Apple rumored to directly provide raises to Foxconn employees

Posted:
in General Discussion edited January 2014
A new report suggests Apple could address employee issues with its manufacturing partner Foxconn by directly compensating workers with profits from products assembled overseas, including the iPhone and iPad.



According to CBS-owned Chinese news site Zol.com.cn, Apple plans to provide Foxconn employees between 1 percent and 2 percent of the profits from its products. The report was translated by MIC Gadget.



The media outlet said that Apple conducted an investigation of Foxconn, as it publicly promised to do, and found that recent employee suicides were related to low wages at the company's massive factory in Shenzhen, China. The Cupertino, Calif., company could address the issue by providing additional wages to workers that would come directly from the profits of products assembled there.



The report claims that the first to receive the pay boost will be those who work on the iPad production line. Currently, it said, Apple pays Foxconn about 2.3 percent of the total price of the iPad.



Last week, Foxconn announced it plans to give a 20 percent pay raise to its employees. The revelation came after at least 10 people committed suicide at the Chinese plant this year alone.



Entry-level workers at the company's factory in Longhua reportedly earn just over 900 yuan, or $131.80 U.S. per month before overtime and bonuses. A recent undercover report from Southern Weekend revealed that employees sign "voluntary overtime affidavits" to take home more than the local minimum wage that can be earned through a regular 36-hour workweek.



Apple's own investigation into Foxconn was announced last week. The company said it is "saddened and upset" by the suicides that have occurred there recently, and it would assign its own investigative team to carry out an independent inquiry.



Apple, along with numerous other electronics makers, partners with Foxconn for the building of its products. The Taiwan-based company assembles iPhones and iPads for Apple. Last week, other technology giants, including Nokia, Sony, Dell and HP, joined in showing concern over the labor conditions at the Chinese factory.
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Comments

  • Reply 1 of 64
    oc4theooc4theo Posts: 294member
    These overworked workers deserve every penny they can get. I think Apple should divert 2-5 percent of their annual profit to the well-being of these workers, some of whom are going to be permanently injured by the chemicals used to manufacture these profitable gadgets.

    But then, you realize that the reason for moving these manufacturing is the first place is to maximize profit.



    Will Apple help the Chinese workers? The jury is still out there.
  • Reply 2 of 64
    lilgto64lilgto64 Posts: 1,147member
    I don't get something here - if
    Quote:

    Apple pays Foxconn about 2.3 percent of the total price of the iPad.



    and the iPad price is $499 (for one model) does that mean Apple's cost of manufacturing each iPad is only $11.47? (not including shipping it around the world.



    Or does that mean the gross profit that Foxconn makes is $11.47 per unit? I would be really surprised if the total cost of materials and manufacturing was only $11.47. unless that $11.47 does not include the materials cost. if the total cost of materials and manufacturing was more like $111.47 that would not surprise me. that is about 22% rather than 2.3% of the total. and a 20% increase on that is about $20. maybe the numbers are backwards - 20% of the total price is the direct charge from Foxconn to Apple for each unit shipped and the worker increase is 2.3%.
  • Reply 3 of 64
    quinneyquinney Posts: 2,521member
    Quote:
    Originally Posted by lilgto64 View Post


    I don't get something here - if and the iPad price is $499 (for one model) does that mean Apple's cost of manufacturing each iPad is only $11.47? (not including shipping it around the world.



    Or does that mean the gross profit that Foxconn makes is $11.47 per unit? I would be really surprised if the total cost of materials and manufacturing was only $11.47. unless that $11.47 does not include the materials cost. if the total cost of materials and manufacturing was more like $111.47 that would not surprise me. that is about 22% rather than 2.3% of the total. and a 20% increase on that is about $20. maybe the numbers are backwards - 20% of the total price is the direct charge from Foxconn to Apple for each unit shipped and the worker increase is 2.3%.



    I think Foxconn just assembles the items. Other companies supply the parts.
  • Reply 4 of 64
    serkolserkol Posts: 39member
    Hopefully workers of other assembly lines (IBM, HP and so on) will survive this news...
  • Reply 5 of 64
    eaieai Posts: 417member
    Apple pay that $11.47 (or whatever) to Foxconn to assemble the iPad. I'd guess Apple are entirely responsible for sourcing the components and getting them to Foxconn's factories.
  • Reply 6 of 64
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by OC4Theo View Post


    These overworked workers deserve every penny they can get. I think Apple should divert 2-5 percent of their annual profit to the well-being of these workers, some of whom are going to be permanently injured by the chemicals used to manufacture these profitable gadgets.

    But then, you realize that the reason for moving these manufacturing is the first place is to maximize profit. :



    The only reason we have affordable high tech products is because of disregard for the environment and poor working conditions in China.



    In the US., EPA regulations, medical insurance, retirement, unions, wages, land, construction, taxes, would make the iPad cost prohibitive. Apple wouldn't even sell them because almost no one would be able to afford it if it was manufactured here.
  • Reply 7 of 64
    ghostface147ghostface147 Posts: 1,629member
    Maximize profits!
  • Reply 8 of 64
    benroethigbenroethig Posts: 2,782member
    How about they just forget these slavelabor foreign partners and start building their products stateside again? They'd have tighter controls on their products and score some good P.R.
  • Reply 9 of 64
    masternavmasternav Posts: 442member
    Nokia, Sony, Dell and HP, beyond "expressing concern" when it comes to providing additional overhead for workers wages as Apple is alleged to have done (whether that is in fact the case actually remains to be seen)?



    But time and again it is Apple that gets targeted and blamed for the conditions at FoxConn, and somehow these other companies get ignored for their complicity in the situation. It would be interesting to find out, if you can, what percentage of the line is actually used to produce Apple products, versus Nokia, Sony, Dell and HP products. And if Apple is etiher carrying a disproportionate load of the blame or is in fact using a larger percentage of the line production capacity of the FoxConn operations.



    One other observation. If Apple provides additional wage supports for those workers on the iPad lines, will that encourage inter-line feuding or perhaps a higher suicide rate on the other lines? One aspect of this situation that doesn't seem to get much coverage is the fact that FoxConn offers a very large settelement to the families of the suicide victims. Given the high incident of suicide in China,the reported lower personal perception of worth, the younger age of the workers, etc. - how much of this is actually reinforced behavior that needs to be addressed?
  • Reply 10 of 64
    justbobfjustbobf Posts: 261member
    Well, if so, that is a start for Apple. Apple rakes in billions of dollars in profits; profits gained by either overcharging for its products, or, more apparently, underpaying its employees. Remember, it is how we treat the least amongst that really counts.
  • Reply 11 of 64
    mitchelljdmitchelljd Posts: 152member
    It is time for Apple to start manufacturing in the USA again.



    I remember when they made most of their computers in the US, but as they drive to expand profit, they killed off the us based manufacturing plants, i am not even sure if the Mac Pro is made in the US anymore even.



    but "Made In China" means alot different from Made in the United States
  • Reply 12 of 64
    justbobfjustbobf Posts: 261member
    Quote:
    Originally Posted by BenRoethig View Post


    How about they just forget these slavelabor foreign partners and start building their products stateside again? They'd have tighter controls on their products and score some good P.R.



    Great idea! If, as some people suppose, the US products would cost a whole lot more, then Apple could offer Made in the USA branded versions for those of us who care and could still afford them.
  • Reply 13 of 64
    anonymouseanonymouse Posts: 6,562member
    Quote:
    Originally Posted by mstone View Post


    The only reason we have affordable high tech products is because of disregard for the environment and poor working conditions in China.



    In the US., EPA regulations, medical insurance, retirement, unions, wages, land, construction, taxes, would make the iPad cost prohibitive. Apple wouldn't even sell them because almost no one would be able to afford it if it was manufactured here.



    Then again, if all those jobs were still in this country, wages might be high enough that it wouldn't be any less affordable than it currently is. Obviously, off-shoring jobs (not to mention hiring illegal immigrants) drives down wages in this country by decreasing demand for labor.
  • Reply 14 of 64
    jmmxjmmx Posts: 341member
    Apple should give them stock. That would be an even greater incentive!
  • Reply 15 of 64
    cmf2cmf2 Posts: 1,427member
    Quote:
    Originally Posted by justbobf View Post


    Well, if so, that is a start for Apple. Apple rakes in billions of dollars in profits; profits gained by either overcharging for its products, or, more apparently, underpaying its employees. Remember, it is how we treat the least amongst that really counts.



    Remember Apple pays Foxconn, and Foxconn is the one "underpaying" its employees although it seems to pay more than other companies in China. Foxconn also makes products like the PS3, XBox 360, Wii, Intel motherboards, components for HP and Dell computers and more according to Wikipedia.



    Apple directly paying Foxconn employees would set a dangerous precedent. It takes the responsibility off Foxconn to shape up, doesn't help employees making other companies products, and possibly exposes Apple to legal liability. Perhaps this is the only way to improve the lives of the workers in the short term, and it will look good in the media, but I can't see this being a good long term solution.
  • Reply 16 of 64
    sheffsheff Posts: 1,407member
    I'm split. On one hand I doubt more money is gonna compensate for (reportedly) 14 hours with no breaks (there was a story on either this site or 9 5 mac that showed workers taking a 5 minute nap at their work chair before going back to work).



    On the other hand having more money will let them do more with the little time they spend outside the factory.



    Of course it would be better if they could just hire more people instead of overworking the existing ones.
  • Reply 17 of 64
    masternavmasternav Posts: 442member
    Quote:
    Originally Posted by BenRoethig View Post


    How about they just forget these slavelabor foreign partners and start building their products stateside again? They'd have tighter controls on their products and score some good P.R.



    Stateside manufacturing has proven time and again to be disproportionately much higher in cost than most of the rest of the world (by population). There are very well-defined reasons and justifications for most of the US companies shipping production and support elsewhere in the world. Our labor system, while having gained some significant ground for the US worker has virtually guaranteed that US manufacturing costs are among the highest in the world and decidedly non-competitive with most of Asia, South America, and the former Eastern bloc countries, whose standard of and cost of living is substantially lower, and unemployment substantially higher. As each of these countries in turn bring in manufacturing workloads due to attractive (to the client companies)low cost of production, they in turn (by local, not US standards) raise the overall standard of living incrementally until they become less competitive with their neighbors, and manufacturing shifts there in turn. This helps their national economies by raising the standard of living, but cost of living rises also, and while a new middle class develops, very little is done about the poverty endemic to their economy.



    Thus manufacturing tends to migrate to the lowest economies, or the lower economies with the highest available resources (eg: workers) and most susceptable to loose controls around working conditions. It has been argued that this system actually slowly raises the national economies, reducing the disparity between the US and those other economies, but the gulf is so great that it will take decades or more of such growth before global economies come anywhere near the US economy under those circumstances. And most of those countries do not have targeted high yield nature resources (like the oil-rich Middle East) to support their manufacturing economies, and so are immediately impacted when they become less attractive from a cost perspective.



    So while calls for moving manufacturing back to the good old US of A are laudable, they do not reflect the disparity of these costs, they do not reflect on the limited beneficial aspects of the global manufacturing migration, and they usually spring out of a misguided sense of patriotism, a failure to recognize the intertwined state of global economies, and the nature of the US economy.
  • Reply 18 of 64
    kiweekiwee Posts: 102member
    There are a million ways this could go wrong.

    Let's say, only Apple pays the Foxconn employees more.

    Then, everyone would want to work on making Apple products. Fighting over positions. Maybe worse..



    What the companies need to do is to go together, put pressure on Foxconn to raise wages and put caps on overtime etc.



    I think the average customer could pay 5 dollars more for an iPad, knowing people don't work themselves to death making them. I know I would.



    Additionally I think this takes away the responsibility from Foxconn who should be the one addressing this problem. Apple probably makes a nice 50% percent profit on the iPad. Sure development etc needs to be payed but come on. Foxconn could charge more without Apple leaving them and with assurances that the extra money goes to the men and women on the floor.



    And please don't call me a communist.

    People should not have to kill themselves to feed their family with the benefits.
  • Reply 19 of 64
    maestro64maestro64 Posts: 4,371member
    Quote:
    Originally Posted by lilgto64 View Post


    I don't get something here - if and the iPad price is $499 (for one model) does that mean Apple's cost of manufacturing each iPad is only $11.47? (not including shipping it around the world.



    Or does that mean the gross profit that Foxconn makes is $11.47 per unit? I would be really surprised if the total cost of materials and manufacturing was only $11.47. unless that $11.47 does not include the materials cost. if the total cost of materials and manufacturing was more like $111.47 that would not surprise me. that is about 22% rather than 2.3% of the total. and a 20% increase on that is about $20. maybe the numbers are backwards - 20% of the total price is the direct charge from Foxconn to Apple for each unit shipped and the worker increase is 2.3%.





    It should say apple pays around 2.3% of the BOM cost (not price) to foxconn for what is known as conversion cost. It cost Apple $2.30 for every $100 in BOM costs to have Foxconn Manufacture the product for Apple. 2% to 6% is the going rate for conversion costs in China today.
  • Reply 20 of 64
    ilogicilogic Posts: 298member
    Why subsidies? Why not jobs for Americans?
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