Apple supplier Flextronics accused of using indentured servants to build components

Posted:
in General Discussion edited January 2014
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.
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Comments

  • Reply 1 of 31
    lkrupplkrupp Posts: 6,607member
    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
  • Reply 2 of 31
    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.
  • Reply 3 of 31
    lkrupplkrupp Posts: 6,607member
    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.

  • Reply 4 of 31

    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?

  • Reply 5 of 31
    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. 

  • Reply 6 of 31

    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.

  • Reply 7 of 31
    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?
  • Reply 8 of 31
    [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.[/quote]

    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?
  • Reply 9 of 31

    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.

  • Reply 10 of 31
    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.
  • Reply 11 of 31
    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.
  • Reply 12 of 31

    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?

  • Reply 13 of 31
    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).

  • Reply 14 of 31
    GrangerFX wrote: »
    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...
  • Reply 15 of 31
    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.

  • Reply 16 of 31
    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.

  • Reply 17 of 31
    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.
  • Reply 18 of 31
    old-wizold-wiz Posts: 194member
    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.
  • Reply 19 of 31
    old-wizold-wiz Posts: 194member

    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.

  • Reply 20 of 31

    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

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