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Apple supplier Flextronics accused of using indentured servants to build components

post #1 of 32
Thread Starter 
Singapore-based contract manufacturer Flextronics is alleged to have flouted Apple supplier guidelines when hiring workers in the weeks before the iPhone 5's release, using recruiters throughout southeast Asia who "sold" the jobs to migrant workers for hundreds of dollars and confiscated their passports, then leaving the workers without pay or food for months.

Flextronics's Austin facility that will produce the new Mac Pro
Flextronics's Austin facility that will produce the new Mac Pro | Source: Apple


Forcing migrant workers to pay fees to secure a job in another country is a standard operating practice in Asia, but a Thursday report from Businessweek alleges that Flextronics --?which is also a supplier to Lockheed Martin and Ford, among others -- allowed recruiters bringing in workers to build iPhone 5 camera modules to charge more than half a year's salary -- far more than is allowed by Apple.

The report cites the case of a Nepalese man who paid approximately $1,000 to three separate recruiters to land a job as a camera module tester at a Flextronics facility in Malaysia, a position that brought a salary of around $180 per month. Apple guidelines set the maximum recruiting fee at one month's net salary, requiring suppliers to refund any excess fees directly to the employee, a policy which Flextronics is alleged to have ignored.

According to the Businessweek report, Apple pulled orders from the Malaysia factory after yield rates dropped to as low as 30 percent, forcing the supplier to lay off its more than 3,000 employees. Though Flextronics did provide full pay and severance, they allegedly did not follow through on promises of repatriation, instead holding the passports of more than 1,300 workers who then had no choice but to remain in a Flextronics-provided hostel with little funds --?and in many cases, no food?--?for up to two months after the facility was shuttered.

Flextronics's Singapore headquarters
Flextronics's Singapore headquarters | Source: Wikipedia


Only when Malaysian police became involved did Flextronics begin providing meals and resumed sending workers home, according to the report. Once back in their native countries, however, the workers still faced the prospect of repaying loans taken out to cover the recruiters' fees -- most are still working to retire the debt with new jobs which pay as little as $90 per month, while others were forced to sell off much-needed land to satisfy the creditors.

For its part, Flextronics told the publication that it had already begun investigating the allegations and would "immediately reimburse any employees that have been charged excessive fees by labor agencies," according to a spokeswoman. The charges come at a time when Flextronics is preparing for a larger role in Apple's supply chain, as the company is set to begin manufacturing the new Mac Pro in an Austin, Texas facility.

Apple said it would ensure "the right payments have been made," and spokesman Chris Gaither noted the company has helped workers recover more than $16 million in such payments since 2008.

"We aggressively investigate any claims of bonded labor where Apple products are made," Gaither said, adding that the company "is continuously auditing deeper into the supply chain" and takes "these allegations extremely seriously."

As Apple's popularity has skyrocketed over the last few years, the company has frequently been lampooned by the media when labor issues arise at contract manufacturers with which the company has a relationship. In response, Apple has initiated a wide-ranging supplier responsibility program, and in 2012 became the first technology company to join the Fair Labor Association, a trade group that independently assesses and reports on factory conditions.
post #2 of 32
As Apple’s popularity has skyrocketed over the last few years, the company has frequently been lampooned by the media when labor issues arise at contract manufacturers with which the company has a relationship...”

Ya think? Of course this will be presented to the world as an Apple only problem. The fact that other large companies do business with Flextronics will be ignored. I can’t wait to see the headline on c|net, followed by the usual hypocritical trolling.

Ooops, it’s already out there.

http://origin-www.businessweek.com/articles/2013-11-07/an-iphone-tester-caught-in-apples-supply-chain#p1
post #3 of 32
This is the link to the original story... http://mobile.businessweek.com/articles/2013-11-07/an-iphone-tester-caught-in-apples-supply-chain?campaign_id=yhoo

Here is my response emailed to Business Week...

I read this article in its entirety this morning. I was affected by the story more than expected. I attributed the emotion to the fact I was reading it on my iPhone 5.

Half way through I wondered about the supply chain activities of other leading US companies like Amazon and Google. I questioned myself to find out if I was attempting to deflect attention away from Apple by placing the focus on other companies.

The answers were yes and no. I really did want to know about the supply chain conditions of the other US companies producing smartphones and tablets just as Apple was doing.

I continued reading the article and understood the downward financial spiral Dhong and others were in and would be unable to easily escape as they attempted to provide a better life for their families and themselves.

At the end if the article I was awed. The birth of the iPhone 5 I am so proud of was not pristine. The collateral damage created from just the iPhone 5's camera boggled my mind. I wondered about the long-term damages that will be felt by Dhong from the iPhone 5 as I move forward with the iPhone 5s and future iPhones.

This thinking brought me back to Amazon and Google. These two companies had new smartphones and tablets on the market near the time Apple had its smartphones and tablets. I wondered if these companies had similar supply chain exploitations being experienced by people like Dhong. And, if so, why was it I had not read anything about it in Businessweek, New York Times, Wall Street Journal, Washington Post, USA Today, Fortune, Forbes and other publications during 2011, 2012 and 2013.

Apple's supply chain cannot be the only supply chain that is so terrible and qualifies to be brought to the world's attention. The decimation of human lives cannot be an Apple-only experience. It just cannot be.
post #4 of 32
Quote:
Originally Posted by leavingthebigG View Post

Apple's supply chain cannot be the only supply chain that is so terrible and qualifies to be brought to the world's attention. The decimation of human lives cannot be an Apple-only experience. It just cannot be.

 

Apple is the most popular company on the planet right now. Anything negative about Apple garners attention. Activists know this (Greenpeace, etc.), talking heads and pundits know this, financial manipulators know this. When you’re the top dog you have a bullseye painted on your back. It does no good to question why Apple is singled out. We should know why by now.

post #5 of 32

What has the MacPro production facility in Austin, TX  to do with indentured servitude?  Is AI trying to suggest that similar practices will occur there, given the Flextronics ownership?

post #6 of 32
Quote:
Originally Posted by lkrupp View Post
 

 

Apple is the most popular company on the planet right now. Anything negative about Apple garners attention. Activists know this (Greenpeace, etc.), talking heads and pundits know this, financial manipulators know this. When you’re the top dog you have a bullseye painted on your back. It does no good to question why Apple is singled out. We should know why by now.

Agreed.   And Apple has reacted to lesser issues in the past, so pointing this out and getting apple to react drives all other companies into the 'we could be next' spotlight. 

 

Singapore is one of those countries that tacitly supports big business and may in fact be involved in this at some level.  I've had very good friends go into countries and have their passports confiscated for their work duration by gov't contractors fronting the regime (Looking at you DUBAI!, NIGERIA!).   I've learned from them it's now a semi-standard operating procedure for IT consultants to go to a intermediary country and get a 'ghost' passport from that country, and use that for port of entry into work environments, smuggling their US (or another non US ghost) passport in just in case the ghost is confiscated [note, often it's confiscated at the Hotel not directly by the contractor as proof of your credit card, then 'held' to 'insure payment'], and you need to exit prior to contract completion. 

post #7 of 32

I remember people saying how great computers were because they cut down on paper waste. Of course, realizing that the environmental impact of even creating the computer is devastating but then relying on more environmental impact to run it. (Delivering the product to your store or your door and disposal are additional issues worldwide.)  I'm glad I don't hear that hogwash any more.

 

I'm glad for stories that get below the surface. It's complex, of course. We can make a choice to buy an iPhone or Samsung or LG or Nokia but the market's already there and there are people, policies, technology, raw materials, training. It's all connected. You can quibble about whether your purchase of the 5s is directly connected, about whether we should care about it, about whether it makes a difference. But it's connected. I'm thinking about Dhong now and hoping he does find trustworthy recruiters.

post #8 of 32
Why, if Apple is going to all the trouble to bring some assembly back to the U.S., would they then contract with a foreign company to do the work? Why not put the profits into American-owned pockets? Are Americans incapable of this task?
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post #9 of 32
Quote:
This thinking brought me back to Amazon and Google. These two companies had new smartphones and tablets on the market near the time Apple had its smartphones and tablets. I wondered if these companies had similar supply chain exploitations being experienced by people like Dhong. And, if so, why was it I had not read anything about it in Businessweek, New York Times, Wall Street Journal, Washington Post, USA Today, Fortune, Forbes and other publications during 2011, 2012 and 2013.

Exactly! Also, I'm sure Flextronics (and Foxconn, and all those other suppliers of Apple products) aren't only doing work for Apple. They must also be doing work for other companies. If so, then what are those other companies that they do business for?
post #10 of 32

Robots. In American factories. Apple should design them. Apple should program them. When they work really well, Apple can sell them to us as another amazing product. Robots keep secrets. Robots don't go on strike. No one cares if a robot is damaged in an industrial accident. The Mac Pro factory in Texas was the prototype but hopefully soon every Apple product will be made by automated factories.

post #11 of 32
Quote:
Originally Posted by TeaEarleGreyHot View Post

What has the MacPro production facility in Austin, TX  to do with indentured servitude?  Is AI trying to suggest that similar practices will occur there, given the Flextronics ownership?


 



Would you want to know if an 'accused' thief (fill in the crime) was living next to you? Would you want to do business dealings with them?

That said, this indentured worker explotation is a known issue, even here in the states. Kudo's to Apple to try to keep it under control.
Edited by boeyc15 - 11/7/13 at 9:44am
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post #12 of 32
Quote:
Originally Posted by GrangerFX View Post

Robots. In American factories. Apple should design them. Apple should program them. When they work really well, Apple can sell them to us as another amazing product. Robots keep secrets. Robots don't go on strike. No one cares if a robot is damaged in an industrial accident. The Mac Pro factory in Texas was the prototype but hopefully soon every Apple product will be made by automated factories.


 



Yes it sure will be interesting too see for these super high volume assembled/tested products.

The thing about a human 'hands-on labor' work force, you can re-program it fairly quickly to the intent the customer wants with the new instructions sheets.For robot's... that hardware and software needs to be pretty flexible and accurate(think ACA website) to cover all the actions a human can perform.
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post #13 of 32

I would like to investigate all the "analysts" and media people who report on Apple to see how many of them have illegal immigrants working for them.  Who cuts their yard?  Who cleans their house?  Who does their laundry?

 

Do they pay them minimum wage?  Provide healthcare benefits?  Report their earning to the IRS and pay unemployment taxes?

post #14 of 32
Quote:
Originally Posted by boeyc15 View Post
 
Quote:
Originally Posted by GrangerFX View Post
 

Robots. In American factories. Apple should design them. Apple should program them. When they work really well, Apple can sell them to us as another amazing product. Robots keep secrets. Robots don't go on strike. No one cares if a robot is damaged in an industrial accident. The Mac Pro factory in Texas was the prototype but hopefully soon every Apple product will be made by automated factories.

 



Yes it sure will be interesting too see for these super high volume assembled/tested products.

The thing about a human 'hands-on labor' work force, you can re-program it fairly quickly to the intent the customer wants with the new instructions sheets.For robot's... that hardware and software needs to be pretty flexible and accurate(think ACA website) to cover all the actions a human can perform.

 

There are general purpose assembly line robots being developed and tested today (if I recall, I think Marvin Minsky is involved in one start-up).

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #15 of 32
Quote:
Originally Posted by GrangerFX View Post

Robots. In American factories. Apple should design them. Apple should program them. When they work really well, Apple can sell them to us as another amazing product. Robots keep secrets. Robots don't go on strike. No one cares if a robot is damaged in an industrial accident. The Mac Pro factory in Texas was the prototype but hopefully soon every Apple product will be made by automated factories.

Extrapolate this to its logical conclusion: Apple will eventually sell products solely to robots, cutting out the human middleman completely.

Their only clients will be manufacturing automatons and WATSON-based investment bankers.

At least the wall st hipsters will finally experience unemployment...
post #16 of 32
Quote:
Originally Posted by boeyc15 View Post

That said, this indentured worker explotation is a known issue, even here in the states. 

Spot on. We get so damn holier-than-thou and teary-eyed about stories like this, and yet what about the fancy restaurant meals we consume, meats and vegetables we cook, houses we live in (construction), and our yards and gardens (landscaping), to mention just a few.

 

The business model -- ability to churn out a profit by keeping costs low -- in these industries in the US would collapse if it weren't for illegal aliens, many of whom are economically exploited.

 

Will people feel equally outraged and embarrassed the next time they dine on steak, chomp on fruits, walk into homes, and sit in patios enjoying their gardens?

 

Why doesn't BusinessWeek do a story about that, instead of constantly picking on the consumer electronics industry, and its supposed poster child, Apple?

 

The hypocrisy is stunning.

post #17 of 32
Quote:
Originally Posted by anantksundaram View Post
 

Spot on. We get so damn holier-than-thou and teary-eyed about stories like this, and yet what about the fancy restaurant meals we consume, meats and vegetables we cook, houses we live in (construction), and our yards and gardens (landscaping), to mention just a few.

...

The hypocrisy is stunning.

 

It's nice to have an illustration of the problem. This story happens to be about a supplier to Apple. I don't think anyone's singling out Apple or the consumer electronics industry.

post #18 of 32
It sickens me that corporations work this way. Although I doubt that the workers would be able to work at all if they were left without food for months as the article preview said. However it seems that all Chinese electronics big players are pure evil and should be dealt with harshly. The Chinese government won't do anything more than a slap on the wrist as punishment. If the electronic giants paid workers with rights to make these electronics, they might cost a couple of hundred dollars more and people wouldn't upgrade as often, but it would be worth it because it's fair. That's a totally foreign concept to the pieces of trash that run these companies. They deserve poverty instead of riches.
Edited by Andrew Payne - 11/7/13 at 1:13pm
post #19 of 32
Indentured slavery is still a common and accepted pratice in 3rd world countries and the big companies like Apple and Microsoft and the others don't care about it unless someone finds out about it. It probably happens here in the U.S. as well, but no one is willing to talk.

They talk about giving money back, but those people still have no passports and are still stuck in a country with no papers and no way home.

I bet a lot of auto parts are produced under the same conditions.
post #20 of 32

They can't bring all the work here because Americans won't work for $ 2.00 per hour with no benefits, unsafe working conditions, required living in company housing, and unable to leave for another job, no vacations, etc. Plus Americans tend to have organizations called Labor Unions that have plenty of political power from bribing government officials.

post #21 of 32

Current list of Flextronics customers according to wikipedia (http://en.wikipedia.org/wiki/Flextronics):

 

Company End Product
Alcatel-Lucent Business telecommunications systems and core routers and switches
Apple Smartphones, notebooks and desktop computing, tablets and consumer

entertainment devices

Cisco Core routers and switches, wireless and enterprise telecommunications

infrastructure

Ericsson Radio base stations for Long Term Evolution and GSM infrastructure
Ford Motor Company SYNC Modules, Lighting Products, Solenoids and Motion Control Electronics
Hewlett-Packard Notebook and netbook computers, inkjet printers and storage devices
Huawei Technologies Wireless and enterprise telecommunications infrastructure and smartphones
Lenovo All-in-one desktop, desktop and notebook computers
Microsoft Computer peripherals and consumer electronics products

and it's only Apple's that is at Fault here...

 

/s

post #22 of 32
Quote:
Originally Posted by Andrew Payne View Post

It sickens me that corporations work this way. Although I doubt that the workers would be able to work at all if they were left without food for months as the article preview said. However it seems that all Chinese electronics big players are pure evil and should be dealt with harshly. The Chinese government won't do anything more than a slap on the wrist as punishment. If the electronic giants paid workers with rights to make these electronics, they might cost a couple of hundred dollars more and people wouldn't upgrade as often, but it would be worth it because it's fair. That's a totally foreign concept to the pieces of trash that run these companies. They deserve poverty instead of riches.

 

Woah!  Hold it.  This has nothing to do with Chinese governments.  Heck, this article is talking about Flextronics, which is not a Chinese company.  Look at their leadership team: http://www.flextronics.com/about_us/Pages/Leadership_Team.aspx

post #23 of 32
Quote:
Originally Posted by boeyc15 View Post
Quote:
Originally Posted by TeaEarleGreyHot View Post

What has the MacPro production facility in Austin, TX  to do with indentured servitude?  Is AI trying to suggest that similar practices will occur there, given the Flextronics ownership?

Would you want to know if an 'accused' thief (fill in the crime) was living next to you? Would you want to do business dealings with them?

That said, this indentured worker explotation is a known issue, even here in the states. Kudo's to Apple to try to keep it under control.

 

I'm glad you phrased the question that way, boeyc15.  Because the answer is no.  I do not persecute people who are merely accused, and not yet found guilty, of crimes.  Similarly, I believe that after restitution is made, be it a fine or a jail sentence, that punishment should cease and rights should be restored.  I'm a patriot (of the USA).

post #24 of 32

Flextronics is located in Singapore, you're correct. But most of these serious labor abuse stories are from Foxconn and other Chinese companies. I made a mistake implying they were from China. I would say asian electronics manufacturers, but that would include Japanese and South Korean companies as well as others who seem to have a non abusive track record.

post #25 of 32
Quote:
Originally Posted by GrangerFX View Post
 

Robots. In American factories. Apple should design them. Apple should program them. When they work really well, Apple can sell them to us as another amazing product. Robots keep secrets. Robots don't go on strike. No one cares if a robot is damaged in an industrial accident. The Mac Pro factory in Texas was the prototype but hopefully soon every Apple product will be made by automated factories.

And robots don't buy any company's products.    If you take away the jobs of everyone, then they'll be no one to buy the products made in these automated factories (except for the executives, of course).  

 

How about we replace you with a robot?

 

When Apple used to have factories in the U.S., they managed them themselves.  And I believe that was also true at the factory in Ireland.   Instead of Flextronics running the U.S. factory for the MacPro, Apple should have run it themselves making a bleeding-edge model out of it to show how it can be done and still treat workers decently.    

post #26 of 32
Quote:
Originally Posted by old-wiz View Post
 

They can't bring all the work here because Americans won't work for $ 2.00 per hour with no benefits, unsafe working conditions, required living in company housing, and unable to leave for another job, no vacations, etc. Plus Americans tend to have organizations called Labor Unions that have plenty of political power from bribing government officials.

They can either accept a lower margin or increase the price of the products to their true market value.     And most of the workers don't even get $2 an hour.   

 

As for Labor Unions, in 2012, only 6.6% of private sector workers were in a union.     (35.9% of public sector workers were in a union).  The numbers are probably lower now because union membership has been consistently declining year after year.   So let's not go blaming labor unions for all the perceived problems in U.S. industry because the reality is that they're not really in U.S. industry anymore.    In 2012, only 14.4 million U.S. workers belonged to a union (including public sector workers).     

post #27 of 32
Bloomberg has chosen to push a second day of this story to the world. As with yesterday story, Apple's supply chain is the problem even though other big technology companies have Flextronics in their supply chains.

I have to give Gizmodo credit for actually reporting other companies use Flextronics and the problem goes beyond Apple.
post #28 of 32
Quote:
Originally Posted by anantksundaram View Post
 
Quote:
Originally Posted by boeyc15 View Post

That said, this indentured worker explotation is a known issue, even here in the states. 

Spot on. We get so damn holier-than-thou and teary-eyed about stories like this, and yet what about the fancy restaurant meals we consume, meats and vegetables we cook, houses we live in (construction), and our yards and gardens (landscaping), to mention just a few.

 

The business model -- ability to churn out a profit by keeping costs low -- in these industries in the US would collapse if it weren't for illegal aliens, many of whom are economically exploited.

 

Will people feel equally outraged and embarrassed the next time they dine on steak, chomp on fruits, walk into homes, and sit in patios enjoying their gardens?

 

Why doesn't BusinessWeek do a story about that, instead of constantly picking on the consumer electronics industry, and its supposed poster child, Apple?

 

The hypocrisy is stunning.


Actually, as so often is the case with your posts, you miss the point entirely. For one thing, it is NOT a case of hypocrisy at all. One can equally well, or better, see it as the cost that the US society in general, is exacting on the third world in order to maintain the illusion of prosperity and well-being.

 

You are quite right that the problem is widespread and certainly isn't an exclusive failing of Apple alone.

 

But there is another aspect.

 

The Apple products are luxury goods, not in any way contributing to the essentials of feeding, sanitation, housing, health-care and education. ... The things that are essential to stay alive and raise healthy children.

 

In addition, Apple and many of their most vocal supporters keep pointing out the insane profit margins and enormous pile of cash rotting in some banks outside of the USA. So while Apple isn't the ONLY, it may well be the WORST offender in the exploitation game.

 

When one praises Cook for his supply-chain genius, you do need to think of the cost to the third world that he knowingly accepts to achieve the results that Apple produces.

 

And let's face it. A couple of billion out of Apple's Stash of Cash would go a long way to eliminate the exploitation of the poor on which Apples riches are largely based. This is a problem that Apple can make a much more significant contribution to solve. But there is no interest in doing so. The consumer technology industries are not about ethics but simply primitive, naked capitalism with all of the dark-side aspects that this involves.

 

So I don't feel sorry in the least for the bad light that the BusinessWeek Article shines on one of the most high profile companies in the world. Apple deserves the shit storm. The fact that other companies also deserve it, is beside the point.

post #29 of 32
Quote:
Originally Posted by old-wiz View Post

Indentured slavery is still a common and accepted pratice in 3rd world countries and the big companies like Apple and Microsoft and the others don't care about it unless someone finds out about it. It probably happens here in the U.S. as well, but no one is willing to talk.

They talk about giving money back, but those people still have no passports and are still stuck in a country with no papers and no way home.

I bet a lot of auto parts are produced under the same conditions.

Indeed it happens in the USA. There was a set of blog posts written by someone who worked in the 3PL (third party logistics - subcontractors) warehouses that shipped for Amazon. Ever wonder why a price on Amazon is "too good to be true"? And of course they are contractors to Amazon so guess who can wash their hands clean in the unlikely event there is ever a crackdown or a whistleblower?

Lets fix the problem here before we throw stones. It is true that injustice anywhere is injustice everywhere, but we can certainly apply more pressure on our home soil, and vote with our dollars.
post #30 of 32
Companies like Apple should all stop their partnerships with companies like Flextronics. The reason big companies don't produce themselves is either:

1. they want an "in between" company like Flextronics to do the dirty work

or

2. They can't produce their devices as cheap as Flextronics and are to ignorant to understand that there's a reason for this.
post #31 of 32
PS: Can anyone tell me which smartphone at the moment is not produced by Flextronics? I will most certainly look for a fair produced phone if it was out there. Am even willing to pay $200 extra for it.
post #32 of 32
Quote:
Originally Posted by Andrew Payne View Post
 

Flextronics is located in Singapore, you're correct. But most of these serious labor abuse stories are from Foxconn and other Chinese companies. I made a mistake implying they were from China. I would say asian electronics manufacturers, but that would include Japanese and South Korean companies as well as others who seem to have a non abusive track record.

Maybe you should try to hit the link ProApple posted another time and look for a single Singapore's habitant in Flextronics' leadership team. Guess what, you will not find one. Flextronics is an American company from origin which has found a way to get under the radars by getting their legal seat in Singapore. Not only about every single member of Flextronics' leadership team is an American, I bet they are located in the States for at least 90% of their time. So stop acting like Americans and American companies won't do things like this.

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