, something tells me that as long as the GIGANTIC titan Apple keeps this place fuelled and keeps pumping money into the Chinese economy as a result, I find it hard to believe that Chinese regulators would ever risk administering strict sanctions on such a place. Your thoughts???
- Mr. L
