Overseas contractors feel pressure from Apple's rules of secrecy

Posted:
in General Discussion edited January 2014
A new report from Reuters has offered a rare inside look at Apple's legendary veil of secrecy, and how the company's desire to prevent information leaks has influenced its relationships with overseas suppliers and manufacturers.



Citing numerous anonymous sources, the report issued Wednesday afternoon revealed that Apple often decides on a supplier only weeks before a product is rumored to launch. Deals with Apple come with a confidentiality clause, and breaches are reportedly met with stiff penalties. Factories have metal detectors, suppliers are issued fake products, and parts are divided among a number of companies so that those who work on the production line often have no idea what the final product will look like.



Sources said it is not common for suppliers to be fined for breaching a confidentiality agreement, though they had heard of companies that were "verbally warned that they were in danger of losing their contract" if leaks continued.



One South Korean supplier allegedly expressed frustration that the Cupertino, Calif., company makes "unreasonable requests," such as custom designs and unique sizes and specifications.



"That means we won't be able to use a common platform or rework those components to serve other clients," the source told Reuters. "And if there's any inventory left, it cannot be used any other way."



The report made mention of an incident in which a reporter, who stood on a public road and took photos of a Foxconn factory, was restrained and kicked by the facility's security guards, who attempted to pull the reporter into the factory, and then into a security vehicle. The reporter contacted the police, and a local police officer reportedly said that Foxconn has "special status" there.



In January, a Foxconn worker in the same town of Guanlan suspiciously died. The Taiwanese manufacturer has been working with local authorities in the ongoing investigation.



Apple's desire to keep projects secret, and the pressure it places on its partners, came under scrutiny last July, when a 25-year-old man reportedly committed suicide after an iPhone prototype he was responsible for went missing. One report said the man was subjected to "unbearable interrogation techniques" in the ensuing investigation by his employer, Foxconn.



The company later said that the man had a suspicious history of losing products. Apple officially commented on the matter, stating that the company requires its suppliers to "treat all workers with dignity and respect."



Reuters also noted that the company sued two Chinese reporters in 2006, asking for $4.4 million for exposing alleged substandard employment practices. That same year, Apple voluntarily conducted its first audit of Foxconn, and found that most of the manufacturer's facilities were in compliance with the law.



Apple has continued its audits of overseas partners in years since. In 2009, Apple's responsibility progress report found more than half of Apple's partners' factories in China were not properly paying their workers. In addition, 23 of 83 surveyed factories were not even paying some of their employers China's minimum wage.
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Comments

  • Reply 1 of 61
    Apple probably has more manufacturing clout than any other tech company out there these days. If the manufacturers don't want to play by their customer's (Apple's) rules, they don't have to do business. However, Apple does need to follow up on their "treat all workers with respect" words. They did a great job improving their environmental impact over the past three or four years. Perhaps the next step is to publicly, transparently set standards for its manufacturers - then enforce them with inspections.



    Apple's got $30 billion in cash. They can afford to pay their factory workers the Chinese minimum wage, give them breaks, be treated humanely, etc. It's fine if they want to be secretive - they just need to be aware of the environment this causes for their suppliers and ensure that people are treated with respect.
  • Reply 2 of 61
    I truly hope all aspects of Apple's manufacturing is as awesome as their dedication to product design and sales. It's a huge company and making sure everything is perfect is a challenge.



    I hope I can help to make it better ! ... I am a design student .. please let me know how I can help : )
  • Reply 3 of 61
    ivladivlad Posts: 739member
    Quote:
    Originally Posted by acslater017 View Post


    Apple probably has more manufacturing clout than any other tech company out there these days. If the manufacturers don't want to play by their customer's (Apple's) rules, they don't have to do business. However, Apple does need to follow up on their "treat all workers with respect" words. They did a great job improving their environmental impact over the past three or four years. Perhaps the next step is to publicly, transparently set standards for its manufacturers - then enforce them with inspections.



    Apple's got $30 billion in cash. They can afford to pay their factory workers the Chinese minimum wage, give them breaks, be treated humanely, etc. It's fine if they want to be secretive - they just need to be aware of the environment this causes for their suppliers and ensure that people are treated with respect.



    But what if Apple needs those $30 Billion to buy Adobe?
  • Reply 4 of 61
    Quote:

    One South Korean supplier allegedly expressed frustration that the Cupertino, Calif., company makes "unreasonable requests," such as custom designs and unique sizes and specifications.



    Hmm, I wonder what part of the term 'contract manufacturer' do they not understand.



    Most of these manufacturers, although not able to use the exact same parts in other projects, gain invaluable information from cutting-edge manufacturing techniques, which Apple is always adopting.



    One of my friends works at A***e and claims that most of the processes must remain proprietary for a period of time after the manufacturing run ends, after which they can apply to other customers' projects. Thus, those shiny new Dell laptops with screws that look like they weren't purchased at the local Ace Hardware store might have come from a spec originally developed by Apple.
  • Reply 5 of 61
    nagrommenagromme Posts: 2,834member
    Quote:
    Originally Posted by acslater017 View Post


    Apple probably has more manufacturing clout than any other tech company out there these days. If the manufacturers don't want to play by their customer's (Apple's) rules, they don't have to do business. However, Apple does need to follow up on their "treat all workers with respect" words. They did a great job improving their environmental impact over the past three or four years. Perhaps the next step is to publicly, transparently set standards for its manufacturers - then enforce them with inspections.



    Apple's got $30 billion in cash. They can afford to pay their factory workers the Chinese minimum wage, give them breaks, be treated humanely, etc. It's fine if they want to be secretive - they just need to be aware of the environment this causes for their suppliers and ensure that people are treated with respect.



    Agreed. I?m sure Apple is doing something?and they?re probably even among the BEST in this regard, while tons of other companies aren?t newsworthy. But are they doing enough? They weren?t in the past.
  • Reply 6 of 61
    "That means we won't be able to use a common platform or rework those components to serve other clients," the source told Reuters. "And if there's any inventory left, it cannot be used any other way."



    What a shame. They aren't allowed to sell Apple's IP to other customers who want to create a copycat device. This is the biggest problem in doing business in China. I have been approached by two manufacturers who wanted to offer me the opportunity to sell a device in the US that is very similar to XYZ product. The extra/leftover parts go into making a device to compete with the original company. And worst of all because the copycat device has little investment in R&D etc., it can undercut the price of the original device.



    One the backside the factory gets a better price on components because the now buy enough for the original device and the copycat device, netting the factory even higher profits.



    I feel for the people who actually assemble the component but not their management/owners.
  • Reply 7 of 61
    igeniusigenius Posts: 1,240member
    Quote:
    Originally Posted by nagromme View Post


    I?m sure Apple is doing something?and they?re probably even among the BEST in this regard,



    What makes you sure? How did you determine the probability?
  • Reply 8 of 61
    Quote:
    Originally Posted by AppleInsider View Post


    One South Korean supplier allegedly expressed frustration that the Cupertino, Calif., company makes "unreasonable requests," such as custom designs and unique sizes and specifications. "That means we won't be able to use a common platform or rework those components to serve other clients," the source told Reuters. "And if there's any inventory left, it cannot be used any other way."



    Uhh, he says that like it's a bad thing. One of the things that make Apple products unique is they they tend NOT to be assemblages of the same off-the-shelf parts everyone else uses. That's what PCs are. Maybe someone needs to have a chat with this supplier.
  • Reply 9 of 61
    grkinggrking Posts: 533member
    Quote:
    Originally Posted by iGenius View Post


    What makes you sure? How did you determine the probability?



    because it is Apple.
  • Reply 10 of 61
    Quote:
    Originally Posted by iGenius View Post


    What makes you sure? How did you determine the probability?



    How about the fact that they actually survey the plants and publish the findings, wow what a concept eh?



    It goes along the same lines of eco-friendly groups ripping apple up for not being "green" and apple turns around is rated as the most eco-friendly company. Wow again huh. Stick to trolling things that are trollable.
  • Reply 11 of 61
    Quote:
    Originally Posted by acslater017 View Post


    Apple's got $30 billion in cash. They can afford to pay their factory workers the Chinese minimum wage, give them breaks, be treated humanely, etc. It's fine if they want to be secretive - they just need to be aware of the environment this causes for their suppliers and ensure that people are treated with respect.



    It's actually more than $30 billion now, but that's not going to change what anyone in China is paid. These workers don't work for Apple, they work for the Chinese contractor, and the Chinese contractor bids the work competitively.
  • Reply 12 of 61
    Quote:
    Originally Posted by iVlad View Post


    But what if Apple needs those $30 Billion to buy Adobe?



    That would be something - buy Adobe and rename the company "HTML 5"
  • Reply 13 of 61
    If we ever go to war (hot or cold) with China, you'd better keep your old Apple device going for the duration, because you won't be able to buy a new one until it's over.
  • Reply 14 of 61
    Quote:
    Originally Posted by AdamIIGS View Post


    How about the fact that they actually survey the plants and publish the findings, wow what a concept eh?



    It goes along the same lines of eco-friendly groups ripping apple up for not being "green" and apple turns around is rated as the most eco-friendly company. Wow again huh. Stick to trolling things that are trollable.



    Aren't you being a little harsh? I don't see what's wrong with giving Apple the benefit of the doubt based on its generally good corporate citizenship. I am not opposed to following up with on-site investigations, but I don't think we have to have absolute skepticism when it comes to Apple.



    BTW, I was very pissed at Greenpeace when they took Apple to task, and told them so. But later I learned that in response, Apple made some significant improvements. Apple's current credentials as an eco-friendly company come in part because of Greenpeace's prodding.



    In any event, to label this guys comments as trolling seems a bit over top to me.



    Not judging you, I have probably done the same from time to time. Just an observation.
  • Reply 15 of 61
    vinney57vinney57 Posts: 1,162member
    Quote:
    Originally Posted by Robin Huber View Post


    If we ever go to war (hot or cold) with China, you'd better keep your old Apple device going for the duration, because you won't be able to buy a new one until it's over.



    Well that applies to every piece of electronics in your home - plus the loans to buy it...
  • Reply 16 of 61
    Quote:
    Originally Posted by Robin Huber View Post


    If we ever go to war (hot or cold) with China, you'd better keep your old Apple device going for the duration, because you won't be able to buy a new one until it's over.



    Highly unlikely there would be a war, they'd be risking their own money! I read this morning that Japan just passed China as the biggest lender to the US. You can bet they still want a return on their investments.
  • Reply 17 of 61
    dreyfus2dreyfus2 Posts: 1,069member
    Quote:
    Originally Posted by nagromme View Post


    I?m sure Apple is doing something?and they?re probably even among the BEST in this regard, while tons of other companies aren?t newsworthy.



    I do not know about other US companies, but I can safely say that several European companies do a lot more. From much more precise supplier terms (Apple's are really superficial), frequent random checks, providing anonymous complaint hotlines, to even putting undercover workers or permanent reps into companies, if there are any doubts. (No, I am not saying that solves all the problems ? but it sure makes it less convenient for the bad boys.) Apple pretty much relies on paperwork, and that is more CYA than efficient. So, their checks indicated that a huge amount of their suppliers does not pay enough and that people do work too many hours... does that help? There are several developing countries with high industry standards throughout Asia. If China is unable an unwilling, move elsewhere... If this increases production cost by 2-3% (hardly more), so what?
  • Reply 18 of 61
    Quote:
    Originally Posted by vinney57 View Post


    Well that applies to every piece of electronics in your home - plus the loans to buy it...



    Amen. If some people had their way we would have outsourced our defense industries to them as well. Anything to make a buck.
  • Reply 19 of 61
    Quote:
    Originally Posted by AppleInsider View Post


    One South Korean supplier allegedly expressed frustration that the Cupertino, Calif., company makes "unreasonable requests," such as custom designs and unique sizes and specifications.



    "That means we won't be able to use a common platform or rework those components to serve other clients," the source told Reuters. "And if there's any inventory left, it cannot be used any other way."



    Well, Duh! If it were a common platform, it would be a PC! We're talking unique, we're talking Apple. Don't like it, don't take the job. It's that simple.
  • Reply 20 of 61
    It's pretty simple:



    Don't leak or steal products.
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