Apple may be poisoning Chinese workers and doesn't seem to care. Should we?

One of the reasons it's so cheap to employ foreign workers is that American standards for health and wellness can be flagrantly disregarded outside the United States.
Written by David Gewirtz, Senior Contributing Editor

The Chinese are truly entering the first world. How do we know? Simple: they complained about something to Apple and Apple -- no surprise to us Americans -- didn't respond.

What a shocker. Apple didn't respond to a complaint, even a valid one.

Before I go on, I should give you a heads-up. Some articles are harder than others to bring in for a landing. This is one of those. It's got a lot of moving parts, so please read the whole thing before you form an opinion.

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We Americans complain when our iPhones drop calls, almost as if we think we have a right to have a full conversation just because we bought an iPhone 4. On the other hand, the Financial Times reports that 36 Chinese environmental groups complained to Apple because they're polluting the environment and risking worker health.

Wait...the Chinese have environmental groups?

That's actually pretty interesting, because it shows that China has loosened up at least to the extent that groups of citizens can express an opinion about something like worker health. Good for the Chinese!

According the FT article, these groups explored worker conditions and pollution at the Chinese operations of 29 multinational corporations, including our friends at Apple. According to the article, many of the companies, including HP, Samsung, Toshiba and others "responded to their inquiries and took some steps to adjust problematic practices at their suppliers or improve supervision systems."

Some others, including Nokia and Sony, were unresponsive and didn't take any action to correct the problems claimed by the environmental groups.

But Apple...apparently Apple behaved exactly like Apple behaves to us Americans. According to the article, Apple was "criticised for being evasive and not responding to the NGOs’ concerns." Further:

When the Chinese environmental groups brought this and another case to Apple’s attention, the NGOs say the company refused to confirm or deny whether the polluting companies were their suppliers and would not respond further.

“Apple behaved differently from the other big brands and seemed totally complacent and unresponsive,” said to Ma Jun, director of the Institute of Public and Environmental Affairs, a well-known Chinese NGO [non-governmental organization, generally a nonprofit] and the main author of the report.

Complacent and unresponsive. Now, that's the Apple we all know and love!

There are some serious issues raised in the article. Apparently, workers at the Lianjian Technology factory got poisoned by a chemical cleaning agent n-Hexane while making Apple touchscreen displays.

Let's separate Apple's unresponsiveness for a moment. That's Apple. Apple is known to practice unresponsiveness as an art form.

Instead, let's look at the following two issues. First, is a U.S. manufacturer responsible for the behavior of a sub-contractor in another nation? Second, should we care, given these jobs should never have been offshored in the first place?

Sub-contractor responsibility

Ultimately, this is a legal question. If Chinese law or American law requires the contracting entity (Apple) to have a level of responsibility, then they do. Is there a so-called moral or ethical responsibility? Sure. None of us want to think that people got poisoned or mistreated just so we could play with our iPads.

But does Apple even have direct oversight over these conditions? When I last looked into Apple's treatment of foreign workers, it became apparent that a big part of the problem was the enormous demand for production output was stressing the contractor companies and their workers to the limits.

One way to reduce the pain being caused these workers is to ship less products. But not only will Apple not accept a reduced revenue stream, we in the press would string Apple management up from the highest pole, simply because they couldn't deliver enough to meet demand.

So, in one sense, not only is Apple responsible, so are demanding consumers and an unrelenting press.

The offshoring question

Next, we get to what I consider the big question: offshoring. I wrote extensively about outsourcing and offshoring in How To Save Jobs and it's a huge problem for American workers. By the way, the book's a free download, so it's well worth reading.

The bottom line for companies like Apple is clear: offshored workers are far less expensive even as workers in foreign lands are pushed beyond their human limits so we can get our shiny toys. Here's a scary data point, derived from analysis in the book:

It costs the typical American employer eight times more each day to pay for an individual employee’s health insurance (and that’s before wages) than it costs to employ a “middle class” Chinese worker, wages and everything.

But most American businesses provide health care for a worker's family as well. Here's the money shot on that:

The health insurance cost shouldered by an American employer for a typical American employee with a family is 24 times the cost of the total wages for a Chinese employee.

Do the math. If it costs a company like Apple 8 to 24 times more just to pay for health care for an America worker -- not including salary -- than it does to pay a Chinese worker, it's much cheaper to employ Chinese workers.

This is our challenge. Apple should not be offshoring manufacturing to Foxconn and Lianjian. Apple, a great American company, should be manufacturing its incredibly popular products here in America, using Americans to do all the work.

But how can they? Your iPad would cost a lot more. Your iPhone would cost a lot more. And companies like Samsung, Sony, and Nokia -- none of which are based here in America -- would clean Apple's clock when it came to price.

On one hand, we want American companies like Apple to be competitive and therefore they must compete on price. Therefore, they must offshore. On the other hand, we want inexpensive devices and we all derive value from having access to these technological wonders and we wouldn't necessarily have that access if they were built here.

The fact is, I don't believe offshoring is a true strategic necessity. I believe it's possible to engineer better processes, bring assembly back to America. I'd rather we use American robots (and some nicely paid Americans to maintain and program them) than put money into China's economy and their workers.

Here's how the math works. Foxconn has something like a million employees. Let's say 100,000 of them work on Apple products. That's 100,000 jobs not here in America. So, as an exercise, let's say Apple can only pay one American worker for what they pay 100 Chinese workers. If one American has to do the work of 100 Chinese workers, so be it. Let's build technology to create that force multiplier and give our own people the jobs.

That'd still be 1,000 jobs here in America.

At the beginning of this article, I told you that Chinese environmental groups are claiming that Apple is poisoning Chinese workers and doesn't seem to care. I then asked, "Should we?"

In my opinion, we should. One of the reasons it's so cheap to employ foreign workers is that American standards for health and wellness can be flagrantly disregarded outside the United States. Both workers and the environment can be abused to keep costs low. This tolerance of abuse is creating an unfair competitive advantage for foreign companies, is keeping the cost of workers artificially low, and is helping put Americans out of jobs.

Perhaps if we demanded that workers offshore working for American companies be treated as well as American employees would be, foreign competitors would no longer have such a cost advantage. Without a towering cost advantage, perhaps our great American companies would employ all our great Americans.

Apple is one of America's crown jewels. It's time they stood up for the country that gave them the opportunity to be such a success and moved those offshored jobs back to America. If any company can figure out how to make it work, Apple can.

Update: This article was originally titled "Apple is poisoning Chinese workers and doesn't seem to care. Should we?". Ever since I saw the article rendered live on the site, the title's been bugging me. The “Apple is” part is the part that I’m less comfortable with. That’s an allegation by these environmental groups, but we don’t know for sure it’s true. I think "may be" is a far more fair way to represent this issue, so I've changed the title accordingly. --David

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