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Apple (AAPL -1.6%) is underperforming today on above-average volume. The Fair Labor...
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Friday, March 30, 2012, 2:42 PM ETApple (AAPL -1.6%) is underperforming today on above-average volume. The Fair Labor Association's discovery of "non-compliances" at Foxconn's Chinese facilities, together with Apple and Foxconn's agreement to address the issues via new hiring and other measures, could have investors worried Apple will see higher manufacturing costs and lower margins.
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FLA: iPad plant conditions ‘way, way above average’
Author's pic
By Charles Starrett
Senior Editor, iLounge
Published: Wednesday, February 15, 2012
News Category: Apple
Working conditions at Foxconn are far better than those in other factories elsewhere in China, according to the initial findings of the Fair Labor Association. Reuters reports that the group is beginning its study—announced Monday—of Apple’s top eight suppliers in China, following several recent reports which painted the conditions at the plants in a negative light, as well as a number of documented worker suicides. Auret van Heerden, president of the FLA, spent the past several days visiting Foxconn plants in preparation for the study.
“The facilities are first-class; the physical conditions are way, way above average of the norm”, said van Heerden. “I was very surprised when I walked onto the floor at Foxconn, how tranquil it is compared with a garment factory. So the problems are not the intensity and burnout and pressure-cooker environment you have in a garment factory. . It’s more a function of monotony, of boredom, of alienation perhaps.” He went on to say that suicides have been a problem at Chinese factories since the 1990s. “You have lot of young people, coming from rural areas, away from families for the first time”, he said. “They’re taken from a rural into an industrial lifestyle, often quite an intense one, and that’s quite a shock to these young workers. And we find that they often need some kind of emotional support, and they can’t get it. Factories initially didn’t realize those workers needed emotional support.”
http://bit.ly/HqDsQb
Apple leading the way in having the best factories in China and leading the way in making them better doesn't make good copy for the media.
Patrick Mattimore, a fellow at the Institute for Analytic Journalism, recently published the following article on China’s People’s Daily Online, headlined: Media badly misplaying Foxconn suicides.
Taiwanese-owned Foxconn has had seven suicides this year. That sounds like a lot, but the firm has an estimated 800,000 workers, more than 300,000 of them at a single plant in Shenzhen.
Although exact figures are hard to come by, even the most conservative estimate for China’s suicide rate is 14 per 100,000 per year (World Health Organization). In other words, Foxconn’s suicide epidemic is actually lower than China’s national average of suicides.
I checked his figures. World Health Organization suicide figures for China (1999) are 13 males and 14.8 females per 100,000 people.
Elderly (65+ years) suicide rates can be as much as 50% higher than youth (18 to 24 years), which means Foxconn’s suicide rate, with its younger workforce, should be significantly below the national average.
Let’s estimate an average of 10 suicides per 100,000 at Foxconn. Just the Shenzhen Foxconn plant alone, with its 330,000 employees, would be expected to have about 33 suicides this year, or 14 so far.
Foxconn has had just 10 suicides this year, and that’s across its entire workforce.
http://zd.net/wSp5AQ
Once again, it just isn't good copy to say the suicide rate at Foxconn is significantly lower than the overall rate of suicide in China.
What makes a good story has little to do with what actually needs attention.
Fox has 1.2 million workers, would be 144 a year at the US rate.
And looked at another way, more people will be proud to own aapl because it's a good citizen.
And my friends if you have a major problem with that I would only suggest you look a little deeper inside your 'soul" and contemplate your morality.
Good trading
And nobody seems to mention the labor used to make products sold by Amazon, RIMM, HTC, Samsung, Sony, Microsoft, or any other major player, that I can see.
Just sour grapes or envy, as far as I can tell.
It's a group of robotic technicians.
I am talking about people.
Good trading
How about on Monday? Do you expect that people on 2 May 2012 are going to be more or less worried about rising costs in July of 2013?
Another down day for Apple [-x%]. Apparently, Apple investors are still concerned about increased labor costs by Foxconn labor restructuring.
or
Apple rebounds on Monday [+y%]. Upon further analysis over the weekend, investors concluded that possible increased labor costs could be offset by increased automated assembly and lower parts costs achieved by higher volumes.
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Apple is fundamentally unchanged on Monday, reflecting investor uncertainty about any impact resulting from Foxconn labor restructuring.
Up, down or unchanged you have your bullet for Monday after the close. You could be on CNBC after the close on Monday. The professional "analysts" don't do anything different.
Nothing, it's all in what's trending now that gets the most readers that then may buy more advertiser's soap. As always, follow the money, as this sure is not news.
I worked in China for nearly 9 years, I can almost guarantee that the workers will be unhappy about this change... Less O/T = less pay, no matter what the company says. These workers came from deep countryside with one and only one goal in mind - make as much money as possible in as short time as possible. O/T is a very profitable way to make money for them and they do want that. By law in China they can earn between 150% to 300% of their hourly rate for OT. They have no life after work and don't want life after work, they just want to make money and send it back to their families to build house, buy land, etc.. This ill conceived western worry about Chinese worker life-work balance, without deeper understanding of this issue, will backfire in employee dissatisfaction and lowered productivity.
Somehow reading these articles about Foxconn one can get an impression that this bad, bad Foxconn (or for many it is that really awful Apple) enslaves Chinese workers to work OT to satisfy gadget cravings of western customers... You couldn't be more wrong. At the place I worked, if I did not specifically banned OT that day, the employees would work OT undeterred. They would pocket the lunch allowances for OT or taxis and provide phony receipts, all with one and only one goal in mind to pocket as much cash as possible. And now comes that "carrying" western customer and deprives them of this extra income... Let's see how this will play out...
So if your typical airline pilot wants to fly for 40 hours straight to make a little extra Christmas cash, do you let him/her. Sure.
BTW. The objective for Foxconn is by Jul 2013 to reduce worker hours and maintain worker pay. Which means that your assumption of less hours, less pay is dead wrong.
And just out of curiosity I was wondering how would you technically do it (keep the same pay and reduce OT), when the OT varies from employee to employee and from month to month for the same employee... No matter what you do, some workers will feel that they are loosing on that new deal.
In addition, even if Foxconn increases hourly pay, the workers will only want the OT even more. I am not taking sides here, just stating my observations based on my experience in China.
BTW, I also feel it is likely that potentially sloppy assembled iPhone by an overworked Foxconn worker, may endanger far fewer lifes (if any) than a tired airline pilot (hance the pay differential as well). But what you or I think may not be so relevant, again I am not advocating excessive OT. I was only trying to shed some light on mentality of Chinese worker in these factories and potential repercussions steming from half-informed media requested changes.
From management point of view it actually might be cheaper to hire more workers if the OT seems to be an ongoing affair at Foxconn rather than pay 150-300% rates for the same assembly work with overworked workers being more prone to errors.
I thought that a 10% increase of a low salary would still be low.
Some here could not admire the success of Apple, or digest their money power.
The media makes money by bashing popular icons, be persons for products..
Also, isn't the enforcement of labor law the something that Chinese government is responsible for? Why are foreign companies imposing its Western standards onto a non-Western country? Before you know it, we'll be lobbying to give six-figure salary to those smart engineers at India because so many US firms outsources to India.
Big J in L.A., retired security analyst