Nightline's Look into Apple's Foxconn Factories

[zoetmb]

So they make $427.80/mo. Rent is cheap and so is food. They can save a lot of money and hopefully send some home to their families. In China I'm sure that is well above the national average and there are millions of people who are far worse off. They work in a clean, high-tech and safe environment. It's a hard but honest living.

If you brought those jobs to the US where workers would want $12/hr you would start seeing the price of your (Apple) electronics go through the roof.

Prices would definitely be higher, but we don't know how much because we don't know how many labor hours it takes to make these products and/or what percentage of the total retail price is devoted to labor. We only know that it takes 141 steps to make an iPhone and 5 days/325 hands to make an iPad. Also, because the price of labor is so low, Chinese factories are not automated. If the factories were in the U.S., there would probably be far more automation.

Personally, I'd rather pay more but see U.S. workers in those jobs. IMO, the only ethical way of doing business is to have factories close to markets so that the populations who buy the products also get the benefit of the associated jobs. In addition, it would reduce carbon footprints because there would be less shipping of the products around the world. I realize that most people don't feel the way that I do - that the price of the product is the most important factor for them and/or Apple's profitability is most important, but I have a problem buying products if I feel that the workers who make those products are abused.

As for whether the Chinese workers are being paid fairly, it's a mixed bag. Obviously the work is tedious, but it's certainly not as bad as coal mining or even road construction. On the other hand, workers seem to really want these jobs -- there was an article last week or so showing thousands of potential workers converging on an office in China to apply for these jobs.

And it's not the hourly pay rate that counts - it's how many hours a Chinese worker has to work to buy food or a pair of pants or rent an apartment, etc. In the summer after high school, I worked 70 hours a week + another 18 hours or so of travelling time for minimum wage - then $1.25 an hour at a time when gas was probably around 35 cents a gallon, a slice of pizza was 20 cents ($1.50 for an entire pie), the NYC subway was 20 cents and my college tuition was $430 per quarter. So pay has to be evaluated in relationship to what you can buy with it, not with "their wage vs. our wage".

As for Apple, they need to push Foxconn to continuously improve the workers' conditions by both raising pay and reducing hours over time. Hopefully within a few years, the workers are working no more than 5 days/50 hours a week. And maybe they could even get them stools and rotate their jobs during the day.

 

[kylevarga]

Foxconn

If you think about they have it kinda better then us. To explain this they get to keep 79% of their income (Assuming work 5 days a week 10 hours a day after 2 hour lunch is taken out) after basic living expenses are paid, including both food and rent with rent being 4.5% ( assuming rent is 17.50 a month) while food is costing them about 16.5% (assuming .70 a meal at 3 meals a day) I know if most Americans could live with these percentages we would have a lot more possibilities. Even though it would be near impossible to move out of the country these works have the opportunity to save nearly 80% of their paycheck every month. That alone is impeccable!

 

[mknopp]

I will put up another perspective on the pay, which as many, many posters have pointed out correctly, is relative.

They pay $.70 for a meal. Assuming that in the US the average meal cost $6, that is an 8.6 adjustment factor.

Looking at rent (to see if the adj. factor holds up there), $17.5 times the 8.6 adj. factor is $150.5, US equivalent, for rent. Four years ago it cost about $750/month for a cheap dorm room at NYU. Which if you were sharing with 6 people works out to $125 per month. So, that looks like it is about in line with dorm cost in the US.

Since the 8.6 adj. factor works out about right for food and rent, let's apply it to their wage. They make $1.78 per hour which when adjusted works out to about $15.31 per hour, US equivalent. This is not a bad wage for an assembly line worker in the US. I know that only the most senior and experienced manufacturers where I work make that.

So, it doesn't seem to me that when adjusted for cost of living that these workers are being taken advantage of.

Of course, a well balanced and honest look at things doesn't make for sensationalist headlines. Everyone knows that "Apple is exploiting Chinese workers and only paying them $1.78 per hour." will draw more readers and more outrage than the more accurate, "Foxconn pays their workers a decent wage of $15.31 per hour, US equivalent."

 

[Chupa Chupa]

Many times I'll watch a story on ABC, NBC, CBS, FOX and then see a COMPLETELY different spin / viewpoint on BBC. Then determine which seems more correct.

Yes, but in doing so, you are being subjective, picking the story (perhaps subconsciously) that most agrees with your own viewpoint. It's called "confirmation bias."

Reporters, being human beings, each inject their own slant with a report. Being unbiased is an impossible concept in reporting. Viewers/readers pick the report he or she wants to believe and dismiss the ones that conflict with their own belief system (cognitive dissonance theory).

 

[Bubba Satori]

The real story was never told. How about the factories that were here?

Well done for asking the inconvenient question.
Thinking differently has gotten you a lot of negative votes.

What does it profit a corporation to gain the world but lose it's soul?
Next up...one trillion in the bank.

 

[CplBadboy]

Lastly, Apple can definitely do a lot of wrong. Here's a list:

- Coming up with Mountain Lion is one of them. That should have been 10.7.4 in stead of 10.8. People shouldn't pay for those little enhancements.
- Gatekeeper sounds like a first step towards a Mac App Store lock-in. This scares me to death. This would kill every lucrative project software wise.
- Apple shouldn't have released the iPhone 4 with the revolutionary antenna. The idea was marvelous, but up until the iPhone 4S, the antenna wasn't as good as it should have been.
- Apple had MobileMe. That sucked.
- Apple now has iCloud. In theory it's a lot better, but still needs so much more improvement.
- iTunes Match has a lot of flaws and needs improvement
- Apple is controlling the news apps with the Newsstand app. All digital content contracts should run trough Apple. Thus Apple will make money on every New York Times, Washington Post of Financial Times contract. Smart move, but not very nice.
- AppleCare in the EU is being pushed in a way that is not very customer friendly. Europeans have better consumer laws than in the US but are still strongly pushed towards buying AppleCare.
- Apple should stay true to the prosumers. They are the ones that stuck with them through thick and thin and are now being phased out slowly. Even if it doesn't make them as much money as the iOS devices, I would always stay loyal to them as they have always been loyal to Apple.

But still, Apple does a lot of good and I love their products. No doubt about it.

Well we might not agree on the Foxconn issue but I certainly agree with everything you have written in that list especially the ML update.

 

[dissemin8or]

And this is why companies like Apple outsource to China. There is no way you would be able to get Americans to work 12 hours on an assembly line making $1.78 per hour. Imagine what that iPhone would cost if it were made in Detroit by union workers!

Not that much more. If it were made in America, there would be much more automated robot assembly, and many fewer workers would be required. The reason they assemble things by hand in Chinese factories is that labor is much much cheaper than buying the robots. So, in America, higher upfront capital expenditure, followed by lower ongoing labor costs. China, lower upfront expenditure, slightly higher ongoing labor costs. Apple could probably get a 30% margin with American labor versus the 40-45% they get with Chinese labor.

 

[Gix1k]

325 hands is aLOT!!!

 

[axual]

Apple logo

Do they really hand carve the logo, or did I hear that wrong??

No, the worker was smoothing out barbs and shards along the inside edge of the stamped out logo.

 

[ThunderSkunk]

If unions hadn't drove up the pay rate.

While I agree with the rest of your post, I see a lot of singling unions out to blame these days.

- The work culture in the US is that everyone is supposed to be out for as much $ as they can personally get, at any cost.
- The cost of living in the US is high, thanks in no small part to litigious people and lawyers, again out for as much $ as they can get, rolling those costs through insurance into every price tag of everything we make and buy. This is a hell of a lot bigger issue than is usually talked about.
- Next to health care costs, Union costs pale.
- Unions append an additional expense to employee costs, but if you look at the cost of having non-unionized employees, it's not as significant as you might think. It is a waste though, but it's a symptom of a crappy approach to business.

For instance, in our industry, we're one of 6 domestic mfgs left, down from 1,100 in 1994. We've employed between 200-400 skilled & unskilled workers for 72 years & it's always been our policy to treat our workers well enough that they don't feel the need to unionize, not because of the threat of unions, but because it's the right way to treat the people who do your work for you and make you a success. Everyone here makes a livable wage comparable to your bumper riveter. All have above avg health coverage. We'd rather spend the $ on our employees, have them like working with us and do good work, than spend it on lawyers and unions lawyers, winding up with employees that fight us, hate their jobs, and don't care about the product they build. We also don't pay managers 3x what everyone else makes, & by doing so eliminate all the shady get-rich-quick sleazebag managers, & attract only the right people. We don't hire as many people as possible and devalue them, we hire creative people who can simplify & solve problems, and rely upon the precisions machines for the rest.

This is why we have the reputation we do, get the work we get, and comfortably stay in business. There was a time when this was normal, decent business practice. Now it is our #1 asset.

BUT, we are not, and will never be a public company. The day you work for shareholders, ethics fly out the window. It would give us a quick influx of cash and we'd be out of work in three months.

If we were Apple, and produced that high of volumes, we'd have a team of production engineers design up a small army of production robots, and just do it right here under our own roof, and enjoy all the various benefits. ...but people would then climb up our ass because we replaced poor people who need the money with robots.

 

[jsnuff1]

Where can I see this episode online I missed it!

 

[jackc]

What does it profit a corporation to gain the world but lose it's soul?
Next up...one trillion in the bank.

They are giving those Chinese workers jobs that are better than their alternative, what have you done for them?

 

[stagmeister]

*does the math*

So, just working 1 day covers their rent. And around 6 day's work covers both their rent and all their food for a month.

That's not too shabby. If I made enough to cover my rent in a day, I'd be making more than $600k per month. Of course that's not the best comparison but it shows that they have the capability to really save, something which most Americans can't seem to do, or want to do.

 

[dissemin8or]

I will put up another perspective on the pay, which as many, many posters have pointed out correctly, is relative.

They pay $.70 for a meal. Assuming that in the US the average meal cost $6, that is an 8.6 adjustment factor.

Looking at rent (to see if the adj. factor holds up there), $17.5 times the 8.6 adj. factor is $150.5, US equivalent, for rent. Four years ago it cost about $750/month for a cheap dorm room at NYU. Which if you were sharing with 6 people works out to $125 per month. So, that looks like it is about in line with dorm cost in the US.

Since the 8.6 adj. factor works out about right for food and rent, let's apply it to their wage. They make $1.78 per hour which when adjusted works out to about $15.31 per hour, US equivalent. This is not a bad wage for an assembly line worker in the US. I know that only the most senior and experienced manufacturers where I work make that.

So, it doesn't seem to me that when adjusted for cost of living that these workers are being taken advantage of.

Of course, a well balanced and honest look at things doesn't make for sensationalist headlines. Everyone knows that "Apple is exploiting Chinese workers and only paying them $1.78 per hour." will draw more readers and more outrage than the more accurate, "Foxconn pays their workers a decent wage of $15.31 per hour, US equivalent."

Good analysis, except for one issue: the hours that Foxconn employees are made to work. With 12 hour days * 6 days/week and no overtime pay, that's the equivalent of a US worker getting paid 40 hours at $12.50 and then 32 hours forced overtime at $18.75. Having worked in manufacturing where we had 12-hour shifts, I can tell you that you burn out quickly working those long hours every day, and I only worked 4 days a week. So yes, not as bad as the headline number, but not as rosy as your cost of living adjustment makes it out to be.

 

[catalyst6]

I watched this last night and was surprised to see how.....normal.....it looked. No doubt this has been set up and engineered for publicity purposes by Foxconn and Apple, but I was expecting to be more "shocked." Yea those jobs are awful from an American perspective, but it seems to be better than average in China (indicated by the folks rushing the door to apply for jobs).

I think what surprised me the most about the entire report was how "handmade" the devices looked to be. I was imagining huge assembly lines pumping out phones, but it honestly all looked a little more "low rent" than I imagine. Maybe next time I fall into my pit of OCD when picking up a new Apple device, I will remember the young girl shaving the burrs off of my iPad or checking the devices for spots/scratches.

I think what people really need to keep in mind about this is that Foxconn is probably better than average. High-end products have been made in China for pennies for many, many decades. I think it is foolish to pin Apple with this ******** when Foxconn creates items for Nintendo, Dell, etc. Without this kind of manufacturing and unskilled labor jobs, China would be no where near where the are today (i.e. an industrial force to be reckoned with).

 

[klover]

Very disappointed in this piece; it had the depth of an Access Hollywood show. No context for who the executives were, no elaboration on living conditions beyond what we already know, incredibly short interviews (hockey players are asked more questions after a game).

 

[Scott6666]

I told my wife we're retiring to Shenzen to take advantage of the low Chinese cost of living.

It's right near the coast. Seems warm. Pick up some part time work at Apple since all the jobs will be there and not in the US. Maybe get some options.

She was not impressed, but she'll come around.

Ni-hao (sp?), y'all.

 

[nickelt]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

I will put up another perspective on the pay, which as many, many posters have pointed out correctly, is relative.

They pay $.70 for a meal. Assuming that in the US the average meal cost $6, that is an 8.6 adjustment factor.

Looking at rent (to see if the adj. factor holds up there), $17.5 times the 8.6 adj. factor is $150.5, US equivalent, for rent. Four years ago it cost about $750/month for a cheap dorm room at NYU. Which if you were sharing with 6 people works out to $125 per month. So, that looks like it is about in line with dorm cost in the US.

Since the 8.6 adj. factor works out about right for food and rent, let's apply it to their wage. They make $1.78 per hour which when adjusted works out to about $15.31 per hour, US equivalent. This is not a bad wage for an assembly line worker in the US. I know that only the most senior and experienced manufacturers where I work make that.

So, it doesn't seem to me that when adjusted for cost of living that these workers are being taken advantage of.

Of course, a well balanced and honest look at things doesn't make for sensationalist headlines. Everyone knows that "Apple is exploiting Chinese workers and only paying them $1.78 per hour." will draw more readers and more outrage than the more accurate, "Foxconn pays their workers a decent wage of $15.31 per hour, US equivalent."

Good analysis, except for one issue: the hours that Foxconn employees are made to work. With 12 hour days * 6 days/week and no overtime pay, that's the equivalent of a US worker getting paid 40 hours at $12.50 and then 32 hours forced overtime at $18.75. Having worked in manufacturing where we had 12-hour shifts, I can tell you that you burn out quickly working those long hours every day, and I only worked 4 days a week. So yes, not as bad as the headline number, but not as rosy as your cost of living adjustment makes it out to be.

I work 100 hours a week. U get used to it. Working 6 days a week is normal in alot of countries.

Everyone needs to stop comparing it to the states.

 

[blow45]

Nightline traveled to a nearby village to compare those living conditions which didn't seem any better. The families who remained in the village told Nightline that their living conditions were better with the "young people" working in the factories.

The conditions in the village are not good either BECAUSE the "young people" are not paid enough to afford to make their village a better place. The living conditions ARE NOT going to get any better if they pay them next to nothing and have them working as slaves. The conditions in the village will improve if the "young people" get some extra cash to alleviate poverty and build infrastructure in their village.

I told my wife we're retiring to Shenzen to take advantage of the low Chinese cost of living.

It's right near the coast. Seems warm. Pick up some part time work at Apple since all the jobs will be there and not in the US. Maybe get some options.

She was not impressed, but she'll come around.

Ni-hao (sp?), y'all.

Lol, great post!

 

[al2o3cr]

Overall, the report was fair-to-positive making it seem like Apple was being very responsive to the concerns.

(emphasis mine)

Troll much, guys?

 

[ObsidianIce]

Because Foxconn and Apple have a contract. If Foxconn were to do that without Apple's approval they would lose Apple's business as well as probably be sued for violating contract terms. A vendor can't just allow someone to randomly come at look at products they are producing unless that is allowed by their contract.

Hi, I own an Android phone. Having said that;



The two are completely independent companys, so why the hell should Apple even 'allow' the media to look into Foxconn's factories? THATS FOXCONN'S CALL.

Am I the only one that thinks "WTF?!?" about all this????

 

[Petraeus]

There is nothing to see here, move along.

No but really, I am a chinese migrant and I see nothing wrong with these working conditions.

It does, and will take DECADES for china to recover from the chairmans' policies.

Going too fast will completely destroy china.

Unfortunately, this is the only way.


My only advice would be to perhaps improve the workers living conditions, not wages.

Sleeping 6-8 in a SINGLE dorm room, is not the equivalent to paying $100,000 to attend harvard and jerking off for 4yrs.

The meal situation should be looked in to as well, as I'm sure rice with some soya sauce isnt the most healthy meal, and perhaps some gyms should be added.


We need to stop COMPARING numbers against other numbers and LOOK at the human element in this equation. While simply doubling of wages would produce no benefit, I'm sure the living conditions could be dramatically improved.

 

[SBlue1]

handmade iphones? wow...

 

[dbo789]

People balk at the wage of 1.27/hour, but they forget that it is cheaper to purchase things too. When is the last time you paid 0.70 for a full lunch?

That's 55% of one hours wage for a meal. To put that in North American perspective, its the same as someone who earns $13/hour paying $7.15 for their lunch.

Suddenly doesn't seem so shocking now, does it?

 

[thewitt]

The meal situation should be looked in to as well, as I'm sure rice with some soya sauce isnt the most healthy meal, and perhaps some gyms should be added.

The cafeteria trays were NOT showing rice with soya sauce. These were large, well balanced meals with rice, veggies and proteins - looked like both fish and chicken.