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Foxconn workers threaten mass suicide in response to terrible working conditions

by Erin Wigger and Peter Schnall
Foxconn (which manufactures iPhones and iPads for Apple) has experienced a number of suicides in the last two years – 14 to date, as well as a number of  unsuccessful attempts. The company responded by raising wages 66% at it’s Shenzen plant, boosting its number of counselors, and making stress management programs available to workers there. It also built safety netting around the factory to prevent further suicide attempts and required that all employees sign a “no suicide” clause in their contract (effectively preventing further payouts to families in the event of a death by suicide). Foxconn also responded with claims that it’s number of suicides, per capita, are not much higher than China’s national average – implying the suicides are not the result of conditions at the manufacturing plant.
However, on January 2nd approximately 150 workers took to the roof of Foxconn’s factory in Wuhan threatening mass suicide if their demands for better pay were not met. The New York Times reports that workers involved in the protest made accused Foxconn of reneging on the salary initially offered workers agreeing to leave the Wuhan factory – paying only a third of the previously proposed salary – and cited unfair treatment at the plant as the reason for their protest. (Recall the many stories that have appeared in the press of the oppressive working conditions at Foxconn with workers reporting excessive work weeks of 72 hours or more, militaristic supervision, low wages, and company induced indebtedness that have prevented many workers from leaving it’s factories.) 
A protest of this nature is shocking. It is hard to condone this type of negotiation or to imagine it is anything but counter-productive in terms of entering into a legitimate dialogue between employers and employees. So what drove it into being? Is this an act of absolute desperation on the part of a collectively abused and exploited labor force, or the extremist tactics of workers trying to coerce the company into bending to their demands?
If this were the first step worker’s had made toward resolving their conflict that would be one thing. But this protest came about only after Foxconn rejected workers attempts at bargaining and issued an ultimatum: resign and receive compensation or stay and continue on the same pay scale as before. In response  to these conditions, approximately 45 employees resigned, but none received any compensation.
This underlines the fact that Chinese employees have no safety net. They do not have the avenues of recourse we, as Americans, enjoy – though these rights in the U.S. are being whittled away daily (e.g. recall the recent Wisconsin Union Bill intended to strip public workers of their collective bargaining rights). In China, Geoffrey Crathall, Director at the China Labor Bulletin, was quoted to have said “employees feel they have no other option. If there were proper channels for the resolution of grievances, they wouldn’t have needed to resort to such actions” and, after weighing the facts, it is hard to disagree. Poor working conditions and pure desperation seem to have driven these workers to the roof.
The protest ended eight hours later after workers were talked down by Foxconn managers and local Chinese Communist Party officials. It remains dubious as to whether or not the dispute over wages has been adequately settled or not.


What a Surprise: Apple Profit Margins Rise at the Expense of Foxconn and Pegatron Corporation

Bloomberg reports in an article today that Apple’s margins have widened at the expense of its main supplier as Foxconn Technology Group cuts prices to retain orders for the iPhone and iPad.

The profit spread at Hon Hai Precision Industry, Foxconn’s Taipei-listed flagship, has narrowed to 1.5 percent since the debut of the iPhone in June 2007 as Apple’s operating margin more than doubled over the past five years, surpassing 30 percent.
Apparently, Foxconn as well as Pegatron are willing to sacrifice profit margins in exchange for volume and scale.  Both companies have seen profit margins decline despite increase sales due to rising salaries and lower sale prices to Apple Corp. on Ipads and Iphones.
This process puts both companies under increasing pressure to get more from workers for less. So if salaries go up it becomes critical to increase worker productivity.
Maybe this has something to do with repetitive motion disorders, stress disorders, suicides and explosions at plants not ready for production but which are pressed into service nonethless (see my previous blog).

See http://www.bloomberg.com/news/2012-01-04/apple-profit-margins-rise-at-foxconn-s-expense.html for more information.

Another explosion reported in a Chinese Manufacturer that supplies Apple

For the third time in little over a year an explosion has rocked a factory that supplies parts in the manufacturing of various Apple devices. The explosion injured 61, and sent 23 to the hospital. Fortunately, there were no fatalities. 

This particular plant (which supplies back panels needed in the manufacturing of IPads), according to Pegatron Chief Financial Officer Charles Lin, “…had not started operations yet. Part of the facility is still under pre-operation inspection and part is running trial production.” 1 
Chinese suppliers are under tremendous pressure from Apple to increase supply to keep up with worldwide demand for IPhones and IPads. Manufacturing the aluminum shells is, admittedly, not without risk. The shells need to be polished and the powder used in this process is potentially explosive – requiring a factory environment with adequate ventilation. Still, providing such an environment is not rocket science.
It is not hard to see that under pressure to increase production companies are cutting corners. In this case, a plant which has not yet “started operations” has already experienced an explosion injuring 61 people.
Who is responsible for this (preventable) disaster? Is it the company which rushed, recklessly, into trial production a facility not yet ready for prime-time, the Chinese government with its lax supervision of various regulations (or perhaps no regulations at all), or is it Apple computer corporation which turns a blind eye to the practices of its suppliers so that they may sell a million or so more iPhones and IPads. Apple Corporation made $7.31 billion dollars in profits in their 3rd Qtr. 2011 financial year alone.
Perhaps there are others who deserve mention.  Please share your take on this tragedy.
Peter Schnall

“Apple supplier Pegatron hit by China plant blast” By Clare Jim and Argin Chang, Reuters. 

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