Fair Labor Association Reaches Agreement with Foxconn on Working Hours and Pay

good!

While this is good, don't be surprised (or complain) when the price of your Apple gear starts to go up! Something has to give.

Chinese labour law is an oxymoron

Glad to hear there may be changes.

Or Apple will move everything Fixconn where there is no agreement.

macduke said:

While this is good, don't be surprised (or complain) when the price of your Apple gear starts to go up! Something has to give.

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And as we all know apple's margins are way too low to give....

Is there documentation/attention to this issue for other companies? (Sony, Samsung, etc)

The confluence of the report, Apple's response, and trends in China itself means that they will need to hire 20% more employees to conform to the per worker hourly reduction pledge. Wage prices in China reliably go up 15% per year and the Chinese Rimimbi currency is all but locked against the dollar.

Now this does have the offset of paying less overtime by about 10-15%.

But overall we should see a labor component cost increase of about 15% per year with it being a bit front loaded as compliance ramps.

The single easiest way to have things cost us less is to borrow and spend less at the Federal government level. It is causing currency destruction at a rate of about 7% a year reliably under the Obama Presidency. We currently deficit spend at the shocking rate of about $250B a MONTH and we were promised stimulus would be one time and about $866B with a then ANNUAL deficit of about $450B.

The TARP, Fed actions, and such are large in scale to the tune of about $7T, about the same scale as the liquidity lost when home prices vaporized $7.5T in about a year and a half. The Fed has "sterilized" those actions, but they are real, have to be unwound some day and there are hard costs to real people to keeping interest rates ridiculously low. Also most of TARP and bank liquidity has been paid back with over $100B in net profit paid into the treasury already.

All of that stuff together makes it cost us more for gasoline (30% since Obama's budget was passed on currency destruction alone, no issues from oil speculation or Iran included in that), food, commodities, and payments to China.

In the CNBC interview the FLA President characterized the forward leaning of Apple and Foxconn on labor issues in China as likely to lead to a "race to the top". For those of us critical of Chinese policies of various types, this is only good. It is also having direct impact on large parts of Chinese society.

So I call it a mixed picture but far more good than bad, and slightly bad for forward earnings of AAPL.

Rocketman

First I will say great job. Next I have to ask why exactly does it take 16 months to get into compliance. Yes I do realize its a gigantic company with so many bodies and they will clearly have to hire more workers etc, etc. Still it shouldn't have gone on for so long, but that was the house that was built.

As for Apple product prices going up, why the heck should they. Apple is the most profitable company, their margins are ridiculous and Apple can afford to eat some of the cost. Really $400+ per iPhone in profit for the base model is a lot.

I LOVE UNIONS.


that is all.

blow45 said:

And as we all know apple's margins are way too low to give....

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They could, but do you honestly believe they will? I doubt it, but we'll see.

there? Is everyone happy? Can we please stop this now?

UPDATE: We can see from the negative votes that people still want to argue and make noise

Every time I hear about labor unions in communist countries, I chuckle a little at the irony.

macduke said:

While this is good, don't be surprised (or complain) when the price of your Apple gear starts to go up! Something has to give.

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It happens. The thing is to hold everyone to the same standard. In the end we either will or will not buy products. It's not like this is going to drive AAPL under.

Rocketman said:

So I call it a mixed picture but far more good than bad, and slightly bad for forward earnings of AAPL.

Rocketman

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That was a really nice explanation.

Missing context

This means a reduction in monthly overtime hours from 80 to 36, and would be a significant improvement given that most of the technology sector is struggling to address excessive overtime.

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Seems to me like we could agree that mandatory (or compulsory) overtime is an evil... but what about voluntary overtime?

If you really want to work 80 hours a week because you want / need the extra money... are we really doing you a favor saying you can't?

What's important is that you can't be fired or otherwise passed over due to NOT working overtime... But overtime (even lots of it) seems to be a personal value (or not)...

macMD said:

As for Apple product prices going up, why the heck should they. Apple is the most profitable company, their margins are ridiculous and Apple can afford to eat some of the cost. Really $400+ per iPhone in profit for the base model is a lot.

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Seriously? You've already paid 600+, what's another 100-200 to you? Just put it on your credit card. If you want the product produced at the rate it's currently at, and the quality, you pay the price.

We pay large amounts for homes, cars, furniture, etc. so it could be argued that in fact products like the iPhone and iPad are more of a necessity.. and if you need it, as opposed to "want it", might as well pay for it.

macMD said:

... Next I have to ask why exactly does it take 16 months to get into compliance. Yes I do realize its a gigantic company with so many bodies and they will clearly have to hire more workers etc, etc. Still it shouldn't have gone on for so long ...

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It will take 16 months exactly because it is a gigantic company (1.2 million employees!).
Change takes time. Considering Foxconn's size and all the stuff that needs to be changed I'm actually surprised they can do it in 16 months.

blow45 said:

Chinese labour law is an oxymoron

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lmao smartest comment of the day so far.
Who cares, they can give them 300% increase in overtime pay but the government
will find a reason to take it back. In which case they don't NEED a reason. "Better dead than red"

$500 for an ipad and the foxconn employees MAKE LESS THAN $1 PER HOUR.


OMG

Isnt it kinda sad that they had to make an agreement to actually follow the law?

Does this mean the nets come down?

All other citations I understand except for lack of worker union representation. Unless they actually formed a union this should not be mentioned.

Unless Foxconn are swallowing the extra costs involved in potentially hiring more staff to cover the shortfall in man hours, it's the companies with already razor thin profit margins who I feel sorry for the most. Apple are at least in the position to simply assume any increase in labour/contract costs. The cynic in me would suggest this was Apple's ploy all along; look like the good guys by inviting the FLA in, pay whatever extra required in labour/contract costs, and price your competitors out of the business as a result of these increases.

ad2435 said:

$500 for an ipad and the foxconn employees MAKE LESS THAN $1 PER HOUR.


OMG

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So what? Stop posting Dribble. Words mean nothing. If you want to make a statement then don't purchase the product!!!!!!!!!

Everything else will be redistributed.

ad2435 said:

$500 for an ipad and the foxconn employees MAKE LESS THAN $1 PER HOUR.


OMG

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What does iPad cost and less than $1 /hr have to do with anything? Apple don't own Foxconn, Foxconn is a supplier to ALL the electronic companies. Have they all agree to raise they hr wage to Chinese workers too? or should this be just Apple issue?

The cost of living is different in China than the US. etc.. etc.. read and understand how the world really is, Foxconn have hundreds and thousands of workers standing inline applying for job at each job fair, if you think these better options elsewhere, please advice.