Tag Archives: Foxconn

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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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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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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Where Does My Stuff Come From?

Why did I write yesterday’s story?

The idea came from something I first saw on the Daily Show. In the segment, Jon Stewart describes the conditions at the “Fear Factory”. Workers are underpaid, forced to work long shifts in total silence. They live in dorms with 13-14 strangers in a 10′ x 10′ room, with bunks stacked 6 high.

Some of the workers jumped from the top of the building rather than continuing to work under those conditions. Their supervisors put up nets to catch them. The nets didn’t work.

This is the Shenzhen factory of Foxconn, and they make most of the electronics we know and love.

Foxconn has contracts with Apple, Amazon, Microsoft, ASUS, HP, Samsung, Toshiba, the list goes on. They make the iPad, the iPhone, the Xbox, the Kindle I bought my dad for Christmas, and maybe even the netbook I’m posting from. My Kindle Fire was not made by Foxconn, but they have a contract for the new 10.1” version.

I knew my stuff came from China, and so did you. I think we all have this idea that conditions aren’t quite as good as America, but that things are basically the same. We envision large efficient machines, or thousands of workers in lab coats. We even resent these people, for taking the job from us.

I type for a living. I write code, e-mails, short-stories, novels and this blog. I’m  at a risk for carpal-tunnel or some other repetitive stress injury if I’m not careful, but that’s probably a long way off. By 26, my current age, many of these workers have ruined their hands forever. Their hands shake like someone in their seventies with crippling arthritis. And then they’re out of a job.

When I first heard these stories it hit me like a punch in the gut. I’m not an Apple guy, but I do love my gadgets as much as the next person. I like that the price of these toys has been coming down. I even have a little of the tech-geek alpha male in me, wanting to have the latest thing and the widest array of technology. I’m one of the reasons these people have to work harder than I can possibly imagine. I’m complicit in their suffering, whether I knew it or not.

Apple is investigating the working conditions at this and other factories. It wouldn’t surprise me if many of the other companies that partner with Foxconn do the same. I could be comforted by this. I could think Apple will do the right thing, and that I don’t need worry about it. I think that’s what a lot of us do. We hear about something that makes us angry, maybe a little guilty, and we let it go at the first hint of something being done about it, with no follow-through.

That’s not good enough.

My wife and I have formed a Facebook group, Consumers for Fairness in Manufacturing and Labor (CFML). Our challenge is simple:

1) Pick ONE electronic device you own (cell phone, eReader, tablet, computer, etc.). It can be your latest gadget, or a device you use all the time.

2) Find out where your device was made.

3) Find out how much the workers who made your device are paid, the hours they work, and the conditions they work and live in.

4) Post what you’ve learned on the Facebook page, this blog or share it with your friends.

We’ll be on a lighter note tomorrow on the blog, but I really hope you’ll take some time to learn more about this. Thanks in advance!

NOTE: I’ve been learning a lot about this subject the last couple of weeks, and have posted a number of links in the Facebook group. One that I would highlight in particular is “Mr. Daisey and The Apple Factory”, which was featured recently on This American Life. The NY Times featured Foxconn as well in an article last Thursday found here.

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Competitive Edge

UPDATE 01/06/15: You can download an eBook version of this story for FREE on the Internet Archive. Enjoy!

NOTE:

I’ll explain more tomorrow, but for now please enjoy. Please feel free to leave any comments\questions below.

Competitive Edge

Yao Hang-Shien sat in his concrete walled office about to light a cigar when Chang burst in. His younger subordinate was always coming into his office unannounced, but Shien chose to accept it since nothing he’d said had changed Chang’s habits. His only form of objection was to continue lighting his cigar without looking up, taking several short puffs before fixing his gaze upward.

Chang was in his late thirties and thin. Despite his supervisory position, he almost never wore a tie or long sleeves to work, and often kept the top two buttons of his shirt unbuttoned. It was deathly hot in the factory, even back in the offices, so again Shien accepted this behavior without comment. Privately he thought it was doubtful Chang would move up in the company if he kept dressing that way, but that was not his problem.

In contrast, Shien sported a glossy black tie, polished leather shoes, a clean and pressed white shirt, and creased dress pants. His suit jacket was draped over the back of his chair, but he could toss it on in a practiced motion should the need arise. The concrete walled room was just one level above the main factory floor and was his day to day office. When customers flew in to meet with him he used the nicer office three flights up. The desk was nearly twice the size of the one he sat behind now, made from mahogany, with leather chairs on either side. There was a full bar, couch, and wall to wall windows with a sweeping view of Shenzhen.

That was the proper place for Shien to be enjoying a cigar, rather than this windowless cold room with plastic chairs, but the necessities of his job meant some sacrifices.

“Yes, Chang?” He asked, not particularly interested.

“It’s about the Amy’s, sir.”

It was always about the Amy’s.

“What is it this time?”

Chang wiped his brow nervously, his dark black hair, only now showing the slightest touches of gray, matting from sweat. Shien, though only ten years Chang’s senior, suffered from male pattern baldness, with only a few thin stands crossing the divide between the sides of his head.

“We lost four more of them last night.” Chang, despite his urgency, seemed reluctant to speak.

Shien’s eyebrows raised, “Lost?”

“They jumped, sir.”

“We have the nets for that sort of thing,” Shien said, his voice maintaining a steady calm.

Chang nodded, “Yes I know. They were working for a while.” His hands didn’t quite seem to know where to rest in his lap. He placed them on his knees, then clasped them back in front of his chest. Shien had rarely seen the younger man so nervous before, and he was enjoying it.

“Yes?” He spoke softly, allowing a hint of menace into his voice.

Once Chang found the words, they poured out of him, “The nets catch them alright, but then one jumps on top of the last one. We put the nets too low. They can build up enough force if they land just right…”

Shien raised a hand, “I get the idea. Presumably there was a fifth Amy who survived.”

“Yes,” Chang nodded, “we have her in isolation for now. Do you want to see her?”

Shien shook his head, “Talking to one Amy is pretty much like talking to another. You can put her to sleep. It’s not kind to keep an animal caged for long.”

He took another long puff of his cigar and tapped the ashes onto his desk. The surface was faux wood plastic, and was tinged gray in the spot where he had ashed his cigars for many years.

“We need more variety in the herd,” Chang said, his voice growing more confident.

Shien raised a tired hand again, “I’ve explained this to you before, Chang. The Amy’s are bred from the very best stock. They are detail-oriented but submissive, and they can work for hours without rest. They are competitive enough to keep up our quotas but not enough to foster aggression. And since they are all the same it makes it that much harder for one of them to be dominant. If we introduced new breeds into the herd it would hurt the integrity we’ve worked so hard to maintain.”

“But they’re burning out faster than before,” Chang said pulling out a small tablet computer. With a couple of flicks of his finger he brought up a chart and laid it on Shien’s desk. “They only last about eighteen months now before needing to be put to sleep. By the end their hands are so ruined they can’t even pick up a tool. It’s getting more expensive to replace them.”

“The basic building blocks are still very cheap to acquire, and we have an ample supply. Every Amy carries thousands of spare parts for her future offspring,” Shien said, half looking at the graph. “That’s why we use the Amy’s in the first place.”

“But we could build machines…”

“Machines are expensive and difficult to replace. It would take months of engineering to build what we can train Amy to do in a day. Machines need regular servicing, whereas the Amy’s require minimal care, and are cheap to replace. All of this you know, Chang,” Shien tapped his cigar again, the ashes collecting on the surface of Chang’s tablet. The gesture was deliberate and dismissive, but Chang ignored it, brushing the ashes aside and putting the tablet back in his lap.

“Have you been to the dormitories lately? They’re becoming more crowded. These last couple of orders have forced us to increase our workforce by twenty percent.”

Shien’s eyes narrowed, “There are ten beds in each of those dormitories, and ten Amy’s in each room?”

“Yes,” Chang said.

Shien mentally shook his head at the younger man’s ignorance, “There’s room for two in each of those beds. If they sleep with their heads at opposite ends we can double our workforce before needing to expand.”

The lights flickered as he spoke, and moments later an alarm sounded. Shien stamped out his cigar angrily on the desk and threw on his jacket, bursting past Chang and out his double doors. The upper level was square, with his office comprising one side. The hallway was lined with metal railings painted white, looking down over the vast open space of the lobby. The stairway was normally retracted so nothing on the ground level could get up to the second level without a supervisor’s permission. Shien pushed a button on the railing to lower the stairs, beginning to walk down even before they had fully deployed. He jumped the last couple of feet and started running toward the end of the lobby, the younger Chang breathing heavily to keep up with him.

The doors that led to the long factory floor were sealed. Two small windows afforded the only view of the thousands of work benches that lay beyond. Shien ignored these, pulling out an access card from his jacket pocket and swiping it in a card reader to unseal the doors. He grabbed both metal handles of the doors and flung them wide open.

A frightened technician was huddled in a corner near the alarm button, and Shien strode over to him without a moment’s hesitation. He shoved the man aside and punched the button off savagely. The room was silent. This distraction dealt with, Shien turned to assess the source of the alarm.

The room was silent. The factory floor was always silent. At every work bench an Amy would be soldering a chip to a circuit board, or assembling a case for a cell phone. This room in particular had been working on motherboards for tablet computers like the one Chang used, This silence was different, more permanent than the usual enforced silence.

One-thousand and twenty-four Amy’s lay slumped over their benches, their throats slit from ear to ear. They were naked, none of the Amy’s ever wore clothing. All of the Amy’s were the same, after all, they were clones.

Shien lifted the closest Amy’s head and thrust it violently backward so that her body fell in a lump on the hard cement floor. Her eyes were half-open, looking in the direction of the door as Chang entered. The younger man was stunned to silence for the first time in his life, something that Shien found useful at this particular moment.

He picked up the circuit board the Amy’s had been working on and flinched as the edge of the board nicked his fingers. The green was tinged in the dark red of blood.

“Damn engineers!” He cursed, “they had to make those tablets thinner. These boards are as sharp as a knife edge. It was only a matter of time before the Amy’s figured it out.”

He tossed the board back on the workbench. Chang’s eyes never left the fallen Amy. Her body was thirteen, though in actuality she was probably only a couple of months old. Her black hair was like straw and cut short. Her eyes were black and lifeless. The hint of breasts just starting to develop were stained with blood from the six inch gash across her neck.

Shien put a hand on the younger man’s shoulder, “It’s alright. They probably only ruined 5% of the boards. The rest can be cleaned. All circuit boards have a little bit of blood and sweat on them.”

Chang nodded, though was still unable to speak. Shien continued.

“It’s gonna give us a devil of a time meeting the Christmas rush though, but scarcity does drive up value and we’ll still be able to make the secondary quotas. This could actually solve a number of our problems.”

Chang nodded again. He looked at Shien, his eyes wide and his breathing heavy but Shien’s face remained the vision of calm.

“I’ll take you to lunch, Chang.” Shien said, grabbing the man’s tablet. “Somewhere new. That’ll do your nerves some good.” With a couple of taps Shien brought up the dinner spinner app, gave the tablet a shake, then nodded with approval at the result.

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