Seeking to avoid the PR disaster faced when Nike’s (NYSE:NKE) manufacturing facilities were profiled in the early 90’s, Apple launched an investigation and issued a preliminary report. Some excerpts are worth sharing in order to understand the scale of outsourced Chinese manufacturing:
Working and Living Environment
The manufacturing facility supports over 200,000 employees (Apple uses less than 15% of that capacity) and has the services you’d expect in a medium city. The campus includes factories, employee housing, banks, a post office, a hospital, supermarkets, and a variety of recreational facilities including soccer fields, a swimming pool, TV lounges and Internet cafes. Ten cafeterias are also located throughout the campus…
Our team randomly selected and inspected a wide range of dormitories (both supplier-owned on-campus and off-site leased facilities) that collectively house over 32,000 people. Buildings are separated by gender, with female dorms containing a private bathroom/shower for each room and male dorm rooms typically sharing bathroom/shower facilities. The dorms have TV rooms, potable water, private lockers, free laundry service, and public telephones. Many also have ping-pong and snooker tables, and sitting/reading areas. All of the on-campus dorms have air conditioning.
And my favorite…
Our interviews with employees revealed areas of both satisfaction and dissatisfaction. A majority of employees interviewed were pleased with the work environment and specifically noted the opportunity for advancement, widespread year-end bonuses, and the reputation of the supplier in the industry. Additionally, employees consistently mentioned that they felt safe and secure in both the workplace and the dormitories.
Employees expressed dissatisfaction with some aspects of the workplace. The single largest complaint (approximately 20% of interviewed workers) was the lack of overtime during non-peak periods. The second largest complaint (less than 10%) was the transportation schedule for employees living in off-campus dorms, which they felt was inadequate outside of working hours.
The bottom line is what appears to a sheltered American as exploitation is really a ticket to a life away from subsistence farming with no running water, no indoor plumbing, no stable diet. Read about life in New York City during the late 1800’s and you will find conditions far worse than the ones that exist in China today.
Photos of the site can be found here.
Update: Based on the epithets being hurled into my inbox, some clarification of my opinion is needed. I am NOT saying that New York in the 1800s is an acceptable yardstick. My point is that China is following the same industrialization curve as the US, and will see the same relative gains in standards of living if the same market forces are allowed to run their course.