Foxconn's $12 Billion Plan for Brazilian iPad Production in Trouble

[carlgo]

Just to reiterate a point that has already been made a lot of times over the past couple of years: the workers at Foxconn committed suicide at a rate significantly lower than that of the general population in China. And those suicide rates are the official Chinese ones, which if anything would probably be understated with regard to suicide in the general populace, because they certainly do not want to look bad.

(Unfortunately, we do not have numbers for China broken down by age. So it may well be that Foxconn's suicides *were* out of the ordinary, for people of that age. However, since we don't know, it seems somewhat irresponsible to assume that that is the case.)

If a company in the US had, say, 50,000 employees, and those employees committed suicide at 2/3 the rate that other people in the US commit suicide, would we hold a Spanish inquisition?

This is not to say that Foxconn is a great place to work, or that there aren't real problems. All I'm saying is, using this as evidence that there are real problems is either slightly ignorant or extremely disingenuous.

People are jumping out of the windows at Ford factories? How about the night shift workers at ghetto mini-marts? Not them either?

There is a big difference between unhappy people who kill themselves in random locations, and those who specifically kill themselves at work by jumping out of the building they work in! They are trying to make a point obviously.

It is ignorant or (that big word) to think otherwise.

 

[DotCom2]

Why didn't they look into these issues before even deciding to build a plant there?
This just amazes me!

 

[cube]

Dear Foxconn:

Mexico is closer to the US, has more international free trade agreements than any other country in the world and has much cheaper wages than Brazil (or Canada).

Regards,

(cheap) skilled labor

The point is to make it in MERCOSUR, or even Brazil itself, to sell it there.

If importing to Brazil were OK, they could just make the stuff in China.

 

[bmturney]

Apple Products will never be made in the US

These mass produced products like this will NEVER be produced in the US... US workers, especially unionized factory workers, demand WAY too much to mass produce consumer devices at a cost that would still allow the devices to be priced competitively... with wages, cost of benefits, cost of construction, and taxes the $499 iPad would cost three times that...

We get pissed that jobs are shipped overseas... yet we get pissed because we don't make enough either... or get pissed because prices are too high... pick your poison...

 

[Mad-B-One]

I say make them in the US and smuggle them into Brazil at a profit. It's better than guns or drugs.

If you go into logistics, you don't want to have a transport empty - ever! so, for the round trip: Drugs north, iPad south! Just fill the Cessna and make double the money.

You know how to find out if someone adopted the model? If you go to an apple store and right in front of it, someone offers Coke in pound-sized bags!

 

[adildacoolset]

Haha, I can beat that price. In Zambia, it costs 7,000,000 kwacha. About $1,800

 

[50548]

what makes it expensive? Importing finished goods into Brazil have high tariffs applied?

If you don't have the workers to build from scratch, why not part-build, and then finish assembly in Brazil? Keep it simple for the skill level of the available workforce, and by supplying 'parts' you'll avoid import tariffs.

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its quite disappointing that these large growth BRIC economies seem to be able to justify almost anything and get away with it due to the desire to trade with them. eg protectionist practices like damaging import tariffs.

I think people need to understand one thing clearly: apart from the fact that they are all "fast/faster growth economies", there is absolutely NOTHING in common between on one hand Brazil, a huge Western/Christian nation with a much smaller population and, on the other hand, eastern States like China or India (Russia is kind of in the middle) - Brazil has ZERO issues with widespread, officially-sanctioned IPR infringement like in China, and practically no outsourcing/sweatshop features like in those two populous countries.

As for protectionism, it must be clear that, when it comes to WTO disputes, it was the US who lost at least THREE times against Brazil in high-profile cases due to illegal trading measures on industrialized orange juice, steel bars and ethanol.

High import tariffs are NOT illegal and can be used to foster local industries, as was and still is common for other advanced economies since the 1960s (try to import meat into Switzerland and you'll see what a high tariff is)...

 

[50548]

If you go into logistics, you don't want to have a transport empty - ever! so, for the round trip: Drugs north, iPad south! Just fill the Cessna and make double the money.

You know how to find out if someone adopted the model? If you go to an apple store and right in front of it, someone offers Coke in pound-sized bags!

Grow up and at least try to learn that Brazil does NOT produce drugs (like Colombia or Bolivia) and is NOT Mexico (which, by the way, is only suffering from that horrendous drug-dealing violence because of nonstop arms smuggling FROM the US into Mexico). We don't have "coke" to ship up north; (unfortunately) our domestic market for drugs is big enough to sniff whatever comes from Latino (hispanic) countries, thank you.

If at least you were able to control your own borders and stop those idiots from selling AK-47s like candy to any little kid out there, your Spanish-speaking neighbors wouldn't be suffering so much now.

 

[ytk]

Wow, I knew iPads were popular, but a Brazilian? How will they ever sell that many?

 

[TyrellDirt]

It doesn't really matter

Foxconn just purchased MILLIONS of these new assembly robots.
These "FRIDA" robots are designed to replicate the dexterity of human hands.
http://www.youtube.com/watch?v=T1qJyAWZeV4


Just imagine all of the suicides that will happen when hundreds of thousands
of Foxconn workers loose their jobs. Or when the few remaining workers have
to try and keep pace with robots. Then you will see a torrent of suicides.
.....As well as more (slightly ill gotten) profits for Apple.

But it's OK.
Just like the blasphemous Porsche SUV paid for the development of a new generation
of Porsche race cars. Apples' squeezing of the Foxconn workers leads to new generations
of Apple workstations.........
......hey, wait a minute...

 

[kdarling]

For those who want the ipad produced in US: Lets face it, the ipad is a hand built electronic product. It is not designed for automated assembly. Go look at the teardowns. Its one reason it is so well made, I am afraid to say. No American could handle the workplace necessary to assemble it. Unless you were willing to double the price.
Good, Fast, Cheap -- Pick two.

I'd like an experienced business professional to explain why it would be prohibitive to build the devices in the USA.

Wage-wise, it certainly wouldn't double the price or anything close to it.

Consider that currently it costs about $3 of Chinese labor per phone. Each worker makes about US $300 a month. Paying someone $3,000 a month (well above minimum wage) should supposedly then raise the labor cost per phone to $30, or $27 more than in China. That's only about 5% more per phone.

Now yes, I realize there's a lot more to this. So let's double that and say it would cost an insane $60 per phone to assemble it in the US or Canada.

Apple makes the highest profit margin per mass market phone in the world, something like 50% compared to the 33-40% that other makers get. So say the phone sells for $600, they make $300 instead of $240 like other makers. That's about $60 extra profit that could be used to pay Americans instead.

My point is, when people say "oh it would cost double", I don't think it would be anywhere near that. Thoughtful replies welcome. Have at me

 

[Tiggs]

My point is, when people say "oh it would cost double", I don't think it would be anywhere near that. Thoughtful replies welcome. Have at me

Lots of studies out there as well as explanations from CEO's as to why companies have to go overseas. Studies show wages are a minor cost issue and only factor in to 10% of the increased costs yet people mistakenly focus on it. Most of the increased costs revolves around severe government rules and regulations that must be constantly adhered too.

 

[3leggeddog]

Apple should make them in the US

Personally, I would pay more for an iPad made in the US. We need to stop exporting our jobs in the name of saving a few dollars. We have over 9% unemployment (in some states it's over 12%), and there is nothing that an American worker can't do that a foreign can do. I agree that a US worker won't work under the conditions that other workers will, but, in truth, we shouldn't buy a product made under those conditions anyway - no human should have to work in an unsafe environment for non-livable wages.

With that said, American workers need to be reasonable about what a fair wage is, and we need to keep the unions out of the factory. There was a time for unions, but that time has long since past. Now the unions themselves are big business and are more concerned about maintaining their own power than actually helping the workers.

Many Japanese cars are made in the US in right-to-work states, and they're able to make cars at a decent price that compete with cars made any where else in the world. It's time we start to bring manufacturing back to this country, and Apple, as the "wealthiest" corporation, should take a leadership role. It used to be "Made In America" meant that it was the best product you could buy - let's reclaim that pride!

(just my two cents)

 

[50548]

Lots of studies out there as well as explanations from CEO's as to why companies have to go overseas. Studies show wages are a minor cost issue and only factor in to 10% of the increased costs yet people mistakenly focus on it. Most of the increased costs revolves around severe government rules and regulations that must be constantly adhered too.

Actually it's been recently reported by the Financial Times that the whole discussion about insourcing production is bogus, for the sheer fact that at least 70% of the wages/jobs related to the production of high-technology devices "Made in China" already go to the country where headquarters are located, i.e. the US - this means packaging, retailing, R&D, advertising jobs etc...

The problem is that "factories" are more visible - therefore, you tend to see these strident populist voices claiming for "jobs at home", even though they should know that most high-tech jobs ARE already at home.

 

[vitzr]

You're damn right. I am Brazillian, and I'm sick with the tax policy applied here.

If it's any consolation, I reside in California and we have a very hostile environment towards businesses. It's simply stupid !

 

[carlgo]

If it's any consolation, I reside in California and we have a very hostile environment towards businesses. It's simply stupid !

Nothing wrong with good laws that protect what needs to be protected, whether the environment or people. If there are silly laws, then I have full faith that Apple could lobby very effectively to eliminate them.

Too bad if business and industry has to meet basic standards of decency and good citizenship. Suck it up.