Apple manufacturer Foxconn may relocate some Chinese factories
Facing increasing scrutiny from the media and general public over a rash of employee suicides, Apple manufacturing partner Foxconn is rumored to be plotting an exodus from mainland China sometime in the future.
The Chinese-language ON.CC broke the news (translation) earlier this week, citing sources who attended the annual shareholders meeting of parent company Hon Hai. Those claims remain largely unverified, however.
Nevertheless, the report cited Hon Hai chairman Terry Gou as saying his firm was in the midst of planning a restructuring that would uproot its mainland China operations in favor of peppering them throughout other regions in Far Eastern such as Taiwan, Vietnam, and India.
The move could reportedly affect up to 800,000 employees, including those employed at Foxconn's Shenzhen location that builds the vast majority of Apple's mobile devices and some Macs.
Foxconn has come under fire in recent weeks as reports of employee suicides over the past year continue to mount. Just before the 10th suicide last month, when a 19-year-old worker who had been with the company just 42 days jumped from a building to his death, Gou insisted to reporters that his company was not running a "sweatshop."
The matter drew enough attention to warrant a comment from Apple, which said it was "saddened and upset by the recent suicides." The iPhone maker added that it was in direct contact with Foxconn senior management and believed the company was taking this matter very seriously.
For Apple, it's not the first time that events at Foxconn have threatened to sour its squeaky clean image. In 2006, the company began conducting a thorough audit of one of Foxconn's manufacturing plants that created iPods after an in-depth media report suggested that workers at the factory were being treated unfairly and forced to operate under sweatshop-like conditions for little pay.
Apple now issues an annual audit of its overseas manufacturing partners. Last year's review found that more than half weren't paying their workers valid overtime rates. Still, Apple -- and numerous other electronics manufacturers like Dell and HP -- have maintained their business relationships with Foxconn, and the company is believed to be the manufacturer of the next-generation iPhone that will hit the market later this month.
At this week's shareholders meeting, Guo reportedly said he suspects the ongoing suicides may be of the copy-cat variety, fueled by media coverage and the expectation of monetary compensation for the families of the deceased. As such, he said Foxconn has suspended death benefits to deter employees from plunging to their deaths from the rooftops of its factories.
In other efforts to improve employee moral, Foxconn has reportedly instated pay raises for its employees, with media reports putting figures at anywhere between 20 and 33%. Separately, the company is said to also begin offering a 66% performance-based raise incentive, though details on how that would be calculated are scarce.
In addition to Apple's inspectors, the Chinese government recently sent approximately 200 inspectors to Foxconn's facilities, who reportedly exonerated Foxconn management for any wrongdoing in the ongoing string of suicides.
The Chinese-language ON.CC broke the news (translation) earlier this week, citing sources who attended the annual shareholders meeting of parent company Hon Hai. Those claims remain largely unverified, however.
Nevertheless, the report cited Hon Hai chairman Terry Gou as saying his firm was in the midst of planning a restructuring that would uproot its mainland China operations in favor of peppering them throughout other regions in Far Eastern such as Taiwan, Vietnam, and India.
The move could reportedly affect up to 800,000 employees, including those employed at Foxconn's Shenzhen location that builds the vast majority of Apple's mobile devices and some Macs.
Foxconn has come under fire in recent weeks as reports of employee suicides over the past year continue to mount. Just before the 10th suicide last month, when a 19-year-old worker who had been with the company just 42 days jumped from a building to his death, Gou insisted to reporters that his company was not running a "sweatshop."
The matter drew enough attention to warrant a comment from Apple, which said it was "saddened and upset by the recent suicides." The iPhone maker added that it was in direct contact with Foxconn senior management and believed the company was taking this matter very seriously.
For Apple, it's not the first time that events at Foxconn have threatened to sour its squeaky clean image. In 2006, the company began conducting a thorough audit of one of Foxconn's manufacturing plants that created iPods after an in-depth media report suggested that workers at the factory were being treated unfairly and forced to operate under sweatshop-like conditions for little pay.
Apple now issues an annual audit of its overseas manufacturing partners. Last year's review found that more than half weren't paying their workers valid overtime rates. Still, Apple -- and numerous other electronics manufacturers like Dell and HP -- have maintained their business relationships with Foxconn, and the company is believed to be the manufacturer of the next-generation iPhone that will hit the market later this month.
At this week's shareholders meeting, Guo reportedly said he suspects the ongoing suicides may be of the copy-cat variety, fueled by media coverage and the expectation of monetary compensation for the families of the deceased. As such, he said Foxconn has suspended death benefits to deter employees from plunging to their deaths from the rooftops of its factories.
In other efforts to improve employee moral, Foxconn has reportedly instated pay raises for its employees, with media reports putting figures at anywhere between 20 and 33%. Separately, the company is said to also begin offering a 66% performance-based raise incentive, though details on how that would be calculated are scarce.
In addition to Apple's inspectors, the Chinese government recently sent approximately 200 inspectors to Foxconn's facilities, who reportedly exonerated Foxconn management for any wrongdoing in the ongoing string of suicides.
Comments
Although the suicide rates seem to be astronomical I wasn't aware that they employed around 800,000 people, so in the grand scheme of things the rate isn't that high.
It seems that once a company or even individuals reach near or achieve the pinnacle of success, they sadly become a media target to be brought down and have their reputations tarnished in some way. Sadly, this is the way of the world, instead of looking on the good things a company does there is a relentless drive to 'dig up dirt' as it were.
It would now appear that media interest in Foxconn will make matters worse for those workers as people will lose their employment. Sad.
Sounds like the few people that decided to kill themselves are possibly going to affect hundreds of thousands of others, India would be a potential suitor if Foxcon decided to move their operation out of China.
Although the suicide rates seem to be astronomical I wasn't aware that they employed around 800,000 people, so in the grand scheme of things the rate isn't that high.
They are bound to have a few bad apples when you are employing almost a million people. These manufacturers are CITIES. I'm surprised they don't have a homicide rate on file as well.
Wow... great outcome scaremongers...
Scaremongers? A rash of loss of human life (no matter the reason) should be taken very seriously and investigated. I doubt they are going to leave china. This is most likely a ploy to gain favorable treatment from the Chinese government. Americans are very naive about this stuff.
Seems to me that Foxconn, not the Chinese people, are the problem. If they treated their workers better, made them work reasonable shifts, and paid better, maybe this wouldn't be an issue.
Foxconn is a contract manufacturer; they get paid based on production volume. If you want to increase volume by 10%, what do you do?
Think of the logistics of hiring, accommodating, feeding, and managing an extra 80,000 people. Think about the logistics of expanding production lines.
Ask yourself how a 10% production increase happens in the US. Do you like the idea of constant cycles of hiring and layoffs?
Now, say you are 20-25% over nominal capacity already. You have peaked what you can accomplish with existing facilities. What now? (Exactly what they are doing: diversifying into other areas.)
Greetings.
Hey, Apple! How about moving the manufacturing HOME to the UNITED STATES! Gee, ever thought of that? We have people who need JOBS here, morons!
I agree. Maybe China could relocate to some depressed area - like - just name some place - the Midwest, the Gulf Coast, etc... Our manufacturing sector is depressed because of the greed of our large corporations, including a company that I admire - Apple. There are many, many people in our own country that would love to have a factory job, if they were available. In stead, they are working flipping hamburgers or working at Wallmart selling products made in China or India.
I thought China was the bottom of the barrel when it came to sweat shops, but I guess Vietnam and India are even sweatier.
Hey, Apple! How about moving the manufacturing HOME to the UNITED STATES! Gee, ever thought of that? We have people who need JOBS here, morons!
While you may have a point in the broader context you definitely need a lesson in how to put your point across. The above is a fine example of how to stupidly undermine your own argument.
Hey, Apple! How about moving the manufacturing HOME to the UNITED STATES! Gee, ever thought of that? We have people who need JOBS here, morons!
How much more would you pay to bring these jobs to the US before you bought someone elses cheaper, China made product? These places are self fulfilling prophecies.
This is unfortunate but these workers over there could teach America some valuable lessons. Whatever situation and stress these unfortunate workers were going through, likely for a long period of time, I guarantee you they went to work every single day.
I know 3 people alone today here that are taking "Mental health days" because its to stressful with their giant houses, expensive cars and cushy lifestyles.
I agree. Maybe China could relocate to some depressed area - like - just name some place - the Midwest, the Gulf Coast, etc... Our manufacturing sector is depressed because of the greed of our large corporations, including a company that I admire - Apple. There are many, many people in our own country that would love to have a factory job, if they were available. In stead, they are working flipping hamburgers or working at Wallmart selling products made in China or India.
I thought China was the bottom of the barrel when it came to sweat shops, but I guess Vietnam and India are even sweatier.
Whatever your thoughts are on outsourcing and in particular, outsourcing to Asia, you need to do a little research. There are sweatshops everywhere but that doesn't mean to say every company that produces goods for Apple and the like are sweatshops. There are non sweatshops factories in Asia.
Another little point, though I suspect I will be told off for being off topic.... The manufacturing sector is depressed in part because of corporate greed but I wonder if you'd be willing to pay what it costs to produce your luxury goods were they to be produced in the US, and were the workers that produced them paid what you would consider a decent living wage for their work.
Scaremongers? A rash of loss of human life (no matter the reason) should be taken very seriously and investigated. I doubt they are going to leave china. This is most likely a ploy to gain favorable treatment from the Chinese government. Americans are very naive about this stuff.
I agree with you it is a bit of ploy to get some support from government. I strongly suspect that's the audience that this was intended to reach.
How much more would you pay to bring these jobs to the US before you bought someone elses cheaper, China made product? These places are self fulfilling prophecies.
This is unfortunate but these workers over there could teach America some valuable lessons. Whatever situation and stress these unfortunate workers were going through, likely for a long period of time, I guarantee you they went to work every single day.
I know 3 people alone today here that are taking "Mental health days" because its to stressful with their giant houses, expensive cars and cushy lifestyles.
You have to be kidding. Do you have any idea what the American workers in this country are going through. Yes, I would pay considerably more if products were made in this country and there would be a lot more who could afford to make products made in this country if they weren't making minimum wage. What in the world do you think the people are doing now that used to work in our factories? Do you think everyone has become a computer consultant or programmer?
I think jobs leaving this country is one of the biggest factors for the state that our country is in right now. Growing up in the 50's and 60's, I remember how robust this country was and the reputation the U.S. had in the world for being creative and productive. American corporations have given this away - for the sake a money. They've said " to hell with our fellow Americans. I can make more money by putting them on the unemployment rolls and hiring some foreign worker for 50 cents per hour. Our American businesses are killing the goose that used to lay golden eggs.
Sorry to be blunt, but I have to say this: I hope all the bleeding-hearters are happy that many thousands will now be out of work. Let's see what that does to people's propensity to want to jump.....
Sounds like the few people that decided to kill themselves are possibly going to affect hundreds of thousands of others, India would be a potential suitor if Foxcon decided to move their operation out of China.
Although the suicide rates seem to be astronomical I wasn't aware that they employed around 800,000 people, so in the grand scheme of things the rate isn't that high.
Suicide rates at Foxconn are lower than the average for China -- unless SJ was lying in his ATD interview with Mossberg.
Hey, Apple! How about moving the manufacturing HOME to the UNITED STATES! Gee, ever thought of that? We have people who need JOBS here, morons!
Go ahead and be the first in line for products that cost double or triple their current costs. Also let's leave the poorer countries to fend for themselves and not give them an opportunity to build better economies for themselves.
And yeah, there's all kinds of corruption and exploitation happening in these countries, I know. Old news. Time to take off the US-centric blinders and see the world for what it is. My Fortune 50 company has to support operations globally, so I get to see this first hand. Once you get out a bit and actually see what the world is really like - then we can talk.
You have to be kidding. Do you have any idea what the American workers in this country are going through. Yes, I would pay considerably more if products were made in this country and there would be a lot more who could afford to make products made in this country if they weren't making minimum wage. What in the world do you think the people are doing now that used to work in our factories? Do you think everyone has become a computer consultant or programmer?
I think jobs leaving this country is one of the biggest factors for the state that our country is in right now. Growing up in the 50's and 60's, I remember how robust this country was and the reputation the U.S. had in the world for being creative and productive. American corporations have given this away - for the sake a money. They've said " to hell with our fellow Americans. I can make more money by putting them on the unemployment rolls and hiring some foreign worker for 50 cents per hour. Our American businesses are killing the goose that used to lay golden eggs.
I agree, In the 50's and 60's the United States was highly competitive either through innovation or otherwise. So... what happened?