Why Apple is held accountable for supply chain mistreatment

Why Apple is held accountable for supply chain mistreatment

Summary: It's all about branding and perceived value.

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It seems that Apple is once again being hauled over hot coals because of what's going on at companies it doesn't own or control within its supply chain. Why is Apple held accountable for worker mistreatment in the supply chain while other companies that use the same suppliers don't?

It's all about branding and perceived value.

The majority of companies that manufacture hardware such as PCs, tablets, smartphones and other consumer electronic devices have to operate with razor thin profit margins, most of the time in the single digit percentage points. Consumers demand cheap stuff and companies have to deliver at a price that people expect or run the risk of going out of business. When you buy that new PC and it comes loaded with bloatware, the OEMs been paid to load that stuff onto the PC, and use that revenue stream to help bring you a cheaper system. It's a cut-throat, dog-eat-dog world.

Except for Apple.

Apple's position is very different from the rest of the industry. Not only are its products seen as 'designer' or even 'luxury' (yes, mass market consumer electronics can be seen as luxury) the company also enjoys fantastic margins on products it sells. Apple is not seen in the same category as the likes of HP or Dell -- or even IBM. Apple is more akin to a German car maker than it is a computer OEM, making products that people lust over and one day wish to own.

There's nothing cheap when it comes to Apple's products, yet the company uses the exact same supply chain companies as those selling cheap products and scraping out an existance with tiny margins. While I don't believe that an 'Apple tax' exists compared to PCs, it's undeniable that you can pick up a beige-box PC or a generic-looking notebook for a lot less than you can pick up a similar product sporting the Apple logo. Your shiny new iPhone, iPad or Mac is assembled in the same factories which build similar devices that you can pick up for a lot less money.

So Apple's problem isn't that it's using the same supply chain as its competitors, and that the supply chain has issues when it comes to how it treats its workforce; it's that Apple is being held to a higher standard that the competition because it makes more money from using that supply chain.

Personally, I think that the response from Apple CEO Tim Cook to the problems facing the supply chain have been frank and open, and I think that his comments regarding what Apple is doing to improve conditions are spot on:

Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain. As we reported earlier this month, we’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.

At the same time, no one has been more up front about the challenges we face. We are attacking problems aggressively with the help of the world’s foremost authorities on safety, the environment, and fair labor. It would be easy to look for problems in fewer places and report prettier results, but those would not be the actions of a leader.

Supply chain issues aren't an Apple issue, they're an industry-wide problem, and part of the blame has to rest with us, the consumer - we constantly demand more for less, and our insatiable demand for gadgets and devices has created a culture where a blind eye has been turned to abuses in the past. That now, thanks to the efforts of companies like Apple, is changing.

Topics: Software, Apple, Enterprise Software

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18 comments
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  • It has more to do with the top dog

    Microsoft has been unfairly accused of tons of stuff that was widespread in the industry back when MS was top dog. Some of it is still happening because many people still think of MS as being the biggest and the strongest.<br><br>I think the other thing that happens too is that much of Apple's advertising and all the Apple fanbois stress that Apple isn't just "as good" as all the others. They claim (as is their right) that Apple is better than everyone else. They have set the Apple standard as being higher then everyone else. Then, when Apple is held up to the higher standards that they themselves have claimed to be operating at, and when they fail to meet those higher standards, the immediate reaction is "yeah, well, everyone else is just as bad as Apple is".

    Finally, there is the undeniable arrogance in Apple. If you see some kid walking down the street and he trips and falls, most would feel kind of bad. If that kid is walking towards you giving you the finger, shouting insults at you, and telling you that he is better than you and then trips and falls, you aren't going to feel quite the same amount of sympathy. Apple (and their fanbois) are that kid so when they fall, like all of us do on occasion, there is a certain amount of "ha, he deserved that".
    toddybottom_z
    • RE: Why Apple is held accountable for supply chain mistreatment

      @toddybottom_z
      So your justification for not helping someone who has suffered misfortune is that...they are holding an iPhone?
      You_are_a_very_strange_ person
      frogspaw
    • RE: Why Apple is held accountable for supply chain mistreatment

      @toddybottom_z

      Utter crap, you sounded very arrogant for a MS stooge.
      AdanC
  • test

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    Dietrich T. Schmitz *Your
    • Missing the Big Picture.

      @Dietrich T. Schmitz * Your Linux Advocate <br><br>This isn't about Apple. It's about the prevailing environment set up by legislation passed over the years, NAFTA, CAFTA, Korean, WTO Treaties and so-called 'Free' trade.<br><br>Our country has seen a mass-exodus of jobs to third-world countries in the name of 'short-term' profit taking by Corporate America.<br><br>It goes further than that, but currently no one is breaking the law off-shoring jobs because of how laws are defined.<br><br>The matter of 'tax shelters' is a separate issue.<br>The matter of 'unfair labor practices' specifically related to sweat shops and child labor in third-world countries for products manufactured by U.S. Corporations is a separate issue.<br><br>Our country is facing a protracted deep recession, which will go even further if measures are not taken to enliven it.<br><br>The fact that we have seen long-standing 'outsourcing' is a current topic that may be a plank for Presidential hopefuls.<br><br>Newest points of view include applying a carrot and stick approach to inducing Corporations to 'insource' job creation on domestic U.S. soil.<br><br>The carrot: Graduated Tax breaks<br>The stick: Graduated Tax Penalties<br><br>I use 'graduated' because any such legislation would have to consider a phased-in approach over several years. You cannot simply undo offshoring of jobs and bludgeon Corporations with punitive taxation. That would be counter-productive and by itself hurt the economy as Corporations offset such costs and pass on to the consumer who ultimately pays for everything.<br><br>My point: You can't get from there (outsourcing) to here (insourcing) without changing the prevailing trade practices encouraged by incentivizing movement of jobs back to America.<br><br>The other flip-side of the coin is that we, America, are participating in WTO-sponsored 'Free Trade', aka the 'Global Economy'.<br><br>The problem with 'Free Trade' is that it isn't particularly <i>free</i> if the Country with which you plan to trade doesn't have a reciprocal arrangement. Example:<br><br>China's looming trade deficit. This deficit is because China will not provide access to their markets on a dollar for dollar basis.<br><br>Every dollar an American spends in WalMart that pays for goods made in China, goes to pay a WalMart invoice from a Chinese manufacturer who in turn, on the current exchange rate converts U.S. dollars to Yuan and defrays their own operating expenses, including paying their employees, who in turn possess the marginal propensity to consume (spend) in 'their' economy, stimulating it, not ours.<br><br>Add to that the fact that China intentionally manipulates their currency to not follow the prevailing market trading exchange rates and the fact that China buys heavily U.S. Treasury Bonds all of which has an effect of keeping their products' pricing to U.S. markets intentionally low, undercutting competition from U.S. manufacturing to match pricing.<br><br>We are not benefiting from the Global Economy. Quite the opposite, our financial strength has been diminished and the story above shows where the cash flows are going--straight out of our country and not trickling back down.<br><br>The worst is yet to come, regardless of 'success stories' about Apple and similar technology stars. Core manufacturing in America is gone and won't come back unless:<br><br>o We incent insourcing with Tax breaks<br>o Apply the 'great equalizer' on Trade-Deficit Countries who don't play fair on Free Trade by applying 'Tariffs'<br><br>The latter above is the 'equalizer' which will cooerce Free-Trade compliance with China.<br><br>Separately, off-shoring tax shelters, intentionally hiding income from the U.S. Internal Revenue service is simply breaking the law and will with time come to an end separately as Corporations are held accountable in a court of law.<br><br>While you are thinking about the above, it would be worthwhile for you to read what Andy Grove, self-made Intel cofounder, recommends:<br><br>h-t-t-p://www.businessweek.com/magazine/content/10_28/b4186048358596.htm<br><br>Thanks Adrian.
      Dietrich T. Schmitz *Your
      • RE: Why Apple is held accountable for supply chain mistreatment

        @Dietrich T. Schmitz * Your Linux Advocate

        Good job, Dietrich. Now if we can only get you away from your obsolete NetBook ... Grin.
        kenosha77a
      • Good read DTS - but is anybody listening?

        @Dietrich T. Schmitz * Your Linux Advocate <br>[i]We are not benefiting from the Global Economy. Quite the opposite, our financial strength has been diminished and the story above shows where the cash flows are going--straight out of our country and not trickling back down.[/i]<br><br>People need to wrap this around their thick and increasingly displaced skulls. So do "American" businesses large and small. If it takes ugly government intervention to bring about such changes, then so be it. [sad, but what else?]

        But the short term >> now gone >> long term screwing over we're taking as a country needs to end. Likewise for the sh*tty excuse making from the tiny lot who profit handsomely by selling out the majority - and this nation as a whole.

        Every business has greater responsibilities to the society and nation that hosts it than whoring profits for their own private circles alone. Providing for aliens and foreigners first, and over the native homegrown population, isn't the way. If they haven't discovered this yet, let 'em learn - by legal decree if necessary.

        Every other nation knows its priorities INCLUDING RED CHINA -- why not ours?
        klumper
      • RE: Why Apple is held accountable for supply chain mistreatment

        @Dietrich T. Schmitz * Your Linux Advocate
        Excellent explanation. I can't blame corporations when our beloved government wants to charge 35% to bring money into the states. Nor do I blame them for leaving due to the relentless onslaught of regulations that chip away at their profits. Due to these conditions there's no company in their right mind that will bring those jobs and their cash from overseas. Yes, some of their motivation is greed but also take a close look at the regulations and taxation that has been forced onto businesses and decide whether or not you would make the same call as they did. After all, if you owned a company and the survival of your business was being threatened by government regulations would you just close your doors or find alternative ways to keep afloat?
        rpollard@...
      • @rpollard

        And you are aware of how much US taxpayer money is handed out to these "multinational" companies despite their gutting our infrastructure?

        If it weren't for our subsidizing them (and later bailing them out because fewer have the money to spend to keep them afloat) then you might have a point...

        But, as they say, "facts are useless things"...

        .
        HypnoToad72
  • RE: Why Apple is held accountable for supply chain mistreatment

    Jobs will come to the USA, when it is cost effective. Complain all you want about the World economy, but the opposite would be far worse. The great depression that many compare to our current struggles. Not accurately by the way, was caused not by a stock market fall in 1929, rather the Smoot Hawley Trade laws in 1930-1. This raised our tariffs on other countries we considered unfair, so they raised theirs and so on and so on. World trade collapsed and most countries fell into depression. It was world wide depression. No, where we are competitive will will enjoy the jobs, just look at BMW, Mercedes, Honda, and Toyota, all have plants in the good ole USA. If all countries practiced what one of your readers suggest, we would lose those thousands of Jobs! On las t thought, loss of Jobs overseas is not the biggest reduction of American factory workers, it is automation.
    Wman
    • No... Just... No.

      @Wman : The Smoot Hawley Tariff is only one of the reasons we had a major depression back then. The major causes were the Stock collapse, and bank failures and the drought which killed buying power when people lost all their money and couldn't make more from farming. Once that happened, people stopped buying. The Tariffs were a knee jerk reaction that didn't help, but the depression was already underway when those passed. My father lived through the depression and told me many stories about it. Like a good number of his school-mates came to school in burlap sacks for clothing because they couldn't afford to buy any clothes. Once buying power drys up, the economy does too.
      Also, those car manufacturers have plants here for the sole reason of avoiding the import tariff on foreign made cars, otherwise they'd be making them in Germany or Japan and shipping them here. Huh, tariffs can bring work here.
      Yes, automation has reduced work force, but there's still a large amount of hand made things, or they wouldn't have moved the production over to where the prolific workforce is cheaper. The original move to China for many companies was not because of supply chain, as Apple purports, but because of cheaper work force. The supply chain aspect came later as they sought to seek ways to keep manufacturing there as their own economy inflates.
      Zorched
    • corporate welfare you pay for aside,

      When will you choose to work for wages well below minimum wage?

      Corporations offshored, pocketed the difference as "profit". They're fleecing us here and workers worldwide, but you might need to figure that out yourself. Others trying to tell you are only being ignored by you...
      HypnoToad72
  • Tinkering around the edges

    People wishing to help the downtrodden in emerging countries have to be careful that they don't create huge economic distortions in the countries they are trying to "help."

    China's economy, however people are paid, is somewhat in balance. If Apple, or Apple and HP, were suddenly to start paying Foxconn workers American-sized wages, it would be as if space aliens landed in Kansas and started paying workers at the Cessna plants -- and only the Cessna plants -- $700,000 per year. That's not a recipe for happiness, it's a ticket to social unrest.

    If you don't like the way it is in China, don't go there. But let the Chinese worry about how they get from the 19th century to the 21st. Our transition was ugly and at times violent. We have no room to lecture others on how to industrialize.
    Robert Hahn
    • RE: Why Apple is held accountable for supply chain mistreatment

      @Robert Hahn - Well put! +3
      The Danger is Microsoft
  • Very wise words ---

    Wman and Robert Hahn;<br><br>You two are very world wise, and exactly right. It might not hurt to at least threaten tarriffs against trade practices where dumping unfairly on the market to purposely run US companies out of business. We wouldn't put up with that from a US company, why in H E double LL would we let overseas companies get away with it? <br><br>Of course, anything congress does would be over board and probably lead to world wide depression. What we do need to look after now is weather the banks are robbing the FDIC insurance fund that protects our money in the bank. I hear ugly rumors that congress is looking the other way, while the fox robs the chicken coup!!!<br><br>As long as the US account holders are truly insured, we cannot have as disasterous a crash as the big depression of the '30s.
    JCitizen
  • RE: Why Apple is held accountable for supply chain mistreatment

    this has gotten off topic.. Apple is not to blame. The Chinese companies and Government are solely to blame for bad worker conditions. No matter how many times Apple inspects a factory and even if they put in their office, someone who holds an emplyee meeting and says "my door is always open", there will be some floor manager in that same meeting who will ask everyone to stay after the Apple guy leaves, and this mamager will say "I don't care what he said, anyone who goes around me gets their head on a spike". That is how it is done. It is done that way here too, except we don't have employees heads on spikes, but instead that manager just makes up some phony baloney accusation and fires the employee instead.
    opcom
    • RE: Why Apple is held accountable for supply chain mistreatment

      @opcom
      So true! Happens everyday. Small scale version of politics at it's finest. Apple's recent inspection yielded 13 previous cases of abuse and 6 current cases and they stopped doing business with one of their suppliers. How many other companies (HP?) have gone this far with trying to keep their suppliers straight!
      rpollard@...
  • RE: Why Apple is held accountable for supply chain mistreatment

    If we tried to bring back PC ~ etc and consumer electronics along with
    a lot of other types of manufacturing the infrastructure and supply chain
    doesen't exist here at scale presently. We almost lost 2/3 of our Automobile
    and related manufacturing capability recently where is it going to end?
    Apple may be the big dog in the house but certainly their are other big dogs .
    preferred user