Hardware 2.0

Adrian Kingsley-Hughes

iPods: Made for kids, by kids

By Adrian Kingsley-Hughes | March 1, 2010, 5:46am PST

Summary: Apple’s annual report has revealed that some of its suppliers have been breaching the company’s “Supplier Code of Conduct” by using child labor and carrying out other dubious practices.

Apple’s annual report has revealed that some of its suppliers have been breaching the company’s “Supplier Code of Conduct” by using child labor and carrying out other dubious practices.

The most shocking of the revelations is that three factories responsible for manufacturing parts had 11 minors employed. These minors were 15 years old, but the minimum working age in the countries in question was 16.

Another 50 factories were found to be keeping workers on for longer than the maximum 60 hour work week, while another 24 were paying workers less than the minimum wage.

Other issues that were uncovered was that 39% of the factories involved in making Apple products weren’t following correct safety regulations and only 43% didn’t have the necessary environmental permits.

There’s no word on the location of the factories that were found to be breaking the code of conduct.

The good news here for Apple is the fact that these discoveries were made as a result of Apple’s own audits of facilities, which means that the company is taking its own code of conduct seriously. Also, as a result of this audit, the child laborers are no longer employed. However, it seems that all the factories discovered to be violating the code of conduct are still being used by Apple.

While Apple should be praised for carrying out the audits, it seem that the company is unable or unwilling to take a “follow the rules of lose the contract” approach. Given Apple’s track record on supply chain issues, this is disheartening.

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Factory, Audit, Apple iPod, Apple Inc., Code Of Conduct, Policies And Procedures, Financial Accounting, Human Resources, Finance, Adrian Kingsley-Hughes

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology.

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Trying to reduce demand for such products

LeonBA Updated - 13th Apr 2010

It would be unfair to take this opportunity to say Ha ha, I'm proud to not be a Mac user, since other manufacturers are doubtless doing similar things--and without the auditing that Apple, as you point out, is doing, much to its credit.

I am, however, glad to be someone who tries to make the most possible use of old technologies. My "new" laptop is years old and I'll be finding someone who can use my previous one. My cell phone is old too and I only change those when my carrier makes me. And I try to pair up people with older but still useful technology whenever possible. The more items I can keep from going to landfills, the fewer new items will (hopefully) be purchased from places with shaky labor practices.

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Cheap Labor/Cut Costs - That's All that Counts

jpr75_z 1st Mar 2010

Overseas cheap labor - "Outsource and Offshore", the mantra of American corporations. It saves huge amounts of money, but at what price? Just more greedy, shameful behavior. And not just Apple. There are many corporations who do the same thing.

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Did you read the article?

Stuka 1st Mar 2010

Yes Apple (along with many others) does out source its labor. Nothing new there. But they were not pocketing the price savings of the child labor. The manufacturing company was. Apple pays them X dollars for each iPod/iPhone made. But Apple has an extremely strict code of conduct which these other companies were breaking.

Your statement of "Cheap Labor/Cut Cost - That's all that Counts" is more true for the manufacturing companies.

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Um, so don't contract to countries where it happens.

No_Ax_to_Grind 1st Mar 2010

Oh yeah, that would cut into Apples profits. Never mind.

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profits

bannedfromzdnetagain 1st Mar 2010

you mean that would cut into the profits of all companies having
suppliers there? or do you blame only apple?

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I agree, it happens with far too many companies

No_Ax_to_Grind 1st Mar 2010

No argument there.

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I see your point too.

ZaiberVaireus 1st Mar 2010

I mean, Apple supplies those companies because
they're probably cheap and efficient. Even if they
don't earn more money out of the cut labor costs
for those companies, they still won't change the
manufacturer because that would probably turn out
to become a higher cost for them too.

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Including HP, Acer, Lenovo, etc...

Wintel_BSOD 1st Mar 2010

In other words, anything with "Made In China" slapped on to it.

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So, Apple should leave the US?

nucrash 1st Mar 2010

Wal-mart was found to have hired employees underage in the US.

I guess we don't want to have those jobs here in this country.

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They left a long time ago. US is just a sales territory.

No_Ax_to_Grind 1st Mar 2010

And saying "the other kids did it" only works if you are 6 years old.

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30.000

bannedfromzdnetagain 1st Mar 2010

only about 30.000 of the 35.000 apple employees work in the u.s.

i know, never let the facts get in the way of an argument.

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@elllroy

Cobra7fac 1st Mar 2010

If Apple Inc. has any Shills, one would be you. As you say, it's disgusting.

As far as facts getting in the way, it's only a fact if you can back it up.

Let me help you: http://seekingalpha.com/article/115797-apple-inc-f1q09-qtr-end-12-27-08-earnings-call-transcript?source=front_page_transcripts&page=-1

That backs up your claim of 35k employee's but it also states that lots of emoployee's are in at least 10 other countries, so I highly doubt that 30k employee's are in the US. Thats also early 09, after more research I found the Apple was set for layoffs and more were coming (didn't research what else happened). Refrence for this fact (try a refrence sometime yourself if you can) http://www.macworld.com/article/139365/2009/03/layoffs_enterprise.html

Get some real facts and refrences then come back.

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facts

bannedfromzdnetagain Updated - 2nd Mar 2010

thanks for the flowers...

apple had a layoff? on which planet? apple is shuffling headcounts as
any other company on a regular basis as they adjust their business
strategies. two weeks ago 40 people from the final cut devision had to
go. that is not a layoff. microsoft axing 5000 and more jobs to reduce
costs - that is a layoff.

most of apple's employees work in cupertino and their stores (most of
the stores are in the u.s.). in addition to it apple has offices in 10
more countries, most of them smaller (a few hundred people) and
bigger ones in ireland and singapur. 30.000 in the us is a guess
based on these facts. the exact number is not known, but it should be
roughly 30.000 based on the number and size of offices and stores
around the world and in the u.s.

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Nice strawman

superbus 1st Mar 2010

But that's a stupid, juvenile argument.

Wal-Mart could be hiring underages in the US, but that's a US company hiring in the US. You slap them on the wrist, and make them stop. They're still hiring Americans.

In these places overseas, these are jobs that SHOULD go to Americans. They're not, so not only are these companies undercutting us on our own products, with our own companies, and costing us our jobs, they're breaking the rules to do THAT.

But from the looks of this, you're going to pick out one sentence in this three paragraph post, and nitpick it. You don't have much to say otherwise.

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Allow me to nitpick

use_what_works_4_U Updated - 1st Mar 2010

Apple is not breaking the rules. According to
the posts by ellroy (who has reviewed Apple's
report and linked to it) what Apple is doing is
enforcing the rules on their
subcontractors. Apparently - based on what
those contractors' employees told Apple - Apple
is the only one actually doing that.

On to sentence number two: You can make the
argument that US workers should be doing the
jobs, I won't try to convince you otherwise.
The facts of life are that we live in a global
economy and global supply chains are to be
expected. The best we can hope for is
accountability.

I never thought I would be doing this, but let
me link to a comment by honeymonster of all
people about this point. If you read a lot
of ZDNet you will recognize Honey as someone
who is not a big Apple fan but I think he puts
the situation into perspective well.
http://bit.ly/ciMzAT (link leads to comments on
The Apple Core blog here on ZDNet)

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Well, yes.

superbus 1st Mar 2010

I agree with you 100% on point #1. Apple's doing a good job here. My issue with the comment I responded to was that that one person made a completely diversionary argument about something that had no effect on the conversation.

Point #2... it sucks. This is a global economy, and by that happening, companies that stay 100% American are usually screwed. But that's a conversation for another time and place, really, as it's not the crux of the point.

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but

Al_nyc 1st Mar 2010

How many of those other corps have the same mark up as Apple?

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Well, to start off with.

Rick_K 1st Mar 2010

Microsoft has higher markups than Apple. And the Majority of their
manufacturing is in fact done in China. You don?t believe that all those
xboxes, mice, office suites, operating systems, etc. are made in the
United States? Do you? It is a sad fact of life that American companies are
only a shadow of their former self.

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There is nothing shocking about it !

mKind 1st Mar 2010

>> The most shocking of the revelations is that three factories responsible for manufacturing parts had 11 minors employed. These minors were 15 years old,

If you have ever visited few developing countries and bothered to get out of the way that was paved for impressing tourists, and seen the harsh realities of life, you wouldn't feel it shocking to know that 15 year old kids are working in factories.

Lot of these manufacturing companies hide the fact that minors are working for them. It has nothing to do with Apple or iPod. It is just that they bothered to do an audit by themselves and found out

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Shocking no, Disgusting yes! (nt)

No_Ax_to_Grind 1st Mar 2010

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I guess I'm not seeing what's shocking about

frgough 1st Mar 2010

A 15-year old sitting in a chair snapping computer components
together. It's less dangerous than a paper route for crying out loud.

But I guess we've all been indoctrinated into thinking that underage
worker means a 6-year old crawling inside a stamping machine in 1905
to clean out a jam.

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You should know better.

Rick_K 1st Mar 2010

No Facts is only feigning shock and disgust. When the subject of
Microsoft offshoring labor came up, No facts was all for it, as it
increased profit. But if someone else does it, then they are evil.

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agreed

bannedfromzdnetagain 1st Mar 2010

adrian, as much as i demand that apple takes bolder steps in
controlling their manufacturers and punishing any violation
of their code of conduct you "forgot" to mention that apple is
the ONLY company making any audits.

what about dell, hp, nokia, etc? worth mentioning that they
don't control or do anything against bad working conditions.

again, apple has to do more but at least they do something.

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Wow nice made up "fact"

Johnny Vegas Updated - 1st Mar 2010

right out of thin air. The FACT that apple didnt cancel their contracts tells you all you need to know...

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apple lies

bannedfromzdnetagain Updated - 1st Mar 2010

"During most of our audits, suppliers stated that Apple was the only
company that had ever audited their facility for supplier responsibility."

well, unless you think apple flat out lies, that's what their report says.

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Have you seen their commericals?

rtk 1st Mar 2010

well, unless you think apple flat out lies,

It's not a thought, Apple flat out lies.

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And what exactly

Pete "athynz" Athens 1st Mar 2010

are those lies?

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Sure I have

Wintel_BSOD 1st Mar 2010

I see your fat, balding face all over them.

lol... grin

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The only relevant "fact"

oncall Updated - 1st Mar 2010

Is that American's continue to demand the cheapest prices for their consumer goods and continue to buy them from companies regardless of any companies particular stance on foreign labor practices. Everything else is just PR fluff.

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And then they complain

nucrash 1st Mar 2010

Then Americans complain because we send the jobs overseas.

Typical American BS.

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And you know this how?

GuidingLight Updated - 1st Mar 2010

dell, hp, nokia, etc? worth mentioning that they don't control or do anything against bad working conditions

Why do you believe that, because they did not report under age workers in their factories?

Could it be that they might be using different, more reputable or accountable manufacturers?

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no

bannedfromzdnetagain Updated - 1st Mar 2010

sony, dell, hp and nokia all use a lot of the same suppliers as apple
(foxconn, wintek, quanta etc.).

apple's report says: "During most of our audits, suppliers stated that
Apple was the only company that had ever audited their facility for
supplier responsibility." (page 4 of their 2010 Supplier Responsibility
Progress Report:
http://images.apple.com/supplierresponsibility/pdf/SR_2010_Progres
s_Report.pdf)

it is an official statement by apple. make what you want of it. you
probably think, it is a big, fat lie. but that would hold apple legally
responsible. i doubt they'd say anything like that if it wasn't true. but
that's only me.

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Simply because they do not care or audit.

Bruizer 1st Mar 2010

Of 300,000 people, 11 were found to be under-age. Dell, HP and Nokia
don't know the number because they do not care and do not wnat to
know.

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But isn?t the mantra of the windows crowd...

Rick_K 1st Mar 2010

That Apple uses the same exact factories to produce their products?
What do you make of this comment? "During most of our audits,
suppliers stated that Apple was the only company that had ever audited
their facility for supplier responsibility.? Using logical deduction the
other companies are not conducting audits, so these companies must not
care. One of the more notable companies is Microsoft. WHo just so
happen to have higher markups on their products.

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Yes, let's take Foxconn for their word

rtk 1st Mar 2010

that nobody else felt the need to audit them.

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Say, weren't you the guy that claimed that...

zkiwi 1st Mar 2010

Apple used pretty much exactly the same manufacturers as the rest of the "US" computer companies?

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Could it be?

Wintel_BSOD 1st Mar 2010

Could it be that they might be using different, more reputable or accountable manufacturers?

Could it be that if you really believe that, I have a bridge to sell you? Covered in lilacs and daffodils?

grin

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So contract with companies/countries with better controls

No_Ax_to_Grind 1st Mar 2010

Lets see, look for the lowest cost manufacture they can find in the entire world (gotta make profits) and then act suprised when you find they are abusing humans to provide the low costs you want so badly???

Of course Apple could contract with companies located in countries with much tougher laws and penalties but,,, they gotta make them big profits.

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Talk is cheap

oncall 1st Mar 2010

Americans don't really want to know. They just want their toys at the cheapest prices possible.

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True enough.

No_Ax_to_Grind 1st Mar 2010

Well, until its their job that goes away, then its the end of the world.

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Same with Europeans.

Bruizer 1st Mar 2010

Given that Nokia uses some of the same suppliers.

It is better stated: People simply want their toys cheap.

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I agree

oncall 1st Mar 2010

Nobody cares unless someone brings it up to bash a particular company. As I asked elsewhere, how often does and particular companies "labor practices" come up when discussing the latest and greatest tech product? It doesn't, EVER. All people care about is how much "value" can be squeezed into the latest sub-$300 netbook. We never even bother to ask if there are hidden environmental or human costs behind these "value loaded" technological wonders.

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This by Apple of 1984

nucrash 1st Mar 2010

If we remember, back in the day before Mr. Jobs was fired, Apple was notorious for overworking employees. He was even making employees pride themselves for working 90 hour work weeks.

This is a good change in events. Whether or not this was brought about just because of an internal audit or because some one tipped them off and threatened to go public, I don't know. Still, this is an improvement over the Apple of old days.

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Fact check, then blog, then proofread

davepowell Updated - 1st Mar 2010

Dear Adrian,

Apple is absolutely following the approach you recommend: "follow the rules or lose the contract." (By the way, please correct your typo).

Did you read the actual body of the report? Apple commits to "terminate business when suppliers have repeat core violations or their practices suggest that they do not take our Code seriously."

On a practical level, Apple also requires "that the facility remedy the situation immediately and implement management systems that ensure sustained compliance. In addition, the facility is placed on probation, usually for a period of one year, ending with a reaudit to ensure the core violation has not reoccurred."

Please read the actual report, not blogs about it, before blogging your own thoughts.

I would also suggest a bit more context: what other tech firms, if any, publicly disclose supplier reports, and how do said reports compare?

I know I'm asking for more journalism and less off-the-cuff riffing, but I also think a modicum of actual reporting is what your customers -- the readers -- expect from someone with your experience, skillset and visibility.

Cheers,

Dave

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Amazing

jragosta 1st Mar 2010

Yet another mindless Apple-bashing article from Adrian. Let's see
how many relevant facts Adrian left out:

1. Apple doesn't hire the employees - the subcontractor does. Apple
then periodically checks to ensure compliance - and caught a couple
of subcontractors cheating.

2. Once Apple discovered the problem, they addressed it immediately
- demanding stepped-up audits in some cases and firing one supplier
in another case.

3. These subcontractors hire hundreds of thousands of workers. 11
underage kids were found. You do realize that employees lie about
their age in the U.S., too, don't you?

4. Most of the suppliers said that even though they do work for Dell,
Nokia, HP, etc, Apple was the only one to audit them or (in some
cases) had the most demanding audits, by far. Where is your article
about Dell, Nokia, HP, etc not even bothering to audit their suppliers?

Bottom line is that Apple did the responsible thing - and stands out in
the industry as the ONLY major company to try to enforce working
conditions. Yet you somehow managed to make this into your usual
Apple-bashing tripe.

Every time I read your articles, it's more and more clear that someone
at Apple stole your girlfriend and you're out for vengeance.

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what a load of malarky

keel 1st Mar 2010

jragosta, you say it much better than I do.
I've given up getting any kind of fair reporting for Apple from
most of the ZDnet bloggers. I don't even pay much attention
to them any more.
I discovered a long time ago that blogger does not equal
journalist, especially around here, most of them are headline
grabbing spin doctors.
It's not worth my valuable time correcting the constant anti-
Apple plain-wrong facts.

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RE: iPods: Made for kids, by kids

Pete "athynz" Athens 1st Mar 2010

Apple?s annual report has revealed that some of its suppliers have been breaching the company?s ?Supplier Code of Conduct? by using child labor and carrying out other dubious practices.

Good for Apple! Any other company make similar audits and are their results accessible? I'd be quite interested in seeing those as well.

The most shocking of the revelations is that three factories responsible for manufacturing parts had 11 minors employed. These minors were 15 years old, but the minimum working age in the countries in question was 16.

Interesting, because the minimum age to work here in the U.S. is 15 and 8 months with a work permit... at least it was when I was that age.

Another 50 factories were found to be keeping workers on for longer than the maximum 60 hour work week, while another 24 were paying workers less than the minimum wage.

Now the OT would be cool IF there were extenuating circumstances such as a huge rush order... but the less than minimum wage pay is crap - hopefully this get's taken care of.

Other issues that were uncovered was that 39% of the factories involved in making Apple products weren?t following correct safety regulations and only 43% didn?t have the necessary environmental permits.

ONLY 43% didn't have the enviornmental permits? Interesting... and the safety violations... Some of this crap would not happen if the factories were here in the U.S. - especially if these factories had union workers...

There?s no word on the location of the factories that were found to be breaking the code of conduct.

Of course not... though as I indicated above I seriously doubt those factories were in the U.S.

The good news here for Apple is the fact that these discoveries were made as a result of Apple?s own audits of facilities, which means that the company is taking its own code of conduct seriously. Also, as a result of this audit, the child laborers are no longer employed. However, it seems that all the factories discovered to be violating the code of conduct are still being used by Apple.

Now a bit of this is nitpicking - sure the child laborers are gone and presumably/ hopefully those who facilitated the child labor in the first place but to make the statement Apple is still using the factories that violated this code... even though the code specifies that the violator in question is given a one year probationary period... don't you think that's nitpicking just a bit?

While Apple should be praised for carrying out the audits, it seem that the company is unable or unwilling to take a ?follow the rules of lose the contract? approach. Given Apple?s track record on supply chain issues, this is disheartening.

Given my comment above, they ARE following the rule... besides as I also said above it would be quite interesting to see the same reports from other companies about the supply factories THEY use. I gotta give Apple props for finding this. Now if this was NOT the first time they found these issue at these particular factories then I could see your point.

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What is this, Adrian. Grooming a shock jock persona like RCK?

honeymonster 1st Mar 2010

As I wrote elsewhere on this site, it is a sad day
when a public company has to keep their audit findings
under wraps to avoid being exploited by cynical online
"journalists" in unscrupulous click-baiting.

In this case Apple performed the audit themselves. It
is not like they were trying to hide something and was
outed by an investigative journalist. They simply went
public with their findings.

Apple has a code of conduct. They require their
suppliers to adhere to it. And they audit the
compliance.

Kudos to Apple! Adrian, drop the click-baiting,
please?

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Wow, I should have that framed

Wintel_BSOD 1st Mar 2010

Put it on my wall!

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Those "underage" kids are still working there...

adornoe@... 1st Mar 2010

it's just that they've aged a bit and are no longer "underage"; so it's Okay for them to stay.

Could it be that Apple and the management at the factories waited for the kids to become "of age" before Apple decided to crackdown and get the factories to uphold Apple's code of conduct and code of ethics?

Though the "kids" are now old enough to work at Apple, I have a sneaking suspicion that somebody at Apple knew all along and waited for those kids to become of legal working age.

And who is to say that it's not still happening at the Apple factories and elsewhere? The people doing the hiring might just decide to get falsified birth certificates for those "underage" kids.