Apple to Contribute Toward Costs of Improving Working Conditions at Foxconn Facilities

[MacRumors]

Reuters reports on comments from Foxconn chief Terry Gou, who claims that Apple and Foxconn will be splitting the initial costs to improve working conditions at Foxconn's facilities in China.

"We've discovered that this (improving factory conditions) is not a cost. It is a competitive strength," Gou told reporters on Thursday after the ground-breaking ceremony for a new China headquarters in Shanghai.

"I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs."

It was unclear if the split would be 50/50 or in some other ratio.

Foxconn workers assembling iPads (Source: Rob Schmitz/Marketplace)​

Foxconn has raised wages several times over the past couple of years as it has faced scrutiny over the treatment of its employees. And following a series of audits, Foxconn and the Fair Labor Association reached an agreement in late March to reduce overtime while boosting compensation packages to compensate for the reduction in hours.

It is unclear how much the actions are costing Apple and Foxconn and how the costs are being split, but with Foxconn operating on a very slim profit margin it has limited ability to finance such improvements without raising costs for its customers or receiving direct support from Apple to assist with the changes.

Article Link: Apple to Contribute Toward Costs of Improving Working Conditions at Foxconn Facilities

 

[mulo]

apple should just buy foxconn

 

[kavika411]

Non-rhetorical question: Why does Apple not just buy Foxconn? Apple could buy Foxconn, strengthen its supply chain, stop paying the Foxconn profit margin, and prevent Foxconn from being a manufacturer for rivals. Maybe I'm overlooking something obvious.

 

[SeattleMoose]

With Steve Gone...

Apple seems to have grown more of a "heart".

Whether or not this is true....it at least appears that way.

 

[Small White Car]

Non-rhetorical question: Why does Apple not just buy Foxconn? Apple could buy Foxconn, strengthen its supply chain, stop paying the Foxconn profit margin, and prevent Foxconn from being a manufacturer for rivals. Maybe I'm overlooking something obvious.

Foxconn is huge and has many other clients.

It would be like someone buying the entire McDonalds corporation just to make and sell the french fries.

 

[MuppetGate]

Where does the 'competitive advantage' come in?

 

[rei101]

Non-rhetorical question: Why does Apple not just buy Foxconn? Apple could buy Foxconn, strengthen its supply chain, stop paying the Foxconn profit margin, and prevent Foxconn from being a manufacturer for rivals. Maybe I'm overlooking something obvious.

Probably their price is so low because they have other income other than Apple. And be sure... Apple wont like to buy that sort of foreign labor.

 

[RoboCop001]

Foxconn is huge and has many other clients.

It would be like someone buying the entire McDonalds corporation just to make and sell the french fries.

Yeah but there's still Burger King and Denny's and Your Friendly Local Fast "Food" Joint

 

[gregwyattjr]

I still don't understand why people are spitting venom at Apple in regards to their factories when there are other factories far far worse.

 

[whooleytoo]

Nice touch, considering Apple didn't HAVE to do this.

Seems like Apple's influence (even if it is being 'forced' by negative press) is having a positive effect on the local workforce & working conditions. I guess that shows the real benefit of being there; rather than avoiding countries with - to Western viewers - negative, oppressive work practices.

 

[Rocketman]

I wonder how the media and the public would respond to a $50 price increase on iPads and iPhones to cover higher commodity, labor, and labor workplace safety costs?

This, given China labor rates are increasing at 15% per year and commodities (in Dollar terms) are increasing in cost at 7% per year, and Apple is co-investing in factory capital costs to improve workplace safety and reduce overtime.

It would be interesting to see of those constituencies, media and public who so often ask companies to do exactly these things, will also be willing to take on, and publicly support, the actual costs of those endeavors.

Rocketman

Q: Why doesn't Apple just buy Foxconn?
A: China does not allow foreign companies to own more than 33% of companies. That is increasing to 49% this year.
A: Apple share holders require a certain operating margin. Foxconn has a much lower operating margin than Apple and its acquisition would tank Apple stock.

Q: Why venom at Apple when so many other factories are far, far worse.
A: By proactively working to improve worker conditions in a country where that is a cultural abnormality, it gets the attention of the media. Once focused on, the media being simple folk, compare the conditions against some local observations they have at their workplace, or some fictional hopeful future workplace, rather than the alternative real people have in their real lives, because it is very disturbing to see. The media generally does a poor job of reporting business stories in the language and standards of business itself. Simply compare MSNBC and CNBC for hard evidence. One might think reporters and especially commentators have no business training or experience.

 

[zzLZHzz]

I still don't understand why people are spitting venom at Apple in regards to their factories when there are other factories far far worse.

people are jealous of their record profit.

 

[Takeo]

I still don't understand why people are spitting venom at Apple in regards to their factories when there are other factories far far worse.

Because they are one of the biggest brands in the world. Same deal with Nike. Everyone makes shoes with cheap chinese labour... everyone aside from maybe a handful of obscure artisans... but Nike is the one that everyone complains about. It's a big target.

 

[isdmd10]

Where does the 'competitive advantage' come in?

I assume more companies would do business with Foxconn if they make these improvements because those companies minimize their PR risks.

 

[blow45]

Because they are one of the biggest brands in the world. Same deal with Nike. Everyone makes shoes with cheap chinese labour... everyone aside from maybe a handful of obscure artisans... but Nike is the one that everyone complains about. It's a big target.

yeah it's the target that's big not the sweatshops that are inhuman...

 

[Small White Car]

Because they are one of the biggest brands in the world. Same deal with Nike.

Uhm, not really. Nike actually DID have big problems. Stuff like children working 16 hour days without days off. That's nothing at all like what goes on at Foxconn.

Nike really did deserve the criticism they got.

 

[Abazigal]

Non-rhetorical question: Why does Apple not just buy Foxconn? Apple could buy Foxconn, strengthen its supply chain, stop paying the Foxconn profit margin, and prevent Foxconn from being a manufacturer for rivals. Maybe I'm overlooking something obvious.

They probably don't want to have to deal with the hassle of having to manage all those employees. Better to just spend a little extra and pay someone else better suited to do this.

Plus, if one day, China does end up being too expensive, they can easily shift to a cheaper country without worry about how to divest itself of its investment, or face the backlash of suddenly laying off a million workers.

They likely feel any savings is just not worth it.

 

[MuppetGate]

I assume more companies would do business with Foxconn if they make these improvements because those companies minimize their PR risks.

Sounds fair enough, but what does Apple get out of it?

 

[fernan]

Foxconn?

No , dont buy foxconn .

Apple is the best company , cares about their customers.
Best design, expensive but it's high quality.

Haters out there are just jelous.

There are thousands of companies that treats the employees 100 times worse.

Working for foxconn is not so bad. The thing is that they choose to work overtime.

Whats the prob about that?

 

[kavika411]

They probably don't want to have to deal with the hassle of having to manage all those employees. Better to just spend a little extra and pay someone else better suited to do this.

Plus, if one day, China does end up being too expensive, they can easily shift to a cheaper country without worry about how to divest itself of its investment, or face the backlash of suddenly laying off a million workers.

They likely feel any savings is just not worth it.

Excellent points. Hadn't considered those.

 

[mobi]

Issues galore straight to the core...Apple

 

[linuxcooldude]

Working for foxconn is not so bad. The thing is that they choose to work overtime.

A lot of workers are complaining about less working hours. Many want the overtime, means more money for them.

 

[isdmd10]

Sounds fair enough, but what does Apple get out of it?

In the same line of thought, fewer media attack dogs nipping at their heels.

 

[IlluminatedSage]

People here are buying the spin, apple's manufacturing in China almost exclusively is massively problematic with china crushing human rights, political dissent and loss of jobs where apple had prior made things in the US and EU.

Here is an article at Peace Love & Apple Pie! Hope you like.

Why Apple Must Manufacture In USA

http://www.peaceloveapplepie.com/apple-must-manufacture-in-usa/

 

[ardy8888]

I still don't understand why people are spitting venom at Apple in regards to their factories when there are other factories far far worse.

Why should that have any influence on this topic. Just because there are worse factories out there, does that mean that everyone else should get a pass until the worst ones are fixed?