Introduction iPhones. The company doing the lion’s share of

Introduction

With
the launch of every new iPhone, nearly every conversation seems to shift in
that direction. Many of the versions may not be a serious update at all,
however, it will sell. Why? Well, because it is Apple. With massive demand,
however comes pressure to produce. Apple in the race to be competitive has
mostly outsourced its production. “Designed by Apple in California Assembled in
China” is printed on the back of every iPhone. US law dictates that products
manufactured in China must be labelled as such. Apple’s inclusion of the phrase
renders the statement uniquely illustrative of one of the planet’s starkest
economic divides – the cutting edge is conceived and designed in Silicon
Valley, but it is assembled by hand in China. The vast majority of plants
that produce the iPhone’s component parts and carry out the device’s final
assembly are based here, in the People’s Republic, where low labor costs and a
massive, highly skilled workforce have made the nation the ideal place to
manufacture iPhones. The company doing the lion’s share of the manufacturing is
the Taiwanese Hon Hai Precision Industry Co, Ltd, better known by its trade
name, Foxconn.

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The
iPhone is made in a number of factories in China, but as its popularity
increased, it was largely assembled at Foxconn’s 1.4 million sq. mile plant
outside Shenzhen, estimated to be home of nearly 450,000 workers at one point
of time.  Today, it may be smaller, but
it is still once of the largest such operations in the world. In 2010, the
media and world witnessed the epidemic caused by multiple deaths, as worker
after worker committed suicide by throwing themselves off the buildings in
tragic displays of desperation. There were at least 18 reported cases of
suicide attempts with 14 confirmed deaths. 20 more workers were talked down by
company officials. The corporate response spurred further unease: Foxconn CEO,
Terry Gou, had large nets installed outside many of the buildings to catch
falling bodies. The company hired counsellors and workers were made to sign
pledges stating they would not attempt to kill themselves.

As
one of Foxconn’s largest clients, Apple came under severe scrutiny when media
learnt that the company was aware of the workers’ conditions in Foxconn
factories. Apple has a strict supplier’s code of conduct which contain clauses
for Labor and Human Rights, Health and Safety, Environmental Impact and Ethics
Management commitment.  Apple in the past
had terminated contracts with suppliers who underpaid employees, continues to
do business with Foxconn.

This
advance in global value chains as the mode of production for an increasing
number of goods and services has had varied impact considerably on the
economies and societies of the world. While it has brought employment and
economic growth to many developing economies, particularly in Asia, it is also
associated with exploitative employment relations, environmental
irresponsibility and recurrent ethical dilemmas. What is really the option for
parent companies to make sure that their suppliers are actually on par with the
expected standards? Where does the line blur that separates the bottom line
with employee welfare? How responsible is one company over the actions of
others? All these are important dilemmas that a company needs to address as it
takes on the global value chain.

 

Apple Inc: The World’s largest
company

Apple
is one of the world’s largest companies. It became the world’s largest brand at
$247 billion in 2015 and became the first company in the world to reach a
Market capitalization of $700 billion, more than the combined worth of Google
and Microsoft. It has reported the highest quarterly profit and amassed high
profits. Much of this wealth was accumulated following Steve Jobs’ return in
1997. Each new Apple product is accompanied by rising crescendos of excitement
at their announcement and long queues outside every Apple store when launched,
indicating that brand loyalty has become a faith that embraces millions.

While
Apple was enjoying a meteoric rise as the world’s most iconic business, there
have been increasing instances where the tragic consequences of human rights,
environmental and ethical dilemmas in the Apple supply chain in China were
emerging. It seems the quality and brand image of Apple ultimately rests upon
the suffering of young workers in electronic sweatshops where human rights, labor
standards, environmental safety and business integrity are routinely ignored. These
abuses in its supply chain were first brought to Apple’s attention in 2006 and
since then the company has made continuous efforts to eradicate problems and
enforce higher standards in all of its suppliers. However, there is much recent
evidence to suggest that the successive interventions of Apple to advance audit
and management systems and improve standards in suppliers’ factories are too often
overwhelmed by the intensity of the production regimes being enforced. There is
evidence of bleak working conditions throughout much of the electronics supply
chain in Asia including at factories manufacturing products for Dell,
Hewlett–Packard, IBM, Lenovo, Motorola, Nokia, Sony, Toshiba and others.
However, as the present market leader, and currently the richest and most
successful consumer electronics company in the world, Apple has a particular
responsibility to ensure the integrity and responsibility of its value chain.

It
has been said that Apple lowers its production costs through outsourcing, but
this is only possible by exploiting workers. Hence, Apple is the real reason
working conditions are deteriorating. But it is not that simple. Assembling
devices for Apple has always been a cyclical, low-margin business, albeit one
that was highly desirable when the Steve Jobs-led firm could do no wrong, and
its revolutionary products were sure-fire hits. In more recent times, the rest
of the world is catching up to Apple on tablets and Google’s Android platform
has surpassed the iPhone, there are dangerous new uncertainties for business
models with barely any room for error. This leads to  the actual exploitation of workers by the
suppliers.

 

Worker Conditions at Foxconn

The
iPhone is a compact and complex machine that requires a large number of workers
working in expansive assembly lines. These people build, inspect test and
package every device, handling anywhere between 600-700 for meticulous work
like fastening chip boards to over 1700 for wiping special polish for the
display. In such sprawling assembly lines, delay or defects can have a ripple
effect, and workers are admonished for any little mistake. The management is
called bath aggressive and duplicitous; publicly condemning any mistakes, while
not keeping any promises they make to the employees. This high-pressure work
environment takes a severe toll on both the physical and mental health of the employees.

Workers
say Foxconn promised free housing, but then forced them to pay very high bills
for electricity and water. The current dorms sleep eight to a room, which used
to be 12 to a room. The social insurance or bonuses are routinely paid late. The
workers are fined for missing work even due to illness and they have to pay a
penalty if they leave before their introductory period of three months.

Foxconn
has attractive advertising campaigns to recruit young immigrants from distant
provinces who have little hope of finding paying jobs in their hometowns. The
largest group of Foxconn workers’ is that of age group of 18-21 years though
there have been instances of child labor as well. These workers are rarely
allowed to go back as days off are rare and trips to family allowed only once
per year. The worker shifts regularly lasts for 11 to 13 hours, with people
sometimes even sleeping in the factories when new product is being launched. If
targets are not met, penalties such as cancellation of lunch breaks, unpaid
overtime etc. are common.

The
combination of management apathy in this high pressure working environment and
routine exploitation of the workers has created a systematic failure which has
given rise to a situation where depression and suicide has become normalized.
Workers have been quoted with statements like, “It wouldn’t be Foxconn without
people dying”, “Every year people kill themselves. They take it
as a normal thing.”, and “Here someone dies, one day later the whole
thing doesn’t exis, you forget about it.”

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