Foxconn angers Brazilian officials with slow manufacturing ramp-up

Posted:
in iPhone edited April 2015
Taiwanese contract manufacturer Foxconn, one of Apple's closest partners, is under fire in Brazil as officials in the South American nation are displeased with the company's slow rate of progress on what was initially sold as a major investment to modernize the Brazilian manufacturing industry.

Foxconn Brazil
Foxconn's Jundiai, Brazil manufacturing plant


While some believed that Foxconn's 2011 expansion to Brazil would bring as many as 100,000 jobs and $12 billion in capital investment, the company currently has fewer than 10,000 employees in its 5 Brazilian factories, according to Reuters. One of those facilities is reportedly dedicated to production of Apple's iPhone 5s.

Despite a public commitment to invest at least $325 million in a new industrial park in Itu, outside of S?o Paulo, the site is not yet operational, though Foxconn did say it should come online by the end of 2015. The lack of headway has been cause for consternation among city officials.

"People are really frustrated," Itu city councilor Givanildo Soares da Silva said. "We were expecting all these jobs by now and it's still just empty promises."

Of the jobs that Foxconn has brought, many pay little more than minimum wage. Acceptance testers at the Brazilian iPhone plant, for example, bring home just $80 per week and lack access to the same training and advancement opportunities that their counterparts in Foxconn's Chinese facilities receive.

Workers have held at least three strikes at the iPhone factory, and a union representative said they were planning another. Such labor flare-ups have angered Foxconn founder Terry Guo, who infamously slammed Brazilian labor in 2010.

"Brazilian workers' wages are very high. But Brazilians, as soon as they hear 'soccer,' they stop working. And there's all the dancing. It's crazy," he said at the time.

Manufacturing Apple devices in Brazil also has not had the desired effect of lowering local prices, which are inflated by as much as 30 percent on imported goods thanks to various taxes and tariffs. iPhones and iPads routinely sell for twice as much in Brazil as they do in the U.S., which does not surprise local residents.

"If we're buying it at that price, then why would they bring it down?" one shopper told Reuters. "I don't even know what the next iPad does, but I know I need it."

Comments

  • Reply 1 of 15
    Crappy government, largely lazy populace, maybe not the best place to put a factory.
  • Reply 2 of 15
    jbdragonjbdragon Posts: 1,964member
    See, Lots of high taxes, trying to protect the local jobs and what do you get? Products like the iPhone that cost twice as much as anywhere else in the world!!! Again, Corporations don't pay taxes, they pass them on to YOU as higher prices. They pay their taxes of course, but the money is coming from YOU the consumer. They more they're taxed, the more YOU pay. It's really that simple.

    This country is really bad in high taxes. Very High Import Taxes trying to keep the jobs there, which is why Foxconn tried to open up shop there. A High Minimum wage which with the prices on everything being sky high is still not much. it's all over inflated and they did it to themselves.

    Of course they cry about it and blame others for what they themselves did.
  • Reply 3 of 15
    melgrossmelgross Posts: 31,334member
    I've read a lot about Brazil over the years. This is a Katin American country, even though it's South American. Their culture is very different than that in China and other Asian countries. It's different than here too.

    There's a similar problem in Europe, but for different reasons.

    Probably Foxconn is dragging their feet. But the situation in Brazil isn't favorable to large factory manufacturing when large numbers of people are needed.
  • Reply 4 of 15
    gprovidagprovida Posts: 247member
    Complex relationship where Brazil Gov't and its labor unions want jobs on their terms but Foxconn has a different agenda of highly responsive production and associated labor force. It's not these can't work together, but it looks like they talk past each other.
  • Reply 5 of 15
    Expectations were probably optimistic, but it does sound like Foxconn is dragging its feet, and the cultural differences need to be addressed.
  • Reply 6 of 15
    lkrupplkrupp Posts: 6,608member
    Quote:

    Originally Posted by JBDragon View Post



    See, Lots of high taxes, trying to protect the local jobs and what do you get? Products like the iPhone that cost twice as much as anywhere else in the world!!! Again, Corporations don't pay taxes, they pass them on to YOU as higher prices. They pay their taxes of course, but the money is coming from YOU the consumer. They more they're taxed, the more YOU pay. It's really that simple.



    This country is really bad in high taxes. Very High Import Taxes trying to keep the jobs there, which is why Foxconn tried to open up shop there. A High Minimum wage which with the prices on everything being sky high is still not much. it's all over inflated and they did it to themselves.



    Of course they cry about it and blame others for what they themselves did.



    I wish more people understood that corporations don’t pay any taxes. Their customers pay the corporation’s taxes. All costs are passed on to the customer via the price of the product. As a customer and a shareholder it is in my  best interest that Apple pay as little taxes a possible.

  • Reply 7 of 15
    SpamSandwichSpamSandwich Posts: 30,562member
    Expectations were probably optimistic, but it does sound like Foxconn is dragging its feet, and the cultural differences need to be addressed.

    I'd not want to expand in a country that has unreliable and combative labor and a tumultuous government. Foxconn should look elsewhere.
  • Reply 8 of 15
    robin huberrobin huber Posts: 3,224member
    Foxconn is getting the full Brazilian. It hurts.
  • Reply 9 of 15
    Apple should step in and take over the Brazilian Foxconn factories, and match it to the local culture. Brazil would be happy, Foxconn guy (who obviously doesn't want to do it) would be happy, Apple would have a hedge against the collapse of China, and we could all learn Portuguese and dance whenever we hear the word "soccer". Like there's something wrong with that?
  • Reply 10 of 15
    Quote:

    Originally Posted by lkrupp View Post

     



    I wish more people understood that corporations don’t pay any taxes. Their customers pay the corporation’s taxes. All costs are passed on to the customer via the price of the product. As a customer and a shareholder it is in my  best interest that Apple pay as little taxes a possible.




    Complete fallacy. Companies don't cut prices because of lower labor costs or a tax break. They keep the prices the same and pocket the profit increase. The price you pay at retail is always going to be what they think the market will bear, not a reflection of what their tax level is. Plus, since corporate taxes are based on profits, it doesn't really make sense to raise prices based on tax.

  • Reply 11 of 15
    entropysentropys Posts: 1,497member
    I think they were talking about input charges imposed by government that are charged irrespective of profit, like wholesale taxes and the high tariffs charged by Brazil. These are applied well before any profit is made. But yeah, corporate tax on profit typically wouldn't get passed on. But it does influence say, where the business is incorporated, like Ireland for example which has low corporate tax.

    A good rule of thumb: look at South American economics, and do the opposite.
  • Reply 12 of 15
    maestro64maestro64 Posts: 4,414member
    Brazilian workers' wages are very high. But Brazilians, as soon as they hear 'soccer,' they stop working. And there's all the dancing. It's crazy," he said at the time.

    This statement is so true it is not even funny. Last summer I was working with a South American company and during the entire world cup I could not get anything done. They would not respond and if they did they told me they would get back to me after the next game. This is not limited to the average worker, management was worse. They would tell me they would going on business trip in reality they were going to the world cup games. They would not tell you ahead of time they tell you after the fact.

    This is not just a South American issue, Mexico has the same issue. The one factory I was working with there said when the local national team played they would set up TV and projectors in the factory so worker could watch otherwise they would leave and go to their local drinking hole and most time never come back for a day or so.

    Image leaving work every time your favor sport team was playing here in the US, your boss would fire your ass, you can not do that in South America.

    Also the labor laws in South America are similar to what the US saw in auto industry where workers could only do one job and were not allowed to be moved to different jobs or be trained to do more than one thing. It is more than crazy there. China who is more pro-labor than anywhere is not this bad.
  • Reply 13 of 15
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:

    Originally Posted by Robin Huber View Post



    Foxconn is getting the full Brazilian. It hurts.



    Wax on... wax off!

  • Reply 14 of 15
    SpamSandwichSpamSandwich Posts: 30,562member
    Quote:

    Originally Posted by DogCowabunga View Post



    Apple should step in and take over the Brazilian Foxconn factories, and match it to the local culture. Brazil would be happy, Foxconn guy (who obviously doesn't want to do it) would be happy, Apple would have a hedge against the collapse of China, and we could all learn Portuguese and dance whenever we hear the word "soccer". Like there's something wrong with that?



    Apple couldn't change a culture to be better factory workers. Let's just stop that misperception before it grows.

  • Reply 15 of 15



    Upon reading my first sentence what I wrote, I see that it recommends the opposite.  Dude!  Bazinga!

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