Apple and Foxconn: Beginning to See the Light

Apple and Foxconn blinked. And those blinks are big in the shift away from worker abuse—even in low-wage nations—as a legitimate business model in the 21st century.

I’m talking about the way electronics giant Apple and its major supplier Foxconn recently gave in to public demands for better treatment of the workers who assemble iPads and iPhones in China.

Apple said it would invite an outside labor rights group to audit its suppliers, which could lead to problematic factories being publicly identified for the first time. Foxconn, meanwhile, said it would raise salaries for many workers in China 16 to 25 percent, to about $400 a month, before overtime. Foxconn also said it would reduce overtime hours at its factories.

These developments are remarkable. As writer David Ferris notes in an upcoming Workforce article, “Seemingly overnight, Apple, one of the world’s most secretive computer companies, declared its intention to become one of the most transparent.”

Foxconn, meanwhile, is the 800-pound gorilla of electronics manufacturing. It employs roughly 1.2 million Chinese workers and assembles an estimated 40 percent of the world’s smartphones, computers and other electronic gadgets.

Raising wages by as much as 25 percent is the kind of change that can move the needle. Don’t be surprised if Apple and other electronics products start costing more as a result.

Could Foxconn’s move simply mean Apple and other companies will shift work to still-lower-wage nations? Maybe. But that could be difficult given the thick web of electronics industry suppliers in China. What’s more, the same forces that pushed Apple and Foxconn to promise reforms are likely to make a low-road labor strategy difficult anywhere.

Those forces can be summed up as technology-fueled people power. People care more about good behavior from the companies in their lives. They are speaking up about their opinions and experiences. And they have the tools to be loud and effective in an era of Twitter, Facebook and YouTube.

In the case of Apple and Foxconn, media reports about harsh, dangerous working conditions at factories making Apple products prompted online petitions with hundreds of thousands of signatures as well as coordinated, worldwide protests at Apple stores.

Here’s how the New York Times characterized the effect of an empowered public on Foxconn: “Foxconn has conceded that employees and consumers have gained a sway once possessed only by Chinese bureaucrats and executives at the global electronics firms that hire Foxconn to build their products.”

Foxconn and Apple aren’t alone. Other firms in the past decade that have seen less-than-savory labor and supply chain practices challenged online include video-game maker Electronic Arts, Target and McDonald’s—which recently declared a new policy for pork suppliers after a video about the use of “gestation crates” in the industry went viral on YouTube.

Increasingly, businesses will have to work closely with their suppliers to make sure they are humane as well as cost-effective. Even the world’s most powerful companies are rubbing their eyes and starting to see the light.

Ed Frauenheim is senior editor at Workforce Management. To comment, write to efrauenheim@workforce.com.