Is Apple Going Far Enough?
MacBook Pro supplier facility in Shanghai.
If you believe Apple, it's doing everything possible to improve the safety of workers who make its popular iPhones, iPads and MacBooks overseas. In fact, the company argues that it goes further than its competitors. But is that really the case?
“Apple knows exactly what's going on at their suppliers but keeps a blind eye on the hardship of workers," said Debby Sze Wan Chan of Students & Scholars Against Corporate Misbehavior (SACOM). The Hong Kong-based watchdog group has been investigating technology-industry working conditions in China since 2005, often getting information via interviews with workers and visits to plants.
In one sense, Apple has been no worse than its competitors, many of which rely on the same suppliers. But Apple, as the most profitable company in the field, is in a better position than most of them to do something about it, whether that means paying more to its subcontractors to improve their working conditions or perhaps moving some of its manufacturing to the United States.
Apple has been notoriously tight-lipped about its supply chain, but after the New York Times reported on conditions at several companies that manufacture iPads, iPhones and some laptops, chief executive Tim Cook answered the company’s critics in an email.
Cook wrote that Apple was opening up its supply chain for inspections by the Fair Labor Association, a nonprofit group that works to improve labor conditions by setting up systems for reporting abuses, improving transparency and creating remediation plans. On Jan. 16 Apple became the first technology company to join the FLA, taking a leadership role, but only after facing broad public criticism.
SACOM notes Apple isn’t the only company that outsources to controversial companies. Foxconn, one of Apple’s major suppliers, also supplies Dell, Hewlett-Packard, Nokia and Microsoft.
But other tech companies have been proactive about safety, says SACOM. One of the major scandals at Foxconn involved the plant in Wuhan that builds Xbox 360s for Microsoft. Some 150 workers threatened to commit suicide Jan. 4 to protest their working conditions. Microsoft immediately launched an investigation into the incident and said a week later that the protest was driven by staffing assignments and transfer policies that need reform.
"In contrast, Apple did not feel accountable to the victims and public whenever there were gross labor-rights violations like mass poisoning at Wintek or explosion at Foxconn," SACOM's Chan said.
In the 2009 Wintek incident, 137 workers were poisoned by the use of a chemical called n-hexane to clean touch screens it supplied to Apple. Long-term exposure to n-hexane can damage the nervous system. Taiwan-based Wintek eventually settled with the workers for $1.5 million. WinTek is still an Apple supplier, according to the latest list that Apple has published.
Four Foxconn workers in Chengdu were killed and 18 injured in May 2011 when aluminum dust in the air caused an explosion at a factory that supplied iPads.
Bringing jobs back home
HP, Nokia and Samsung have been roughly as aggressive as Apple in outsourcing. But because of its sheer size, Apple is in a position to demand even more productivity from its subcontractors, who in turn squeeze more out of their workers.
If working conditions in China are irreparably bad, and Apple sees such enormous revenue, can’t it move production to the U.S. and still make hefty profits? Apple reported profit margins of 28.2 percent in its most recent quarter, with $13 billion in profits, far outstripping competitors such as Dell (5.83 percent and $839 million) or Hewlett-Packard (0.74 percent and $239 million).
The Dutch company Philips, for example, brought the manufacture of electric razors back from China to the Netherlands. Costs in China were not that much less than at home, as wages for skilled workers in China have increased. And the company decided the quality was just as high, if not better, than overseas, noted Sven Trantow, project leader at International Monitoring, a German group that studies industrial production.
Meanwhile, German companies for the most part have kept design and manufacture together in their native country.
"These companies follow the economic mantra of the Rhine Capitalism," Trantow wrote in an email. "They are not maximizing their profits … but they are combining profit orientation with a social and regional responsibility." Many of these companies aren’t well-known to people outside the industry, but they are often the biggest sellers in very specific markets. "We call them 'hidden champions,'" Trantow said.
Apple didn’t invent the idea of making goods in China; it just does it more profitably than anyone else.
Said Aaron Pickering, a spokesman for the Fair Labor Association: "Protecting workers' rights in product-supply chains shouldn't be the responsibility of one sector or of one small group of brands."