Category Archives: CFML

Consumers For Fairness In Manufacturing And Labor – The hidden costs of how our gadgets are made and delivered.

If you bought an iPhone 5, please consider returning it

I think we’ve all gone a little insane. Or at least five million of us.

Let’s start with 2000 and work our way up. By now you’ve probably heard about the 2000 worker riot at a Foxconn plant in Taiyuan. While the initial findings seemed to indicate that the riot started as a dispute between workers from different provinces, it seems more likely that the riot broke out as a result of workers having enough of distrust and beatings from the guards. 5000 police had to be sent in to stop the riot, and the 79000 person factory shut down as they picked up the broken glass and the 40 injured.

This plant may have made the iPhone, and if they didn’t, another one just like it did. Apple sold five million of those phones this weekend, and if these workers had been pushed just a bit harder, they might have sold another two million.

But make no mistake, we bought them, this $800 phone that may be as much as a year behind its competitors. Many of this five million will likely replace this new phone with the latest model next year.

I didn’t buy one, but that’s not terribly surprising. Apple hasn’t been selling to me for a while. I particularly like the Mac Book Pro, priced at $1399 for the basic 64GB model. The computer on which I am writing this blog post has 160GB (+32 GB in an expansion SD card slot),  and cost $185 dollars. I could literally buy seven of them for the same money, one for each day of the week.

I’m solidly middle middle class. Maybe lower middle middle. I have gadgets certainly, but an $800 phone makes no sense. I was mad when my $800 HP laptop only lasted two years, and most people who buy the iPhone don’t even keep it that long.

This is insanity, this economy that requires a constant influx of new things while we throw out the old. And I think we know that. We also know the “hidden” costs of this constant influx of new things, environmental damage, distracted driving, and thousands of workers in China working criminally long hours, being searched to make sure they aren’t stealing the products they make, and being beaten by guards at the slimmest provocation.

We don’t need these things, and we know it. I’m a cube dweller. There is not a single function for my job that requires, or even would be helped by an iPhone (or any smartphone). There are thousands like me in my company and in every company. Even managers who might have more of a legitimate business use more often then not seem to use these devices for little else than being rude in meetings.

I’m not saying give up your gadgets. To pull out an old chestnut from my dear friend Brian “pot to kettle, damn your blackness.” I’m saying keep them and use them until they don’t work anymore. Make deliberate decisions about what you buy and decide if its really something that’s right for you and that you will use. Take your time before bringing this thing into your home. And consider the source, the people who made this magic device you are holding.

Apple’s not alone in the crazy department (though a patent on rounded rectangles is just silly and Michael Okuda should be counter-suing you any day now Apple), but lately they may be a little more insane than most. Even the little decisions, like cutting Google Maps from the phones and then not knowing where Mt. Rushmore is just seems sad. It’s sad that Apple prices itself out of the middle class, and doesn’t seem to share its wealth with the people making its products, be it through more humane working conditions or better pay.

We know what’s right, what’s sensible, what reasonable. So do it already!

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Did We Win? Maybe.

According to last month’s report from the Fair Labor Association, one of the biggest problems at Foxconn is the amount of overtime worked by each employee. The average worker can put in as much as 80 hours of overtime a month, or a 60 hour work week. Chinese law states that overtime is limited to 36 hours a month, or 9 hours a week on average. FLA also found that many were not being compensated at the overtime rate of “time and a half” or 150% of hourly salary.

As a result Foxconn has pledged to increase salaries by 16 to 25% by Mid 2013, and to comply with Chinese law and reduce overtime to 9 hours a week. Some Foxconn employees think the reduction in overtime is too drastic, saying they’d be willing to work 60 hours of overtime a month, or 15 hours a week.

Given the numbers flying around I thought it would be helpful to provide some context. Like any good math student I’ve shown my work, and I’ll state my assumptions:

  • I’m defining X to be the average hourly salary of a Foxconn employee.
  • I’m assuming the 16-25% pay increase is to the base salary (i.e. the amount paid for 40 hours of work per week).
  • I have calculated figures for Foxconn previously complying with Chinese overtime (150%) as well as if they did not. It’s important to remember that if Foxconn did not compensate for overtime then that is money they legally owe their employees.
  • I’m showing the figures here for 9 hours overtime pay, I did calculations for 15 hours which you can see here.

If Foxconn did not pay overtime before, then the average worker should experience a 3.4% – 11.5% gain in earnings under a 9 hour overtime policy. However, they would experience a 4.5% – 11.3% loss in earnings if they had been paid what they were owed for the illegal overtime.

If overtime was previously compensated then the average hourly pay for a worker working 60 hours a week would be 1.17X (or 1.17 times base hourly salary). If they were not paid for overtime then their hourly rate would be 1X. Under the new system workers can earn anywhere from 1.27X to 1.36X for 9 hours compensated overtime.

If Foxconn had previously paid overtime, then the cost of their 1.2 million person workforce would be 84 million * X. Otherwise it would be 72 million * X. If Foxconn’s budget for workers remains unchanged they can hire as many as 135.6 thousand new workers if they had previously paid overtime. Otherwise they would need to lay off almost as many or increase their salary budget.

Bottom line is this:

  • If Foxconn had been paying what they owed employees, then employees will earn less than they could before. If, however, they were not compensated, then they will be bringing home more money.
  • Average hourly salaries have increased significantly under the new system, even with reduced overtime.
  • Foxconn will have to raise its budget for employee compensation if they had not previously been paying overtime. Otherwise they can afford to hire the “tens of thousands” of new employees without increasing the budget.
  • If Foxconn did not compensate workers for overtime, then I think punitive damages for unpaid overtime should also be leveled against them.

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Bonus Friday Post (A Novel Approach, Prayer and Perspective)

I want to end this week with a couple of different thoughts I’ve been having on the Apple factory situation.

New CFML Challenge

As I said on Monday, I understand the impulse to want to tell a story, a narrative that can make people care about the conditions at the factories that make our electronics. I know there are some creative people that follow this blog and I thought it might be interesting to see what you can come up with.

Prompt: Create a story/poem/piece of artwork from the perspective of one of the actors in the Apple factory situation. It can be from the perspective of the workers, owners of the factory, Apple executives, engineers or consumers.

If anyone wants to do this please share it here.

Prayer and Perspective

We were discussing the blessing and woes section of Luke (6:20-26) in Life Group on Wednesday, and it helped to put into perspective some of the feelings I’ve been having about this whole situation. God’s really been working to challenge me on the ways my actions have an effect on others, even in indirect ways. The things that I buy, and the consumer culture I’m a part of, have an effect on the way people have to live and work. I’m really blessed, and some of it is at the cost of those who are poor.

It’s a complex situation, and one that can’t be looked at from an American perspective alone. For some of these workers, these factory conditions are better than what they were doing before, but that doesn’t make them right. Still, I think it is important to consider all sides to this story and I thought I’d share a blog post by Eugene Cho (thanks Dad for bringing this to my attention).

I particularly like the prayer at the end for the blessing of the hands of the workers who made this device I am about to enjoy. I pray that prayer before meals as well, and regardless of the way things change or stay the same, it is important to pray for those who are less fortunate than we are.

Have a good weekend!

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Once More With Feeling

“Where do we go from here?”

What are working conditions really like in the factories that make our electronics, and should we feel guilty about it? The retraction of Mike Daisey’s story from January’s This American Life prompts this question. In the third half of the TAL Retraction show Charles Duhigg, co-author of the NY Times investigative series on conditions at Foxconn, tries to answer both of these questions, and I thought it would be a good idea to present the basic arguments here.

Duhigg classifies working conditions at these factories into two categories. The first is unpleasant or harsh working conditions: long hours, low pay, repetitive labor, etc. The second, smaller category are outright safety violations resulting in worker injury or death.

There have been some recent reports of safety violations that have resulted in two explosions at different factories. The second of these, months after the first, has been in the news lately, as it has recently come to light that Apple inspectors had just checked out the plant mere hours before the explosion. The root cause of both explosions was build up and ignition of aluminum dust, a problem which can be easily addressed with proper ventilation. These incidents, while isolated, are appalling especially given the amount of time between them to correct the fault.

But again, the amount of safety violations is relatively small. The real story is the amount of hours workers are required to work, and the conditions of that work. Duhigg states that worker overtime is one of the biggest problems, and one that can be looked at from two perspectives. The workers may be demanding this overtime in order to earn more money for their families back home, or the workers may be coerced into worker longer hours for fear of job loss or not being able to get overtime when desired.

Duhigg then outlines what some of the costs would be to manufacture the iPhone, and other products like it in America. Labor is not a significant part of the cost of an electronic device, and estimates vary widely as to how much more it would cost in America (from $10 to $65 a device). Some might consider this a lot, but when we’re talking about iPads, which already cost in the $499 – $649 range, we’re not significantly changing the market for those devices by passing that increased cost fully onto the consumer. If an iPad cost $50 more or less, I’m still not buying one.

Do we really need any of these things? My experience, and the experience of most people I talk to, is that we live just fine without an electronic gadget until we buy one. Then it becomes a “need” and we cannot find a way to de-integrate it from our lives. Checking e-mail everywhere we are is not a necessity, even in business. Some people (managers/CEOs/project leads) need real time communication, but those of us in the cubicle trenches, we can wait until we can check it on our desktops or laptops.

Duhigg’s final argument is I think the most interesting, and one I’ve touched on a little before. We used to have conditions like the ones in China during the industrial age of our country. And then we had a labor movement, we formed unions, and we fought for better working standards, better pay, saner hours, healthcare. We can manufacture these products under American standards, it just might cost us a little more to do it and force us to separate our needs form our wants. If we don’t, then we are exporting the harsh labor conditions we fought in this country to get rid of. In another century, who will the Chinese export their labor standards to?

Are working conditions something we only care about for ourselves? We’re a nation that seems to care about others. We  try to spread democracy, give humanitarian aid, prevent genocide, and in general spread the American dream beyond our borders. Why then do we think differently about our gadgets?

Maybe that’s the kind of thinking differently Steve Jobs meant.

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Pushing Daiseys

“Inspired by true events”

These four words should precede Mike Daisey’s critically acclaimed stage play, “The Agony and the Ecstasy of Steve Jobs”. Instead the events presented in this monologue, detailing Mike Daisey’s 2010 trip to Foxconn and other factories that manufacture Apple products, are presented as the truth, or at least they were when a portion of this stage play was excerpted on This American Life.

Last Friday, This American Life host and producer Ira Glass issued a press release stating they were retracting their January show, which had featured a 39 minute excerpt of Daisey’s stage play, because it “contained significant fabrications … we can’t vouch for its truth.” The story of this retraction was featured on last weekend’s TAL episode, which you can listen to here.

The fabrications consist of exaggerations regarding the amount of workers interviewed and factories visited, as well as meetings with workers that never took place. Two significant examples of this were meetings with workers who had been exposed to n-hexane, a neuro-toxin that was used in the cleaning of some iPhone screens, and with a worker with crippled hands seeing an iPad for the first time. In the case of the n-hexane exposure, Daisey admits he inserted this detail from a story that happened in a different factory 1000 miles away and that he never met workers who were exposed to n-hexane. In the case of the crippled worker, Daisey’s translator, whose name Daisey lied about, disputes his account of events saying this incident, which is one of the most emotional moments of the stage play and the TAL show. never happened.

“My mistake, the mistake I truly regret, is that I had it on your show as journalism, and it’s not journalism. It’s theater.” Daisey responded to questions from Ira Glass and Marketplace reporter Rob Schmitz, who first broke the story. Daisey later went on to say that he stands by the work as a piece of theater.

This gets into the troubling part of this story. What Daisey says about many of the conditions at Apple factories is true. Where he lied is his own experiences, the ones he talks about in his monologue. The monologue is a work of fiction, strung together from real things that have happened, just not to him, and not all in the same area. It is a simple narrative designed to tug at the heart strings, which I can attest it is very effective at doing.

I understand this idea of trying to tell a truth in a fictional way, because when I first heard these stories I was inspired to do much the same thing. The result, my short story “Competitive Edge“. There’s a proud tradition in science fiction of talking about societal problems in a fictional context, from Orwell to Heinlein to Star Trek. TAL itself has used fictional stories to highlight ideas about every facet of life, from love to job loss to rejection. In this case, however, Daisey’s story has a more documentary feel, and is presented if not “as” then certainly “like” journalism.

There’s a marked contrast between the way Daisey talks about this mistake and the way Ira Glass talks about it. When confronted with the fact that he had lied about the n-hexane workers Daisey’s response is “I wouldn’t express it that way.” In contrast Ira clearly calls the decision to run the story “a mistake” and is very clear about the fact that while Daisey had lied, it was ultimately TAL’s responsibility in not killing the story. Rob Schmitz describes talking to Daisey as “exhausting” and listening to the interview I would agree. I kept wanting Daisey to admit that he had lied openly, to “man up”. Instead he kept coming back to this idea that the cause and the “truth” of the problems was more important and that he wanted to construct this show to get people’s attention on this issue.

Again, I sympathize. I’m trying to do the same thing with the stories and blog posts I write about this issue. But I can’t help but think that Daisey’s approach lacked rigor. On TAL he exaggerated the number of factories he visited and workers he talked to, perhaps in an attempt to make it sound like he had been more thorough than he really had been. I’m not a giant fan of Michael Moore’s, but I was contrasting Daisey’s story to Moore’s first documentary Roger & Me. As with all documentaries there is definitely a narrative being told, but the amount of “boots on the ground” work that Moore did is astronomical when compared to Daisey. If Daisey had really wanted to construct a stage show based on the truth he should have spent several months in Shenzhen not several days, and let the truth speak for itself.

Daisey was not how I first heard about this issue. It was Jon Stewart, and I find it kind of amusing that Stewart’s story had more journalistic integrity than one presented on TAL, both shows I love. When Stewart is at his best he is telling the truth, and it’s the truth itself that is funny, or his reaction to it. The conditions at these factories are appalling, and are not in need of embellishment.

Tomorrow I’ll talk more about the second half of the TAL program, regarding what is true, and how we should feel about it.

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Suck It Up! Work is Work!

We live in a tough economy, and a job is a job is a job. Even if the work is dehumanizing, low-wage and detrimental to your health, you need to tough it out and be grateful you have a job.

Man up America. China is willing to put up with it and so should you.

Or maybe not.

A recent article in Mother Jones highlighted the conditions in an Amazon fulfillment center. Workers are expected to find and package 1600 items a day, often having to reach up high or bend down low while running through a factory that can be miles long. The conditions are hot, job security and health insurance are next to zero, and shifts are long. This is actually not the first article on this subject and Amazon has released official statements saying it will deal with some of the specific problems mentioned. Still any news like this is cause for customer concern, but also seems to engender a lot of the opposite response.

Is hard work something you should just accept, or should you fight for better conditions?

A lot of people don’t feel like they have a choice. They need a job just to stay afloat and due to any one of a number of factors, this is the job they have to accept. There have always been hard jobs, and a class of people who have had to do them. The difference is that workers had unions who would fight for better pay, health benefits, and more humane conditions. Most workers in these fulfillment centers are temporary employees who can be fired at any time and have no benefits. They do what they are told or they are replaced, and for what exactly? So that I can get a DVD a nickel cheaper and pay no shipping.

Given the volume an increase in pay of a nickel an item would mean an additional $80 in gross pay a day per worker. Or an increase in ten cents could mean an extra worker who could take on half the volume. I’ll pay it. Now I know things aren’t really that simple, but I also know they aren’t that hard. Take the gross salary per day, divide by the number of items handled, and you have the cost of that worker per item. If you pass that cost directly onto me or any other customer for each item, I’ll pay it, hell I’ll double it. 20 cents is not too much of a surcharge to get an item I want. I don’t think you could make the case to me that I’ll buy from someone else just because an item is cents cheaper. Maybe dollars, but cents?

Now Amazon has been dealing with this particular problem, and maybe this is old news, but what does it say about them as a company that it allowed this to happen in the first place? A smart business practice is to account for growth by building infrastructure and hiring the bodies necessary for the future. Some might respond that you should just not buy from Amazon. If their official statements on the matter are not enough for you then you will never be happy.

Do we have to accept things as they are or should we try to change? Workers worked in pretty brutal conditions at the turn of the last century, and then there was a labor movement that gave them rights. Is that something we don’t do anymore? Is it okay for a company to say it is fixing the problem without taking financial responsibility for the decisions it made before?

What do you think?

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Apples To Apples

Do we care about labor conditions in other countries?

Last week Apple announced the Fair Labor Association would be inspecting Foxconn and other factories that manufacture Apple products. Preliminary reports are coming out that Foxconn has “tons of issues“, details of which should be coming out on FLA’s website in March. Foxconn has made an effort to raise salaries, which does seem to be a step in the right direction, but there are still many issues to be addressed.

But, whether or not the FLA is effective in its audit (which sometimes is in doubt), and whether or not workers salaries increase, are we going to change our behavior if conditions do not get better?

Jordan Terry of Forbes thinks we won’t. In a blog post from yesterday “So What If Apple Has A Chinese Labor Problem?“, Terry conducts a detailed financial analysis on the impact to Apple’s sales and share price of the Foxconn issue, and potential solutions to it.

I’d like to address two assertions Terry makes in this article:

1) There’s a “cognitive dissonance” in protestors who are at the same time carrying Apple products.

2) Our country has enough issues to deal with to worry about labor practices overseas.

Let’s address the cognitive dissonance first. Terry is right that sub-optimal working conditions in China are nothing new, and it hasn’t seemed to bother us before. As previously stated here, I think we all had an idea of what conditions were like, but convinced ourselves that they were only a little worse. But now that we know, should we continue to use technology or change our buying and using behavior?

It’s tough in this world to be completely pure. I like the romantic idea of a grassroots movement traveling via only world of mouth to convince people to stop buying Apple or any other electronics until practices change. But that would deprive this movement of the effective social tools of this decade, social media and twitter, and even things like this blog. Like it or not, we live in a technological world, and at least for the things we already own, there isn’t a lot we can do about it so we might as well use it.

It’s that future device that makes all the difference. Terry makes the assertion that it would be difficult for Apple people to be caught dead with a non-Apple product. Whether or not this is true, it’s missing the point. All electronics are bad apples in this fight. Foxconn supplies all of them, and it is not the only company with sub-par labor conditions. The question is are we willing to not buy any new electronics until something changes? That’s a tough sell, and leads us to the next issue Terry raises.

Should we solve our own problems first before worrying about those in other countries? I think morally we know the answer to this question. American businesses, justified by capitalism or not, are responsible for their actions in hiring Foxconn to do the work. It might be (and is) a perfectly sound business decision, but it compromises other values in the process. It doesn’t matter that we’ve got a lot of other things on our mind right now, it’s our responsibility. It may be difficult to enforce labor laws in other countries, but just because it is difficult doesn’t make it worth doing.

How do we get people to care? By educating ourselves, by raising awareness, and asking questions of the companies that make our favorite gadget, and perhaps being willing to sacrifice our next new toy. I respond by writing stories, maybe you do art, or writing your own article, or telling a couple of your friends. Whatever you do, do something.

You can share your thoughts and responses on our CFML page or on the Facebook group, or right here!

Note: It can be difficult to find news stories once something has passed out of the news cycle. A good newsletter for tech news is http://www.circuitnet.com/ where I found most of the stories for today’s post.

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