Foxconn Workers Reportedly Strike over iPhone 5 Quality Control Demands

[MacN3wb]

"Apple’s market value drops $60 billion following iPhone 5 quality control issues"
http://www.extremetech.com/computin...llowing-iphone-5-scuff-quality-control-issues

I didn't think it was this bad.

 

[^^BIGMac]

Hope they figure this mess out.

After waiting 3 weeks for my black iPhone 5 I rejected it due to scratches on the bezel.

Not a happy camper. More waiting.

 

[snberk103]

I just talk from personal experiences. I've never had good encounters with union workers. Sugar in gas tanks, sabotage, and overall laziness in the unionized construction industry gets old.

Fair enough. And certainly, a number of unions have forgotten that their mandate is to support their workers both now, and into the future. Too many unions have forgotten that they need to think long-term, and that they don't exist to simply maximize worker benefits for this year.

But there are lots of good, hard-working, quiet unions that work hard to benefit their members and the company since you need a strong company to support good benefits.

 

[Mr Bigs]

I just talk from personal experiences. I've never had good encounters with union workers. Sugar in gas tanks, sabotage, and overall laziness in the unionized construction industry gets old.

Your experience is with union people who won't take the crap that you were probably dishing. Their is no behaviour like that without a good reason.

 

[rendevouspoo]

Your experience is with union people who won't take the crap that you were probably dishing. Their is no behaviour like that without a good reason.

That's exactly the response I have come to expect from a unionized worker.

 

[Mr Bigs]

That's exactly the response I have come to expect from a unionized worker.

You'd damn well better believe it and yours of union basher.

 

[nutjob]

where is your data? where is your analysis? what are your assumptions?

according to your statement, vehicles built in the US should also be double the price of their counterparts built in mexico. i don't see that...do you?

at least provide something with numbers on how you arrived at that number? otherwise we'll all just think you were lobbied with the rest of 'em

Clearly you need things spelt out for you: The last time I looked there just wasn't the ecosystem of local manufacturers, or the experienced engineers available anywhere in the US for that sort of undertaking, which means doing it all yourself, which means massive costs.

Is that enough analysis for you? I not that you didn't say much of anything in your own post.

 

[Medic311]

Clearly you need things spelt out for you: The last time I looked there just wasn't the ecosystem of local manufacturers, or the experienced engineers available anywhere in the US for that sort of undertaking, which means doing it all yourself, which means massive costs.

Is that enough analysis for you? I not that you didn't say much of anything in your own post.

That isn't an analysis, it's a series of epic fail assumptions.

You still failed to present any sort of numerical data that a US-assembled iPhone would be double the price. Until you do, your assumption is just that...a silly assumption

Your logic would mean that no one would invest in building anything if it already exists somewhere else in the world. That logic is flawed

 

[xofruitcake]

That isn't an analysis, it's a series of epic fail assumptions.

You still failed to present any sort of numerical data that a US-assembled iPhone would be double the price. Until you do, your assumption is just that...a silly assumption

Your logic would mean that no one would invest in building anything if it already exists somewhere else in the world. That logic is flawed

heh heh. A foxconn workers make $285 a month for base salary and has to glue to their station with minimal break. What is our minimum wage now?. And you think US worker is willing to accept the working condition?

The salary difference is just one factor. The other factor is the willingness of worker to do the repetitive word day in and day out and accept a substandard working condition and hours. In general, workers in developed countries has a different expectation of what working hard mean. For us, we define it by how many breaks we can take within a work day. The working environment should be at a certain level. The working hours should be a certain level. And in developing world, the labor force don't have such a high standard and they will accept what is there, so they get the job instead of us. Union help when the labor is battling with the business owner for better working condition and pay. But now we are battling with labor force in other country. Union are not helpful in any way.

I am a retired programmer. My company has been doing this offshoring of programming job for the last 15+. How do you argue with developing country programmer making about $20k a year all in while our graduate start at 60k+ and someone land a job in Apple or Google, they may get pay 70-80k? We will get those job back with or without union if we are willing to accept the same salary and working condition as everyone else. Otherwise, the high skill labor in our economy will have job and the rest will be unemployed.. it is the brutal part of globalization. our labor force has to compete with labor in other country for any given job.

http://www.bloomberg.com/news/2012-...putes-disrupt-iphone-output-for-2nd-time.html

The workers also generally earn less than they would at auto manufacturers. The base salary at Foxconn in Taiyuan is about 1,800 yuan ($285) per month, with workers able to almost double that amount through overtime work and bonuses, according to Hao

 

[nutjob]

That isn't an analysis, it's a series of epic fail assumptions.

You still failed to present any sort of numerical data that a US-assembled iPhone would be double the price. Until you do, your assumption is just that...a silly assumption

Your logic would mean that no one would invest in building anything if it already exists somewhere else in the world. That logic is flawed

LOL, and what have you presented, besides ignorance? You think you just set up a factory and assemble an iPhone. You need all the components and engineering talent that supports them to successfully build a product. You can't ships things back and forth for weeks when they're 0.001" off and they need to be re-engineered.

If you open your eyes for a second you'll notice that almost everything in consumer electronics is manufactured in China, exactly because the eco-system is there.

But hey, don't take my word for it, google it and become informed, rather than humiliated.

 

[GermanyChris]

LOL, and what have you presented, besides ignorance? You think you just set up a factory and assemble an iPhone. You need all the components and engineering talent that supports them to successfully build a product. You can't ships things back and forth for weeks when they're 0.001" off and they need to be re-engineered.

If you open your eyes for a second you'll notice that almost everything in consumer electronics is manufactured in China, exactly because the eco-system is there.

But hey, don't take my word for it, google it and become informed, rather than humiliated.

Or the lack of environmental controls, virtual slave labor, a stable totalitarian government..

On the positive side it has close access to the inputs, and the money can be kept in a few tax havens in Europe.

There is no altruism in business only the drive for money.

P.S. Who do you think set up the ecosystem you think so highly of? That would the the USA and Europe.

 

[fpsBeaTt]

On my fourth iPhone 5

 

[nutjob]

Or the lack of environmental controls, virtual slave labor, a stable totalitarian government..

On the positive side it has close access to the inputs, and the money can be kept in a few tax havens in Europe.

There is no altruism in business only the drive for money.

P.S. Who do you think set up the ecosystem you think so highly of? That would the the USA and Europe.

Ugh, ok, but what's that got to do with the discussion of cost of manufacturing going up if you moved it to the US? That's what we're discussing.

 

[GermanyChris]

Ugh, ok, but what's that got to do with the discussion of cost of manufacturing going up if you moved it to the US? That's what we're discussing.

No you were justifying the manufacturing in China because the have the ecosystem. You then said we don't have the engineering talent here make the necessary on the spot changes to the production runs etc.

We actually have all of those things we used those assets to create the ecosystem that exists in China. It would not be significantly more expensive to manufacture here they would just have to deal square and not cheat which would cost more money but they should be doing that anyway.

 

[nutjob]

No you were justifying the manufacturing in China because the have the ecosystem. You then said we don't have the engineering talent here make the necessary on the spot changes to the production runs etc.

We actually have all of those things we used those assets to create the ecosystem that exists in China. It would not be significantly more expensive to manufacture here they would just have to deal square and not cheat which would cost more money but they should be doing that anyway.

No, I wan't justifying anything. Try reading the whole thread instead one reply out of context.

I didn't say there was a lack on engineering talent, I said there was a lack of engineers.There is no existing industry on the scale of China, so there are not enough experienced engineers. You could certainly do it but it would cost a lot to set it up, which is the point I was making.

 

[GermanyChris]

No, I wan't justifying anything. Try reading the whole thread instead one reply out of context.

I didn't say there was a lack on engineering talent, I said there was a lack of engineers.There is no existing industry on the scale of China, so there are not enough experienced engineers. You could certainly do it but it would cost a lot to set it up, which is the point I was making.

I did read the whole thread, and I picked on your because it's the most unrepentant of the outsourcers.

There is not even a lack of engineers nor a lack of idle factory space, nor a lack of robot technology to build them. There is a lack of desire to on-shore the the revenue.

 

[snberk103]

I did read the whole thread, and I picked on your because it's the most unrepentant of the outsourcers.

There is not even a lack of engineers nor a lack of idle factory space, nor a lack of robot technology to build them. There is a lack of desire to on-shore the the revenue.

Actually, I think there is a lack of capital (money). Any company bidding on supplying Apple with it's parts would need to show a fully functional assembly line, with the ability to move massive amounts of parts into the factory and then the finished product out. And they would have to show Apple that they have the ability to retool the plant quickly and efficiently to deal with last minute changes.

They also would need to demonstrate that they have recruited, trained, and are functionally staffed.

Any company is free to do this, and to bid on the contracts. Who - in their right mind - would invest hundreds of $$millions in acquiring the land (near a major port where land values are high), building the factory (or revamping an existing building), building the assembly lines, etc etc with absolutely no guarantees that they will ever win a contract.

Just the time it takes to move the parts from their factories in Asia by ship to a US assembly line is a disincentive. That is inventory (money) tied up while the part is in transit. One of the advantages that Foxconn has is that a large proportion of the parts inventory (money) spends a couple of hours to a day or two on a truck. The amount of money they have tied up in inventory is minimal.

One of the things that Tim Cook is renowned at is keeping the money Apple has tied up in inventory to a minimum. I think if an iWidget spends more than a week from assembly to being sold, Tim is unhappy. Any plant in North America means parts are now in-transit for days or weeks instead of hours days.

Also keep in mind that a North American assembly plant might be placed in Mexico or Canada, under NAFTA. Mexico has cheaper labour and cheaper land. Just building the factory and acquiring the land would be astronomically cheaper in Mexico. Canada has Vancouver, the closest major port to Asia - linked to the US with highways and rail-lines that have been upgraded specifically to move goods from ships arriving from Asia to US markets. Vancouver is about a day closer to Asia than even Seattle. Canada also has the skilled work force for a highly automated factory. What Vancouver doesn't have is cheap land. But Prince Rupert does, that port is even closer to Asia than Vancouver - and it has the rail-lines. Plus cheap power.

I doubt anyone is going to build an assembly line in Canada, or Mexico, or the US for that matter. The upfront cost is huge. Foxconn can do it because they are simply expanding on their existing factory network.

I only brought Canada and Mexico into this post simply to show that there is no 'divine right' that dictates Americans must work. They have to compete for the jobs like everyone else, and they may lose out on those jobs when someone has a better proposal.

----

With all of the above said.... The one company that might decide to build the infrastructure domestically in order to bid on the job - is Apple itself. At the moment, it makes sense for Apple to build these things in China - strictly from a financial point of view. However, financially, Apple is vulnerable (very vulnerable!) to any kind of dispute between the US and China.

It appears that at the moment Foxconn and Apple believe they can influence their respective governments enough to keep frictions to a minimal level. The US is also bound by agreements to Taiwan and to Japan, both of whom have their own issues with mainland China. I could see Apple deciding to move some core assembly operations out of China so that if the supply lines are cut, Apple would have some assembly operations that they could expand and build on in order to stay in business. It would still be hugely disruptive to Apple to do this, but at least they would have something to build up from instead of having to start from scratch.

I know that Foxconn has a plant in Brazil now. Do they have one in Mexico? I seem to recall reading about one there, but could be wrong. I could see them trying out an automated plant in Germany as well.

Just speculating...

 

[nutjob]

I did read the whole thread, and I picked on your because it's the most unrepentant of the outsourcers.

There is not even a lack of engineers nor a lack of idle factory space, nor a lack of robot technology to build them. There is a lack of desire to on-shore the the revenue.

LOL, whatever. It's there in black and white, you are obviously just making stuff up to justify your own political rants, which also don't make sense. Good luck.

 

[MacManTexas56]

Lazy? Not in general. Most Americans work longer hours and take less vacation than people in other countries, especially European. Americans are usually in the top ten world list of longest hours of work each week.

And while, yes, in some areas people seem to be adverse to doing what is considered boring, menial work, I also know many laid-off people who now do whatever is necessary to support their family.

of those that WORK yes. There are many people even laid off that make more from unemployment so they remain unemployed. That's the problem with the system.

 

[Surf Monkey]

Every time there are discussions about bringing jobs back, this guy comes up with the same response! Same amount even!

There are several posters like that who respond the same way every time.

I suspect paid trolls, hired by either China or Foxcon.

Whoops! Edit to include Apple as a suspect.

The real answer is, of course, that labor alone is not the deciding issue as there isn't that much labor time. A few bucks extra at most. The real issue is overseas taxation, money laundering by Chinese/American companies, lack of environment regulations and things like that. Not labor alone.

I'm not a paid troll and you're welcome to search my posting history and try to find these imaginary examples of me making the same post over and over.

Ultimately all your post does is dodge the point. Like it or not, manufacturing iPhones domestically is not a viable option. The labor costs would cause the cost of the device to skyrocket. That's a simple matter of fact. Snotty attempts to frame me as a troll don't change the facts.

 

[snberk103]

Lazy? Not in general. Most Americans work longer hours and take less vacation than people in other countries, especially European. Americans are usually in the top ten world list of longest hours of work each week.
...

While this is in fact true, I'm sure it's actually a good thing. The whole point of the industrial/technological revolutions was to allow people to work less time and still 'create' the same amount of products. Many European nations, and Canada to a lesser degree, have managed this... so why not the US?

...
... Canadians and Europeans have less worries and longer ''time-off'' hours (Vacation, sick time, parental leave, etc)

Not to forget that minimum wage in some states is $5.10, that's insanely low!

Just a quibble (but it strengthens your point) ... several American states have no minimum wage at all. Without checking, but I think it's about 5 or so. Since Canada has cropped up a couple of times, I will note that the highest minimum wage in the US is still lower than the lowest Canadian minimum wage.

of those that WORK yes. There are many people even laid off that make more from unemployment so they remain unemployed. That's the problem with the system.

What's even more interesting is that even with a system that penalizes workers for taking low paying jobs, the majority of people who are collecting unemployment will still take a low paying job and get off unemployment if the systemic penalty is not too severe - that is, if they can still afford a place to live and to eat, and don't have medical expenses, the majority of people would still prefer to work than to receive unemployment benefits. The media (and politicians) naturally only showcase the minority who abuse the system.

....
Ultimately all your post does is dodge the point. Like it or not, manufacturing iPhones domestically is not a viable option. The labor costs would cause the cost of the device to skyrocket. That's a simple matter of fact. Snotty attempts to frame me as a troll don't change the facts.

I agree that manufacturing iPhones domestically is not viable (at this time). However, you need to be specific about the "costs will skyrocket" statement. The labour involved to assembly the iPhone is just a few dollars. Even if the labour cost was multiplied by 10x, you are still talking about only $25 to $40 on a $700 or more item.

Although, that said... there are other "labour" costs that typically don't get mentioned. Since China is a socialist/communist state Foxconn does not need to provide basic health insurance, or contribute to a pension fund. Both of these expenses (especially the health costs if part of a pension plan) can be a considerable expense for any factory based in the US. A 'domestic' factory to assemble iPhones might actually end up in Canada since we are also a 'socialist' democracy.

However, it's not the labour cost that is the barrier, it's staggering high cost of building the factories and the infrastructure to support the time sensitive shipments in and out of the factory. Apple and Foxconn do not want their money tied up in inventory sitting on ships and in trucks. Assembly plants in China are near, by design, many of the factories that are providing parts so that the parts spend at most a day or two in transit - usually just a couple of hours - between the factory that made it and assembly plant. Any 'domestic' assembly plant has a huge cost penalty because the parts inventory are now sitting in ships as they cross the Pacific.

Add to all of that Apple changes its product lines frequently, and you also now have cost of retooling plants on frequent basis. People are much much easier to 'reprogram' than robots. Foxconn can adapt to minor changes in a matter of hours, and to big changes in a matter of days. Robotic factories are much more difficult to retool, especially for big changes. The one big advantage a robotic plant has over people is that you can run it 24 hours a day and 7 days a week with only incremental cost increases. Basically, the 1st iPhone is gonna cost you hundreds of millions of dollars, but each one after that can be very very cheap to produce.

Finally.... Why is the onus on Apple to bring the assembly back to the US? Why isn't it up to a US (or Canadian or Mexican) company to build the plant and bid on the job? If a north American company could produce the iPhones for the same price - do you not think that Apple would look at the bid? There are some pretty good reasons why Apple might even pay a bit of premium for a north American built iPhone ... if someone could figure out how to build them as fast as Foxconn and overcoming the infrastructure challenges.

 

[kdarling]

However, it's not the labour cost that is the barrier, it's staggering high cost of building the factories and the infrastructure to support the time sensitive shipments in and out of the factory.

Samsung manufactures the CPU and memory chips here in the USA. No doubt some of the other chips are made here as well. The original touchscreens were made in Germany, I believe. Gorilla glass is also made here. What does that leave? Small parts and the LCD.

Add to all of that Apple changes its product lines frequently, and you also now have cost of retooling plants on frequent basis.

Apple only changes each product line about once a year.

People are much much easier to 'reprogram' than robots.

I think it's a lot quicker, easier to train tens of thousands of robots, with better guaranteed results.

The one big advantage a robotic plant has over people is that you can run it 24 hours a day and 7 days a week with only incremental cost increases.

Robotic factories also don't require as much heating for people, bathrooms, lunchrooms, parking, etc.

Finally.... Why is the onus on Apple to bring the assembly back to the US?

It's ironic that foreign companies do this.

Samsung has spent $9 billion building chip factories in Texas, in large part to make chips to sell to Apple.

According to their website, Samsung finds it better to build automated factories there to take advantage of the wealth of technical students and graduates.

 

[snberk103]

Samsung manufactures the CPU and memory chips here in the USA.

Yes, they manufacture their own product. Apple gets companies to bid on the assembly. Also, assembling a product from parts (including Samsung chips) is different than manufacturing the part.

No doubt some of the other chips are made here as well. The original touchscreens were made in Germany, I believe. Gorilla glass is also made here.

Gorilla Glass is made in the USA, Japan, and Taiwan. I don't know where the iPhone's glass is made, but since Gorilla Glass is being used by many different products, if I had to hazard a guess I would say that the smart money is on the factory closest to the assembly lines. But that is just a guess.

What does that leave? Small parts and the LCD.

There is a teardown photo here.
It shows quite a few more parts. Some very small.

Apple only changes each product line about once a year.

Yes, and it's usually a big change. Plus modifications during the year if they have a problem. Once a year is pretty frequent. It means that if your assembly line is down for just one week, you have lost 2% of your total production time.

I think it's a lot quicker, easier to train tens of thousands of robots, with better guaranteed results.

Robots are not adaptive. Yes, within their limits, they are easier to train - I will agree. But they don't cope well with change. If you want to change anything, the entire line needs to be tested. Whereas a human can often just adapt without any instructions, or can be taught simply by reading a memo. " From now on, widgetX will be attached with 3 screws instead of 2. Use the same screw and procedure on the 3rd screw as for the #1 and #2. Thanks - Have a Nice Day "

A robotic line needs to be stopped for a bit while they debug the new procedures.

Robotic factories also don't require as much heating for people, bathrooms, lunchrooms, parking, etc.

No. But they do need much more cooling to keep things from heating. Also, Foxconn factories don't have a lot of parking. Their workers take the bus (another socialist advantage , walk or bike.

It's ironic that foreign companies do this.

Samsung has spent $9 billion building chip factories in Texas, in large part to make chips to sell to Apple.

Making chips is different than assembling products. Though, if a company was going to bid on the assembly because they have expertise in automation - it will likely be based in Germany or Japan, maybe Taiwan.