Apple outsourcing to Foxconn

2010 $65.23 B

2011 $108.25 B

2012 $156.51 B

2013 $170.91 B

2014 $182.8 B

2010 $26.71 B

2011 $45.63

2012 $71.94 B

2013 $71.06 B

2014 $78.48 B

Ethical Dilemmas

About China

About Foxconn

Situation Part 2

Unreasonable working hours

Other substandard conditions

About Apple Inc.

Apple Inc. Annual Profits

Apple Inc. Annual Revenues

Consumer Products

• China is located in Asia (where slide is)
• Population: 1,355,692,576 (July 2014 est.)
• GDP (purchasing power parity) $13.39 trillion (2013 est.)
• GDP per capita (per person) $9,800
• Major industries: mining and ore processing, machine building, consumer products (e.g. electronics)
• Literacy rate: 95.1%
• Child labour percentage: unknown

• Taiwanese multinational electronics company
• Contracts manufacturing
• Headquartered in Tu Cheng, New Taipei, Taiwan
• Largest electric contractor
• Third largest information technology company by revenue
• Makes 40 percent of the world's consumer electronics
• Clients include Dell, Intel, Nintendo and of course Apple

• Crowded factory living areas: 7 to a room in Foxconn dormitories
• Discrimination: Mainland China by Taiwanese co-workers
• President of FLA: stress is created from boredom and alienation

-When did it happen?

• 2000s Apple began to outsource production
• Blew up in media in 2010 with mass suicides

-Where is it happening?

• Primarily in Chinese Foxconn factories
• E.g. the largest factory is in Longhua, Shenzhen, China

• Foxconn workers typically have 12 hour work days 6 days a week
• Continuous shifts: two 12 hour work sessions in a row
• Cap at 60 hours/week
• Chinese labour laws have a cap of 49 hours/week
• Foxconn does not comply with government standards
• Many of their workers work 60h/week+
• Tian Yu, a Foxconn employee worked over 84 hours in a single week
• Swelled legs: some have trouble walking
• Stress and long working hours believed are believed to have caused caused 18 worker suicides at Foxconn since 2010

Apple headquarters location

• Multinational corporation
• Headquartered in Cupertino, California (the map location)
• Designs, develops and sells consumer electronics and computer software
• Most valuable company in the world in terms of market value

Well known products include:

• iPod
• iPhone
• iPad

A Foxconn factory dorm

Situation Part 3

About Foxconn Factories

Situation Part 1

Unsafe working conditions

Unrepresentative Workers Committees

-Why did it happen?

• Belief that foreign workers are better
• Cheaper labour/low wages
• Access to a large skilled and willing workforce
• As we have learned, low cost of production, or input price(Foxconn) = more profitable for the company(Apple) and potentially lower price for consumer
• Foxconn profit: cut corners by buying cheaper chemicals and force long working hours
• If Apple pays suppliers low, it forces them to treat workers poorly and cut their safety

Who was involved?

• Apple Incorporated
• Foxconn Technology Group

-What is happening?

• Foxconn oppresses it’s factory workers with inhumane labour.

• Labour intensive jobs
• Apple products are assembled by hand
• e.g. iPhones take 141 steps to make
• Hires over 1 million workers
• Has 13 factories in 9 cities in China
• More than in any other country

• Information based upon Fair Labour Association report
• Aluminum dust is made by polishing iPads
• Poor ventilation and inadequate personal protective equipment
• Safety risk: Aluminum dust around the factory is concerning because it already caused a factory explosion at Chengdu in 2011 where 4 people were killed and 18 injured
• Aluminum dust is not safe to breathe

• There are worker committees, but the workers themselves do not know they exist
• Not representative: Management nominates committee executives, not workers
• Lack of involvement means that they do not have the power to resolve any issues, like health problems and reduced work hours

A Foxconn factory in Guangdong Province, China

Unreasonable pay

• Workers are paid $1.78/hour in 2012
• Average starting salary is $285/month in 2012
• Must pay for their food
• Unfair: 14 percent of workers do not receive fair compensation for unscheduled overtime
• e.g. 28 minutes of work means no overtime money
• 2011: Chengdu factory wage dispute = riots in dormitories
• 200 police wrestled with workers

• A picture from the explosion in May 2011 killed 4 and injured 18

Child Labour

Unsafe conditions at other Apple outsourcers

• Foxconn employs underage interns as young as 14
• These children were sent to Foxconn by schools but Foxconn did not bother to check their ID and age
• Make $244 a month and forced to work overtime if they didn't complete their projects.
• Approximately 2.7 percent of Foxconn's 1.2 million employees are made up of the interns.

• Dangerous chemical exposure at another Apple outsourcer, Wintek
• Workers sued Apple in 2010 because of exposure to a poison
• 100 exposed to n-Hexane, a neurotoxin but were never told
• Cheaper and more efficient screen cleaner to alcohol,
• n-Hexane causes nerve damage and paralysis

Pollution:Toxic waste

• According to environmental groups, Foxconn has been dumping black-greenish water with a chemical odour into the Huangcangjin and Haputang river.
• These rivers feed into the Yantze and Huangpu rivers (Major Rivers)
• Foxconn dumps this water twice a day
• The dumping of polluted wastewater contributes a lot to China's heavy metal pollution problem

Did the company make an ethical choice? What is being done.

If you were the CEO, what would you do?

• Through grueling work hours, unsafe conditions, mind numbing stress, unrepresentative workers committees and a crippling pay, Apple has made an extremely unethical choice, however they have worked to resolve these issues.
• After more than a dozen workers killed themselves, a team of experts suggested to put nets as a preventative measure
• To deal with the mental health of the workers, workers (*cough slaves) must sign documents to say they will not commit suicide (like that will do much)
• Apple executives explain, “They’ve done more than any company to prevent the widespread abuse of migrant workers”

Tim Cook, Apple's CEO

Questions

Did the company make an ethical choice? What is being done continued.

• Now that you know about the inhumane ethics of Foxconn factories we'll ask you some questions. Would you buy your electronics at an increased price, if Apple promised that it would directly support the conditions of these oppressed workers?
• Were you shocked about the human cost of the electronics that you cherish so dearly?
• Will you keep this in mind whenever you touch an electronic device?

• Apple claims to be creating reforms that reduce working hours, offer full payment of overtime wages and improved safety procedures.
• They continue to take suggestions to improve Foxconn work ethic.
• Work hours have been reduced to 53 hours/week from 60 hours/week
• Apple and Foxconn created a list of 360 items that need improvement in factories, and they have completed 99 percent of the items on the list.
• While this is unrelated, it is worthy to note that Change.org has created a petition to convince Apple to improve working conditions at Foxconn. This has been signed by hundreds of thousands of consumers.

Apple outsourcing to Foxconn

THANKS FOR

WATCHING! (even if you didn't pay attention)

By Michael Lin, Anthony, Gordon

How Apple keeps profit margins high by outsourcing production to Foxconn, an unethical company that oppresses it's workers.