Foxconn, Apple share costs to improve work conditions

Foxconn, Apple share costs to improve work conditions

Summary: Cupertino and its manufacturing partner will split costs of improving conditions in Foxconn's Chinese factories, as latter responds to criticism over alleged poor labor practices, report states.

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Foxconn Chief Executive Terry Gou said his company and Apple will share the initial costs of improving labor conditions at the former's China factories that assemble Apple devices, which have been in the spotlight for its poor working environment in recent months, reports Reuters.

The news wire reported on Thursday that Gou did not disclose a figure for the costs and it is not clear if it will be evenly split between the two companies. He added that his company has invested heavily to fight public perception and what it regards as unfair criticism that its factories are sweatshops with poor working conditions.

"We've discovered that [improving factory conditions] is not a cost. It is a competitive strength. I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs," he said in the report.

According to Reuters, analysts attributed weaker-than-expected first-quarter results at Foxconn's listed unit Hon Hai Precision Industry mainly to rising salary costs. Hon Hai has been trying to cut rising Chinese labor costs in the past two or three years by relocating plants to areas where wage levels are lower, it added.

Gou's comments came at a time when Foxconn and Apple have been in the headlines over the labor conditions at the factories in China that build Apple devices including iPhones and iPads.

Just last month, Foxconn workers at the Wuhan plant threatened suicide in protest over wages--a incident similar to the protest organized earlier in January that was latter settled.

In March, the U.S. Fair Labor Association (FLA) said it found "significant issues" at three of Foxconn's Chinese factories where it conducted inspections beginning in February, including excessive overtime, problems with overtime compensation, and several health and safety risks.

FLA also said Foxconn has "committed" to comply with the Chinese legal limits and FLA standard of working hours by 2013, develop a new compensation package, increase its workforce, and build more housing and canteen capacity.

Prior to the release of the audit results, Foxconn also announced it opened new job positions to improve factory working conditions which include a safety and security officer, a lifestyle services manager, and two fire chiefs.

Topics: IT Employment, CXO, Hardware, Mobility, Software Development

Jamie Yap

About Jamie Yap

Jamie writes about technology, business and the most obvious intersection of the two that is software. Other variegated topics include--in one form or other--cloud, Web 2.0, apps, data, analytics, mobile, services, and the three Es: enterprises, executives and entrepreneurs. In a previous life, she was a writer covering a different but equally serious business called show business.

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