Apple's supply chain flap: It's really about us

Apple's supply chain flap: It's really about us

Summary: Apple is under fire for its supply chain labor, but every tech item---and thing you own---goes through the same manufacturing paces.

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Apple CEO Tim Cook has responded to a New York Times report about the working conditions at its Foxconn contract manufacturer as false and offensive.

In a long letter to employees published by 9to5Mac, Cook outlined how Apple cares about workers in its supply chain and takes steps to audit how they are treated. The response comes after a New York Times went into detail about how Apple's China manufacturing efforts are a) necessary due to U.S. inability to be nimble and b) the cost advantages of making your electronics abroad.

Apple's supply chain flap: It's really about us

Credit: Associated Press

Apple was the main target of the story, but the Times made a passing mention that there was a tech industry problem. It didn't go much deeper on the subject. Apple is a much better storyline. I've been relatively silent on this Apple supply chain argument because I think the company is being targeted because it's the big dog on the tech block. In fact, the Apple-Foxconn tale isn't really just a tech problem. It's a U.S. problem and it's a consumer problem that goes well beyond tech.

In other words, Cook has every right to be miffed about the Times report. His company is being singled out.

A few thoughts at a high level:

Apple may be the poster child for manufacturing abroad, but HP also uses Foxconn heavily. Analysts estimate that Apple will be roughly 40 percent of Foxconn's revenue in 2012. HP is about 25 percent, according to Fubon Research. No one is writing about HP though even though its supply chain report reads just like Apple's. Every electronic you have on you right now goes through China. The data center that powers the cloud behind those devices were also made by folks stacked in tech dorms in China. The minerals in the battery were mined somewhere. Deep down do you really give a rat's ass about the working conditions that created those relatively inexpensive devices? Of course not, you're from a Western economy. And from what I can tell you're still buying as much tech gear as you can.

This chart from Fubon Research gives you a rough sketch of Hon Hai's revenue breakdown. Hon Hai is the parent of Foxconn.

It's not just tech. Tech is being thrown under the bus with this debate because it's sexier. Ever notice how everything you wear comes from somewhere else too. We go to Wal-Mart, Target or wherever and demand cheap chic. You don't get cheap without inexpensive labor. In the fashion industry the race is on to find more sourcing outside of China. Why? Labor costs are going up. Africa is looking good at the moment. Rest assured that shirt on your back has some exploited labor behind it. In fact, everything you own comes from a supply chain that probably has multiple things you just don't want to know about. You could swap out Apple in that New York Times story and replace it with almost any American corporate giant.

The U.S. wants inexpensive. Theoretically, there should be some buy American movement that would make companies manufacture here and then charge prices that make them whole. First, the buy American movement never quite worked. Every institution we have depends on prices being kept in check. To do that you need the cheapest labor you can find. Take the U.S. government. These guys print money better than any counterfeiter on the planet. The whole house of cards depends on the U.S. being a reserve currency. Inflation would go through the roof if we all suddenly manufactured everything here. The pols talk about U.S. manufacturing being built up, but their grand plan to print money depends on cheap goods or we'll look like Germany after World War I with buckets of worthless currency. And then there's the reality that all of these takes on the abused supply chain are all viewed through the Western lens. To that person working in the Foxconn plant he's providing for his family and future generations. To him, the pay is probably pretty good. Maybe the second and third generations wind up running Foxconn. Ditto for the guy in the textile worker in Africa and every other person in an emerging market.

The bottom line here is we enable a supply chain that has a lot of warts. We want to examine those warts, but not really. This flap about worker safety isn't about Apple, the tech industry or any other vertical. It's about us.

Related:

CNET: Tim Cook: Apple cares about ‘every worker’ in its supply chain

Topics: China, Apple, Enterprise Software, Software

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309 comments
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  • RE: Apple's supply chain flap: It's really about us

    So you're saying we shouldn't do anything about it because then we can't buy cheap stuff. Got it. Status quo it is then. Thanks for putting that in perspective for me.
    marbo100
    • You're not that dense, are you?

      @marbo100
      The article doesn't say that at all. True the ending points out that our viewpoint isn't the only one that is relevant, but that's not the message.

      The message is that instead of picking on one corporation because they happen to be the media darling, we need to evaluate how badly do we really want to change the situation? If we want to change it, then we need to understand it and the first step for that understanding is to know that the issue is pervasive and driven by our buying habits. Only when we get that basic truth can we make a decision about how we proceed.

      Change, don't change, whichever path we take, we, the consumers of the First World have to decide what we are willing to do either maintain the status quo or not. But first we have to understand.
      use_what_works_4_U
      • RE: Apple's supply chain flap: It's really about us

        @macadam

        agreed...
        HypnoToad72
      • Apple has known about this issue for years.... THEY DON'T GIVE A DAMN.

        @macadam .... Apple is quite happy for their products to be made by slaves.

        What's the problem, Apple stock is doing great?
        Reality Bites
      • RE: Apple's supply chain flap: It's really about us

        @macadam agreed. They are not "slaves" only by our limited Western Perspective. They are responsible adults making their own economic decisions. I wish we in America could do the same without a federal overlord mandating and stipulating conditions that are onerous to bear, i.e., minimum wage laws that only cause job shortages, and income taxes that are essentially making us a slave of the federal plantation. Those jobs might have been here had our government not imposed their authority on us.
        clifftrapp
      • RE: Apple's supply chain flap: It's really about us

        @marbo100

        yeah we can't blame Apple or industry. It's our fault because we are looking for the best bargain which is different from what we were looking for 50 plus years ago. You see we are dense because we can't see human nature changed.
        Turd Furgeson
      • RE: Apple's supply chain flap: It's really about us

        @macadam - Apparently Yes to your question, and BINGO to your rebuttal.
        ItsTheBottomLine
      • RE: Apple's supply chain flap: It's really about us

        @macadam
        Very well said.
        mKind
      • RE: Apple's supply chain flap: It's really about us

        @macadam <br><br>I would guess that Apple gets singled out more often not only because it is so large/successful, but also because it is so profitable (people would argue they have the margins to manufacture here) and because Apple seems to make an effort to change the appearance of the thing. Others companies have less pretense.<br><br>If you hire the mafia to do your collections, they will use illegal methods. It is what they do. If you hire a chinese contract manufacturer, the workers will work like chinese contract manufacturer workers. The conditions are why it is so cheap, scaleable, and flexible. <br><br>Using the mafia analogy, if you asked a Dell. HP, etc why they use the mafiaa for collections it would be something like "They are cost-effective, efficient at getting the job done, and we must use them to remain cost-competitive."<br><br>The Apple response seems to be more like "The mafiaa does not use illegal methods in the process of its collections services. We audit the mafiaa regularly to be sure the they are not doing anything illlegal.
        SlithyTove
      • RE: Apple's supply chain flap: It's really about us

        @clifftrap

        In China, if you create a union, they send you prison for 10 years. To be clear, China's "prisons" for dissidents are their notoriously unsafe coal mines. The reason our per capita prison population exceeds China's is that China kills off tens of thousands of theirs every year, because they wanted Union. In China if you report to the "Union", the communist party, that your employer ordered you to stick your bare hand into a known neurotoxin that would destroy your hands within a year, you will be blacklisted. If this isn't slavery, it's the next best thing.
        tkejlboom
      • RE: Apple's supply chain flap: It's really about us

        @Reality Bites
        I am sure AAPL is doing quite well, but I honestly don't follow it right now. I wish that circumstances a few years ago hadn't forced me to sell all my shares.

        As for slave labor? If you want to change it, then protest EVERYONE who uses foreign labor and don't buy their products. Go on, try it. Then let us know how that nudity works out for you when you walk down the street to work because you don't own a vehicle (yes Ford, GM, Chrysler, they all use inexpensive foreign labor for parts and manufacturing).
        use_what_works_4_U
      • RE: Apple's supply chain flap: It's really about us

        @slithytrove

        +1
        tkejlboom
      • RE: Apple's supply chain flap: It's really about us

        @clifftrapp

        Right, the Chinese model of limited government oppression, model environmental practices, and quality working conditions are something to which we should aspire.
        Jammin72
      • RE: Apple's supply chain flap: It's really about us

        @macadam
        In a virus outbreak, there is always a firstcase. Identifying that does not stop the rest of the Identification, but usually does help track further cases and sheds light on the outbreak. Apple may just be the first case. Good reporting identifies the first case (in this case it is possibly Apple). Good reporting should also clarify that they will do follow up and additional investigation, but someone has to be identified and then the public has to evaluate what that means to them (if it is important it gets traction, if it is not important it may not get traction). Hopefully the reporters continue to investigate and additional information comes out about the issues. We the consumer then have to know about the issue and care. Until we know about the issue (and eventually if it is isolated or common place) we don't know how to fully react.
        jkohut
      • RE: Apple's supply chain flap: It's really about us

        @macadam
        So your going with "don't single out Apple" instead of the usual Apple denial? I assume then that you admit the story is true. Don't you fanbois insist Apple is different, ie better than M$??

        Apple is just another greedy American company looking to maximize their profits at the expense of whoever they can exploit and ripoff. Since they're the top dog now they fully deserve the harsh glare of the spotlight.
        PhillyIT
      • RE: Apple's supply chain flap: It's really about us

        @Reality Bites [b]Apple has known about this issue for years.... THEY DON'T GIVE A DAMN.
        @macadam .... Apple is quite happy for their products to be made by slaves.

        What's the problem, Apple stock is doing great?[/b]

        So let's zero in on Apple and forget every other company that uses Foxconn - or Chinese - labor to manufacture their products. The very PC you are using was made by Chinese labor (and likely at Foxconn) if it's an HP, Sony, Leveno, Asus, Dell, etc. But that's okay because it's not an Apple product. Dolt.
        athynz
      • RE: Apple's supply chain flap: It's really about us

        @macadam @clifftrap
        Very well said indeed. I'm ashamed that I too look for "deals" that inevitably come from cheap labour somewhere else. But the economic condition cited in the article is a scary potential reality that I don't want to materialize.
        marketeermik@...
      • RE: Apple's supply chain flap: It's really about us

        @Reality Bites Foxconn workers are of course economic migrants, uprooted - by their own people, from rural areas. Economically they are much better off, but spiritually and emotionally the are probably not.

        To describe them as slaves [as you do below] is ludicrous - and an insult to real slaves.
        Graham Ellison
      • RE: Apple's supply chain flap: It's really about us

        @macadam

        Of course you go after the biggest company in the world first. Who else? The 5th, the 10th. Sorry you're an Apple fan. Means more to you than factory workers conditions your precious bloody company reputation does it.
        Bozzer
      • RE: Apple's supply chain flap: It's really about us

        @macadam "The message is that instead of picking on one corporation because they happen to be the media darling,"

        Is that why Apple was the prime suspect in the NYTimes article?
        I don't think so. The article was perfectly timed to trash Apple just after a blowout quarterly announcement. Stuff like this doesn't just happen. Someone MADE this happen. This was a MAJOR propaganda win for Apple's competitors. I'm guessing Microsoft was behind it.
        zato_3@...