Is Foxconn Baking Apple’s Reputation?

If you have an iPod, iPad, or iPhone, do you ever look at it and wonder about the people who assembled your electronic marvel?  Most people do not think about the supply chain, including labor, that goes into the products they use.  Yes, we do know about sweat shop and child labor and efforts to reduce this problem in the garment industry.  Yet every product has a supply chain behind it that may have problems associated with it.  Apple products, like most in the electronics industry, have “problems” with using conflict metals and minerals as well as labor issues.  This case will focus on the labor issues.

 

In February of 2011, Apple releases a report titled “Apple’s Supplier Responsibility 2011 Progress Report.”  It was the first effort by Apple to expose the labor problems it faces.  Among the problems were 137 employees being poisoned at its Wintek’s Suzhou factory in China by n-hexane, a cleaning agent used in the production of parts for Apple and Nokia. For Apple, the facility makes iPhone screens. The report also noted compliance problems with the 60 hour work week established by Apple.    However, the report does not offer much detail about what Apple is doing to address the problems.

 

The most disturbing part of the report might have been the problems at FoxConn Technology in Shenzhen.  During one five-month span, there were 15 suicides or attempted suicides.  The problem was so bad that the factory hung netting to catch workers trying to commit suicide by jumping from certain locations in the factory.

 

Foxconn remains a very active problem for Apple.  Major news outlets, including the New York Times, continue to report about the problems there.  After running two stories about Foxconn in January of 2012, Apple decided to reply to the New York Times.  The reply was a e-mail that CEO Tim Cook sent to employees.  It should be noted that Cook is the person at Apple who found the Foxconn facility.  The long e-mail is an attempt to boost employee morale.  The reports linking Apple to the tragic events at Foxconn can demoralize employees if they feel the company they work seems to care so little about people further up the supply chain.  Here is the text of the e-mail:

 

Team,

As a company and as individuals, we are defined by our values. Unfortunately some people are questioning Apple’s values today, and I’d like to address this with you directly. We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don’t care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It’s not who we are.

For the many hundreds of you who are based at our suppliers’ manufacturing sites around the world, or spend long stretches working there away from your families, I know you are as outraged by this as I am. For the people who aren’t as close to the supply chain, you have a right to know the facts.

Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain. As we reported earlier this month, we’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.

At the same time, no one has been more up front about the challenges we face. We are attacking problems aggressively with the help of the world’s foremost authorities on safety, the environment, and fair labor. It would be easy to look for problems in fewer places and report prettier results, but those would not be the actions of a leader.

Earlier this month we opened our supply chain for independent evaluations by the Fair Labor Association. Apple was in a unique position to lead the industry by taking this step, and we did it without hesitation. This will lead to more frequent and more transparent reporting on our supply chain, which we welcome. These are the kinds of actions our customers expect from Apple, and we will take more of them in the future.

We are focused on educating workers about their rights, so they are empowered to speak up when they see unsafe conditions or unfair treatment. As you know, more than a million people have been trained by our program.

We will continue to dig deeper, and we will undoubtedly find more issues. What we will not do — and never have done — is stand still or turn a blind eye to problems in our supply chain. On this you have my word. You can follow our progress at apple.com/supplierresponsibility.

To those within Apple who are tackling these issues every day, you have our thanks and admiration. Your work is significant and it is changing people’s lives. We are all proud to work alongside you.

Tim

Below are some reactions posted to a news story about the e-mail:

The only reason Cook and the Board care now is because of Public outcry… But it won’t hurt sales… People want the cheapest price they can get no matter what the costs. Hypocrites.

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0 replies · active 17 hours ago

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Coldwaters Rundeep · 22 hours ago

Who is making sure Apple is following it’s own policies? Corruption in this neck of the woods is to great to leave it up to the parent corporation and needs an outside agency that is arm length with Apple.

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2 replies · active 10 hours ago

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Tony · 19 hours ago

To which I would reply to Mr. Cook, bullshit. Apple doesn’t even care about people at corporate let alone the factories. Granted its a different level of caring but people are not treated with respect at Apple at. Very personal experience allows to me to share this. My experience with Apple in Cupertinomis that most people there can’t wait to get a job elsewhere. Get Apple on the resume and move on as quickly as possible. It’s a shit environment.

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3 replies · active 11 hours ago

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Industrial Hitlers · 20 hours ago

Apple CEO Tim Cook, just like Better-Off-Dead Liar and Stinky Hippie Steve Jobs, is an Industrial Hitler issuing self-serving propaganda while murdering slave labor.

People who eat up his obvious PR spin are complicit. That includes Obama, Congress, and every Apple employee and customer.

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0 replies · active 20 hours ago

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Will · 23 hours ago

Apple is to blame b/c it has been squeezing supplier profit margins which requires them to cut corners on safety. It’s that simple. Apple should use some of its record profits and provide it’s suppliers with some money to improve safety at its factories.

The concern over Foxconn is real for Apple. In late January, a self-described Apple started a petition at Change.Org.  Here is the e-mail requesting support for the petition:

According to the New York Times, workers at a factory in Shenzhen, China, owned by Foxconn (a company that manufactures iPhones, iPads and other devices for Apple) regularly work sixteen-hour, seven-day work weeks.

They stand until their legs swell and they can’t walk, and they perform repetitive motions on the production line for so long that some permanently lose the use of their hands. To cut costs, managers make workers use cheap chemicals that cause neurological damage. There has been a rash of suicides at the Foxconn plant, and 300 workers recently threatened to jump off the roof over a safety and pay dispute.

In short, as one former Apple executive told the New York Times, “Most people would be really disturbed if they saw where their iPhone comes from.”

Mark Shields, a self-described member of the “cult of Mac,” started a petition on Change.org demanding Apple exert its influence on its suppliers to improve working conditions for the factory workers that make iPhones, iPads and other Apple products. Click here to sign Mark’s petition right now.

Apple knows it can play an important role in ensuring safe and fair working conditions for the workers at its suppliers, like Foxconn. In 2005, the company released a supplier code of conduct, and it performs hundreds of audits each year in China and around the world to confirm its suppliers are meeting the code’s expectations.

But that’s where Apple’s commitment falters: the number of supplier violations has held steady year to year and Apple hasn’t consistently publicly stated which suppliers have problems or dropped offending suppliers.

The bottom line, Apple executives admit, is that they’re not being forced to change.

One current executive told the New York Times that there’s a trade-off: “You can either manufacture in comfortable, worker-friendly factories,” he said, or you can “make it better and faster and cheaper, which requires factories that seem harsh by American standards. And right now, customers care more about a new iPhone than working conditions in China.”

That means public pressure is the only thing that can force Apple to ensure its suppliers treat workers humanely. If enough people sign Mark’s petition — and tell Apple they care more about human beings than they do about how fast the company can produce the next generation iPhone — the company could be convinced to make real change for the workers at Foxconn and other factories.

 Click here to sign Mark’s petition demanding Apple change the way it does business.

Thanks for being a change-maker,

– Amanda and the Change.org team

People are beginning to question Apple’s commitment to responsible behavior.  The company is making billions while the suffering of many workers is well documented.  Foxconn is a massive facility.  Foxconn employees over 230,000 workers.  Most workers make about $17 a day and one quarter live on site in company barracks.  The kitchen at Foxcoon serves 3 tons of pork and 13 tons of rice per day.  We have not seen anything like Foxconn in the U.S. since the early days of the industrial revolution when “company towns” were in vogue.  In a company town, employees lived in housing owned by the company and shopped at stores owned by the company.  In fact, some employees were paid in company scrip rather than actual money.  No need to actual money when everything a worker made was being paid to the company.  Scrip eliminated the need to have cash on hand and was common in the coal industry

Questions to Consider

1.  Is Foxconn a crisis for Apple at this point?  Justify your answer.

2.  How does this case illustrate the connection between issues management and crisis management?

3.  What is Apple’s responsibility for the workers at Foxconn who are part of their supply chain?

4.  Does Apple’s strong, favorable reputation help to insulate them from the problems at Foxconn?  Why or why not?

5.  How would rate the ethics of Apple’s initial report disclosing their supply chain problems and why would you assign it that rating?

6.  How would you evaluate the effectiveness of the CEO’s defense of Apple?  What criteria did you apply to reach your conclusions?

7.  What else would you recommend Apple do to address the situation and why would those recommendations help?

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