Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

Summary: Go ahead and buy your consumer electronics. Doing so is putting food in people's mouths. It's also putting blood on all our hands.

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This is a challenging story to tell, because no matter how you approach it, it's horrible. Even if you thought you knew the whole story, you don't. This week, we found out it gets even worse.

First, though, some background.

"Run to your Death"

Apple's iPad, iPhone, and other Apple products are made in China by a $61 billion company named Foxconn. According to Reuters, Foxconn is the world's largest maker of electronic components. Beyond Apple products, Foxconn also makes products for other technology companies, including HP and Dell.

Last May, we learned about the string of suicides on Apple's production line. As of May 27, 16 people had attempted to take their lives by jumping off factory roofs (12 succeeded). At least another 20 were stopped before they could jump. Reuters reports that Chinese workers have "twisted Foxconn's Chinese name so that it now sounds like: 'Run to your Death'."

51 cents an hour

The company strings nets between buildings as a way to catch jumpers. According to Foxconn's CEO, Terry Gou, "It is a clumsy solution, but it may save lives." .

On the 10th of each month, Foxconn workers have their only good day. That's because they get the Chinese equivalent of $130. That's $130 for about 240 hours of work. The math is disturbing. These workers make about 51 cents an hour.

It should be noted that Apple's Foxconn workers used to work longer hours, as much as 70 hours a week. Apple mandated that the maximum overtime be 20 hours a week, so Foxconn workers now only work 60 hours a week. Of course, they're still making only 51 cents an hour.

By contrast, according to Forbes, Mr. Gou has a net worth of $5.5 billion. Steve Jobs has a net worth of $6.1 billion

51 cents an hour is apparently too much

I wrote a lot about China's workers in How To Save Jobs. I wrote about how, to many Chinese workers, middle class means you make the princely sum of $2 an day (a subset of that chapter is on CNN at China on $2 a day). By these measures, workers at Foxconn make a lot more than the typical Chinese peasant.

In How To Save Jobs, I talked about how the "middle classing" of Chinese workers will be driving the cost of goods up for those American companies who outsource jobs to China. I wrote that as workers earn more in China, companies will have to find workers in new places, people willing to work for less money.

This is, apparently, one possibility of what's happened at Foxconn. And this is where our story gets even more troubling.

The bulk of Foxconn's employees work in Longhua, a suburb of the massive Chinese industrial city of Shenzhen. It seems that 51 cents an hour is too much to pay for workers in Shenzhen. Remember, these are workers who are under such pressure that the factory complex is the site of a suicide cluster.

According to another Reuters report, Foxconn is spending something on the order of $10 billion to build a new plant in Chengdu. Why? According to Reuters, "Foxconn is expanding...to where wages are lower and workers more plentiful."

Foxconn may be spending billions of dollars to build a plant where it can pay workers even less than 51 cents an hour.

The rest of the story

On the other hand, the story may be more nuanced than it appears on the surface. In the May Reuters report, Gou is quoted as saying that he's considering moving factories closer to where the workers' families live.

Both Gou and Jobs find themselves caught between something of a rock and a hard place. According to the Reuters interview, Gou seemed genuinely disturbed about the worker deaths, but is also faced the challenge of keeping up with an almost insane level of demand, which often involved stretching workers to the breaking point.

We in the press are also not without some level of involvement in this. Whenever Apple (and, to a lesser extend, other vendors) can't keep up with demand, we often criticize management for poor planning and delivery. Avoiding our criticism may well mean pushing some foreign workers beyond their limits.

It should also be noted that for an emerging country, the Foxconn plant is actually quite progressive. The workers make considerably more than almost anyone else doing the same work in China.

Deplorable working conditions aren't confined to just Foxconn, or even to China for that matter. There's a fascinating movie called Shipbreakers that shows the absolutely squalid conditions workers in India must put up with at a site that breaks apart old ships for scrap. Workers are seen walking over decaying metal scraps and through toxic water -- barefoot.

But even that's not as clear cut as it might be. These poorly paid workers would otherwise starve, and hundreds of thousands of them make the trek to the shipbreaker port from all across the country because it's a job that pays -- even as it kills.

The sad fact is the average salary worldwide is $7,000 per year. Given how much we make in America and the number of very rich worldwide, that means that there are a tremendous number of people on the planet who make a lot less than $7,000.

In China, the average employment income per person, per year, is $4,325. Given the extreme income disparity between billionaires like Terry Gou and dirt poor farmers in the hinterlands, billions of Chinese make well less than that each year.

Here's perspective: in my research for How To Save Jobs, I calculated that more people are starving in China and India than America has people.

What should we do? What should we think?

This is a deeply disturbing topic to contemplate. Do we Americans really need our electronic toys so much, we're willing to look away when our fellow human beings are dying from the pressure they're placed under to, essentially, live the lives of slaves?

Yes, I know these people are getting paid and slaves don't get paid, but where do we draw the line? At what point does the stress, the long hours, the ban on speaking to other workers, the requirement that workers stand without being able to move or stretch for hours on end, the beatings, at what point does all of this become too much for us to accept?

It's not an easy answer. Millions of Americans rely on their jobs in the electronics and computer industries and those jobs are ultimately dependent on our continual purchases of affordable electronics. If we stopped buying our iPads and iPhones (and laptops and desktops and motherboards), Americans would lose jobs.

We also can't build these devices in the U.S. and have them sell.

According to Wolfram Alpha, the median American wage is $42,270 per year. That means each worker generally costs American employers about $15.57/hour. For the sake of this exercise, let's leave out the high cost of benefits. Even so, the typical American worker makes 30 times more than the typical Foxconn worker.

The low-end iPad sells for $499. If it were built by Americans, it would have to cost $14,970. No one would buy an iPad for $14,970. No one would buy a mid-level laptop for $23,970. No one would buy a smartphone for $5,970.

The only way we're able to get our affordable consumer electronics is, quite literally, on the blood of other humans working in misery.

And yet.

If we were to simply decide to stop buying consumer electronics, not only would American jobs be lost, the jobs of those miserable Chinese workers would be eliminated as well.

The sad, sad, horribly sad fact is these jobs are actually good for many of the workers at Foxconn. Because they're making so much more than their typical Chinese brethren, they're desperate to keep the gigs, even if the work is, almost literally, torture. Working at Foxconn, they're able to send money home to starving families, they're able to put some of their children into school, and they're able to move up, ever so slightly, on the incomprehensibly brutal economic ladder that exists in China.

So are these deplorable conditions Terry Gou's fault? Are they Steve Jobs' fault? Are they our fault?

Chinese workers -- and many other people throughout the world -- live in terrible conditions. We Americans are far more fortunate, all of us, than almost anyone here can imagine.

I'd like to see Mr. Gou relax some of the terrible working restrictions on his workers. I'd like to encourage the executives at Apple here in American who oversea the Foxconn contract to help motivate Foxconn to make improved conditions a priority.

The fact is, we're going to keep buying our consumer electronics. The good news is, doing so is putting food in people's mouths. The bad news is, it's also putting blood on all our hands. That's our world.

Topics: CXO, Apple, Outsourcing, IT Employment

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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Talkback

148 comments
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  • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

    As usual you seem to completely focus on Apple
    explodingwalrus
    • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

      @explodingwalrus
      Gee, he included HP and Dell. Did you not read the article?
      No_Ax_to_Grind
      • Not in the title he didn't

        @No_Ax_to_Grind
        And based on the title I knew who it was:)

        Pagan jim
        James Quinn
    • Only Apple is to blame

      @explodingwalrus
      Workers working on HP and Dell products aren't killing themselves. Only the workers who work on Apple's products. The explanation is twofold:
      1. Apple sells incredible numbers of units right after release of a new product so workers who work on Apple products are far more rushed.
      2. There is an unprecedented level of security imposed on people working on Apple products and this one is 100% Steve Jobs' fault because he is the one that mandates it. This extra security causes guards to beat workers they suspect of leaking info and, in some cases, even killing them. This added level of stress is also a contributing factor to the suicide of workers who work on Apple products.

      This [b]is[/b] an Apple only problem and so the author is 100% right to focus on Apple.
      NonZealot
      • Citation please...

        @NonZealot... Like usual this sounds like a Ipullfrommyass statistic.

        Edit: and yet you buy Apple products, I guess this makes you either a hypocrite, or an accessory.
        Snooki_smoosh_smoosh
      • Guards? Are they prisoners or are they security?

        @NonZealot
        Now why beat anyone just fire them. If they do get beaten at all that is. Might I ask for some proof on that and if there have been beatings has Apple not made attempts to correct this? In and of itself being secretive is NOT a crime. Being successful is hardly a crime either. If the workers are being badly treated then the fault lies with the government of China for lax laws to protect their workers and the company itself who employes said employee's.

        Pagan jim
        James Quinn
      • I'm an accessory

        [i]I guess this makes you either a hypocrite, or an accessory.[/i]

        And I admit it. I do try to buy non Apple products wherever I can and will continue to do so until Apple improves as a company. I can't wait to replace my iPhone with a WP8 phone!
        NonZealot
      • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

        @NonZealot

        When I see 'you' buying only US designed and manufactured computers and other electronics I MIGHT believe a fraction of rhetoric you discharge. Until then you're yet another internet blowhard that represents nothing and does nothing.
        Win3.1
      • @Win3.1: Why would I buy US made stuff?

        [i]When I see 'you' buying only US designed and manufactured computers and other electronics I MIGHT believe a fraction of rhetoric you discharge.[/i]

        I live in Canada. If anything, I'd buy Canadian made stuff.

        The truth is that almost all electronics are made in China. However, some companies that outsource to China have horrendous safety records (Apple) while others have very good safety records (HP, Dell, MS).

        Of course, I've purchased 2 Apple products myself so, as I've already admitted, I'm an accessory. The difference is that I can admit to it. I don't deny it contrary to [b]all[/b] evidence. As you can see first hand, the Apple zealots deny, deny, deny anything that paints Apple in anything that is less than 110% positive.
        NonZealot
      • It's not THAT hard

        @NonZealot
        Try? Just don't and sell the ones you have with non-Apple equivalents. It's not that hard.
        ZackCDLVI
      • Is there a name for this little fantasy world you live on?

        <i>"Workers working on HP and Dell products aren't killing themselves. Only the workers who work on Apple's products."</i><br><br>Is there a name for this little fantasy world you live on? They're the <i>same</i> workers. They <i>all</i> contract through Foxconn. HP is the global market share leader of all companies, they ship roughly 4x as many products as Apple, Dell over 3x as many products. Nokia commands 40% of the cell phone market as yet another company that contracts through Foxconn... and you're blaming this completely on Apple?
        olePigeon
      • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

        @NonZealot blathered:

        "The truth is that almost all electronics are made in China."

        How about the furniture you're sitting on? How about a good portion of the food additives or the lamp assemblies you use to light your basement room? Do you REALLY think an electronics plant worker has it worse than the people who spray on the wood finishes?

        As I said, you're yet another internet blowhard that represents nothing and does nothing.

        When you care to cite/slow these studies or records you inexplicably seem to have access to you MIGHT get more credibility. Until then you're just a *zealot
        Win3.1
      • "Bli Blitish"

        @Win3.1<br><br>And I'm British. So I try to buy British. Which is why I use Ubuntu! lol <br><br>Actually, I tried to by a British laptop once, but unfortunately all it's insides where made, guess where...<br><br>Best wishes, G.
        mrgoose
      • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

        @NonZealot

        WRONG

        Your logic is so desperately broken that it doesn't even slightly support your point.

        Go ahead and toss out the fact you have absolutely NO FACTS to support your wild assumptions and claims that this problem is specific to Apple.

        Any person who isn't salivating at any chance to attack the company whose product is in YOUR pocket can look rationally on the situation.

        The workers are overstressed by demands placed upon them by factory managers, not by the electronics in their hands! This is a large factory complex, and the problems are focused on a specific section. There are other sections in FOXCONN that also make Apple products, but they don't have te same problems.

        Apple is the only manufacturer mentioned in the article that initiated overtime limits--not HP or DELL.

        Yet somehow, you blame the designer of the metals in the workers' hands?

        Does YOUR iPhone make YOU want to kill yourself when you hold it in your hands?

        Get a grip.
        lelandhendrix@...
      • RE: Is Apple's suicide factory outsourcing to even cheaper Chinese peasants?

        @NonZealot

        HP actually gets awards for increasing the working standards for employees in China and India. Now if they would only:
        1. Do that for their US employees and
        2. Increase the quality standards for the PRODUCTS we manufactured there,

        THEN, MAYBE, HP wouldn't produce so much dross.
        tkejlboom
    • That is because ....

      @explodingwalrus
      .... it is Apple who is the largest and most powerfull player in this situation with its massive marketing scheme. They seem to set the bar and the rules. It is like Walmart. If you argue with either you are out of a job/contract.
      It is not Apple bashing per se, but pointing out the most powerfull culprit. It could just as easily have been Sony years ago.
      kd5auq
  • So...

    Now you have stuck the boot into Apple, how's about a bit of research on how other tech companies experiences with Chinese companies (even Foxconn, coz they don't only do Apple stuff) pan out. Or not. Be a journalist, or go for clickbait.
    zkiwi
  • Cupertino

    And I thought Apple was proudly made in Cupertino. So, I reckon it's just the same old stuff as the PC.
    duclod
    • No matter where it is made one can always have

      @duclod
      higher standards than another.

      Pagan jim
      James Quinn
    • Watch, here come the claims that Apple products aren't built the same

      @duclod
      The Apple zealots will claim that Apple products are built differently than non Apple products when it suits them. Then they will claim that Apple products are built exactly the same when it comes to making sure Dell and HP get blamed for security and overtime policies as set by Apple.
      NonZealot